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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Amendment 1 to
FORM 10SB
General Form for Registration of Securities of Small
Business Issuers
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
Belair Enterprises, Inc.
(Exact name of Small Business Issuer in its charter)
NEVADA 98-0194067
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
16th Floor, 25A, Fontana Gardens, Tai Hang Road
Causeway Bay, Hong Kong
(Address of principal executive offices) (Zip Code)
Registrant's Telephone number, including area code: 852-9156-8865
Securities to be registered pursuant to Section 12(b) of the Act:
None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 par value
Forward-Looking Statements and Associated Risk. This Registration
Statement contains forward-looking statements including statements
regarding, among other items, the Company's growth strategies, and
anticipated trends in the Company's business and demographics. These
forward-looking statements are based largely on the Company's
expectations and are subject to a number of risks and uncertainties,
certain of which are beyond the Company's control. Actual results
could differ materially from these forward-looking statements as a
result of the factors, including among others, regulatory or economic
influences.
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ITEM 1. DESCRIPTION OF BUSINESS
A. The Company was incorporated on May 11, 1998, in the State of Nevada
The Company was formed to serve as a holding company for one or more
operating subsidiaries to start-up and/or conduct business of
consultation, acquisition and joint venture programs with corporate
entities doing business nationally and internationally, throughout the
world.
The Company currently has two wholly owned subsidiary, Bickmore
Holdings, Inc., a Commonwealth of the Bahamas company and Tampa Bay
Investments Limited, a British Virgin Island company.
Tampa Bay Investments Limited ("Tampa")
Tampa was incorporated in British Virgin Island in May 1999. In
August 1999, Tampa entered into a letter of intent to acquire a 49%
interest for $11,500,000 with an option to acquire a further 2%
interest for no more than $1,500,000 in Guangzhou South China
Telecommunications Investment Corporation, a China telecommunications
company. The letter of intent does not have a specific closing date
as a number of conditions must first be completed. On June 28, 1999,
the Company issued 250,000 restricted common shares at $2.00 per share
as earnest money under the letter of intent. These shares are
currently held in safe keeping by the Company's attorneys. The Company
also advanced $315,000 on October 4, 1999 as partial payment on the
acquisition. If the acquisition is not completed, the $315,000 is
fully refundable. Tampa and the Company intend to finance the
acquisition through the issuance of convertible debentures or issuance
of common shares in the Company. The Company may be required to loan
the China telecommunication company $3,000,000 at terms to be
determine.
Bickmore Holdings, Inc. ("Bickmore")
Bickmore is in the business of investing in the telecommunications
industry, particularly with regard to wireless technology and related
products and/or services, in the People's Republic of China ("PRC").
Bickmore is a company incorporated under the Laws of the Bahamas on
13th February 1998. Bickmore maintains offices in Hong Kong. The Hong
Kong office manages all Asian investments. The Hong Kong office
address is 16th Floor, Flat 25A, Fontana Gardens, Causeway Bay, Hong
Kong.
Through joint ventures with Chinese partners, Bickmore plans on
investing in the manufacturing and development of telecommunications
equipment in the PRC.
Bickmore's management has identified the PRC as having a significant
untapped requirement for telecommunications equipment and
infrastructure. As the country's economy continues to grow and as
foreign investment becomes increasingly important, so does its
telecommunications infrastructure. Bickmore's management sees the
strong economy in PRC and government commitment to expanding
telecommunications infrastructure as creating an opportunity to
capitalize on the huge market potential for wireless telecommunications.
Bickmore will concentrate its efforts in Guangdong Province located in
southern PRC and which borders on Hong Kong. Its major city, Shenzhen,
has been designated an economic development zone. As such, this region
has seen incredible economic activity and foreign investment since its
designation in 1980. The population has grown 80-fold in just 18
years. Business activity in the region has prompted a huge need and
demand for all forms of telecommunications.
Bickmore's proposed acquisition: Zhanjiang Casonic Electronic Co. Ltd.
("Casonic")
Bickmore is in the final stages of completion of the acquisition of
Casonic. The companies have signed acquisition contracts on June
22,1999.
Bickmore intends to acquire 60% of the company for a total price of
US$4.7 million. The acquisition will be made through a sino joint
venture between Bickmore, Zhanjiang Ministry of Post and
Telecommunications and Kartek Holdings Ltd. The acquisition price is at
a price / earnings ratio of four.
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Bickmore will pay US$2.3 million in cash with the balance being
financed by the cash flow of Casonic through the collection of accounts
receivables outstanding. The US$2.3 million will be raised through
equity or debt financing.
Casonic is located in Zhanjiang , Guangdong China. The company has been
in operations since 1995 and has approximately 1,000 employees. Casonic
has produced over 10 million phones over the last 15 years all for the
domestic Chinese market. This equates to 10% of the overall phones
produced in China by domestic manufacturers over the last 15 years.
Casonic is a brand name that is recognized in many parts of China.
Casonic is a vertically integrated company. The production facilities
include plastics molding, printing and assembly departments. All
facilities are located on its own premises with over 200,000 feet of
production space. Casonic is capable of producing up to three million
telephone sets per year.
Market Value of Zhanjiang Casonic
Nelson Wheeler RSM , an international Certified Public Accounting firm
in Hong Kong, prepared a due diligence report dated October 31,1998.
After adjustments for differences in Chinese and US GAAP accounting
practises and various other adjustments, the unaudited net asset value
of the company was US$800,000.
C.Y. Leung & Company Limited, International Surveyors, Real Estate
Agents, Valuers & Auctioneers, prepared a valuation report on the
market value of the real estate properties held by Casonic. Based on
the report dated January 1999, Casonic holds real estate properties
worth US$3.75 million.
Richards Butler, a Hong Kong based international law firm, has given
the opinion that the acquisition of Casonic is legal under the current
PRC laws. Richards Butler was also responsible for the drafting of the
acquisition contracts.
The Product
The Company through Casonic intends to further the development of new
technology in the production of hi technology telephone handsets such
as DECT telephones. The Company will enter into strategic
relationships with technology holders to import new products into the
PRC.
Bickmore will invests in new equipment so that the hi technology phones
can be produced at the factory in Zhanjiang.
The Competition
The telephone market in the PRC is very competitive as there are many
manufacturers of telephone products. Pricing of the products are still
relatively high as compared to exports of the telephone products.
Bickmore's proposed acquisition: Kingtone Cable Enterprises Ltd. -
"Kingtone"
Bickmore is in final stages to acquire Kingtone. Acquisition contracts
were signed on June 22,1999 with amendments to the acquisition price on
November 2,1999.
Bickmore intends to acquire 60% of the company for a total price of
US$2.5 million. The acquisition will be made through a sino joint
venture between Bickmore, Zhanjiang Ministry of Post and
Telecommunications and Kartek Holdings Ltd.
Bickmore will pay US$1.25 million in cash with the balance being
financed by the cash flow of Kingtone through the collection of
accounts receivables outstanding. The US$1.25 million will be raised
through equity of debt financing.
Kingtone was established in 1995 to produce telephone communications
cables. The main product is the copper coax telephone cables and is
available in many different gauges. All cable products are sold to the
various telephone ministries around the PRC. Kingtone has 318,000 feet
of production space all housed on one site.
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Market Value of Kingtone
Nelson Wheeler RSM , an international Certified Public Accounting firm
in Hong Kong, prepared a due diligence report dated October 31,1998.
After adjustments for differences in Chinese and US GAAP accounting
practises and various other adjustments, the unaudited net asset value
of the company was US$2.8 million.
C.Y. Leung & Company Limited, International Surveyors, Real Estate
Agents, Valuers & Auctioneers, prepared a valuation report on the
market value of the real estate properties held by Casonic. Based on
the report dated January 1999, Kingtone holds real estate properties
worth US$4.64 million.
Richards Butler, a Hong Kong based international law firm, has given
the opinion that the acquisition of Kingtone is legal under the current
PRC laws. Richards Butler was also responsible for the drafting of the
acquisition contracts.
The Product
Bickmore intends to develop the fiber optics cable and preform
manufacturing in the PRC. Through a joint venture with a US based
technology company, Bickmore intends to set up a fiber optics preform
and cable manufacturing facility in Zhanjiang.
The fiber optics market in the PRC is growing exponentially over the
next ten years. According to experts from the Ministry of Information
Industry of China, the demand for optical fiber and cable will continue
to grow in the next ten years. It is expected that by the year 2000 the
annual demand for optical fiber will reach 6 million kilometers and the
demand for cable will exceed 300,000km.
In 1998, the total market for fiber optic communication systems and
equipment in China exceeded US$1 billion and it will grow to US$2
billion by the year 2010 according to the Director General of the
Telecom R&D Centre at Beijing University of Post and
Telecommunications.The fiber optics core and cable factory have an
estimated cost of between US$20 million and US$35 million including
plant and equipment.
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Tampa Bay's proposed Joint Venture: Guangzhou South China
Telecommunications Investment Corporation.
Tampa Bay is in the process of raising funding for the joint venture
agreement signed with South China. Tampa Bay intends to set up a sino
joint venture with South China with Tampa Bay holding 49% of the
company.
Guangzhou South China Telecom Investment Co. is one of the 15
shareholders of China United Telecommunications Corporation Limited,
commonly known as "China Unicom". GSCT has a strong foothold in the
Chinese telecommunications market and has the expertise to operate
and expand further into the telecommunications businesses such as
CDMA cellular manufacturing and operation, internet telephony and
cable television networks as well as Web television projects.
Combining the efforts of the newly formed joint venture and the
Zhanjiang factories that Belair is in the process of acquiring,
Belair Enterprises Inc. and Guangzhou South China Telecom Investment
Co. is poised to gain market share in the Chinese telecommunications
market with their products and services.
A legal due diligence has been completed by Richards Butler in Hong
Kong.
BUSINESS OF THE COMPANY AND ITS WHOLLY OWNED SUBSIDIARIES
Company Goals and Objectives
To provide better quality and higher technology telephone products
to the people of the PRC.
To expand by acquiring new technologies and products and develop
them in the PRC
To seek long term partners to develop the PRC market
To diversify into other related telecommunications industries
The Company does not expect to be dependent on any suppliers for any
essential raw material, energy or other items. There are no existing
supply contracts.
ECONOMIC ACTIVITY IN THE PEOPLE'S REPUBLIC OF CHINA
The People's Republic of China
The People's Republic of China (the "PRC"), is the third largest
country in the world with a total land area estimated at 9.572 million
square kilometers. The official language is Mandarin.
The population of the PRC is estimated at 1.2 billion people, 80% of
whom live in the eastern half of the country. At the end of 1992,
approximately 25% of the population resided in cities.
The government is organized pursuant to the Constitution. The National
People's Congress (NPC), is the supreme legislative body and the
Constitution provides for the election of members to the NPC and
provides for the legalization of private companies and the rental of
land use rights.
When the NPC is not in session, the Standing Committee carries out the
duties of the NPC and supervises the State Council which is responsible
for state administration. The State Council is headed by the Premier
and is composed of departmental ministers, vice-premiers, and state
councilors. The State Council is responsible for the operation of all
ministries and commissions at the state level and the state
administrative agencies at the local levels. An estimated sixty
ministries, commissions, and "adhoc" organizations, together with The
People's Bank of China, are under the administration of the State
Council.
The PRC is administratively divided into provinces, autonomous regions,
and government-controlled municipalities. The provinces and autonomous
regions report directly to the State Council while the municipalities
are administered by the Central PRC government (Beijing, Tianjin, and
Shanghai). The autonomous regions are Inner Mongolia, Guangxi,
Ningxia, Xinjiang, and Tibet. The provinces, autonomous regions, and
government-controlled municipalities, in turn, are divided into
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prefectures, autonomous prefectures, counties, autonomous counties, and
municipalities and townships. Local congresses exist at the
provincial, county, municipal, and certain autonomous prefecture
levels.
Although the NPC is the supreme legislative body in the PRC, it
operates under the leadership of the Communist Party of the PRC, which
has a central committee consisting of 175 full members.
Economic Development
The Chinese central government is in the process of changing from a
centrally planned collective economy, with limited private ownership,
into a "Socialist market economy"; as a result, economic initiatives
are in a state of change. During the late 1980's and early 1990's,
economic growth and change were substantial.
The PRC's "open door" policy and economic reform programs were formally
adopted at the Third Plenary Session of the Party Central Committee of
the 1 1 the National Party Congress in December, 1978. This marked a
shift in the PRC economy from a rigid centralized system to a more
decentralized economy, which included a reopening of foreign trade.
Although the initial reform programs embraced comprehensive policies
and long-term objectives, implementation has occurred gradually over
the past fifteen years. The reform programs are intended to transform
the economy into a market-oriented economy with an effective control
system, a modern enterprise system and an equitable system of income
distribution and social security.
China has developed and operated a centrally-planned economy, managed
in part through a series of five-year economic and social development
plans formulated by the State Council. Each five-year plan sets
overall agricultural, industrial, financial, and other economic and
social development targets. In implementing the five-year plans, the
State Planning Commission establishes specific annual production and
development targets, formulates and supervises the implementation of
annual plans designed to achieve those targets, and approves major
projects. Currently, there exists a five-year economic plan covering
the period from 1991 to 1995, and a ten-year plan which covers the
period to 2001.
Over the five-year period to 1993, the PRC experienced significant
economic growth stimulated by the government's continued implementation
of the economic reform policies initiated in 1978. Between 1988 and
1992, the annual real growth of gross national product was 8.1%. During
the same period, gross domestic product growth averaged 8.1% per year
and national income rose at an annual rate of 8.4%, supported by gains
in industrial and agricultural gross output of 15.6% and 4.9% per year,
respectively. Between 1988 and 1992, average income including non-wage
income, increased by 23% in urban areas and 17.9% in rural areas.
Foreign capital investment, including foreign loans and direct foreign
investment, increased from $10.2 billion in 1988 to $19.2 billion in
1992. During this same period, the aggregate of total imports and
exports increased from $102.8 billion to $165.6 billion.
The PRC, historically, has had an agrarian economy. In 1992,
approximately 74% of the labor force lived in rural areas. Since 1949,
the government has fostered growth in industry and the construction
sectors but recently, the services sector, including commerce,
transportation, telecommunications, entertainment, tourism, and
banking, has experienced substantial growth. In 1992, industry and
construction accounted for approximately 48% of the gross domestic
product; agriculture accounted for approximately 24%; and the services
sector accounted for 28%. In 1992, China was the world's eleventh
largest economy and the second largest in Asia in terms of GDP.
As a result of early initiatives to encourage growth through various
means during the early 1990's including foreign investment, the economy
"overheated" and several major cities experienced inflation of more
than 20%. The central government has taken steps to restrain the pace
of economic development and control inflation.
Some of the more recent measures instituted by the PRC central
government include:
General
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Development and implementation of a new legal framework. The concept
of contract law in the PRC is vague. Governance is sometimes by
regulations which are not publicized; a company may not know the rules
under which it may operate;
Passage of a new business incorporation law effective July 1, 1994;
Passage of a new income tax law on December 29, 1993, which was
applicable to foreign enterprises effective January 1, 1994;
Introduction of new foreign exchange controls which were effective
March 31, 1994.
Import and Trade
A proposal by the central government to implement a phased reduction of
import tariffs to an average of approximately 15%;
An undertaking by the government to release all documents about import
and export management and to apply only those and regulations that are
in the public domain as opposed to applying informal rules that are not
available to foreign companies.
Economic Structure
The principal participants in the economy are state-owned enterprises
which are wholly-owned by the people acting through the government;
collective enterprises owned by local groups for which the government
is not responsible for wages or similar obligations; businesses
operated by private individuals; joint-stock companies, including those
subject to varying degrees of state ownership; and enterprises owned at
least 25% by foreign individuals or companies. In 1992, state-owned
enterprises, located mostly in urban areas, accounted for approximately
48% of the PRC's total industrial gross output value, while
collectively-owned enterprises, predominantly located in rural areas,
accounted for approximately 38%.
Although increasing in absolute terms, gross industrial output value
contributed by state-owned enterprises has been declining in percentage
terms due to the rapid growth of other sectors. The fastest growing
sectors of the economy have been joint-stock companies, foreign
invested companies, and cooperative enterprises, with privately-owned
enterprises and collectively-owned enterprises also growing rapidly.
Township and village enterprises, a form of small-scale collectively-
owned enterprise developed primarily in townships and rural areas after
the 1978 reform, accounted for approximately 97% of the industrial
gross output value of all collectively-owned enterprises in 1992.
These have been a vibrant segment of the economy with the total gross
industrial output value increasing from 25% to 37% of the PRC total
over the period from 1988 to 1992.
On January 1, 1994, the PRC government implemented a managed-floating-
rate system under which the currency, called Renminbi, though still not
freely convertible, is allowed to float within limits against other
currencies based on market forces. Several new tax regulations came
into effect on January 1, 1994 that are designed to introduce
uniformity, simplicity, and fairness into the taxation system and to
clarify the fiscal relationships between the PRC government and state-
owned enterprises and between the central and local governments.
Foreign Investment
As part of its reopening to foreign trade in 1978, the PRC embarked
upon a policy of allowing foreign investors to establish certain types
of business enterprises in the PRC. Since then, a broad range of
related laws, administrative rules and regulations have been adopted
that provide a framework within which foreign investment activities can
be effectively conducted and regulated. Up to 1994, over 180,000
foreign enterprises have come into existence.
Such foreign enterprises have taken one of three forms; equity joint-
ventures, cooperative joint-ventures, and wholly foreign-owned
enterprises.
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Equity Joint-Ventures
An equity joint-venture is a limited liability company, incorporated
and registered in the PRC, with a foreign entity as one party and a PRC
entity as the other party. An equity joint-venture is a PRC legal
entity which has the right to own, use, and dispose of personal
property. The parties share in the investment risk and profits of the
joint-venture in proportion to their respective contribution in same.
At the end of the joint-venture period, the Chinese partner typically
has the option to purchase the foreign partners' share in the joint-
venture at fair market value.
Cooperative Joint-Ventures
In contrast to equity joint-ventures, cooperative joint-ventures are
not necessarily PRC legal entities, although many have such status. If
a cooperative joint-venture is not a PRC legal entity, each PRC and
foreign party is responsible for paying its own taxes on profits
derived from the venture and bears its own liability of risks and
losses. Parties may use equipment, materials, and services as
investments without such contribution being expressed in monetary terms
and accordingly, may determine any method of profit distribution as
they see fit. At the end of the cooperative joint-venture period, the
foreign partner typically turns over its interest in the venture to the
PRC partner who assumes complete control of the operations.
Wholly Foreign-Owned Enterprises
A wholly foreign-owned enterprise is owned completely by one or more
foreign investors using their own capital and does not involve any PRC
parties. The enterprise is a PRC legal entity under PRC law and must
generally be an enterprise, which either utilizes advanced technology
or which exports 50% or more of its products. The establishment of
wholly foreign-owned enterprises is restricted or prohibited in certain
specified business sectors such as media, trading companies, banking,
insurance and telecommunications.
The Chinese government affords flexibility to foreign parties in
managing such enterprises, including latitude in hiring and firing of
workers, in setting levels of wages and systems of bonuses and
allowances, in purchasing raw materials, and in marketing products.
General Issues
Attracting qualified staff for joint-venture operations can mean higher
wages and operating costs than existing domestic Chinese operations.
Nevertheless, compared to other developing countries, wage rates are
considerably lower for joint-venture operations and typically range
between $60 and $120 per month.
Joint-ventures usually involve a PRC entity and foreign partners and
typically are established to generate foreign exchange earnings.
Investments are controlled, resulting in a need for numerous documents,
studies, and certificates. Export market potential and technologically
advanced ventures tend to be favored. There can be restrictions on
involvement in some industries as well as on specific aspects of a
venture's operation. Trade, currency, and other regulations must be
observed and documented. Foreigners are usually expected to supply
capital, technical expertise, management skills, and technology. Tax
incentives, material sourcing, and foreign exchange exists for some
investments. The Chinese partner usually has supervisory authority
with respect to the joint-venture's operations, however, the joint-
venture company's Board of Directors decides all major issues,
including the determination of policy relating to the distribution of
profits.
Profit allocation is generally proportional to a partner's share of the
registered capital and distributed according to the contract and
articles of association of the venture. Most joint-ventures are for
periods ranging from ten to thirty years, with most being fifteen
years.
Business structures in the PRC use the concept of registered capital.
This is the value contributed by partners and registered with Chinese
authorities. Capital may be cash or, tangible or intangible assets,
and is treated similarly by all joint-venture types. Value placed upon
the capital depends upon the official exchange rate and the valuation
agreed to by the partners or their jointly appointed valuator.
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The fiscal year for Chinese regulatory reporting is the calendar year.
Accounting books and statements must be kept in Chinese. Unaudited
quarterly accounts and audited annual accounts must be submitted to the
authorities. General tax rates on profits for joint-ventures usually
are as follows:
Years one and two zero
Years three to five 16 2/3%
Beyond year five, taxes are usually 33% of profits although special
incentives exist for some locations, technologies, and industries.
Taxes may be refunded on profits reinvested in China. Losses may be
carried forward five years. Double taxation treaties exist with many
nations.
Foreign Exchange
All foreign exchange movements in and out are subject to the approval
of the People's Bank of China and the State Administration of Exchange
Control (SAEC). Foreign currency loans from overseas banks must be
registered with the SAEC. All foreign investments in the PRC must
establish both local currency (Rmb) and foreign exchange accounts with
the Bank of China. All receipts and disbursements of foreign exchange
must pass through these foreign exchange accounts.
Foreign investors may repatriate capital but must go through a clearing
process. Capital may be repatriated during operating periods if all
parties agree and if all prior years' losses have been cleared, taxes
have been paid, and contributions have been made to staff bonus and
welfare funds, the enterprise funds, and the general reserve fund.
Prior to 1994, not only were two legal currency exchange rates in
existence in China, but also, two units of currencies, the Foreign
Exchange Certificate (FEC) and the Renminbi (Rmb). Foreigners and/or
tourists entering China, had their foreign money exchanged for FEC's
using the Official Rate. This Rate also applied to most government
businesses. Commercial enterprises and all other trades, which account
for over 90% of the money transactions, were conducted using the Swap
Rate. In 1993, the Official Rate to the U.S. dollar was 5.6 FEC: $1.00
U.S., whereas the Swap Rate was 8.8 Rmb: $1.00 U. S.
Since January 1, 1994, the FEC has been discontinued and the official
unit of Chinese currency is the Rmb. The 'old' Official Rate is no
longer used and all currency conversions are now transacted at the Swap
Rate, which floats in a narrow range.
The unification of the two rate system into one is China's effort to
facilitate the move to have its currency traded in the international
monetary marketplace. As China strides to become a major international
trading partner, it is only a matter of time when its currency will
find a place in the world money market. In Hong Kong, the Rmb is now
readily accepted for value in many stores and convertible into most
world currencies at major financial institutions.
Zhanjiang , Guangdong Province
Zhanjiang is a sea side city with a natural deep water port. It is
located in the southwest part of Guangdong Province. Zhanjiang is one
of the fourteen economic development zones approved by the State
Council in Beijing. Zhanjiang lies in surrounded by three coastal
provinces of Guangdong, Hainan and Guangxi.
Zhanjiang offers offers the shortest sea route from China to countries
like Vietnam, Singapore and other Southeast Asia destinations.
Zhanjiang has its own airport and a railway system that connects it to
all parts of China.
Letters of Intents.
On April 14, 1999, the Company entered into a letter of intent to
acquire a majority interest in an Internet software development company
in Kuala Lumpur, Malaysia. The letter of intent gives the Company an
exclusive period to acquire The MediaShoppe SdnBhd subject to the
completion of the due diligence. The accounting firm of Hanifah Teo &
Associates in Kuala Lumpur have been engaged in the due diligence which
was completed in October, 1999. Negotiations on the acquisition terms
are currently being conducted.
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In June 1999, the Company entered into a letter of intent to purchase
60% of Zhanjiang Casonic Electronic Industrial Company Limited, a
telephone manufacturing company in Zhanjiang, China for approximately
$4,390,000. The Company has completed its due diligence and is
currently negotiating an adjustment to the purchase price. The closing
was originally set at September 30, 1999 but has been verbally extended
indefinitely. The Company intends to finance the purchase by issuing
convertible debentures and/or common shares.
In June 1999, the Company entered into a letter of intent subject to
certain conditions to purchase 60% of Zhanjiang Kingstone Cable
Enterprises Limited, a cable manufacturing company in Zhanjiang, China
for approximatley $3,500,000. The Company has completed its due
diligence and currently negotiating an adjustment to the purchase
price. The closing was originally set at September 30, 1999 but has
been verbally extended indefinitely. The Company intends to finance
the purchase by issuing convertible debentures and/or common shares.
Seasonal Nature of Business Activities. The Company's business
activities are not seasonal.
Item 2. Management's Discussion and Analysis or Plan of Operation
Trends and Uncertainties. Demand for the Company's products and
services will be dependent on, among other things, market acceptance of
the Company's concept, its proposed operations and general economic
conditions that are cyclical in nature. Inasmuch as a major portion of
the Company's activities will be the receipt of revenues from the sales
of its products and services, the Company's business operations, upon
commencement, may be adversely affected by the Company's inability to
obtain the necessary financing, competitors and prolonged recessionary
periods.
Capital and Source of Liquidity. The Company requires substantial
capital in order to meet its ongoing corporate obligations and in order
to continue and expand its current and strategic business plans.
For the six months ended October 31, 1999, the Company issued 500,000
common shares for $325,000 resulting in net cash provided by financing
activities of $325,000.
For the six months ended October 31, 1998, the Company received $234,500
from the sale of its common shares resulting in net cash provided by
financing activities of $234,500.
For the period from inception to April 30, 1999, the Company sold its
common shares for net proceeds of $670,000. As a result, the Company
had net cash provided by financing activities of $697,000 for the
period from inception to April 30, 1999.
The Company had net cash used in investment activities of $(263,905) in
its investment in Guangzhou South China Telecommunications Investment
Co.
For the three months ended October 31, 1999 and 1998, the Company had no
investing activities.
For the period from inception to April 30, 1999, the Company had no
investing activities
Results of Operations. For the six months ended October 31, 1999, the
Company had a net loss of $313,548. The Company did not have any
revenues for that same period. For the six months ended October 31,
1999, the Company paid bank changes of $171, consulting fees of
$34,000, legal and accounting expenses of $192,890, courier fees of
$163, wages of $76,000, travel and hotel of $6,403, telephone of
$1,322, exchange/gains of $863 and miscellaneous expenses of $1,738.
For the three months ended October 31, 1998, the Company had a net loss
of $76,923. The Company did not have any revenues for that same
period. For the six months ended October 31, 1998, the Company paid
bank changes of $84, general and administrative fees of $65,844 and
professional fees of $10,995.
For the period from inception to April 30, 1999, the Company had a net
loss of $740,706. The Company did not have any revenues for that same
period. For the period from inception to April 30, 1999, the Company
<PAGE>12
paid bank charges of $3,410, travel expenses of $43,963, professional
fees of $162,730, general expenses of $15,905, consulting fees of
$356,720 and other fees of $157,978.
Plan of Operation. The Company is not delinquent in any of its
obligations even though the Company has generated no operating
revenues. However, the Company continues its efforts to raise
capital. The Company does not currently have sufficient capital to
expand operations for the next twelve months and will have to raise
additional capital to meet its business objectives as well as 1934 Act
reporting requirements. The Company intends to pursue its business
plan and meet its reporting requirements utilizing cash made available
from advances revenues from its subsidiary and the private and future
public sale of its securities. The Company's management is of the
opinion that revenues from the sales of its securities will be
sufficient to pay its expenses until its business operations create
revenue.
Other than described above, the Company does not expect significant
changes in the number of employees during the next twelve months.
On a long-term basis, the Company's liquidity is dependent on
expansion of operations, revenue generation, additional infusions of
capital and potential debt financing. The Company management believes
that additional capital and debt financing in the short term will allow
it to commence its business plan and thereafter result in revenue and
greater liquidity in the long term. However, there can be no assurance
that the Company will be able to obtain the needed additional equity or
debt financing in the future.
Year 2000 Compliance Issues. The Company has not experienced any
material effects from any year 2000 issues
ITEM 3. DESCRIPTION OF PROPERTY.
The Company's executive offices consist of approximately 300 square
feet, located at 16th Floor, 25A, Fontana Gardens, Tai Hang Road,
Causeway Bay, Hong Kong. The offices are provided free of charge to
the Company by Zhanjiang Kingtone Cable Enterprises.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
There are currently 7,621,000 Common Shares outstanding. The
following tabulates holdings of shares and other securities of the
Company by each person who, subject to the above, at the date of this
prospectus, holds of record or is known by Management to own
beneficially more than 5.0% of the Common Shares and, in addition, by
all directors and officers of the Company individually and as a group.
Each named beneficial owner has sole voting and investment power with
respect to the shares set forth opposite his name.
Shareholdings
<TABLE>
<CAPTION>
Percentage of
Number & Class(1) Outstanding
Name and Address of Shares Common Shares
<S> <C> <C>
William W.M. Ko
16th Floor, 25A
Fontana Gardens
Causeway Bay, Hong Kong 312,000 4.23%
Jack Augsback
580 Village Boulevard
Suite 140
West Palm Beach, FL 33409 0 0%
Michael Tan
1344 Whitby Road
West Vancouver, BC Canada 377,000 5.11%
William Lai
Block J, 17F
International industrial Centre
Shatin, Fo Tan, NT
Hong Kong 500,000 6.78%
<PAGE>13
Directors and Officers
as a group
(2 persons) 312,000 4.23%
(1)Pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended, beneficial ownership of a security consists of sole or shared
voting power (including the power to vote or direct the voting) and/or
sole or shared investment power (including the power to dispose or
direct the disposition) with respect to a security whether through a
contract, arrangement, understanding, relationship or otherwise.
Unless otherwise indicated, each person indicated above has sole power
to vote, or dispose or direct the disposition of all shares
beneficially owned, subject to applicable unity property laws.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
Board of Directors. The following persons listed below have been
retained to provide services as director until the qualification and
election of his successor. All holders of Common Stock will have the
right to vote for Directors of the Company. The Board of Directors has
primary responsibility for adopting and reviewing implementation of the
business plan of the Company, supervising the development business
plan, review of the officers' performance of specific business
functions. The Board is responsible for monitoring management, and
from time to time, to revise the strategic and operational plans of the
Company. Directors receive no cash compensation or fees for their
services rendered in such capacity. The directors will serve until the
next annual meeting scheduled for the fourth quarter of 1999.
The Executive Officers and Directors are:
</TABLE>
<TABLE>
<CAPTION>
Name Position Term(s) of Office
<S> <C> <C>
William W.N. Ko, age 32 President, Chief Executive November 1998
Officer,
Secretary Chief Financial January 6, 2000
Director, Controller to present
Jack Augsback, age 56 Director July 1999
</TABLE>
William Ko and Allan Seet will devote approximately 100% of their time
to the business.
Mr. Ko is serving a five year term as a director. Mr. Augsback is
serving two year terms as directors.
RESUMES
Willliam W.N. Ko. From November 1998 to present, Mr. Ko has been
President, Chief Executive Officer and Director of the Company. From
April 1997 to April 1998, Mr. Ko was a Director of APAC
Telecommunications Corporation, a telecommunications company. From
January 1994 to April 1997, Mr. Ko was a Director and Manager of BC
Garment Factory Limited, a clothing distributor. Mr. Ko graduated in
1989 from the University of British Columbia, Vancouver, Canada with a
Bachelor of Commerce degree in Accounting. He obtained the Canadian
Certified Management Accountants designation in 1995.
Jack Augsback. Mr. Augsback has been a director of the Company since
July 1999. For the last five years, Mr. Augsback has been President
and Chief Executive Officer of Jack Augsback & Associates, Inc., Jack
Augsback & Co., Inc. and Managing Partner of Jack Augsback & Co. LLC.
These companies are all in the financial consulting and investor
relations business. Mr. Augsback graduated from Miami University with
a Bachelor of Science degree in Economics. He received a MBA in
Quantivie Economics from the Miami Graduate School of Business and MBAs
in Finance and Economics from the St. Moritz University.
Remuneration. During the year ended April 30, 1999, the Company was
charged $36,000 for management services by William Ko, an officer and a
director of the Company, of which $9,000 was payable at year end. In
July 1999 the Company entered into an employment contract with this
individual to continue providing services to the Company for a minimum
<PAGE>14
of $143,000 per annum for five years. The contract may be terminated
by either party with 6 months notice. Under the terms of employment,
Mr. Ko is entitled to 500,000 stock options annually for 5 years.
These options are exercisable at $.50 per share. The option to
acquire shares, if not exercised in the year granted, can be carried
forward to subsequent years of the employment contract.
During the year ended April 30, 1999, the Company was charged $32,000
for management services by Michael Tan, a shareholder of the Company,
of which $8,000 was payable at year end. in July 1999, the Company
entered into an employment agreement with this individual to continue
providing management services to the Company for a minimum of $104,000
per annum for five years. The contract may be terminated by either
party with six months notice. Under the terms of employment, the
shareholder is entitled to 500,000 stock options annually for five
years. These options are exercisable at $.50 per share. The option
to acquire shares, if not exercised in the year granted, can be carried
forward to subsequent years of the employment contract.
Jack Augsback, a director of the Company shall receive 225,000 stock
options to purchase shares of the Company upon assisting the Company in
raising $4,000,000 in financing. The stock options shall be
exercisable at $.50 per share for a period of five years.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Management Contract. On May 12, 1998, the Company entered into a
management contract with Joist Management Ltd. under which Joist
Management Ltd. would provide administrative and general office
services to the Company at a rate of $10,000 per month until May 31,
1999, unless terminated with 5 days notice by either party. Current
management believes none of the shareholders, directors or officers of
Joist Management Ltd. are shareholders of Belair. In November 1998,
the contract was terminated. The Company paid a total of $120,000 to
Joist Management Ltd. from may 1998 to November 1998 for its management
services.
In September 1999, a director lent the Companyu approximately $32,000.
The loan is repayale on demand and bears interest at 8% per annum.
The loan is convertible at the director's option into common shares of
the Company at $0.60 per share.
Consulting Fees to Shareholders. In November 1998, the Company paid
consulting fees totally $97,500 to two shareholders of the Company.
The shareholders provided services to the Company.
During the year ended April 30, 1999, the Company paid a consulting fee
of $50,000 to APAC Telecommunications Corporation, a company with
common shareholders and directors.
During the year ended April 30, 1999, the Company paid a fee of
$157,978 to Joist Management Ltd., a company which current management
believes may have common shareholders or be related to prior management
or connect to Joist Management Ltd.
On April 30, 1999, the Company purchase 100% of Bickmore Holdings, Inc.
from a relative of Wiliam Ko, a director of the Company for $1.00.
Bickmore holdings, Inc. did not have any assets, liabilities, revenue
or expenses as of April 30, 1999.
On November 10, 1998, the Company entered into an agreement with Jack
Augsback & Company, a company controlled by Jack Augsback who become a
director of the Company on July 21, 1999. Under this agreement, Jack
Augsback and Company would provide sources of corporate financing to
the Company in exchange for the payment of finders fees on the
successful completion of any financing transactions brought in by Jack
Augsback and Company. The agreement terminates on December 31, 1999
ITEM 8. DESCRIPTION OF SECURITIES
Qualification. The following statements constitute brief summaries of
the Company's Certificate of Incorporation and Bylaws, as amended.
Such summaries do not purport to be complete and are qualified in their
entirety by reference to the full text of the Certificate of
Incorporation and Bylaws.
<PAGE>15
Common Shares. The Company's articles of incorporation authorize it to
issue up to 30,000,000 Common Shares, $.001 par value per Common Share.
All outstanding Common Shares are legally issued, fully paid and non-
assessable.
Liquidation Rights. Upon liquidation or dissolution, each outstanding
Common Share will be entitled to share equally in the assets of the
Company legally available for distribution to shareholders after the
payment of all debts and other liabilities.
Dividend Rights. There are no limitations or restrictions upon the
rights of the Board of Directors to declare dividends out of any funds
legally available therefor. The Company has not paid dividends to date
and it is not anticipated that any dividends will be paid in the
foreseeable future. The Board of Directors initially may follow a
policy of retaining earnings, if any, to finance the future growth of
the Company. Accordingly, future dividends, if any, will depend upon,
among other considerations, the Company's need for working capital and
its financial conditions at the time.
Voting Rights. Holders of Common Shares of the Company are entitled
to voting rights. Holders may cast one vote for each share held at all
shareholders meetings for all purposes.
Other Rights. Common Shares are not redeemable, have no conversion
rights and carry no preemptive or other rights to subscribe to or
purchase additional Common Shares in the event of a subsequent
offering.
Transfer Agent. Interwest Transfer Company, Inc., Salt Lake City, Utah
acts as the Company's transfer agent.
<PAGE>16
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock began trading on November 10, 1998. Until
October 7, 1999, the Company's Common Stock was listed for trading
under the symbol "BLAI" in the over-the-counter market on the OTC
Bulletin Board maintained by the NASD. After that date, the Company's
Common Stock has been listed on the "pink sheets."
The following table sets forth the range of high and low bid quotations
for the Company's common stock for each quarter since the Company
commenced trading as reported on the NASD Bulletin Board by the
Company's market makers. The quotations represent inter-dealer
prices without retail markup, markdown or commission, and may not
necessarily represent actual transactions.
<TABLE>
<CAPTION>
Quarter Ended High Bid Low Bid
<S> <C> <C>
January 31, 1999 - -
April 30, 1999 $1.50 $2.3125
July 31, 1999 $.625 $.6875
October 31, 1999 $.375 $.375
January 31, 2000 $.375 $.375
</TABLE>
The Company has never paid any cash dividends nor does it intend, at
this time, to make any cash distributions to its shareholders as
dividends in the near future.
As of October 31, 1999, the number of shareholders of the Company was
44
ITEM 2. LEGAL PROCEEDINGS
The Company is not a party to any legal proceedings nor is the Company
aware of any disputes that may result in legal proceedings.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
During the Company's two most recent fiscal years or any later interim
period, there have been no changes in or disagreements with the
Company's principal independent accountant or a significant
subsidiary's independent accountant.
<PAGE>17
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
At inception, the Company authorized the issuance of 1,500,000 Common
Shares at $.001 per share (an aggregate of $1,500 cash) to the
following:
Name Amount of Shares
Terry Woo 500,000
Haliun Hongorzul 250,000
Tak Hing Lam 250,000
Siu Hing Chan 250,000
Chiam Ai Ngoh 250,000
These issuances were made pursuant to an exemption from registration
under Section 4(2) of the Securities Act of 1933. These issuances
were made to sophisticated investors who had an ongoing relationship
with the Company.
During May 1998, the Company pursued an offering of 4,000,000 Common
Shares at $.01 per Common Share under Rule 504 of Regulation D. The
offering was approved and/or exempted by the required states and the
appropriate Form D was filed with the Securities and Exchange
Commission. The Company received gross proceeds of $40,000 cash.
Name Amount of Shares
Enrique Yon 260,000
Khin Chong 250,000
Hsiao Wei Li 250,000
Kam Chun Hui 260,000
Sui Tong Chan 260,000
Kwok Tim Leung 260,000
Chi Jen Chen 250,000
<PAGE>17
Lillian Wong 230,000
Tun Sze Tang 230,000
Kum Peng Lee 230,000
Richard Tan 230,000
Choilon Khulan 260,000
Kar Chun Chow 260,000
Rita Meiyi Fang 260,000
Anna Fon 250,000
Sodgerel Suren 260,000
During July 1998, the Company pursued an offering of 67,000 Common
Shares at $3.00 per Common Share under Rule 504 of Regulation D. The
offering was approved and/or exempted by the required states and the
appropriate Form D was filed with the Securities and Exchange
Commission. The Company received gross proceeds of $201,000 cash.
Name Amount of Shares
Mun Soo Chun 2,000
Wendy Yu 2,000
Joanne Wood 2,000
Justina Mark 2,000
Benjamin Ka Yuen Cheng 3,000
Hitomi Gilliam 1,000
Sue Kah Wone 5,000
Suyan Ponich 3,000
Richard Hung Fai Kwan 3,000
Kum Peng Lee 7,000
Chi Jen Chen 7,000
Bailey Wang 8,000
Lillian Wong 8,000
Philip Wong 8,000
Dr. Shuryo Nakai 1,000
Kam Chun Hui 2,000
KY Matthews 3,000
In December 1998, the Company pursuant an offering of 130,000 Common
Shares at $2.80 per Common Share under Rule 504 of Regulation D. The
offering was approved and/or exempted by the required states and the
appropriate Form D was filed with the Securities and Exchange
Commission. The Company received gross proceeds of $364,000
<PAGE>18
Name Amount of Shares
Lim Cher Kia 100,000
Anthony Heng 10,000
Tan Tian Hin Jerry 20,000
On June 1999, the Company issued 50,000 Common Shares for cash proceeds
of $112,500 to Lim Chai Huat. This issuance was made pursuant to an
exemption from registration under Section 4(2) of the Securities Act of
1933. The issuance was made to a sophisticated investor who had an
ongoing relationship with the Company.
On June 28, 1999, the Company issued 250,000 Common Shares to Shenzhen
Dragon Investments at $2.00 per share ($500,000) in relation to an
agreement entered into by its wholly owned subsidiary, Tampa Bay
Investments, Limited. These shares are currently held in escrow
pending completion of the acquisition of a China Telecommunications
Company. This issuance was made pursuant to an exemption from
registration under Section 4(2) of the Securities Act of 1933. The
issuance was made to sophisticated investors who had an ongoing
relationship with the Company.
On June 28, 1999, the Company issued 624,000 Common Shares to William
Ko and Tardjo Halim (312,000 each) as consideration for Mr. Ko and
Tardjo Halim utilizing a portion of their shares as payment to
unrelated third parties for services to be rendered to the Company.
This issuance was made pursuant to an exemption from registration under
Section 4(2) of the Securities Act of 1933. These issuances were made
to sophisticated investors who had an ongoing relationship with the
Company.
On July 21, 1999, 500,000 Common Shares were issued to William Lai as
partial payment on the possible acquisition of the Zhanjiang Casonic
Electronic industrial Company Limited and Zhanjiang Kingstone Cable
Enterprises Limited.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Indemnification. The Company shall indemnify to the fullest extent
permitted by, and in the manner permissible under the laws of the State
of Nevada, any person made, or threatened to be made, a party to an
action or proceeding, whether criminal, civil, administrative or
investigative, by reason of the fact that he is or was a director or
officer of the Company, or served any other enterprise as director,
officer or employee at the request of the Company. The Board of
Directors, in its discretion, shall have the power on behalf of the
Company to indemnify any person, other than a director or officer, made
a party to any action, suit or proceeding by reason of the fact that
he/she is or was an employee of the Company.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the
Company, the Company has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Company of expenses incurred or paid by
a director, officer or controlling person of the Company in the
successful defense of any action, suit or proceedings) is asserted by
such director, officer, or controlling person in connection with any
securities being registered, the Company will, unless in the opinion of
its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issues.
INDEMNIFICATION OF OFFICERS OR PERSONS CONTROLLING THE CORPORATION FOR
LIABILITIES ARISING UNDER THE SECURITIES ACT OF 1933, IS HELD TO BE
AGAINST PUBLIC POLICY BY THE SECURITIES AND EXCHANGE COMMISSION AND IS
THEREFORE UNENFORCEABLE.
<PAGE>19
PART F/S
The following financial statements required by Item 310 of Regulation
S-B are furnished below:
Belair Enterprises, Inc. Unaudited Balance Sheet dated October 31, 1999
Belair Enterprises, Inc. Unaudited Statement of Operations for the
three months ended October 31, 1999 and 1998
Belair Enterprises, Inc. Unaudited Statement of Cash Flows for the
three months ended October 31, 1999 and 1998
Belair Enterprises, Inc. Notes to Unaudited Consolidated Financial
Statements
Independent Auditor's Report dated October 18, 1999, except as to Note
6(e) which is as to November 18, 1999
Consolidated Balance Sheets - April 30, 1999
Consolidated Statement of Operations for the year ended April 30, 1999
Consolidated Statement of Changes In Stockholders' Equity for the year
ended April 30, 1999
Consolidated Statement of Cash Flows for the Year Ended April 30, 1999
Notes to Consolidated Financial Statements
<PAGE>20
Balance Sheet
October 1999
Assets
Current Assets
Cash on Hand $ 883
Advances to Bickmore Holdings 500
Advances to Casonic 11,938
Advances to Tampa Bay Investments 705
Interest Receivable 2
Investment in South China Tele 313,905
---------
Total Current Assets 327,933
---------
Total Assets 327,833
=========
Liabilities
Current Liabilities 357,817
---------
Total Liabilities 357,817
Equity
Shareholders' Equity
Share Capital - Common Shares 6,247
Contributed surplus 1,015,754
----------
Total Shareholders' equity 1,022,001
Retained Earnings (738,437)
Current Year Earnings (313,545)
---------
Total Equity $(29,981)
---------
Total Liability and Equity $327,833
=========
<PAGE>21
Belair Enterprises, Inc.
Statement of Operations
Six Months Ended October 31, 1999 and 1998
(in U.S. Dollars)
1999 1998
Income $0.00 $0.00
Cost of Sales 0.00 0.00
------ ------
Gross Profit $0.00 0.00
Expenses
Bank charges 171 84
Professional fees 192,890 10,995
General and
administrative 120,489 65,844
-------- -------
Total Expenses $313,550 76,923
-------- -------
Operating Profit ($313,550) ($76,923)
Other Income
Interest Income 2 0
--------- ---------
Net Profit/(Loss) ($313,548) ($76,923)
======== ========
Weighted average loss
per share $(0.01) $(0.01)
<PAGE>22
Belair Enterprises, Inc.
Statement of Cash Flow
Six Months Ended October 31, 1999 and 1998
(in U.S. Dollars)
1999 1998
Operating Activities
Net loss for the period $(313,548) $(76,923)
Changes in noncash working
capital balances
Relating to operations
Accounts payable 280,117 17,100
--------- -------
Cash used in operating activities (33,431) (59,823)
--------- -------
Investment Activities
Investment in Guangzhou South China
Telecommunications Investment Co (313,905) -
--------- ---------
Cash used in investment activities (313,905) -
Financing Activities
Common shares issued and allotted 325,000 234,500
-------- -------
Cash provided by financing activities 325,000 234,500
Net increase in cash for the period 22,336 174,677
------- -------
Cash beginning of period 174,677 -
------- ------
Cash end of period 22,336 174,677
------- ------
<PAGE>23
BELAIR ENTERPRISES, INC.
(Incorporated under the laws of Nevada)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 31, 1999
(In U.S. Dollars)
1. INCORPORATION AND OPERATIONS
Belair Enterprises, Inc. ("Belair") was incorporated on May 12, 1998 in
Nevada, U.S.A.
Belair is currently in the development stage and is proposing to engage in
the telecommunications business. Subsequent to April 30, 1999, Belair
entered into several agreements to develop its business in the
telecommunications industry in the Peoples' Republic of China and South
East Asia. (Note 6)
2. CONSOLIDATED FINANANCIAL STATEMENTS
These consolidated financial statements include the accounts of the Belair
and its wholly owned subsidiary, Bickmore Holdings Inc., a Commonwealth of
the Bahamas company and Tampa Bay Investments Ltd., a British Virgin Islands
company.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Foreign currency translation
Monetary assets and liabilities are translated at the rate prevailing at the
balance sheet date. Non monetary assets and liabilities are translated at
the rates prevailing at the respective transaction date, revenue and expenses
are translated at an average rate. Foreign currency gains and losses arising
on translation are included in income.
Going Concern
These consolidated financial statements have been prepared on the basis of
generally accepted accounting principles consolidated in Canada as applicable
to a going concern which assume that Belair will realize its assets and
discharge its liabilities in the normal course of business. Belair's ability
to meet its obligations and develop and maintain its operations is contingent
upon successful completion of additional financial arrangements and the
continuing support of its creditors.
Financial Instruments
The financial instruments of Belair consist of cash, short-term deposits,
accounts receivable, bank indebtedness and accounts payable and accrued
liabilities. Unless otherwise noted, it is management's opinion that Belair
is not exposed to significant currency or credit risks arising from these
financial instruments. The fair values of these consolidated financial
instruments approximate their carrying values, unless otherwise noted.
4. SHARE CAPITAL
a) Authorized:
30,000,000 common shares with par value of $0.001 each
b) Issued or allotted:
<TABLE>
<CAPTION>
Number of Total Share Capital Contributed
Shares Proceeds at Par Value Surplus
$ $ $ $
<S> <C> <C> <C> <C>
Issue of common shares on
organization of company for
cash proceeds 1,500,000 1,500 1,500 -
Issue of common shares for
cash proceeds 4,000,000 40,000 4,000 36,000
Issue of common shares for
cash proceeds 67,000 201,000 67 200,933
Issue of common shares for
cash proceeds 130,000 364,000 130 363,870
Allotted common shares
for cash proceeds 50,000 112,500 50 112,450
<PAGE>24
Issue of common shares
For cash proceeds 500,000 325,000 500 324,500
Issue of common shares
For payment of factory
Acquisitions 500,000 - - -
Issue for Payment of South China
Telecommunications 250,000 - - -
Issue of common shares
For restricted shares 624,000 - - -
--------- --------- ----- ---------
Subtotal 7,621,000 1,044,000 6,247 1,037,753
Less share issuance costs (8,000) (8,000)
Less finders fee (14,000) (14,000)
--------- --------- ----- ---------
Balance - October 31, 1999 7,621,000 1,022,000 6,247 1,015,753
</TABLE? ========= ========= ===== =========
4. RELATED PARTY TRANSACTIONS
In September, 1999, a director lent Belair approximately $32,000. The
loan is repayable on demand and bears interest at 8% per annum. The loan is
convertible at the director's option into common shares of Belair at $0.60
per share.
On January 5, 2000, a proposed merger with Southland Financial, Inc.
was called off due to conditions on the merger agreement that could not
be fulfilled.
SUBSEQUENT EVENTS
Belair is currently negotiating a private placement to issue 10,000,000
common shares for cash proceeds of $0.50 per share (total $5,000,000), less a
finders fee of approximately $300,000. As at October 31 , 1999, the private
placement was not yet complete.
6. YEAR 2000 ISSUE
Most entities depend on computerized systems and, therefore, are exposed
to the Year 2000 conversion risk which, if not properly addressed, could
effect the entity's ability to conduct normal business operations.
Management is addressing this issue; however, given the nature of this
risk, it is not possible to be certain that all aspects of the Year 2000
issue effecting Belair and those with whom it deals such as customers,
suppliers or other third parties, will be fully resolved without adverse
impact on Belair's operations.
<PAGE>25
CONSOLIDATED FINANCIAL STATEMENTS
BELAIR ENTERPRISES, INC.
April 30, 1999
Comments by Auditors for U.S. Readers
on Canada-U.S. Reporting Difference
To: The Shareholders of Belair Enterprises, Inc.
In the United States, reporting standards for auditors require the
addition of an explanatory paragraph (following the opinion paragraph)
when the consolidated financial statements are affected by conditions and
events that cast substantial doubt on the Company's ability to continue as
a going concern, such as those described in Note 3 to the consolidated
financial statements of Belair Enterprises, Inc. for the period from May
12, 1998 (date of incorporation) to April 30, 1998. Our report to the
shareholders dated October18, 1999, except as to Note 6(e) which is as of
November 18, 1999 is expressed in accordance with Canadian reporting
standards which do not permit a reference to such events and conditions in
the auditors' report when these are adequately disclosed in the
consolidated financial statements.
Vancouver, Canada
October 18, 1999, Chartered Accountants
except as to Note 6(e) which
is as to November 18, 1999
<PAGE>26
AUDITORS REPORT
To: The Shareholders of Belair Enterprises, Inc.
We have audited the consolidated balance sheet of Belair Enterprises, Inc.
as at April 30, 1999 and the consolidated statements of operations and
deficit, and cash flows for the period from May 12, 1998 (date of
incorporation) to April 30, 1999. These consolidated financial statements
are the responsibility of the company's management. Our responsibility is
to express an opinion on these consolidated financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards in Canada. Those standards require that we plan and perform an
audit to obtain reasonable assurance whether the consolidated financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also
includes assessing the accounting principles used an significant estimates
made by management, as well as evaluating the overall consolidated
financial statement presentation.
In our opinion, these consolidated financial statements present fairly, in
all material respects, the financial position of the company as at April
30, 1999 and the results of its operations and the changes in its
financial position for the period from May 12, 1998 (date of
incorporation) to April 30, 1999 then ended in accordance with generally
accepted accounting principles in Canada.
Vancouver, Canada
October 18, 1999, Chartered Accountants
except as to Note 6 (e) which is
as of November 18, 1999
<PAGE>27
BELAIR ENTERPRISES, INC.
(Incorporated under the laws of Nevada)
CONSOLIDATED BALANCE SHEET
As at April 30,
(In U.S. Dollars)
1999
$
ASSETS
Current
Cash 1,236
Accounts receivable 1,738
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities 45,444
------
45,444
SHAREHOLDERS' EQUITY
Share capital (note 4) 5,747
Contributed surplus (note 4) 691,253
Deficit (740,706)
--------
(43,706)
--------
1,738
=======
Subsequent events (note 6)
See accompanying notes
<PAGE>28
BELAIR ENTERPRISES, INC.
(Incorporated under the laws of Nevada)
CONSOLIDATED STATEMENT OF OPERATIONS AND DEFICIT
Period from May 12, 1998 (date of incorporation) to April 30, 1999
(In U.S. Dollars)
1999
$
EXPENSES
Bank charges 3,410
Consulting fees (note 5(a)-(e)) 356,720
General and administrative 15,905
Other fee (note 5 (f)) 157,978
Professional fees 162,730
Travel 43,963
--------
740,706
========
Net loss for the period and deficit,
end of period (740,706)
========
Weighted average loss per share $ 0.14
========
See accompanying notes
<PAGE>29
BELAIR ENTERPRISES, INC.
(Incorporated under the laws of Nevada)
CONSOLIDATED STATEMENT OF CASH FLOW
Period from May 12, 1998 (date of incorporation) to April 30, 1999
(In U.S. Dollars)
1999
$
OPERATING ACTIVITIES
Net loss for the year (740,706)
Changes in non-cash working capital balances
relating to operations
Accounts receivable (502)
Accounts payable and accrued liabilities 45,444
-------
Cash used in operating activities (695,764)
FINANCING ACTIVITIES
Common shares issued and allotted 697,000
-------
Cash provided by financing activities 697,000
Net increase in cash and cash, ended of period 1,236
=======
See accompanying notes
<PAGE>30
BELAIR ENTERPRISES, INC.
(Incorporated under the laws of Nevada)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 1999
(In U.S. Dollars)
1. INCORPORATION AND OPERATIONS
Belair Enterprises, Inc. ("Belair") was incorporated on May 12, 1998 in
Nevada, U.S.A.
Belair is currently in the development stage and is proposing to engage in
the telecommunications business. Subsequent to April 30, 1999, Belair
entered into several agreements to develop its business in the
telecommunications industry in the Peoples' Republic of China and South
East Asia. (Note 6 (a), (b) and (c)).
2. CONSOLIDATED FINANANCIAL STATEMENTS
These consolidated financial statements include the accounts of Belair and
its wholly owned subsidiary, Bickmore Holdings Inc., a Commonwealth of the
Bahamas company.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Foreign currency translation
Monetary assets and liabilities are translated at the rate prevailing at the
balance sheet date. Non-monetary assets and liabilities are translated at
the rates prevailing at the respective transaction date, revenue and expenses
are translated at an average rate. Foreign currency gains and losses arising
on translation are included in income.
Going Concern
These consolidated financial statements have been prepared on the basis of
generally accepted accounting principles consolidated in Canada as applicable
to a going concern which assume that Belair will realize its assets and
discharge its liabilities in the normal course of business. Belair's ability
to meet its obligations and develop and maintain its operations is contingent
upon successful completion of additional financial arrangements and the
continuing support of its creditors.
Financial Instruments
The financial instruments of Belair consist of cash, short-term deposits,
accounts receivable, bank indebtedness and accounts payable and accrued
liabilities. Unless otherwise noted, it is management's opinion that Belair
is not exposed to significant currency or credit risks arising from these
financial instruments. The fair values of these consolidated financial
instruments approximate their carrying values, unless otherwise noted.
<PAGE>31
BELAIR ENTERPRISES, INC.
(Incorporated under the laws of British Columbia)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 1999
(In U.S. Dollars)
4. SHARE CAPITAL
a) Authorized:
30,000,000 common shares with par value of $0.001 each
b) Issued or allotted:
Number of Total Share Capital Contributed
Shares Proceeds at Par Value Surplus
$ $ $ $
Issue of common shares on
organization of company for
cash proceeds 1,500,000 1,500 1,500 -
Issue of common shares for
cash proceeds 4,000,000 40,000 4,000 36,000
Issue of common shares for
cash proceeds 67,000 201,000 67 200,933
Issue of common shares for
cash proceeds 130,000 364,000 130 363,870
Allotted common shares
for cash proceeds 50,000 112,500 50 112,450
Subtotal 5,747,000 719,000 5,747 713,253
Less share issuance costs (8,000) (8,000)
Less finders fee (14,000) (14,000)
---------- ------- ------ -------
Balance - April 30, 1999 5,747,000 697,000 5,747 691,253
========== ======= ====== =======
The 50,000 common shares allotted at April 30, 1999 were issued on June 7,
1999.
a) Subsequent to April 30, 1999, Belair issued a total of 1,424,000
additional common shares as follows:
i) On June 28, 1999, 250,000 restricted common shares were issued at
$2.00 per shares (total $500,000) as Earnst money as part of a potential
investment (note 6 (a)).
ii) On June 13, 1999, Belair entered in to an agreement with a company
in which the company would provide advertising services worth $100,000 in
exchange for 133,333 free trading common shares and 133,333 restricted
common shares. On July 19, 1999, 50,000 of the restricted common shares
were issued for the equivalent of $18,750 of services. These shares are
restricted from trading for one year from date of issuance. Of the
remaining 216,666 common shares to be issued a portion has been issued
from the 520,000 shares as discussed in note 4(c)(iii).
iii) On June 28, 1999, two individuals exchanged 260,000 free trading
shares (total 520,000 shares) on a 1.2 basis for 312,000 restricted
trading shares (total 624,000 shares). One of these individuals is a
director of the company. Belair transferred the 520,000 free trading
shares to an individual who subsequently became a director of Belair, to
exchange the free trading shares for services provided to Belair.
Management has advised that none of these services were in connection with
the offer or sale of securities in a capital raising transaction. As at
October 18, 1999, a portion of these free trading shares had been sold or
reissued to various companies and individuals (see note 4(c) (iii)).
iv) On July 21, 1999, 500,000 restricted common shares were issued as
partial payment on the possible acquisition of the Zhanjang Casonic
Electronic Industrial Company Limited and Zhanjiang Kingstone Cable
Enterprises Limited (note 6(b) and 6(c)) at $0.65 per share. The shares
are restricted from trading for one year from date of issuance. The
shares are not refundable should the acquisition not be completed.
a) Subsequent to April 30, 1999, Belair allotted 500,000 common shares
to an individual who is connected with the Zhangjiang Casonic Electronic
Industrial Company Limited and Zhangjiang Kingstone Cable Enterprises
Limited for cash proceeds of $0.65 per share (total $325,000). As at
October 18, 1999, these shares had not been issued.
<PAGE>32
b) Stock Options (note 5 (c) and (d).
5. RELATED PARTY TRANSACTIONS
a) On May 12, 1998, Belair entered into a management contract with Joist
Management Ltd. under which Joist Management Ltd. would provide
administrative and general office services to Belair at a rate of $10,000
per month until May 31, 1999, unless terminated with 5 days notice by
either party. Current management believes none of the shareholders,
directors or officers of Joist Management Ltd. are shareholders of Belair.
In November 1998, the contract was terminated. Belair paid a total of
$120,000 to Joist Management Ltd. from May 1998 to November 1998 for its
management services.
b) In November 1998, Belair paid consulting fees totalling $97,500 to two
shareholders.
c) During the year, Belair was charged $36,000 for management services by
a director of the company, of which $9,000 was payable at year-end. In
July 1999, Belair entered into an employment contract with this individual
to continue providing services to Belair for a minimum of $143,000 per
annum for five year. The contract may be terminated by either party with
6 months notice. Under the terms of employment, the director is entitled
to 500,000 stock options annually for 5 years. These options are
exercisable at $0.50 per share. The option to acquire shares if not
exercised in the year granted, can be carried forward to subsequent years
of the employment contract.
d) During the year, Belair was charged $32,000 for management services
by a shareholder of the company, of which $8,000 was payable at year end.
In July 1999, Belair entered into an employment agreement with this
individual to continue providing management services to Belair for a
minimum of $104,000 per annum for five years. The contract may be
terminated by either party with 6 months notice. Under the terms of
employment, the shareholder is entitled to 500,000 stock options annually
for 5 years. These options are exercisable at $0.50 per share. The
option to acquire shares if not exercised in the year granted, can be
carried forward to subsequent years of the employment contract.
e) During the year, Belair paid a consulting fee of $50,000 to a company
with common shareholders and directors.
f) During the year, Belair reimbursement $157,978 to one of its
directors which he paid to several individuals for undetermined services
on the request of the prior management. The director believes that these
individuals may be related to prior management or be connected to Joist
Management Ltd. (see Note 5(a)).
g) On April 30, 1999, Belair purchased 100% of Bickmore Holdings Inc.
from a relative of a director of Belair for $1. Bickmore Holdings Inc.
did not have any assets, liabilities, revenue or expenses as at April 30,
1999.
h) On November 10, 1998, Belair entered into an agreement with a company
controlled by an individual who became a director of Belair on July 21,
1999. Under this agreement, the company would provide sources of
corporate financing to Belair in exchange for the payment of finders fees
on the successful completion of any financing transactions this company
bring in. The agreement terminates on December 31, 1999.
6. SUBSEQUENT EVENTS
a) In May 1999, Belair incorporated a wholly owned subsidiary, Tampa Bay
Investments Limited, a British Virgin Island company. In August 1999 Belair
entered into an agreement through Tampa Bay Investments Limited, to acquire a
49% interest for $11,500,000, with an option to acquire a further 2% interest
for no more than $1,500,000, in a China telecommunications company. The
agreement does not have a specific closing date as a number of conditions
must first be completed. On June 28, 1999 Belair issued 250,000 restricted
common shares at $2 per share (total $500,000) as Earnst money under the
agreement. These shares are currently held in safe keeping by Belair's
lawyers. Should the investment not be completed, the Earnst money is fully
refundable.
Belair also has advanced $315,000 to October 18, 1999 as partial payment on
the investment. Should the investment not be completes, the $315,000 is
fully refundable.
<PAGE>33
In addition, Belair management anticipates paying a finders fee on the
completion of the agreement to a maximum of $2,000,000. Management
maintains that no agreement exists regarding this possible finders fee.
Belair management also anticipates paying an additional $10,000,000 in
common shares at a price in the range of $2.00 to $2.50 per share and may
also lend the China telecommunication company $3,000,000 at unknown terms.
The terms of both the finders fees, additional $10,000,000 common shares
and $3,000,000 loan are still under negotiations. Management of Belair
maintains that both the additional $10,000,000 in common shares and the
$3,000,000 loan form an integral part of Belair's
ability to complete the original agreement to purchase the 49% interest in
the company and the original agreement will not be completed until these
additional items are resolved.
b) In June 1999, Belair entered into an agreement to purchase 60% of
Zhanjiang Casonic Electronic Industrial Company Limited, a telephone
manufacturing company in Zhanjiang, China, for approximately $4,390,000.
Belair has completed its due diligence and consequently is in the process of
negotiating an adjustment to the purchase price. The agreement was to be
completed by September 30, 1999 but has been verbally extended indefinitely.
c) In June 1999, Belair entered into an agreement subject to certain
conditions to purchase 60% of Zhanjiang Kingstone Cable Enterprises Limited,
a cable manufacturing company in Zhanjiang, China, for approximately
$3,500,000. Belair has completed its due diligence and consequently is in
the process of negotiating a reduction of the purchase price. The agreement
was to be completed by September 30, 1999 but has been verbally extended
indefinitely.
d) In September, 1999, a director lent Belair approximately $32,000. The
loan is repayable on demand and bears interest at 8% per annum. The loan is
convertible at the director's option into common shares of Belair at $0.60
per share.
e) On November 18, 1999, Belair released a news report that Belair had
finalized a Memorandum of Intent pending both shareholders and directors
approval, for Southland Financial, Inc. ("Southland") to acquire Belair and
its telecommunications assets in the People's Republic of China in exchange
for Southland shares. A formal agreement has not been finalized.
7. YEAR 2000 ISSUE
Most entities depend on computerized systems and, therefore, are exposed
to the Year 2000 conversion risk which, if not properly addressed, could
effect the entity's ability to conduct normal business operations.
Management is addressing this issue; however, given the nature of this
risk, it is not possible to be certain that all aspects of the Year 2000
issue effecting Belair and those with whom it deals such as customers,
suppliers or other third parties, will be fully resolved without adverse
impact on Belair's operations.
<PAGE>34
PART III
ITEM 1. INDEX TO EXHIBITS
(3) Charter and By-Laws
(4) Instruments defining the rights of security holders
(10) Material Contracts
(27) Financial Data Schedule
ITEM 2. DESCRIPTION OF EXHIBITS
(3.1) Articles of Incorporation
(3.2) Bylaws
(4) Common Stock Certificate
(10) Agreement between Kartek International Holdings Limited,
Zhanjiang Post Bureau, Zhanjiang Telecommunications Bureau
and Bickmore Holdings, Inc. dated June 22, 1999.
(27) Financial Data Schedule
<PAGE>35
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized.
Belair Enterprises, Inc., Inc.
Date: February 25, 1999 /s/ William W.M. Ko
-------------------------
By: William W.N. Ko, President
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<ALLOWANCES> 0
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<CURRENT-ASSETS> 327,833
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0
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