SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934
For the transition period from ____________ to _____________.
Commission File Number 33-8964
AM-PAC INTERNATIONAL, INC.
-----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Nevada 16-1260971
- -------------------------------- --------------------------------------
(State or other jurisdiction (I.R.S. Employer Identification Number)
of incorporation or jurisdiction)
Suite 2014-21, Sun Hung Kai Centre
30 Harbour Road, Wanchai, Hong Kong
--------------------------------------------
(Address of principal executive offices)
(852) 2591-6928
-------------------------
(Issuer's telephone number)
431 East Central Boulevard, Suite 900, Orlando, Florida 32801
-----------------------------------------------------------------
(Former name, former address and formal fiscal year,
if changed since last report)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
twelve (12) months (or such shorter period that the registrant was required to
file such reports) and (2) has been subject to such filing requirements for the
past ninety (90) days. Yes No
As of October 30, 1998, 18,749,583 shares of common stock of the issuer
were outstanding.
<PAGE>
AM-PAC INTERNATIONAL, INC.
INDEX
Page
------
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
Consolidated Balance Sheets - March 31, 1998
and December 31, 1997........................................... 3
Consolidated Statements of Operations -Three and months ended
March 31, 1998 and 1997......................................... 4
Consolidated Statements of Cash Flows - Three months ended
March 31, 1998 ................................................. 5
Notes to Consolidated Financial Statements...................... 6
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations....................................... 7
PART II - OTHER INFORMATION .............................................. 7
ITEM 6. Exhibits and Reports on Form 8-K................................ 7
Signatures ............................................................. 8
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AM-PAC INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(000)
March 31, December 31,
1998 1997
-------------- --------------
(unaudited)
ASSETS
Current Assets:
Cash and bank deposits $ 14 $ 14
Accounts receivable, net 2,870 2,870
Deposit and prepayments 162 162
Inventory - 761
------------------ ---------------
3,046 3,807
Fixed Assets 24,562 24,642
------------------ ---------------
Total assets $ 27,688 $ 28,449
================== ===============
LIABILITY, MINORITY INTERESTS
AND SHAREHOLDERS' EQUITY
Current Liabilities:
Miscellaneous payables $ 149 $ 149
Due to a related company 2,739 4,745
Taxes payable 125 125
------------------ ---------------
3,013 5,019
Long term loans 3,731 3,731
Long term loans from directors 11,823 11,823
------------------ ---------------
Total liabilities 18,567 20,573
------------------ ---------------
Minority interest 4,484 4,484
------------------ ---------------
Shareholders' Equity:
Share capital 187 50
Retained earnings 4,442 3,334
Cumulative translation adjustment 8 8
------------------ ---------------
Total shareholders' equity 4,637 3,392
------------------ ---------------
Total liabilities, minority interest
and shareholders' equity $ 27,688 $28,449
================== ===============
See Accompanying Notes to Consolidated Financial Statements
3
<PAGE>
AM-PAC INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(000)
For the Three Months Ended
March 31, 1998 March 31, 1997
----------------- ----------------
(Proforma)
Net Sales $ 12,487 $ 17,691
Cost of goods sold (10,849) (16,408)
---------------- ----------------
1,638 1,283
Selling, general and administrative expenses (391) (462)
Interest expense/net - (344)
Other income - -
---------------- ----------------
(Loss) income before income tax 1,247 477
Provision for income tax - (79)
---------------- ----------------
Net (Loss) income $ 1,247 $ 398
================ ================
(Loss) earnings per common share $ .07 $ .02
================ ================
Weighted average number of common shares
outstanding 18,749,583 18,749,583
================ ================
See Accompanying Notes to Consolidated Financial Statements
4
<PAGE>
AM-PAC INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Three Months Ended
(000)
March 31, 1998
------------------
Cash flows from operating activities:
Net income $ 1,245
Decrease/increase in operating assets:
Inventories, net (761)
------------------
Net cash used in operating activities 484
------------------
Cash flow from investing activities: -
Cash flows from financing activities:
Decrease in payable to a related company (484)
------------------
Net cash used in financing activities (484)
------------------
Net increase (decrease) in cash 0
Cash at beginning of period 14
------------------
Cash at end of period $ 14
==================
See Accompanying Notes to Consolidated Financial Statements
5
<PAGE>
AM-PAC INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
March 31, 1998
1. The interim financial statements have been prepared pursuant to the
requirements for reporting on Form 10-QSB. The March 31, 1998 balance sheet
was derived from unaudited financial statements and does not include all of
the disclosures required by generally accepted accounting principles. The
interim financial statements and notes thereto should be read in
conjunction with the financial statements and footnotes thereto included in
the Company's report on Form 8-K/A, Amendment No. 1 dated November 18,
1998. In the opinion of management, the interim financial statements
reflect all adjustments of a normal receiving nature necessary for a fair
statement of the results for the interim period.
2. On May 7, 1998, the Company acquired all of the issued and outstanding
stock of Sun East International Development Limited ("Sun East") in
exchange for 15,130,000 shares of the Company's common stock. Simultaneous
therewith, the Company redeemed 5,320,222 shares of its common stock held
by its two principal shareholders in exchange for all of the assets,
subject to all of the liabilities of the Company. Both transactions were
given retroactive effect to the close of business on December 31, 1997.
This acquisition has been treated as a reverse acquisition since Sun East
and its subsidiaries are the continuing entities as a result of the
recapitalization and restructuring. On this basis, the historical financial
statements prior to January 1, 1998 represent the financial statements of
Sun East and its subsidiaries. The historic shareholders equity accounts of
the Company as of December 31, 1997 have been retroactively restated to
reflect the issuance of 15,130,000 shares of common stock and the
redemption of shares of common stock.
6
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Background
On May 7, 1998, the Company acquired all of the issued and outstanding
stock of Sun East International Development Limited ("Sun East") in exchange for
15,130,000 shares of the Company's common stock. Simultaneous therewith, the
Company redeemed 5,320,222 shares of its common stock held by its two principal
shareholders in exchange for all of the assets, subject to all of the
liabilities of the Company. Both transactions were given retroactive effect to
the close of business on December 31, 1997. This acquisition has been treated as
a reverse acquisition since Sun East and its subsidiaries are the continuing
entities as a result of the recapitalization and restructuring. On this basis,
the historical financial statements prior to January 1, 1998 represent the
financial statements of Sun East and its subsidiaries. The historic shareholders
equity accounts of the Company as of December 31, 1997 have been retroactively
restated to reflect the issuance of 15,349,583 shares of common stock and the
redemption of 5,320,222 shares of common stock.
Net Sales. Net sales for the three months ended March 31, 1998 decreased by
$5,204 or 30% to $12,487 compared to $17,691 for the corresponding period of the
prior year. This decrease resulted from change of product mix within China
market.
Cost of Goods Sold. Cost of goods sold for the three months ended March 31, 1998
decreased by $5,559 or 34% to $10,849 compared to $16,408 for the corresponding
period of the prior year. The decrease in cost of goods sold is attributable to
the reduced sales and sale of product with higher profit margin. Cost of goods
sold as a percentage of sales decreased to 86.88% for the three months ended
March 31, 1998 compared to 92.75% for the corresponding period of the prior
year.
Selling, General and Administrative Expenses. Selling general and administrative
expenses for the three months ended March 31, 1998 decreased by $71 or 15.37% to
$391 from $462 for the corresponding period of the prior year. This decrease is
attributable to better control of expenses.
Interest Expense/net. Interest expense, net for the three months ended March 31,
1998 decreased by $344 to $0 from $344 for the corresponding period of the prior
year. This decrease resulted from this type of expenses was included in handling
commission to the agent.
Income Tax Expense. Income tax expense for the three months ended March 31, 1998
decreased by $79 to $0 from $79 for the corresponding period of the prior year.
This decrease resulted from tax liabilities were not provided in this quarter.
LIQUIDITY & CAPITAL RESOURCES
At March 31, 1998 the Company had working capital of $33 and cash of $14
compared to a deficit in working capital of $1,212 and cash of $14 as of March
31, 1997. The change in working capital is attributable to the earnings of the
Company.
If the Company is to expand its operations, it must have additional capital
to fund letters of credit necessary to purchase the goods which are delivered to
customers in the People's Republic of China. Because of this, the Company plans
a public offering of its shares in early 1999.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27.1 Financial Data Schedule
(b) Reports on Form 8-K
None
7
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
AM-PAC INTERNATIONAL, INC.
Date: November 20, 1998 By: /s/ Xinnan Li
---------------------------
Xinnan Li
Chief Executive Officer
Dated: November 20, 1998 By: /s/ Lawrence Tsui
---------------------------
Lawrence Tsui
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 14
<SECURITIES> 0
<RECEIVABLES> 2,870
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,046
<PP&E> 24,562
<DEPRECIATION> 0
<TOTAL-ASSETS> 27,688
<CURRENT-LIABILITIES> 3,013
<BONDS> 15,554
0
0
<COMMON> 187
<OTHER-SE> 4,450
<TOTAL-LIABILITY-AND-EQUITY> 27,688
<SALES> 12,487
<TOTAL-REVENUES> 12,487
<CGS> 10,849
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 391
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,247
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,247
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,247
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
