SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) November 10, 1997
BAHUI USA, INC.
(Exact name of registrant as specified in its charter)
A.G. Holdings, Inc.
(Former Name)
Washington
(State or other jurisdiction of incorporation)
0-23180 91-1253514
(Commission File Number) (IRS Employer Identification No.)
45110 Club Drive, Suite B, Indian Wells, California 92210
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 760-360-1042
<PAGE>
Item 1. Change in Control of Registrant.
Item 2. Acquisition or Disposition of Assets.
OVERVIEW
Bahui USA, Inc., formerly A.G. Holdings Inc.(the "Company" or "Bahui
USA"), is incorporated in the State of Washington. The Company has 100,000,000
shares of common stock authorized, of which 15,000,000 shares are issued and
outstanding. Bahui USA recently acquired a Hong Kong corporation named Green
Bamboo Ltd., which owns 65% of Jiangyin Zhiye Real Estate Co. For the year ended
1996, Jiangyin Zhiye Real Estate Co earned $5,300,000, which results in $.35 per
share earnings for Bahui USA shareholders. The Company is developing over
2,259,500 sq. ft of space at an estimated resale value of over $150 million in
various stages of development at the present time.
Bahui USA's subsidiary is a developer of large residential and
commercial high rise real estate projects in China. This subsidary has a record
of earnings which are expected to continue.
Currently Bahiu's subsidiary has eight projects under development which
have a combined value in excess of $150,000,000. Historically the residential
units have always been sold and the commercial space rented, prior to
completion. Bahui expects that pattern to continue.
Bahui USA's gives investors the comfort of investing in a regulated US
public company, in US dollars, while participating in the Chinese building boom.
Bahui USA Inc. corporate headquarters are located in Indian Wells,
California and is staffed by experts in financial reporting, corporate
compliance, and investor relations. Bahui's operations office is located in
Jiangyin, China, where the Company employees are experienced in economics, urban
planning, engineering, construction, finance, marketing and leasing.
OFFICERS AND DIRECTORS
Meng Gui Xing is the CEO of Bahui U.S.A. and the Chairman of the
Board. He
was educated at Zhongshan University in China where he graduated with a masters
degree in
economics. Mr. Meng began his career as the general manager of Fai Tat
Industrial where he
developed a 215,000 sq. ft and a 538,000 sq. ft residential and commercial
building project,
with a combined value in excess of $24 million dollars. Later Mr. Meng became
associated
with the Zhuhai Jiangyin Industrial & Trade Company where he developed a $25
million
residential building project.
In 1993 Mr. Meng organized the Jiangsu Bahui Group which has grown into
a major developer of urban residential and commercial projects. The Company has
developed 3,335,600 sq. ft of buildings in the cities of Zhuhai, Zhongshan and
Shenzhen, valued in excess of $215 million dollars.
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Robert Filiatreaux is the President of Bahui USA and a member of its
board of
directors. Mr. Filiatreaux has been engaged in international business for the
past 27 years. He
received a degree from the University of Wisconsin served three years with the
US Air Force.
Mr. Filiatreaux worked for over 20 years in various executive capacities in
sales and
marketing for US companies doing business in foreign countries. Mr. Filiatreau
has worked
in over 55 countries.
Randall Baker is the Chief Financial Officer of Bahui USA and is a
member of its
board of directors. After discharge from the United States Navy, Mr. Baker began
his
investment career with the Pacific Coast Stock Exchange. After leaving the
stock exchange,
Mr. Baker worked in the securities industry, including twenty years with Wm.
Mason &
Company of Los Angeles, where he served as its Executive Vice President. Mr.
Baker was
responsible for data systems, trading, personnel, and client liaison. Mr. Baker
has served as
the compliance officer for two public companies.
DEVELOPMENTS
Bahui USA targets prime urban real estate in areas classified as
"downtown zones" for it's multi-purpose projects. Bahui USA's projects typically
involve high rise construction with a combination of residential, professional
office suites, retail shops, restaurants and theater complexes. The Company's
projects are historically "Sold Out" or "Leased Out" prior to the completion of
construction. One of the Company's major strengths is its ability to fund all
projects internally, eliminating most interest costs and the risk foreclosure.
A majority of Bahui USA's competitors opt for development on raw land
located on the urban fringes of major cities and suburban zones. These
competitors rely heavily on external debt financing and see vacancy rates of 40%
or greater upon project completion due to incomplete strategic planning and
uncertain demographics. Bahui USA uses a population core approach by identifying
5-7 central city blocks in an average size project where demand far outweighs
available supply of residential and commercial vacancies. After preliminary
evaluation and planning, Bahui moves forward with purchase of the target
property relying solely on it's internal capitalization and funding
capabilities. Once the land is purchased and construction is initiated, Bahui
collects deposits of 30% from purchasers, which provides sufficient cash to
complete the project.
On all projects, after the Company purchases the land and before the
start of construction, the Company relocates displaced families and commercial
entities completes demolition of existing structures, excavation, grading and
the installation of infrastructure requirements such as power utilities,
telecommunications service, water, sewer amenities.
Concurrently Bahui organizes and administers all phases of permitting
and inspection with regulatory agencies within the project's jurisdiction. Bahui
further uses it's management and administration expertise in project management
and project tracking to coordinate relationships with architects, design firms,
vendors, suppliers, civil engineers, electrical engineers, contractors, sub
contractors and Bahui's own internal work force of approximately 315 employees.
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<PAGE>
THE CHINA MARKET
With more than one-fifth of the world's population and an economy that
has been doubling in size every eight years, China is emerging as the economic
motor of the Asia Pacific, with growing political significance. What happens in
China will be relevant to the economic health of all major trading countries and
to virtually every issue of the global community.
China's economy has quadrupled in size since economic modernization
became the hallmark of Chinese government policy in 1978. With current GDP
standing at about $750 billion, the country is already the eighth-largest
economy in the world, even before resuming full sovereignty over Hong Kong this
year. Annual growth is averaging 9 per cent, the world's fastest growth rate in
the last decade. This growth is projected to continue at a similar rate, and by
early in the next century China is predicted to become the world's largest
economy.
China's internal restructuring is gathering momentum. The economic
reforms that began in the late 1970s were the catalyst for redefining the role
of the state in China - a redefinition that has gathered momentum since the
early 1990s. The central tenet of China's economic reforms was that of
increasing economic growth, productivity, diversity and efficiency through the
application of market mechanisms.
In commerce, industry and service, the non-state sector has
demonstrated tremendous growth, while the state sector has continued to
stagnate. The financial sector is also now undergoing a transformation as the
state gradually backs out of direct involvement.
Foreign investment in China continues to grow. China has become a major
destination for foreign direct investment, with annual flows increasing from
US$4 billion in 1990 to more than $38 billion in utilized foreign investment by
the end of 1995. Hong Kong and Macao remain the major source of foreign
investment into China, with nearly 60 per cent of the total, while the U.S.,
Japan and Taiwan each represent about 8 per cent of the total. Industry has
captured more than 50 per cent of the investment, followed by real estate and
utilities at 30 per cent. Most investment to date has been focused in the
coastal regions, and the government is now strongly encouraging investment into
the interior.
China's foreign trade has outperformed the world average by a factor of
more than two. China's imports have grown from under US$12 billion in 1978 to
more than US$132 billion by the end of 1995, while its exports have increased
from under US$10 billion to US$149 billion.
China's commitment to pursue further economic reform should sustain
high growth and continue to generate promising opportunities. While the central
government in Beijing continues to exercise a paramount role in economic
leadership and setting priorities, China should also be viewed as a collection
of distinct regional markets differentiated by geography, culture and dialects,
economic structure, level of development and growth prospects.
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<PAGE>
Project management and engineering services are needed for the complex
residential and industrial construction planned in Hong Kong and South China,
which can now be considered one market with respect to the use of higher-quality
building products and services.
Just 10 years ago, there were no office buildings and apartments for
rent in China. At that time, many foreign and domestic businessmen set up
offices in hotel rooms, and lived in hotels as home for years. Massive
construction of commercial and residential buildings started in 1990, and it
will continue for decades as China redevelops decaying urban areas with modern
residential and commercial development.
According to the State, the real estate sector witnessed a growth trend
during the Eighth Five-Year Plan period, with the volume of investments
increasing on an annual basis. The growth rate of investment in 1995 was roughly
the same as the 41.3 percent recorded in 1994.
China's real estate investment environment has improved considerably in
recent years. Centralized government control has led to the elimination of less
competitive real estate companies, while powerful enterprises with ample
financial resources, including many foreign-funded enterprises, have continued
to develop. This favorable environment is highly beneficial to powerful Chinese
and foreign companies alike. It is this climate that Bahui USA has identified
and capitalized on for it's current and long term growth.
China's efforts to create a real estate market is a development in
recent years that has been attracting attention from international business
community. In December 1987, under the hammer of an auction with the
participation of foreign companies, the first piece of land in Shenzhen Special
Economic Zone was granted for consideration to a local company. This transaction
was a historical breakthrough and marked the beginning of the land reform system
in China. Within a short period since then, China has been evolving into one of
the nations with the fastest growing real estate market. Real estate investment
in China is becoming a popular investment for domestic and foreign investors
China's industry has rebounded from its stagnant period in the early
1990s and ushered in a new round of sound, speedy and sustained growth,
according to a report recently released by China's State Statistics Bureau
(SSB).
The report predicted that China's industry in the years ahead is to
keep its current development momentum. Thanks to the improved supply of energy
and raw materials and the stable investment and consumption markets, China's
industry in remaining years of the Ninth Five-Year Plan (1996-2000) period will
stay on its current fast track. The contribution of China's industry to the
gross domestic product is expected to be further increased.
The report said that its development in the past five years could be
divided into three phases. The industry recorded fast growth in 1992 and 1993.
The added values of China's industry in the two years posted respective growth
of 21.2 percent and 20.1 percent. The overall industrial output value raised
24.7 percent and 27.3 percent respectively.
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<PAGE>
The Chinese government in 1994 introduced a series of reform measures
in such key fields as finance, taxation, foreign exchange and investment. The
industrial growth rate in the year dropped to 18.9 percent while the output
value kept a high increase of 24.2 percent.
The industrial growth in the ensuing two years further slowed down
owing to the relatively tight macro-economic situation. The added values in the
two years moved up 14.3 percent and 12.5 percent and the output values rose by
20.3 percent and 16.6 percent.
The industrial scale in the past five years swelled markedly. By the
end of 1996, China had total industrial assets worth 8,573 billion yuan. The
added values of industry in the year totaled 2,908 billion yuan; the industrial
output value, 9,959 billion yuan; and taxes, 519.7 billion yuan.
China's industrial structure also witnessed profound changes in the
period. The proportion of industrial assets and output values held by
non-state-owned industrial enterprises steadily increased. According to the
report, the proportion of state-owned industrial assets and output values
dropped from 74.4 percent and 56.2 percent in 1992 to 56.2 percent and 28.5
percent in 1996.
The state-owned sector, however, has still held the controlling
position among the sectors of strategic significance for the national economy,
including oil and natural gas exploration, coal mining, electricity generation
and ferrous and non-ferrous industries. According to the report, small
industrial enterprises became more active and played more important role in
China's industry. But large- and medium-sized enterprises were still the pillars
of the industry.
The report indicated that the state enterprise reform in the past five
years has been accelerated. The State Council, the country's cabinet, and other
economic decision-making departments introduced a series of measures, such as
enterprise restructuring, formation of enterprise groups, trial operation of
enterprise bankruptcy and merging, so as to decentralized the enterprise
management and hone its competitive edge in the market.
The report predicted that China's industry in the years ahead is to
keep its current development momentum. Thanks to the improved supply of energy
and raw materials and the stable investment and consumption markets, China's
industry in remaining years of the Ninth Five-Year Plan (1996-2000) period will
stay on its current fast track. The contribution of China's industry to the
gross domestic product is expected to be further increased.
Due to Bahui USA's intimate knowledge and historical expertise of key
personnel in prior positions in the State government, a strategy was developed
and implemented to ensure a competitive edge over many foreign and domestic
competitors particularly in the largest market region, the Yangtze Delta,
anchored on Shanghai.
Structural changes in recent years have unleashed two powerful forces
in China: the inherent productive capacity of the largest country in the world;
and, in parallel, an unceasing drive towards higher standards of living. These
forces are largely being played out in a rapidly-expanding network of large,
medium and small size cities located in strategic,
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urbanizing regions. In just two decades, China has become the world's largest
urban nation: despite official figures that suggest only 28.6% of the population
lives in cities, using more universal definitions of what constitutes a "city",
and including the burgeoning suburban and urban areas in which most new
industries are now locating, China's urban population is around 40%. This means
that there are approximately 460 million urban consumers in the country. The
World Bank estimates that more than 50% of the population will become urban by
2010 at the latest. The implications of this urbanization trend for American
investors and exporters are far-reaching: consumer markets are becoming
concentrated as never before in China's history, and the rapid shift from rural
to urban living will demand a wide range of products and services that represent
concrete commercial opportunities for both domestic and foreign firms.
One of three provincial-level cities in China, Shanghai is the
country's largest urban center with a permanent population approaching 13
million and a "temporary" population of approximately 3 million. Almost 80% of
Shanghai's population is concentrated in the 254 square kilometer (km2) urban
zone of the municipality which, together with 9 rural counties, covers an area
of 6,340 km2. Including temporary residents, Shanghai has an urban population
density of just under 50,000 inh/km2, making it one of the densest cities in the
world. The municipality's population is expected to continue to grow to at least
17 million people by the year 2000, in large part due to a growing number of
rural migrants seeking employment in China's most important industrial base, its
largest port, and its major center of commerce, trade, finance and science.
Shanghai is now undergoing a process of rapid, unprecedented change.
The main entrepot city in all of Asia in the early part of this century,
Shanghai suffered greatly during the Japanese occupation and civil war. After
Liberation it was left to atrophy both because of its symbolic role as the
pre-Communist hub of foreign capitalism, and because of its strategic exposure
to military attack by "foreign imperialists". As China's economy began to
develop, Shanghai slowly re-attained its function as the country's principal
industrial city, but it had lost its international role in finance and trade.
The present course of development under market reforms is seeing Shanghai
rapidly re-establish that role.
Crucial to Shanghai's continuing economic development is the recent
recognition by both municipal and State-level authorities that the city must
consolidate three major economic functions by the turn of the century: as
China's principal financial city providing access to what is expected to become
the world's tenth largest trading nation by the end of this decade; as the
economic powerhouse, or "dragon's head", of the country's largest integrated
economic region now emerging in the 6000 km. long Yangtze River Basin (in which
just under one-third of China's population produces more than 50% of the
country's industrial and agricultural output); and as the major economic anchor
in the Yangtze Delta Region in which 193 million people (16% of the national
population) produce more than 40% of China's industrial output.
Shanghai is the most cosmopolitan city in China. Over 800,000 foreign
tourists visited Shanghai in 1993, and generated around US$ 825 million in
foreign exchange. Actual direct foreign investment in 1993 amounted to US $ 3.16
billion, more than half of the total actual foreign investment in Shanghai since
reforms began in China in 1978 3). The volume of
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<PAGE>
foreign investment in Shanghai, and its share of overall investment in China,
has continued to grow since then.
The urban area of Shanghai, known as "Puxi" (pronounced - interestingly
- - as pushee), essentially occupies the west bank of the Huangpu River which
flows into the Yangtze River upstream from the city. The city has generally
developed along an east-west corridor anchored on the historic "Bund" on the
Huangpu River front. The central business core, and the larger central
commercial area, generally correspond to the French, British and International
areas of Shanghai prior to Liberation in 1949. There are three principal
east-west axes: Nanjing Road (the major one) stretching from the Huangpu River
as far as the international airport in Hongqiao to the west; Yanaan Road which
veers off from Nanjing Road in the west and now empties out into the planned
Lujiazui Financial Services District in Pudong through a cross-harbor tunnel
near the southern portion of the Bund; and Huaihai Road which is primarily a
retail street.
Pent up demand, the opening of the urban land market, and large
infrastructure projects are causing major redevelopment in Puxi. Entire
neighborhoods are being cleared to make way for new office buildings, retail
facilities, and elevated expressways to support Shanghai's tertiary sector
growth. Once quaint streetscapes, built in the early part of this century during
the city's heyday as a foreign enclave, are being replaced by high-rise towers
and retail podiums. Although key heritage sites are protected, including the
historic Bund area, the urban fabric of dense, low-rise neighborhoods is rapidly
being transformed. Over 300,000 households have been resettled in the past few
years to make way for redevelopment projects, and government officials predict
at least as many will need to be relocated by the end of this decade, often to
suburban districts.
Shanghai is spending heavily to tackle its transport and infrastructure
constraints; about 43% of its GDP was invested in fixed asset construction in
1993, the highest rate of investment of any of China's provinces on a per capita
basis. The major multilateral development banks are supporting Shanghai's urban
construction with over US$ 2 billion in loans since the late 1980s. Some large
bilateral agencies are also working in Shanghai, such as Japan's OECF which is
providing aid for the planned new international airport in the Pudong New Area.
Shanghai is the core of the Yangtze Delta Region which includes
Jiangsu, Zhejiang and Anhui Provinces. There are 193 million consumers in this
region on a land base half the size of Alberta, Canada. This is more than the
population of Indonesia, three times the population of the Philippines, and
three and a half times the consumer base of Thailand. At an average population
density of 530 people per square kilometer, the Yangtze Delta is one of the most
concentrated markets in the world.
Recent economic growth in the Yangtze Delta Region has been faster than
in most of the Asian Tiger economies at any time during the past two decades. So
far this decade the average annual real GDP growth rate in the Yangtze delta has
been almost double that in the "Tiger" economies of Taiwan and South Korea, and
over two percentage points higher than in Thailand and Malaysia. The major
dynamo of the Yangtze Delta Region is a dense urbanizing corridor of 76 million
consumers stretching 600 km. from Nanjing to Shanghai, Hangzhou
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and Ningbo. At current growth rates, this megalopolis will have a population of
more than 90 million people in ten years time.
The Delta's economy in 1993 was already the size of Indonesia's, larger
than Thailand's, and almost 40% of South Korea's. Fully one quarter of China's
increased economic production between 1990 and 1993 was created in the Yangtze
Delta, compared to 20% in the Bohai Gulf provinces of Liaoning, Hebei, Shandong,
Beijing and Tianjin, and 13% in Guangdong. Although it holds 16% of China's
population, the Yangtze Delta generated almost 40% of its industrial production
value in 1993; the value of industrial output tripled in real terms from 1990 to
1993. Even though this industrial growth is expected to moderate somewhat in
coming years, the value of industrial output in the Yangtze Delta Region will
likely grow in real terms to six or seven times its present level by the year
2005. Most of this growth will occur in the Nanjing-Shanghai-Hangzhou
megalopolis that is expected to account for 80% of all industrial production in
the Yangtze Delta in ten years time.
Despite its recent growth, it will clearly take some time for the
Yangtze Delta Region to reach the purchasing power of other more affluent Asian
economies. However, this may be happening much faster than anywhere else in East
Asia during the past two decades. For example, from 1990 to 1993, average bank
deposits in the Yangtze Delta rose by 70% in real terms; in the Yangtze
megalopolis, the value of deposits grew by 80%. Some estimates place per capita
GDP in strategic parts of the Yangtze Delta Region, on a purchasing power parity
basis, at around US$ 2,000, about 50% higher than for China as a whole. Per
capita production and incomes in parts of the Yangtze Delta megalopolis are
quickly approaching those in Thailand. A prosperous middle income population is
emerging in strategic parts of the Delta with a buying power previously seen in
China only in Shenzhen, adjacent to Hong Kong.
The industrial structure of the Yangtze Delta Region will change quite
dramatically with the completion of major inter-city highways, starting at the
end of next year. By the end of this decade, industries locating in the middle
of the Yangtze Delta megalopolis will have quick and easy access to four major
ports. No other part of coastal China, including Guangdong, will be able to
offer such a range of competitive international distribution options
CHANGEpOFvAUDITORS:ess to a navigable waterway as long as the Yangtze River, and
a captive domestic market of 450 million people within its basin. Bahui USA,
Inc. replaced its former auditor, Pritchett, Siler & Hardy of Salt Lake City,
Utah with Koo, Chow & Company of Los Angeles, California 90012. Koo, Chow &
Company is an international accounting firm with offices in Los Angeles,
California and Shanghai, China. They are bilingual in English, Mandarin and
Cantonese. They are authorized to practice in both China and the United States.
See Item 4.
CHANGE OF TRANSFER AGENT:
Bahui USA, Inc. replaced its transfer agent TransSecurities International with
Executive
Registrar & Transfer Agency, Inc.- at 3145 W. Lewis Ave.#200, Phoenix, AZ 85009.
CONTROL OF THE COMPANY
As of November 28, 1997, of the 15,000,000 shares outstanding, Mr. Meng
Gui Xing owned 10,500,000 shares outright and 300,000 shares as trustee.
Item 4. Changes in Registrant's Certifying Accountant.
1. (i) The Registrant changed independent accounting firms
from Pritchett,
Siler & Hardy P.C. ("PSH") to Koo, Chow & Company on or about November 28, 1996.
(ii) The report by PSH on the financial statements of the
Registrant dated June 25, 1997, including a balance sheet as of April 30, 1997,
and 1996 and the statements of operations, cash flows and statement
of changes in stockholders' equity for the years ended April 30, 1997 and 1996,
did not
contain an adverse opinion or a disclaimer of opinion, or was qualified or
modified as to uncertainty, audit scope or accounting principles, except for a
statement as to the going concern nature of the Registrant.
(iii) During the period covered by the financial statements
through the date of resignation of the former accountant, there were no
disagreements with the former accountant on any matter of accounting principles
or practices, financial statement disclosure, or auditing scope or procedure.
A letter from the former independent accountant for the
Registrant is attached as an Exhibit to this Form 8-K.
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2. On November 28, 1997 the Registrant engaged Koo, Chow &
Company as its
new independent accountant.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a)(b) The required financial statements and pro forma financial
information is unavailable as of the date hereof and will be filed by the
Registrant pursuant to the requirements of the Securities Exchange Act and the
rules and regulations promulgated thereunder within 60 days of the date of the
event reported herein. The Registrant provides the following unaudited financial
information.
(c) Exhibits
2.1 Agreement and plan of reorganization between the
Company and Meng
Gui Xing.
16.1 Letter from Pritchett, Siler & Hardy P.C., former
principal accountant
for the Registrant. To be filed by amendment.
SIGNATURES
Pursuant to the requirements 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.
Dated: November 28, 1997 BAHUI USA, INC.
By: /s/ Robert Filiatreaux
Robert Filiatreaux
President
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<TABLE>
<CAPTION>
JIANGYIN ZHIYE REAL ESTATE LTD. CO.
BALANCE SHEET FOR YEAR ENDED 1994 / 1995 / 1996
YEAR YEAR YEAR
1994 1995 1996
USD USD USD
ASSETS
Current Assets
<S> <C> <C> <C>
Cash on Hand 5,245.99 2,581.08 5,383.83
Cash in Bank 132,207.50 172,604.76 142,278.00
CASH 137,453.49 175,185.84 147,661.83
Accounts Receivable (CHQ) 1,330,444.90 1,166,346.00 1,252,884.00
Accounts receivable 3,053,192.00 3,581,509.21 3,304,137.58
Prepayment 1,199,199.14 1,283,962.15 1,371,404.70
Other Receivable 532,143.37 451,910.63 513,774.65
Inventories 5,143,400.27 5,672,408.06 6,082,979.80
TOTAL CURRENT ASSETS 11,395,833.17 12,331,321.89 12,672,842.56
-----------------------------------------------------------------
FIXED ASSETS
Cost 8,608,760.23 9,050,783.67 9,908,672.10
Less Depreciation 1,120,573.68 1,723,186.41 2,325,802.67
Total Fixed Assets 7,488,186.55 7,327,597.26 7,582,869.43
TOTAL ASSETS $18,884,019.72 $19,658,919.15 $20,255,711.99
LIABILITIES & CAPITAL
Current Liabilities
Accounts Payable (CHQ) 653,405.60 333,509.84 607,460.09
Accounts Payable 2,502,821.00 3,421,205.40 2,988,973.80
Payments in Accrual 1,345,187.90 1,129,421.86 1,279,304.71
Other Accounts Payable 480,676.76 424,109.24 448,355.64
Welfare Payable 8,998.69 14,307.14 16,682.75
Tax Payable 442,367.20 397,585.81 437,464.30
Other Tax Payable 13,129.50 15,359.20 8,445.65
----------------------------------------------------------------
TOTAL CURRENT LIABILITIES 5,426,586.65 5,735,498.49 5,786,686.94
----------------------------------------------------------------------------
CAPITAL
Capital 12,310,00.00 12,310,000.00 12,310,000.00
Retained Earnings 1,147,433.07 1,613,420.66 2,159,025.05
-----------------------------------------------------------------
TOTAL CAPITAL 13,457,433.07 13,923,420.66 14,469,025.05
---------------------------------------------------------
TOTAL CAPITAL AND
LIABILITIES 18,884,019.72 19,658,919.15 20,255,711.99
</TABLE>
<TABLE>
<CAPTION>
PROFIT & LOSS STATEMENT FOR THE YEAR DECEMBER 31, 1996
YEAR YEAR YEAR
1994 1995 1996
USD USD USD
<S> <C> <C> <C>
SALES REVENUE 63,964,523.68 76,428,661.66 90,499,779.63
Less:
Cost of Services Rendered
Cost of Merchandise 52,130,684.80 62,497,960.41 74,302,824.47
Sales Expenses 959.483.35 1,103,389.60 1,246,828.75
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Selling Tax & Others 3,518,048.80 4,203,576.38 4,977,487.89
-----------------------------------------------------------------
56,608,216.95 67,804,926.39 80,527,141.11
-----------------------------------------------------------------
GROSS PROFIT $7,356,306.73 $8,623,735.27 $9,972,638.52
Less:
Management Fee
Entertainment 129,778.75 150,543.35 190,014.89
Others 1,154,615.38 1,326,510.77 1,523,366.89
-----------------------------------------------------------------
1,284,394.13 1,477,054.12 1,713,381.78
-----------------------------------------------------------------
Less:
Financial Expenses
Interest Paid 152,030.76 191,642.15 115,907.69
NET PROFIT/(LOSS) 5,919,881.84 6,955,039.00 8,143,349.05
-----------------------------------------------------------------
NET PROFIT CONTRIBUTED BY:
TAXATION (33% of NET PROFIT) 1,953,561.01 2,295,162.87 2,687,305.19
LEGAL PROVIDENT FUND (6.7% NP) 396,632.08 465,987.61 545,604.39
DIVIDEND PAID(60.3% of NP) 3,569,688.75 4,193,888.52 4,910,439.48
$6,919,881.84 $6,955,039.00 $8,143,349.05
</TABLE>
(Y) Bahui USA Inc.'s portion of the above profit is $5,293,176.80
12
<PAGE>
<TABLE>
<CAPTION>
JIANGYIN ZHIYE REAL ESTATE LTD. CO.
BALANCE SHEET AS AT THE YEAR ENDED DECEMBER 31, 1996
YEAR
1996
USD
ASSETS
Current Assets
<S> <C>
Cash on Hand 5,383.83
Cash in Bank 142,278.00
Cash 147,661.83
Accounts Receivable (CHQ) 1,252,884.00
Accounts receivable 3,304,137.58
Prepayment 1,371,404.70
Other Receivable 513,774.65
Inventories 6,082,979.80
-------------
Total current Assets 12,672,842.56
FIXED ASSETS
Cost 9,908,672.10
Less Depreciation (2,325,802.67)
Total Fixed Assets 7,582,869.43
TOTAL ASSETS 20,255,711.99
LIABILITIES & CAPITAL
Current Liabilities
Accounts Payable (CHQ) 607,460.09
Accounts Payable 2,988,973.80
Payments in Accrual 1,279,304.71
Other Accounts Payable 448,355.64
Welfare Payable 16,682.75
Tax Payable 437,464.30
Other Tax Payable 8,445.65
-------------
Total Current Liabilities $5,786,686.94
CAPITAL
Capital 12,310,000.00
Retained Earnings 2,159,025.05
SHAREHOLDER EQUITY $14,469,025.05
TOTAL CAPITAL AND
LIABILITIES $20,255,711.99
</TABLE>
<TABLE>
<CAPTION>
PROFIT & LOSS STATEMENT FOR THE YEAR DECEMBER 31, 1996
YEAR
1996
USD
<S> <C>
SALES REVENUE 90,499,779.63
Less:
Cost of Services Rendered
Cost of Merchandise 74,302,824.47
Sales Expenses 1,246,828.75
Selling Tax & Others 4,977,487.89
-------------
13
<PAGE>
80,527,141.11
GROSS PROFIT 9,972,638.52
Less:
Management Fee
Entertainment 190,014.89
Others 1,523,366.89
1,713,381.78
Less:
Financial Expenses
Interest Paid 115,907.69
NET PROFIT/(LOSS) 8,143,349.05
</TABLE>
(Y) Bahui USA Inc.'s portion of the above profit is $5,293,176.80
NOTES TO THE FINANCIAL REPORTS
Jiangyin Zhiye Real Estate Company Ltd. is a Joint Venture corporation. The
Company is incorporated in Year 1993. It is mainly running the real estate
business, dealing with the sales & purchases and developing in the property
market. Our Capital Assets is more than USD 20,250,000.00 now. Our turnover is
about USD 90,000,000.00 per annum. Our business is running very well with high
profit margin, our net assets increase year by year. Below are some remarks or
our Financial Reports for the year 1996:
1. PROGRESS OF OUR SALES
Our real estates business covers the locations of Guangzhou, Zhuhoi,
Shanghai, Tongshen, Jiangyin etc. etc., Besides the completed items
which are being for sales in the market, the Work in Progress amount is
USD 6,080,000.00. This figure is briefly listed as below:
A. Guangzhou Fong Tsuen Fardee Wan Commercial & Residential Area
Two Blocks of buildings with thirty-three (33) stories of 695
suites. Total lettable area is 60,000 cube meter which 40,000
cuM is for residential usage and 20,000 cuM is for commercial
usage. The construction is being started in 1997 and will be
completed for sales in Year 1999. The construction period
takes two and a half years. Total investments is USD
28,940,000.00: USD 16,650,000.00 is being the construction
cost. USD 10,850,000.00 is the transfer price of the property.
And the indirect costs is about USD 1,440,000.00. The
estimated sales amount is USD 37,650,000.00. We have already
invested USD 2,060,000.00 and USD 1,200,000.00 is included in
the Work in Progress.
B. Zhuhoi Kungpei Commercial & Residential Area
Six Blocks of buildings with twelve (12) stories and 420 suites
. Total lettable
area is 36,000 cube meter which consists of 24,000 cuM for
residential usage,
8,000 cuM for commercial users and 4,000 cuM is the Car
parking space. The
14
<PAGE>
construction has been started in 1997, and will be completed
for sales in the market in Year 1998. The construction period
is one and half years. Total investments on this project is
USD 16,020,000.00. Out of it USD 7,380,000.00 is being the
construction cost, the transfer price of the property is USD
7,720,000.00 and the indirect costs is USD 920,000.00. The
estimated sales is USD 21,630,000.00. We have already invested
USD 2,810,000.00 and USD 2,520,000.00 has been included in the
Work in Progress.
15
<PAGE>
C. Shanghai Choi Kar to Commercial & Residential Area
Three Blocks of buildings with twenty-eight (28) stories and
six(6) stories of 925 suites. Total lettable area is 85,000
cube meter which consists 55,000 cuM for residential purposes
and 30,000 for commercial purposes. The construction will be
commenced in Year 1998 and will be finished the Project for
sale in Year 2000. The construction period will last for three
years. Total investments on this project is USD 51,470,000.00;
Destruction cost is USD 25,620,000.00, Construction cost is
USD 23,550,000.00, Indirect cost is USD 2,3000,000.00, The
estimated sales is USD 68,580.000.00 At this moment we have
invested on this for USD 860,000.00. And USD 720,000.00 is
being shown as our Work in Progress.
D. Shanghai On Yuen Road Commercial & Residential Area
Two Blocks of buildings with eighteen (18) and six (6) stories
of 290 suites. Total lettable area is 25,000 cube meter which
consists 20,000 cuM for residential purpose and 5,000 cuM for
commercial usage. The job will be started in Year 1998 and job
to be completed for sale in Year 1999. The construction will
last for two years. Total investments on this project is USD
13,640,000.00; Destruction cost is USD 7,530,000.00,
Construction cost is USD 4,890,000.00, Indirect cost is USD
1,220,000.00. The estimated sales is USD 19,530.000.00 At this
moment we have invested on this for USD 510,000.00. And USD
480,000.00 is being shown as our Work in Progress.
E. Tong Shen Cheung Kwok Chong Commercial & Residential Area
Twenty-six (26) blocks of 6 stories buildings with 520 suites.
Total lettable area is 50,000 cube meter. The construction
work has been started in Year 1996 and complete in Year 1997
for sale in the market. The total investments for this area is
USD 7,890,000.00. The estimates dales is USD 9,850,000.00. Now
already invested USD 1,070,000.00. Being shown as Work in
Progress is USD 8000,000.00.
16
<PAGE>
F. Jiangyin Zhiye People Printing Factory and Western Gardens
small Commercial
& Residential Area
Twelve (12) Blocks of buildings with 242 suites. Total
lettable area is 23,000 cube meter. This contains 20,000 cuM
for Residential usage and 3,000 cube meter for commercial
usage. The job has been started in Year 1997 and will be sold
within the same Year upon completed of the construction. Total
investments is USD 3,600,000.00. The estimated sales is USD
5,260,000.00. Now we have invested USD 660,000.00 and Work in
Progress is shown as USD 360,000.00.
<TABLE>
<CAPTION>
PROFIT ANALYSIS
TURNOVER NET PROFIT
USD USD
<S> <C> <C>
Shenshen Project 32,000,000.00 2,890,000.00
Guangtong Project 29,510,000.00 2,690.000.00
Zhuhoi Project 28,980,000.00 2,560,000.00
------------- ------------
TOTAL AMOUNT 90,490,000.00 8,140,000.00
------------- ------------
</TABLE>
CURRENT ASSETS ANALYSIS
USD USD
Cash at Bank 140,000.00
Cash on Hand 7,600.00
BILLS RECEIVABLE
For Shenshen Project 890,000.00
For Zhuhoi Project 360,000.00 1,250,000.00
ACCOUNTS RECEIVABLE
For Zhuhoi Project 1,840,000.00
For Guangtung Project 820,000.00
For Chungshen Project 640,000.00 3,300,000.00
------------
PREPAYMENT & OTHER RECEIVABLE
For Guangzhou Project 860,000.00
For Zhuhoi Project 290,000.00
For Shanghai Project 170,000.00
For Tongsheng Project 270,000.00
For Jiangyin Project 300,000.00 1,890,000.00
------------
INVENTORIES (WORK IN PROGRESS)
Pls. refer to our Note 1
for the breakdown. 6,080,000.00
TOTAL CURRENT ASSETS 12,667,600.00
ACCOUNTS PAYABLE ANALYSIS
USD USD
BILLS RECEIVABLE 610,000.00
(For Materials & Construction Fee)
ACCOUNTS PAYABLE
Construction Fee 2,360,000.00
Raw Materials 630,000.00 2,990,000.00
------------
17
<PAGE>
RECEIVED IN ADVANCED
For Zhuhoi Project 970,000.00
For Shenshen Project 310,000.00 1,280,000.00
------------
OTHER PAYABLES
Overseas Traveling Expenses 130,000.00
Departmental and Personal Advanced 320,000.00 450,000.00
WELFARE PAYABLE
(Staff welfare & medical fee) 17,000.00
TAX PAYABLE
Trading Business Tax 310,000.00
Profit Tax 120,000.00
Withholding Tax 10,000.00 440,000.00
------------ -------------
TOTAL ACCOUNTS PAYABLE 5,787,000.00
18
<PAGE>
Exhibit 2.1
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is dated as
of the 10th day of November, 1997, and is between A.G. Holdings, Inc.
("Company") a
Washington corporation, and Meng Gui Xing ("Meng").
R E C I T A L S
WHEREAS, Meng is the legal and beneficial owner of 99% of Green Bamboo, a Hong
Kong
corporation, and
WHEREAS, Green Bamboo Ltd. is a 65% owner and joint venture partner of Jiangsu
Bahui
Group Co., and
WHEREAS, A.G. Holdings is a United States public company, required to file
certified audits
and quarterly financial reports with the Securities Exchange Commission; and
WHEREAS, A.G. Holdings desires to acquire 99% of the issued and authorized
shares of Green
Bamboo Ltd. which owns 65% of all of the legal and beneficial ownership of
Jiangyin Zhiye
Real Estate Co.
WHEREAS, A.G. Holdings is authorized to issue 100,000,000 shares of Common
Stock. A.G. Holdings has completed a 500 to 1 reverse split of its shares, and
issued additional shares in consideration for the cancellation of debts and past
and current services rendered, resulting A.G. Holdings having 1,500,000 shares
are outstanding, prior to any shares issued under this agreement.
AGREEMENT
In consideration of the mutual covenants and agreements contained in
this agreement and in reliance upon the representations and warranties set forth
below, the parties agree as follows:
EXCHANGE OF THE SHARES AND CONSIDERATION
Contribution by Meng. Concurrently with the execution of this Agreement, the
Meng hereby assigns, transfers and delivers to A.G. Holdings, Ltd., 99% of the
legal and beneficial ownership of Green Bamboo, Ltd.
Consideration. In consideration of the assignment, transfer and delivery of 99
of the legal and
beneficial ownership of Green Bamboo. Ltd., to A.G. Holdings, A.G. Holdings is
issuing
13,500,000 shares to Meng and warrants to purchase up to 5% of any new shares
issued by A.G.
Holdings over the next 3 years, at $.10 per share.. Meng hereby instructs A.G.
Holdings to issue
19
<PAGE>
Mengs 13,500,000 shares to the following parties: 10,500,000 shares to Meng Gui
Xing, which represents 70% of A.G. Holdings, 300,000 shares to Meng Gui Xing,
Trustee, 300,000 shares to Eight Convergence International, 300,000 shares to
John Fong and 2,100,000 shares to employees and consultants of Magellan Capital
plus warrants to purchase up to 5% of any new shares issued by A.G. Holdings
over the next 3 years, at $.10 per share. After giving effect to A.G. Holdings
reverse stock split, shares issued for cancellation of debt and services
rendered and the acquisition of Green Bamboo, A.G. Holdings will have 15,000,000
shares outstanding.
REPRESENTATIONS AND WARRANTIES OF MENG
The Shareholder represents and warrants to A.G. Holdings as follows:
Organization.: Green Bamboo is a corporation duly organized and in good
standing under
the laws of Hong Kong. Green Bamboo's joint venture status was validly acquired
and in
good standing under both Hong Kong and PRC law. Jiangsu Zhiye Real Estate Co.
is a PRC
joint venture owned 65% by Green Bamboo Ltd.,and 35% by Jiangsu Bahui Group Co.
The
documents of Green Bamboo Ltd. and Jiangsu Zhiye Real Estate Co., delivered to
the
Company, are valid and truthfully represent the status of the companies.
Capitalization. 99% of the legal and beneficial ownership of Green Bamboo Ltd.
is owned by
Meng executing this agreement and is being transferred by this agreement to A.G.
Holdings.
There are no outstanding options, warrants or rights to purchase any legal or
beneficial ownership
in Green Bamboo Ltd.
Financial Statements. The financial statements provided to A.G. Holdings by Meng
(attached) fairly present the financial position and results of operations of
Jiangyin Zhiye Real Estate Co. Meng represents that under US. accounting
methods, for 1996, Jiangyin Zhiye Real Estate Co. has approximately $20,000,000
in assets, $6,000,000 in liabilities, $14,000,000 in Shareholder equity, and
$90,000,000 in gross revenues. Meng further represents that Green Bamboo's 65%
ownership of Jiangyin Zhiye Real Estate Co. results in $5,300,000 in net after
tax earnings for Green Bamboo. Meng agrees that, if Green Bamboo's share of the
net after tax income of Jiangyin Zhiye Real Estate Co., under US. accounting
rules, is more or less than $5,300,000, than the 10,500,000 shares issued to
Meng Gui Xing under this agreement will be adjusted up or down to maintain A.G.
Holdings earnings per share at $0.35. Meng agree to provide a US. certified
audit within 75 days of executing this agreement.
No Undisclosed Liabilities. Neither Green Bamboo Ltd., or Jiangyin Zhiye Real
Estate Co. is
subject to any undisclosed material liability or obligation.
Litigation. There is no litigation, proceeding or investigation pending or
threatened against
Green Bamboo Ltd. or Jiangyin Zhiye Real Estate Co.
Title of Assets. Jiangyin Zhiye Real Estate Co. and Green Bamboo Ltd., has good
and
marketable title to all of its assets and properties carried on its balance
sheet, free and clear of all
liens or encumbrances, except those reflected on its financial statements.
Defaults. Neither Green Bamboo Ltd., nor Jiangyin Zhiye Real Estate Co.'s
in material default,
20
<PAGE>
or alleged to be in material default, under any contract or obligation.
Transactions with Affiliates, Directors and Shareholder. There are no contracts
or agreements between Meng, Green Bamboo Ltd., or Jiangsu Bahui Group Co that
have an adverse material effect on Green Bamboo Ltd., or Jiangyin Zhiye Real
Estate Co..
Authority. Meng has the full power and authority to enter into this Agreement
and to carry out the transactions contemplated herein. The execution of this
Agreement and transfer of Green Bamboo Ltd., to A.G. Holdings does not need the
consent of any governmental authority in the PRC.
REPRESENTATIONS AND WARRANTIES OF AG HOLDINGS, INC.
A.G. Holdings hereby represents and warrants to Meng as follows:
Organization. A.G. Holdings is a Washington State corporation duly organized
and in good
standing. A.G. Holdings has the corporate power and authority to conclude this
transaction. The
copies of the Articles of Incorporation, and all amendments thereto, of the
Company, and the By-
laws of the Company are complete and correct.
Capitalization of A.G. Holdings, Inc. The authorized capital stock of A.G.
Holdings consists of 100,000,000 shares of Common Stock of which 1,500,000
shares will be outstanding after giving effect to the reorganization of the
capital structure of the company, including a reverse stock spilt, in
preparation for a reverse merger. All outstanding shares are duly authorized,
validly issued, fully paid and non-assessable. After giving effect to the shares
being issued in consideration for Green Bamboo LTD, A.G. Holdings will have
15,000,000 shares outstanding.
Authority. The A.G. Holdings, Inc., has full power and authority to enter into
this Agreement. The execution of this Agreement and the issuance of the
Company's Common Stock have been duly authorized and approved by the Board of
Directors of the Company.
No Undisclosed Liabilities. A.G. Holdings is not subject to any liability or
obligation, except as
disclosed in the Company's financial statements.
Litigation. There is no litigation, proceeding or investigation pending or
threatened against the
Company.
SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
All representations, warranties and covenants of A.G. Holdings and Shareholder
shall survive the closing of this transaction and remain in full force and
effect.
CERTAIN AGREEMENTS AND UNDERSTANDINGS
21
<PAGE>
Securities and Exchange Commission filings. A.G. Holdings shall file a Form
8-K within 15
days of this Agreement with the US. Securities and Exchange Commission, and
within 60 days
will file financial statements of Jiangyin Zhiye Real estate Co., audited by an
independent public
accountant prepared under US. GAAP. A.G. Holdings agrees to file a registration
statement
under S-8 to register 2,400,000 shares of common stock plus common stock
underlying the
warrants issued in this transaction.
MISCELLANEOUS
Directors. The current directors of A.G. Holdings are Randall Baker and Robert
Filiatreaux. Baker and Filiatreaux hereby appoint Meng Giu Xing as a member of
the board of directors of A.G. Holdings effective November 28th, 1997. Within 10
days of the filing of the required audits of Jiangsu Bahui Group, Baker and
Filiatreau agree to appoint two additional qualified directors nominated by Meng
Gui Xing.
Indemnification. In consideration for the shares issued to Magellan Capital in
the reorganization of A.G. Holdings and for services rendered in this
transaction, and the cancellation of any debts owing A.G. Holdings by Magellan,
Magellan Capital agrees to pay all of the liabilities of A.G. Holdings, through
November 9, 1997, including the legal fees of this transaction.
Share Restriction. The shares issued under this agreement to Meng Gui Xing,
Eight Convergence International, and John Fong are being acquired for investment
purposes and are restricted from sale to the public, under rule 144, for a
minimum of one year. There is no restriction from sale in a private transaction.
Counterparts. This Agreement may be executed in several counterparts, each of
which shall be
deemed an original but all of which together shall constitute one and the same
instrument.
Governing Law. Meng, Green Bamboo Ltd. and A.G. Holdings agree that in the
event of a
legal dispute between any of the parties, the dispute will be resolved within
the State of
California and under California State law.
Entire Agreement; Amendments. This Agreement contains the entire understanding
of the
parties. There are no representations, agreements, or undertaking other than
those set forth herein
or therein.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the
parties hereto as the date first above written.
A.G. Holdings, Inc..
By: _____________________________ ___________________________
Robert Filiatreaux, director Randall Baker, director
22
<PAGE>
MENG GUI XING
- ---------------------------------------
Meng Gui Xing, 99% shareholder of Green Bamboo
