SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended
December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-23101
DIVERSIFIED HOLDINGS INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Delaware 52-2051281
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1201 4th Avenue South, Suite 312, Seattle, Washington 98134
(Address of principal executive offices) (zip code)
Issuer's Telephone Number: 202/387-5400
Securities registered under Section 12(g) of the Exchange
Act: Common Stock, $.0001 par value per share
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the
last 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
Check if there is no disclosure of delinquent files in
response to Item 405 of Regulation S-B is not contained in
this form, and no disclosure will 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-KSB or any amendment to this Form 10-KSB. [ X ]
State issuer's revenues for its most recent fiscal year. $0.
State the aggregate market value of the voting and non-voting
common equity held by non-affiliates computed by reference to
the price at which the common equity was sold, or the average
bid and asked price of such common equity, as of a specified
date within the past 60 days. $0.
State the number of shares outstanding of each of the
issuer's classes of common equity, as of the latest
practicable date.
Class Outstanding at December 31, 1997
Common Stock,
par value $0.0001 5,000,000
Documents incorporated by reference: Form 10-SB (File No. 0-
23101) filed on September 18, 1997
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS
Diversified Holdings International, Inc. (the
"Company"), was incorporated on August 8, 1997 under the laws
of the State of Delaware to engage in a merger with or
acquisition of an unidentified foreign or domestic private
company which desires to become a reporting ("public")
company whose securities are qualified for trading in the
United States secondary market. The Company has been in the
developmental stage since inception and has no operations to
date. Other than issuing shares to its original
shareholders, the Company has not commenced any operational
activities. The Company meets the definition of a "blank
check" company contained in Section (7)(b)(3) of the
Securities Act of 1933, as amended.
The Company registered its common stock on a Form 10-SB
registration statement filed pursuant to the Securities
Exchange Act of 1934 (the "Exchange Act") and Rule 12(g)
thereof. The Company files with the Securities and Exchange
Commission periodic and episodic reports under Rule 13(a) of
the Exchange Act, including quarterly reports on Form 10-QSB
and annual reports Form 10-KSB. As a reporting company under
the Exchange Act, the Company may register additional
securities on Form S-8 (provided that it is then in
compliance with the reporting requirements of the Exchange
Act) and on Form S-3 (provided that is has during the prior
12 month period timely filed all reports required under the
Exchange Act), and its class of common stock registered under
the Exchange Act may be traded in the United States
securities markets provided that the Company is then in
compliance with applicable laws, rules and regulations,
including compliance with its reporting requirements under
the Exchange Act.
The Company will attempt to locate and negotiate with a
business entity for the merger of that target business into
the Company. In certain instances, a target business may
wish to become a subsidiary of the Company or may wish to
contribute assets to the Company rather than merge. No
assurances can be given that the Company will be successful
in locating or negotiating with any target business.
Management believes that there are perceived benefits
to being a reporting company with a class of publicly-traded
securities which may be attractive to foreign and domestic
private companies. These benefits are commonly thought to
include (1) the ability to use registered securities to make
acquisition of assets or businesses; (2) increased visibility
in the financial community; (3) the facilitation of borrowing
from financial institutions; (4) improved trading
efficiency; (5) shareholder liquidity; (6) greater ease in
subsequently raising capital; (7) compensation of key
employees through options for stock for which there is a
public market; (8) enhanced corporate image; and, (9) a
presence in the United States capital market.
A private company which may be interested in a business
combination with the Company may include (1) a company for
which a primary purpose of becoming public is the use of its
securities for the acquisition of assets or businesses; (2) a
company which is unable to find an underwriter of its
securities or is unable to find an underwriter of securities
on terms acceptable to it; (3) a company which wishes to
become public with less dilution of its common stock than
would occur normally upon an underwriting; (4) a company
which believes that it will be able obtain investment capital
on more favorable terms after it has become public; (5) a
foreign company which may wish an initial entry into the
United States securities market; (6) a special situation
company, such as a company seeking a public market to satisfy
redemption requirements under a qualified Employee Stock
Option Plan; and, (7) a company seeking one or more of the
other benefits believed to attach to a public company.
Management is actively engaged in seeking a qualified
private company as a candidate for a business combination.
Management is in discussion with a number of both foreign and
domestic companies, and has received information and
proposals from several of those companies. The Company is
authorized to enter into a definitive agreement with a wide
variety of private businesses without limitation as to their
industry or revenues. It is not possible at this time to
predict with which private company, if any, the Company will
enter into a definitive agreement or what will be the
industry, operating history, revenues, future prospects or
other characteristics of that company.
The Company will not acquire or merge with any entity
which cannot provide audited financial statements at or
within a reasonable period of time after closing of the
proposed transaction. The Company is subject to all the
reporting requirements included in the Exchange Act.
Included in these requirements is the duty of the Company to
file audited financial statements as part of its Form 8-K to
be filed with the Securities and Exchange Commission upon
consummation of a merger or acquisition, as well as the
Company's audited financial statements included in its annual
report on Form 10-K (or 10-KSB, as applicable). If such
audited financial statements are not available at closing, or
within time parameters necessary to insure the Company's
compliance with the requirements of the Exchange Act, or if
the audited financial statements provided do not conform to
the representations made by the target company, the closing
documents may provide that the proposed transaction will be
voidable at the discretion of the present management of the
Company.
The Company will not restrict its search for any
specific kind of firms, but may acquire a venture which is in
its preliminary or development stage, which is already in
operation, or in essentially any stage of its corporate life.
It is impossible to predict at this time the status of any
business in which the Company may become engaged, in that
such business may need to seek additional capital, may desire
to have its shares publicly traded, or may seek other
perceived advantages which the Company may offer. However,
the Company does not intend to obtain funds to finance the
operation of any acquired business opportunity until such
time as the Company has successfully consummated such a
merger or acquisition.
The Company may seek a business opportunity with
entities which have recently commenced operations, or which
wish to utilize the public marketplace in order to raise
additional capital in order to expand into new products or
markets, to develop a new product or service, or for other
corporate purposes. The Company may acquire assets and
establish wholly-owned subsidiaries in various businesses or
acquire existing businesses as subsidiaries.
A business combination with a target business will
normally involve the transfer to the target business of the
majority of common stock of the Company, and the substitution
by the target business of its own management and board of
directors.
The Company has, and will continue to have, no capital
with which to provide the owners of business opportunities
with any cash or other assets. However, management believes
the Company will be able to offer owners of acquisition
candidates the opportunity to acquire a controlling ownership
interest in a publicly registered company without incurring
the cost and time required to conduct an initial public
offering. The officers and directors of the Company have not
conducted market research and are not aware of statistical
data to support the perceived benefits of a merger or
acquisition transaction for the owners of a business
opportunity.
The analysis of new business opportunities will be
undertaken by, or under the supervision of, the officers and
directors of the Company, who are not professional business
analysts. In analyzing prospective business opportunities,
management will consider such matters as the available
technical, financial and managerial resources; working
capital and other financial requirements; history of
operations, if any; prospects for the future; nature of
present and expected competition; the quality and experience
of management services which may be available and the depth
of that management; the potential for further research,
development, or exploration; specific risk factors not now
foreseeable but which then may be anticipated to impact the
proposed activities of the Company; the potential for growth
or expansion; the potential for profit; the perceived public
recognition or acceptance of products, services, or trades;
name identification; and other relevant factors. Management
will meet personally with management and key personnel of the
business opportunity as part of their investigation. To the
extent possible, the Company intends to utilize written
reports and personal investigation to evaluate the above
factors. The Exchange Act requires that any merger or
acquisition candidate comply with certain reporting
requirements, which include providing audited financial
statements to be included in the reporting filings made under
the Exchange Act. The Company will not acquire or merge with
any company for which audited financial statements cannot be
obtained at or within a reasonable period of time after
closing of the proposed transaction.
In implementing a structure for a particular business
acquisition, the Company may become a party to a merger,
consolidation, reorganization, joint venture, or licensing
agreement with another corporation or entity. It may also
acquire stock or assets of an existing business. On the
consummation of a transaction, it is probable that the
present management and shareholders of the Company will no
longer be in control of the Company. In addition, the
Company's directors may, as part of the terms of an
acquisition or merger transaction, resign and be replaced by
new directors or may sell their stock in the Company.
It is anticipated that any securities issued in any
such reorganization would be issued in reliance upon
exemption from registration under applicable federal and
state securities laws. In some circumstances, however, as a
negotiated element of its transaction, the Company may agree
to register all or a part of such securities immediately
after the transaction is consummated or at specified times
thereafter. If such registration occurs, of which there can
be no assurance, it will be undertaken by the surviving
entity after the Company has entered into an agreement for a
business combination or has consummated a business
combination and the Company is no longer considered a blank
check company. Until such time as this occurs, the Company
will not attempt to register any additional securities. The
issuance of substantial additional securities and their
potential sale into any trading market which may develop in
the Company's securities may have a depressive effect on the
market value of the Company's securities in the future, if
such a market develops, of which there is no assurance.
While the actual terms of a transaction to which the
Company may be a party cannot be predicted, it may be
expected that the parties to the business transaction will
find it desirable to avoid the creation of a taxable event
and thereby structure the acquisition in a "tax-free"
reorganization under Sections 351 or 368 of the Internal
Revenue Code of 1986, as amended (the "Code").
With respect to any merger or acquisition negotiations
with a target business, management expects to focus on the
percentage of the Company which such target business
shareholders would acquire in exchange for their
shareholdings in the target business. Depending upon, among
other things, the target business's assets and liabilities,
the Company's shareholders will in all likelihood hold a
substantially lesser percentage ownership interest in the
Company following any merger or acquisition. The percentage
ownership may be subject to significant reduction in the
event the Company acquires a target business with substantial
assets. Any merger or acquisition effected by the Company
can be expected to have a significant dilutive effect on the
percentage of shares held by the Company's shareholders at
such time.
No assurances can be given that the Company will be
able to enter into a business combination, as to the terms of
a business combination, or as to the nature of the target
business.
As of the date hereof, management has not made any
final decision concerning or entered into any agreements for
a business combination. When any such agreement is reached
or other material fact occurs, the Company will file notice
of such agreement or fact with the Securities and Exchange
Commission on Form 8-K. Persons reading this Form 10-KSB are
advised to determine if the Company has subsequently filed a
Form 8-K.
The Company anticipates that the selection of a
business opportunity in which to participate will be complex
and without certainty of success. Management believes (but
has not conducted any research to confirm) that there are
numerous firms seeking the perceived benefits of a publicly
registered corporation. Such perceived benefits may include
facilitating or improving the terms on which additional
equity financing may be sought, providing liquidity for
incentive stock options or similar benefits to key employees,
increasing the opportunity to use securities for
acquisitions, and providing liquidity for shareholders and
other factors. Business opportunities may be available in
many different industries and at various stages of
development, all of which will make the task of comparative
investigation and analysis of such business opportunities
extremely difficult and complex.
RISK FACTORS. The Company's business is subject to
numerous risk factors, including the following:
NO OPERATING HISTORY OR REVENUE AND MINIMAL ASSETS.
The Company has had no operating history nor any revenues or
earnings from operations. The Company has no significant
assets or financial resources. The Company will, in all
likelihood, sustain operating expenses without corresponding
revenues, at least until the consummation of a business
combination. This may result in the Company incurring a net
operating loss which will increase continuously until the
Company can consummate a business combination with a target
company. There is no assurance that the Company can identify
such a target company and consummate such a business
combination.
SPECULATIVE NATURE OF COMPANY'S PROPOSED OPERATIONS.
The success of the Company's proposed plan of operation will
depend to a great extent on the operations, financial
condition and management of the identified target company.
While management intends to seek business combinations with
entities having established operating histories, there can be
no assurance that the Company will be successful in locating
candidates meeting such criteria. In the event the Company
completes a business combination, of which there can be no
assurance, the success of the Company's operations may be
dependent upon management of the target company and numerous
other factors beyond the Company's control.
SCARCITY OF AND COMPETITION FOR BUSINESS OPPORTUNITIES
AND COMBINATIONS. The Company is and will continue to be an
insignificant participant in the business of seeking mergers
with and acquisitions of business entities. A large number
of established and well-financed entities, including venture
capital firms, are active in mergers and acquisitions of
companies which may be merger or acquisition target
candidates for the Company. Nearly all such entities have
significantly greater financial resources, technical
expertise and managerial capabilities than the Company and,
consequently, the Company will be at a competitive
disadvantage in identifying possible business opportunities
and successfully completing a business combination.
Moreover, the Company will also compete with numerous other
small public companies in seeking merger or acquisition
candidates.
NO AGREEMENT FOR BUSINESS COMBINATION OR OTHER
TRANSACTION - NO STANDARDS FOR BUSINESS COMBINATION. The
Company has no arrangement, agreement or understanding with
respect to engaging in a merger with or acquisition of a
business entity. There can be no assurance the Company will
be successful in identifying and evaluating suitable business
opportunities or in concluding a business combination.
Management has not identified any particular industry or
specific business within an industry for evaluation by the
Company. There is no assurance the Company will be able to
negotiate a business combination on terms favorable to the
Company. The Company has not established a specific length
of operating history or a specified level of earnings,
assets, net worth or other criteria which it will require a
target business opportunity to have achieved, or without
which the Company would not consider a business combination
with such business entity. Accordingly, the Company may enter
into a business combination with a business entity having no
significant operating history, losses, limited or no
potential for earnings, limited assets, negative net worth or
other negative characteristics.
CONTINUED MANAGEMENT CONTROL, LIMITED TIME
AVAILABILITY. While seeking a business combination,
management anticipates devoting up to ten hours per month to
the business of the Company. The Company's officers have not
entered into written employment agreements with the Company
and are not expected to do so in the foreseeable future. The
Company has not obtained key man life insurance on its
officers or directors. Notwithstanding the combined limited
experience and time commitment of management, loss of the
services of the officers would adversely affect development
of the Company's business and its likelihood of continuing
operations.
CONFLICTS OF INTEREST - GENERAL. The Company's
officers and directors participate in other business ventures
which may compete directly with the Company. Additional
conflicts of interest and non-arms length transactions may
also arise in the future.
REPORTING REQUIREMENTS MAY DELAY OR PRECLUDE
ACQUISITION. Section 13 of the Securities Exchange Act of
1934 (the "Exchange Act"), requires companies subject thereto
to provide certain information about significant
acquisitions, including certified financial statements for
the company acquired, covering one or two years, depending on
the relative size of the acquisition. The time and
additional costs that may be incurred by some target
companies to prepare such financial statements may
significantly delay or essentially preclude consummation of
an otherwise desirable acquisition by the Company.
Acquisition prospects that do not have or are unable to
obtain the required audited statements may not be appropriate
for acquisition so long as the reporting requirements of the
Exchange Act are applicable.
LACK OF MARKET RESEARCH OR MARKETING ORGANIZATION. The
Company has neither conducted, nor have others made available
to it, results of market research indicating that market
demand exists for the transactions contemplated by the
Company. Moreover, the Company does not have, and does not
plan to establish, a marketing organization. Even in the
event demand is identified for a merger or acquisition
contemplated by the Company, there is no assurance the
Company will be successful in completing any such business
combination.
LACK OF DIVERSIFICATION. The Company's proposed
operations, even if successful, will in all likelihood result
in the Company engaging in a business combination with only
one business opportunity. Consequently, the Company's
activities will be limited to those engaged in by the
business opportunity which the Company merges with or
acquires. The Company's inability to diversify its
activities into a number of areas may subject the Company to
economic fluctuations within a particular business or
industry and therefore increase the risks associated with the
Company's operations.
REGULATION. Although the Company will be subject to
regulation under the Exchange Act, management believes the
Company will not be subject to regulation under the
Investment Company Act of 1940, insofar as the Company will
not be engaged in the business of investing or trading in
securities. In the event the Company engages in business
combinations which result in the Company holding passive
investment interests in a number of entities, the Company
could be subject to regulation under the Investment Company
Act of 1940. In such event, the Company would be required to
register as an investment company and could be expected to
incur significant registration and compliance costs . The
Company has obtained no formal determination from the
Securities and Exchange Commission as to the status of the
Company under the Investment Company Act of 1940 and,
consequently, any violation of such Act could subject the
Company to material adverse consequences.
PROBABLE CHANGE IN CONTROL AND MANAGEMENT. A business
combination involving the issuance of the Company's common
stock will, in all likelihood, result in shareholders of a
target company obtaining a controlling interest in the
Company. Any such business combination may require
management of the Company to sell or transfer all or a
portion of the Company's common stock held by them, and to
resign as members of the Board of Directors and as officers
of the Company. The resulting change in control of the
Company will likely result in removal of the present officers
and directors of the Company and a corresponding reduction in
or elimination of their participation in the future affairs
of the Company.
REDUCTION OF PERCENTAGE SHARE OWNERSHIP FOLLOWING
BUSINESS COMBINATION. The Company's primary plan of
operation is based upon a business combination with a
business entity which, in all likelihood, would result in the
Company issuing securities to shareholders of such business
entity. The issuance of previously authorized and unissued
common stock of the Company would result in reduction in
percentage of shares owned by the present shareholders of the
Company and would most likely result in a change in control
or management of the Company.
ASPECTS OF BLANK CHECK OFFERING. The Company may enter
into a business combination with a business entity that
desires to establish a public trading market for its shares.
A target company may attempt to avoid what it deems to be
adverse consequences of undertaking its own public offering
by seeking a business combination with the Company. Such
consequences may include, but are not limited to, time delays
of the registration process, significant expenses to be
incurred in such an offering, loss of voting control to
public shareholders or the inability to obtain an underwriter
or to obtain an underwriter on terms satisfactory to the
Company.
TAXATION. Federal and state tax consequences will, in
all likelihood, be major considerations in any business
combination the Company may undertake. Currently, such
transactions may be structured so as to result in tax-free
treatment to both companies, pursuant to various federal and
state tax provisions. The Company intends to structure any
business combination so as to minimize the federal and state
tax consequences to both the Company and the target company;
however, there can be no assurance that such business
combination will meet the statutory requirements of a
tax-free reorganization or that the parties will obtain the
intended tax-free treatment upon a transfer of stock or
assets. A non-qualifying reorganization could result in the
imposition of both federal and state taxes which may have an
adverse effect on both parties to the transaction.
REQUIREMENT OF AUDITED FINANCIAL STATEMENTS MAY
DISQUALIFY BUSINESS OPPORTUNITIES. Management of the Company
will request that any potential business opportunity provide
audited financial statements. One or more attractive business
opportunities may choose to forego the possibility of a
business combination with the Company rather than incur the
expenses associated with preparing audited financial
statements.
In such case, the Company may choose to obtain certain
assurances as to the target company's assets, liabilities,
revenues and expenses prior to consummating a business
combination, with further assurances that an audited
financial statement would be provided after closing of such a
transaction. Closing documents relative thereto may include
representations that the audited financial statements will
not materially differ from the representations included in
such closing documents.
COMPETITION. The Company will remain an insignificant
participant among the firms which engage in the acquisition
of business opportunities. There are many established
venture capital and financial concerns which have
significantly greater financial and personnel resources and
technical expertise than the Company. In view of the
Company's combined extremely limited financial resources and
limited management availability, the Company will continue to
be at a significant competitive disadvantage compared to the
Company's competitors.<PAGE>
ITEM 2. DESCRIPTION OF PROPERTY
The Company has no properties and at this time has no
agreements to acquire any properties. The Company currently
uses the offices of Alan Kwong, one of the Company's
directors, at no cost to the Company. Mr. Kwong has agreed to
continue this arrangement until the Company completes an
acquisition or merger.
ITEM 3. LEGAL PROCEEDINGS
There is no litigation pending or threatened by or
against the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders,
through the solicitation of proxies or otherwise, during the
fourth quarter of the fiscal year covered by this report.
<PAGE>
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
There is currently no public market for the securities
of the Company. The Company does not intend to trade its
securities in the secondary market until completion of a
business combination or acquisition. It is anticipated that
following such occurrence the Company will cause its common
stock to be listed or admitted to quotation on the NASD OTC
Bulletin Board. The Company does not anticipate that a
trading market will develop its in stock until, if at all, a
merger or acquisition with a target company has been
effected. One requirement of listing on the OTC Bulletin
Board is that a company must have a market maker. At such
time that a merger or acquisition has occurred, the Company
may seek a market maker for the Company's securities.
However, a target company may already have arrangements with
a broker-dealer to act as that company's market maker. The
Company has not had any preliminary discussions nor has
entered into any agreements or arrangements with any market
maker regarding participation of such market maker in any
future trading market, if any, of the Company's securities.
The proposed business activities described herein
classify the Company as a "blank check" company. The
Securities and Exchange Commission and many states have
enacted statutes, rules and regulations limiting the sale of
securities of blank check companies in their respective
jurisdictions. Management does not intend to undertake any
efforts to cause a market to develop in the Company's
securities until such time as the Company has successfully
implemented its business plan described herein. Accordingly,
the shareholders of the Company have executed and delivered
"lock-up" letter agreements, affirming that such shareholders
will not sell or otherwise transfer their shares of the
Company's common stock except in connection with or following
completion of a merger or acquisition and the Company is no
longer classified as a blank check company.
During the past three years, the Company has sold
securities which were not registered as follows:
DATE NAME NUMBER OF CONSIDERATION
8/15/97 Mark Alan Mannhalt 50,000 $5.00
8/15/97 Donald Tom Prechitt 30,000 3.00
8/15/97 Fred Umayam 100,000 10.00
8/15/97 Huang Waxu 80,000 8.00
8/15/97 Pollysol Investments Ltd. 100,000 10.00
8/15/97 He Rong Hui 20,000 2.00
8/15/97 Lee Shick Por 20,000 2.00
8/15/97 C.L. Ng 652,500 65.25
8/15/97 Kam Ping Lui 130,500 13.05
8/15/97 Brenda Kayikong 435,000 43.50
8/15/97 William Wing Keung Tang 2,175,000 217.50
8/15/97 Alan Kwong 957,000 95.70
8/15/97 First Agate Capital Corporation 250,000 25.00
As listed above, the Company issued shares of its
Common Stock par value $.0001 per share to the individuals or
entities for the consideration as listed in cash. If any of
these sales were made within the United States or to United
States citizens or residents, such sales were made in
reliance upon the exemption from registration provided by
Section 4(2) of the Securities Act of 1933.
All the shareholders of the Company have executed and
delivered a "lock-up" letter agreement which provides that
each such shareholder shall not sell the securities except in
connection with or following the consummation of a merger or
acquisition. Any liquidation by the current shareholders
after the release from the "lock-up" selling limitation
period may have a depressive effect upon the trading price of
the Company's securities in any future market which may
develop.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
The Company was formed to engage in a merger with or
acquisition of an unidentified foreign or domestic private
company which desires to become a reporting ("public")
company whose securities are qualified for trading in the
United States secondary market. The Company meets the
definition of a "blank check" company contained in Section
(7)(b)(3) of the Securities Act of 1933, as amended. The
Company has been in the developmental stage since inception
and has no operations to date. Other than issuing shares to
its original shareholders, the Company has not commenced any
operational activities. As such the Company can be defined
as a "shell" company, whose purpose is to locate and
consummate a merger or acquisition with another entity.
Management is actively engaged in seeking a qualified
private company as a candidate for a business combination.
Management is in discussion with a number of both foreign and
domestic companies, and has received information and
proposals from several of those companies. The Company is
authorized to enter into a definitive agreement with a wide
variety of private businesses without limitation as to their
industry or revenues. It is not possible at this time to
predict with which private company, if any, the Company will
enter into a definitive agreement or what will be the
industry, operating history, revenues, future prospects or
other characteristics of that company.
The Company will not acquire or merge with any entity
which cannot provide audited financial statements at or
within a reasonable period of time after closing of the
proposed transaction. The Company is subject to all the
reporting requirements included in the Exchange Act.
Included in these requirements is the duty of the Company to
file audited financial statements as part of its Form 8-K to
be filed with the Securities and Exchange Commission upon
consummation of a merger or acquisition, as well as the
Company's audited financial statements included in its annual
report on Form 10-K (or 10-KSB, as applicable). If such
audited financial statements are not available at closing, or
within time parameters necessary to insure the Company's
compliance with the requirements of the Exchange Act, or if
the audited financial statements provided do not conform to
the representations made by the target company, the closing
documents may provide that the proposed transaction will be
voidable at the discretion of the present management of the
Company.
The Company will not restrict its search for any
specific kind of firms, but may acquire a venture which is in
its preliminary or development stage, which is already in
operation, or in essentially any stage of its corporate life.
It is impossible to predict at this time the status of any
business in which the Company may become engaged, in that
such business may need to seek additional capital, may desire
to have its shares publicly traded, or may seek other
perceived advantages which the Company may offer. However,
the Company does not intend to obtain funds to finance the
operation of any acquired business opportunity until such
time as the Company has successfully consummated such a
merger or acquisition.
A business combination with a target business will
normally involve the transfer to the target business of the
majority of common stock of the Company, and the substitution
by the target business of its own management and board of
directors.
ITEM 7. FINANCIAL STATEMENTS
John P. MacLean
Certified Public Accountant
15701 Alameda Drive
Bowie, Maryland 20716
301/249-4900
Diversified Holdings International, Inc.
I have audited the accompanying Balance Sheet of
Diversified Holdings International, Inc. as of December 31,
1997. This financial statement is the responsibility of the
Corporation's. My responsibility is to express an opinion on
this financial statement based on my audit.
I conducted my audit in accordance with generally
accepted auditing standards. Those standards require that I
plan and perform the audit to obtain reasonable assurance
about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. I believe that my audit provides a
reasonable basis for my opinion.
In my opinion, the financial statement referred to
above presents fairly, in all materials respects, the
financial position of Diversified Holdings International,
Inc. as of December 31, 1997, in conformity with generally
accepted accounting principles.
/s/ John P. MacLean, CPA, CFP
April 4, 1998<PAGE>
DIVERSIFIED HOLDINGS INTERNATIONAL, INC.
Balance Sheet
December 31, 1997
ASSETS
Cash $1,000
Total assets $1,000
LIABILITIES
Current -0-
Long-term -0-
Total Liabilities -0-
Shareholder Equity
Common Stock (5,000,000 shares
$.0001 par value) $500
Additional paid in capital $500
Total Equity $1,000
See Auditor's Report
<PAGE>
Diversified Holdings International, Inc.
Notes to Financial Statements
December 31, 1997
Summary of Significant Accounting Policies
A summary of the significant accounting policies consistently
applied in the preparation of the accompanying financial
statement follows.
(A) DESCRIPTION OF BUSINESS. The company was organized
August 8, 1997 for the purpose of engaging in any lawful
business. The company is in the development stage and
operations have not commenced. The Company has selected the
calendar year as its fiscal year.
(B) COMMON STOCK ISSUED. The Company has authorized
100,000,000 shares of Common Stock having a par value of
$.0001 per share and 20,000,000 shares of preferred stock
having a par value $.0001 per share. As of December 31,
1997, 5,000,000 shares of Common Stock had been issued and
are outstanding.
(C) NO COSTS INCURRED. As of December 31, 1997, no
shareholders, officers, directors or other related parties
had incurred costs on behalf of the Company.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
The Company has not changed accountants since its
formation and there are no disagreements with the findings of
its accountants.
<PAGE>
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
The Directors and Officers of the Company are as
follows:
Name Age Positions and Offices Held
Alan Kwong 37 President, Director
William Wing Keung Tang 39 Vice President,
Secretary, Director
There are no agreements or understandings for the
officers or directors to resign at the request of another
person and the above-named officers and directors are not
acting on behalf of or will act at the direction of any other
person.
Set forth below is the name of the directors and
officers of the Company, all positions and offices with the
Company held, the period during which they have served as
such, and the business experience during at least the last
five years:
Alan Kwong, 37, serves as President and a director of
the Company. Mr. Kwong received his elementary and high
school education in Hong Kong and obtained his Bachelor of
Arts degree from the State University of New York in 1985 and
his Masters of Arts degree in computer graphics from the New
York Institute of Technology in 1987. From 1987 to 1994, Mr.
Kwong was the President of Pacific Star International Inc., a
Seattle, Washington company engaged in project research and
development in China. While President of Pacific Star, the
company handled contract negotiations for various projects in
China including the "Royal Plaza" aggregating US$125,000,000,
a motorcycle factory in Shanghai, an automobile factory in
Shenzhen, and various import and export transactions. From
1995 to the present, Mr. Kwong has been President of Global
Pacific International, Inc., a Vancouver, British Columbia
corporation engaged in real estate development in the Far
East and elsewhere.
William Wing Keung Tang, 39, serves as Vice President,
Secretary and a director of the Company. Mr. Tang was born
in and is a resident of Hong Kong. In 1982, Mr. Tang
graduated in Business Studies from the Hong Kong Business
School. From 1991 to 1993, Mr. Tang served as General
Manager for Winning Group, a watch manufacturer in Mainland
China. Mr. Tang developed and monitored a chain of more than
120 outlets of Winning Group in throughout China. From 1993
to 1995, Mr. Tang served as manager for licensing and
merchandising of Warner Bros. (F.E.) Licensing Inc., Hong
Kong. From 1996 to present, Mr. Tang served as the Managing
Director of Asian Finance and Investment Ltd. In 1991, Mr.
Tang founded and has been the General Manager since 1991 of
Bilities International, Hong Kong. Mr. Tang is experienced
in international trading, business and manufacturing in
China, the Far East and elsewhere.
CONFLICTS OF INTEREST IN GENERAL
Management may agree to pay finder's fees, as
appropriate and allowed, to unaffiliated persons who may
bring a target business to the Company where that reference
results in a business combination. The amount of any
finder's will be subject to negotiation, and cannot be
estimated at this time. No finder's fee of any kind will be
paid to the management or promoters of the Company or to
their associates or affiliates. No loans of any type have, or
will be, made to management or promoters of the Company or to
any of their associates or affiliates.
None of the Company's officers, directors, promoters,
or their affiliates or associates have had any negotiations
with and there are no present arrangements or understandings
with any representatives of the owners of any business or
company regarding the possibility of a business combination.
The Company will not enter into a business combination,
or acquire any assets of any kind for its securities, in
which management or promoters of the Company or any
affiliates or associates have any interest, direct or
indirect.
There are no binding guidelines or procedures for
resolving potential conflicts of interest. Failure by
management to resolve conflicts of interest in favor of the
Company could result in liability of management to the
Company. However, any attempt by shareholders to enforce a
liability of management to the Company would most likely be
prohibitively expensive and time consuming.
SPECIFIC CONFLICTS OF INTEREST
Mr. Kwong is president of a company involved in real
estate development in the Far East which company primarily
acts as a finder for real estate transactions. Mr. Kwong may
act as a finder for a project or projects suitable for
development by the Company or other business entities which
entities may present more favorable terms for acting as a
finder. Mr. Kwong is the president, a director and
shareholder of Global Pacific Enterprises, Inc. which,
through its trustee corporation Central Ocean International,
Ltd., of which Mr. Kwong is a 60% shareholder, has entered
into an initial joint venture agreement with a Chinese
government-owned development company to develop "Royal
Plaza", a commercial/residential/hotel complex site in the
City of Chengdu, China. Global Pacific Enterprises, Inc. is
required to contribute approximately $6,000,000 to the joint
venture project by mid-1998 in order to continue as a joint
venturer in the project. Global Pacific Enterprises, Inc.
has filed a registration statement with the United States
Securities and Exchange Commission for the sale of its
securities. If Global Pacific Enterprises, Inc. is unable to
raise sufficient funds it may determine to seek alternate
joint venture projects. Such projects may conflict with
projects being sought by the Company.
Mr. Kwong is the vice president of Century Investments
International, Inc., a development-stage Delaware
corporation, formed to develop, manage and acquire commercial
real estate properties in the Far East, particularly China.
Century Investments International, Inc. has filed a
registration statement with the Securities and Exchange
Commission for the offer and sale of its securities. Century
Investments International, Inc. is a development stage
company with no operations or revenues.
In general, officers and directors of a corporation
incorporated under the laws of the State of Delaware are
required to present certain business opportunities to such
corporation. Accordingly, as a result of multiple business
affiliations, certain of the Company's directors and its
executive officers may have similar legal obligations to
present certain business opportunities to other entities. In
addition, the Company may enter into one or more joint
ventures with third parties or with entities associated with
officers or directors of the Company. These joint ventures
may be in conflict with the Company in obtaining the rights
to acquire or develop certain project opportunities, or in
the use of available funds or other resources for such
development. There can be no assurance that any of the
foregoing conflicts, if such conflicts arise, will be
resolved in favor of the Company.
Management of the Company has not been involved in any
previous blank offerings. Global Pacific Enterprises, Inc.
has been formed to develop and locate funding for a specific
property located in China. Century Investments International
has been formed to specifically develop and manage real
estate projects in the Far East and China. The Company has
been formed to locate and merge with a target business
without limitation as to the type of business in which it is
engaged.
There are no binding guidelines or procedures for
resolving potential conflicts of interest. Failure by
management to resolve conflicts of interest in favor of the
Company could result in liability of management to the
Company. However, any attempt by shareholders to enforce a
liability of management to the Company would most likely be
prohibitively expensive and time consuming.
ITEM 10. EXECUTIVE COMPENSATION
The Company's officers do not receive any compensation
for their services rendered to the Company, nor have they
received such compensation in the past. As of the date of
this registration statement, the Company has no funds
available to pay any officer or director. Further, the
officers are not accruing any compensation pursuant to any
agreement with the Company.
The officers and directors of the Company will not
receive any finder's fee, either directly or indirectly, as a
result of their efforts to implement the Company's business
plan outlined herein. However, the officers and directors of
the Company anticipate receiving benefits as beneficial
shareholders of shares of the common stock of the Company.
No retirement, pension, profit sharing, stock option or
insurance programs or other similar programs have been
adopted by the Company for the benefit of its employees.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth, as of December 31,
1997, each person known by the Company to be the beneficial
owner of five percent or more of the Company's Common Stock
and the directors and officers of the Company. Except as
noted, the holder thereof has sole voting and investment
power with respect to the shares shown.
Name and Address Amount of Beneficial Percent of
of Beneficial Owner Ownership Class
William Wing Keung Tang 2,175,000 43%
Trinity House, #605
165 Wanchai Road
Hong Kong
Alan Kwong 957,000 19%
6839 Southeast Cougar Mountain Hgwy
Bellevue, Washington 98006
First Agate Capital Corporation 250,000 5%
1504 R Street, N.W.
Washington, D.C. 20009
All Executive Officers and 3,132,000 62%
Directors as a Group (2 Persons)
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Board of Directors has passed a resolution which
contains a policy that the Company will not seek an
acquisition or merger with any entity in which the Company's
officers, directors or shareholders or their affiliates or
associates serve as officer or director or hold any ownership
interest. Management is not aware of any circumstances under
which this policy may be changed.
The proposed business activities described herein
classify the Company as a "blank check" company. The
Securities and Exchange Commission and many states have
enacted statutes, rules and regulations limiting the sale of
securities of blank check companies in their respective
jurisdictions. Management does not intend to undertake any
efforts to cause a market to develop in the Company's
securities until such time as the Company has successfully
implemented its business plan described herein. Accordingly,
the shareholders of the Company have executed and delivered
"lock-up" letter agreements, affirming that such shareholders
shall not sell such shareholder's respective shares of the
Company's common stock until such time as the Company has
successfully consummated a merger or acquisition and the
Company is no longer classified as a blank check company.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 4
- -- Certificate of Incorporation filed as an
exhibit to the Company's registration statement
on Form 10-SB (File No. 0-23101) filed on
September 18, 1997 and is incorporated herein by
reference.
- -- By-Laws filed as an exhibit to the Company's
registration statement on Form 10-SB (File No. 0-
23101) filed on September 18, 1997 which is
incorporated herein by reference.
Exhibit 27 Financial Data Schedule filed
herewith.
(b) There were no reports on Form 8-K filed by the
Company during the quarter ended December 31, 1997.
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange
Act, the registrant caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
Diversified Holdings International, Inc.
By: /s/ Alan Kwong
Alan Kwong, Director, President
Dated: April 14, 1998
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