<PAGE> 1
U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
[ X ] QUARTERLY REPORT PURSUANT SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
[ ] TRANSITION REPORT PURSUANT SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ............. to ...............
Commission file number 0-12825
JENSON INTERNATIONAL, INC.
(Exact name of small business issuer as
specified in its charter)
Nevada 84-0916272
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
Room 1008-9 Shun Tak Centre, West Tower, 168-200 Connaught Road,
Central, Hong Kong
(Address of principal executive offices)
(852) 2548-0781
(Issuer's telephone number)
Best Medical Treatment Group, Inc.
45110 Club Drive, Suite B, Indian Wells, California
October 31
(Former name, former address and former fiscal year, if
changed since last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [ ] No [X]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of May 31, 1999: 2,763,843
Transitional Small Business Disclosure Format:
Yes [ ] No [X]
<PAGE> 2
JENSON INTERNATIONAL, INC.
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets (Unaudited) -
March 31, 1999 and December 31, 1998
Condensed Consolidated Statements of Operations (Unaudited) -
Three Months Ended March 31, 1999 and 1998
Condensed Consolidated Statements of Cash Flows
(Unaudited) - Three Months Ended March 31, 1999
Notes to Condensed Consolidated Financial Statements
(Unaudited) - Three Months Ended March 31, 1999
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
<PAGE> 3
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
JENSON INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
MARCH 31, 1999 AND DECEMBER 31, 1998
<TABLE>
<CAPTION>
AS AT AS AT AS AT AS AT
MARCH 31, 1999 DECEMBER 31,1998 MARCH 31, 1999 DECEMBER 31,1998
-------------- ---------------- -------------- ----------------
RMB RMB US$ US$
<S> <C> <C> <C> <C>
Current assets :
Cash and cash equivalents 594,622 825,433 71,641 99,450
Accounts receivable 5,938,118 2,189,927 715,436 263,847
Inventories 887,429 767,702 106,919 92,494
Prepayments, deposits and other receivables 1,386,098 795,282 167,000 95,817
----------- ----------- ---------- ----------
Total current assets 8,806,267 4,578,344 1,060,996 551,608
Property, plant and equipment 46,056,872 47,717,113 5,549,021 5,749,050
----------- ----------- ---------- ----------
54,863,139 52,295,457 6,610,017 6,300,658
=========== =========== ========== ==========
Current liabilities :
Short term bank borrowings 25,560,099 25,560,099 3,079,530 3,079,530
Accounts payable 3,224,722 2,556,854 388,521 308,055
Accrued hotel management fees 3,269,047 3,269,047 393,861 393,861
Statutory provision for staff welfare and benefits 10,845,106 10,614,268 1,306,639 1,278,827
Interest payable 3,366,055 3,185,756 405,549 383,826
Other creditors 4,141,047 4,123,047 498,921 496,753
Amount due to principal shareholder 2,497,091 996,757 300,854 120,091
Income tax payable 848,370 718,000 102,213 86,506
Accruals 10,830,880 10,877,906 1,304,925 1,310,591
----------- ----------- ---------- ----------
Total current liabilities 64,582,417 61,901,734 7,781,013 7,458,040
----------- ----------- ---------- ----------
Shareholders' advances and shareholders' equity :
Advances from the principle shareholder 70,000,000 70,000,000 8,433,735 8,433,735
----------- ----------- ---------- ----------
Common stock par value US$ 0.001;
authorised 50,000,000 shares; issued
2,763,843 and 2,763,843 at March 31, 1999 and
December 31, 1998, respectively 22,933 22,933 2,763 2,763
Additional paid-in capital (6,972) (6,972) (840) (840)
Accumulated deficit (79,735,239) (79,622,238) (9,606,654) (9,593,040)
----------- ----------- ---------- ----------
Total deficiency of shareholders' equity (79,719,278) (79,606,277) (9,604,731) (9,591,117)
----------- ----------- ---------- ----------
Total shareholders' advances and shareholders' equity (9,719,278) (9,606,277) (1,170,996) (1,157,382)
----------- ----------- ---------- ----------
Total liabilities and shareholders' equity 54,863,139 52,295,457 6,610,017 6,300,658
=========== =========== ========== ==========
</TABLE>
See accompanying notes to the Condensed Consolidated Financial Statements
<PAGE> 4
JENSON INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 1999 AND 1998
<TABLE>
<CAPTION>
3 MONTHS 3 MONTHS 3 MONTHS 3 MONTHS
ENDED ENDED ENDED ENDED
MARCH 31, 1999 MARCH 31, 1998 MARCH 31, 1999 MARCH 31, 1998
-------------- -------------- -------------- --------------
RMB RMB US$ US$
<S> <C> <C> <C> <C>
Revenues :
Hotel operations :
Rooms 2,381,468 1,720,577 286,924 207,298
Food and beverage 1,259,923 1,052,370 151,798 126,792
Other operating departments 242,968 233,295 29,273 28,108
Sales tax (247,054) (150,148) (29,766) (18,090)
----------- ----------- ---------- ----------
3,637,305 2,856,094 438,229 344,108
Group tour commission 2,848,086 -- 343,143 --
Consultancy services 1,000,000 1,550,000 120,482 186,747
Others 33,834 12,601 4,076 1,518
Sales tax for consultancy services (39,000) (39,000) (4,699) (4,699)
----------- ----------- ---------- ----------
Total revenue 7,480,225 4,379,695 901,231 527,674
----------- ----------- ---------- ----------
Operating expenses :
Hotel operations by departments :
Rooms 499,027 336,181 60,124 40,504
Food and beverage 887,331 768,328 106,907 92,570
Other operating departments 170,680 76,592 20,564 9,228
Group tour services :
Group tour commission 913,251 -- 110,030 --
Consultancy services :
Consultancy fee to principal shareholder 20,000 31,000 2,410 3,735
Other operating expenses :
Administrative and general 735,238 1,031,377 88,583 124,262
Consultancy fee paid to the consultant 0 174,300 0 21,000
Depreciation and amortization 2,016,997 1,070,204 243,012 128,940
Electricity, gas and water 472,993 546,233 56,987 65,811
Repairs and maintenance 150,823 29,838 18,171 3,595
Salaries and allowances 793,525 644,673 95,604 77,672
Provision for staff welfare and benefits 154,451 149,261 18,609 17,983
Legal and professional fees 261,000 717,242 31,446 86,415
Management fee to a related company 96,300 96,300 11,602 11,602
----------- ----------- ---------- ----------
Total operating expenses 7,171,616 5,671,529 864,049 683,317
----------- ----------- ---------- ----------
Net operating loss 308,609 (1,291,834) 37,182 (155,643)
Interest expenses (291,240) (339,000) (35,089) (40,843)
----------- ----------- ---------- ----------
Loss before income taxes 17,369 (1,630,834) 2,093 (196,486)
Income taxes (130,370) (52,000) (15,707) (6,265)
----------- ----------- ---------- ----------
Net loss for the period (113,001) (1,682,834) (13,614) (202,751)
=========== =========== ========== ==========
Loss per share
Basic (0.13) (1.92) (0.02) (0.23)
=========== =========== ========== ==========
Weighted average number of share of common stock
Basic 877,821 877,821 877,821 877,821
=========== =========== ========== ==========
</TABLE>
See accompanying notes to the Condensed Consolidated Financial Statements
<PAGE> 5
JENSON INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 1999 AND 1998
<TABLE>
<CAPTION>
3 MONTHS 3 MONTHS 3 MONTHS 3 MONTHS
ENDED ENDED ENDED ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1999 1998 1999 1998
--------- --------- --------- ---------
RMB RMB US$ US$
<S> <C> <C> <C> <C>
Cash flows from operating activities :
Net loss (113,001) (1,682,834) (13,615) (202,751)
Adjustments to reconcile net loss to
net cash provided by operating activities :
Depreciation and amortization 2,016,997 1,070,204 243,012 128,940
Consulting fees 0 174,300 0 21,000
Changes in working capital components :
Accounts receivable (3,748,191) (1,174,607) (451,590) (141,519)
Inventories (119,727) (4,702) (14,425) (567)
Prepayments, deposits and other receivables (590,816) (130,271) (71,183) (15,695)
Amount due to the principal shareholder 1,500,334 105,244 180,763 12,680
Accounts payable 667,868 (442,713) 80,466 (53,339)
Other creditors and accruals 18,000 300,219 2,169 36,171
Statutory provisions for staff welfare and benefits 230,838 270,837 27,812 32,631
Interest payable 180,299 615,949 21,723 74,211
Income tax payable 130,370 52,000 15,707 6,265
Accrued expenses (47,026) 1,060,540 (1,798) 127,776
---------- ---------- -------- --------
Net cash provided by operating activities 125,945 214,166 19,041 25,803
---------- ---------- -------- --------
Cash flow from investing activities
Purchase of fixed assets (356,756) (102,955) (42,983) (12,404)
---------- ---------- -------- --------
Net (decrease) increase in cash and cash equivalents (230,811) 111,211 (23,942) 13,399
Cash and cash equivalents
Beginning of the period 825,433 816,557 99,450 98,380
---------- ---------- -------- --------
End of the period 594,622 927,768 75,508 111,779
---------- ---------- -------- --------
</TABLE>
See accompanying notes to the Condensed Consolidated Financial Statements
<PAGE> 6
JENSON INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 1999 AND 1998
NOTE 1. ORGANIZATION AND BASIS OF PRESENTATION
ORGANIZATION - Jenson International, Inc. (the "Company", which term shall
include, when the context so requires, its subsidiaries), formerly known as Best
Medical Treatment Group Inc., Gaensel GoldMines, Inc., World Technologies &
Trading Company, and Chatham Energy Corporation, was incorporated in the State
of Nevada, the United States of America on September 13, 1981.
The Company had no operations from 1984, until early 1997. On March 31, 1997,
the Company acquired all of the capital stock of Lifeline Medical Information
Systems, Inc. ("Lifeline"). In connection with this transaction, the Company
issued an aggregate of 800,000 share of common stock, $ 0.001 par value per
share ("Common Stock").
On March 12, 1998, the Company entered into a Share Exchange Agreement
("Agreement") with C.M. Cheng (the "Shareholder"). Pursuant to the Exchange
Agreement, the Company acquired from the Shareholder all of the outstanding
shares of Wonderwide Consultants Limited (BVI) ("Wonderwide") in exchange for
the issuance to the Shareholder of 2,230,000 shares of Common Stock of which
334,500 shares of the Shareholder are under escrow. The closing date of the
transactions was March 16, 1998.
Section 2.04 of the Exchange Agreement provided that in the event that
Wonderwide's consolidated net income, as audited under United States generally
accepted accounting principles ("U.S. GAAP"), was less than $2.5 million for the
year ended December 31, 1997, then the Shareholder would cancel that number of
shares of Common Stock to that level that would have existed had Winderwide's
1997 earnings met the minimum level stated above (before adjustment for any
splits or new issuances post closing). Wonderwide's consolidated net income, as
audited under U.S. GAAP for the fiscal year ended December 31, 1997, was
$793,736. In accordance with Section 2.04 of the Agreement, an aggregate of
1,886,022 shares of Common Stock issued pursuant to the Agreement were
automatically cancelled effective as of May 18, 1999 ( which is the date of
completion of the independent audit of Wonderwide's financial statements for the
fiscal year ended December 31, 1997).
Subsequent to the closing date of the Agreement, the Shareholder agreed to
transfer to Wonderwide all of the issued and outstanding capital stock of Jenson
International Travel Services Limited ("Jenson Travel") in exchange for the
issuance to the shareholder by the Company of 1,275,673 shares of Common Stock.
The Shareholder also has agreed to contribute to the Company the sum of RMB
36,535,000, represented the approximate net income of the group tour business
now conducted by Jenson Travel for the years ended December 31, 1995, 1996, 1997
and 1998. In addition, the Shareholder has provided certain operating advances
to the Company from time to time, in the aggregate amount of RMB70,000,000 with
respect to such advances, the Company and the Shareholder have agreed that (i)
RMB36,535,000 shall be applied to offset in full the obligation of the
Shareholder to contribute to the Company an amount equal to the approximate net
income of the group tour business now conducted by Jenson Travel for the years
ended December 31, 1995, 1996 , 1997 and 1998, and (ii) in exchange for the
remaining amount of such advances of RMB 33,465,000, the Company shall issue to
the Shareholder an aggregate of 501,484 shares of Common Stock. The foregoing
transactions are described in an Investment Agreement dated as of May 18, 1999,
entered into and between the Company and the Shareholder.
On January 1,1999, Malee acquired all of the issued and outstanding capital
stock of Lite Charter (China) Limited ("Lite Charter") from a third party. Lite
Charter is an inactive company which was incorporated in Hong Kong during 1996.
Lite Charter had no significant assets and liabilities at January 1, 1999.
On February 1, 1999, Malee transferred all its consulting contracts to Lite
Charter for tax planning purpose by entering into two agreements with Lite
Charter and the contracting parties of the original consulting contracts.
<PAGE> 7
FOREIGN CURRENCY TRANSLATION
In preparing the consolidated financial statements, the financial statements of
the Company are measured using Renminbi ("RMB") as the functional currency.
The Company's share capital is denominated in United States dollars ("US$") and
the reporting currency is the RMB. For financial reporting purposes, the US$
share capital amounts have been translated into RMB at the applicable rates
prevailing on the transactions dates.
All translation of amounts from RMB into US$ is for the convenience of the
reader only and has been made at the swap center rate of US$1.00 = RMB8.3 as
quoted by the People's Bank of China ("PBOC") on March 31, 1999. No
representation is made that the Renminbi amounts could have been, or could be,
converted into United States dollars at that rate or at any other rate.
NOTE 2. COMMENTS
The accompanying condensed consolidated financial statements are unaudited, but
in the opinion of the management of the Company, contain all adjustments
necessary to present fairly the financial position at March 31, 1999, and the
results of operations and cash flows for the three months ended March 31, 1999.
These adjustments are of a normal recurring nature. The consolidated balance
sheet as of December 31, 1998 is derived from the Company's audited financial
statements. Certain information and footnote disclosures normally included in
financial statements that have been prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to the
rules and regulations of the Securities and Exchange Commission, although
management of the Company believes that the disclosures contained in these
financial statements are adequate to make the information presented therein not
misleading. For further information, refer to the consolidated financial
statements and notes thereto included in the Company's Annual Report on Form
10K-SB for the fiscal year ended December 31, 1998, as filed with the Securities
and Exchange Commission.
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 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.
The results of operations for the three months ended March 31, 1999 are not
necessarily indicative of the results of operations to be expected for the full
fiscal year ending December 31, 1999.
NOTE 3. (LOSS) EARNINGS PER SHARE
Effective December 31, 1997, the Company adopted Statement of Financial
Accounting Standards No. 128, "Earnings Per Share" ("SFAS 128"), which requires
the presentation of basic and diluted earnings per share. Basic earnings per
share are calculated by dividing net income by the weighted average number of
common shares outstanding during the period. Diluted earnings per share are
calculated by dividing net income by the basic shares and all dilutive
securities (stock options and warrants), but does not include the impact of
contingently issuable securities or potential common shares which would be
antidilutive.
For the three months ended March 31, 1999 and 1998, net income per common share
is based on the weighted average number of shares of the Common Stock issued and
outstanding during each respective period. The weighted average number of common
stock outstanding for the periods presented are calculated after taking effect
of the cancellation of 1,886,022 shares issued to the Shareholder
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Consolidated Results of Operations:
Three months ended March 31, 1999 and 1998
SALES:
For the three months ended March 31, 1999, net sales were RMB 7,480,225, of
which RMB 3,637,305 (48.6%) was from the hotel operation, RMB 2,848,086 (38.1%)
was from the consulting services and 994,834 (13.3%) was from the group tour
operation.
For the three months ended March 31, 1998 net sales were RMB 4,379,695, of which
RMB 2,856,094 (65.2%) was from the hotel operation and RMB 1,523,602 (34.8%) was
from the consulting services.
Net sales increased by RMB3,100,530 (70.8%) in the first quarter of 1999 as
compared to 1998. This increase was mainly contributed by the group tour
operation acquired by the Company in 1999.
OPERATING EXPENSES:
Operating expenses increased by RMB1,532,187 or 27.0% in the first quarter of
1999 as compared to 1997. Such increase represented was mainly contributed by
the increase in depreciation and amortization, and the direct cost of the group
tour commission for RMB946,793 and RMB913,251, respectively or 88.5% and 100% in
the first quarter of 1999 as compared to 1998.
Depreciation and amortization increased significantly as the Company spent over
RMB17 million to refurbish the hotel rooms and facilities in 1998 and these
refurbishment are put in the operation in the first quarter. The group tour
operation was newly acquired by the Company in 1999 and there was no such
operating cost was incurred in the first quarter of 1998.
Legal and professional fees decreased by approximately RMB 630,000 in the
firstly quarter of 1999 as compared to 1998. Legal and professional fees in 1998
includes audit fees, legal counsel fees and professional expenses incurred for
the reversed acquisition of Best Medical Treatment Group, Inc during 1998.
INTEREST INCOME AND INTEREST EXPENSES:
For the three months ended March 31, 1999, interest expense was RMB291,240 as
compared to RMB339,000 for the first quarter in 1998. No material interest
income was noted during these periods.
INCOME TAXES:
For the three months ended March 31, 1999, Hong Kong subsidiaries of the Company
operating in Hong Kong and in the PRC were subject to Hong Kong Profits Tax and
PRC income tax and respective tax provisions made during the period were RMB
97,370 and RMB33,000, respectively.
Save as disclosed above, no other companies within the Group has assessable
income during the three months ended March 31, 1999 and 1998.
NET (LOSS)/INCOME BEFORE INCOME TAXES:
Net loss for the three months ended March 31, 1999 was decreased by RMB1,569,833
to RMB113,001 as compared to RMB1,682,834 for the first quarter in 1998.
Decrease in the net loss in the first quarter in 1999 was mainly due to the
profit contribution from the group tour operation.
CONSOLIDATED FINANCIAL RESOURCES - MARCH 31, 1999
LIQUIDITY AND CAPITAL RESOURCES
For the three months ended March 31, 1999, the Company's operations provided
cash resources of RMB125,945. The major components of the cash provided by
operations during the period were the increase of RMB 1,500,334 in amount due to
the principal shareholder, increase of RMB 667,868 in accounts payable and
increase of RMB 3,748,191 in accounts receivable. RMB356,756 were used in
investing activities for the purchase of property, plant and equipment.
The Company's cash balance decreased by RMB230,811 to RMB594,622 at March 31,
1999, as compared to RMB 825,433 at December 31, 1998. The Company's net working
capital deficit decreased by RMB1,547,240 to RMB 55,776,150 at March 31, 1999,
as compared to RMB57,323,390 at December 31, 1998. As a result, the Company's
current ratio increased to 0.14 to 1 at March 31, 1999, as compared to 0.07 to 1
at December 31, 1998.
The Company is currently operating at a loss and has net working capital
deficit. The Company's ability to continue as a going concern is dependent on
the continued financial support of its principal shareholder, who has provided a
letter of financial support to the Company.
The management is currently seeking alternative ways to improve the liquidity of
the Company. On May 18, 1999, the principal shareholder signed an investment
agreement with the Company to forego repayment on the advances made by him of
RMB 70,000,000 in exchange for 501,484 shares of common stock of the Company.
FOREIGN CURRENCY EXCHANGE AND INFLATION
The People's Republic of China ("PRC") government imposes control over
its foreign currency reserves in part through direct regulation of the
conversion of Renminbi into foreign exchange and through restrictions on foreign
trade. The conversion of Renminbi into United States Dollars and other foreign
currencies is based on the rate set by the People's Bank of China ("PBOC"),
which is set based on the previous day's PRC interbank foreign exchange market
rate and with reference to current exchange rates on the world financial
markets.
Foreign investment enterprises may generally remit out of the PRC
profits or dividends derived from a source within the PRC, subject to the
availability of foreign currency. Except for such profits or dividends,
remittance out of the PRC by foreign investors of any other amount (including
proceeds from a disposition of an investment in the PRC) is subject to the
approval of the State Administration of Foreign Exchange and the availability of
foreign currency (at the central government of provincial level). In addition,
if there is a deterioration in the PRC's balance of payments or for other
reasons, the PRC may impose restrictions on foreign currency remittances abroad.
No assurance can be given that the Company's PRC subsidiaries will be able or
permitted to remit out of the PRC amounts due to the Company.
In the most recent decade, the Chinese economy has experienced rapid
economic growth as well as relatively high rates of inflation, which in turn
resulted in the periodic adoption by the Chinese government of various
corrective measures designed to regulate growth and contain inflation. Since
1993, the Chinese government has implemented an economic program designed to
control inflation, which has resulted in the tightening of working capital to
Chinese business enterprises. The recent Asian financial crisis has resulted in
a general reduction in domestic production and sales, and a general tightening
of credit. The success of the Company depends in substantial part upon the
continued growth and development of the Chinese economy.
Foreign operations are subject to certain risks inherent in conducting
business abroad, including price and currency exchange controls, influctations
in the relative value of currencies. The Company conducts virtually all of its
business in China and, accordingly, the sale of its products and services is
settled primarily in RMB. As a result, devaluation of the RMB against the United
States Dollar ("USD") would adversely affect the Company's financial performance
when measured in USD. Although prior to 1994, the RMB experienced significant
devaluation against the USD, the RMB has remained fairly stable since then. In
addition, the RMB is not freely convertible into foreign currencies, and the
ability to convert the RMB is subject to the availability of currencies.
Effective December 1, 1998, the foreign exchange transactions involving the RMB
must take place through authorized banks or financial institutions in China at
the prevailing exchange rates quoted by the PBC.
The continuing Asian financial crisis has inhibited the growth and
general level of activity of the Chinese economy, thus reducing consumer demand
in China, which has had a negative impact on the Company's results of
operations, financial condition and cash flows. In addition, as a result of the
Asian financial crisis, China has tightened its foreign exchange controls.
Although the central government of China has repeatedly indicated that it does
not intend to devalue its currency in the near future, devaluation still remains
a possibility. Should the central government of China decide to devalue its
currency, the Company does not believe that such an action would have a
detrimental effect on the Company's operations, since the Company conducts
virtually all of its business in China, and the sale of its products and
services is settled in RMB.
YEAR 2000 ISSUE
The Year 2000 Issue results in the fact that certain computer programs
have been written using two digits rather than four digits to designate the
applicable year. Computer programs that have sensitive software may recognize a
date using "00" as the year 1900 rather than the year 2000. This could result in
a system failure or miscalculations causing disruptions of operations,
including, among other things, a temporary inability to process transactions,
send invoices, or engage in similar normal business activities. Based on a
recent internal assessment, the Company does not believe that the cost to modify
its existing software and/or convert to new software will be significant.
Due to the number of distributors and suppliers that the Company
conducts business with on a continuing basis, and their varying levels of
sophistication with respect to utilization of computer systems, the Company is
currently unable to determine if such parties have fully addressed the Year 2000
Issue as it relates to their respective operating systems. However, the Company
does not believe that a Year 2000 system failure by any of such parties will, in
the aggregate, have a material adverse effect on the Company's consolidated
results of operations, financial position or cash flow.
<PAGE> 9
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In August 1988, Qin Dynasty, a subsidiary of the Company, signed a loan
agreement (the "Loan Agreement") with a company in the PRC (the "Plaintiff") to
provide a loan in the amount of US$ 2,000,000 to Qin Dynasty. Under the Loan
Agreement, the loan accrued interest at the 6-month LIBOR rate plus 0.8% per
annum and was repayable 24 months after the first draw down date in four equal
half-yearly installments of US$500,000. The loan was secured by a RMB10,000,000
deposit (approximately equivalent to the loan amount on the draw down date)
provided by C.M. Cheng on behalf of Qin Dynasty to the Plaintiff and accrued
interest at a fixed annual interest rate of 7.2%. The Plaintiff was required to
refund the deposit to C.M. Cheng in four equal half-yearly installments of
RMB2,500,000 on the maturity dates of the four half-yearly principal
installments of US$500,000 on April 3, 1991 and September 3, 1992. However, Qin
Dynasty did not repay any portion of the loan and the Plaintiff did not request
settlement during the period because the Company contends there was a verbal
agreement (the "Verbal Agreement") between the parties whereby the parties
agreed that the quarterly principal payment of US$500,000 would be set off
against RMB2,500,000 of the deposit in case of default in repayment.
The Plaintiff made its first demand for the settlement under the Loan
Agreement in March 1994. Qin Dynasty refused to pay in view of the existence of
the Verbal Agreement.
The Plaintiff then filed a lawsuit against Qin Dynasty and in May,
1996, PRC court determined that the first three installments of the loan
repayment with an aggregate value of US $1.5 million should be set-off against
RMB7.5 million of C.M. Cheng's deposit and that Qin Dynasty should repay the
fourth loan installment of US$500,000 to the Plaintiff in return for a refund of
the remaining RMB2,500,000 deposit to Cheng Chao Ming. All related interest
expenses and penalty interest for the delay of repayment in respect of the
US$500,000 loan principal and RMB2,500,000 deposit to be computed and settled in
accordance with the Loan Agreement. The Company's directors believe that the
ultimate resolution of this matter will not have any material impact on the
Company's financial position.
<PAGE> 10
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibits Description Method of Filing
- -------- ----------- ----------------
(27) Financial Data Schedule Filed herewith
<PAGE> 11
(b) Reports on Form 8-K
None.
<PAGE> 12
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
JENSON INTERNATIONAL, INC.
Date: June 2, 1999 /s/ C.M. Cheng
--------------------------- --------------------------------------
C.M. Cheng
Chairman (Chief Executive Officer)
/s/ C.M. Chow
--------------------------------------
C.M. Chow
(Chief Financial Officer)
<PAGE> 13
EXHIBIT INDEX
Exhibit 27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1
<CASH> 71,641
<SECURITIES> 0
<RECEIVABLES> 715,436
<ALLOWANCES> 0
<INVENTORY> 106,919
<CURRENT-ASSETS> 1,060,996
<PP&E> 5,549,021
<DEPRECIATION> 0
<TOTAL-ASSETS> 6,610,017
<CURRENT-LIABILITIES> 7,781,013
<BONDS> 8,433,735
0
0
<COMMON> 1,923
<OTHER-SE> (9,604,731)
<TOTAL-LIABILITY-AND-EQUITY> 6,610,017
<SALES> 0
<TOTAL-REVENUES> 901,231
<CGS> 0
<TOTAL-COSTS> 864,049
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (37,182)
<INCOME-PRETAX> 2,093
<INCOME-TAX> (15,707)
<INCOME-CONTINUING> (13,614)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (13,614)
<EPS-BASIC> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
