<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended: JUNE 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTON 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934.
COMMISSION FILE NO.: 0-28868
LEADING EDGE PACKAGING, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 22-3432883
- ------------------------------------- ----------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
EMPIRE STATE BUILDING, SUITE 3922, 350 FIFTH AVENUE, NEW YORK, NEW YORK 10018
- --------------------------------------------------------------------------------
(Address of principal executive offices)
(212) 239-1865
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports to be
filed by Section 13 or 15 (D) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. YES X NO
----- -----
State the number of shares outstanding of each of the issuer's classes of
common stock: As of June 30, 1998, the issuer had 4,562,500 shares of its
common stock, par value $.01 per share, outstanding.
<PAGE>
LEADING EDGE PACKAGING, INC.
FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 1998
INDEX
PART I. FINANCIAL INFORMATION PAGE NO.
Item 1. Financial Statements
Condensed Combined Balance Sheet 3
June 30, 1998 and March 31, 1998
Condensed Combined Statement of Income 4
Three Months Ended June 30, 1998 and 1997
Condensed Combined Statement of Cash Flows 5
Three Months Ended June 30, 1998 and 1997
Notes to Financial Statements 6-7
Item 2. Management's Discussion and Analysis of 7-9
Financial Condition and Results of Operations
PART II. OTHER INFORMATION
9
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURES 12
2
<PAGE>
LEADING EDGE PACKAGING, INC.
CONDENSED COMBINED BALANCE SHEET
(In Thousands)
<TABLE>
<CAPTION>
(UNAUDITED)
June 30, March 31,
1998 1998
ASSETS ---------- ----------
<S> <C> <C>
CURRENT ASSETS
Cash & cash equivalents $ 787 $ 951
Accounts receivable 3,216 2,296
Bills receivable (Note 2) 1,732 936
Inventories (Note 3) 7,830 6,590
Receivable from Chung Hwa Development Holdings Limited (Note 4) 12,746 12,746
Prepaid expenses and other current assets 538 505
---------- ----------
Total Current Assets 26,849 24,024
---------- ----------
Property and equipment, net of accumulated depreciation
of $3,409 and $3,160 5,483 5,588
---------- ----------
TOTAL ASSETS $ 32,332 $ 29,612
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable 2,678 2,425
Bills payable 2,075 1,251
Accrued liabilities 2,001 2,154
Income taxes payable 182 547
Short-term borrowings 7,951 5,865
Current portion of long-term debt 21 273
---------- ----------
TOTAL CURRENT LIABILITIES 14,908 12,515
---------- ----------
LONG TERM LIABILITIES
Deferred income taxes 51 51
Long-term debt 651 657
---------- ----------
TOTAL LONG TERM DEBT 702 708
---------- ----------
MINORITY INTERESTS 1,550 1,550
---------- ----------
SHAREHOLDERS' EQUITY
Common Stock, par value $0.01 per share,
Authorized 5,000,000 shares,
Issued and outstanding 4,562,500 shares 46 46
Additional paid in capital 7,308 7,308
Retained earnings 7,827 7,494
Foreign currency translation adjustments (9) (9)
---------- ----------
TOTAL SHAREHOLDERS' EQUITY 15,172 14,839
---------- ----------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 32,332 $ 29,612
========== ==========
</TABLE>
See Accompanying Notes to Condensed Combined (Unaudited) Financial Statements
3
<PAGE>
LEADING EDGE PACKAGING, INC.
CONDENSED COMBINED STATEMENT OF INCOME
(UNAUDITED)
(In thousands, except per share data)
Three Months Ended
June 30,
1998 1997
------------ ------------
Net sales $ 4,439 $ 4,286
Cost of goods sold 2,768 2,379
------------ ------------
Gross profit 1,671 1,907
Selling, general, and administrative
expenses 1,233 1,101
------------ ------------
Operating income $ 438 $ 806
Interest expense net of interest income (110) (35)
Other income 46 25
------------ ------------
Income before income taxes 374 796
------------ ------------
Provision for income taxes 41 285
------------ ------------
Net income $ 333 $ 511
============ ============
Basic and diluted earnings per share $ 0.06 $ 0.09
============ ============
Weighted average of
shares outstanding 5,562,500 5,562,500
============ ============
See Accompanying Notes to Condensed Combined (Unaudited) Financial Statements
4
<PAGE>
LEADING EDGE PACKAGING, INC.
CONDENSED COMBINED STATEMENT OF CASH FLOWS
(UNAUDITED)
(In thousands)
For the Three Months Ended
June 30,
1998 1997
--------- ---------
Cash flows from operating activities:
Net income $ 333 $ 511
Adjustment to reconcile net income to net
Cash provided (used in) activities:
Depreciation and amortization 249 165
Net increase (decrease) in cash due to
Changes in current assets and liabilities (2,430) 1,572
--------- ---------
Net cash provided by (used in) operating activities: (1,848) 2,248
--------- ---------
Cash flows from investing activities:
Purchase of property, plant and equipment (144) (28)
--------- ---------
Net cash used in investing activities: (144) (28)
--------- ---------
Cash flows from financing activities:
Proceeds from short-term borrowings 2,086 136
Repayments of long-term borrowings (258) (61)
--------- ---------
Net cash (used in) provided by financing activities 1,828 75
--------- ---------
Net increase (decrease) in cash and cash equivalents (164) 2,295
Cash and cash equivalents at the beginning of period 951 5,100
--------- ---------
Cash and cash equivalents at the end of period $ 787 $ 7,395
========= =========
Supplemental disclosure of cash flow information:
Interest paid $ 243 $ 259
--------- ---------
Taxes paid $ 351 $ 365
--------- ---------
See Accompanying Notes to Condensed Combined (Unaudited) Financial Statements
5
<PAGE>
LEADING EDGE PACKAGING, INC.
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
June 30, 1998
(UNAUDITED)
Note 1. BASIS OF PRESENTATION
The accompanying unaudited financial statements of Leading Edge
Packaging, Inc. (the "Company"), as of June 30, 1998 and 1997 for the three
months then ended, have been prepared in accordance with generally accepted
accounting principles for interim financial information. Accordingly, they do
not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. Certain
information and footnote disclosures required under generally accepted
accounting principles have been condensed or omitted pursuant to the
Securities Exchange Act of 1934, as amended, and regulations thereunder,
although the Company believes that the disclosures are adequate to make the
information presented not misleading. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary
for fair presentation have been included.
On January 23, 1998, the Company entered into a Share Exchange
Agreement (the "Agreement") with its ultimate holding company, Chung Hwa
Development Holdings Limited ("Chung Hwa"). Chung Hwa is a Bermuda company
and its shares are listed on The Stock Exchange of Hong Kong Limited.
Pursuant to the Agreement, the Company received all of the issued and
outstanding shares of Justrite Investment Limited ("Justrite"), a wholly
owned subsidiary of Chung Hwa incorporated in the British Virgin Islands, in
exchange for 2,250,000 shares of the Company's common stock valued at $6.00
per share. Justrite is engaged in the manufacturing sale and distribution of
packaging products. The Company and Chung Hwa completed the transaction on
March 13, 1998, subject to the issuance of 2,250,000 shares of the Company's
common stock to Chung Hwa. 1,250,000 of such shares were issued on June 10,
1998, and the remaining 1,000,000 shares are expected to be issued upon
amendment of the Company's certificate of incorporation increasing its
authorized share capital.
The Company and Justrite are under common control. The financial
statements have been prepared to reflect the combined financial position,
results of operations and cash flows of the Company and Justrite for all
periods presented at historical cost as if the structure of the Company
resulting from the above transactions had been in existence for each of the
periods presented.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
The results of operations for the three-month period ended June 30,
1998 and 1997 are not necessarily indicative of the results to be expected for
the entire year or for any other period. The accompanying financial statements
should be read in conjunction with the financial statements and notes thereto
included in the Company's Annual Report on Form 10-K for the year ended March
31, 1998.
6
<PAGE>
LEADING EDGE PACKAGING, INC.
Note 2. BILLS RECEIVABLE
Bills receivable represent accounts receivable on FOB sales in the
form of bills of exchange, whose acceptances and settlements are handled by
banks.
At June 30, 1998, the Company had not factored any bills receivable
or accounts receivable with financial institutions.
Note 3. INVENTORIES
Inventories held for resale are stated at the lower of cost,
determined by the first-in, first-out method, or value determined by the
market. Finished goods inventories consist of raw materials, direct labor, and
overhead associated with the manufacture process.
Note 4. RECEIVABLE FROM CHUNG HWA DEVELOPMENT LIMITED
The amounts due from Chung Hwa are unsecured, non-interest bearing, and
repayable on demand.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Certain statements under this item constitute "forward-looking
statements" under the Private Securities Litigation Reform Act of 1995. See
"Part II. Item 5(a). Other Information."
GENERAL
The Company manufactures, sells and distributes worldwide
packaging products used primarily in the sale of luxury consumer goods. Its
packaging products include metal, plastic and paper based jewelry, optical
and watch cases, pouches and bags, paper gift boxes and premium and novelty
items. The Company has a 2,000 square-foot office and showroom in the Empire
State Building, 350 Fifth Avenue, New York City and a 65,000 square-foot
warehouse, distribution and light assembly facility in Raritan Center
Industrial Park, Edison, New Jersey. The Company has two principal overseas
subsidiaries, Leading Edge Packaging, Limited in Hong Kong, an international
trading company, and Dongguang Walford Ornaments Packaging Co. Ltd. in China,
a manufacturing subsidiary. Dongguang Walford employs 3,000 workers and is
considered a fully integrated manufacturing plant, where every phase of the
production process and, ranging from making of moulds, metal stamping of
shells, injection moulding process and hinge production to powder coating
process, are all conducted in-house.
YEAR 2000 MATTERS
The Company is currently assessing the impact of the Year 2000 on
its information systems, including the year 2000 readiness of those with whom
it conducts business, and is developing and implementing a Year 2000
compliance strategy. The Company expects increased spending to bring its
systems into Year 2000 compliance, but Year 2000 related expenses are not
expected to be material to the Company's results of operations and financial
position and will be expensed as incurred. However, if modifications and
conversions by the Company and those with whom it conducts buisness are not
completed in a timely manner, the Year 2000 issue may have a material adverse
effect on the Company's business, results of operations and financial
position.
7
<PAGE>
LEADING EDGE PACKAGING, INC.
RESULTS OF OPERATIONS
COMPARISON OF THE THREE MONTHS ENDED JUNE 30, 1998 TO THE THREE MONTHS
ENDED JUNE 30, 1997.
Net sales for the three months ended June 30, 1998 were
approximately $4,439,000, an increase of $153,000 or 3.6% from approximately
$4,286,000 for the three months ended June 30, 1997. Although the Company's
first quarter sales were slightly higher, the net income for the quarter had
decreased due to the Company's focus on maintaining its market share strategy
rather than short term profitability. The Company after reviewing Asia's
current economic condition took the position of improving its market share by
meeting today's pricing environment, and will further increase its marketing
and sales efforts to off-set Asian manufacturing pricing pressure.
Cost of goods sold for the three months ended June 30, 1998 was
approximately $2,768,000, an increase of $389,000 or 16% from approximately
$2,379,000 for the three months ended June 30, 1997. As a percentage of net
sales, cost of goods sold for the three months ended June 30, 1998 was 62% or
7% higher compared to 55% for the three months ended June 30, 1997. An
increase of Cost of Goods Sold to the Net Sales as a percentage was due to
price cutting measures to meet competition, thereby it had an impact to the
Gross Profit. Such gross margin pressure was partly off-set by the Company's
ability, upon completion of the share exchange with Chung Hwa, to increase
Gross Profit by eliminating such cost of a 6% and 8% mark-up over the
wholesale price as per the "Distribution Agreement" signed between Rich City
and the Company.
Selling, general and administrative expenses for the three months ended
June 30, 1998 were approximately $1,233,000, an increase of $132,000 from
approximately $1,101,000 for the three months ended June 30, 1997. For the three
months ended June 30, 1998, these expenses primarily consisted of additional
cost of corporate planning and development, combined selling, general and
administrative expenses of the parent Company and its subsidiaries, using the
pooling-of-the-interests methods.
The Company had net income of approximately $333,000 (or $0.06 per
share on a fully diluted basis) for the three months ended June 30, 1998,
compared to net income of approximately $511,000 (or $0.09 per share on a fully
diluted basis) for the three months ended June 30, 1997.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of working capital are cash flows from
operations and borrowing under its credit facilities. The Company's working
capital increased to approximately $11,941,000 at June 30, 1998 from $11,509,000
at March 31, 1998. Management expects that cash flows from operating activities
and funds available under its credit facilities should be sufficient to support
the Company's current business program and seasonal working capital needs for
the foreseeable future.
8
<PAGE>
LEADING EDGE PACKAGING, INC.
As a result of the share exchange with Chung Hwa, receivables from
Chung Hwa are unsecured non-interest bearing and payable on demand. However,
under a letter agreement, dated May 27, 1998, Chung Hwa had deposited
2,250,000 shares of the Company's common stock (1,000,000 of such shares to
be issued upon the filing of an amendment to the Company's Certificate of
Incorporation, increasing its authorized share capital), together with a stock
power executed in blank delivered to Bondy & Schloss LLP, as Agent, to cover
a $12,746,000 receivable outstanding from Chung Hwa. (See Exhibit 10 hereto)
PART II. OTHER INFORMATION
Item 1. NONE
Item 2. NONE
Item 3. NONE
Item 4. NONE
9
<PAGE>
LEADING EDGE PACKAGING, INC.
Item 5. OTHER INFORMATION
(a) Forward-Looking Statements
Certain statements in this Form 10-Q and in the future filings by
the Company with the Securities and Exchange Commission, in the Company's
press releases, and in other written and oral statements made by or with the
approval of an authorized executive officer constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act
of 1995. "Forward-looking statements" include any statement which is not of
purely historical fact, such as statements concerning plans, objectives,
goals, strategies, future events or performance and underlying assumptions
thereof. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors, which may cause the actual results,
performance, or achievements of the Company to be materially different from
any future results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among others, the
following: general economic and business conditions which may impact demand
for the Company's packaging products; changes in tax laws and regulations;
the ability of the Company to implement its market consolidation strategy and
to expand its business in the worldwide market; and changes in laws and
government regulations applicable to the Company.
10
<PAGE>
LEADING EDGE PACKAGING, INC.
Item 6. EXHIBITS and Reports on Form 8-K:
(a) Exhibits
10-Letter Agreement dated May 27, 1998, together with stock
power executed in blank.
27-Financial Date Schedule
(b) Reports on Form 8-K:
None.
11
<PAGE>
LEADING EDGE PACKAGING, INC.
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
LEADING EDGE PACKAGING, INC.
Dated: August 12, 1998 By: /S/ Casey K. Tjang
-----------------------
Casey K. Tjang
President, Director, Chief Financial Officer
and Secretary
Signing on behalf of the registrant as principal
accounting officer.
12
<PAGE>
EXHIBIT 10
[LETTERHEAD OF CHUNG HWA DEVELOPMENT HOLDINGS LIMITED]
(Incorporated in Bermuda with limited liability)
27 May 1998
Leading Edge Packaging, Inc.
Empire State Building
350 fifth Avenue
Suite 3922
New York, New York 10118
Bondy & Schloss LLP
6 East 43rd Street
25th Floor
New York, New York 10017
Ladies and Gentlemen:
The undersigned, Chung Hwa Development Holdings Limited, a Bermuda company
with its shares listed on The Stock Exchange of Hong Kong (hereinafter referred
to as "Chung Hwa") acknowledges to Leading Edge Packaging, Inc., A Delaware
corporation and a subsidiary of Chung Hwa("LEPI") and to Bondy & Schloss LLP, as
agent of LEPI (the "Agent"), that it owes to LEPI the sum of HK$79,165,000 (Hong
Kong Dollars Seventy Eight Million One Hundred Sixty Five Thousand Only)
equaling to US$10,125,000 (United State Dollars Ten Million One Hundred Twenty
Five Thousand Only) as a result of various intercompany transfer including but
not limited to collection of various accounts receivables and funds borrowed on
behalf of Chung Hwa by Leading Edge Packaging Limited (formerly known as Rich
City International Packaging Limited), a subsidiary of LEPI. Pursuant to a
certain Share Exchange Agreement, dated January 23, 1998, LEPI is obligated to
issue to Chung Hwa 2,250,000 shares of the common stock of LEPI, par value $0.01
per share (the "Shares"). In satisfaction of its aforesaid obligations to LEPI,
Chung Hwa wishes to have the Shares delivered, when issued pursuant to the terms
of this letter agreement, to the Agent to hold on behalf of LEPI until such time
as LEPI designates to the Agent one or more third party transferees of the
Shares, in LEPI's sole discretion, except that the Shares shall not be
transferred prior to December 3, 1998.
In consideration of the foregoing, it is hereby agreed that the Shares will
be issued in the name of Chung Hwa in two tranches of 1,375,000 Shares and
875,000 Shares, respectively. The first tranche of 1,375,000 Shares shall be
issued within 10 days of the date of this letter. The remaining tranche of
875,000 Shares shall be issued upon the expiration of 20 days from the date of
mailing of a certain Information Statement to the public stockholders of LEPI,
as required by the U.S. Securities and Exchange Commission, which Information
Statement relates to the increase in authorized share capital of LEPI as is
necessary to issue the remaining tranches of
1
<PAGE>
875,000 Shares. It is agreed that the Shares shall be delivered into the
custody of the Agent until such time as LEPI has designated in writing to the
Agent one or more third party transferees to whom the Agent shall then deliver
the Shares. Chung Hwa hereby expressly authorizes the officers of LEPI''
transfer agent at the time of the issuance of the Shares to deliver the Shares
to the Agent. The Agent is hereby irrevocably instructed (i) to take custody of
the certificates evidencing the Shares when and as issued, (ii) to hold such
certificates, together with a stock power corresponding to each certificate,
executed simultaneously with this letter by Chung Hwa, in blank, with signature
guaranteed (a copy of each of which is attached to this letter(, (iii) to
deliver such certificates and the appropriately completed stock power(s) to any
third party transferee designated by LEPI on or after December 3, 1998, and (iv)
to take any and all such further actions as in necessary to effect the purposes
of this agreement.
It is expressly understood that, irrespective of any attempts by Chung Hwa
to pay in cash or otherwise satisfy its aforesaid obligations to LEPI, the
appointment of and instructions to the Agent contained in this letter agreement
are irrevocable, and LEPI shall have sole discretion and authority to instruct
the Agent as to the disposition of the Shares to any third party transferee(s).
It is further agreed between LEPI and Chung Hwa Development Holdings Ltd. the
execution of the terms of this letter should be deemed as full settlement of the
aforesaid debt of HK$78,165,000 equaling to US$10,125,000.
Sincerely,
CHUNG HWA DEVELOPMENT HOLDINGS LIMITED
By: /s/ Kwok Ying Chuen, Martin
-----------------------------
Name: Kwok Ying Chuen, Martin
Title: Chairman
Agreed and Acknowledged:
/s/ Lip-Boon Saw
- ----------------------------
Leading Edge Packaging, Inc.
/s/ Bondy & Schloss LLP
- -----------------------------
Bondy & Schloss LLP, as Agent
2
<PAGE>
CHUNG HWA DEVELOPMENT HOLDINGS LIMITED
Minutes of the Board of Directors' Meeting held at Room 912 Hutchison House,
10 Harcourt Road, Central, Hong Kong on May 27, 1998 at 4:00 p.m.
- ----------------------------------------------------------------------------
Present: Mr. Kwok Ying Chuen, Martin
Mr. Cheung Yu Shum, Jenkin
Mr. Lam, Benjamin
Mr. Lee Hoong Seun
Mr. Cham Wai Ho, Anthony
Quorum: It was noted that a quorum was present.
Chairman: Mr. Kowk Ying Chuen, Martin, chaired the Meeting.
It was produced to the Board of Directors a Letter addressed to its subsidiary,
Leading Edge Packaging Inc., and its U.S. attorneys as agent, Bond & Schloss
LLP.
After due consideration, IT IS HEREBY RESOLVED that:-
1) The Board of Directors acknowledges that the Company is indebted to Leading
Edge Packaging Inc. (LEPI) and/or LEPI's subsidiary Leading Edge Packaging
Limited (LEP Ltd) in the sum of HK$78,165,000/- (the debt).
2) The Board of Directors further acknowledges that the debt is due and had to
be settled per the terms of the Share Exchange Agreement entered between
the Company and LEPI dated January 23, 1998.
3) In consideration of LEPI's forbearance to take any action to recover the
debt and having considered in detail the proposed letter addressed to LEPI
and its agent, Bondy & Schloss LLP (a copy of which is attached to this
resolution), the Chairman is hereby authorized to sign and is instructed to
dispatch the letter forthwith to LEPI and Bondy & Schloss LLP together with
the executed Stock Power/s.
4) The Board of Directors shall take all and every step to give effect to the
terms of the aforesaid letter.
End of Meeting: There being no other business, the Meeting was adjourned at
4:30 p.m.
/s/ Kwok Ying Chuen, Martin
- ---------------------------
CHAIRMAN
Dated this 27th Day of May 1998, Hong Kong.
3
<PAGE>
STOCK POWER
FOR VALUE RECEIVED, CHUNG HWA DEVELOPMENT HOLDINGS LIMITED
-------------------------------------------------------------
PLEASE INSERT SOCIAL SECURITY
NUMBER OR OTHER IDENTIFYING
NUMBER OF ASSIGNEE
------------------
hereby sell, assign and transfer unto _______________________
------------------
- --------------------------------------------------------------------------------
eight hundred seventy-five thousand ********************************************
- --------------------------------------------------------------------------------
(875,000) Shares of the ********** Capital Stock of LEADING EDGE PACKAGING, INC.
- --------- ------------ ----------------------------
standing in my(our) name(s)
- ----------------------------------------------------
on the books of said Corporation represented by
Certificate(s) No(s)___________________________________________________________
herewith, and do hereby irrevocably constitute and appoint _____________________
_______________________________________________________ attorney to transfer the
said stock on the books of said Corporation with full power of substitution
in the premises.
Dated CHUNG HWA DEVELOPMENT HOLDINGS LIMITED
-----------------------------
By: /s/ Kwok Ying Chuen, Martin
----------------------------------
Name: Kwok Ying Chuen, Martin
Title: Chairman
In presence of
- ----------------------------------
4
<PAGE>
STOCK POWER
FOR VALUE RECEIVED, CHUNG HWA DEVELOPMENT HOLDINGS LIMITED
-------------------------------------------------------------
PLEASE INSERT SOCIAL SECURITY
NUMBER OR OTHER IDENTIFYING
NUMBER OF ASSIGNEE
------------------
hereby sell, assign and transfer unto _______________________
------------------
- --------------------------------------------------------------------------------
eight hundred seventy-five thousand ********************************************
- --------------------------------------------------------------------------------
(1,375,000) Shares of the ********** Capital Stock of LEADING EDGE PACKAGING,
INC.
- --------- ------------ ----------------------------
standing in my(our) name(s)
- ----------------------------------------------------
on the books of said Corporation represented by
Certificate(s) No(s)___________________________________________________________
herewith, and do hereby irrevocably constitute and appoint _____________________
_______________________________________________________ attorney to transfer the
said stock on the books of said Corporation with full power of substitution
in the premises.
Dated CHUNG HWA DEVELOPMENT HOLDINGS LIMITED
-----------------------------
By: /s/ Martin Kwok
----------------------------------
Name: Martin Kwok
Title: Chairman
In presence of
- ----------------------------------
5
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Leading Edge
Packaging Financial Statement for the Quarter ended June 30, 1998 and 1997 and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C> <C>
<PERIOD-TYPE> 3-MOS YEAR 3-MOS
<FISCAL-YEAR-END> MAR-31-1999 MAR-31-1998 MAR-31-1998
<PERIOD-START> APR-01-1998 APR-01-1997 APR-01-1997
<PERIOD-END> JUN-30-1998 MAR-31-1998 JUN-30-1997
<CASH> 787 951 0
<SECURITIES> 0 0 0
<RECEIVABLES> 4,948 3,232 0
<ALLOWANCES> 0 0 0
<INVENTORY> 7,830 6,590 0
<CURRENT-ASSETS> 26,849 24,024 0
<PP&E> 8,892 8,748 0
<DEPRECIATION> (3,409) (3,160) 0
<TOTAL-ASSETS> 32,332 24,612 0
<CURRENT-LIABILITIES> 14,908 12,515 0
<BONDS> 702 708 0
0 0 0
0 0 0
<COMMON> 46 46 0
<OTHER-SE> 15,126 14,793 0
<TOTAL-LIABILITY-AND-EQUITY> 32,332 29,612 0
<SALES> 4,439 0 4,286
<TOTAL-REVENUES> 4,439 0 4,286
<CGS> 2,768 0 2,379
<TOTAL-COSTS> 1,233 0 1,101
<OTHER-EXPENSES> 0 0 0
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 110 0 35
<INCOME-PRETAX> 374 0 796
<INCOME-TAX> 41 0 285
<INCOME-CONTINUING> 333 0 511
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 333 0 511
<EPS-PRIMARY> .06 0 .09
<EPS-DILUTED> .06 0 .09
</TABLE>
