Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Wintech Digital System Technology Corp.
(Exact Name of registrant as specified in its charter)
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<S> <C> <C>
Nevada 6770 88-0325524
(State or Jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification No.)
organization) Classification Code No.)
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(0118610)62547647
(Registrant's Telephone Number, Including Area Code)
Room 510, DSP Building,
17 Zhongguancun Road
Beijing, China, 100080
(0118610)62547647
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
YongHong Dong
Room 510, DSP Building,
17 Zhongguancun Road
Beijing, China, 100080
(0118610)62547647
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Temple Summit Financial Projects, Inc
223 East FM 1382, Suite 12720
Cedar Hill, Texas 75104
Former name and former address of registrant
Copies of Communications to:
Shawn F. Hackman, a P.C.,
3360 West Sahara Avenue, Suite 200,
Las Vegas Nevada 89102
Telephone: (702) 732 2253 Facsimile: (702) 940-4006
Ancas Financial, Inc.
87 Sea Holly Way, Suite 200
Henderson, NV 89014
Telephone: (702) 617 1971 Facsimile: (702) 837 8864
Approximate date of commencement of proposed sale to the public: As soon
as practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier registration statement for the same
offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
CALCULATION OF REGISTRATION FEE
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Title of Class of Amount to be Registered Proposed Max. Off.Price Proposed Maximum Amount Of
Securities Per Share Offering Price Registration Fee(1)(2)
Common stock, $.001 2,505,000 $0.8750(1) $2,191,875 $578.65
Total 2,505,000 $ 0.8750 $2,191,875 $578.65(3)
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(1) The shares currently trade on the OTC Bulletin Board under symbol "WDSP"
and had a closing bid price of $0.8750. The actual price of sales may vary
depending on the price per share when the sales are made.
(2) Estimated solely for the purpose of calculating the registration fee based
on the closing bid price as of October 24, 2000 in accordance with Rule
457(f)(2).
(3) Paid by electronic transfer.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION
8(a), MAY DETERMINE.
PROSPECTUS Subject to Completion, Dated ____, 2000
The information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any state in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state.
WINTECH DIGITAL SYSTEM TECHNOLOGY CORPORATION
2,505,000 SHARES OF COMMON STOCK TO BE SOLD BY THE HOLDERS THEREOF
This registration statement relates to the offer and sale of 2,505,000
shares of common stock, $.001 par value per share, of Wintech Digital Systems
Technology Corporation, a Nevada corporation ("Wintech" or the "Company") by the
holders of such common stock. All costs incurred in the registration of the
shares are being borne by Wintech.
Wiintech's stock is currently trading on the OTC Bulletin Board under
the symbol "WDSP". Sales of the shares being offered by the selling
securityholders, or even the potential of such sales, may likely have an adverse
effect on the market price of the common stock of Wintech.
The shares will become tradable on the effective date of this
prospectus. The selling securityholders will receive the proceeds from the sale
of their shares and Wintech will not receive any of the proceeds from such
sales. The selling securityholders, directly or through agents, dealers or
representatives to be designated from time to time, may sell their shares on
terms to be determined at the time of sale. SEE "PLAN OF DISTRIBUTION." The
selling securityholders reserve the sole right to accept or reject, in whole or
in part, any proposed purchase of the shares being offered for sale.
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK. SEE "RISK FACTORS" CONTAINED IN
THIS PROSPECTUS BEGINNING ON PAGE 5.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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PROCEEDS TO COMPANY OR * UNDERWRITING DISCOUNTS
OTHER PERSONS PRICE TO PUBLIC(1) AND COMMISSIONS(2)
------------------------- ------------------- ------------------------------
------------------------- ------------------- ------------------------------
(3) Per Share $ 0.8750 $0
------------------------- ------------------- -------------------------------
------------------------- ------------------- -------------------------------
(3) Total $ 2,191,875 $0
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(1) All the shares are being sold by the selling securityholders. The
price is estimated based on the closing bid of Wintech's
common stock as quoted on the OTC Bulletin Board as of October 24, 2000
of $0.8750. However the actual sales price may vary depending on the
price at the time each sale is made.
(2) The shares are being sold by the selling securityholders and Wintech
has no agreements or understandings with any broker or dealer for the
sales of such shares. A selling securityholder may determine to use a
broker-dealer in the sale of its securities and the commission paid to
such broker-dealer if any, will be determined at that time.
(3) Wintech will not receive any proceeds from the sale of the shares.
The date of this Prospectus is
________________, 2000.
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PROSPECTUS SUMMARY
THE FOLLOWING IS A SUMMARY OF CERTAIN INFORMATION CONTAINED ELSEWHERE IN THIS
PROSPECTUS. REFERENCE IS MADE TO, AND THIS SUMMARY IS QUALIFIED BY, THE MORE
DETAILED INFORMATION SET FORTH IN THIS PROSPECTUS, WHICH SHOULD BE READ IN ITS
ENTIRETY.
WINTECH DIGITAL SYSTEM TECHNOLOGY CORPORATION
In July, 2000 Beijing Wintech Technology Co., Ltd. (Beijing Wintech)
was acquired by Temple Summit Financial Projects, Inc. ("Temple"), a fully
reporting Company in accordance with the Securities and Exchange Act of 1934, in
exchange for an aggregate of 12,000,000 shares of common stock and became a
wholly-owned subsidiary of Temple Summit Financial Projects, Inc. Prior to the
acquisition Temple conducted a 200 for 1 reverse split of its common stock on
July 24, 2000. At the time of the split the shares outstanding were 138,096,863.
The total number of outstanding shares was reduced to 690,484. At the time of
the acquisition all officers and directors of Temple Summit resigned and
appointed Yonghong Dong as the new president. As a result of 12,000,000 shares
being issued for the acquisition the new outstanding share amount was
12,690,484. In August 2000 Temple changed its name to Wintech Digital System
Technology Corporation("Wintech"). The transaction was treated as a reverse
acquisition. As a result of the reverse acquisition, the new entity of Wintech
became the successor and is required to continue compliance with the reporting
requirements of the Securities and Exchange Act of 1934.
TRADING MARKET
Currently Wintech's securities are quoted on the OTC Bulletin Board
under the symbol "WDSP". The closing bid price as of October 24, 2000 was
$0.8750
SELECTED FINANCIAL DATA
As more fully explained in the accompanying financial statements, the
acquisition on July 25, 2000 by Wintech of Beijing Wintech was accounted for as
a recapitalization of Wintech. The following tables set forth the unaudited
proforma statements of operations data of Wintech from July 1, 1999 through June
30, 2000 prepared on the basis that the reverse acquisition had occurred on July
1, 1999 and the the unaudited proforma balance sheet data as of June 30, 2000 as
if the acquisition had occurred on July 1, 1999.
OPERATING DATA:
WINTECH DIGITAL SYSTEM TECHNOLOGY CORP.
UNAUDITED PROFORMA STATEMENTS OF OPERATIONS
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(Historic) (Historic) *
Temple Beijing Wintech Proforma Combined (1)
<S> <C> <C> <C> <C> <C>
RMB US$ RMB US$ RMB US$
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<S> <C> <C> <C> <C> <C> <C>
Sales of products and
services .......................... -- -- 7,720,004 932,593 7,720,004 932,593
Cost of sales......... ............ -- -- 2,242,755 270,930 2,242,755 270,930
Gross Profit.......... ............ -- -- 5,477,249 661,663 5,477,249 661,663
Selling, general and administrative
expenses.............. ............
520,222 62,844 2,244,063 271,087 2,764,285 333,931
Income from
Operations ............ .......... (520,222) (62,844) 3,233,186 390,576 2,712,964 327,732
Interest income ........ ......... -- -- 9,950 1,202 9,950 1,202
Other income, net....... ......... -- -- 216,802 26,190 216,802 26,190
Income (Loss) before
Discontinued Operations ........... (520,222) (62,844) 3,459,938 417,968 2,939,716 355,124
Income tax ............. .......... -- -- 244,707 29,561 244,707 29,561
Net income.............. .......... (520,222) (62,844) 3,215,231 388,407 2,659,009 325,563
</TABLE>
2
BALANCE SHEET DATA:
WINTECH DIGITAL SYSTEM TECHNOLOGY CORP.
(1) Renminbi amounts have been translated into United States dollars at the
exchange rate as of June 30, 2000 of Rmb8.2780 to 1 United States dollar.
Such translation should not be constructed as a representation that
Renminbi amounts could be converted into United States dollars at that or
any other rate of exchange.
(2) The balance sheet of Beijing Wintech at June 30, 2000 adjusted to reflect
the re-capitalization arising from the reverse acquisition is as follows:
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(Historic) (Historic)
Temple Beijing Wintech Proforma Combined
<S> .................... <C> <C> <C> <C> <C> <C>
* ...................... RMB US$ RMB US$ RMB US$
Current Assets ...... 8,095 978 8,820,366 1,065,519 8,828,461 1,066,497
Total assets ........ 8,095 978 9,177,777 1,108,695 9,185,872 1,109,673
Total liabilities ... -- -- 3,726,998 450,229 3,726,998 450,229
Shareholders' equity 8,095 978 5,450,779 658,466 5,458,874 659,444
Total liabilities and
shareholders' equity 8,095 978 9,177,777 1,108,695 9,185,872 1,109,673
</TABLE>
3
RISK FACTORS
There are substantial risk factors involved in investment in Wintech.
Investment in Wintech is speculative and no assurances can be made of any return
to investors.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus may contain certain forward-looking statements and
information relating to Wintech that are based on its beliefs as well as
assumptions made by and information currently available to them. These
statements include, among other things, the discussions of Wintech's business
strategy and expectations concerning its market position, future operations,
expansion opportunities, and profitability. When used in these documents, the
words "anticipate," "feel," "believe," "estimate," "expect," "plan," and
"intend" and similar expressions, as they relate to Wintech, are intended to
identify forward-looking statements. Such statements reflect the current view of
Wintech respecting future events and are subject to certain risks,
uncertainties, and assumptions, including the meaningful and important risks and
uncertainties noted, particularly those related to the operations, results of
operations, and growth strategy of Wintech, liquidity, competitive factors and
pricing pressures, changes in legal and regulatory requirements, general
economic conditions, and other factors described herein. Although Wintech has
attempted to identify important facts that could cause actual results to differ
materially, there may be other factors that cause the forward-looking statement
not to come true as anticipated, believed, estimated, expected, planned, or
intended. Should one or more of these risks or uncertainties materialize, or
should underlying assumptions prove incorrect, actual results may vary
materially from those described herein as anticipated, believed, estimated,
expected, or intended. Neither Wintech nor any other person undertakes any
obligation to revise these forward-looking statements, to identify important
facts, or to reflect the occurrence of unanticipated events after the date
hereof that could cause actual results to differ materially.
RISK FACTORS
MANAGEMENT OF WINTECH HAS LIMITED EXPERIENCE OPERATING AS A PUBLIC COMPANY
While Wintech's executive management provide it with experience and recognition
in the Digital Signal Processing (DSP) business, Wintech has no operating
history as it is currently structured. Because of the nature of Wintech's
business, and its lack of operating history under its current structure,
historical results of operations may not be indicative of future financial
operating results and future financial performance is unknown. There is no
assurance Wintech will continue to show operating profits.
LACK OF ACCESS TO CAPITAL IN CHINA
Although Wintech has been able to grow without the help of outside capital, the
lack of working capital has prevented the Company from growing faster and
quickly capturing more market share. The lack of funds also prevented the
Company from entering the international market. Currently, the market in which
Wintech competes in is funded primarily by private individuals and private
companies. It is very difficult for a non-government owned Company to borrow
funds from banks in China. If China is admitted into the World Trade
Organization foreign financial institutions will be permitted to do business in
China. If China is not admitted into the World Trade Organization, the
operations and planned expansion could be adversely affected. The Company
believes that its' cash reserves and revenues from operations will be sufficient
to continue operations for the next 12 months. However, any planned expansion
will be dependent on the ability to raise capital.
4
WINTECH IS DEPENDENT UPON THE EXPERIENCE AND KNOWLEDGE OF ITS KEY PERSONNEL
The operations of Wintech will depend to a great extent on the efforts
and expertise of Wintech's executive officers and directors, particularly, its
President and Chairman, Yonghong Dong, Xiaoming Chen, Vice President of
Administration/Director, Mingrong Li, Wintech's Vice President of Marketing and
Baoling Zheng it's Vice President of Finance.
Wintech has no employment contracts with any individuals who can be
classified as management. Wintech carries no key man insurance on any of these
individuals, although all are shareholders of Wintech. In addition, it is not
anticipated that Wintech will maintain "key man" insurance with any of its
senior management or other employees, although Wintech, in its discretion, may
enter into employment contracts with such management or employees in the future
as it deems appropriate. See "MANAGEMENT." If Wintech is unable to retain its
senior management for any reason, Wintech could be materially and adversely
affected.
NO ASSURANCE THAT FINANCIAL RESULTS WILL CONTINUE TO SHOW A PROFIT
Wintech was profitable for the years ended June 30, 1999 and 2000 as
reflected in the audited financial statements. There can be no guarantee that
Wintech will continue to operate at a profit in the future for the following
reasons: o Possibility of new competitors into the electronics and
communications sales and Digital Signal Processing market, o Rapid change in
technology that would deem the Company's products inadequate, o Loss of key
management and personnel, o Lack of access to capital that would not allow for
timely expansion, o Change in the political and social environment in China, o
Entrance into the same market by competitors who could offer the same products
at significantly lower prices.
If any of the previous conditions occur there is a possibility that your
investment could lose value.
FLUCTUATING EXCHANGE RATES MAY CAUSE PROFITS TO DECREASE WHEN STATED IN THE
FINANCIAL STATEMENTS
Substantially all of our revenue, expense, assets and liabilities are
denominated in Renminbi. The Company can't guarantee that the current exchange
rate of Rmb8.277986 to 1 US dollar, will remain the same, therefore there is a
possibility that Wintech could post the same amount of profit for two comparable
periods and because of a fluctuating exchange rate actually post higher or lower
profit depending on exchange rate of Rmb converted to US dollars on that date.
The exchange rate could fluctuate depending on changes in the political and
economic environments without notice.
CHANGES IN THE POLITICAL OR BUSINESS ENVIRONMENT IN CHINA COULD AFFECT
OPERATIONS
Currently, China is in a period of growth and is openly promoting
business development in order to bring more business into China as evidenced by
the creation of the Beijing Technology Park. Additionally, China allows a
Chinese corporation to be owned as a subsidiary by a United States company. If
the laws or regulations are changed by the Chinese government to prohibit
ownership of Chinese companies by United States companies, Wintech's ability to
operate as a subsidiary of a United States Company could be affected.
Our ability to raise funds in the US capital markets and to market
our products and services in the US depends on a stable relationships between
the United States and China. If the relationship between the US and China
deteriorates due to reasons such as the increased tension over the Taiwan
straits, China related stock will suffer, which will impair the Company's
ability to raise funds in the capital markets. Furthermore, deteriorated
relations between the US and China may adversely affect normal trade relations
between the two countries and thus impair the our ability to sell our products
in US.
NO DIVERSITY OF OPERATIONS AS BUSINESS OPERATIONS ARE CONCENTRATED IN CHINA
Currently, Wintech's revenues are derived from sales of electronics and
communications equipment to companies in China. While Wintech hopes to expand
its operations to countries outside of China, it has not yet begun this
expansion and there can be no assurances that Wintech will be able to
successfully achieve such an expansion. Therefore, a downturn or stagnation in
the economic environment of China, could have a material adverse effect on
Wintech's financial condition. All of our revenues, expenses, assets and
liabilities are denominated in Renminbi.
5
THE ELECTRONICS AND COMMUNICATIONS EQUIPMENT SALES AND DEVELOPMENT BUSINESS IS
HIGHLY COMPETITIVE
In addition to competing with other electronics and communications
equipment companies, Wintech could have to compete with larger US companies who
have greater funds available for expansion, marketing, research and development
and the ability to attract more qualified personnel if access is allowed into
the Chinese market. If US companies do gain access to the Chinese markets, they
will be able to offer products at a lower price. There can be no assurance that
Wintech will remain competitive should this occur.
MANAGEMENT AND AFFILIATES OWN ENOUGH SHARES TO CONTROL SHAREHOLDER VOTES
Wintech's executive officers and directors beneficially own
approximately 64.8% of the outstanding common stock. Wintech's executive
officers and directors will be able to exercise their controlling interest over
matters requiring stockholder approval, including the election of directors and
the approval of material corporate matters such as change of control
transactions. The effects of such stock ownership could be to delay or prevent a
change of control of Wintech unless the terms are approved by such shareholders.
A PUBLIC MARKET MAY NOT BE SUSTAINED AND THE PRICE MAY FLUCTUATE
Wintech's stock is publicly traded on the OTC Bulletin Board maintained
by Nasdaq under the symbol "WDSP". The closing bid price as of October 24, 2000
was $0.8750. There can be no guarantee that the current price can be maintained
or be expected to increase in value. If for any reason the common stock is no
longer listed on the OTC Bulletin Board maintained by Nasdaq, purchasers of the
shares may have difficulty selling their common stock should they desire to do
so.
ISSUANCE OF ADDITIONAL COMMON STOCK WILL REDUCE INVESTORS' PERCENTAGE OWNERSHIP
The future issuance of all or part of the remaining authorized common
stock could result in a substantial reduction in the percentage of Wintech's
common stock held by its then shareholders, including purchasers of the shares
offered herein. No vote of the shareholders is required for the issuance of
additional common stock or the designation and issuance of preferred stock.
Wintech may determine to issue common stock for future acquisitions, or other
items, or may sell shares of its common stock at a price lower than price paid
by any purchaser hereof. Such issuance may have the effect of diluting the value
of the shares held by its then shareholders and might have a material adverse
effect on any trading market, should a trading market develop for Wintech's
securities.
ADDITIONAL SHARES ENTERING MARKET PURSUANT TO RULE 144 WITHOUT ADDITIONAL
CAPITAL CONTRIBUTION
Pursuant to Rule 144 of the General Rules and Regulations of the
Securities and Exchange Commission, after the expiration of the holding period
certain shares of Wintech's common stock now restricted for trading will become
eligible for trading in the public market without any additional payment
therefore or increase to Wintech's capitalization. Possible or actual sales of
its outstanding common stock by all or some of the present shareholders may have
an adverse effect on the market
6
price of Wintech's common stock. The additional availability of such shares to
be traded in the public market would increase the "public float" of Wintech
without any corresponding increase in its capital.
POSSIBLE DIFFICULTY FOR RECOURSE BY SHAREHOLDERS
All of our assets are located outside the United States. In addition, all of our
directors and officers are nationals and/or residents of countries other than
the United States, and all or a substantial portion of our or these persons'
assets are located outside the United States. As a result, it may be difficult
for you, within the United States, to enforce against them or against us,
judgments obtained in United States courts, including judgments predicated upon
the civil liability provisions of the securities laws of the United States or
any state.
SELLING SECURITYHOLDERS MAY SELL SECURITIES AT ANY PRICE OR TIME
After effectiveness of this prospectus, the selling securityholders may
offer and sell their shares at a price and time determined by the selling
securityholder in accordance with applicable federal and state securities laws.
Affiliates of Wintech will be subject to limitations of Rule 144, including its
volume limitations in the sale of their shares. The timing of such sales and the
price at which the shares are sold by the selling securityholders could have an
adverse effect and cause price fluctuations to the common stock.
POSSIBILITY OF NO STATE RESTRICTION ON SALES BY SELLING SECURITYHOLDERS
The National Securities Market Improvement Act of 1996 limits the
authority of states to impose restrictions upon sales of Securities made
pursuant to Sections 4(1) and 4(3) of the Securities Act of companies which file
reports under Sections 13 or 15(d) of the Securities Exchange Act. Sales by the
selling securityholders in the secondary market may be made pursuant to Section
4(1) (sales other than by an issuer, underwriter or broker). It is anticipated
that following the effective date of this prospectus, the selling
securityholders' shares will be eligible for resale in the secondary market in
each state.
THE POSSIBILITY OF WINTECH ISSUING PREFERRED STOCK WITH CERTAIN PREFERENCES MAY
DEPRESS MARKET PRICE OF THE COMMON STOCK
The Board of Directors may designate a series or classes of preferred
shares without shareholder consent which designations may give the holders of
the preferred stock, if previously issued, voting control and other preferred
rights such as to liquidation and dividends. The authority of the Board of
Directors to issue such stock without shareholder consent may have a depressive
effect on the market price of Wintech's common stock even prior to any such
designation or issuance of preferred stock. Any such issuance of shares of
preferred stock, under certain circumstances, could have the effect of delaying
or preventing a change in control of Wintech or other take-over attempt and
could adversely materially affect the rights of holders of shares of the common
stock.
ABSENCE OF CASH DIVIDENDS
The Board of Directors does not anticipate paying cash dividends on the
Shares for the foreseeable future and intends to retain any future earnings to
finance the growth of the Company's business. Payment of dividends, if any, will
depend, among other factors, on earnings, capital requirements, and the general
operating and financial condition of Beijing Wintech, and will be subject to
legal limitations on the payment of dividends out of paid-in capital.
OFFICERS AND DIRECTORS HAVE LIMITED LIABILITY AND HAVE INDEMNITY RIGHTS
The Certificate of Incorporation and By-Laws of Wintech provide that
Wintech indemnify its officers and directors against losses sustained or
liabilities incurred which arise from any transaction in such officer's or
director's respective managerial capacity unless such officer or director
violates a duty of loyalty, did not act in good faith, engaged in intentional
misconduct or knowingly violated the law, approved an improper dividend, or
derived an improper benefit from the transaction. Wintech's Certificate of
Incorporation and By-Laws also provide for the indemnification by it of its
officers and directors against any losses or liabilities incurred as a result of
the manner in which such officers and directors operate Wintech's business or
conduct its internal affairs, provided that in connection with these activities
they act in good faith and in a manner which they reasonably believe to be in,
or not opposed to, the best interests of Wintech and their conduct does not
constitute gross negligence, misconduct or breach of fiduciary obligations.
7
WINTECH'S COMMON STOCK MAY BE SUBJECT TO PENNY STOCK REGULATION
Currently, Wintech's stock is publicly traded on the OTC Bulletin
Board, maintained by Nasdaq, quoted under the symbol "WDSP" at the closing bid
price on October 24, 2000 of $0.8750. Since the common stock of Wintech trades
below $5.00 per share, the common stock may be considered "penny stock." Penny
stocks generally are equity securities with a price of less than $5.00 per share
other than securities registered on certain national securities exchanges or
quoted on the Nasdaq Stock Market, provided that current price and volume
information with respect to transactions in such securities is provided by the
exchange or system. Wintech's securities may be subject to "penny stock" rules
that impose additional sales practice requirements on broker-dealers who sell
such securities to persons other than established customers and accredited
investors (generally those with assets in excess of $1,000,000 or annual income
exceeding $200,000 or $300,000 together with their spouse). For transactions
covered by these rules, the broker-dealer must make a special suitability
determination for the purchase of such securities and have received the
purchaser's written consent to the transaction prior to the purchase.
Additionally, for any transaction involving a penny stock, unless exempt, the
rules require the delivery, prior to the transaction, of a disclosure schedule
prescribed by the Commission relating to the penny stock market. The
broker-dealer also must disclose the commissions payable to both the
broker-dealer and the registered representative and current quotations for the
securities. Finally, monthly statements must be sent disclosing recent price
information on the limited market in penny stocks. Consequently, the "penny
stock" rules may restrict the ability of broker-dealers to sell Wintech's
securities.
AVAILABLE INFORMATION
Wintech is subject to the informational requirements of the Exchange
Act and in accordance therewith files reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission"). Such
reports, proxy statements and other information may be inspected and copied on
the Commission's home page on the World Wide Web at HTTP://WWW.SEC.GOV or at the
Commission's public reference room located at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the Commission's Regional Offices located at
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661 and at 7 World Trade Center, 13th Floor, New York, New York
10048. Information about the Commission's public reference room can be obtained
by calling 800/SEC-0330. Copies of such materials may also be obtained at
prescribed rates from the Public Reference Section of the Commission located at
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549.
Wintech has filed a registration statement relating to the securities
offered hereby with the Commission pursuant to the provisions of the Securities
Act of 1933, as amended (the "Securities Act"). This prospectus forms a part of
the registration statement; however, it does not contain all the information set
forth in the registration statement, the exhibits and schedules thereto and the
documents incorporated herein and therein by reference. For further information
with respect to Wintech and the securities offered hereby, reference is made to
the registration statement, the exhibits and schedules thereto and the documents
incorporated herein and therein by reference. Summaries of and references to
various documents in this prospectus do not purport to be complete and in each
case reference is made to the copy of such document which has been filed as an
exhibit to or incorporated by reference into the registration statement.
Wintech will provide without charge to each person who receives a copy
of this prospectus, upon written or oral request by such person, a copy of any
of the information incorporated herein by reference, not including exhibits.
Such requests should be made in writing to Yonghong Dong, President and
Chairman, Room 510, DSP Building, 17 Zhongguancun Road, Beijing, China, 100080.
8
Wintech intends to furnish its shareholders with annual reports
containing audited financial statements and such other reports as may be
required by law.
THE COMPANY
Beijing Wintech was formed as a corporation in accordance with the
rules and regulations of the People's Republic of China. On July 25, 2000
Beijing Wintech was acquired by Temple for an aggregate of 12,000,000 shares of
common stock. Prior to the acquisition on July 24, 2000 a reverse split of 200
for 1 was conducted and brought the then current outstanding shares of
138,096,833 to 690,484. As a result of the acquisition, all officers and
directors of Temple resigned and Mr. Yonghong Dong was appointed as the new
President and Chairman. The transaction was accounted for as a reverse
acquisition. Temple had previously filed a form 10-SB pursuant to the Securities
Exchange Act of 1934, as amended, and became a fully reporting publicly traded
Company. On July 25, 2000 Temple changed its name to its current name of Wintech
Digital Systems Technology Corporation under which it continues to report in
accordance with the Securities Exchange Act of 1934, as amended.
Wintech is engaged in the business of electronics and communications
equipment sales and development, with its main focus being in digital signal
processing solutions, in Beijing, China.
Wintech has an authorized capitalization of 300,000,000 shares of
common stock, par value of $.001 per share, of which 12,690,484 shares are
issued and outstanding, and has no preferred shares issued or authorized. The
address of Wintech is Room 510, DSP building, 17 Zhongguancun Road, Beijing,
China, 100080 and its telephone number is (0118610) 62547647. SEE "DESCRIPTION
OF SECURITIES."
EMPLOYEES
Wintech currently employs a staff of 32 full time employees.
USE OF PROCEEDS
Wintech will not receive any proceeds from the sale of the shares.
DIVIDEND POLICY
Wintech currently intends to retain substantially all of its earnings,
if any, to support the development of its business and has no present intention
of paying any dividends on its common stock in the foreseeable future. Any
future determination as to the payment of dividends will be at the discretion of
the Board of Directors, and will depend on Wintech 's financial condition,
results of operations and capital requirements, and such other factors as the
Board of Directors deems relevant.
BUSINESS
OVERVIEW
As a consequence of the reverse acquisition, Wintech's historical financial
statements will present the operations of Beijing Wintech. The following
description of business of Wintech relates to its operations in China which are
conducted by its subsidiary, Beijing Wintech.
Beijing Wintech was founded in August 1996 and is located in Beijing, China, in
the New Technology Development Experiment Zone. Beijing Wintech has been
certified by the Beijing city government as a New Technology Enterprise.
Focusing on DSP (Digital Signal Processing) technology, the Company has
achieved great success in DSP research and development; in designing,
manufacturing, marketing of its products; and in providing related services. We
have developed a complete series of DSP development tools.
9
Targeting several areas in the current information industry, we have developed
different DSP solutions, including multi-user object boards, multi-algorithmic
function library, and application procedure library. We are currently developing
DSP solutions for telecommunications networks, including solutions for ADSL
(Asymmetric Digital Subscriber Loop) and IP Phone. We are committed to be in the
leading edge of the DSP technology and to working closely with world leading DSP
companies. We are a DSP Third Party of Texas Instruments and also a partner of
Arrow Electronics, Inc., the largest semiconductor Company in the world. Wintech
and Arrow are jointly developing and marketing DSP solutions.
In only three years, Wintech and its products have become highly recognized
in the DSP field, including in the DSP market place and research community. We
are in a leading position and play a vital role in the Chinese DSP market. We
now have over 5,000 subscribed users in China and sales continue to grow year by
year. Our DSP tools and DSP Solutions have captured 50% of the Chinese market.
In a recent international bidding for "Chinese Higher Education DSP Projects",
which was sponsored by the World Bank, we won the bid against a long list of
Chinese and foreign competitors.
To achieve further development and growth, we are in the process of
repositioning and restructuring ourselves. Our goal is to become the largest DSP
Company in China, and at the same time, to capitalize on our technological and
price advantage in order to open the global DSP market. Our business will be
focused on the following three areas:
1. DSP Solutions
DSP is an important basic technology in the information age with a very
wide range of applications. We will position ourselves in the following areas:
networks, telecommunications, and DSP general purpose platforms.
In the network area, we will focus on developing ADSL products; in the
telecommunications area, the focus will be on IP phone and software radio (a
programmable wireless communication signal processing hardware platform); as for
the general purpose DSP platforms, the main focus will be on the development of
a variety of general purpose signal processing platforms with wide
applicability.
2. DSP Tools
We will further improve DSP tool product series and try to gradually increase
our market share in this fast growing market.
3. DSP Service and Electronic Engineering (EE) Web Sites
We currently provide DSP books in Chinese and provides DSP engineer training. We
also provide client DSP design assistance. We plan to use the Internet to
provide more services. Two web sites: www.DSPChina.com and www.DSP.com.cn have
already been established. These two web sites are Electronic Engineering (EE)
portals in China and provide the following services: discussion forum for
electronic engineers to communicate with each other; advertising; online
electronics market; online electronics bookstore; online electronic engineer
career resource center; electronic technology and product news.
10
DESCRIPTION OF BUSINESS
DSP is the abbreviation of Digital Signal Processing. DSP is the core
technology in the digital age. Its role is equivalent to the role of the CPU
technology in the PC era. DSP technology will be widely used in such fields as
networking, telecommunications, artificial intelligence and digital appliances.
According to the projections of Dataquest, a market research Company, the global
DSP market will reach $50 billion in the year 2007 and will have an average
annual growth rate of 30%. DSP technology consists of DSP IC (Integrated
Circuit), DSP Solutions, DSP Service, and DSP Tools. We develop DSP Solutions,
DSP Service, and related DSP tools on DSP IC. According to our analysis of the
percentage of DSP IC in the end products such as cellular phones and Modems, DSP
IC constitutes 40% of the DSP market, while DSP Solutions, DSP Services, and DSP
Tools constitute 60% of that market.
According to our analysis, the Chinese DSP market has enormous potential.
The total market capacity of the DSP Solutions, DSP Services, and DSP Tools is
over Rmb25 billion. Because of the rapid development of the Chinese market, the
annual growth rate of the DSP market will exceed 100% in next three years.
The founders of Beijing Wintech have more than ten years of experience in the
DSP and telecommunication fields. They are experienced in technology
development, marketing, and management. In particular, they have a profound
understanding of DSP related business and technology. Mr. Yonghong Dong, one of
the founders, graduated from the School of Electronic Engineering, Beijing
University, and worked for the Beijing Communication Technology Research
Institute, researching DSP and developing DSP products. During that period, he
was in charge of the DSP design of a major national communication system and was
highly praised for his exceptional performance. Under Mr. Dong's leadership,
Beijing Wintech has formed a team of DSP experts, and a team of business and
marketing managers. Our development team includes 4 senior ranking engineers and
16 mid-ranking engineers. (These are prestigious rankings awarded by government
institutions, not by individual companies.) Our consulting team includes senior
professors specialized in the DSP area from Tsinghua University and Beijing
University. We believe that we will become one of the largest DSP enterprises in
China.
Company Business
Our business focuses mainly on the following three areas: DSP Solution, DSP
Service, and DSP Tools.
DSP Solutions
Our emphasis is on developing DSP solutions in networks, telecommunications
and general purpose platforms.
Networks
We are developing ADSL solutions. ADSL is a technology that uses surplus
frequency on existing copper telephone lines to provide high speed data transfer
between the phone Company and its users without affecting normal telephone
communications. ADSL can reach a maximum speed of 8 Mbps on traditional
telephone lines. In consideration of the actual variation of the channel
qualities and costs, ITU (International Telecommunication Union) has established
the G.Lite standard. The standard specifies that the ADSL down-load speed is 1.5
Mbps and the up-load speed is 384 Kbps. ADSL products are classified into
user-products and server-products. We are focusing on the user-product first and
will turn our attention to server-products once the user products are well
developed.
11
Unlike other ADSL manufactures which use specialized ADSL chip set provided
by semiconductor manufacturers, we develop our ADSL solutions on general purpose
DSP ICs. Our strategy is based on following considerations:
A. Because of the rapid development of the network technology, sooner or
later, the current ITU G.Lite standard will be changed. Products that
developed on the general purpose DSP chips can be easily upgraded by
changing the algorithm in the chip.
B. ADSL is a wide-band Internet connection product. By using general
purpose DSP chips, ADSL and other audio, video signal processing
algorithms can be stored in the same DSP chip to integrate IP Phone and
VOD (Video On Demand) with ADSL without increasing cost. This approach
should greatly enhance the competitive advantage of our products.
ADSL has enormous market potential in next few years. Widely used modems
today will soon be replaced by ADSL. Moreover, since the bandwidth of ADSL
connection is much larger than today's modem connection, many value-added
applications can be developed on ADSL.
Telecommunications
We have developed two DSP based solutions: IP Phone and Software Radio.
(1) IP Phone
IP Phone is the technology that transfers compressed sound data over the
IP Network in real time. IP Network includes both the LAN (Local Area Network)
within a Company and the widely used Internet. IP Phone products can be
classified into three levels: Home, Office, and Telecommunications. We position
our IP Phone products for office applications. In today's business information
infrastructure, there are two independent systems. One is the group telephone
network, and the other is the Local Area Network within a Company.
Traditionally, two separate network wiring systems are installed. Such
installation not only involves high costs, but also is a source for causing
chaos in a Company's internal communication systems. Our objective is to use IP
Phone technology to combine the two office networks, establish a unified call
center and information system within a Company. To achieve this objective, we
are developing the following two products:
A. IP LAN Phone. This uses the network cable originally connected to a PC
as the input end. One output jack connects to the PC's network card, another
output jack connects to a standard telephone, and a third standard V.35 port
will be reserved to support N* 64 K data transfer. This port can be used to send
IP Video.
B. IP LAN Gateway. IP LAN Gateway is a gateway between the LAN inside a
Company and the telephone networks outside of the Company and supports 4-8
incoming telephone lines. It is connected to a network HUB through a RJ-45 jack.
With an IP LAN Gateway and any number of IP LAN Phones, the two traditional
networks within a Company can be combined effectively. The internal phone calls
run through the Company LAN and outside calls run through the IP LAN Gateway. If
a Company's LAN is connected to the Internet, then Internet IP Phone calls can
be made from any IP LAN Phone.
Since the installation of IP LAN Phone and IP LAN Gateway effectively
combines the voice flow and the data flow, the combined information flow in the
LAN can be saved, transmitted and edited, which makes it easier for a Company to
manage its business activities and increase its efficiency. In fact, this system
integrates all the functions of a CTI (Computer Telephony Integration) system. A
web based call center can be easily established on this system.
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(2) Software Radio
Software Radio is a programmable wireless communication signal processing
hardware platform. Using Software Radio technology, different communication
algorithms and protocols can be implemented on the same hardware platform. There
are two types of wireless communications equipment: mobile equipment (such as
cell phones) and stationary equipment (such as a base station). We focus on
providing programmable hardware platforms for the stationary equipment.
Our software radio hardware platform has the following features:
a) The modular has a extremely high computation speed-10000MIPS.
b). Using matrix DSP and pipeline technology so the modular has very high data
transfer speed.
c). The modular contains high capacity high-speed memory whose maximum capacity
is 128 MB.
d). The modular adapts Compact PCI bus architecture. It can support hot swap.
e). The modular contains 4 built-in DDC's (Digital Down Converters) .
f). The modular has multi T1/E1 ports.
g). The modular supports different communication systems such as GSM, CDMA, WLL
and IMT2000.
DSP General Purpose Platforms
The General Purpose Platforms developed by us include a general hardware
platform and general purpose algorithms.
(1) General Hardware Platforms
The general hardware platform is designed mainly for electronic engineers.
It provides a high speed hardware module for DSP system integration projects;
provides hardware platform for DSP software engineers; and provides a real time
testing environment for DSP algorithm developers. We also provide DSP OEM
modular for relevant enterprises.
Our DSP general purpose platforms can be classified into the following
categories:
For telecommunication applications, we have developed a high-speed
communication signal processing PCI card. This card is a high-end multi-channel
communication platform. The card is equipped with a convenient software
programming port which makes the secondary development on the card easier.
The main features of the card are listed below:
A. The onboard 200M Hz TMS 320C6201 DSP Chip has a maximum speed of 1600 MIPS;
B. The PCI bus supports master/slave model;
C. An onboard 512 KB, 133 MHz SBSRAM;
D. 32 MB, 100 MHz SDRAM;
E. All DSP Memory can be accessed through PCI bus;
F. Enhanced MVIP-90 communication bus;
G. 384*384 channel exchange capability;
H. T1/E1 port;
I. Supports u law and A law coding;
J. Supports PCI plug & play.
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This card is especially useful for DSP engineers to evaluate communication
algorithms and for CTI application development.
For image processing applications, We have developed a high-speed real time
DSP hardware platform. Testing and evaluation for real time image processing
algorithms can be performed on this board. The features of the board are listed
as following:
A. Real time acquisition of NTSL/PAL video signal;
B. PCI port which supports master/slave model;
C. Onboard 166M TMS320C6701 Chip with the maximum speed of 10GFLOPS
D. Onboard 1 Mb SBSRAM;
E. 32 Mb of 100 MHz SDRAM;
F. All DSP Memory can be accessed through PCI bus;
G. Standard T1/E1 port;
H. Supports NTSL/PAL video output.
This board is especially useful for DSP engineers to do VCD, DVD Real time
Compression. It can also be used as a hardware model for video conferencing. In
addition, it supports MPEG-1. MPEG-2. MPEG-4, H.320, wavelet conversion and
other image processing algorithms.
For data acquisition applications, We have developed a high-precision,
multi-channel, Synchronous Intelligent Data Acquiring Processing System. This
board is a PCI based intelligent 16 bit Collecting Processing System. It has a
multiple secondary programming interface. The features are:
A. Four-Channel Synchronous Sampling. Four internal Sample/hold;
B. Maximum 200 KHZ sampling frequency;
C. Sampling precision of 16 bit;
D. Equipped with TMS320C31 Floating DSP Chip;
E. Equipped with 128 K*32 bit high-speed SRAM;
F. Equipped with 4 K*32 bit high-speed dual port SRAM;
G. PCI Port which support master/slave model;
H. Supports PCI plug & play.
Such equipment is suitable for engineers to do value-added development in
the fields of industrial monitoring and control, electronic instruments,
vibration analysis, etc.
The above are only three of the nearly 20 platforms developed by us.
(2) General Purpose Algorithms
We have developed general purpose DSP algorithms based
on the TMS 320 series, including:
A. FFT: 8-4096 points, supports complex and real mode;
B. Digital Filter:
FIR Filter
IIR Filter
Complex FIR
Cascade IIR
Hilbert FIR
Lattice FIR
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C. Adaptive Filter: Dime, Nbims, and Ndlme;
D. Mathematical Function Library: Sine, Atan, Atan2, addition, subtraction,
multiplication, division, logarithm, square root, negative, maximum, minimum,
random number, and floating point format converter.
The above algorithms are programmed with DSP assembly language and are
packed as functions. They can be called by the C Language.
DSP Tools
DSP Tools developed by us are classified into two categories: DSP emulation
development system and DSP Experiment development system.
DSP Emulation Development System.
Our DSP emulation development systems are divided into three categories
according to customer needs: PCI port model, EPP port model, and ISA slot model.
Each category is further divided into sub-categories according to the chip used:
TMS320C2XX, TMS320C3X, TMS320C5X, TMS320C54x, TMS320C6X.
PCI Port Model: It is a high-speed plug & play device.
EPP Port Model: It can be directly connected with a printer port without opening
the computer case. It is simple to install and can be connected with a notebook
computer to make onsite adjustments.
ISA Slot Model: It enables users to use one piece of hardware to develop on all
the DSP chips from TI (Texas Instruments) without having to distinguish between
fixed point and floating point chips. Once a customer owns our TMS320 series
development system, all that is needed is to purchase DSP Series software in
order to develop the DSP chip in the corresponding series.
The debug software that comes with the hardware emulation system supports C
language source code debugging. The interrupt point can be easily set to track
the variables. Because of the adoption of the JTAG technology, debugging
software can transparently visit all of the resources inside the DSP Chip.
DSP Experimental Development System
Based on PCI port model DSP emulation system, DSP Experimental Development
System is created by using the virtual instrument method to add the functions of
oscillograph, spectrum analyzer, and wave generator. The system is also equipped
with a DSP learning and experimenting board. The system is mainly designed for
college laboratory classes, but it can also provide a comprehensive DSP
development platform for DSP engineers.
DSP Service and Electronic Engineering (EE) Web Sites
We will continue to provide DSP books in Chinese; provide DSP engineer
training; and help clients with DSP designing. We will also focus on the
development of the Chinese DSP web site. Our company's DSP sites will be
extended to become the largest EE portal in China. Our web sites are positioned
to provide the following services:
A. EE Information Searching Engine (EE Resource Center);
B. EE News Service (EE Information Center);
C. EE discussion groups and information exchange service (EE Club);
D. E-Commerce service for electronics industry, including electronics parts,
circuit board products, and electronics books (EE Super Market). We expect
to attract a large number of users to our web site through our EE Resource
Center and EE Information Center which will ensure the success of the
E-Commerce business.
Market Analysis
Market Environment
Overview of the DSP Market in China
According to the projections of Dataquest, a market research firm, the
average annual growth rate of DSP could be as much as 30% per year worldwide
through the year 2007. In 1999, the global market was approximately $6.2 billion
and according to projections it could reach $50 billion in 2007. The Chinese DSP
market is about 10% of the global market, which means the Chinese DSP market
should reach $5 billion in 2007. Of the entire DSP industry, DSP IC accounts for
40% of the total market while DSP Solutions, DSP Service and DSP Tools account
for the remaining 60%. Based on this estimation, the market that we are focused
on, namely DSP Solutions, DSP Service and DSP Tools, should reach $3 billion in
2007.
Factors affecting the development of DSP in China
The potential Chinese DSP market is huge. But the following factors may
affect our development:
A. Lack of DSP Service
At present, DSP service is still an area yet to be established. Due to the
lack of channels to share information, many engineers and researchers repeat
research work that had been done elsewhere by others. We hope that our DSP
Service and EE web sites will provide a way for engineers to share information
so engineers can avoid duplicating each other's work and more effectively work
on technology integration.
B. Lack of Funding
At this early stage of development, the Chinese DSP industry is formed by a
group of private enterprises run by experts in this field. Their funding comes
from their own self-accumulated capital. It is almost impossible for them to get
loans from state banks due to the current financial policy of the central
government.
Once China joins the WTO, foreign financial institutions will be allowed to
operate in China, the privately-run DSP enterprises could seek loans from the
outside sources. This will pave the way for faster development for the entire
DSP industry.
Domestic Purchasing Power
From the customers' vantage point, any purchase of DSP Solutions, DSP
Service and DSP Tools is an investment, which will bring added value to their
own services or products. As long as China's economy keeps growing, the
purchasing power for our products should keep growing.
DSP Solutions Market and Competitive Analysis:
In the DSP solution market, our main focus is on networks,
telecommunications and general purpose platforms.
Networks
A. Market Analysis
In the network area, we are focusing on developing DSP solutions for ADSL.
ADSL is a new broad-band connection technology. ADSL can provide high speed data
transfer on existing copper telephone lines without affecting the normal
telephone communication. According to the latest ITU G. Lite standard, the
down-load speed of ADSL is 1.5Mbps, and the up-load speed is 384kbps. ADSL
products are classified into user-product and server-product.
The market size of ADSL user products can be derived from the market size of
56K (V.90) modem. According to the statistics of CNNIC (China Internet Network
Information Center), the number of Internet users in 1996 was 670,000. By the
end of 1999, it had increased to 8 million. It is expected to reach 15 million
at the end of 2000, and keep growing rapidly after 2000. Most Chinese Internet
users (98%) rely on dial-up Internet connection, which requires a modem.
Compared to traditional modems, ADSL is much faster in connection speed and our
feature/price ratio is much higher. According to the Dataquest projection, by
2002, over half of the modems (56 K V.90) will be replaced by ADSL.
At present, the Chinese ADSL market is still in the early development stage.
The market potential is huge. With our leading technology, once we obtain
sufficient funding, we should be able to capture a large market share.
B. Competitive Analysis
Since the Chinese ADSL market is still at the research and development
stage, there is no real sale of products, therefore, this analysis is only based
on technology and funding.
In user-end ADSL devices, our major competitor is Legend. Legend's advantage
is that it is a large Company and the leader in the Chinese PC industry. Our
disadvantage is that it neglects technology innovation and, as a result, it does
not have much of our own technology. To compete with Legend, we can take the
advantage of our lead in technology by making the cost of our products 20% lower
than that of Legend. In addition, we will attempt to form alliances with several
large PC makers in China to enhance our competitive edge in the market.
The Server-end ADSL device is a complicated communication system. Its
production requires strong technology support and large investment. It is more
likely that a traditional PBX manufacturer will be involved. Among those, Julong
is our main competitor. Julong has sufficient funding and marketing experience
in large communications systems. However, Julong is a state-owned enterprise and
lacks efficient management and employee loyalty. As one of the leading companies
in DSP technology, the core technology of ADSL, we believe we have an advantage
over Julong.
Telecommunications
In this area, our emphasis is on DSP Solutions for IP Phone and Software
Radio.
17
IP Phone
According to different applications, IP Phone can be classified into three
levels: Home level, Office level and Telecommunications level. We are targeting
the office level.
Our office IP Phone solution employs IP LAN Phone together with IP LAN
Gateway. This solution is our invention. Since this solution must combine IP LAN
Phone and IP LAN Gateway together to work as one system, IP LAN Phone and IP LAN
Gateway will be viewed as one product in the following discussion.
A. Market analysis
At the end of 1999 it was estimated that there were 15,000,000 computers in
China. Approximately 9,000,000, or 60%, are used in offices or for other
commercial purposes. About 3,600,000 of the 9,000,000, 40%, are connected with
local networks. This is the current Chinese market capacity for IP LAN Phone and
IP LAN Gateway. This capacity will expand as the number of computers and
Internet users grows in China. The annual growth rate should be at least 30%. We
plan to market this product globally.
B. Competitive analysis
This product is a significant innovation of ours.
Software Radio
Software Radio is a programmable wireless communication signal processing
hardware platform. With different algorithms, this general purpose platform can
function as different communication systems. For example : GSM, CDMA, IMT2000
etc.
A. Market analysis
In the global market, especially in China, mobile telecommunications have
been growing rapidly driven by the needs of personal telecommunications. To
better serve the ever growing demand of users, in addition to traditional voice
signal, mobile telecommunications systems must have the ability to transfer
E-mail, images, and other signals. Since different signal transmissions require
different wireless transmission protocols, the equipment at the base station
must have high programmability to meet the needs of new technology and new
communication protocols. Traditional ASIC-based based stations will not be able
to meet these needs. Software Radio technology must be used. Each of our
software radio hardware Platforms can handle 16 mobile users simultaneously.
Therefore, the market capacity for software radio hardware platforms is
approximately 3 million. This number will grow as the telecommunications
industry grows. The annual growth rate should be no less than 30%.
B. Competitive Analysis
At present, the market of Software Radio is still undeveloped. Chinese base
station manufacturers are just beginning to research the technology. According
to our market research, technology companies may start their own research and
development in this area. Their advantage is that they have been successful in
manufacturing and marketing of GSM base stations and once they succeed in
developing software radio technology, they can apply this technology in their
own base station equipment. But as a hardware manufacturer, they will not
release the technology to other
18
manufacturers in the industry. Our approach is different. We will focus on the
research and production of the software radio technology modules, and will
provide the modules to other communications equipment manufacturers in order to
help them enter the next generation high performance base station market.
DSP General Purpose Platforms
DSP general purpose platforms, including DSP hardware platforms and DSP
algorithms, are designed for DSP engineers. We are developing our DSP hardware
platforms in three areas: telecommunications, image processing, and data
acquisition. Our algorithms include F.F.T. (Fast Fourier Transformation),
Digital Filter, Adaptive Filter and Math Function Library.
A. Market analysis
According to the statistics of the China Electronic Engineering
Association, at the end of 1999, there were 5,000,000 electronic engineers in
China, Of which 200,000 were working on projects related to DSP research and
development. A typical project group usually consists of 4 to 5 members. This
indicates that about 40-50 thousand DSP projects are underway in China every
year. Each DSP project needs at least one DSP general purpose platform.
Therefore, the market capacity for DSP general purpose platforms is at least
40-50 thousand sets per year. The demand for DSP general purpose platforms will
grow as the use of DSP technology increases. The estimated annual growth rate
will be at least 30%.
Besides providing development platforms to DSP engineers, We also provide
DSP general purpose platforms to DSP related product manufacturers through OEM
agreements.
Since the cost of technology development and production is much lower in
China, our products are much more competitive compared with similar products in
the global market. We plan to market our DSP general purpose platforms to DSP
related product manufacturers globally.
B. Competitive Analysis
DSP General Purpose Platforms are technology intensive products and are
hard to develop. Our market research shows that there is no competition in China
at this point. Our main competition comes from DSP manufacturers from foreign
countries. At the same quality level, our products are priced at 30-50% of the
price of the foreign products. It is also very hard for the foreign
manufacturers to compete with us in providing local technical support and onsite
services.
Currently, the customs tariff for imported DSP general purpose platforms is
only 6%. China's entry into the WTO should not increase the competitiveness of
foreign DSP products, but it should enhance our ability to enter the global
markets.
DSP Tools Market and Competitive Analysis
DSP tools are systems with the functions of DSP emulation, debugging,
experimenting, etc., designed for DSP engineers and DSP college courses. By
usage, DSP tools can be divided into a DSP emulation system and a DSP
experimental development system.
DSP Emulation System
DSP emulation system is a necessary tool for DSP engineers. Our DSP
emulation system
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consists of DSP hardware emulator, source code debugging, and related assemble
and link software.
It can be divided into PCI port, EPP port and ISA slot system. Each of them
supports the TMS320 series emulation.
A. Market analysis
As mentioned above, there were 200,000 DSP engineers in China working
on 40,000 -- 50,000 DSP projects each year. About 10% of these projects are DSP
hardware development projects. Others are software development projects and
algorithm research projects. Engineers working in DSP hardware development
projects must use DSP emulation development tools. According to the projection
of China Signal Processing Association, the demand for DSP development tools
will be 4,000 sets in 2000. As the DSP market grows in China, DSP related
projects should increase at a rapid pace. Some DSP general purpose platform
based software development projects also need DSP emulation tools for real time
testing. Also since DSP chips and software are constantly being upgraded, new
demand for DSP development tools is constantly being created. Considering all
the above factors, the DSP development tool market demand in China should
increase at the rate of 50%.
B. Competitive analysis
The competitors in the DSP emulation system market are Seed Corporation
("Seed")of China and a number of foreign companies. The price of the products is
4-5 times higher than that of the same domestic products and is very hard for
them to provide follow up services. Therefore, the market share of foreign
products is very low.
Seed is successful in marketing ICs that go with the DSP emulation systems.
However, due to the lack of technology development capability, Seed has stopped
research and development and is only focusing on the IC market. At present, it
only markets low level emulation tools and only carries ISA bus port systems.
DSP Experimental Development System
Our DSP experimental developmental system is a comprehensive system
designed for DSP higher college courses and experiments. Based on our high-end
PCI emulation development system, the DSP experimental developmental system
adapted virtual instrument technology, virtual analog oscillograph, spectrum
analyzer, and signal generators, etc. This product is another one of our
innovations, and is the first such system in the world.
A. Market Analysis
DSP has become required basic knowledge for future electronic engineers.
Therefore, all higher education institutions are listing DSP as a required
course for EE students. Since DSP is a practical technology, lab courses are
necessary. Therefore, there is an urgent need to establish DSP labs in those
schools.
According to the statistics of the Chinese Ministry of Higher Education,
there are more than 1,000 higher education institutions in China. Each
institution in average provides at least three majors related to EE and each
major on average has 30 students. In other words, 3000 DSP labs are needed for
Chinese high education institutions. The lab guide issued by the Ministry of
Education requires that each set of experiment device can only be shared by no
more than two students. Thus about 45,000 sets of DSP Experiment Systems will be
needed. This number does not include the needs of some research institutes for
research and training purposes.
20
B. Competitive Analysis
The DSP experimental development system is our innovation and does not have any
competitors at this time.
DSP Service and Electronic Engineering (EE) Web Sites
DSP Service includes publishing of DSP related information, providing
continuing education for DSP engineers and DSP customer design projects.
We will provide these services through the Internet. We have established
two DSP web sites: www.DSP.com.cn and and plan to expand these two sites to
cover all electronic engineering subjects, making them some of the largest web
sites for electronic engineering professionals.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following financial review and analysis is intended to assist
prospective investors in understanding and evaluating the financial condition
and results of operations of the Company, for the years ended June 30, 1999 and
2000. All Renminbi amounts have been translated into United States dollars at
the exchange rate as of June 30, 2000 of Rmb8.2780 to 1 United States dollar.
This information should be read in conjunction with the Financial Statements of
Beijing Wintech and accompanying notes thereto, "Selected Financial Data" and
other detailed information regarding the Company appearing elsewhere in this
Prospectus.
OVERVIEW
Wintech in its current form resulted from the acquisition on July 25,
2000 of Beijing Wintech by Temple , which had no operations, revenues or
liabilities. Beijing Wintech has been a private Chinese Company since August
1996 and has operated as an electronics and communications sales and development
organization, focusing on digital signal processing solutions. In relation to
the acquisition the shareholders of Beijing Wintech were issued 12,000,000
shares of common stock of Temple.
The transaction between Wintech and Temple has been accounted for as a
Reverse acquisition of Temple by Beijing Wintech. The assets of Temple have been
recorded at historical cost since Temple had assets of only $978, represented by
cash, and had no liabilities prior. The results of operations represent the
operations of Beijing Wintech.
RESULTS OF OPERATIONS:
COMPARISON OF YEAR ENDED JUNE 30, 2000 AND YEAR ENDED JUNE 30, 1999
The historical operations for the years ended June 30 ("fiscal 2000")
and ("fiscal 1999") are analyzed as follows:
Revenues. The Company had total revenues of Rmb 7,720,004 or $932,594, an
increase from Rmb 4,379,682 or $529,074 in fiscal 1999.
The increase in revenues was primarily due to the following factors: DSP
emulation product sales more than doubled in fiscal 2000, and a new product
line, the DSP hardware platform was introduced in fiscal 2000.
Gross margin increased to RMB5,477,249 or $661,663 in fiscal 2000
representing 71% of revenues from Rmb7,720,004 or $932,593 in fiscal 1999
representing 61% of revenues due to the expansion of the sales volume and the
decrease of the cost of sales due to the decrease in the row materials cost.
Selling, general and administrative expenses. Selling, general and
administrative expenses of Rmb 2,244,063 or $271,088 for fiscal 2000 increased
from Rmb 1,638,919 or $197,984 in fiscal 1999 primarily due to increased salary
cost and office expenses arising from the Company's growth. The number of
employees increased from 5 to 32 during the period.
Income Tax. The Company was exempt from income tax in fiscal 1999 and
was subject to tax at 7.5% taxable income in fiscal 2000 resulting in income tax
expense of Rmb 244,000 or $29,476.
Net income. As a result of the foregoing factors, net income of Rmb
3,215,231 or $388,407 for Fiscal 2000 increased from Rmb 1,212,827 or $146,512
in Fiscal 1999.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity is a measure of a Company's ability to meet potential cash
requirements, including ongoing commitments to fund investing and financing
activities and for general purposes. Cash for general operating expenses is
primarily obtained through cash flows from operations.
The Company has significant ongoing liquidity needs to support its
existing business and continued growth. The Company's liquidity is actively
managed on a periodic basis and the Company's financial status, including its
liquidity, is reviewed periodically by the Company's management. This process is
intended to ensure the maintenance of sufficient funds to meet the needs of the
Company.
The Company has historically relied upon the cash flow from operations
to provide for its capital requirements. In fiscal 2000, net cash provided by
operating activities increased to Rmb 4,558,654 or $550,695 from Rmb 380,745 as
a result of an increase in net income and an advance of Rmb 1,653,366 or
$199,994 from Capital Financial Partners, Ltd. To develop a project named
"Compression algorithm based on a wavelet transformation". The Company's
shareholders have also provided interest-free finance to the Company; in fiscal
1999 the Company received Rmb 930,000 or $112,338 of advances, however, in
fiscal 2000 the Company repaid Rmb 750,000 or $90,602 of such advances. The
Company also provided interest-free loans to shareholders of Rmb 674,000 or
$81,415 in fiscal 1999 and Rmb 855,532 or $103,350 in fiscal 2000. The balance
of such loans at June 30, 2000 of Rmb 1,529,532 or $184,771 is repayable not
later than January 31, 2001. Management believes that cash generated from
operations, together with cash on hand at June 30, 2000 will be sufficient to
provide for its capital requirements for at least the next 12 months. The
Company may seek additional equity financing in the early part of 2001 through
an offering of its common stock, and contemplates that such offering, before
expenses relating to the offering, will be no less than $2 million and no more
than $5 million. There can no assurance that the Company will be able to
complete an offering.
At June 30, 2000, Wintech had Rmb 3,820,391 or $461,511of cash and had Rmb
8,820,366 or $1.6 million in current assets. At that same date, current
liabilities were Rmb 3,726,998 or $0.45 million. Shareholders' equity on the
same date, calculated on a pro forma basis assuming the reverse acquisition had
occurred on that date, was Rmb 5,450,779 or $0.65 million. Accordingly,
management believes that Wintech will have sufficient working capital and equity
to meet its operating needs in the near term without additional external
financing.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, accounting for
derivative instruments and hedging activities, which was amended by SFAS 137 and
SFAS 138. This statement establishes accounting and reporting standards for
derivative instruments and hedging activities. SFAS No. 133 requires recognition
of all derivative instruments in the statement of financial position as
either assets or liabilities and the measurement of derivative instruments at
fair value. SFAS No. 133 is effective for fiscal years beginning after June 15,
2000. The adoption of SFAS No. 133 will not have any impact on the Company's
financial position because the Company does not use derivative instruments
In December 1999, the Securities and Exchange Committee issued Staff Accounting
Bulletin ("SAB") 101, "Revenue Recognition in Financial Statements". SAB 101
establishes accounting and reporting standards for the recognition of revenue.
It states that revenue is generally realized or realizable and earned when all
of the following criteria are met: (1) persuasive evidence of an arrangement
exists; (2) delivery has occurred or services has been rendered; (3) the
seller's price to the buyer is fixed or determinable; (4) collectibility is
reasonably assured. SAB 101 is effective no later than the fourth quarter of
fiscal years beginning after December 15, 1999. At this time management has not
determined the effect, if any, that the implementation of SAB 101 will have on
the Company's financial position and results of operations.
MANAGEMENT
OFFICERS AND DIRECTORS
The officers and directors of the Company are as follows:
<TABLE>
<S> ............................................................. <C> <C>
NAME ............................................................ AGE TITLE
Yonghong Dong ................................................... 33 President and Chairman
Treasurer, Vice President of
Xiaoming Chen ................................................... 46 Administration, Director
Mingrong Li ..................................................... 33 Vice President of Marketing, Director
Baoling Zheng ................................................... 40 Vice President of Finance, Director
Yihe Wan ........................................................ 36 Director
</TABLE>
All directors of the Company hold office until the next annual meeting
of shareholders or until their successors are elected and qualified. At present,
the Company's Bylaws provide for not less than one nor more than fifteen
directors. Currently, there are four directors of the Company. The Bylaws permit
the Board of Directors to fill any vacancy and such director may serve until the
next annual meeting of shareholders or until his successor is elected and
qualified. Officers serve at the discretion of the Board of Directors.
The principal occupation and business experience for each officer and
director of the Company, for at least the last five years are as follows:
YONGHING DONG currently serves as the President and Chairman of the Board
of Directors. He has a B.S. in Electronic Engineering from Beijing University.
Since 1996, Mr. Dong has been the President of Beijing Wintech. His primary
responsibilities are being in charge of overall product series planning while
maintaining the Company's focus on DSP business and overall product research and
development. Mr. Dong successfully led the Company's innovations in the DSP
market and made Wintech the leader in the Chinese DSP market in a short amount
of time by establishing advanced management systems. Mr. Dong also lead the
Company to conduct business on the Intranet/Internet and to adopt a "B to B"
e-commerce business model between the Company and its agents. From August 1994
to 1996 he was the Technical Manager and Chief Engineer for Beijing Taidishen
Technology Development Corp. He was in charge of technology development and
management. While employed by Beijing Taidishen Technology Development Corp. he
obtained several DSP development contracts. From September, 1989 to August, 1994
Mr. Dong was the Chief Designer for the Beijing Communication Technology
Research Institute. While there he was in charge of the digital signal
processing portion of several national key communication projects. Mr. Dong was
the youngest DSP expert in the institute at that time.
XIAOMING CHEN, Treasurer, Vice President of Administration and Director has
a B.S. in Industrial Engineering and has been with the Company since 1999. From
1997 to 1999, Mr. Chen was the President of Beijing Mindi Science and Technology
Development Co., Ltd. which focused on telecommunication systems and computer
systems integration. From 1993 to 1997 Mr. Chen was the President and Director
of Beijing ReiCi Communication System Development Co. Ltd.where the focus was on
communication terminal equipment technology development.
MINGRONG LI, Vice President of Marketing and Director has a Masters of
Science from. Beijing University. He has been with Wintech since October 1999.
Prior to his employment at Wintech, from August 1993 to September 1999, Mr. Li
was the President of Beijing Chang An Hudsons Electronic Co. where he was
responsible for marketing video signal processing and teleconference systems to
both domestic and international clients.
BAOLING ZHENG, Vice President of Finance, Secretary and Director possesses
an MBA and has been with Wintech since November 1999. Prior to joining Wintech
from November 1998 to November 1999 he was the Vice President of Finance for
Beijing New Ort Group. From November 1996 to November, 1998 Mr. Zheng was a Vice
President for the Beijing Yadu Group.
YIHE WAN, Vice President of Technology and Director possesses a M.S., from
North-West Telecommunication University. Mr. Wan has been employed with Wintech
since May, 2000. From September, 1984 to April, 2000 Mr. Wan was the Vice-Chief
Engineer for the Jiangxi Wireless Factory where he was engaged in researching
and developing communications systems, products and also worked as the Chief
Director for Tsingha Tongfang number 713, a factory design institute.
EMPLOYMENT AGREEMENTS
Currently the Company has no employment agreements with any of its
employees. However, in the future the Company will enter into employment
agreements when deemed necessary.
REMUNERATION
All Officers and Directors of the Company currently receive salaries.
All Officers and Directors receive salaries of Rmb5,000 or $609 per month with
the exception of the President and Chairman, Mr. Yonghong Dong, who receives
Rmb5,500 or $670 per month.
INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS
No director of Wintech will have personal liability to Wintech or any of its
shareholders for monetary damages for breach of fiduciary duty as a director
involving any act or omission of any such director since provisions have been
made in the Articles of Incorporation limiting such liability. The foregoing
provisions shall not eliminate or limit the liability of a director (i) for any
breach of the director's duty of loyalty to Wintech or its shareholders, (ii)
for acts or omissions not in good faith or, which involve intentional misconduct
or a knowing violation of law, (iii) under applicable Sections of the Nevada
Revised Statutes, (iv) the payment of dividends in violation of Section 78.300
of the Nevada Revised Statutes or, (v) for any transaction from which the
director derived an improper personal benefit.
The By-laws provide for indemnification of the directors, officers, and
employees of Wintech in most cases for any liability suffered by them or arising
out of their activities as directors, officers, and employees of Wintech if they
were not engaged in willful misfeasance or malfeasance in the performance of his
or her duties; provided that in the event of a settlement the indemnification
will apply only when the Board of Directors approves such settlement and
reimbursement as being for the best interests of the Company. The Bylaws,
therefore, limit the liability of directors to the maximum extent permitted by
Nevada law (Section 78.751).
The officers and directors of Wintech are accountable to Wintech as fiduciaries,
which means they are required to exercise good faith and fairness in all
dealings affecting Wintech. In the event that a shareholder believes the
officers and/or directors have violated their fiduciary duties to the Company,
the shareholder may, subject to applicable rules of civil procedure, be able to
bring a class action or derivative suit to enforce the shareholder's rights,
including rights under certain federal and state securities laws and regulations
to recover damages from and require an accounting by management. Shareholders
who have suffered losses in connection with the purchase or sale of their
interest in Wintech in connection with such sale or purchase, including the
misapplication by any such officer or director of the proceeds from the sale of
these securities, may be able to recover such losses from Wintech.
The registrant undertakes the following:
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (the "Act") may be permitted to directors, officers and controlling persons
of the small business issuer pursuant to the foregoing provisions, or otherwise,
the small business issuer 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
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of the effective
date of this prospectus regarding the beneficial ownership of Wintech's common
stock by each of its officers and directors and by each person who owns in
excess of five percent of its common stock giving effect to the exercise of
warrants or options held by the named securityholder.
<TABLE>
<S> <C> <C> <C>
---------------------------- ------------------------ -------------------- --------------------------
Percent of
Amount of Common Percent of Common Stock
Stock Beneficially Common Stock Beneficially Owned
Name Owned (1) Benefecially Owned After the Offering (2)
---------------------------- ------------------------ -------------------- --------------------------
---------------------------- ------------------------ -------------------- --------------------------
Mr. Yonghong Dong
President and Chairman
No. 48-30 Gensi Road
Taixing Town Taixing Shi
Jiangsu Province China 6,453,200 50.8% 50.8 %
---------------------------- ------------------------ -------------------- --------------------------
---------------------------- ------------------------ -------------------- --------------------------
Mr. Xiaoming Chen
Vice President of
Administration
Treasurer and Director
North 21-601 Zhaoshang
Road Shekou ShenZhen 884,000 6.9% 6.9%
,Guangdong Province, China
---------------------------- ------------------------ -------------------- --------------------------
---------------------------- ------------------------ -------------------- --------------------------
Mr. Baolin Zheng
Vice President of Finance,
Corporate Secretay and
Director
119-3-9 No.19 Xisanhuan
Middle Road Haidian 707,200 5.5% 5.5%
District, Beijing China
---------------------------- ------------------------ -------------------- --------------------------
---------------------------- ------------------------ -------------------- --------------------------
Mr. Mingrong Li
Vice President of
Marketing a
and Director
No. 22-3-502 Dongzhuang
You An Men Wai Fengtai 176,800 1.3% 1.3%
District
Beijing China
---------------------------- ------------------------ -------------------- --------------------------
---------------------------- ------------------------ -------------------- --------------------------
Mr. Yihe Wan
Director
Qianqu 1-104 No.781 Shili
Da Dao Lushan Disctrict
Jiujiang 176,800 1.3% 1.3%
Jiangxi Province, China
---------------------------- ------------------------ -------------------- --------------------------
---------------------------- ------------------------ -------------------- --------------------------
All Directors and
Executive Officers as a
Group 8,398,000 66.7% 66.7%
(4 persons)
---------------------------- ------------------------ -------------------- --------------------------
</TABLE>
(1) Based upon 12,690,484 shares outstanding as of October 24, 2000
(2) No new shares are being issued in this offering.
SELLING SECURITYHOLDERS
Wintech is registering for offer and sale shares of its common stock held
by certain security holders. The selling securityholders may offer their shares
for sale on a continuous or delayed basis pursuant to Rule 415 under the 1933
Act. SEE "RISK FACTORS--Additional Shares Entering Public Market without
Additional Capital Pursuant to Rule 144" and "Selling Securityholders May Sell
Shares at any Price or Time."
All of the shares registered herein will become tradable on the
effective date of this prospectus.
The following table sets forth the beneficial ownership of the shares
held by each person who is a selling securityholder and by all selling
securityholders as a group.
<TABLE>
<S> <C> <C> <C> <C>
--------------------------------------------------- ------------ ------------ ----------------- ------------------
Number of
Common Shares Percentage of Percentage of
Name and Address of Stock Owned Registered Stock Owned Stock Owned
Beneficial Owner for Sale Prior to After the
Offering (1) Offering (2)
--------------------------------------------------- ------------ ------------ ----------------- ------------------
--------------------------------------------------- ------------ ------------ ----------------- ------------------
--------------------------------------------------- ------------ ------------ ----------------- ------------------
--------------------------------------------------- ------------ ------------ ----------------- ------------------
Weirong Ding
Appartment 1402, Building 4, District 1, 250,000 250,000 1.9 % 1.9 %
GuangAnMen NanJie JianGongBeiLi, Beijing, China
100053
--------------------------------------------------- ------------ ------------ ----------------- ------------------
--------------------------------------------------- ------------ ------------ ----------------- ------------------
Huanhua Wu
Jia 12, GuangAnMen NanJie 250,000 250,000 1.9 % 1.9 %
Beijing, China
--------------------------------------------------- ------------ ------------ ----------------- ------------------
--------------------------------------------------- ------------ ------------ ----------------- ------------------
Ke Luo
The railroad ministry Apt., No. 46-4
Yang-Fang-Dian, Haidian 500,000 500,000 3.9 % 3.9 %
Beijing, China 100038
--------------------------------------------------- ------------ ------------ ----------------- ------------------
--------------------------------------------------- ------------ ------------ ----------------- ------------------
Zhiming Tan
No.6 Group Beixiao Cun Jiaodang Xiang Taixing 500,000 500,000 3.9 % 3.9 %
Jiangsu Province China
--------------------------------------------------- ------------ ------------ ----------------- ------------------
--------------------------------------------------- ------------ ------------ ----------------- ------------------
Daohen Yu
No.14-409 Peking University 500,000 500,000 3.9% 3.9%
Haidian District , Beijing China
--------------------------------------------------- ------------ ------------ ----------------- ------------------
--------------------------------------------------- ------------ ------------ ----------------- ------------------
Prakash Patel
3129 Millwood Terrace
Apt. M134 15,000 15,000 * *
Boca Raton, FL. 33431
--------------------------------------------------- ------------ ------------ ----------------- ------------------
--------------------------------------------------- ------------ ------------ ----------------- ------------------
Craig Hanselman
1080 South Military Trail 85,000 85,000 * *
Apt. 303
Deerfield Beach, FL. 33432
--------------------------------------------------- ------------ ------------ ----------------- ------------------
--------------------------------------------------- ------------ ------------ ----------------- ------------------
Tai Q. Chung
6936 Winton Blount Blvd 100,000 100,000 * *
Montgomery, AL 36117
--------------------------------------------------- ------------ ------------ ----------------- ------------------
--------------------------------------------------- ------------ ------------ ----------------- ------------------
Elmer R Biersack
1212 Dalraida Rd 10,000 10,000 * *
Montgomery, AL 36109
--------------------------------------------------- ------------ ------------ ----------------- ------------------
--------------------------------------------------- ------------ ------------ ----------------- ------------------
John Hogue
19819 Henderson Rd
Apartment M
Cornelius, NC 28031 10,000 10,000 * *
--------------------------------------------------- ------------ ------------ ----------------- ------------------
--------------------------------------------------- ------------ ------------ ----------------- ------------------
Jie Zhao
15540 Owens Glen Ter 10,000 10,000 * *
Gaithersburg, MD 20878
--------------------------------------------------- ------------ ------------ ----------------- ------------------
--------------------------------------------------- ------------ ------------ ----------------- ------------------
Jinsong Zeng
A610, HuiBin DaSha
No.8 Beichendong st. 32,500 32,500 * *
Beijing, China 100101
--------------------------------------------------- ------------ ------------ ----------------- ------------------
--------------------------------------------------- ------------ ------------ ----------------- ------------------
Ray Howard
P. O. Box 1904 10,000 10,000 * *
Livingston, Texas 77351
--------------------------------------------------- ------------ ------------ ----------------- ------------------
--------------------------------------------------- ------------ ------------ ----------------- ------------------
Richard Wang
7231 Waters Edge 2,500 2,500 * *
Montgomery, AL 36117
--------------------------------------------------- ------------ ------------ ----------------- ------------------
--------------------------------------------------- ------------ ------------ ----------------- ------------------
Jianzhong Zhang
7226 Farnsworth Ct 10,000 10,000 * *
Montgomery, AL 36117
--------------------------------------------------- ------------ ------------ ----------------- ------------------
--------------------------------------------------- ------------ ------------ ----------------- ------------------
Jie Ma
7512 Brampton Lane 8,000 8,000 * *
Montgomery, AL 36117
--------------------------------------------------- ------------ ------------ ----------------- ------------------
--------------------------------------------------- ------------ ------------ ----------------- ------------------
Jiankang Zhang
430 North Lincoln Avenue #A 2,000 2,000 * *
Monterey Park, CA 91755
--------------------------------------------------- ------------ ------------ ----------------- ------------------
--------------------------------------------------- ------------ ------------ ----------------- ------------------
Jie Ruan
7109 Fair Oaks Ct 5,000 5,000 * *
Montgomery, AL 36117
--------------------------------------------------- ------------ ------------ ----------------- ------------------
--------------------------------------------------- ------------ ------------ ----------------- ------------------
Kelly Charles
87 Sea Hoilly Way
Henderson, NV 89014 7,500 7,500 * *
--------------------------------------------------- ------------ ------------ ----------------- ------------------
--------------------------------------------------- ------------ ------------ ----------------- ------------------
SWK Enterprises
3840 Brookside Dr.
Bedford, Texas 76021 100,000 100,000 * *
--------------------------------------------------- ------------ ------------ ----------------- ------------------
--------------------------------------------------- ------------ ------------ ----------------- ------------------
Bill Hopkins
11080 Hidden Ridge #2035
Irving, Texas 75038 10,000 10,000 * *
--------------------------------------------------- ------------ ------------ ----------------- ------------------
--------------------------------------------------- ------------ ------------ ----------------- ------------------
Tarja Morado
708 Hillcrest Drive
Cedar Hill, Texas 75104 50,000 50,000 * *
--------------------------------------------------- ------------ ------------ ----------------- ------------------
--------------------------------------------------- ------------ ------------ ----------------- ------------------
David Clifton
753 Bandit Trail
Keller, Texas 76180 30,000 30,000 * *
--------------------------------------------------- ------------ ------------ ----------------- ------------------
--------------------------------------------------- ------------ ------------ ----------------- ------------------
Ron Terranova
8533 Vivid Violet
Las Vegas, NV 89143 2,500 2,500 * *
--------------------------------------------------- ------------ ------------ ----------------- ------------------
Romie Krickbaum
708 Hillcrest Drive
Cedar Hill, Texas 75104 2,500 2,500 * *
--------------------------------------------------- ------------ ------------ ----------------- ------------------
Wade Vogel
1108 27th Street N.W.
Mandan, ND 58554 2,500 2,500 * *
--------------------------------------------------- ------------ ------------ ----------------- ------------------
</TABLE>
* Denotes less than 1%.
(1) Assumes 12,690,484 shares of common stock outstanding.
(2) Assumes sale of all shares offered by the selling securityholders.
In the event the selling securityholders receive payment for the sale
of their shares, Wintech will not receive any of the proceeds from such sales.
Wintech is bearing all expenses in connection with the registration of the
shares of the selling securityholders.
The shares owned by the selling securityholders are being registered
pursuant to Rule 415 of the General Rules and Regulations of the Securities and
Exchange Commission, which Rule pertains to delayed and continuous offerings and
sales of securities. In regard to the shares offered under Rule 415, the Company
has given certain undertakings in Part II of the Registration statement of which
this prospectus is a part which, in general, commit the Company to keep this
prospectus current during any period in which offers or sales are made pursuant
to Rule 415.
28
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the years ended June 30, 2999 and 2000, Beijing Wintech advanced
a total of Rmb 674,000 or $81,415 and RMB 855,332 or $103,350, respectively, to
investors in Beijing Wintech. Such advances are interest-free and are repayable
no later than January 31, 2000.
In the year ended June 30, 1999, investors in Beijing Wintech advanced
interest-free Rmb 930,000 or $112,338 of which Rmb 750,000 was repaid during the
year ended June 30, 2000. There are no specific repayment terms on the
outstanding balance.
DESCRIPTION OF SECURITIES
The Company has an authorized capital of 200,000,000 shares of Common
stock, $.001 par value, and has no preferred stock authorized. On July 24, 2000
Temple conducted a reverse stock split of 200 for 1. At the time of the reverse
split there were 138,096,833 shares outstanding. After the reverse split
occurred the outstanding shares became 690,484. 12,000,000 shares of restricted
stock were issued on July 25, 2000 for the acquisition of Wintech which brought
the outstanding shares to 12,690,484. There have been no additional shares
issued since the acquisition occurred.
SHARES OF COMMON STOCK
The Company is not offering for sale any shares of common stock in this
registration statement. The selling securityholders of Wintech are registering
an aggregate of 2,505,000 shares of common stock for sale at a price to be
determined in the future. The closing price as quoted on the OTC Bulletin Board
as of October 24, 2000 was $0.8750. A final price for sales can only be
determined at the time the sale is made due to the fact that the price of the
stock may fluctuate.
Holders of the common stock do not have preemptive rights to purchase
additional shares of common stock or other subscription rights. The common stock
carries no conversion rights and is not subject to redemption or to any sinking
fund provisions. All shares of common stock are entitled to share equally in
dividends from sources legally available therefor when, as and if declared by
the Board of Directors and, upon liquidation or dissolution of the Company,
whether voluntary or involuntary, to share equally in the assets of the Company
available for distribution to shareholders. All outstanding shares are validly
authorized and issued, fully paid and nonassessable, and all shares to be sold
and issued as contemplated hereby will be validly authorized and issued, fully
paid and nonassessable.
The Board of Directors is authorized to issue additional shares of
common stock, not to exceed the amount authorized by the Company's Certificate
of Incorporation, and any amendments thereto, and to issue options for the
purchase of such shares, on such terms and conditions and for such consideration
as the Board may deem appropriate without further stockholder action.
PENNY STOCK REGULATION
Penny stocks generally are equity securities with a price of less than
$5.00 per share other than securities registered on certain national securities
exchanges or listed on the Nasdaq Stock Market, provided that current price and
volume information with respect to transactions in such securities is provided
by the exchange or system. The "penny stock" rules impose additional sales
practice requirements on broker-dealers who sell such securities to persons
other than established customers and accredited investors (generally those with
assets in excess of $1,000,000 or annual income exceeding $200,000 or $300,000
together with their spouse). For transactions covered by these rules, the
broker-dealer must make a special suitability determination for the purchase of
such securities and have received the purchaser's written consent to the
transaction prior to the purchase. Additionally, for any transaction involving a
penny stock, unless exempt, the rules require the delivery, prior to the
transaction, of a disclosure schedule prescribed by the Commission relating to
the penny stock market. The broker-dealer also must disclose the commissions
payable to both the broker-dealer and the registered representative and current
quotations for the securities. Finally, monthly statements must be sent
disclosing recent price information on the limited market in penny stocks.
Consequently, the "penny stock" rules may restrict the ability of broker-dealers
to sell the Company's securities. The foregoing required penny stock
restrictions will not apply to the Company's securities if such securities reach
and maintain a market price of $5.00 or greater.
NONCUMULATIVE VOTING
Each holder of common stock is entitled to one vote per share on all
matters on which such shareholders are entitled to vote. Shares of common stock
do not have cumulative voting rights. The holders of more than 50 percent of the
shares voting for the election of directors can elect all the directors if they
choose to do so and, in such event, the holders of the remaining shares will not
be able to elect any person to the Board of Directors.
PREFERRED STOCK
The Company's Certificate of Incorporation does not authorize the
issuance of preferred stock. However the Company may at a time when needed elect
to amend the articles of incorporation.
The Board of Directors of the Company is authorized to amend the
Certificate of Incorporation in order to provide for the issuance of shares of
preferred stock in series and, by filing a certificate pursuant to the
applicable law of the State of Nevada, to establish from time to time the number
of shares to be included in each such series, and to fix the designation,
powers, preferences and rights of the shares of each such series and the
qualifications, limitations or restrictions thereof without any further vote or
action by the shareholders. Any shares of preferred stock so issued may have
priority over the common stock with respect to dividend or liquidation rights.
Any future issuance of preferred stock may have the effect of delaying,
deferring or preventing a change in control of the Company without further
action by the shareholders and may adversely affect the voting and other rights
of the holders of common stock. At present, the Company has no plans to issue
any preferred stock nor adopt any series, preferences or other classification of
preferred stock.
ADDITIONAL INFORMATION DESCRIBING STOCK
The above descriptions concerning the stock of the Company do not
purport to be complete. Reference is made to the Company's Certificate of
Incorporation and By-Laws which are included as exhibits to the registration
statement of which this prospectus is a part and which are available for
inspection at the Company's offices. Reference is also made to the applicable
statutes of the State of Nevada for a more complete description concerning
rights and liabilities of shareholders.
TRANSFER AGENT AND REGISTRAR
Nevada Agency and Trust Company of Reno, Nevada serves as the transfer
agent for Wintech.
REPORTS TO SHAREHOLDERS
Wintech will furnish to its shareholders annual reports containing
audited financial statements examined and reported upon, and with an opinion
expressed by, an independent certified public accountant. The Company may issue
other unaudited interim reports to its shareholders as it deems appropriate.
PLAN OF DISTRIBUTION
Wintech will not receive the proceeds from the sale of the shares by
the selling securityholders.
The selling securityholders' shares may be sold to purchasers from time
to time directly by and subject to the discretion of the selling
securityholders. The selling securityholders may from time to time offer their
shares for sale through underwriters, dealers or agents, who may receive
30
compensation in the form of underwriting discounts, concessions or commissions
from the selling securityholders and/or the purchasers of the shares for whom
they may act as agents. The shares sold by the selling securityholders may be
sold from time to time in one or more transactions: (i) at an offering price
that is fixed or that may vary from transaction to transaction depending upon
the time of sale or (ii) at prices otherwise negotiated at the time of sale.
Such prices will be determined by the selling securityholders or by agreement
between the selling securityholders and any underwriters.
Any underwriters, dealers or agents who participate in the distribution
of the securities may be deemed to be "underwriters" under the Securities Act
and any discounts, commissions or concessions received by any such underwriters,
dealers or agents may be deemed to be underwriting discounts and commissions
under the Securities Act.
At the time a particular offer is made by or on the behalf of the selling
securityholders, a prospectus, including any necessary supplement thereto, will
be distributed which will set forth the number of shares of common stock and
other securities being offered and the terms of the offering, including the name
or names of any underwriters, dealers or agents, the purchase price paid by any
underwriter for the shares purchased from the selling securityholders, any
discounts, commissions and other items constituting compensation from the
selling securityholders, any discounts, commissions or concessions allowed,
reallowed or paid to dealers, and the proposed selling price to the public.
Pursuant to Regulation M of the General Rules and Regulations of the
Securities and Exchange Commission, any person engaged in a distribution of
securities, including on behalf of a selling security holder, may not
simultaneously bid for, purchase or attempt to induce any person to bid for or
purchase securities of the same class for a period of five business days prior
to the commencement of such distribution and continuing until the selling
security holder (or other person engaged in the distribution) is no longer a
participant in the distribution.
If, at some time, Wintech meets the requirements of the Nasdaq Small
Cap Market it will apply for listing thereon. If it should be accepted for
listing thereon, then certain underwriters may engage in passive market making
transactions in the Company's common stock in accordance with Rule 103 of
Regulation M.
In order to comply with the applicable securities laws, if any, of
certain states, the securities will be offered or sold in such states through
registered or licensed brokers or dealers in those states. In addition, in
certain states, the securities may not be offered or sold unless they have been
registered or qualified for sale in such states or an exemption from such
registration or qualification requirement is available and with which the
Company has complied.
In addition and without limiting the foregoing, the selling
securityholders will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder in connection with transactions in shares
during the effectiveness of the registration statement.
Wintech will pay all of the expenses incident to the registration of
the shares (including registration pursuant to the securities laws of certain
states) other than commissions, expenses, reimbursements and discounts of
underwriters, dealers or agents, if any.
In addition and without limiting the foregoing, the selling
securityholders will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder in connection with transactions in the sale
of the selling securityholder shares during the effectiveness of this
prospectus.
RESALES OF THE SECURITIES UNDER STATE SECURITIES LAWS
The National Securities Market Improvement Act of 1996 ("NMSIA") limits
the authority of states to impose restrictions upon sales of securities made
pursuant to ss.ss.4(1) and 4(3) of the Securities Act of companies which file
reports under Sections 13 or 15(d) of the Securities Exchange Act. Sales of the
shares offered by the selling securityholders in the secondary market may be
made pursuant to Section 4(1) (sales other than by an issuer, underwriter or
broker). It is anticipated that following the effective date hereof, the selling
securityholders' shares will be eligible for resale in the secondary market in
each state.
LEGAL MATTERS
LEGAL PROCEEDINGS
Wintech is not subject to any legal proceedings at this time.
EXPERTS
The financial statements of Beijing Wintech included in this prospectus for the
years 1999 and 2000 and for the years then ended have been audited by Deloitte
Touche Tohmatsu Shanghai CPA, independent auditors, as stated in their report
appearing herein and are included in reliance upon the report of that firm given
upon their authority as experts in accounting and auditing.
The financial statements of Temple for the years 1999 and 2000 and for the years
then ended have been audited by Clyde Bailey CPA, independent auditor, as stated
in his report appearing herein and have been so included in reliance upon the
report of that firm given upon his authority as an expert in accounting and
auditing. Mr. Bailey will remain the independent auditor of the Company until
the next meeting of the board of directors.
LEGAL OPINION
Shawn F. Hackman, a P.C. has given its opinion as attorneys-at-law that
the shares offered for sale herein have been fully paid, validly issued and are
non-assessable.
FINANCIAL STATEMENTS
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> ................................................................................................... <C>
Page(s)
BEIJING WINTECH TECHNOLOGY CO., LTD.:
Independent Auditors' Report .......................................................................... F-1
Balance Sheets at June 30, 1999 and 2000 .............................................................. F-2
Statements of Operations for the years ended June 30, 1999 and 2000 ................................... F-3
Statements of Investors' Equity for the years ended June 30, 1999 and 2000 ............................ F-4
Statements of Cash Flows for the years ended June 30, 1999 and 2000 ................................... F-5
Notes to Financial Statements ......................................................................... F-6-11
TEMPLE SUMMIT FINANCIAL PROJECTS, INC
Independent Auditors' Report .......................................................................... F-16
Balance Sheets at June 30, 2000 and 1999 .............................................................. F-17
Statements of Operations for the years ended June 30, 2000 and 1999 ................................... F-18
Statements of Shareholders' Equity for the years ended June 30, 2000 and 1999 ......................... F-19
Statements of Cash Flows for the years ended June 30, 2000 and 1999 ................................... F-20
Notes to Financial Statements ......................................................................... F-21-24
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of Beijing Wintech Technology Co., Ltd.
We have audited the accompanying balance sheets of Beijing Wintech Technology
Co., Ltd. (the " Company") as of June 30, 1999 and 2000 and the related
statements of operations, investor's equity and cash flows for the years then
ended (expressed in Renminbi). These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company as of June 30, 1999 and 2000,
and the results of its operations and its cash flows for the years then ended in
conformity with accounting principles generally accepted in the United States of
America.
Deloitte Touche Tohmatsu Shanghai CPA
Beijing, People's Republic of China
August 14, 2000
F-1
BEIJING WINTECH TECHNOLOGY CO., LTD.
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, June 30,
---------
ASSETS ............................................................................ 1999 2000 2000
--------- --------- ---------
<S> ............................................................................... <C> <C> <C>
Rmb Rmb US$
Current Assets:
Cash ........................................................................... 965,098 3,820,391 461,511
Accounts receivable, trade ..................................................... 926,610 1,483,719 179,237
Amounts due from investors ..................................................... -- 1,529,532 184,771
Other receivables .............................................................. 80,200 204,940 24,757
Inventories .................................................................... 847,439 1,739,284 210,109
Prepaid expenses ................................................................ 42,500 42,500 5,134
--------- --------- ---------
Total Current Assets ................................................. 2,861,847 8,820,366 1,065,519
Amounts due from investors ........................................................ 674,000 -- --
Property and equipment, net ....................................................... 350,116 357,411 43,176
--------- --------- ---------
Total Assets ...................................................................... 3,885,963 9,177,777 1,108,695
========= ========= =========
========= =========
LIABILITIES AND INVESTORS' EQUITY
Current Liabilities:
Accounts payable, trade ......................................................... 50,634 60,775 7,342
Amounts due to investors ........................................................ 930,000 180,000 21,744
Customer Deposits ............................................................... -- 1,653,366 199,730
Other payables and accrued expenses ............................................. . 399,459 48,255
157,735
Income tax payable ............................................................. -- 244,707 29,561
Other taxes payable ............................................................. 512,046 1,188,691 143,597
--------- --------- ---------
Total Current Liabilities ...................................... 1,650,415 3,726,998 450,229
--------- --------- ---------
Commitments and contingencies (note 10)
Investors' Equity:
Paid-in capital ............................................................ 500,000 5,000,000 604,011
Retained earnings ........................................................... 1,543,986 399,999 48,321
Statutory reserves .......................................................... 191,562 50,780 6,134
---------
--------- ---------
Total Investors' Equity ................................................. 2,235,548 5,450,779 658,466
--------- --------- ---------
Total Liabilities and Investors' Equity ........................................... 3,885,963 9,177,777 1,108,695
========= ========= =========
</TABLE>
See notes to financial statements.
F-2
BEIJING WINTECH TECHNOLOGY CO., LTD.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Years ended June 30,
----------------------------------------------
1999 2000 2000 (1)
<S> ................................................................................. <C> <C> <C>
Rmb Rmb US$
Sales of products and services ...................................................... 4,379,682 7,720,004 932,593
Cost of sales ....................................................................... 1,707,376 2,242,755 270,930
--------- --------- ---------
Gross profit ........................................................................ 2,672,306 5,477,249 661,663
Selling, general and administrative expenses ........................................ 1,638,919 2,244,063 271,087
--------- --------- ---------
Income from operations .............................................................. 1,033,387 3,233,186 390,576
Interest income ..................................................................... 5,498 9,950 1,202
Other income, net ................................................................... 173,942 216,802 26,190
--------- --------- ---------
Income before income tax ............................................................ 1,212,827 3,459,938 417,968
Income tax .......................................................................... -- 244,707 29,561
--------- --------- ---------
Net income .......................................................................... 1,212,827 3,215,231 388,407
========= ========= =========
=========
</TABLE>
See notes to financial statements
F-3
BEIJING WINTECH TECHNOLOGY CO., LTD.
STATEMENTS OF INVESTORS' EQUITY
<TABLE>
<S> ...................... <C> <C> <C> <C>
* ........................ * * Total
* ........................ Paid-in Retained Statutory investors'
* ........................ capital earnings reserves equity
* ........................ -- -- -- --
* ........................ Rmb Rmb Rmb Rmb
Balance at July 1, 1998 .. 500,000 522,721 -- 1,022,721
Net income ............... -- 1,212,827 -- 1,212,827
Appropriations of reserves -- (191,562) 191,562 --
--------- ----------- ---------- -----------
Balance at June 30, 1999 . 500,000 1,543,986 191,562 2,235,548
Net income ............... -- 3,215,231 -- 388,407
Increase in capital ...... 4,500,000 (4,100,000) (400,000) --
Appropriations of reserves -- (259,218) 259,218 --
--------- ----------- ---------- -----------
Balance at June 30, 2000 . 5,000,000 399,999 50,780 5,450,779
========= =========== ========== ===========
US$ equivalent .......... 604,011 US $48,321 US $6,134 US $658,466
========= =========== ========== ===========
</TABLE>
See notes to financial statements
F-4
BEIJING WINTECH TECHNOLOGY CO., LTD.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year ended June 30,
----------
----------
<S> ............................................ <C> <C> <C>
* .............................................. 1999 2000 2000
* .............................................. -- -- --
* .............................................. Rmb Rmb US$
Cash flows from operating activities:
Net income .................................... 1,212,827 3,215,231 388,407
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation ............................... 49,267 90,534 10,937
Changes in assets and liabilities:
Accounts receivable, trade ............ (826,610) (557,109) (67,300)
Other receivables ..................... (80,200) (124,740) (15,069)
Inventories ........................... (439,225) (891,845) (107,737)
Prepaid expenses ....................... (42,500) -- --
Accounts payable, trade ............... (94,411) 10,141 1,225
Customer Deposits ..................... -- 1,653,366 199,730
Other payables and accrued expenses ... 241,724 29,201 155,776
Income taxes payable ......... -- 244,707 29,561
Other taxes payable ........... 445,821 676,645 81,740
---------- ---------- ----------
Net cash provided by operating activities 380,745 4,558,654 550,695
---------- ---------- ----------
Cash used in investing activities:
Purchase of property and equipment . (241,512) (97,829) (11,818)
---------- ---------- ----------
----------
Cash used in financing activities:
Advances due to investors ............. 930,000 -- (90,602)
Repayment of advances by investors ..... -- (750,000) --
Advances due from investors ........... (674,000) (855,532) (103,350)
---------- ---------- ----------
Net cash provided by (used in) financing
activities ................................... 256,000 (1,605,532) (193,952)
---------- ---------- ----------
Increase in cash ............................... 395,233 2,855,293 344,925
Cash, beginning of year ........................ 569,865 965,098 116,586
---------- ---------- ----------
Cash, end of year .............................. 965,098 3,820,391 461,511
========== ========== ==========
</TABLE>
See notes to financial statements
F-5
BEIJING WINTECH TECHNOLOGY CO., LTD.
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND PRINCIPAL ACTIVITIES
Beijing Wintech Technology Co., Ltd. (the "Company") was established on August
23, 1996 as a limited liability Company in Beijing, People's Republic of China
("PRC"), with an operating period of 10 years.
The Company is principally engaged in developing digital signal processing
("DSP") solutions for network, telecommunication and general purpose platforms.
The Company manufactures and sells DSP products and its related materials, as
well as providing consulting services to outside customers.
Pursuant to a resolution passed at an investors' meeting on June 5, 2000,
retained earnings and statutory reserves of Rmb4,100,000 (equivalent to
US$495,303) and Rmb400,000 (equivalent to US$48,320), respectively, were
transferred to paid-in capital to increase paid-in capital from Rmb500,000
(equivalent to US$60,401) to Rmb5,000,000 (equivalent to US$604,011).
At June 30, 1999 and 2000, details of paid-in capital were as follows:
<TABLE>
<CAPTION>
June 30, 1999 June 30, 2000
-------------------------------------
<S> ............... <C> <C> <C> <C>
* ................. Original Cur % Original Cur %
* ................. Rmb Rmb
Dong Yonghong -- -- 3,650,000 73
Tan Mingjuan 400,000 80 250,000 5
Zheng Baolin -- -- 400,000 8
Chen Xiaomin -- -- 500,000 10
Wan Yihe .... -- -- 100,000 2
Li Minglong . -- -- 100,000 2
Yu Daoheng .. 50,000 10 -- --
Zhang Guirong 50,000 10 -- --
--------- --------- --------- ---------
--------- ---------
500,000 100 5,000,000 100
========= ========= ========= =========
</TABLE>
2. BASIS OF PREPARATION OF FINANCIAL STATEMENTS
The financial statements were prepared in accordance with accounting
principles generally accepted in the United States of America ("US
GAAP"). This basis of accounting differs from that used in the statutory
financial statements of the Company which are prepared in accordance with
the accounting principles and the relevant financial regulations
applicable to limited liability Company as established by the Ministry of
Finance of the PRC ("PRC GAAP"). There were no significant adjustments
made to the statutory accounts of the Company.
F-6
BEIJING WINTECH TECHNOLOGY CO., LTD.
NOTES TO FINANCIAL STATEMENTS - (continued)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Inventories - Inventories mainly represent raw materials and are stated
at the lower of cost or market. The cost of inventories is determined
using the weighted average method. Cost includes purchase price, freight
charges and other related expenses.
Property and equipment - Property and equipment is stated at cost less
accumulated depreciation. Depreciation is provided using the
straight-line method over the estimated useful lives as follows:
Electronic equipment 3 years
Furniture and fixtures 5 years
Impairment - The Company reviews long-lived assets, for impairment
whenever events or changes in circumstances indicate that the carrying
amount of an asset may no longer be recoverable. An impairment loss,
measured based on the fair value of the asset, is recognized if expected
future undiscounted cash flows are less than the carrying amount of the
assets.
Income taxes - Deferred income taxes are provided using the asset and
liability method. Under this method, deferred income taxes are recognized
for all significant temporary differences and classified as current or
non-current based upon the classification of the related asset or
liability in the financial statements. A valuation allowance is provided
to reduce the amount of deferred tax assets if it is considered more
likely than not that some portion of, or all of, the deferred tax asset
will not be realized.
Revenue recognition - Revenue from products sales are recorded when title
of products passed to customers, which usually occurs at the time of
delivery or acceptance, and collectibility is reasonably assured. The
Company recognizes revenues from consulting services, net of business
tax, when services are provided to customers and collectibility is
reasonably assured. Commissions, net of business tax, received from the
sales of products on behalf of third parties are recognized when the
sales are made and the Company is entitled to the commission and
collectibility is reasonably assured.
Financial instruments - The carrying value of financial instruments,
which mainly consist of cash, accounts receivable and accounts payable
approximates fair value due to the short-term nature of these
instruments.
Foreign currency translation - The Company maintains its accounting
records in Renminbi ("Rmb"), its functional currency. Transactions in
currencies other than Renminbi are translated at the market exchange rate
ruling on the transaction date. Monetary assets and liabilities
denominated in currencies other than Renminbi are translated at the
market exchange rate ruling on the balance sheet date at the year end.
Comprehensive income- The Company reports comprehensive income in
accordance with SFAS No. 130, "Reporting Comprehensive Income," which
establishes standards for reporting and display of comprehensive income,
its components and accumulated balance. Comprehensive income is defined
to include all changes in equity except those resulting from investments
by owners and distributions to owners. There are no items of
comprehensive income and net income represents the comprehensive income.
F-7
BEIJING WINTECH TECHNOLOGY, CO., LTD.
NOTES TO FINANCIAL STATEMENTS - (continued)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES- Continued
Convenience translation into United States dollars - The financial
statements for the year ended June 30, 2000 are presented in United
States dollars for the convenience of readers in the United States of
America. The translation of Renminbi amounts into United States dollars
has been made at the rate of exchange quoted by the People's Bank of
China on June 30, 2000 of Rmb8.2780 to US$1.00. The translation of
Renminbi amounts into United States dollars should not be construed as
representations that Renminbi amounts could be converted into United
States dollars at that or any other rate of exchange.
Use of estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures 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 standard not yet adopted - In June 1998, the Financial
Accounting Standards Board issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities.", which was amended by
SFAS 137 and SFAS 138. This statement requires companies to record all
derivatives on the balance sheet as assets or liabilities measured at
fair value. Gains and losses resulting from changes in fair market values
of those derivative instruments would be accounted for depending on the
use of the instrument and whether it qualifies for hedge accounting. SFAS
133 will be effective for the Company's fiscal year beginning July 1,
2000. The Company has not yet determined the impact, if any, on its
financial position, results of operations or cash flows.
In December 1999, the Securities and Exchange Committee issued Staff
Accounting Bulletin ("SAB") 101, "Revenue Recognition in Financial
Statements". SAB101 establishes accounting and reporting standards for
the recognition of revenue. It states that revenue generally is realized
or realizable and earned when all of the following criteria are met: (1)
persuasive evidence of an arrangement exists; (2) delivery has occurred
or services have been rendered; (3) the seller's price to the buyer is
fixed or determinable; (4) collectibility is reasonably assured. SAB101
is effective no later than the fourth quarter of fiscal years beginning
after December 15, 1999. At this time management does not expect SAB 101
to have any impact on the financial position of the Company.
4. AMOUNTS DUE FROM/TO INVESTORS
<TABLE>
<CAPTION>
June 30,
---------
<S> .................................................................... <C> <C>
1999 2000
--------- ---------
Rmb Rmb
Amounts due from investors
Dong Yonghong ..................................................... 674,000 1,390,237
Tan Mingjuan ...................................................... -- 139,295
--------- ---------
674,000 1,529,532
========= =========
Noncurrent amount ................................................. 674,000 --
Amount due within 1 year .......................................... -- 1,529,532
--------- ---------
674,000 1,529,532
========= =========
Amounts due to investors
Chen Xiaomin ...................................................... 100,000 180,000
Tan Mingjuan ...................................................... 830,000 --
--------- ---------
930,000 180,000
========= =========
</TABLE>
F-8
BEIJING WINTECH TECHNOLOGY CO., LTD.
NOTES TO FINANCIAL STATEMENTS - (continued)
4. AMOUNTS DUE FROM/TO INVESTORS - Continued
The Company advanced investors Rmb674,000 and Rmb855,532 in the years
ended June 30, 1999 and 2000, respectively, on an interest free basis.
The amounts are repayable not later than January 31, 2001.
In the year ended June 30, 1999, investors advanced Rmb930,000 to the
Company on an interest free basis without fixed payment terms. In the
year ended June 30, 2000, the Company repaid Rmb750,000 of these
advances.
5. INVENTORIES
<TABLE>
<CAPTION>
June 30,
---------
<S> ................................... <C> <C>
1999 2000
------- ---------
Rmb Rmb
Raw materials ......................... 847,439 1,738,378
Finished goods ........................ -- 906
------- ---------
847,439 1,739,284
======= =========
</TABLE>
6. PROPERTY AND EQUIPMENT, NET
<TABLE>
<CAPTION>
June 30,
-------
<S> ......................................... <C> <C>
1999 2000
------- -------
Rmb Rmb
At cost:
Electronic equipment .................. 416,757 513,790
Furniture and fixtures ................ 16,557 17,351
------- -------
433,314 531,141
Less: Accumulated depreciation ........ 83,198 173,730
------- -------
Net book value ........................ 350,116 357,411
======= =======
</TABLE>
7. OTHER TAXES PAYABLE
<TABLE>
<CAPTION>
June 30,
---------
<S> .................................... <C> <C>
1999 2000
--------- ---------
Rmb Rmb
Value added tax payable ("VAT") ........ 404,253 967,601
Business tax ("BT") ................... 34,648 57,528
Others ................................. 73,145 163,562
--------- ---------
--------- ---------
512,046 1,188,691
========= =========
</TABLE>
F-9
BEIJING WINTECH TECHNOLOGY CO., LTD.
NOTES TO FINANCIAL STATEMENTS - (continued)
7. OTHER TAXES PAYABLE - Continued
The Company is subject to VAT at a rate of 17% on sales of DSP products
and 5% BT on revenue from consulting services.
8. INCOME TAXES
The Company is subject to the Income Tax Law of PRC Enterprises and
relevant local income tax laws (the "Income Tax Laws"). Under the Income
Tax Laws, limited liability enterprises generally are subject to income
tax at a rate of 33% (30% state income taxes plus 3% local income taxes)
on income as reported in their statutory financial statements after tax
adjustments.
Pursuant to the Income Tax Laws, limited liability enterprises approved
as high-tech enterprises which are established in the Beijing New
Technology Industry Development Zone ("BDZ") are subject to income tax at
the reduced rate of 15%. High-tech enterprises are also eligible for a
three-year exemption from income tax followed by a 50% reduction of
income tax for the next three years. This relief commences from the date
of commencement of operations. The Company has been approved as high-tech
enterprise and has obtained an approval from tax bureau for the
preferential tax treatment described above effective from September 1,
1996.
The Company was exempt from income tax for the year ended June 30, 1999.
The applicable income tax rate for the year ended June 30, 2000 was 7.5%.
Income tax on the PRC assessable income was Rmb244,707 for the year ended
June 30, 2000. There were no significant temporary differences in the
years ended June 30, 1999 and 2000 or at these dates.
9. RETIREMENT BENEFITS AND OTHER EMPLOYMENT BENEFITS
The Company's employees are entitled to retirement benefits calculated
with reference to their basic salaries on retirement and their length of
service in accordance with a government managed benefits plan. The PRC
government is responsible for the benefits liability to these retired
employees. The Company is required to make contributions to the state
retirement plan at 19% of the monthly basic salaries of the current
employees. The expense of such arrangement to the Company was Rmb40,118
in the year ended June 30, 1999 and Rmb87,430 in the year ended June 30,
2000.
In addition, the Company is required by law to contribute 14% and 1.5% of
basic salaries of the PRC employees for staff welfare fund and education
fund, respectively.
F-10
BEIJING WINTECH TECHNOLOGY CO., LTD.
NOTES TO FINANCIAL STATEMENTS - (continued)
10. COMMITMENTS AND CONTINGENCIES
Operating leases - As of June 30, 2000, the Company was committed under
certain operating leases, requiring annual minimum rentals as follows:
Rmb
----------------------
----------------------
2001 355,250
2002 41,000
----------------------
396,250
======================
The leases are renewable subject to negotiation. Rental expense for the
years ended June 30, 1999 and 2000 was Rmb225,040 and Rmb419,000,
respectively.
11. CONCENTRATION OF CREDIT RISK
Financial instruments, which potentially subject the Company to
concentration of credit risk, consist principally of temporary cash
investments and accounts receivable.
The Company places its temporary cash investments with various financial
institutions in the PRC. The Company believes that no significant credit
risk exists as these investments are placed principally with
government-owned financial institutions in the PRC.
The Company's business activities and accounts receivable are principally
with customers in the PRC. The Company believes that no significant
credit risk exists as credit losses, when realized, have been within the
range of management's expectations.
12. DISTRIBUTION OF PROFITS
As stipulated by the Company Law of PRC, net income after taxation can
only be distributed as dividends after allowance has been made for:
(i) Making up cumulative prior years' losses, if any;
(ii) Allocations to the statutory common reserve of at least 10% of
income after tax, as determined under PRC accounting rules and
regulations, until the fund amounts to 50% of the Company's
registered capital;
(iii) Allocations of 5 to 10% of income after tax, as determined under
PRC accounting rules and regulations, to the Company's statutory
common welfare fund, which is established for the purpose of
providing employee facilities and other collective benefits to the
Company's employees; and
(iv) Allocations to the discretionary surplus common reserve, if
approved by the investors in general meeting.
The statutory reserves as stated in the financial statements represented
the allocations of 10% of net income to statutory common reserve and 5%
of net income to statutory common welfare fund for the years ended June
30, 1999 and 2000, respectively.
13. SUBSEQUENT EVENT
On July 25, 2000, the investors of the Company entered into an
agreement with Temple Summit Financial Projects, Inc., ("Temple"),
incorporated in the United States, whereby the Company became a
wholly-owned subsidiary of Temple.
F-11
CLYDE BAILEY P.C.
------------------------------------------------------------------------------
Certified Public Accountant
10924 Vance Jackson #404
San Antonio, Texas 78230
(210) 699-1287(ofc.)
(888) 699-1287 ? (210) 691-2911 (fax)
Member:
American Institute of CPA's
Texas Society of CPA's
Board of Directors
Temple Summit Financial Projects, Inc.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANT
I have audited the accompanying balance sheet of Temple Summit Financial
Projects, Inc. (Company) as of June 30, 2000 and the related statement of
operations, statement of shareholders' equity, and the statement of cash flows
for the years ended June 30, 2000 and 1999. These financial statements are the
responsibility of the Company's management. My responsibility is to express an
opinion on these statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
On April 12, 2000, the Company sold all of its assets and liabilities to Nevada
Mining & Metals Corporation, a Nevada Corporation for a total of $30,000. The
Company has no other assets or liabilities as of June 30, 2000. This is further
explained in Note 6.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company has no viable operations
and little or no tangible assets. This is further explained in the Note 4.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of the Company as of June 30, 2000 and
the results of its operations for the year then ended in conformity with
generally accepted accounting principles.
Clyde Bailey P.C.
San Antonio, Texas
July 05, 2000
F-16
TEMPLE SUMMIT FINANCIAL PROJECTS
Balance Sheet
As of June 30, 2000
<TABLE>
<S> ................................................................. <C> <C>
A S S E T S
Current Assets:
Cash ............................................................... $ 978
Total Current Assets ............................................. $ 978
---
Total Assets ..................................................... $ 978
===
L I A B I L I T I E S
Current Liabilities: ................................................ $ --
Total Current Liabilities ........................................ --
Total Liabilities ................................................ --
---
SHAREHOLDERS' EQUITY
Common Stock ........................................................ 138,097
200,000,000 authorized shares, $.001 par value
138,096,863 shares issued and outstanding
Additional Paid-in-Capital .......................................... 2,353,503
Accumulated Deficit ................................................. (2,490,622)
---
Total Shareholders' Equity ....................................... 978
Total Liabilities and
Shareholders' Equity .................................... $ 978
===
</TABLE>
F-17
TEMPLE SUMMIT FINANCIAL PROJECTS
Statement of Operations
<TABLE>
<CAPTION>
For the Twelve Month
Period Ended June 30
<S> ........................................................................... <C> <C>
Revenues: ..................................................................... 2000 1999
---- ----
Revenues .................................................................. $ -- $ --
Total Revenues ....................................................... -- --
Expenses:
Consulting Expenses ...................................................... 5,000 3,500
Office Rents ............................................................. 8,730 9,690
Insurance ........................................................ ....... 2,475 4,563
Legal & Professional ..................................................... 25,250 4,500
Other Expenses ........................................................... 21,389 18,946
---- ----
Total Expenses ............................................... ...... 62,844 41,199
---- ----
Net Loss from Operations ............................................ (62,844) (41,199)
Provision for Income Taxes:
Income Tax Benefit ...................................................... -- --
---- ----
Net (Loss) before Discontinued
Operations ......................................................... (62,844) (41,199)
Discontinued Operations:
Discontinued Operations ................................................. (813,988) --
---- ----
Net (Loss) ........................................................... $ (876,832) $ (41,199)
==== ====
Basic and Diluted Earnings per Common Share .................................. Nil Nil
Weighted Average number of Common Shares ...................................... 84,374,345 65,639,531
used in per share calculations
</TABLE>
F-18
Temple Summit Financial Projects, Inc.
Statement of Shareholders' Equity
As of June 30, 2000
<TABLE>
<S> ................................... <C> <C> <C> <C> <C>
*** $ .001 Paid-In Accumulated Shareholders'
* ..................................... Shares Par Value Capital Deficit Equity
-----------
Balance July 1, 1998 .................. 53,139,531 $ 53,140 $ 1,922,112 $(1,572,591) $ 402,661
Stock issued for Cash ................. 5,034,999 5,035 216,090 -- 221,125
Stock issued for Debt ................. 20,000,000 20,000 180,000 -- 200,000
Net (Loss) ............................ -- -- -- (41,199) (41,199)
-----------
Balance, June 30, 1999 ................ 78,174,530 78,175 2,318,202 (1,613,790) 782,587
Stock Issues for Cash ................. 3,922,333 3,922 35,301 -- 39,223
Stock issued for Services ............. 56,000,000 56,000 -- -- 56,000
Net (Loss) ............................ -- -- -- (876,832) (876,832)
-----------
Balance June 30, 2000 ................. 138,096,863 $ 138,097 $ 2,353,503 $(2,490,622) $ 978
</TABLE>
F-19
Temple Summit Financial Projects, Inc.
Statement of Cash Flows
<TABLE>
For the Twelve Month
Period Ended June 30
<S> ........................................ <C> <C>
2000 1999
----------- -----------
Cash Flows from Operating Activities:
Net (Loss) ................................. $ (876,832) $ (41,199)
Changes in operating assets and liabilities:
Note Receivable ................ (1,200) 1,500
Employee Advances .............. (27,781) (72,875)
-----------
----------- -----------
Total Adjustments .......................... (28,981) (71,375)
----------- -----------
Net Cash used in Operating Activities ..... (905,813) (112,574)
Cash Flows from Investing Activities:
Asset Sold ..................... 1,542,318 --
----------- -----------
Net Cash used in Investing Activities ...... 1,542,318 --
Cash Flows from Financing Activities:
Short-Term Liabilities ......... (13,000) (34,147)
Liabilities Sold ............... (698,331)
Shareholder Loans .............. 36,360 --
Common Stock ................... 39,223 128,075
----------- -----------
Net Cash provided for Financing Activities . (635,748) 93,928
Net Increase (Decrease) in Cash ............ 757 (18,646)
Cash Balance, Begin Period ................. 221 18,867
----------- -----------
Cash Balance, End Period ................... $ 978 $ 221
=========== ===========
</TABLE>
F-20
Temple Summit Financial Projects, Inc.
Notes to Financial Statements
Note 1 - Summary of Significant Accounting Policies
Organization
Temple Summit Financial Projects, Inc. ("the Company") was incorporated under
the laws of the State of Texas on April 22, 1992, to conduct any lawful business
for which corporations may be incorporated under the Texas Business Corporations
Act. In November of 1993, this corporation became the successor to a former Utah
corporation named Midvale Packing Company. This succession occurred immediately
following the recession of a previous merger between Midvale and a Nevada
corporation named New Dawn Development Company. The net effect was that Midvale
Packing Company was reincorporated in Nevada as Temple Summit Financial
Projects, Inc. The Company has a total of 200,000,000 authorized shares with a
par value of $.001 and with 138,096,863 shares issued and outstanding as of June
30, 2000.
Fixed Assets
The Company has no fixed assets at this time.
Federal Income Tax
The Company has adopted the provisions of Financial Accounting Standards Board
Statement No. 109, Accounting for Income Taxes. The Company accounts for income
taxes pursuant to the provisions of the Financial Accounting Standards Board
Statement No. 109, "Accounting for Income Taxes", which requires an asset and
liability approach to calculating deferred income taxes. The asset and liability
approach requires the recognition of deferred tax liabilities and assets for the
expected future tax consequences of temporary differences between the carrying
amounts and the tax basis of assets and liabilities.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure on
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.
Accounting Method
The Company's financial statements are prepared using the
accrual method of accounting. Revenues are recognized when earned and expenses
when incurred. Fixed assets are stated at cost. Depreciation and amortization
using the straight-line method for financial reporting purposes and accelerated
methods for income tax purposes.
F-21
Temple Summit Financial Projects, Inc.
Notes to Financial Statements
Note 1 - Summary of Significant Accounting Policies (con't)
Earnings per Common Share
The Company adopted Financial Accounting Standards (SFAS) No. 128, "Earnings Per
Share," which simplifies the computation of earnings per share requiring the
restatement of all prior periods.
Basic earnings per share are computed on the basis of the weighted average
number of common shares outstanding during each year.
Diluted earnings per share are computed on the basis of the weighted average
number of common shares and dilutive securities outstanding. Dilutive securities
having an anti-dilutive effect on diluted earnings per share are excluded from
the calculation.
Comprehensive Income
Statement of Financial Accounting Standards (SFAS) No. 130, "Reporting
Comprehensive Income," establishes standards for reporting and display of
comprehensive income, its components and accumulated balances. Comprehensive
income is defined to include all changes in equity except those resulting from
investments by owners and distributions to owners. Among other disclosures, SFAS
No.130 requires that all items that are required to be recognized under current
accounting standards as components of comprehensive income be reported in a
financial statement that is displayed with the same prominence as other
financial statements. The Company does not have any assets requiring disclosure
of comprehensive income.
Segments of an Enterprise and Related Information
Statement of Financial Accounting Standards (SFAS) No. 131, Disclosures about
Segments of an Enterprise and Related Information, supersedes SFAS No. 14,
"Financial Reporting for Segments of a Business Enterprise." SFAS 131
establishes standards for the way that public companies report information about
operating segments in annual financial statements and requires reporting of
selected information about operating segments in interim financial statements
issued to the public. It also establishes standards for disclosures regarding
products and services, geographic areas and major customers. SFAS 131 defines
operating segments as components of a Company about which separate financial
information is available that is evaluated regularly by the chief operating
decision maker in deciding how to allocate resources and in assessing
performance. The Company has evaluated this SFAS and does not believe it is
applicable at this time.
F-22
Temple Summit Financial Projects, Inc.
Notes to Financial Statements
Note 2 - Common Stock
A total of 5,034,999 shares of common stock were sold in 1999 for $221,125, and
in 2000 a total of 3,922,333 shares of common stock was sold for $ 39,223. In
1999, 20,000,000 shares of common stock was issued to settle $200,000 to the
former directors and officers, and in 2000 a total of 56,000,000 shares of
common stock was issued to the former directors and officers for services that
had been accrued in prior years.
Note 3 - Related Parties
The Organization has no significant related party transactions and/or
relationships any individuals or entities.
Note 4 - Going Concern
The Company has had no operations to date, has little or no tangible assets or
financial resources, and incurred losses since inception. These losses and lack
of operations raise substantial doubt about the Company's ability to continue as
a going concern.
Note 5 - Income Taxes
Deferred income taxes arise from temporary differences resulting from the
Company's subsidiary utilizing the cash basis of accounting for tax purposes and
the accrual basis for financial reporting purposes. Deferred taxes are
classified as current or non-current, depending on the classification of the
assets and liabilities to which they relate. Deferred taxes arising from timing
differences that are not related to an asset or liability are classified as
current or non-current depending on the periods in which the timing differences
are expected to reverse. The Company's previous principal temporary differences
relate to revenue and expenses accrued for financial purposes, which are not
taxable for financial reporting purposes. The Company's material temporary
differences consist of bad debt expense recorded in the financial statements
that is not deductible for tax purposes and differences in the depreciation
expense calculated for financial statement purposes and tax purposes.
The net deferred tax asset or liability is composed of the following:
<TABLE>
<S> ........................................ <C> <C>
* .......................................... 2000 1999
Total Deferred Tax Assets ......... $ 9,427 $ 6,180
Less: Valuation Allowance ......... ( 9,427 ) ( 6,180 )
Net Deferred Tax Asset ... -- --
Total Deferred Tax Liabilities -- --
Net Deferred Tax Liability -- --
Less Current Portion ..... -- --
Long-Term Portion ........ $ -- $ --
</TABLE>
F-23
Temple Summit Financial Projects, Inc.
Notes to Financial Statements
Note 6 - Sale of Assets and Loss from Discontinued Operations
On April 12, 2000, the Company sold all of its assets and liabilities to Nevada
Mining & Metals Corporation, a Nevada Corporation for a total of $30,000. The
Company has no other assets or liabilities as of June 30, 2000.
Note 7 - Subsequent Events
There were no other material subsequent events that have occurred since the
balance sheet date that warrants disclosure in these financial statements.
F-24
No dealer, salesman or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and, if given or made, such information or representations may not
be relied on as having been authorized by the Company or by any of the
Underwriters. Neither the delivery of this prospectus nor any sale made
hereunder shall under any circumstances create an implication that there has
been no change in the affairs of the Company since the date hereof. This
prospectus does not constitute an offer to sell, or solicitation of any offer to
buy, by any person in any jurisdiction in which it is unlawful for any such
person to make such offer or solicitation. Neither the delivery of this
prospectus nor any offer, solicitation or sale made hereunder, shall under any
circumstances create any implication that the information herein is correct as
of any time subsequent to the date of the prospectus.
TABLE OF CONTENTS
Available Information..........................................................
Prospectus Summary.............................................................
Risk Factors...................................................................
The Company ...................................................................
Use of Proceeds................................................................
Dividend Policy................................................................
Business.......................................................................
Management's Discussion and Analysis of Operations.............................
Management.....................................................................
Security Ownership of Certain Beneficial Owners and Management.................
Selling Securityholders........................................................
Certain Relationships and Related Transactions.................................
Description of Securities......................................................
Plan of Distribution...........................................................
Legal Matters..................................................................
Experts........................................................................
Index to Financial Statements..................................................
Until 90 days after the date of this prospectus, all dealers effecting
transactions in the registered Securities, whether or not participating in this
distribution, may be required to deliver a prospectus.
WINTECH DIGITAL SYSTEMS TECHNOLOGY CORPORATION
2,505,000 SHARES OF COMMON STOCK
TO BE SOLD BY THE HOLDERS THEREOF
PROSPECTUS
_______________, 2000
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
No director of Wintech will have personal liability to Wintech or any
of its shareholders for monetary damages for breach of fiduciary duty as a
director involving any act or omission of any such director since provisions
have been made in the Articles of Incorporation limiting such liability. The
foregoing provisions shall not eliminate or limit the liability of a director
(i) for any breach of the director's duty of loyalty to Wintech or its
shareholders, (ii) for acts or omissions not in good faith or, which involve
intentional misconduct or a knowing violation of law, (iii) under applicable
Sections of the Nevada Revised Statutes, (iv) the payment of dividends in
violation of Section 78.300 of the Nevada Revised Statutes or, (v) for any
transaction from which the director derived an improper personal benefit.
The By-laws provide for indemnification of the directors, officers, and
employees of Wintech in most cases for any liability suffered by them or arising
out of their activities as directors, officers, and employees of Wintech if they
were not engaged in willful misfeasance or malfeasance in the performance of his
or her duties; provided that in the event of a settlement the indemnification
will apply only when the Board of Directors approves such settlement and
reimbursement as being for the best interests of the Corporation. The Bylaws,
therefore, limit the liability of directors to the maximum extent permitted by
Nevada law (Section 78.751).
The officers and directors of Wintech are accountable to Wintech as fiduciaries,
which means they are required to exercise good faith and fairness in all
dealings affecting Wintech . In the event that a shareholder believes the
officers and/or directors have violated their fiduciary duties to the Company,
the shareholder may, subject to applicable rules of civil procedure, be able to
bring a class action or derivative suit to enforce the shareholder's rights,
including rights under certain federal and state securities laws and regulations
to recover damages from and require an accounting by management.. Shareholders
who have suffered losses in connection with the purchase or sale of their
interest in Wintech in connection with such sale or purchase, including the
misapplication by any such officer or director of the proceeds from the sale of
these securities, may be able to recover such losses from Wintech .
The registrant undertakes the following:
INSOFAR AS INDEMNIFICATION FOR LIABILITIES ARISING UNDER THE SECURITIES ACT OF
1933, AS AMENDED, MAY BE PERMITTED TO DIRECTORS, OFFICERS OR PERSONS CONTROLLING
THE COMPANY PURSUANT TO THE FOREGOING PROVISIONS, IT IS THE OPINION OF THE
SECURITIES AND EXCHANGE COMMISSION THAT SUCH INDEMNIFICATION IS AGAINST PUBLIC
POLICY AS EXPRESSED IN THE ACT AND IS THEREFORE UNENFORCEABLE.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the expenses in connection with this
Registration statement. All of such expenses are estimates, other than the
filing fees payable to the Securities and Exchange Commission.
<TABLE>
<S> .............................................. <C>
Filing Fee--Securities and Exchange Commission ... $ 536
Fees and Expenses of Accountants and legal counsel 30,000
Printing, Edgarizing and Engraving Expenses ...... 3,000
Miscellaneous Expenses ........................... 2,000
-------
Total ... 35,536
-------
</TABLE>
II-1
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
The Company issued shares of common stock, par value $.001 per share,
to the following individuals and were issued as part of the acquisition and
stock exchange transaction with Temple Summit Financial Projects, Inc.
If any of these sales were made within the United States or to United
States citizens or residents, such sales were made in reliance upon the
exemption from registration provided by Section 4(2) of the Securities Act of
1933 except shares of common stock issued by Temple Summit Financial Projects,
Inc. prior to the stock exchange transaction and name change, which shares were
issued in reliance on Rule 506 of Section 4(2) of the Securities Act and Rule
701 of Section 3(b) of the Securities Act.
Some of holders of the shares listed below may have subsequently
transferred or disposed of their shares and the below list does not purport to
be a current listing of shareholders of the Company.
<TABLE>
<S> <C> <C> <C>
DATE SHAREHOLDER NUMBER OF SHARES CONSIDERATION
------------------ ----------------------------------- -------------------- ----------------------
------------------ ----------------------------------- -------------------- ----------------------
07/25/00 Weirong Ding
250,000 *
------------------ ----------------------------------- -------------------- ----------------------
------------------ ----------------------------------- -------------------- ----------------------
07/25/00 Huanhua Wu 250,000 *
------------------ ----------------------------------- -------------------- ----------------------
------------------ ----------------------------------- -------------------- ----------------------
07/25/00 Ke Luo 500,000 *
------------------ ----------------------------------- -------------------- ----------------------
------------------ ----------------------------------- -------------------- ----------------------
07/25/00 Zhiming Tan 500,000 *
------------------ ----------------------------------- -------------------- ----------------------
------------------ ----------------------------------- -------------------- ----------------------
07/25/00 Daohen Yu 500,000 *
------------------ ----------------------------------- -------------------- ----------------------
------------------ ----------------------------------- -------------------- ----------------------
07/25/00 Prakash Patel 15,000 *
------------------ ----------------------------------- -------------------- ----------------------
------------------ ----------------------------------- -------------------- ----------------------
07/25/00 Craig Hanselman 85,000 *
------------------ ----------------------------------- -------------------- ----------------------
------------------ ----------------------------------- -------------------- ----------------------
07/25/00 Tai Q. Chung 100,000 *
------------------ ----------------------------------- -------------------- ----------------------
------------------ ----------------------------------- -------------------- ----------------------
07/25/00 Elmer R Biersack 10,000 *
------------------ ----------------------------------- -------------------- ----------------------
------------------ ----------------------------------- -------------------- ----------------------
07/25/00 John Hogue 10,000 *
------------------ ----------------------------------- -------------------- ----------------------
------------------ ----------------------------------- -------------------- ----------------------
07/25/00 Jie Zhao 10,000 *
------------------ ----------------------------------- -------------------- ----------------------
------------------ ----------------------------------- -------------------- ----------------------
07/25/00 Jinsong Zeng 32,500 *
------------------ ----------------------------------- -------------------- ----------------------
II-2
------------------ ----------------------------------- -------------------- ----------------------
07/25/00 Ray Howard 10,000 *
------------------ ----------------------------------- -------------------- ----------------------
------------------ ----------------------------------- -------------------- ----------------------
07/25/00 Richard Wang 2,500 *
------------------ ----------------------------------- -------------------- ----------------------
------------------ ----------------------------------- -------------------- ----------------------
07/25/00 Jianzhong Zhang 10,000 *
------------------ ----------------------------------- -------------------- ----------------------
------------------ ----------------------------------- -------------------- ----------------------
07/25/00 Jie Ma 8,000 *
------------------ ----------------------------------- -------------------- ----------------------
------------------ ----------------------------------- -------------------- ----------------------
07/25/00 Jiankang Zhang 2,000 *
------------------ ----------------------------------- -------------------- ----------------------
------------------ ----------------------------------- -------------------- ----------------------
07/25/00 Jie Ruan 5,000 *
------------------ ----------------------------------- -------------------- ----------------------
------------------ ----------------------------------- -------------------- ----------------------
07/25/00 Kelly Charles 7,500 *
------------------ ----------------------------------- -------------------- ----------------------
------------------ ----------------------------------- -------------------- ----------------------
07/25/00 SWK Enterprises 100,000 *
------------------ ----------------------------------- -------------------- ----------------------
------------------ ----------------------------------- -------------------- ----------------------
07/25/00 Bill Hopkins 10,000 *
------------------ ----------------------------------- -------------------- ----------------------
------------------ ----------------------------------- -------------------- ----------------------
07/25/00 Tarja Morado 50,000 *
------------------ ----------------------------------- -------------------- ----------------------
------------------ ----------------------------------- -------------------- ----------------------
07/25/00 David Clifton 30,000 *
------------------ ----------------------------------- -------------------- ----------------------
------------------ ----------------------------------- -------------------- ----------------------
07/25/00 Ron Terranova 2,500 *
------------------ ----------------------------------- -------------------- ----------------------
------------------ ----------------------------------- -------------------- ----------------------
07/25/00 Romie Krickbaum 2,500 *
------------------ ----------------------------------- -------------------- ----------------------
------------------ ----------------------------------- -------------------- ----------------------
07/25/00 Wade Vogel 2,500 *
------------------ ----------------------------------- -------------------- ----------------------
</TABLE>
* Issued as part of the acquisition and stock exchange transaction with
Temple Summit Financial Projects, Inc on July 25, 2000.
ITEM 27. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
3.1**Certificate of Incorporation, filed with the registration statement of
Temple Summit Financial Projects, Inc. on Form 10-SB12G (file no. 0-30553)
filed with the Commission on May 03, 2000, and incorporated herein by
reference.
II-3
3.2**By-Laws of the Company, filed with the registration statement of Temple
Summit Financial Projects, Inc. on Form 10-SB12G (file no. 0-30553) filed
with the Commission on May 03, 2000 and incorporated herein by reference.
4.1**Agreement and Plan of Reorganization between Temple Summit Financial
Projects, Inc., a Nevada corporation and Beijing Wintech Science and
Technology Development Corporation dated as of August 10, 2000 filed with
the Form 8-K of Temple Summit Financial Projects, Inc. (file no. 30553) and
incorporated herein by reference.
<TABLE>
<S> <C>
5.1 Opinion of Shawn F. Hackman a P.C
23.1 Consent of Deloitte Touche Tohmatsu Shanghai CPA
23.2 Consent of Clyde Bailey, CPA
23.3 Consent of Shawn F. Hackman a P.C. contained in exhibit 5.1
27.1 Financial Data Schedule Wintech Digital Systems Technology Corporation
27.2 Financial Data Schedule for Temple Summit Financial Projects, Inc. ...
** Previously filed
</TABLE>
(b) The following financial statement schedules are included in this
registration statement.
None.
ITEM 28. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities
Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement;
(iii)To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant 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
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being
II-4
registered, the registrant 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 issue.
(c) The undersigned registrant hereby undertakes that:
(i) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or 497(h) under
the Securities Act shall be deemed to be part of this registration statement as
of the time it was declared effective.
(ii) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Wintech Digital Systems Technology Corporation certifies that it has reasonable
grounds to believe that it meets all of the requirements for filing on Form SB-2
and has duly caused this amendment to its registration statement on Form SB-2 to
be signed on its behalf by the undersigned, thereunto duly authorized, in Las
Vegas, Nevada on the 15th day of September, 2000.
WINTECH DIGITAL SYSTEMS TECHNOLOGY CORPORATION
By: /s/ Yonghong Dong
President
By /s/ Baoling Zheng
Secretary/
Vice President of Finance
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed below by the following persons in
the capacities and on the dates indicated.
<TABLE>
<S> ................. <C> <C>
SIGNATURE ........ TITLE DATE
--------------------- -------- ------------------
/s/ Yonghong Dong Director September 15, 2000
/s/ Baoling Zheng Director September 15, 2000
/s/ Xiaoming Chen Director September 15, 2000
/s/ Mingrong Li . Director September 15, 2000
/s/ Yihe Wan .... Director September 15, 2000
</TABLE>
