UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report March 31, 2000
Bluepoint Linux Software Corp.
------------------------------
(Exact name of Registrant as specified in charter)
Indiana 0-25797 35-2070348
------- ------- ----------
(State or other jurisdiction (Commission (I.R.S. Employee
of incorporation) File Number) Identification No.)
A301, East-2, SEG Science & Industry Park, Huaqiang Road North,
Shenzhen, Guangdong Province, China
(Address of principal executive offices)
(Address of principal executive offices)
Registrant's telephone number, including area code: 011867553763731
SECURITIES REGISTERED PURSUANT TO SECTION 12(B)OF
THE SECURITIES EXCHANGE ACT OF 1934:
Title of Each Class Name of Each Stock Exchange on Which Registered
------------------- -----------------------------------------------
Common None
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405of Regulation S-B is not contained herein and will not be contained, to
the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ ]
Indicate by check mark whether the Registrant (1)has filed all reports
required to be filed by Section 13 or 15(d)of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES X NO ___
The aggregate market value of the voting stock held by non-affiliates
of the Registrant on at June 30, 2000, was approximately $12,654,000.
The number of shares held by non-affiliates of Registrant's Common
Stock outstanding on June 30, 2000, was 4,500,000.
The Registrant's total revenues for the period ended March 31, 2000,
were $62,613.
Total of Sequentially
Numbered Pages:
Exhibit Index on Page:
<PAGE>
TABLE OF CONTENTS
PAGE:PART I
ITEM 1. DESCRIPTION OF BUSINESS..........................................
ITEM 2. DESCRIPTION OF PROPERTY..........................................
ITEM 3. LEGAL PROCEEDINGS................................................
ITEM 4. SUBMISSION OF MATTERS
TO A VOTE OF SECURITY HOLDERS....................................
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.............................................
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATION.............................................
ITEM 7. FINANCIAL STATEMENTS............................................
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS.....................................................
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS
AND CONTROL PERSONS; COMPLIANCE WITH
SECTION 16(a) OF THE EXCHANGE ACT...............................
ITEM 10. EXECUTIVE COMPENSATION..............................................
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT...........................................
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS........................................................
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K....................................
SIGNATURES...................................................................
INDEX TO EXHIBITS............................................................
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS
Business Development
Bluepoint Linux Software Corp. (the "Company" or "Bluepoint"), was
originally established as Shenzhen Sinx Software Co., Ltd. ("Sinx")in the
People's Republic of China (the "PRC") on September 3, 1999, as a limited
liability company. It commenced operations in October 1999 and is engaged in the
licensing of its software, "Bluepoint Linux" to PRC original equipment
manufacturers of personal computers and the sale of "Bluepoint Linux" software
packages to software retailers in the PRC.
The business of Bluepoint is focused on Linux operating system,
embedded Linux platform and related service and support. The company developed
the first true Chinese Linux operating system called Bluepoint. Bluepoint is
very stable, easy to use and offers high performance. It supports multiple
languages and is very suitable for Asian users. Although the history of the
Bluepoint is very short, it has already gained market acceptance. Bluepoint has
access to a large percentage of the Linux bundling market in China and is
pre-installed in computers by several major computer makers in China, including
Great Wall, TCL, and Xiahua Sanbao. The company is also providing customized
development and training services for these computer makers.
On January 7, 2000, Bluepoint entered into a Plan of Agreement and
Reorganization (the "Agreement")with MAS Acquisition XI Corp. ("MAS"), an
Indiana corporation, whereby Bluepoint became a wholly owned subsidiary of MAS.
On February 17, 2000, a name change was effectuated with the State of
Indiana from MAS Acquisition XI Corp. to Bluepoint Linux Software Corp., to
reflect the fact that Sinx is best known for its Bluepoint Linux Operating
System. Bluepoint Linux Software Corp.(the "Company" or, "Corporation"),
presently has executive offices at: A301 East-2, SEG Science & Industry Park,
Huaqiang Road North, Shenzhen, People's Republic of China.
In March, 2000, the Company signed marketing agreements with the
following five companies:
1.) Beijing Federal Software Co., Ltd., addressed at 9F,
-------------------------------------
Yifang Bldg, 13 Haidian Nan Rd, Beijing, China;
2.) Beijing Sailesi Science & Trade Co., Ltd., addressed at
------------------------------------------
18/D, Zhichun Lane, Haidian District, Beijing, China;
3.) Beijing Bainianshuren Software Technology Co., Ltd.,
----------------------------------------------------------
addressed at 2 Dani Bay,Huang Village, Haidian District,
Beijing, China;
4.) Nanjing Sushifang Computer Science Co., Ltd., addressed at
--------------------------------------------
Room 201, 6217Luyuan, Chanan, Jianye District, Nanjing,
China; and,
5.) Beijing Liren Science Development Co.,Ltd., addressed at
------------------------------------------
1/D,Bayi Middleshool,
29 Suzhou Road, Haidian District, Beijing, China.
According to the terms of the agreements, these five companies will market
Bluepoint Linux 1.0 CDs which will be supplied to them by the Company at 40%-50%
discount to the retail price.
In March 2000, the Company also signed an agreement with Shenzhen
Debele Eletronic Development Co., Ltd. ("Debele"),addressed at m421,W-2, SEG
Science & Industry Park, Huaqiang Road North, Shenzhen, China, to jointly
develop an Embedded Linux based Intelligent Housing System. The two parties
intend to form a joint venture and Bluepoint will own 65% in the joint venture.
Debele had already secured the first contract from Shenzhen Yihui Real Estate
Development Corp. to use the Intelligent Housing System in 6,000 house/apartment
units. The first subdivision that will install the Intelligent Housing System is
Yihui Garden, a subdivision with 2,000 house/apartment units. The system will be
priced at around $300US per unit.
Business of Issuer
Bluepoint Linx operating system is similar to "Red Hat" Linux operating
system, except that it is a Chinese version. The Linux operating system is a
competitor to Microsoft Windows. Just as many of the personal computer
manufacturers in the United States and elsewhere, pre- install Microsoft
Windows, Chinese companies such as Great Wall, TCL, Xiahua, Downing pre- install
Bluepoint Linux on some of their PC series. Right now, Linux is mostly used on
servers since Microsoft Windows NT server charges a pay per use license fee. The
Company believes that the Linux operating system is more efficient and stable
when compared with Windows system. It has basic programs such as software
similar to Microsoft "Word", "Spreadsheet", etc.
1
<PAGE>
The Company is continuing to develop upgrade the Bluepoint Linux
Operating System and has recently completed the development of the Bluepoint
version 2.0. It will continue to expand its market share in the Linux
pre-installation (bundling) market. The company is also aggressively pursuing
the Linux solution market. The company currently provides 17 Linux solutions.
The solutions are usually sold in different combinations of several solutions at
a time, at a price of $20,000 to $30,000. The company is also actively
developing embedded linux systems. The company is currently developing
Intelligent Housing System and embedded system for Set-top Box, WebTV and
Thin-Client.
The Company owns two web sites: http://www.bluepoint.com.cn/ and
http://www.openunix.org/. Established in March, 1999, openunix.org is a
destination site for Unix and Linux information. It is the most influential
Linux site in China. The site provides services such as news, technical
discussion forums, knowledge bases and software downloading. The site also
provides advertising, publishing, survey and consulting services.
The Company has been granted a ten years operation period which can be
extended with approvals from relevant People's Republic of China authorities. In
addition to its presence in the People's Republic of China, Bluepoint intends to
expand its market in the near future.
As of June 30, 2000, the Company has 32 full time employees.
ITEM 2. DESCRIPTION OF PROPERTY
The company currently leases office spaces located at: A301 East-2, SEG
Science & Industry Park, Huaqiang Road North, Shenzhen, China and at 2nd Floor,
East Building, New Century Hotel Building, Shoudutiyuguan South Road, Haidian
District, Beijing, China. These two leases will expire on August 24,2000 and
February 28,2001 respectively.
ITEM 3. LEGAL PROCEEDINGS ITEM
The Company is presently not involved in any legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the fourth quarter of the 2000 fiscal year, there were no
matters submitted to a vote of the Company's shareholders.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market Information
The following table sets forth the prices of the Common Stock on the
OTC Bulletin Board for fourth quarter during fiscal year 2000. These
over-the-counter market quotations are based on inter-dealer bid prices, without
markup, markdown, or commission, and may not necessarily represent actual
transactions. Note that the Company was not publicly traded prior to the Fourth
quarter.
Quarter HIGH LOW
------- ---- ---
Fourth $18.50 $9
Shareholders
There were approximately 159 record holders of Common Stock as of March
31, 2000, holding a total of 20,000,000 outstanding shares of Common Stock of
which 4,073,750 was in the public float.
Dividends
The Company has never declared a cash dividend on its Common Stock and
does not anticipate doing so in the near future. The future payment of
dividends, if any, on the Common Stock is within the discretion of the board of
directors and will depend on the Company's earnings, capital requirements,
financial condition, and other relevant factors.
2
<PAGE>
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
On January 7, 2000, Bluepoint entered into a Plan of Agreement and
Reorganization (the "Agreement") with MAS Acquisition XI Corp. ("MAS"), an
Indiana corporation. Prior to the agreement, On January 5, 2000, MAS cancelled,
8,203,133 shares of its common stock. The agreement called for MAS to effectuate
a 15 for 1 forward stock split. As consideration for the acquisition of Sinx,
the Company issued 15,500,000 restricted shares of the Company's par value
$0.001 common stock to the shareholders of Sinx, leaving a total of 20,000,000
shares of common stock issued and outstanding. As result of the Agreement
between the Company and Bluepoint, Bluepoint became and operates as, a wholly
owned subsidiary of MAS.
Further, as a result of the Agreement, the Company has accepted the
resignation of Aaron Tsai, the Company's sole Director and Officer, as of
February 17, 2000, and appointed Yu Deng, as President and Chief Executive
Officer and Yu Deng, Zhe Kang, ShengMiao Liao, YiHuo Ye and Ling Li, as
Directors.
The Company formally changed its name to Bluepoint Linux Software Corp.
on February 17, 2000 to reflect the fact that Sinx is best known for its
Bluepoint Linux Operating System. Bluepoint Linux Software Corp.(the "Company"
or, "Corporation"), presently has executive offices at: A301 East-2, SEG Science
& Industry Park, Huaqiang Road North, Shenzhen, People's Republic of China.
The individuals who collectively owned 100% of Sinx's registered share
capital prior to January 7, 2000 were Yu Deng, Zhe Kang, Yihuo Ye, Shengmiao
Liao and Ling Li. Pursuant to the acquisition of Sinx, the Company underwent a
change of control and these five individuals obtained a majority interest in the
Company and were appointed as the Company's directors and/or officers.
Events That Took Place Subsequent to Fiscal Year Ending March 31, 2000
In April, 2000, the Company entered into an agreement with Beijing
Qunwei Science Co.,Ltd., Rm 4511, Friendship hotel, 3 Baishi Bridge Rd, Haidian
District, Beijing, China. According to the terms of the agreement, Qunwei will
purchase the following software products through the Company: Inoculate IT,
NetworkIT pro, ARServer IT, ControlIT, and the Company will provide free online
support and training to Qunwei.
In April, 2000, the Company signed an agreement with Beijing Guoyan
Information Science Co.,Ltd., 6F Huashi Buiding, No.16, 2nd Banking Street, West
District, Beijing, China. Pursuant to the terms of the agreement, Guoyan will
purchase Bluepoint Linux operating system from the Company and the Company will
help Guoyan configure and optimize Guoyan's Linux servers to meet its need and
provide consultant service and technical support to Guoyan.
In April, 2000, the Company signed a contract with Shenzhen Shenrun
Network System Co., Ltd., 20A-B-C Shenzhen Development Building, Shennan Road
Eeast, Shenzhen, China. Pursuant to the contract, the company will provide an
Internet access link such as "bookmark", "my favorites", "personal bar",
pointing to Shenrun's web site in the browser provided in Bluepoint Linux. The
price for the link is $73,000.
In April, 2000, the Company signed a agreement with Beijing Agesun
Commercial Co. Ltd., 5 Building, No. 4 Block, Anzhenxili, Chaoyang District,
Beijing, China. Pursuant to the agreement, both sides will cooperate in
developing Linux training, and attempt to increase its popularity the PRC. In
April, 2000, the Company contracted with China United Online Information
Development Co., Ltd., 18th Floor, Huarun Building, No.8 Jianguomen North
Street, Beijing, China. In accordance with the terms of the agreement, China
United Online will purchase search engine system and free-email server system
from Bluepoint, and Bluepoint will provide China United Online with technical
support and technical training.
In May, 2000, the Company signed a software licensing agreement with
HancomLinux, Inc., 9F,Daehwa Bldg,#169,Samsung-dong, Kangnam-ku, Seoul, 135-090,
Korea. According to the agreement, the Company will purchase 'Wonjie (Chinese
Word Processor)product from Hancomlinux.Inc. and bundle it with Bluepoint Linux
operating system product(s).
In May, 2000, the Company signed MPEGTV licensing agreement with
MPEGTV, LCC, 25 Baker Street, Suite #4, San Francisco, CA 94117, USA. According
to the agreement, the Company will purchase the license of MTV-1.1.1.2 RPM
package from MPEGTV, LCC.
In May, 2000, the Company signed a strategic cooperation agreement with
Downing Information Industry Corp. Ltd. (Beijing Shuguang Tian Yan Information
Industry Corp. Ltd.). According to the agreement, Bluepoint Linux OS will be
pre-installed in Downing server products.
3
<PAGE>
In June, 2000, the Company signed an agreement with Intel China Ltd.,
4th Floor, Building 18, 485 Gui Ping Road, Caohejing, Shanghai, China. Pursuant
to the agreement, both parties will cooperate in setting up Linux support center
and POC program in China. Both parties have acknowledged and agreed that the
objectives of the program is to accelerate the development and delivery of Intel
Architecture based solution in China through establishing customer oriented
Linux technical support center and POC centers within Bluepoint's organization
and open to potential customers in China, such as systems integrators, EBSP,
OEM, e-providers, consulting companies and end-users.
Finally, in June, 2000, the Company renewed its agreement with Xiamen
Xoceco Trigem Computer Co. Ltd., 5th Floor, C Building, XIAHUA Electronic
Industry City, Xiamen Huoju Hi-tech park, Xiamen, China. The agreement calls for
TRIGEM to pre-install Bluepoint Linux's operating system into its XiaHuaShangBao
brand PC products.
Results of Operations
For the period from inception (September 3, 1999) to March 31, 2000:
As a result of the aforementioned acquisition of Shenzhen Sinx Software
Co., Ltd., the Company's Total Liabilities and Stockholders' Equity as of March
31, 2000 was $725,161 as set forth on page F-4 of the attached Financials.
According to the "Consolidated Statement of Operations" set forth on Page F-5 of
the attached financial statements, the Net Sales from the inception to March 31,
2000 was $62,613. During the same period, the Cost of Sales was $18,075; the
Gross Margin was 71%; the Administrative Cost was $42,684 and the Net Operating
Loss of the Company amounted to $8,296.
An earnings per share was $0 calculated on the basis of the weighted
average number of 20,000,000 shares in issue during the period.
Plan of Operations
Statements contained herein that are not historical facts are
forward-looking statements as that term is defined by the Private Securities
Litigation Reform Act of 1995. Although the Company believes that the
expectations reflected in such forward-looking statements are reasonable, the
forward-looking statements are subject to risks and uncertainties that could
cause actual results to differ from those projected. The Company cautions
investors that any forward-looking statements made by the Company are not
guarantees of future performance and that actual results may differ materially
from those in the forward-looking statements. Such risks and uncertainties
include, without limitation: well established competitors who have substantially
greater financial resources and longer operating histories, regulatory delays or
denials, ability to compete as a start-up company in a highly competitive
market, and access to sources of capital.
During the year 2000, the Company plans to continue to develop and
improve Bluepoint Linux Operating system and Linux solutions. The Company will
continue to expend its market share in both Linux operating system market and
Linux solution market. The Company plans to establish strategic relationship
with at least one world leading Linux server provider and market its servers in
Chinese market. The servers will be installed with Bluepoint Linux Operating
System and selected Linux solutions provided by the Company. The Company will
also provide technical support for the servers. The Company will significantly
increase its efforts in the development and marketing of embedded Linux
operating system and embedded applications.
Capital Resources and Liquidity
The Company completed the reverse acquisition of Sinx on January 17,
2000. 100% of the registered share capital of Sinx was acquired by the Company,
in exchange for 15,500,000 shares of the Company's $0.001 par value common
stock. After issuing 15,500,000 shares of the common stock to Sinx, the Company
has a total of 20,000,000 shares of common stock issued and outstanding.
In March 2000, $600,100 was received from a potential investor. This
amount is unsecured, interest free and has no fixed terms of repayment.
The net increase in cash and cash equivalent as set forth on Page F-7
of the attached financials was $640,908.
Additional capital needs will be met either through additional sales of
the Company's stock or through generated revenues from the Company's operations.
It is possible that the Company will be unable to sell such stock and that it
may not receive such funds. The Company's current cash on hand is sufficient to
meet the Company's capital needs for the next 12 months.
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See the audited financial statements attached hereto and numbered F-1
through F-10.
4
<PAGE>
Bluepoint Linux Software Corp.
(Formerly known as MAS Acquisition XI Corp.)
Consolidated Financial Statements
For the period from inception to March 31, 2000
<PAGE>
Bluepoint Linux Software Corp.
(Formerly known as MAS Acquisition XI Corp.)
Index To Consolidated Financial Statements
Pages
Report of Independent Auditors 1
Consolidated Balance Sheet 2
Consolidated Statement of Operations 3
Consolidated Statement of Stockholders' Equity 4
Consolidated Statement of Cash Flows 5
Notes to Consolidated Financial Statements 6 to 10
<PAGE>
Report of Independent Auditors
To the Board of Directors of
Bluepoint Linux Software Corp.
(Formerly known as MAS Acquisition XI Corp.)
We have audited the accompanying consolidated balance sheet of Bluepoint Linux
Software Corp. as of March 31, 2000, and the related consolidated statements of
operations, stockholders' equity and cash flows for the period from September 3,
1999 (date of inception) to March 31, 2000. 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 the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about 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 and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Bluepoint Linux Software Corp. as of March 31, 2000 and the results of its
consolidated operations and cash flows for the period from September 3, 1999
(date of inception) to March 31, 2000, in conformity with generally accepted
accounting principles in the United States of America.
By:/s/ BDO International
------------------------
BDO International
Hong Kong,
May 8, 2000
F-1
<PAGE>
Bluepoint Linux Software Corp.
(Formerly known as MAS Acquisition XI Corp.)
Consolidated Balance Sheet
(Expressed in US Dollars)
March 31,
2000
---------
ASSETS
Current assets
Cash and cash equivalents $ 640,908
Accounts receivable 24,338
Other receivables, deposits and prepayments 16,640
Amounts due from directors (Note 3) 4,420
Inventories (Note 4) 8,110
---------
Total current assets 694,416
Office equipment, net (Note 5) 30,745
---------
Total assets $ 725,161
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 3,937
Other payables and accrued expenses (Note 6) 704,774
Other taxes payable (Note 7) 560
---------
Total current liabilities 709,271
---------
Commitments and contingencies (Note 8)
Shareholders' equity
Preferred stock, par value $0.001 per share;
20,000,000 shares authorized;
none issued or outstanding
Common stock, par value $0.001 per share;
80,000,000 shares authorized;
20,000,000 shares issued and outstanding 20,000
Additional paid-in capital 4,186
Accumulated losses (8,296)
---------
15,890
---------
Total liabilities and stockholders' equity $ 725,161
=========
See accompanying notes to consolidated financial statements.
F-2
<PAGE>
Bluepoint Linux Software Corp.
(Formerly known as MAS Acquisition XI Corp.)
Consolidated Statement of Operations
(Expressed in US Dollars)
From
inception to
March 31,
2000
------------
Net sales $ 62,613
Cost of sales (18,075)
------------
Gross profit 44,538
Selling expenses (10,309)
General and administrative expenses (42,684)
------------
Operating loss (8,455)
Interest income 159
------------
Loss before income tax (8,296)
Provision for income tax (Note 9) --
------------
Net loss $ (8,296)
============
Loss per share - basic and diluted $ --
============
Weighted average common shares outstanding
- basic and diluted 20,000,000
============
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
Bluepoint Linux Software Corp.
(Formerly known as MAS Acquisition XI Corp.)
Consolidated Statement of Stockholders' Equity
(Expressed in US Dollars)
<TABLE>
<CAPTION>
Common Stock Additional Total
Number Paid-in Accumulated Stockholders'
of Shares Amount Capital Losses Equity
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance, September 3, 1999 -- $ -- $ -- $ -- $ --
Contribution of capital (Note 10) -- -- 24,155 -- 24,155
Issuance of shares for Sinx
transaction 15,500,000 15,500 (15,500) -- --
Issuance of shares in connection
with reverse merger 4,750,005 4,750 (4,719) -- 31
Cancellation of shares (250,005) (250) 250 -- --
Net loss -- -- -- (8,296) (8,296)
----------- ----------- ----------- ----------- -----------
Balance, March 31, 2000 20,000,000 $ 20,000 $ 4,186 $ (8,296) $ 15,890
=========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
Bluepoint Linux Software Corp.
(Formerly known as MAS Acquisition XI Corp.)
Consolidated Statement of Cash Flows
Increase in Cash and Cash Equivalents
(Expressed in US Dollars)
From
inception to
March 31,
2000
---------
Cash flows from operating activities
Net loss $ (8,296)
Adjustments to reconcile net income
to net cash provided by operating activities
Depreciation of office equipment 628
Write-off of organizational costs 31
Changes in:
Accounts receivable (24,338)
Other receivables, deposits and prepayments (16,640)
Amount due from directors (4,420)
Inventories (8,110)
Accounts payable 3,937
Other payables and accrued expenses 104,674
Other taxes payable 560
---------
Net cash provided by operating activities 48,026
---------
Cash flows from investing activities
Acquisition of equipment (31,373)
---------
Net cash used in investing activities (31,373)
---------
Cash flows from financing activities
Cash received from a potential investor 600,100
Contribution of capital in connection with
reverse acquisition 24,155
---------
Net cash provided by financing activities 624,255
---------
Net increase in cash and cash equivalents
and at end of period $ 640,908
=========
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
Bluepoint Linux Software Corp.
(Formerly known as MAS Acquisition XI Corp.)
Notes To Consolidated Financial Statements
(Expressed in US Dollars)
Note 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Shenzhen Sinx Software Co., Ltd. ("Sinx") was established in the People's
Republic of China (the "PRC") on September 3, 1999 as a limited liability
company. It commenced operations in October 1999 and is engaged in the licensing
of its software, "Bluepoint Linux" to PRC original equipment manufacturers of
personal computers and the sale of "Bluepoint Linux" software packages to
software retailers in the PRC. Sinx has been granted a ten years operation
period which can be extended with approvals from relevant PRC authorities.
On January 5, 2000, MAS Acquisition XI Corp. ("the Company") cancelled 8,203,133
shares of its common stock held by its major shareholder. On January 7, 2000,
the Company effected a 15 for 1 forward split. On January 17, 2000, 100% of the
registered share capital of Sinx was acquired by the Company, in exchange for
15,500,000 shares of the Company's $0.001 par value common stock. After issuing
15,500,000 shares of the common stock to Sinx, the Company has a total of
20,000,000 shares of common stock issued and outstanding. For accounting
purposes, the acquisition has been treated as the acquisition of the Company by
Sinx with Sinx as the acquirer (reverse acquisition). The historical financial
statements prior to January 17, 2000 are those of Sinx. All shares and per share
data prior to the acquisition have been restated to reflect the stock issuance
as a recapitalization of Sinx.
The Company was initially incorporated in the State of Indiana on October 7,
1996. On February 16, 2000, the Company changed its name to Bluepoint Linux
Software Corp.
NOTE 2 - SUMMARY OF IMPORTANT ACCOUNTING POLICIES
Basis of Accounting and Principles of Consolidation
The consolidated financial statements are prepared in accordance with generally
accepted accounting principles in the United States of America and present the
financial statements of the Company and its wholly owned subsidiary, Sinx. All
material intercompany transactions have been eliminated.
Foreign Currency Translation and Transactions
The functional currency of the Company is US$ and the financial records are
maintained and the financial statements prepared in US$. The functional currency
of Sinx is Renminbi (RMB) and the financial records are maintained and the
financial statements are prepared in RMB.
Foreign currency transactions during the year are translated into US$ at the
exchange rates ruling at the transaction dates. Gain and loss resulting from
foreign currency transactions are included in the statement of operations.
Assets and liabilities denominated in foreign currencies at the balance sheet
date are translated into US$ at year end exchange rates. When assets,
liabilities and equity denominated in RMB are translated into US$, translation
adjustments are included as a component of stockholders' equity.
Exchange rates between US$ and RMB were fairly stable during the period
presented. The rate ruling as of March 31, 2000 is US$1: RMB8.28. Due to the
stability of the exchange rates, there were no net adjustments in the
stockholders' equity.
F-6
<PAGE>
NOTE 2 - SUMMARY OF IMPORTANT ACCOUNTING POLICIES - Continued
Revenue Recognition
Revenue from software sales is recognised when all shipment obligations have
been met, fees are fixed and determinable, collection of sales proceeds is
deemed probable, and persuasive evidence of an agreement exists.
Revenue from software licensing is recognised in accordance with terms
stipulated in licensing agreements.
Inventories
Inventory is accounted for on the first in first out basis and is stated at the
lower of cost or market. Market value is determined by reference to the sales
proceeds of items sold in the ordinary course of business after the balance
sheet date or to management estimates based on prevailing market conditions.
Cash and Cash Equivalents
Cash and cash equivalents include all highly liquid investments with an original
maturity of three months or less.
Equipment and Depreciation
Equipment is stated at cost. Depreciation is computed using the straight-line
method to allocate the cost of depreciable assets over the estimated useful
lives of the assets as follows:
Estimated
useful life
(in years)
--------------
Computer equipment 5
Office equipment 5
Maintenance, repairs and minor renewals are charged directly to the statement of
operations as incurred. Additions and betterments to plant and equipment are
capitalized. When assets are disposed of, the related cost and accumulated
depreciation thereon are removed from the accounts and any resulting gain or
loss is included in the statement of operations.
Long-lived Assets
The Company periodically reviews their long-lived assets for impairment based
upon the estimated undiscounted future cash flows expected to result from the
use of the asset and its eventual disposition. When events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable, the asset is written down to its net realizable value.
F-7
<PAGE>
NOTE 2 - SUMMARY OF IMPORTANT ACCOUNTING POLICIES - Continued
Income Taxes
The Company accounts for income taxes in accordance with Statement of Financial
Accounting Standards ("SFAS") No. 109. Under SFAS No. 109, deferred tax
liabilities or assets at the end of each period are determined using the tax
rate expected to be in effect when taxes are actually paid or recovered.
Valuation allowances are established when necessary to reduce deferred tax
assets to the amount expected to be realized.
Fair Values of Financial Instruments
The carrying amounts of certain financial instruments approximate their fair
values as of March 31, 2000 because of the relatively short-term maturity of
these instruments.
Use of Estimates
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 ("SFAS No. 133"), Accounting for
Derivative Instruments and Hedging Activities. SFAS No. 133 requires companies
to recognize all derivative contracts as either assets or liabilities in the
balance sheet and to measure them at fair value. If certain conditions are met,
a derivative may be specifically designated as a hedge, the objective of which
is to match the timing of gain or loss recognition on the hedging derivative
with the recognition of (i) the changes in the fair value of the hedged asset or
liability that are attributable to the hedged risk or (ii) the earnings effect
of the hedged forecasted transaction. For a derivative not designated as a
hedging instrument, the gain or loss is recognized as income in the period of
change. SFAS No. 133 as amended by SFAS No. 137 is effective for all fiscal
quarters of fiscal years beginning after June 15, 2000. Based on its current and
planned future activities relative to derivative instruments, the Company
believes that the adoption of SFAS No. 133 will not have a significant effect on
its financial statements.
Net Loss Per Common Share
The Company computes net loss per share in accordance with SFAS No. 128,
Earnings per Share ("SFAS No. 128") and SEC Staff Accounting Bulletin No. 98
("SAB 98"). Under the provisions of SFAS No. 128 and SAB 98, basic net loss per
share is computed by dividing the net loss available to common shareholders for
the period by the weighted average number of shares of common stock outstanding
during the period. The calculation of diluted net loss per share gives effect to
common stock equivalents, however, potential common shares are excluded if their
effect is antidilutive.
F-8
<PAGE>
NOTE 3 - AMOUNTS DUE FROM DIRECTORS
The Company, from time to time, received from or made repayment to directors.
The amounts due from directors do not bear interest and do not have clearly
defined terms of repayments.
NOTE 4 - INVENTORIES
March 31,
2000
------------------
Finished goods - software packages $ 8,110
==================
NOTE 5 - OFFICE EQUIPMENT, NET
March 31,
2000
-----------------
Computer equipment $ 24,933
Other equipment 6,440
-----------------
31,373
Less: Accumulated depreciation 628
-----------------
$ 30,745
=================
NOTE 6 - OTHER PAYABLES AND ACCRUED EXPENSES
Other payables and accrued expenses include cash of $600,100 received from a
potential investor. This amount is unsecured, interest free and has no fixed
terms of repayment.
NOTE 7 - OTHER TAXES PAYABLE
Other taxes payable comprise mainly Valued-Added Tax ("VAT") and Business Tax
("BT"). VAT is charged at a rate of 4% on the selling price of the Company's
products. BT is charged at a rate of 5% on the revenue from software licensing.
F-9
<PAGE>
NOTE 8 - COMMITMENTS AND CONTINGENCIES
Operating Lease Commitment
During the period ended March 31, 2000, the Company incurred lease expenses
amounting to $4,500. As of March 31, 2000, the Company had commitments under a
non-cancellable operating lease expiring within one year amounting to $12,657.
Capital Commitment
As of March 31, 2000, the Company had capital commitment on investment amounting
to $104,271.
NOTE 9 - INCOME TAX
Pursuant to an approval document dated March 21, 2000 issued by the Shenzhen Tax
Bureau, Sinx, being a "computer software developer", is eligible to full
exemption from PRC Corporate Income Tax for one year starting from the first
profit making year followed by a 50% reduction in the tax payable in the
following two years. Tax losses for a year of assessment can be carried forward
to offset the next year's assessable profits up to 5 years.
Accordingly, no provision for income tax has been made for the period.
No provision for deferred taxation has been made as there is no material
temporary difference at the balance sheet date.
NOTE 10 - CONTRIBUTION OF CAPITAL
On January 17, 2000, 100% of the registered share capital of Sinx amounting to
$24,155 was contributed into the Company as a result of reverse acquisition.
F-10
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There have been no disagreements with the Company's independent
accountants over any item involving the Company's financial statements. MAS
Acquisition XI Corp. 's independent accountant during 1999 and up to June 20,
2000 was Tubbs & Bartnick, P.A., 2300 Glades Rd., Ste. 415, Boca Raton, Florida
33413. Subsequent to that time, the Company has selected a new independent
accountant, On that date, the Company changed accountants from Tubbs & Bartnick,
P.A to BDO International, 111 Connaught Road Central, 29th Floor, Wing On
Centre, Hong Kong; (852)254-5041. The details of that selection change are
described in the Company's Form 8-K filed on June 23, 2000.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Name Age Position(s) and Office(s)
---- --- -------------------------
Yu Deng 26 President, Chairman of the Board & Director
Zhe Kang 29 Treasurer, Vice President, Director
Yihuo Ye 28 Director
Shengmiao Liao 29 Secretary, Vice President,& Director
Ling Li 26 Director
Yu Deng, President
July, 1999--Present; Founder, Bluepoint Linux Software Corp.
Feb.1999-July, 1999 - WEB project director, Shenzhen Shengrun Network System
Ltd., Guangdong Province. In charge of organizing and developing the stock
trading site, www.stock2000.com.cn . In two weeks from the time the project is
completed, the site"s national ranking raised from number 15 to number 3.
July, 1997-Feb.1999 - System Engineer, Technical Director, ShenZhen Longmai
Information Ltd., Guangdong Province.
1. Pre/Post-sales technical support;
2. System integration project designing and development;
3. In charge of technical support department daily operation.
Apr. 1996-May 1997 - Research and Development Engineer, Assistant Director of
Technology Department, Hangzhou Xun Ye Goldennet Ldt., Zhejiang Province.
1. Design and develop web project;
Coordinate and monitor information publishing.
Large Project Development Experience:
Shenzhen City Animal and Plant Health Inspection Bureau Internet Information
System;
2. Shenzhen City Technology Monitoring Bureau Internet Information System;
Shenzhen Qunan Securities Stock Research site;
Guangdong Dayawang Nuclear Power Plant System Integration Project;
Guangdong Meizhou Data Bureau, Shaoguan Data Bureau Internet Project;
Security Exchange 2000, a large web site project.Honor & Recognition:
In 1999, received Sun Microsystems Inc. system engineer certification
Zhe Kang, Vice President
July, 1999--Present; Bluepoint Linux Software Corp.
March,1999--July,1999 - Director of Corporate Development, Shenzhen Shengrun
Network System Ltd., Guangdong Province.
July,1994--Mar., 1999 - Reporter, Executive Editor, Shenzhen Special Zone Daily.
July,1993--July, 1994 - Reporter, Economic Daily
5
<PAGE>
Yihuo Ye, Director
July, 1999__Present; Bluepoint Linux Software Corp.
May, 1999_July, 1999 - Chief Technical Advisor, ZhongXun Golden Net. In charge
of ISP business platform designing and development. April, 1996__May,1999 -
Executive Vice President, Chief Technical Advisor, Engineer, Hangzhou Xun Ye
Goldennet Ldt. In charge of Internet application, platform, commercial project
development and system integration.
Dec.1995_April,1996 - Engineer, Micro Electronic Equipment Corp., Singapore(A US
company.)In charge of technical management in the silicon chip manufacturing
process. July,1992_April, 1994 - Manager, Wengzhou Energy Equipment Factory.
In charge of the entire operation of the factory.
Large Project Development Experience:
Xunye Golden Net nationwide email system;
China Telecom ISP project;
China Online technical platform design and development; Hangzhou Power Bureau
MIS system.
Post_bachelor degree received - July, 1996, Master of Science, Singapore
National University.
Shengmiao Liao, Vice President, Chief Technical Officer
May,1999 -- Present; Bluepoint Linux Software Corp.
Jan. 1999--May,1999 - Ertian Information Technology, Ltd. Shenzhen, Guangdong
Province. In charge of Network Integration.
May, 1998--Dec.1998 8- Shenzhen Yuanwang Software Corp.
In charge of POS sy8stem development.
Apr.1997--Apr. 1998 - Software Engineer, Shenzhen Tianhong Market.
In charge of POS system development.
Mar. 1997--Apr. 1997 - System engineer, Shenzhen Wangyong Information Network.
In charge of system maintenance.
Nov.1993--Feb.1997 System Engineer, Shenzhen Yuanwangcheng Multimedia Corp. In
charge of network system integration; researching UNIX/Network application
technology; SUN Solaris/SCO UNIX/Sybase technical support; SCO UNIX based
application development; MIS/POS system analysis and development.
May,1993--July,1993 - System engineer, Guangzhou Yuantong Science and Technology
Engineering Corp. In charge of ATM software development.
July, 1992--Jan. 1993 - System engineer, Fujiang Kefa Corp.
In charge of PBX software development.
Ling Li, Senior Technical Director
May,1999--Present; Founder, Bluepoint Linux Software Corp.
July, 1998--May,1999 - Independent consultant.
Apr.1997--July, 1998 - Manager, System Integration Division, Haikou Modern
Office Equipment Corp. In charge of designing and implementing system
integration projects; Set up and maintain company Intranet.
Dec. 1996--Apr.1997 - Associate Director, Computer system development division,
Haikou Brokerage Office, Southern Securities.
Maintain stock trading network; Develop trading system.
Sep.1996--Dec.1996 - System Engineer, Hainan Guoxing Technology Corp.
Internet site development;
Direct technical support group.
July,1995--Oct.1996 - Computer Science Instructor, Huanan Tropical Agriculture
College.Large Project Development Experience:8
Southern Securities (Haikou) Stock Trading System; Hainan Province Public
Security Bureau Intranet; Hainan Province Commerce Department Network System;
Hainan Province Social Security Bureau Information System.
Compliance With Section 16(a)of the Exchange Act
Based solely upon a review of Forms 3, 4 and 5 furnished to the Company,
the Company is not aware of any person who, at any time during the fiscal year
ended March 31, 2000,was a director, officer, or beneficial owner of more than
ten percent of the Common Stock of the Company, and who failed to file on a
timely basis reports required by Section 16(a)of the Securities Exchange Act of
1934 during such fiscal year.
6
<PAGE>
ITEM 10. EXECUTIVE COMPENSATION
The following table summarizes certain information concerning executive
compensation paid to or accrued by the Company's chief executive officer during
the Company's last fiscal year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Awards Long Term Compensation
Name and Principal Position Year Salary($) Bonus($) Other Restricted Options/ LTI Other
Annual Stock SARs (#) Payout
Comp. Awards
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Yu Deng, 1999 2195 -0- -0- -0- -0- -0- -0-
President
</TABLE>
Yu Deng received nominal amount of compensation from the inception (September,
1999) to February, 2000 and start to receive moderate salary on March, 2000.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information concerning the stock
ownership as of June 30, 2000, with respect to: (i) each person who is known to
the Company to beneficially own more than 5% of the Company's Common Stock; (ii)
all directors; and (iii) directors and executive officers as a group (the notes
below are necessary for a complete understanding of the figures). The Company
calculated the owners of 5% of the Common Stock using the 20,000,000 shares of
Common Stock issued on June 30, 2000.
<TABLE>
<CAPTION>
Name and Address of Title of Class and Amount
Beneficial Owner and Management of Beneficial Ownership Percentage of Class
---------------- -------------- ----------------------- -------------------
<S> <C> <C>
Yu Deng 4,200,000 shares 21.00%
6-704,#2 HuaFa Bei Road,
Shenzhen, China
Shengmiao Liao 3,750,000 shares 18.75%
602, B Building, HuiYaYuan,
Shenzhen, China
Zhe Kang 3,150,000 shares 15.75%
Dormitory of Shenzhen
Special Zone Daily,
Shenzhen, China
Ling Li 2,700,000 shares 2,700,000 shares 13.50%
602, B Building, HuiYaYuan,
Shenzhen, China
YiHuo Ye 1,200,000 shares 6.00%
Floor 18, HuaRun Building,
No.8 JianGuoMen North St,
Beijing, China
</TABLE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
ITEM 13. EXHIBITS
2. Plan of Agreement and Reorganization, January 7, 2000
3. Amended Articles of Incorporation
27. Financial Data Schedule
7
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized, this 13th day of July, 2000.
Bluepoint Linux Software Corp.
By:/s/ Yu Deng
------------------------------------
Yu Deng, President & Director
BY:/s/ Zhe Kang
-----------------------------------------------------
Zhe Kang, Treasurer, Vice-President & Director
By:/s/ Yihuo Ye
-------------------------
Yihuo Ye, Director
By:/s/ Shengmiao Liao
----------------------------------------------------------
Shengmiao Liao, Secretary, Vice-President& Director
By:/s/ Ling Li
------------------------
Ling Li, Director
