SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
____________________
FORM 10-K/A
Amendment No. 1
(Mark One)
(X) ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the Fiscal Year Ended June 30, 2000
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number: 000-24999
LOTUS PACIFIC, INC.
(Exact name of registrant as specified in its charter)
Delaware 52-1947160
(State of Organization) (I.R.S. Employer Identification Number)
200 Centennial Avenue, Suite 201, Piscataway, New Jersey 08854
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (732) 885-1750
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.001 per share
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Exchange Act during
the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
(1) Yes X No _____ (2) Yes X No _____
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. ( )
As of October 11, 2000, the aggregate market value of the shares of
Common stock (based on the last sale price of the Common Stock on the
OTC Bulletin Board on that date) held by non-affiliates of the
Registrant was approximately $260 million.
As of October 11, 2000 there were 64,133,795 shares of the Registrant's
Common Stock, par value $0.001 per share, outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None
PART III
Item 10. Directors and Executive Officers of the Registrant.
The following table sets forth certain information with respect to the
directors and officers of the Company as of October 30, 2000:
Name Age Positions and Offices Held With the Company
---------------- ------- -------------------------------------------
June L. Chang........ 48 Director
C. Jeffrey Gull...... 37 Vice President
Gary Huang........... 45 Secretary, Treasurer and Director
David Leung.......... 55 Director
David Li............. 35 Chief Financial Officer
Jack Lin............. 32 Director
Marx Lu.............. 41 President and Chief Executive Officer of Arescom
Kuan C. Tsai......... 47 Director
Hsing Chih Tuan...... 48 President of Correlant Communications
De-Liang Wang........ 43 Vice President
Jeremy H. Wang....... 45 President & Director
James Yao............ 47 Chairman of the Board of Directors
Ms. Chang has been a member of the Board of Directors since September 2000.
From 1984 to 1989, Ms. Chang was an economist and department manager at CNTIC,
a major import and export company in China. From 1993 to 1998, she served as
Vice President of Producer International Inc. (USA), an international import-
export company. From 1999 to present, she is self-employed as an individual
investor. Ms. Chang received her M.B.A. degree from Birmingham University
Business School in the United Kingdom in 1991.
Mr. Gull has been Vice President of the Company since March 1999. He began
with the company on January 1, 1999. Prior to joining the company, he was the
director of Asia Development for Nu Skin Enterprises, a global direct selling
company that develops and markets personal care and nutritional products and
also technology and telecommunication products and services. Mr. Gull spent
over eight years with Nu Skin working with New Market Development and
Operations for their Asia Pacific region. He has also worked in the financial
and computer software industries with Dean Witter and Clyde Digital. Mr. Gull
has a B.S. in business finance from Brigham Young University.
Mr. Huang has been a member of the Board of Directors since October 1998. From
January 1997 to the present, Mr. Huang has served as Secretary of the Company,
and he has served as Treasurer since March 2000. Prior to joining the Company,
from January 1996 to January 1997, Mr. Huang was an accountant / financial
analyst at Rightiming Electronics Corp., a consumer electronics technology
company based in New Jersey. He holds an M.B.A. in finance from the University
of New Haven and an M.A. in Economics from Yale University.
Mr. Leung has been Director of the Company since January 1997. Prior to joining
the Company, he was General Manager of Shenzhen New Technology Development Co.,
Ltd., a computer software technology corporation in Shenzhen, China from
January 1993 to March 1995. He has also been a director of Lotus International
Holdings Corp., an investment management company since 1997. Mr. Leung holds a
B.S. from Beijing Institute of Technology.
Mr. Li has been Chief Financial Officer of the Company since July 1999. Prior
to joining the Company, from January 1999 to July 1999, Mr. Li served as Chief
Financial Officer of U.S. Business Network, an Internet B-to-B company. Prior
to that time, from April 1997 to December 1998, Mr. Li worked as an investment
banker at Donaldson, Lufkin and Jenrette, and from January 1996 to March 1997,
as an Investment Manager at Walden Investment Group, a venture capital firm.
Mr. Li holds an M.B.A. from the Wharton School at the University of
Pennsylvania, an M.A. from Columbia University and a B.A. from Beijing
University.
Mr. Lin has been a Director of the Company since October 16, 2000. From 1998
to the present, He serves as International Marketing Manager at Crown
Limited, an Australian company engaged in travel/hospitality business. From
1995 to 1998, Mr. Lin was Assistant International Manager of Conrda
International. Mr. Lin holds a BA in business from Griffith University in
Australia.
Mr. Lu founded, and since December 1995 has been President, Chief Executive
Officer and a director of Arescom. From April 1999 to September 2000, he also
served as Vice President of the Company. Prior to founding Arescom, Mr. Lu
served as the Vice President of Engineering and Marketing at CNET Technologies,
a new media company, from September 1994 to March 1996. Mr. Lu holds a B.S.
degree in Electrical Engineering from the National Tsing Hua University (Hsin
Chu, Taiwan) and a M.S. degree in Electrical Engineering from the University of
Texas at Arlington.
Mr. Tsai was appointed to the Company's Board of Directors on September 19,
2000. Mr. Tsai is a CPA and is a partner in, and in 1997 founded, Kuan C. Tsai
& Associates, P.C., a public accounting firm in Metuchen, New Jersey. From 1988
to 1994, He was solo practitioner of K.C. Tsai, CPA, and from 1994 to 1997, he
served as President of K.C. Tsai & Co, Inc. Mr. Tsai has more than eighteen
years' experience in public accounting and auditing experience, and frequently
gives tax and general accounting consultation to corporate and individual
clients. Mr. Tsai holds an M.B.A. from St. John's University in public
accounting.
Mr.Tuan co-founded, and since February 1996 has been President of Correlant
Communications, Inc. (formerly TurboNet Communications), a subsidiary of the
Company. From April 1999 to September 2000, Mr. Tuan also served as Vice
President of the Company. From 1992 to 1995, Mr. Tuan served as both a director
and lead software engineer at MultiSpectra Engineering, Inc., an engineering
consulting company. Mr. Tuan has over ten years experience in the design and
implementation of satellite communications systems, over 4 years experience in
the design and implementation of digital television systems and over 3 years
experience in the design and implementation of data-over-cable systems.
Mr. Tuan received his B.S. in Electrical Engineering from the National Chiao
University in Taiwan in 1975 and his M.S. in Electrical Engineering from the
University of Southern California in 1979.
Mr. De-Liang Wang has been Vice President of the Company since March 1999.
Prior to that time, from January 1996 to March 1999, Mr. Wang served as Vice
President of Regent Electronics Corp., a subsidiary of the Company. Mr. Wang
was employed as a senior hardware engineer at AT&T Bell Laboratories from May
1990 to December 1995.
Mr. Jeremy Wang has been the Company's President since March 1999 and a
Director since May 1997. Prior to joining the Company, from September 1991 to
March 1999, Mr. Wang served as a Senior Technology Analyst at AT&T where he
managed the development of next generation communications systems. Mr. Wang
holds an M.S. in Computer Sciences from the New Jersey Institute of
Technology, an M.S. in Engineering from the University of Virginia and a B.S.
in Engineering from National Taiwan University.
Mr. Yao has been Chairman of the Company's Board of Directors since January
1997. Previously, he served as President of the Company from December 1996 to
March 1999. Mr. Yao has over 16 years of business experience in multinational
companies, most recently with Yao Investment Corp., an investment management
company, from January 1999 to the present, and Lotus International Holdings
Corp., where he has served as President since December 1996. Mr. Yao graduated
from Miya Gawa University in Tokyo, Japan.
None of the members of the Board of Directors or executive officers of the
Company are related to one another.
Compliance With Section 16(A) of The Securities Exchange Act Of 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), requires the Company's officers and Directors and persons who own more
than 10% of a registered class of the Company's equity securities
(collectively, the "Reporting Persons") to file reports of ownership and
changes in ownership with the Securities and Exchange Commission and to furnish
the Company with copies of these reports. To the Company's knowledge, based
solely on a review of the Forms 3, 4, and 5 submitted to the Company during and
with respect to Fiscal 2000, there are no known failures to file a required
Form 3, 4 or 5 and, except for a late filing of a Form 3 by each of James Yao,
David Leung, Evolving Investments Ltd., and Yao Investment Corp., no known late
filings of a required Form 3, 4 or 5 during Fiscal 2000 by any person required
to file such forms with respect to the Company pursuant to Section 16 of the
Exchange Act.
Item 11. Executive Compensation.
The following table sets forth for the fiscal years ended June 30, 1998, 1999
and 2000 the compensation for services in all capacities to the Company of the
persons who were at June 30, 2000 (i) the chief executive officer of the
Company, and (ii) other executive officers of the Company who received over
$100,000 in compensation during any of the three years (collectively, the
"Named Officers").
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation
-------------------------------------------------------- ----------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Restricted Securities
Name and Principal Other Annual Stock Underlying LTIP All Other
Position Year Salary($) Bonus($) Compensation Award Options/SAR Payouts Compensation
--------------- ---- --------- -------- ------------ ---------- ----------- ------- ------------
Jeremy Wang 2000 120,000 60,000 --- --- --- --- ---
President 1999 40,000(1) --- --- --- --- --- ---
1998 N/A --- --- --- --- --- ---
David Li 2000 66,667(2) 90,000 --- --- 300,000 --- ---
1999 N/A --- --- --- --- --- ---
1998 N/A --- --- --- --- --- ---
Hsinh Chih Tuan 2000 209,263 82,250 --- --- --- --- ---
President of 1999 --- --- --- --- --- ---
Correlant 1998 --- --- --- --- --- ---
Communications
Max Lu 2000 163,385 --- --- --- 1,400,000(2) --- ---
President & CEO 1999 --- --- --- --- --- ---
of Arescom 1998 --- --- --- --- --- ---
--------------------------------------------------------------------------------------------------------
</TABLE>
(1) Reflects actual salary paid during the portion of Fiscal 1999 that Mr. Wang
was employed by the Company. Mr. Wang's annual salary rate during such time
was $120,000.
(2) Reflects actual salary paid during the portion of Fiscal 1999 that Mr. Li
was employed by the Company. Mr. Li's annual salary rate during such time
was $80,000.
(3) Options are for the purchase of common stock of Arescom.
Stock Options
The table below sets forth information with respect to stock option grants made
to the Named Officers during Fiscal 2000. No stock appreciation rights were
granted during Fiscal 2000.
<TABLE>
<CAPTION>
Options Granted in Fiscal 2000
Individual Grants
-----------------------------------------------------------------------------------
Number of % of Total Potential Realizable Value
Securities Options at Assumed annual Rates
Underlying Granted to of Stock Price Appreciation
Options Employees Exercise for Option Term
Granted (#) in Fiscal Price Per Expiration ----------------------------
Name 2000 Share ($/sh) Date 5% ($) 10% ($)
---------- -------------- ----------- ----------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
David Li(1) 300,000 100.00 $12.00
Max Lu (2) 1,400,000 26.8 $2.00 6/30/09 $1,760,905 $4,462,479
</TABLE>
(1) The stock options granted are vested as to 100,000 shares annually and
expire five years from the grant date.
(2) Options are for the purchase of common stock of Arescom and percentage
relates to outstanding stock of Arescom.
Potential realizable values are net of exercise price, but before the payment
of taxes associated with exercise. Amounts represent hypothetical gains that
could be achieved for the respective options if exercised at the end of the
option term. The 5% and 10% assumed annual rates of compounded stock price
appreciation are mandated by rules of the Securities and Exchange Commission
and do not represent estimates or projections of future common stock prices.
These amounts represent assumed rates of appreciation in the value of the
common stock from the fair market value on the date of grant, which was $2.00
and $12.00 per share, respectively. Actual gains, if any, on stock option
exercises are dependent on the future performance of Arescom common stock and
overall stock market conditions. The amounts reflected in the table may not
necessarily be achieved.
The options granted by Arescom are not immediately exercisable, and are subject
to Arescom's right to repurchase the shares at their exercise price if the
optionee ceases to be employed by Arescom. This repurchase right lapses over a
period of time and upon certain events.
Option Exercises and Holdings
The table below sets forth information with respect to the Named Officers
concerning their exercise of options during Fiscal 2000 and the unexercised
options held by them as of the end of such year.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at June 30, 2000 at June 30, 2000(1)
Number of Shares Value --------------------------- --------------------------
Name Acquired on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
--------------- -------------------- --------- --------------------------- --------------------------
<S> <C> <C> <C> <C> <C> <C>
Jeremy Wang --- --- 180,000 --- $695,500 ---
David Li --- --- 100,000 200,000 0 0
Hsing Chih Tuan --- --- --- --- --- ---
Max Lu(1) --- --- --- 1,400,000 n/a n/a
---------------
</TABLE>
(1) Relates to shares of Arescom common stock, which is not publicly traded.
(2) Based upon the market price of $9.875 per share, which was the last
reported sales price per share of Common Stock on OTC Bulletin Board on
June 30, 2000, less the option exercise price payable per share.
Director Compensation
During Fiscal 2000, non-employee directors of the Company were each paid
$1,000 for each regular meeting of the Board of Directors which they attended
and $800 for each special or committee meeting of the Board of Directors which
they attended, plus, in each case, actual out-of-pocket expenses for
attendance. Non-employee directors are eligible to receive an option to
purchase 5,000 shares of the Company's common stock for each fiscal year
which they serve as Directors. Prior to Fiscal 2000, no payments were made and
no stock options were granted to non-employee directors.
Directors who are also employees of the Company do not receive cash payments or
stock options for their service on the Board of the
Directors.
Employment Contracts, Termination of Employment, and Change in Control
Agreements
None of the Company's executive officers have employment or severance
agreements with the Company, and their employment may be terminated at any time
at the discretion of the Board of Directors.
COMPENSATION COMMITTEE REPORT ONEXECUTIVE COMPENSATION
The Company operates in the extremely competitive and rapidly changing high
technology industry. The Committee believes that the compensation programs for
the executive officers should be designed to attract, motivate and retain
talented executives responsible for the success of the Company and should be
determined within a competitive framework and based on the achievement of
designated financial targets, individual contribution and financial performance
relative to that of the Company's competitors. Within this overall philosophy,
the goals of the Committee are to:
- attract, retain and motivate highly qualified executive officers and
employees who contribute to the long-term success of the Company;
- align the compensation of executive officers with business objectives and
performance;
- align incentives for executive officers with the interests of shareholders
in maximizing value.
The guiding principle of the Compensation Committee is to establish a
compensation program that aligns executive compensation with the Company's
objectives and business strategies as well as with operational and financial
performance. Accordingly, each executive officer's compensation package is
responsibilities, performance and expertise and is designed to be competitive
with salary levels in effect at high technology companies of the same size;
(b) annual cash bonuses tied to the Company's achievement of specified goals;
and (c) non-qualified stock options which strengthen the alignment of interests
between the executive officers and the Company's stockholders.
Compensation Committee Interlocks and Insider Participation
During Fiscal 2000, Jeremy Wang, the Company's President, and James Yao, the
Company's Chairman of the Board, were members of the Company's
Compensation Committee.
STOCK PERFORMANCE
The following table compares the percentage change in cumulative total
shareholder return on the Company's Common Stock against the cumulative total
return of the Russell 3000 Index and the Chase Hambrecht & Quist Technology
Index from May 9, 1997, the earliest date for which trading records with
respect to the Company's Common Stock are available, through June 30, 2000.
The comparisons in this table are required by the Securities and Exchange
Commission. The stock price performance shown on the table is not intended to
forecast or be indicative of future price performance.
5/9/1997 6/30/1997 6/30/1998 6/30/1999 6/30/2000
-------- --------- --------- --------- ---------
[S] [C] [C] [C] [C] [C]
Lotus Pacific $100 $117 $337 $350 $329
Russell 3000 100 108 137 163 176
H&Q Technology Index 100 107 115 186 310
Item 12. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information with respect to the number of shares
of Common Stock beneficially owned as of October 12, 2000, by (i) all persons
who are beneficial owners of five percent or more of the Company's Common
Stock, (ii) the Company's executive officers named in the Summary Compensation
Table above, (iii) each director and nominee for director of the Company, and
(iv) all current executive officers and directors as a group as of October 12,
2000:
<TABLE>
<CAPTION>
(i)Beneficial Owners of more than 5% of Common Number of Shares
Stock (other than directors and executive officers) Beneficially Owned(1) Percentage of Class(1)
------------------------------------------------------ --------------------- ----------------------
<S> <C> <C>
TCL Industries Holdings (HK) Ltd. (2) 9,606,671 14.9%
13/F, TCL Tower
8 Tai Chung Road
Tsuen Wan, Hong Kong
Evolving Investments Limited (3) 8,000,000 11.1%
25 G Block 10 Locwood Ct
Kingswood Villas Yuen Lon
NT Hong Kong
Yao Investment Corp (4) 8,000,000 12.5%
200 Centennial Avenue
Piscataway, NJ 08854
Lotus International Holdings Corp. (5)(6) 7,031,999 11.0%
200 Centennial Avenue, Suite 201
Piscataway, NJ 08854
Rightiming Electronics Corp.(7) 5,666,000 8.0%
P.O. Box 186
Piscataway, NJ 08855
-----------------------------------------------------------------------------
(ii) Directors and Executive Officers
James Yao (8) 15,211,999 23.7%
Jeremy Wang (9) 180,000 *
David Li(10) 300,000 *
David Leung 500,000 *
Hsing Chih Tuan(11) 452,000
Max Lu(12) 1,784,000
Kuan C. Tsai 5,000 *
Gary Huang 0 0
June L. Chang 5,000 *
De-Liang Wang 50,000 *
C. Jeffrey Gull 0 0
-----------------------------------------
(iii) All directors and executive officers as a
group 16,251,999 25.2%
(consisting of 11 persons)
------------------------------------------
</TABLE>
* Less than one percent
(1) All information is as of October 12, 2000 and was determined in accordance
with Rule 13d-3 under the Securities Exchange Act of 1934, as amended, based
upon information furnished by the persons listed or contained in filings made
by them with the Securities and Exchange Commission.
(2) TCL Industries Holdings (HK) Ltd. is an affiliate of TCL Holdings Group.
(3) Evolving Investments Limited owns currently exercisable warrants to
purchase 8,000,000 shares of Common Stock. Mr. Sunman Lee owns Evolving
Investments Limited and has sole dispositive power with respect to such
warrants.
(4) Mr. James Yao is the sole stockholder of Yao Investment Corp. and has sole
voting power and dispositive power with respect to the 8,000,000 shares of
Common Stock owned by Yao Investment Corp.
(5) Mr. James Yao, Chairman of LPFC's Board of Directors, Mr. David Leung,
a director of LPFC, and Mr. James Liu, former Vice President and director of
LPFC, are directors of Lotus International Holdings Corp. Mr. Yao and Mr. Liu
are the majority stockholders of Lotus International Holdings Corp. and have
shared voting power and shared dispositive power with respect to the shares
held by Lotus International Holdings Corp. Mr. Leung has no voting power and no
dispositive power with respect to such shares.
(6) Lotus International Holdings Corp. also owns all 4,300 outstanding shares
of LPFC's Series A Preferred Stock.
(7) Robert Wang and John Wang are the principal stockholders of Rightiming
Electronics Corp. and are not related to Jeremy Wang or De-liang Wang.
Jeremy Wang and De-liang Wang are not related to each other.
(8) Includes 180,000 shares subject to stock options that are currently
exercisable; 7,031,999 shares of Common Stock beneficially owned by Lotus
International Holdings Corp. and 8,000,000 shares of Common Stock
beneficially owned by Yao Investment Corp.
(9) Includes 180,000 shares subject to stock options that are currently
exercisable.
(10)Includes 100,000 shares subject to stock options that are currently
exercisable.
(11)Mr. Tuan is President of Correlant Communications, Inc., a subsidiary of
the Company. The stock shares he owns as indicated above are common stock of
Correlant Communications.
(12)Includes 1,400,000 shares of stock options for purchase of common stock
of Arescom, and 384,000 shares of Arescom's common stock. Mr. Lu is President
of Arescom, Inc., a subsidiary of the Company.
Item 13. Certain Relationships and Related Transactions.
As best knowledge of the Company, during Fiscal 2000, Lotus Pacific had no
related party transactions of the kind described in Item 404 of Regulation
S-K.
Signatures
Pursuant to the requirements of Section 13 of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
Date: October 30, 2000 Lotus Pacific, Inc.
By: /s/ Jeremy Wang
------------------------------
Jeremy Wang, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons in the capacities and
on the dates indicated.
/s/ James Yao
------------------------------------ Date: October 30, 2000
James Yao, Chairman
/s/ David Li
------------------------------------ Date: October 30, 2000
David Li, Chief Financial Officer
/s/ June L. Chang
------------------------------------ Date: October 30, 2000
June L. Chang, Director
/s/ David Leung
------------------------------------ Date: October 30, 2000
David Leung, Director
/s/ Jack Lin
------------------------------------ Date: October 30, 2000
Jack Lin, Director
/s/ Gary Huang
------------------------------------ Date: October 30, 2000
Gary Huang, Director
/s/ Kuan C. Tsai
------------------------------------ Date: October 30, 2000
Kuan C. Tsai, Director
