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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. __)
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
LJ INTERNATIONAL INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction
applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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LJ INTERNATIONAL INC.
UNIT #12, 12/F, BLOCK A
FOCAL INDUSTRIAL CENTRE
21 MAN LOK STREET
HUNG HOM, KOWLOON, HONG KONG
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD WEDNESDAY, DECEMBER 6, 2000
To Our Shareholders:
PLEASE TAKE NOTICE that our annual meeting of shareholders will be held
at our office at 1212, Block A, Focal Industrial Centre, 21 Man Lok Street, Hung
Hom, Kowloon, Hong Kong on Wednesday, December 6, 2000, at 11:00 a.m., local
time, for the following purposes:
1. To elect four directors to hold office for the term specified in the
proxy statement or until their successors are elected and qualified; and
2. To transact such other business as may properly come before the
meeting or any adjournment.
The board of directors has fixed the close of business on October 23,
2000, as the record date for the determination of shareholders entitled to
notice of and to vote at the meeting and at any adjournment. A proxy statement
which describes the foregoing proposals and a form of proxy accompany this
notice.
By Order of the Board of Directors
Ka Man Au
Secretary
Dated: October 30, 2000
IMPORTANT
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE EXECUTE THE
ACCOMPANYING PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED REPLY ENVELOPE WHICH
REQUIRES NO POSTAGE. IF YOU GRANT A PROXY, YOU MAY REVOKE IT AT ANY TIME PRIOR
TO THE MEETING. ALSO, WHETHER OR NOT YOU GRANT A PROXY, YOU MAY VOTE IN PERSON
IF YOU ATTEND THE MEETING.
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LJ INTERNATIONAL INC.
UNIT #12, 12/F, BLOCK A
FOCAL INDUSTRIAL CENTRE
21 MAN LOK STREET
HUNG HOM, KOWLOON, HONG KONG
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD WEDNESDAY, DECEMBER 6, 2000
SOLICITATION OF PROXY
The accompanying proxy is solicited on behalf of the board of directors
of LJ INTERNATIONAL INC. for use at our annual meeting of shareholders to be
held at our office at 1212, Block A, Focal Industrial Centre, 21 Man Lok Street,
Hung Hom, Kowloon, Hong Kong on Wednesday, December 6, 2000, and at any
adjournment. In addition to mails, proxies may be solicited by personal
interview, telephone or telegraph by our officers, directors and other
employees, who will not receive additional compensation for such services. We
may also request brokerage houses, nominees, custodians and fiduciaries to
forward the soliciting material to the beneficial owners of stock held of record
and will reimburse them at the rates suggested by the New York Stock Exchange.
We will bear the cost of this solicitation of proxies, which are expected to be
nominal. Proxy solicitation will commence with the mailing of this proxy
statement on or about October 23, 2000.
Execution and return of the enclosed proxy will not affect your right
to attend the meeting and to vote in person. If you execute a proxy, you still
retain the right to revoke it at any time prior to exercise at the meeting. A
proxy may be revoked by delivery of written notice of revocation to our
Secretary, by execution and delivery of a later proxy or by voting the shares in
person at the meeting. A proxy, when executed and not revoked, will be voted in
accordance with its instructions. If there are no specific instructions, proxies
will be voted "FOR" the election as directors of those nominees named in the
proxy statement and in accordance with his best judgment on all other matters
that may properly come before the meeting.
The enclosed form of proxy provides a method for shareholders to
withhold authority to vote for any one or more of the nominees for director
while granting authority to vote for the remaining nominees. The names of all
nominees are listed on the proxy. If you wish to grant authority to vote for all
nominees, check the box marked "FOR." If you wish to withhold authority to vote
for all nominees, check the box marked "WITHHOLD." If you wish your shares to be
voted for some nominees and not for one or more of the others, check the box
marked "FOR" and indicate the name(s) of the nominee(s) for whom you are
withholding the authority to vote by writing the name(s) of such nominee(s) on
the proxy in the space provided.
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PURPOSE OF MEETING
As stated in the notice of annual meeting of shareholders accompanying
this proxy statement, the business to be conducted and the matters to be
considered and acted upon at the meeting are as follows:
1. To elect four directors to hold office for the term specified herein
or until their successors are elected and qualified; and
2. To transact such other business as may properly come before the
meeting or any adjournment.
VOTING AT MEETING
Our voting securities consist solely of common stock, $.01 par value
per share.
The record date for shareholders entitled to notice of and to vote at
the meeting is the close of business on October 23, 2000, at which time we had
outstanding and entitled to vote at the meeting 8,671,615 shares of common
stock. Shareholders are entitled to one vote for each share of common stock held
in their name on the record date. Shareholders representing a majority of the
common stock outstanding and entitled to vote must be present or represented by
proxy to constitute a quorum.
The election of directors will require the affirmative vote of the
holders of a majority of the common stock present or represented by proxy at the
meeting and entitled to vote. Cumulative voting for directors is not authorized
and proxies cannot be voted for more than four nominees.
STOCK OWNERSHIP
The following table sets forth certain information regarding the
beneficial ownership of shares of our common stock as of August 14, 2000 by:
o each person who is known by us to own beneficially more than 10% of our
outstanding common stock,
o each of our executive officers and directors, and
o all directors and executive officers as a group.
<TABLE>
<CAPTION>
NUMBER
SHARES BENEFICIALLY
NAME OF BENEFICIAL HOLDER OWNED PERCENT
------------------------- ------------------- -------
<S> <C> <C>
Yu Chuan Yih...................................................................... 4,684,200(1)(2) 48.4%
Ka Man Au......................................................................... 200,000(3) 2.3%
Joseph Tuszer..................................................................... 300,000(4) 3.3%
Hon Tak Ringo Ng.................................................................. 200,000(5) 2.3%
Michael S. Gilburd ............................................................... 0 0%
Po Yee Elsa Yue................................................................... 6,000(6) 0.1%
Lionel C. Wang.................................................................... 0 0%
All directors and executive officers as a group (7 persons)....................... 5,390,200 51.9%
</TABLE>
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(1) Of Mr. Yih's 4,684,200 shares, 1,500,000 shares are owned of record by
Pacific Growth Developments Ltd., a British Virgin Islands corporation
which is owned by Mr. Yih (60%), his wife Tammy Yih (20%) and an adult
daughter, Bianca Tzu Hsiu Yih (20%). In addition, Mr. Yih is the sole
shareholder of the following British Virgin Islands corporations which
own shares of our common stock as follows: Welgram International
Limited - 236,000 shares and Sunflower Gold Holdings Limited - 252,000
shares.
(2) Includes options currently exercisable to acquire 775,000 shares of
common stock held by Mr. Yih and options currently exercisable to
acquire 230,000 shares of common stock held by Mr. Yih's wife.
(3) Includes options currently exercisable to acquire 200,000 shares of
common stock.
(4) Includes options currently exercisable to acquire 300,000 shares of
common stock.
(5) Includes options currently exercisable to acquire 200,000 shares of
common stock.
(6) Includes options currently exercisable to acquire 6,000 shares of
common stock.
BOARD OF DIRECTORS
Our board of directors has the responsibility for establishing broad
corporate policies and for our overall performance, although it is not involved
in day-to-day operating details. The board meets regularly throughout the year,
including the annual organization meeting following the annual meeting of
shareholders, to review significant developments affecting us and to act upon
matters requiring board approval. It also holds special meetings as required
from time to time when important matters arise requiring board action between
scheduled meetings. During the last fiscal year ended April 30, 2000, the board
met eight times.
We have established an audit committee, which consists of Messrs. Yih
and Wang and Ms. Yue. Its functions are to:
o recommend annually to our board of directors the appointment of our
independent public accountants;
o discuss and review the scope and the fees of the prospective annual
audit and review the results with the independent public accountants;
o review and approve non-audit services of the independent public
accountants;
o review compliance with our existing accounting and financial policies;
o review the adequacy of our financial organization; and
o review our management's procedures and policies relative to the
adequacy of our internal accounting controls and compliance with
federal and state laws relating to financial reporting.
The Audit Committee met two times during the fiscal year ended April
30, 2000.
We do not have a nominating committee. The functions customarily
attributable to a nominating committee are performed by the board of directors
as a whole.
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No director attended fewer than 75 percent of the aggregate of the
total number of meetings of the board of directors and the total number of
meetings held by all committees of the board on which he served.
Each non-employee director is compensated separately for service on the
board and is reimbursed for expenses to attend board meetings.
ELECTION OF DIRECTORS
At the meeting, four directors are to be elected. Each director will be
elected for a one-year term or until his successor is elected and qualified.
Shares represented by properly executed proxies will be voted, in the
absence of contrary indication or revocation by the shareholder granting such
proxy, in favor of the election of the persons named below as directors. The
person named as proxy has been designated by management and intends to vote for
the election to the board of directors of the persons named below, each of whom
now serves as a director. If any nominee is unable to serve as a director, the
shares represented by the proxies will be voted, in the absence of contrary
indication, for any substitute nominee that management may designate. We know of
no reason why any nominee would be unable to serve. The information presented
with respect to the nominees was obtained in part from each of them and in part
from our records.
NOMINEES FOR ELECTION AS DIRECTORS
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Yu Chuan Yih................. 61 Chairman of the Board of Directors, President and
Chief Executive Officer
Ka Man Au.................... 36 Executive Vice President, Secretary and Director
Lionel C. Wang............... 44 Non-Executive Director
Po Yee Elsa Yue.............. 36 Non-Executive Director
</TABLE>
None of our directors and officers was selected pursuant to any
agreement or understanding with any other person. There is no family
relationship between any of our directors or executive officers and any other
director or executive officer.
MR. YIH established the business of Lorenzo Jewelry Mfg. (HK) Ltd. and
has served as its president and managing director since 1987. Mr. Yih is
primarily responsible for our business development and overall company
management. He has over 20 years of experience in semi-precious stone production
and marketing. Mr. Yih has been a gemstone trader in Brazil and has extensive
experience and relationships in gem sourcing and jewelry design. Mr. Yih is also
president of the Hong Kong branch of the Gemological Institute of America (GIA),
the nonprofit educational organization for the jewelry industry.
MS. AU has served as a director of Lorenzo Jewelry Mfg. (HK) Ltd. since
its incorporation in 1987. Ms. Au is primarily responsible for our general
administration, human resources, operations and management.
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MR. WANG has served as a non-executive director since June 1998. He
received his Bachelor of Commerce from Tamkung University, Taipei, Taiwan in
1978, his Master of Business Administration from California State Polytechnic
University in 1980 and his Master of Science from Stanford University in 1981.
From 1984 to 1990, Mr. Wang served as marketing research analyst and senior
strategic planning analyst for The Gillette Company, Boston, Massachusetts. From
1990 to 1995, he served as associate director and then director of product
development for Information Resources, Inc., Waltham, Massachusetts. From 1995
to 1996, Mr. Wang served as vice-president as Nielsen North America with
responsibility for analytical and modeling projects on Kraft Foods/White Plains
account. Since 1996, Mr. Wang has served as director of analytical services for
The NPD Group, Inc., Port Washington, New York.
MS. YUE has served as a non-executive director since December 1999. She
is a graduate gemologist from the Gemology Institute of America and has served
as vice president of GIA, Hong Kong since August 1994.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
The aggregate compensation paid by us to all of our directors and
executive officers as a group for the fiscal year ended April 30, 2000 on an
accrual basis, for services in all capacities, was HK$7,122,000 (US$921,000).
During the fiscal year ended April 30, 2000, we contributed an aggregate amount
of HK$107,000 (US$14,000) toward the pension plans of our directors and
executive officers.
EXECUTIVE SERVICE CONTRACT
We entered into an employment agreement with Mr. Yu Chuan Yih effective
October 1, 1997 for a period of three years at an annual salary of HK$1,600,000
(US$207,000). Mr. Yih's remuneration package includes benefits with respect to
an automobile. In addition, Mr. Yih will be entitled to an annual management
bonus of a sum to be determined by the board at its absolute discretion having
regard for our operating results and the performance of Mr. Yih during the
relevant financial year. The amount payable to Mr. Yih will be decided by
majority decision of the members of the board present in the meeting called for
that purpose. Mr. Yih shall abstain from voting and not be counted in the quorum
in respect of the resolution regarding the amount payable to him.
THE 1998 STOCK COMPENSATION PLAN
Effective June 1, 1998, we adopted and approved the 1998 Stock
Compensation Plan. The purpose of the plan is to:
o encourage ownership of our common stock by our officers, directors,
employees and advisors;
o provide additional incentive for them to promote our success and our
business; and
o encourage them to remain in our employ by providing them an opportunity
to benefit from any appreciation of our common stock through the
issuance of stock options.
Options constitute either incentive stock options within the meaning of
Section 422 of the United States Internal Revenue Code of 1986, as amended, or
options which constitute nonqualified options at the time of issuance of such
options. The plan provides that incentive stock options and/or nonqualified
stock options may be granted to our officers, directors, employees and advisors
selected by the compensation committee. A total of 4,000,000 shares of
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common stock are authorized and reserved for issuance during the term of the
plan which expires in June 2008. The compensation committee has the sole
authority to interpret the plan and make all determinations necessary or
advisable for administering the plan. The exercise price for any incentive
option must be at least equal to the fair market value of the shares as of the
date of grant. Upon the exercise of the option, the exercise price must be paid
in full either in cash, shares of our stock or a combination. If any option is
not exercised for any reason, such shares shall again become available for the
purposes of the plan.
As of August 31, 2000, the following options to purchase shares of our
common stock under the Plan were outstanding:
o stock options to purchase 1,285,000 shares at $5.00 per share through
April 11, 2009, of which 431,000 are held by our directors and officers
as a group
o stock options to purchase 265,000 shares at $5.00 per share through
January 13, 2010, none of which are held by our directors and officers
as a group
o stock options to purchase 1,770,000 shares at $3.00 per share through
May 7, 2010, of which 1,050,000 are held by our directors and officers
as a group
OTHER OPTIONS AND WARRANTS OUTSTANDING
As of August 31, 2000, the following additional options and warrants to
purchase shares of our common stock were outstanding:
o 1,679,000 common stock purchase warrants which are publicly traded and
which we issued in our April 1998 initial public offering to purchase
1,679,000 shares of common stock at $5.75 per share through April 15,
2003
o 146,000 stock purchase options to purchase 146,000 shares of common
stock at $8.25 per share through April 15, 2003 which we sold to the
IPO underwriter and/or persons related to the underwriter
o 146,000 warrant purchase options to purchase 146,000 warrants at
$0.20625 per warrant to purchase shares of common stock at $8.25 per
share through April 15, 2003 which we sold to the IPO underwriter
and/or persons related to the underwriter
o options to purchase 35,000 shares at $5.00 per share through July 30,
2004 which we granted to our former financial consultant
o warrants to purchase 75,000 shares at $3.75 per share through November
30,2004 and warrants to purchase 87,500 shares at $6.9375 per share
through March 31, 2005 which we sold to two investors and our placement
agent
THE BOARD OF DIRECTORS RECOMMENDS TO OUR SHAREHOLDERS THAT THEY VOTE
"FOR" THE ELECTION OF SUCH NOMINEES.
CERTAIN TRANSACTIONS
Yu Chuan Yih, our chairman and president, is a director and principal
shareholder of Gemological Institute of America, Hong Kong Limited; and Hong
Kong Brasil Lapidary Limited. During the fiscal years ended April 30, 1998, 1999
and 2000, Mr. Yih and these affiliated companies received unsecured advances
from, and made unsecured advances to, us which were interest free and repayable
on demand.
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During the fiscal year ended April 30, 1998, we sold an investment
property to Mr. Yih at its appraised value of HK$3,800,000 (US$492,000),
resulting in a gain to us of HK$2,904,000 (US$376,000). The sale price of the
property was based on a valuation report prepared by an independent professional
property appraiser.
During the fiscal year ended April 30, 1999, we sold finished goods of
HK$74,000 (US$10,000) to Gemological Institute of America, Hong Kong Limited and
Hong Kong Brasil Lapidary Limited, which were made according to the published
prices and conditions offered to our major customers. In addition, we provided a
guarantee to a bank in respect of mortgage loans granted to Yu Chuan Yih to the
extent of HK$4,882,000 (US$632,000).
INDEPENDENT PUBLIC ACCOUNTANTS
A representative of Moores Rowland Hong Kong will attend the meeting
and will have the opportunity to make a statement if he so desires. This
representative will be available to respond to appropriate shareholder questions
at that time.
PROPOSALS OF SHAREHOLDERS FOR PRESENTATION
AT NEXT ANNUAL MEETING OF SHAREHOLDERS
Any shareholder of record who desires to submit a proper proposal for
inclusion in the proxy materials relating to the next annual meeting of
shareholders must do so in writing and it must be received at our principal
executive offices by April 29, 2001. You must be a record or beneficial owner
entitled to vote at the next annual meeting on your proposal and must continue
to own such security entitling you to vote through the date on which the meeting
is held.
ANNUAL REPORT
Our annual report to shareholders concerning our operations during the
fiscal year ended April 30, 2000, including audited financial statements, has
been distributed to all record holders as of the record date. The annual report
is not incorporated in the proxy statement and is not to be considered a part of
the soliciting material.
OTHER BUSINESS
Our management is not aware of any other matters which are to be
presented at the meeting, nor have we been advised that other persons will
present any such matters. However, if other matters properly come before the
meeting, the individual named in the accompanying proxy shall vote on such
matters in accordance with his best judgment.
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AVAILABILITY OF ANNUAL REPORT ON FORM 20-F
UPON WRITTEN REQUEST, WE WILL PROVIDE, WITHOUT CHARGE, A COPY OF OUR
ANNUAL REPORT ON FORM 20-F FOR THE FISCAL YEAR ENDED APRIL 30, 2000 TO EACH
SHAREHOLDER OF RECORD OR TO EACH SHAREHOLDER WHO OWNED OUR COMMON STOCK LISTED
IN THE NAME OF A BANK OR BROKER, AS NOMINEE, AT THE CLOSE OF BUSINESS ON OCTOBER
23, 2000. ANY REQUEST BY A SHAREHOLDER FOR OUR ANNUAL REPORT ON FORM 20-F SHOULD
BE SENT TO OUR SECRETARY, LJ INTERNATIONAL INC., UNIT #12, 12/F, BLOCK A, FOCAL
INDUSTRIAL CENTRE, 21 MAN LOK STREET, HUNG HOM, KOWLOON, HONG KONG.
The above notice and proxy statement are sent by order of our board of
directors.
KA MAN AU
Secretary
October 30, 2000
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY
FOR THE ANNUAL MEETING OF SHAREHOLDERS OF
LJ INTERNATIONAL INC.
TO BE HELD DECEMBER 6, 2000
The undersigned hereby appoints Yu Chuan Yih as the lawful agent and Proxy
of the undersigned (with all powers the undersigned would possess if personally
present, including full power of substitution), and hereby authorizes him to
represent and to vote, as designated below, all the shares of common stock of LJ
International Inc. held of record by the undersigned as of the close of business
on October 23, 2000, at the Annual Meeting of Shareholders to be held on
Wednesday, December 6, 2000, or any adjournment or postponement.
1. ELECTION OF DIRECTORS
FOR all nominees listed below WITHHOLD AUTHORITY
--- (except as marked to the --- to vote for all nominees
contrary below) listed below
Y.C. Yih; K.M. Au; L. Wang; P. Yue
(INSTRUCTION: To withhold authority to vote for any nominees, write the
nominees' names on the space provided below.)
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2. In his discretion, the Proxy is authorized to vote upon any matters which
may properly come before the meeting, or any adjournment or postponement.
It is understood that when properly executed, this proxy will be voted in
the manner directed herein by the undersigned shareholder. WHERE NO CHOICE IS
SPECIFIED BY THE SHAREHOLDER, THE PROXY WILL BE VOTED FOR THE ELECTION OF
DIRECTORS PROPOSED IN ITEM(1).
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The undersigned hereby revokes all previous proxies relating to the shares
covered hereby and confirms all that the Proxy or his substitutes may do by
virtue hereof.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by president or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
Dated: , 2000 ------------------------------------
--------------- Signature
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Signature if held jointly
PLEASE MARK, SIGN, DATE AND
RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
[ ] PLEASE CHECK THIS BOX IF YOU INTEND TO BE PRESENT AT THE MEETING.
