SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
Amendment No. 1
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Fiscal Year Ended March 31, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________ to _______________.
Commission File No. 0-22049
S.W. LAM, INC.
------------------------------------------------
(Name of registrant as specified in its charter)
Nevada 62-1563911
-------------------------------- ---------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
Unit 25-32, Second Floor, Block B, Focal Industrial Centre,
21 Man Lok Street, Hunghom, Hong Kong
-------------------------------------------------------------
(Address of principal executive offices)(Zip code)
Registrant's telephone number, including area code: (852) 2766 3688
Securities Registered Pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which Registered
------------------- -----------------------------------------
None None
Securities Registered Pursuant to Section 12(g) of the Act:
Common Stock, $.001 par value
-------------------------------
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required 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 ninety (90) days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
As of July 1, 2000, 12,800,000 shares of common stock of the Registrant
were outstanding. As of such date, the aggregate market value of the voting and
non-voting common equity held by non-affiliates, based on the closing price, was
approximately $3,600,000.
DOCUMENTS INCORPORATED BY REFERENCE
None.
<PAGE>
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Identification of Directors, Executive Officers and Certain Significant
Employees
The following table sets forth certain information regarding the directors
and executive officers of the Company.
Name Age Position
------ ----- ----------
Lam Sai Wing.............. 45 Chairman, Chief Executive Officer and
President
Chan Yam Fai, Jane........ 37 Vice President, Chief Financial Officer and
Director
Ng Yee Mei................ 38 Vice President and Director
Cheng Wa On............... 37 Director
Terms of Office
The directors of the Company hold office until the next annual meeting of
stockholders of the Company or until their successors in office are elected and
duly qualified. All officers serve at the discretion of the Board of Directors
except as set forth in employment agreements.
Family Relationships
Lam Sai Wing and Chan Yam Fai, Jane are husband and wife.
Business Experience
Lam Sai Wing has served as Chairman of the Board, Chief Executive Officer
and President of the Company since the Exchange in December of 1996 and of the
Company's predecessor and operating subsidiaries, the Hang Fung Group, since
founding the Hang Fung Group in 1986.
Chan Yam Fai, Jane has served as Vice President, Chief Financial Officer
and a Director of the Company since the Exchange in December of 1996 and of the
Hang Fung Group since 1990.
Ng Yee Mei has served as Vice President and a Director of the Company since
the Exchange in December of 1996 and of the Hang Fung Group since 1991.
Cheng Wa On has served as a Director of the Company since the Exchange in
December of 1996. Mr. Cheng has been employed by the Hang Fung Group as Export
Manager since 1986.
Compliance With Section 16(a) of the Exchange Act
Under the securities laws of the United States, the Company's directors,
its executive officers and any persons holding more than ten percent of the
Company's Common Stock are required to report their initial ownership of the
Company's Common Stock and any subsequent changes in that ownership to the
Securities and Exchange Commission. Specific due dates for these reports have
been established and the Company is required to disclose any failure to file by
these dates during fiscal 2000.
All of the filing requirements were satisfied on a timely basis in fiscal
2000. In making these disclosures, the Company has relied solely on written
statements of its directors, executive officers and shareholders and copies of
the reports that they filed with the Commission.
1
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
Executive Compensation Table
The following table sets forth information as to the compensation paid or
accrued to each officer and director receiving compensation of at least $100,000
per year and the Chief Executive Officer for the three years ended March 31,
2000:
<TABLE>
Annual Compensation
---------------------------------------------------
Other Annual All Other
Name and Principal Position Year Salary Bonus Compensation (1) Compensation
--------------------------- ---- ------ ----- ---------------- -------------
<S> <C> <C> <C> <C> <C>
Lam Sai Wing.......................... 2000 $166,880 $507,060 $56,222 $0
Chief Executive Officer,............ 1999 202,694 400,000 39,237 0
Chairman and President.............. 1998 194,000 0 0 0
</TABLE>
---------------
(1) Mr. Lam's other annual compensation consists of a housing allowance and
education allowance.
Director's Compensation
No compensation has been paid to any directors for service in such capacity
in the past and no such compensation is presently payable to directors. At such
time as the Board of Directors deems appropriate, the Company intends to adopt
an appropriate policy to compensate non-employee directors in order to attract
and retain the services of qualified non-employee directors.
Employment Agreements
The Company previously maintained employment agreements with Mr. Lam and
Ms. Chan. In connection with the Group Reorganization and Hong Kong Offering,
both of those employment agreements were terminated on February 27, 1999 and the
Company's subsidiary, Hang Fung Gold, entered into employment agreements with
Mr. Lam, Ms. Chan and Ms. Ng Yee Mei.
The Employment Agreement with Mr. Lam commenced October 1, 1998 and runs
for a term of three years. The agreement provides for a monthly salary of
HK$100,000 with annual adjustments based on review by the board of directors,
not to exceed 15%. The agreement also provides for a guaranteed annual bonus
equal to one month's salary and discretionary bonuses to be fixed by the board,
with the aggregate bonuses payable to executive directors not to exceed 5% of
consolidated profits of Hang Fung Gold. In addition to the salary and bonus
provisions, Mr. Lam is entitled to (i) participation in insurance schemes
adopted by Hang Fung Gold, (ii) participation in provident funds maintained by
Hang Fung Gold, (iii) use of a company automobile, including maintenance, gas
and parking, (iv) payment of maintenance, gas and parking costs for one
automobile owned by Mr. Lam, (v) use of a company provided residence, including
payment by Hang Fung Gold of all management and utility costs associated with
such residence, with the monthly rental payable by Hang Fung Gold not to exceed
HK$30,000, and (vi) an education allowance of up to HK$300,000 annually to pay
for tuition of dependent children under the age of 18.
The Employment Agreement with Ms. Chan commenced October 1, 1998 and runs
for a term of three years. The agreement provides for a monthly salary of
HK$30,000 with annual adjustments based on review by the board of directors, not
to exceed 15%. The agreement also provides for a guaranteed annual bonus equal
to one month's salary and discretionary bonuses to be fixed by the board, with
the aggregate bonuses payable to executive directors not to exceed 5% of
consolidated profits of Hang Fung Gold. In addition to the salary and bonus
provisions, Ms. Chan is entitled to (i) participation in insurance schemes
adopted by Hang Fung Gold, (ii) participation in provident funds maintained by
Hang Fung Gold, (iii) use of a company automobile, including maintenance, gas
and parking, and (iv) payment of maintenance, gas and parking costs for one
automobile owned by Ms. Chan.
2
<PAGE>
The Employment Agreement with Ms. Ng Yee Mei commenced October 1, 1998 and
runs for a term of three years. The agreement provides for a monthly salary of
HK$50,000 with annual adjustments based on review by the board of directors, not
to exceed 15%. The agreement also provides for a guaranteed annual bonus equal
to one month's salary and discretionary bonuses to be fixed by the board, with
the aggregate bonuses payable to executive directors not to exceed 5% of
consolidated profits of Hang Fung Gold. In addition to the salary and bonus
provisions, Ms. Ng Yee Mei is entitled to (i) participation in insurance schemes
adopted by Hang Fung Gold, (ii) participation in provident funds maintained by
Hang Fung Gold, (iii) use of a company automobile, including maintenance, gas
and parking, and (iv) payment of maintenance, gas and parking costs for one
automobile owned by Ms. Ng Yee Mei. The Employment Agreement with Ms. Ng
terminated effective November 1, 1999 by delivery of notice of termination from
Ms. Ng.
Provident Plan
The Company's subsidiaries in Hong Kong have adopted a voluntary defined
contribution provident plan (the "Plan") for its employees in Hong Kong. The
Plan generally covers all employees of the Company's operating subsidiaries
(excluding contract workers in the PRC) who have completed twelve months of
service with the Company. Employees electing to participate in the Plan defer,
in the form of a contribution to the Plan, an amount equal to five percent (5%)
of their monthly salary and the Company makes a matching contribution on behalf
of each participating employee. Participating employees are always fully vested
with respect to contributions made by them to the Plan and earnings or increases
thereon. Employees become vested in contributions made by the Company ratably
over ten years.
Share Option Scheme
The Company's subsidiary, Hang Fung Gold, adopted a Share Option Scheme
pursuant to which the directors of Hang Fung Gold may grant options to Hang Fung
Gold employees to purchase shares of common stock of Hang Fung Gold. Pursuant to
the Share Option Scheme, options may be granted to purchase shares of Hang Fung
Gold at a price determined by the directors, not less than 80% of the average
closing price of the share quoted on the Stock Exchange for the five trading
days immediately preceding the date of the option or the nominal value of the
share of Hang Fung Gold whichever is higher, for a period of not more than 10
years. The total number of shares issuable pursuant to the Share Option Scheme
may not exceed ten percent of the shares of Hang Fung Gold outstanding from time
to time.
Compensation Report
The Company does not presently maintain a Compensation Committee of its
Board of Directors. The Board of Directors, acting under the guidance of the
Company's Chairman and Chief Executive Officer, Mr. Lam, has historically fixed
the compensation of executive officers. The salary of Mr. Lam, Ms. Chan and Ms.
Ng Yee Mei was fixed pursuant to the terms of Employment Agreements between Hang
Fung Gold and those officers entered in 1998.
In fixing the compensation of Mr. Lam and other executive officers, the
Board of Directors considered the following factors, among others: (1) from
fiscal 1995 through fiscal 2000, the Company and its predecessor, the Hang Fung
Group, was consistently profitable -- with revenues increasing 427% and net
income increasing 162%, (2) the importance of attracting and retaining the
highly skilled executive officers in the management team that has been
responsible for such financial performance, (3) the efforts, skills and
responsibilities of, and contributions made by, each such executive officer, and
(4) the competitiveness of the Company's compensation packages.
With respect to the Chairman and Chief Executive Officer, the Directors
acknowledged that he has brought to the Company not only his expertise and
personal relationships in the jewelry industry, but also his vision, foresight
and efforts to bring about the Company's financial performance over the past
several years, and to steer the Company toward the more profitable segments of
the business. The Directors also took into account the need to retain such
highly qualified officers by providing competitive compensation packages.
3
<PAGE>
Performance Graph
The following graph summarizes cumulative total shareholder return
(assuming reinvestment of dividends) on the Common Stock of the Company compared
to the returns of the S&P Smallcap 600 Index and of a peer group (the "Peer
Group") consisting of DG Jewellery CDA Ltd. ("DGJ") and IWI Holding Limited
("IWI"). The Company's Common Stock was first registered under Section 12(g) of
the Securities Exchange Act of 1934, as amended, on March 24, 1997. The
measurement period hereto commenced on March 31, 1997 and ended on March 31,
2000, the Company's 2000 fiscal year end date. The graph assumes that $100 was
invested on March 31, 1997.
As there is no broad equity market index for the OTC Bulletin Board where
the Company's Common Stock is traded and there is no published industry or
line-of-business index for the jewelry business in which the Company is engaged,
the Company has selected DGJ and IWI as peer issuers for comparison. DGJ and IWI
are engaged primarily in the design, assembly, merchandising and wholesale
distribution of jewelry and whose shares are traded in the over-the-counter
market in the United States.
The comparisons in this graph are required by the Securities and Exchange
Commission and are not intended to forecast or be indicative of future stock
price performance or the financial performance of the Company. Shareholders are
encouraged to review the Financial Statements of the Company mentioned in Item 8
above.
[OBJECT OMITTED]
<TABLE>
March 31, 1997 March 31, 1998 March 31, 1999 March 31, 2000
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
S.W. Lam, Inc. 100 16.67 42.86 133.33
S&P SmallCap 600 Index 100 145.87 117.96 154.18
Peer Group 100 35.31 93.22 38.58
</TABLE>
4
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Common Stock
The following table is furnished as of March 31, 2000 to indicate
beneficial ownership of shares of the Company's Common Stock by (1) each
shareholder of the Company who is known by the Company to be a beneficial owner
of more than 5% of the Company's Common Stock, (2) each director and named
officer of the Company, individually, and (3) all officers and directors of the
Company as a group. The information set out in the following table was supplied
by such persons.
<TABLE>
Name and Address of Number of Shares
Beneficial Owner (1) Beneficially Owned Percent
-------------------- ------------------- -------
<S> <C> <C>
Good Day Holdings Ltd. (2)(3)........................ 6,600,000 (2) 51.6%
Lam Mo Wan (3)....................................... 2,930,000 22.9%
Chan Wai Sum (3)..................................... 670,000 5.2%
Lam Sai Wing (2)..................................... 6,600,000 (2) 51.6%
Carhill Limited (4).................................. 800,000 6.3%
Chan Yam Fai, Jane................................... 300,000 2.3%
Ng Yee Mei........................................... 0 -
Cheng Wa On.......................................... 0 -
All officers and directors as a group (2 persons).... 6,900,000 (2) 53.9%
</TABLE>
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(1) Unless otherwise noted, each person or group identified possesses sole
voting and investment power with respect to the shares shown opposite the
name of such person or group.
(2) Good Day Holdings Ltd. is controlled 100% by Lam Sai Wing, an officer and
director of the Company. Accordingly, Mr. Lam may be deemed to be the
beneficial owner of the shares held by Good Day Holdings Ltd.
(3) Address is Unit 25-32, Second Floor, Block B, Focal Industrial Centre, 21
Man Lok Street, Hunghom, Hong Kong.
(4) Address is c/o Suite 4703, Central Plaza, 18 Harbour Road, Wanchai, Hong
Kong.
Preferred Stock
Series A Preferred Stock. The following table is furnished as of March 31,
2000 to indicate beneficial ownership of the Company's Series A Preferred Stock
by each shareholder of the Company who is known by the Company to be a
beneficial owner of more than 5% of the Company's Series A Preferred Stock.
Name and Address of Number of Shares
Beneficial Owner (1) Beneficially Owned Percent
-------------------- ------------------- --------
Good Day Holdings Ltd. (3).................. 100,000 (2) 100.0%
Lam Sai Wing................................ 100,000 (2) 100.0%
(1) Unless otherwise noted, each person or group identified possesses sole
voting and investment power with respect to the shares shown opposite the
name of such person or group.
(2) Good Day Holdings Ltd. is controlled 100% by Lam Sai Wing, an officer and
director of the Company. Accordingly, Mr. Lam may be deemed to be the
beneficial owner of the shares held by Good Day Holdings Ltd.
(3) Address is Unit 25-32, Second Floor, Block B, Focal Industrial Centre, 21
Man Lok Street, Hunghom, Hong Kong.
5
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company's predecessor and subsidiary, Hang Fung Group, has, from time
to time entered into transactions with officers and directors of the Company and
companies controlled by officers and directors of the Company.
During the fiscal year ended March 31, 1999 and March 31, 2000, the Hang
Fung Group paid rental payments of $20,916 and $41,592, respectively, to Mr. Lam
in connection with the lease of a residential premises for Mr. Lam's residence.
The Company has from time to time both advanced to and borrowed funds from
Mr. Lam. At March 31, 1999, the Company owed Mr. Lam $0.4 million. At March 31,
2000, the Company owed Mr. Lam $0.57 million. All of such loans are unsecured,
non-interest bearing and without pre-determined repayment terms.
Mr. Lam and Ms. Chan personally guaranteed the existing banking facilities
of the Hang Fung Group, pledged certain real estate as collateral to secure such
banking facilities.
All of the above transactions are believed by management to be on terms at
least as favorable to the Company as may have been obtained from unaffiliated
third parties. The Company has no present policy governing related party
transactions but intends to implement a policy such that all future and ongoing
transactions between the Company and its directors, officers, principal
stockholders or affiliates will be on terms no less favorable to the Company
than may be obtained from unaffiliated third parties, and any such transactions
will be approved by a majority of disinterested directors of the Company.
6
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this Amendment No. 1 to on
Form 10-K report to be signed on its behalf by the undersigned, thereunto duly
authorized.
S.W. LAM, INC.
By: /s/ Lam Sai Wing
----------------------------------------
Lam Sai Wing
President and Chief Executive Officer
Dated: July 27, 2000
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.
Signature Title Date
----------- -------- -------
/s/ Lam Sai Wing President, Chief Executive Officer July 27, 2000
------------------------ (Principal Executive Officer) and
Lam Sai Wing Chairman of the Board
/s/ Chan Yam Fai, Jane Vice President, Chief Financial July 27, 2000
------------------------- Officer (Principal Accounting
Chan Yam Fai, Jane and Financial Officer) and Director
/s/ Ng Yee Mei Vice President and Director July 27, 2000
-------------------------
Ng Yee Mei
/s/ Cheng Wa On Director July 27, 2000
-------------------------
Cheng Wa On
