U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
X Quarterly report under section 13 or 15(d) of the
Securities Exchange Act of 1934 for the quarterly period
ended September 30, 1996.
____Transition report under section 13 or 15(d) of the
Securities Exchange Act of 1934 for the transition period
from _________ to _________.
Commission File No: 33-27707
TENGTU INTERNATIONAL CORP.
(Name of small business in its charter)
Delaware 77-0407366
(State or other (IRS Employer Id. No.)
jurisdiction of Incorporation)
19105 36th Avenue, Suite 207 98037
Linwood, Washington
(Address of Principal Office) Zip Code
Issuer's telephone number: (604)685-3234
Check whether the issuer (1) filed all reports required to
be filed by Section 13 or 15(d) of the Securities
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 X No ____
Applicable only to issuers involved in bankruptcy
proceedings during the past five years
Check whether the issuer has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of
the Exchange Act after the distribution of securities under
a plan confirmed by a court. Yes ____ No ____
Applicable only to corporate issuers
State the number of shares outstanding of each of the
issuer's classes of common equity, as of the latest
practicable date: 16,099,972 shares outstanding
as of September 30, 1996.
Transitional Small Business Disclosure
Format (Check one):
Yes X No ____<PAGE>
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS AND EXHIBITS
The unaudited financial statements of registrant
for the three months ending October 31, 1996, follow. The
financial statements reflect all adjustments which are,
in the opinion of management, necessary to a fair statement
of the results for the interim periods presented.
FINANCIAL STATEMENTS
TENGTU INTERNATIONAL CORP.
(A Development Stage Company)
Quarter Ended September 31, 1996<PAGE>
TENGTU INTERNATIONAL CORP.
(A Development Stage Company)
Index to Financial Statements
Balance Sheet
Statement of Loss and Deficit
Statement of Cash Flows
Notes to Financial Statements<PAGE>
TENGTU INTERNATIONAL CORP.
DEVELOPMENT STAGE COMPANY)
BALANCE SHEET AS OF AND FOR THE
THREE MONTHS ENDED SEPTEMBER 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION> 1996 1995
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash 604,847 -0-
OTHER ASSETS:
Investment in Joint
Venture 1,540,000 -
Revivor Costs 576 576
TOTAL ASSETS 2,145,423 576
LIABILITIES AND SHAREHOLDERS'
EQUITY
CURRENT LIABILITIES
Accounts payable 5,443 -
SHAREHOLDERS' EQUITY
Common stock, $.01 par value
100,000,000 shares and
50,000,000 shares authorized
Issued and Outstanding
16,099,972 and 385,500
at September 30, 1996
and 1995 respectively 161,000 3,856
Preferred stock, $.01 par value
10,000,000 shares and 5,000,000
shares authorized at September
30, 1996 and 1995 respectively.
Issued and outstanding -0- -0-
Paid-in Capital 2,476,873 249,767
Accumulated deficit during
the development stage (497,893) (253,047)
Total shareholder's equity 2,139,980 576
TOTAL LIABILITIES
AND
SHAREHOLDERS' EQUITY 2,145,423 576
/TABLE
<PAGE>
TENGTU INTERNATIONAL CORP.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF LOSS AND DEFICIT
FOR THE THREE MONTHS ENDED
SEPTEMBER 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
EXPENSES
Accounting fees 2,649 -
Bank charges 159 -
Corporate development
expenses 210,003 -
Legal 4,518 -
Office 926 -
Salaries and benefits 10,024 -
Telephone 229 -
Transfer Agent 1,110 -
Travel 2,988 -
NET LOSS 232,607 -
Deficit, beginning of
period 265,286 253,047
Deficit, end of period 497,893 253,047
/TABLE
<PAGE>
TENGTU INTERNATIONAL CORP.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN
FINANCIAL POSITION FOR THE
THREE MONTHS ENDED
SEPTEMBER 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Cash provided by (used in)
Operating Activities
Net loss (232,607) -
Increase (decrease) in
accounts payable 2,454 -
Cash provided by (used in)
Financing Activities
Common shares issued 1,625,000 -
Cash provided by (used in)
Investing Activities
Decrease (increase) in
investments (1,290,000) -
Increase in Cash 104,847 -0-
Cash and equivalents at
beginning of period 500,000 -0-
Cash and equivalents at
end of period 604,847 -0-
As Represented By:
Cash In Trust 569,177 -0-
Bank 35,671 -0-
Balance 604,847 -0-
/TABLE
<PAGE>
TENGTU INTERNATIONAL CORP.
NOTES TO FINANCIAL STATEMENTS
THREE MONTHS ENDED
SEPTEMBER 30, 1996
(UNAUDITED)
1. ORGANIZATION AND NATURE OF BUSINESS
Tengtu International Corp. (the "Company") was incorporated in
the State of Delaware on May 6, 1988, as Galway Capital
Corporation, a Development Stage Enterprise. The Company's
business was to seek potential business ventures. During fiscal
year 1990-1991, the Company ceased operations and was inactive
until May 1996. In August 1993, the Company was renamed
Tower Broadcast, Inc.
In May 1996, the control of the Company was acquired by several
individuals for the purposes of acquiring certain interests in a
Chinese foreign joint venture company. This joint venture has
been licensed by the Chinese government to produce and distribute
electronic educational software to the Chinese elementary, junior
and middle school system which number approximately 900,000
schools. On May 24, 1996, the Company was renamed to its
current name.
The Company has changed from a year-end basis of reporting for
financial and tax purposes to a fiscal beginning July 1.
2. SHAREHOLDERS' EQUITY
In August, 1996, the Company issued a private placement
memorandum offering to raise $13,500,000 by the issuance of
6,000,000 shares at $2.25 per share. This is an offshore
transaction and shares will not be offered to any persons
in the United States, nor will the offering be registered
under the United States Securities Act of 1933. As of the
date of these statements, the Company has issued 722,222
common shares at $2.25 upon receipt of $1,625,000.
3. WARRANTS
The Company has 8,750,000 warrants outstanding which are
exercisable at $1.00 each. Two million of the warrants are
exercisable on or before July 31, 1997, and six million seven
hundred and fifty thousand warrants are exercisable on or before
July 31, 1998.
4. INVESTMENT IN JOINT VENTURE
Effective June 30, 1996, the Company purchased a 49% profit
interest in a Chinese foreign joint venture named Beijing Tengtu
United Electronic Development Co. ("Tengtu United"). The
Company has agreed to raise $12,000,000 to provide working
capital for Tengtu United, in increments ending July 31, 1997.
Tengtu United is a Chinese foreign joint venture company that was
formed for the purpose of assuming the business of Tengtu China,
which is an operating Chinese company owned by three major
Chinese State computer companies, whose focus is the production
and distribution of Chinese educational software in China. Funds
provided by the Company are for the working capital of the joint
venture and have been capitalized.
5. COMMITMENTS AND CONTINGENCIES
The Company is committed to raise no less than $12,000,000 in
working capital to be provided to the joint venture (see subsequent
note). The Company has offices in Lynnwood, Washington and
Vancouver, Canada.
The Company is not presently a party to any litigation.
6. SUBSEQUENT EVENTS
In August, 1996, the company issued a private placement
memorandum offering to raise $13,500,000 by the issuance of
6,000,000 shares at $2.25 per share. This is an offshore
transaction and shares will not be offered to any person in
the United States nor will the offering be registered under
the United State Securities Act of 1933. Since September
30, 1996, the Company has provided approximately $2,557,000
towards its commitment to provide working capital for the
joint venture.
ITEM 2. MANAGEMENT'S DISCUSSION AND
ANALYSIS OR PLAN OF OPERATION
On June 30, 1996, the Company's wholly owned Barbadian
subsidiary, Tengtu Enterprises, Limited (the "Subsidiary"),
was assigned the right to acquire a 49% interest in the profits
of Beijing Tengtu United Electronics Development Co., Ltd.
("Tengtu United"). Tengtu United is a sino foreign joint
venture company approived by the Peoples Republic of China
to produce and distribute educational software to the
elementary, junior and middle schools in China.
The right of the Company to acquire a 49% interest in
the profits of Tengtu United is contingent, among other things,
upon the Company's ability to provide twelve million dollars
U.S. (U.S. $12,000,000) to Tengtu United no later than July
30, 1997.
The Company is currently engaged in a private placement
offering of its securities for the purpose of raising the funds
necessary to complete its investment in the joint venture. The
Company's plan of operation for the remainder of its current
fiscal year, which ends June 30, 1997, and for the twelve months
following the date of this report on Form 10-QSB, is to raise
sufficient funds through the sale of its securities, to complete
its $12,000,000 investment in Tengtu United on or before July 30,
1997. There is no assurance that the Company will be able to meet
this objective.
Part II
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBIT 27 - FINANCIAL DATA
SCHEDULE
(b) REPORTS ON FORM 8-K - One Form 8-K report was
filed by the Company during this last quarter. This Form 8-K
reported: (1) a change in the Company's fiscal year from a
calendar year to a fiscal year ending on June 30 of each year;
and (2) the Company's resumption of reporting under Section 15(d)
of the Exchange Act. No financial statements were filed with
this Form 8-K. The date of this report was August 22, 1996.
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.
TENGTU INTERNATIONAL CORP.
(Registrant)
Date: November 14, 1996
/s/Pak Kwan Cheung
Pak Kwan Cheung, President
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> SEP-30-1996
<CASH> 604,847
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 604,847
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,145,423
<CURRENT-LIABILITIES> 5,443
<BONDS> 0
0
0
<COMMON> 161,000
<OTHER-SE> 2,476,873
<TOTAL-LIABILITY-AND-EQUITY> 2,145,423
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (232,607)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (232,607)
<EPS-PRIMARY> (0.014)
<EPS-DILUTED> 0
</TABLE>
