-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, C8S1HdX9yUylGp0GsUkx4G8CsTGXq3/mgsxMI7biiwMCdsJL8FmP/oVUy6RDJ4rv B716sTodDoqzrfO3dQZvtQ== 0001021432-97-000081.txt : 19971212 0001021432-97-000081.hdr.sgml : 19971212 ACCESSION NUMBER: 0001021432-97-000081 CONFORMED SUBMISSION TYPE: S-1/A PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19971211 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ASPAC COMMUNCATIONS INC CENTRAL INDEX KEY: 0001048172 STANDARD INDUSTRIAL CLASSIFICATION: BLANK CHECKS [6770] IRS NUMBER: 954652797 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: S-1/A SEC ACT: SEC FILE NUMBER: 333-38543 FILM NUMBER: 97736186 BUSINESS ADDRESS: STREET 1: 2049 CENTURY PAR E #1200 CITY: LOS ANGELES STATE: CA ZIP: 90067 MAIL ADDRESS: STREET 1: 2049 CENTURY PAR E #1200 CITY: LOS ANGELES STATE: CA ZIP: 90067 FORMER COMPANY: FORMER CONFORMED NAME: ASPAC COMMUNICATIONS INC DATE OF NAME CHANGE: 19971021 S-1/A 1 REGISTRATION STATEMENT As filed with the Securities and Exchange Commission on December 10, 1997 Registration No. 333-38543 =================================== SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ AMENDMENT #1 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 -------------------------- ASPAC COMMUNICATIONS, INC. --------------------------------- (Exact Name of registrant as specified in its charter) Delaware 4812 95-4652797 - --------------- ----------------- --------------- (State or other (Primary Standard Employer Number jurisdiction of Industrial (I.R.S. incorporation or Classification Identification organization) Code Number) Number) ------------ 2049 Century Park East, Suite 1200 Los Angeles, California 90067 310/712-3288 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Marc F. Mayeres, President 2049 Century Park East, Suite 1200 Los Angeles, California 90067 310/712-3288 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies to: Cassidy & Associates, 1504 R Street, N.W. Washington, D.C. 20009, 202/387-5400 Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. / X / If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier registration statement for the same offering. / / If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. / / CALCULATION OF REGISTRATION FEE
Proposed Proposed Maximum Maximum Amount Title of Each Amount Offering Aggregate of Class of Securities to be Price Offering Registra- to be Registered Registered Per Share Price tion Fee Shares of Common Stock, $.0001 par value 450,000 $20.00 $9,000,000 $2,700 Shares of Common Stock by Selling Securityholders 9,010,000(1) N.A. N.A. N.A. Total $9,000,000 $2,700(2)
(1) There is no current market for the shares and the dollar amount of the shares to be registered is de minimis based upon the estimated per share book value ($.0001). (2) Paid by electronic transfer. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. [Legend for Red Herring Prospectuses] The information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This prospectus shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state. PROSPECTUS ASPAC COMMUNICATIONS, INC. 450,000 Shares of Common Stock at $20 per Share; 9,010,000 Shares of Common Stock to be Sold by the Holders Thereof This Prospectus is being furnished by Aspac Communications, Inc., a development stage Delaware corporation, (the "Company") for the offer and sale of 450,000 shares of Common Stock of the Company, $.0001 par value per share (the "Company Shares") at $20 per Company Share. SEE "PROSPECTUS SUMMARY." The Company is offering a minimum of 100,000 Company Shares (the "Minimum Offering") and a maximum of 450,000 Company Shares (the "Maximum Offering"). All funds received by the Company with respect to the sale of the first 100,000 Company Shares will be deposited in a special escrow account to be established by the Company at Wells Fargo Bank, N.A. If 100,000 Company Shares are not sold within one hundred eighty days (180) following the effective date of the registration statement of which this Prospectus is a part (the "Effective Date"), the Offering will automatically terminate and all funds received from the sale of the Company Shares will be returned to the purchasers thereof without deductions and without interest. Once funds from the sale of 450,000 Company Shares have been received, the Company will not accept any further purchasers and any funds tendered therefor will be returned. There can be no assurance that the Minimum Offering will be sold. SEE "RISK FACTORS--If Minimum Offering Is Not Sold". The Company Shares are being offered for sale by the officers and directors of the Company, including Mr. Marc F. Mayeres, President, Ms. Ming Zhang, Secretary and Mr. Liancheng Ji, director, who will not receive any remuneration for such sales. The officers and directors are relying on the provisions of Rule 3a4-1 of the Securities Exchange Act of 1934 (the "Exchange Act") in the sale by them of the sale of the Company Shares. SEE "PLAN OF DISTRIBUTION". The Company is a recently formed development stage Delaware corporation, with limited operations and capital and no revenues. SEE "THE COMPANY." The Company intends to develop telecommunications in the Far East, including China, and the United States by the construction and development of telephone and communication systems, including Internet services, and, possibly, the acquisition of existing telecommunication systems and networks. SEE "BUSINESS". The Company Shares offered for sale herein are subject to a lock-up agreement with the Company restricting sale of such Company Shares for up to 90 days after the Effective Date of the Registration Statement of which this Prospectus is a part. SEE "RISK FACTORS--Trading of Company Shares Restricted for up to 90 Days" and "DESCRIPTION OF SECURITIES--Lock-Up Agreement". The offering price of the Company Shares was determined arbitrarily by the Company and is not necessarily related to asset or book value, net worth or any other established criteria of value. SEE "PLAN OF DISTRIBUTION" for a discussion of the factors used to determine such offering price. There is no current public trading market for the Shares. SEE "RISK FACTORS--No Current Trading Market for the Company's Securities." The registration statement of which this Prospectus is a part also relates to the sale of 9,010,000 shares of the Company's Common Stock (the "Selling Securityholders Shares") by the respective holders thereof (the "Selling Securityholders"). (The Selling Securityholders' Shares and the Company Shares are hereinafter referred to collectively as the "Shares"). The Selling Securityholders will receive the proceeds from the sale of the securities being offered by them. The Company will not receive any of the proceeds from such sales. The Selling Securityholders' Shares may be offered from time to time by the Selling Securityholders through ordinary brokerage transactions in the over-the-counter market, in negotiated transactions or otherwise, at market prices prevailing at the time of sale or at negotiated prices. The securities being offered by Selling Securityholders are expected to become tradeable on or about the date of this Prospectus. Sales of the securities being offered by Selling Securityholders, or even the potential of such sales, may likely have an adverse effect on the market prices of the Company Shares being offered by the Company. All costs incurred in the registration of the Company Shares and the Selling Securityholders' Shares are being borne by the Company. The Selling Securityholders may be deemed to be "underwriters" as defined in the Securities Act of 1933, as amended (the "Securities Act"). If any broker-dealers are used by the Selling Securityholders, any commissions paid to broker-dealers and, if broker-dealers purchase any Selling Securityholders' Shares as principals, any profits received by such broker-dealers on the resales of the Selling Securityholders' Shares may be deemed to be underwriting discounts or commissions under the Securities Act. In addition, any profits realized by the Selling Securityholders may be deemed to be underwriting commissions. Brokerage commissions, if any, attributable to the sale of the Selling Securityholders' Shares will be borne by the Selling Securityholders. The Company has agreed to indemnify the Selling Securityholders against certain liabilities, including liabilities under the Act. The Selling Securityholders' Shares offered by this Prospectus may be sold from time to time by the Selling Securityholders, or by transferees, commencing on the date of this Prospectus. No underwriting arrangements have been entered into by the Company or, to the Company's knowledge, the Selling Securityholders. The distribution of the Selling Securityholder's Shares by the Selling Securityholders may be effected in one or more privately-negotiated transaction or through sales to one or more dealers for resale of such Selling Securityholder's Shares as principals, at market prices prevailing at the time of sale, at prices related to such prevailing market prices or negotiated prices. Usual and customary or specifically negotiated brokerage fees or commissions may be paid by the Selling Securityholders in connection with sales of the Selling Securityholders' Shares. Unless otherwise specifically provided, all currency amounts in this document are expressed in United States dollars and are preceded by "$". THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK. SEE "RISK FACTORS" CONTAINED IN THIS PROSPECTUS BEGINNING ON PAGE 6. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE COMPANY WILL REGISTER OR QUALIFY THE OFFERING IN THE STATES OF CALIFORNIA, NEW YORK, WASHINGTON, FLORIDA, ILLINOIS, TEXAS AND NEVADA ONLY. PURCHASERS OF THE SHARES IN THE OFFERING MUST BE RESIDENTS OF THOSE STATES. SEE "RISK FACTORS--LIMITED STATE OFFERING" AND "PLAN OF DISTRIBUTION".
Underwriting Discounts Proceeds Price to and or Other to Company Public Commissions(1) Persons (2) Per Share $20 -0- $20 Minimum Offering-- $2,000,000 -0- $2,000,000 100,000 Shares of Common Stock Maximum Offering-- $9,000,000 -0- $9,000,000 450,000 Shars of Common Stock
(1) The officers and directors of the Company are offering the Company Shares for sale. The Company does not intend to use an underwriter. If, however, an underwriter were to be used, which is not currently anticipated, discounts or commissions would not exceed 10% of the offering price. (2) Does not include an estimated $157,700 in expenses of issuance and distribution of this Offering which funds have been borrowed by the Company from a shareholder. SEE "BUSINESS--Shareholder Loan". The date of this Prospectus is December ____, 1997. CERTAIN SECURITIES DESCRIBED HEREIN ARE OFFERED BY THE SELLING SECURITYHOLDERS SUBJECT TO PRIOR SALE, WITHDRAWAL, CANCELLATION OR MODIFICATION OF THE OFFERING, WITHOUT NOTICE. IN ADDITION, THE RIGHT IS RESERVED TO CANCEL ANY CONFIRMATION OF SALE EVEN IF THE PURCHASE PRICE HAS BEEN PAID, IF IN THE OPINION OF THE COMPANY OR ANY PARTICIPATING BROKER-DEALER, COMPLETION OF SUCH SALE WOULD VIOLATE FEDERAL OR STATE SECURITIES LAWS OR A RULE OR POLICY OF THE NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC. FOLLOWING THE COMPLETION OF THIS OFFERING, CERTAIN BROKER-DEALERS MAY BE THE PRINCIPAL MARKET MAKERS FOR THE SECURITIES OFFERED HEREBY. UNDER THESE CIRCUMSTANCES, THE MARKET BID AND ASKED PRICES FOR THE SECURITIES MAY BE SIGNIFICANTLY INFLUENCED BY DECISIONS OF THE MARKET MAKERS TO BUY OR SELL THE SECURITIES FOR THEIR OWN ACCOUNT. NO ASSURANCE CAN BE GIVEN THAT ANY MARKET MAKING ACTIVITIES OF THE MARKET MAKERS, IF COMMENCED, WILL BE CONTINUED. FOR A PERIOD OF AT LEAST ONE YEAR FOLLOWING CLOSING OF THIS OFFERING, THE COMPANY WILL BE REQUIRED BY THE SECURITIES EXCHANGE ACT OF 1934 TO FILE PERIODIC REPORTS AND OTHER INFORMATION WITH THE SECURITIES AND EXCHANGE COMMISSION. SUCH MATERIAL MAY BE INSPECTED AT THE COMMISSION'S PRINCIPAL OFFICES AT JUDICIARY PLAZA, 450 FIFTH STREET, N.W. WASHINGTON, D.C. 20459 AND COPIES MAY BE OBTAINED ON PAYMENT OF CERTAIN FEES PRESCRIBED BY THE COMMISSION. THE COMPANY WILL FURNISH TO HOLDERS OF ITS COMMON STOCK ANNUAL REPORTS CONTAINING AUDITED FINANCIAL STATEMENTS EXAMINED AND REPORTED UPON, AND WITH AN OPINION EXPRESSED BY AN INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT. THE COMPANY MAY ISSUE OTHER UNAUDITED INTERIM REPORTS TO ITS SHAREHOLDERS AS IT DEEMS APPROPRIATE. PROSPECTUS SUMMARY The following is a summary of certain information contained elsewhere in this Prospectus. Reference is made to, and this summary is qualified by, the more detailed information set forth in this Prospectus, which should be read in its entirety. The Company Aspac Communications, Inc. is a development stage corporation incorporated in Delaware on June 1, 1994. The Offering The Company currently has limited operations and assets and no revenue. The Company intends to develop and/or construct telecommunication and Internet networks and systems in the Far East including the People's Republic of China ("PRC" or "China"), and elsewhere, including the United States. SEE "BUSINESS--Business Plan." The Company intends to build its own systems, purchase existing networks or systems, or enter into joint ventures with third parties for the development, construction or purchase of telecommunication systems or Internet networks. The Company intends to develop and manage such telecommunication and Internet systems. The Company may need to raise additional capital to construct such telecommunications systems or to acquire existing systems. SEE "RISK FACTORS-- Need for Additional Financing to Commence of Continue Operations Even if Minimum Offering Sold". Transfer Agent The transfer agent for the Company is ________________________. SEE "DESCRIPTION OF SECURITIES -- Transfer Agent and Registrar." Selling Securityholders Securities 9,010,000 Shares of Common Stock registered hereby and owned by Selling Securityholders to be offered for sale by such securityholders. SEE "SELLING SECURITYHOLDERS." The Selling Securityholders' Shares constitute an aggregate of 10% of the issued and outstanding Common Stock of the Company as of the date hereof. Limited State Registration The Company anticipates that a substantial portion of Company Shares will be sold to investors located outside the United States. The Company will register or qualify the Shares only in the states of California, New York, Washington, Florida, Illinois, Texas and Nevada. Offers and sales in the Offering can be made only to entities resident in those states. SEE "RISK FACTORS--Limited State Offering" and "Plan of Distribution". Trading Market The Company intends to apply initially for admission to quotation of the Shares on the NASD OTC Bulletin Board and to apply for listing on the Nasdaq Small- Cap Market at such time, if any, as it qualifies. However, there can be no assurance that the Shares will be so listed. SEE "RISK FACTORS--No Current Trading Market for the Company's Securities" and "DESCRIPTION OF SECURITIES--Admission to Quotation on Nasdaq SmallCap Market or NASD OTC Bulletin Board". SELECTED FINANCIAL DATA The Company's fiscal year ends September 30. The following table sets forth selected financial information concerning the Company as of October 1, 1997: Balance Sheet Data: Current assets $ 200 Total assets $ 200 Stockholders' equity (deficit) $ 200 The selected financial data above is a summary only and has been derived from and is qualified in its entirety by reference to the Company's financial statements and the report related thereto of John MacLean, Certified Public Accountant, included elsewhere in this Prospectus. SEE "EXPERTS" and "FINANCIAL STATEMENTS." THE COMPANY The Company is a development stage company incorporated in the State of Delaware on June 1, 1994. The Company has limited operations or no revenue to date. The Company intends to engage in the development, construction and operation of telecommunication systems and Internet services. The Company intends to offer to business and residential customers enhanced telecommunication services including, but not limited to, local, regional, and international telephone service, fixed (land) and cellular line systems, Internet access, and paging, mobile and facsimile transmission capability. The Company will concentrate its services in the Far East, including China and, as opportunities arise, in the United States. The Company has entered into discussions for the development of certain telecommunications systems, but as of the date hereof, no agreements have been entered into and the Company does not own or manage any telecommunications systems or Internet networks. The Offering herein is considered a "blind pool". SEE "BUSINESS". EMPLOYEES The Company presently has two officers and one employee. The Company does not expect to hire any additional employees before the Effective Date of the registration statement of which this Prospectus forms a part. OFFICES The United States offices of the Company are located at 2049 Century Park East, Suite 1200, Los Angeles, California 90067. Its telephone number is 310/712-3288 and its fax number is 310/712-3286. On August 28, 1997, the Company entered into a 6-month lease agreement with Barrister Executive Suites, Inc. for such offices. The Company is provided with an office suite at a rent of $1,600 per month and is provided access to conference room facilities shared with other business tenants. The Company does not believe that it currently needs additional space. However, upon closing of the Offering and the addition of more employees, of which there can be no assurance, the Company will determine whether to remain in its current space or to move to larger office space. RISK FACTORS THE SECURITIES OFFERED HEREBY ARE SPECULATIVE IN NATURE AND INVOLVE A HIGH DEGREE OF RISK. THE SECURITIES OFFERED HEREBY SHOULD BE PURCHASED ONLY BY PERSONS WHO CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT. THEREFORE, EACH PROSPECTIVE INVESTOR SHOULD, PRIOR TO PURCHASE, CONSIDER VERY CAREFULLY THE FOLLOWING RISK FACTORS, AS WELL AS ALL OF THE OTHER INFORMATION SET FORTH ELSEWHERE IN THIS PROSPECTUS AND THE INFORMATION CONTAINED IN THE FINANCIAL STATEMENTS, INCLUDING ALL NOTES THERETO. RISKS RELATING TO OPERATING IN CHINA AND ELSEWHERE IN THE FAR EAST ENFORCEABILITY OF CERTAIN CIVIL LIABILITIES The Company's sole director and certain of the Selling Securityholders reside outside the United States. All of the assets of these persons are, and the Company anticipates that a substantial portion of the assets that may developed or acquired by the Company will be located outside the United States. As a result, it may not be possible for investors to effect service of process within the United States upon such persons, or to enforce against the Company's assets or against such persons judgments obtained in United States courts predicated upon the liability provisions, and most particularly the civil liability provisions, of the United States securities laws or state corporation or other law. INVESTMENT IN FAR EAST GENERALLY The Company anticipates that it will initially focus its development efforts on telecommunication projects and opportunities located in China and the Far East. Because of government controls and lack of established information systems, information regarding projects in which the Company may participate located in China and the Far East will be difficult for United States investors to obtain and investors will be unable to track the progress of the Company. In addition, if the Company begins operations in China or the Far East it will be subject to the risks incident to the ownership and operation of businesses therein. These risks include, among others, the risks of internal political or civil unrest, war, or government restrictions. These risks are dynamic and difficult to quantify. The Company will be subject to the risks normally associated with changes in general national economic conditions or local market conditions, competition, patronage, changes in market rates, and the need to periodically upgrade and replace equipment to maintain desirability, and to pay the costs thereof. Although many of the governments of the countries of the Far East have liberalized policies on international trade, foreign ownership and development, investment, and currency repatriation, increasing both international trade and investment accordingly, such policies might change unexpectedly. The Company will be effected by the rules and regulations regarding foreign ownership of real and personal property, including telecommunication switching stations, land lines and other property. Such rules may change quickly and dramatically which may have an adverse impact on ownership and may result in a loss without recourse of property or assets of the Company. Hong Kong is in a period of transition from control over it by Great Britain to control by China. It is uncertain what changes may result from such transition in regard to business, foreign property ownership, restrictions on development, taxes or other factors. INVESTMENT IN CHINA IN PARTICULAR Because the operations of the Company are expected to be based to a substantial extent in China, the Company will be subject to the rules and restrictions governing China's legal and economic system as well as general economic and political conditions in that country. These include the following: Political and Economic Matters. Under its current leadership, the government of the People's Republic of China ("PRC") has been pursuing economic reform policies, which include the encouragement of private economic activity and greater economic decentralization. There can be no assurance, however, that the Chinese government will continue to pursue such policies, or that such policies will be successful if pursued. Changes in policies made by the Chinese government may result in new laws, regulations, or the interpretation thereof, confiscatory taxation, restrictions on imports, currency devaluations or the expropriation of private enterprise which may, in turn, adversely affect the Company. Furthermore, business operations in China can become subject to the risk of nationalization, which could result in the total loss of ownership and control of any assets or operations that may be developed by the Company in China. Also, economic development may be limited by the imposition of austerity measures intended to reduce inflation, the inadequate development of an infrastructure, and the potential unavailability of adequate power and water, transportation, communication networks, raw materials and parts. Legal System. The PRC's legal system is a civil law system based on written statutes. Unlike the common law system in the United States, decided legal cases in the PRC have little value as precedents. Furthermore, the PRC does not have a well-developed body of laws governing foreign enterprises. Definitive regulations and policies with respect to such matters as the permissible percentage of foreign investment and permissible rates of equity returns have not yet been published, statements regarding these evolving policies have been conflicting, and any such policies, as administered, are likely to be subject to broad interpretation and modification, perhaps on a case-by-case basis. As the legal system in the PRC develops with respect to such new forms of enterprise, foreign investors may be adversely affected by new laws, changes in existing laws (or interpretation thereof) and the preemption of provincial or local laws by national laws. The Company's operations in China, if any are developed of which there can be no assurance, will be subject to administrative review and approval by various national and local agencies of the PRC government. Management intends that the Company's operations will comply with applicable administrative requirements; however, there is no assurance that the Company will be able to timely obtain the necessary administrative approvals for any projects that the it determines to develop. Inflation/Economic Policies. In recent years, the Chinese economy has experienced periods of rapid growth and high rates of inflation, which have, from time to time, led to the adoption by the PRC government of various corrective measures designed to regulate growth and contain inflation. In 1995, China's overall inflation rate was estimated to be 14.8%, compared to 21.4% in 1994 and 13.2% in 1993. High inflation has in the past and may in the future cause the PRC government to impose controls on prices, or to take other action which could inhibit economic activity in China, which in turn could affect the Company's development or operations. Foreign Currency Exchange. The Renminbi ("Rmb"), the currency of China, is not a freely convertible currency. Both conversion of Rmb into foreign currencies and the remittance of Rmb abroad are subject to the PRC government approval. The Company intends to develop telecommunication systems in the Far East including China and anticipates that initially it may earn revenues, if any, and incur costs, in Rmb. Prior to January 1, 1994, Rmb earned within China were not freely convertible into foreign currencies except with government permission, at rates determined at swap centers, where the exchange rates often differed substantially from the official rates quoted by the People's Bank of China. On January 1, 1994, the People's Bank of China introduced a managed floating exchange rate system based on the market supply and demand and proposed to establish a unified foreign exchange inter-bank market among designated banks. In place of the official rate and the swap center rate, the People's Bank of China publishes a daily exchange rate for Rmb based on the previous day's dealings in the inter-bank market. It is expected that swap centers will be phased out. However, the unification of exchange rates does not imply full convertability of Rmb into United States Dollars or other foreign currencies. Payment for imported materials and remittance of earnings outside of China are subject to the availability of foreign currency which is dependent on the foreign currency denominated earnings of the entity or allocated to the Company by the government at official exchange rates. Approval for exchange at the exchange center is granted to enterprises in China for valid reasons such as purchases of imported goods and remittance of earnings. While conversion of Rmb into dollars or other foreign currencies can generally be effected at the exchange center, there is no guarantee that it can be effected at all times. There is still uncertainty as to how foreign enterprises will be treated under this new system or whether the system will be changed again in the future. In the event of shortages of foreign currency, the Company may be unable to convert sufficient Renminbi into foreign currency to enable it to comply with foreign currency payment obligations it may have. PRC Regulation of the Telecommunications Industry. The Ministry of Posts and Telecommunications (the "MPT") regulates the telecommunications industry in China. The MPT directly or indirectly regulates entry into the telecommunications industry, scope of permissible business, interconnection and transmission line arrangements, technology and equipment standards, and other aspects of the Chinese telecommunications industry. Such regulation may limit the Company's flexibility to respond to certain development opportunities. In addition, changes in the regulations or policies governing such regulatory framework could have an adverse effect on the Company. The Company may have to obtain certain licenses, if required, from the MPT in order to commence its proposed business. There is no assurance that it will be able to obtain such licenses, or if obtained, that they will not be untimely revoked or suspended. The rates that the Company will be permitted to charge for telecommunications services, if any are developed, are subject to regulation by the State Planning Commission, the MPT, and relevant Provincial Price Bureaus. Once authorized by such regulatory agencies, there can be no assurance that changes in the tariffs and rates would not have a material adverse effect on any Company business and results of operations, if any had been developed. RISK FACTORS CONCERNING THE COMPANY THE COMPANY IS A DEVELOPMENT STAGE COMPANY WITH LIMITED OPERATING HISTORY The Company, organized on June 1, 1994, is a development stage company and has not begun operations as of the date of this Prospectus. Without an operating history, there is only a limited basis upon which a potential investor may evaluate the Company's prospects for its ability to construct, develop and manage telecommunications systems and Internet networks. To date, the Company's efforts have been limited to organizational activities and the preparation of the registration statement of which this Prospectus is a part. The Company has limited resources and has had no revenues to date. The Company's proposed operations are subject to all of the risks inherent in the establishment of a new business enterprise, including the absence of an operating history. The likelihood of the success of the Company must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered in connection with a new business and the competitive environment in which the Company will operate. No assurance can be given that the operations of the Company will result in any revenues or that the Company will be profitable. SEE "BUSINESS." SUCCESS OF PLAN OF OPERATIONS AND SHAREHOLDER INFORMATION DEPENDENT ON MANAGEMENT The ability of the Company to successfully effect its business objectives and to develop, construct, management and acquire telecommunication systems and Internet networks will be largely dependent upon the efforts of its Management including Mr. Marc F. Mayeres, President of the Company and Liancheng Ji, a director of the Company. As the Company anticipates operations in China and elsewhere in the Far East, shareholders may have difficulty in obtaining information from sources other than the Company, including foreign local or national government agencies, about the Company's activities and development of its projects in China or such other countries in the Far East. Shareholders will be dependent upon Management for reports of the Company's development and activities and expenditure of proceeds. The Company has entered into an employment agreement with Mr. Mayeres. SEE "MANAGEMENT". The Company has not obtained any "key man" life insurance on the lives of any of its officers or the director. The loss of the services of the key executives or director could have a material adverse effect on the Company's ability to successfully achieve its business objectives. The officers of the Company will work full time on the development and operations of the Company. Mr. Liancheng Ji will devote such time as a director as reasonably necessary to assist the Company in developing its telecommunications systems and Internet network in China and elsewhere in the Far East. CONTROL BY SELLING SECURITYHOLDERS Management does not currently own any securities of the Company and will not own any of the securities of the Company following the Offering. The current Selling Securityholders own 100% of the outstanding shares of the Company, of which 10% are being offered for sale by the holders thereof. SEE "DESCRIPTION OF SECURITIES". LIMITED TELECOMMUNICATIONS INDUSTRY EXPERIENCE The Company's Management has limited experience in owning, constructing, developing or managing telecommunications and Internet systems although the sole director of the Company has both education and experience in such areas and has worked in the telecommunications field in the Far East for over 30 years. Although the Company plans to hire consultants, and professional operating technicians and specialists, there can be no assurance that these professionals will be available on terms acceptable to the Company. SEE "BUSINESS" and "MANAGEMENT." In order to supplement the business experience of Management, the Company may employ accountants, technical experts, appraisers, attorneys, or other consultants or advisors in China, the Far East or the United States. Furthermore, it is anticipated that such persons may be engaged by the Company on an independent basis without a continuing fiduciary or other obligation to the Company. As of the date of this Prospectus, the Company has not entered into any agreements or arrangements with any such technical support. IF MINIMUM OFFERING IS NOT SOLD If the Minimum Offering (100,000 Company Shares) is not sold by the Company within 180 days of the Effective Date, all funds received by the Company will be returned to the investors thereof without deductions or interest. Investors should be aware that investment funds will be held in an escrow account maintained by the Company and investors will not be entitled to a return of their investment during such 180 day period. Investors will not receive any interest on their funds while held in the escrow account. POSSIBLE NEED FOR ADDITIONAL FINANCING TO COMMENCE OR CONTINUE OPERATIONS EVEN IF MINIMUM OFFERING SOLD If the Minimum Offering is sold, the Company will receive $2,000,000 gross proceeds and if the Maximum Offering is sold, the Company will receive $9,000,000 in gross proceeds. Although the Company can commence initial operations if the Minimum Offering is sold, the Company will be limited in implementing its business plan for the development, construction and management of telecommunication and Internet systems and for the acquisition of existing telecommunication systems and will likely need to obtain additional funds in order to develop such telecommunications or Internet systems. The Company may seek additional sources of capital, including an additional offering of its equity securities, an offering of debt securities or obtaining financing through a bank or other entity. The Company has not established a limit as to the amount of debt it may incur nor has it adopted a ratio of its equity to a debt allowance. If the Company needs to obtain additional financing, there is no assurance that financing will be available, from any source, or that it will be available on terms acceptable to the Company, or that any future offering of securities will be successful. The Company could suffer adverse consequences if it is unable to obtain additional capital when needed. SEE "BUSINESS" and "USE OF PROCEEDS". The pace of the Company's development of telecommunication and Internet systems and the possible acquisition of existing systems is directly related to the amount of capital available to the Company for such purposes. The greater the number of Company Shares that are sold, the greater the amount of proceeds available to the Company to enter into development or construction projects or to acquire existing telecommunication systems. COMPETITION FROM OTHER MORE ESTABLISHED ENTITIES Even if the Maximum Offering is sold, the Company will be a small participant in the telecommunications industry and it will face competition from well financed entities already established and actively engaged in related or identical projects to those in which the Company plans to participate. Many of such entities have significantly greater financial resources, technical expertise and managerial capabilities than the Company and, consequently, the Company may be at a competitive disadvantage. SEE "BUSINESS--Competition." PURCHASERS WILL EXPERIENCE IMMEDIATE AND SUBSTANTIAL DILUTION IN VALUE OF SHARES Purchasers of the Company Shares offered herein will incur immediate and substantial dilution in the pro forma net tangible book value of their Common Stock. The unaudited estimated per share book value as of November 30, 1997, prior to the Offering, is $(.0004). SEE "DILUTION". ISSUANCE OF FUTURE SHARES MAY DILUTE VALUE OF SHARES HELD BY SHAREHOLDERS The Certificate of Incorporation of the Company authorizes the issuance of a maximum of 100,000,000 shares of Common Stock, $.0001 par value and 20,000,000 shares of non-designated preferred stock. As of the date hereof there are 90,100,000 shares of Common Stock outstanding and no shares of preferred stock outstanding. The future issuance of all or part of the remaining authorized Common Stock may result in dilution in the percentage of the Company's Common Stock held by the Company's then existing shareholders. Moreover, any Common Stock issued in the future may be valued on an arbitrary basis by the Company. The issuance of the Common Stock of the Company as part of the Company's participation in a project or acquisition or for the payment for services or as compensation, may have the effect of diluting the value of shares held by investors, and might have an adverse effect on any trading market, should a trading market develop for the Company's shares. POTENTIAL ADVERSE EFFECTS OF AUTHORIZATION OF PREFERRED STOCK The Company has 20,000,000 authorized shares of non-designated preferred stock of which none have been issued as of the date hereof. The Company may, without further action or vote by shareholders of the Company, designate and issue the shares of preferred stock. The terms of any series of preferred stock, which may include priority claims to assets and dividends and special voting rights, could adversely affect the rights of holders of the Common Stock and thereby reduce the value of the Common Stock. The designation and issuance of preferred stock favorable to current Management or current shareholders could make the possible takeover of the Company or the removal of Management of the Company more difficult and discourage hostile bids for control of the Company which bids might have provided shareholders with premiums for their shares. NO INTENTION OF PAYING DIVIDENDS Should the proposed operations of the Company be profitable, it is likely that the Company would retain much or all of its earnings in order to finance future growth and expansion. The Company has not and does not presently intend to pay dividends and dividends are unlikely to be paid in the foreseeable future. FACTORS BEYOND THE COMPANY'S CONTROL Numerous conditions beyond the Company's control may substantially affect its success. Such conditions include, but are not limited to, fluctuations in costs of goods and services including Internet access charges, line use charges by third-party carriers, availability of telecommunications equipment, import/export restrictions, weather conditions, equipment shortages, political unrest, as well as competition from other businesses. RISK FACTORS CONCERNING THE OFFERING NO CURRENT TRADING MARKET FOR THE COMPANY'S SECURITIES There is currently no established public trading market for the Shares. No assurance can be given that an active trading market in the Company's securities will develop after completion of the Offering, or, if developed, that it will be sustained. No assurance can be given that the market price of the Company's securities will not fall below the initial public offering price. The Company intends to apply for admission to quotation of the Shares on the NASD OTC Bulletin Board and, if and when qualified, of which there can be no assurance, it intends to apply for admission to quotation on the Nasdaq SmallCap Market. SEE "DESCRIPTION OF SECURITIES". The Company is a development stage company with limited operations and no revenues. There can be no assurance that such a listing can now be obtained or will be obtained once operations and revenues are established. There can be no assurance that a regular trading market for the Common Stock will develop or that, if developed, it will be sustained. Various factors, such as the Company's operating results, changes in laws, rules or regulations, general market fluctuations, changes in financial estimates by securities analysts and other factors may have a significant impact on the market price of the securities. The market price for the securities of public companies often experience wide fluctuations which are not necessarily related to the operating performance of such public companies such as high interest rates or impact of overseas markets. TRADING OF COMPANY SHARES RESTRICTED FOR UP TO 90 DAYS In connection with the purchase of the Company Shares, purchasers will enter into a lock-up agreement with the Company providing that the Company Shares registered herein held purchased by such purchaser will not be transferred, sold, assigned, pledged, hypothecated, distributed or otherwise disposed of, directly or indirectly, for a period of 60 days following the admission for trading of the Company's Common stock for trading on any market. The Company Shares will be eligible to be transferred, sold, assigned, pledged, hypothecated, distributed or otherwise disposed of after expiration of such 60 day period with the Company's approval, which permission shall not be withheld unless market conditions so dictate. 90 days after following the admission for trading on any market of the Company's Common Stock, the Company Shares can be transferred, sold, assigned, pledged, hypothecated, distributed or otherwise disposed of without the permission of the Company. In all events, the lock-up provisions will terminate six months after the Effective Date hereof. REGISTRATION OR QUALIFICATION OF THE SECURITIES IN A LIMITED NUMBER OF STATES The Company anticipates that a substantial portion of Company Shares will be sold to investors located outside the United States. The Company will register or qualify the offer and sale of the Shares in California, New York, Washington, Florida, Illinois, Texas and Nevada. Purchasers of the Shares who are residents of the United States must be residents in one of these states. The Company will not accept purchases from residents not located in a state in which the Shares have been qualified or registered. The Offering may not achieve the Minimum Offering amount or the Maximum Offering amount due to this limited registration. RESALES OF THE SHARES UNDER STATE SECURITIES LAWS--THE NATIONAL SECURITIES MARKET IMPROVEMENT ACT OF 1996 Currently, the Company intends to register the Offering only in California, New York, Washington, Florida, Illinois, Texas and Nevada. The Company will not accept shareholders who are not resident of these states or such other state in which registration or qualification is not required. The National Securities Market Improvement Act of 1996 ("NMSIA") limits the authority of states to impose restrictions upon sales of securities made pursuant to Sections 4(1) and 4(3) of the Securities Act of companies which file reports under Sections 13 or 15(d) of the Securities Exchange Act. Sales of the Shares in the secondary trading market will be made pursuant to Section 4(1) (sales other than by an issuer, underwriter or broker). It is anticipated that the Shares will be immediately eligible for resale in the secondary market subject to any lock up agreements thereon. ARBITRARY DETERMINATION OF OFFERING PRICE The initial public offering price of the Company Shares has been arbitrarily determined by the Company and does not necessarily bear any relationship to the Company's assets, net worth or other established criteria of value. SEE "PLAN OF DISTRIBUTION" for a discussion of the factors used to determine such offering price. MANAGEMENT HAS DISCRETION IN APPLICATION OF PROCEEDS Management of the Company has considerable discretion over the use and expenditure of the proceeds from the sale of the Company Shares offered herein. The Company intends to use the funds raised in this Offering and additional capital (if such can be obtained, of which there is no assurance) for the development of telecommunication and Internet networks, marketing, working capital, administrative and other matters. SEE "USE OF PROCEEDS". To the extent that the Company finds changes are necessary or appropriate in order to address changed circumstances and/or opportunities, Management may find it necessary to adjust the use of the Company's capital, including the proceeds of this Offering. As a result of the foregoing, the success of the Company may be substantially dependent upon the discretion and judgment of the Management with respect to the application and allocation of the net proceeds hereof. LIMITATION OF LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS The Certificate of Incorporation and By-Laws of the Company provide that the Company shall indemnify its officers and directors against losses sustained or liabilities incurred which arise from any transaction in such officer's or director's respective managerial capacity unless such officer or director violates a duty of loyalty, did not act in good faith, engaged in intentional misconduct or knowingly violated the law, approved an improper dividend, or derived an improper benefit from a transaction. The Company's Certificate of Incorporation and By-Laws also provide for the indemnification by it of its officers and directors against any losses or liabilities incurred as a result of the manner in which such officers and directors operate the Company's business or conduct its internal affairs, provided that in connection with these activities they act in good faith and in a manner which they reasonably believe to be in, or not opposed to, the best interests of the Company, and their conduct does not constitute gross negligence, misconduct or breach of fiduciary obligations. SEE "MANAGEMENT--Indemnification". PENNY STOCK REGULATION Penny stocks generally are equity securities with a price of less than $5.00 per share other than securities registered on certain national securities exchanges or quoted on the Nasdaq Stock Market, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. The Company's securities may be subject to "penny stock" rules that impose additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and accredited investors (generally those with assets in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 together with their spouse). Broker-dealer practices in connection with transaction in "penny stocks" are regulated by certain penny stock rules adopted by the Securities and Exchange Commission. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker- dealer must also provide the customer with current bid and offer quotations for the penny stock, the compensation received by the broker-dealer and its salesperson in the transaction, and monthly account statement showing the market value of each penny stock held in the customer's account. in addition, the penny stock rules generally require that prior to a transaction in a penny stock, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and the broker-dealer must receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for a stock that becomes subject to the penny stock rules. If the Company's securities become subject to the penny stock rules, investors in this Offering may find it more difficult to sell their securities. ADDITIONAL SHARES ENTERING PUBLIC MARKET WITHOUT ADDITIONAL CAPITAL PURSUANT TO RULE 144 No shares of stock of the Company were issued prior to August 1, 1997. All the issued and outstanding shares of the Company, to the extent not sold or transferred pursuant to this Offering, are "restricted securities" as such term is defined in Rule 144 ("Rule 144") promulgated under the Securities Act. In general, under Rule 144, if adequate public information is available with respect to a company, a person who has satisfied a one- year holding period as to his restricted securities or an affiliate who holds unrestricted securities may sell, within any three month period, a number of that company's shares that does not exceed the greater of one percent of the then outstanding shares of the class of securities being sold or the average weekly trading volume during the four calendar weeks prior to such sale. Sales of restricted securities by a person who is not an affiliate of the company (as defined in the Securities Act) and who has satisfied a two year holding period may be made without any volume limitation. Pursuant to such Rule 144, after expiration of the holding period certain shares of Common Stock now restricted for trading will become eligible for trading in the public market without any payment therefore or increase to the Company's capitalization. Possible or actual sales of the Company's outstanding Common Stock by all or some of the present stockholders may have an adverse effect on the market price of the Company's Shares should a public trading market develop. SHARES ELIGIBLE FOR SALE PURSUANT TO RULE 415 A Selling Securityholder may offer and sell the Selling Securityholder Shares at a price and time determined by the particular Selling Securityholder. The timing of such sales and the price at which the Selling Securityholder Shares are sold by the individual Selling Securityholder could have an adverse effect upon the public market for the Shares, should one develop. CERTAIN TAX CONSIDERATIONS The Company will be subjected to taxes imposed on it in the jurisdiction in which it operates. Further, its income is subject to United States federal and state income taxes when distributed, deemed distributed or otherwise attributed to, the Company, which is a United States corporation. Complex tax rules apply for purposes of determining the calculation of those United States taxes, the availability of a credit for foreign taxes imposed and the timing of the imposition of United States tax. Normally all foreign income earned by a United States multinational corporation eventually will be subject to United States tax. In order to relieve double taxation, the United States federal tax law generally allows United States corporations a credit against their United States tax ability in the year the foreign earnings become subject to United States tax in the amount of the foreign taxes paid on those earnings. The credit is limited under complex limitation rules. Further, complex rules exist for allocating and apportioning interest, research and development expenses and certain other expense deductions between the United States and foreign sources. These rules can prevent United States multinational companies from crediting all of the foreign taxes they pay against their United States taxes. To the extent such credits are not allowed, foreign source income bears a tax burden higher than the United States tax rate. USE OF PROCEEDS If the Maximum Offering is sold, the proceeds to the Company will be $9,000,000 and if the Minimum Offering is sold, the proceeds to the Company will be $2,000,000. There are no anticipated underwriting fees, discounts or commissions to be paid. The Company anticipates that it may utilize certain Company Shares for use in acquiring or leasing equipment or existing telecommunications systems. Such usage will benefit the Company by decreasing the amount of cash required to obtain such equipment or services, but the Company will not receive any proceeds usable for other matters directly from such use of its Company Shares. The following table sets forth the Company's anticipated use of proceeds from the Offering:
MINIMUM OFFERING MAXIMUM OFFERING Total Proceeds $ 2,000,000 $ 9,000,000 Offering Expenses (1) 157,700 157,700 Initial capitalization of one or more of potential projects(2) 1,500,000 5,700,000 Acquisition or construction to be financed 2,500,000 of telecommunication network Working capital including equipment, furnishings, salaries and rent 342,300 642,300
(1) The Company has obtained a loan from Finhorn Enterprises Limited, a shareholder and Selling Securityholder, for payment of these initial offering expenses. SEE "BUSINESS--Shareholder Loan". (2) SEE "BUSINESS--Current Operations". If none of the projects currently being initially discussed by the Company and generally described in "BUSINESS--Current Operations", the Company anticipates locating another project or projects of similar estimated costs. The foregoing represents the Company's best estimate of the net proceeds of the Offering based on current planning and business conditions. The exact allocation of the proceeds for the purposes set forth above and the timing of the expenditures may vary significantly depending upon the exact amount of funds raised, the time and cost involved in locating existing telecommunication systems for purchase or obtaining necessary regulatory approvals for construction of new telecommunication systems, the status of competing entities, availability and delivery of supplies and equipment, and other factors. The Company believes that the proceeds from the Minimum Offering would not be sufficient to fund its development for the next 12 months; whereas, the proceeds from the Maximum Offering would be sufficient to fund certain development for the next 12 months. If an amount less than Maximum Offering is raised, the Company may be required to delay, scale back or eliminate parts of its development plan or obtain funds through additional financing, including loans or offerings of its securities. DILUTION Purchasers of the Company Shares will experience immediate and substantial dilution in the value of their Shares. Dilution represents the difference between the initial public offering price per share paid by the purchasers in the Offering and the net tangible book value per share immediately after completion of the Offering. Net tangible book value per share represents the net tangible assets of the Company (total assets less total liabilities), divided by the number of shares of Common Stock outstanding upon closing of the Offering. As of November 30, 1997, the Company had a net tangible book value (on an unaudited basis) of $(38,378) or $(.0004) per share. If the Minimum Offering is sold, the net tangible book value of the Company would be $1,892,300 or $.02 per share. If the Maximum Offering is sold, the net tangible book value of the Company would be $8,892,300 or $.10 per share. This represents a per share increase of $.0204 if the Minimum Offering is sold and $.1004 if the Maximum Offering is sold. This represents an immediate dilution to investors in the Offering of $19.98 per share if the Minimum Offering is sold and $19.90 per share if the Maximum Offering is sold. The following table illustrates such effect: Minimum Offering Maximum Offering Initial public price per Unit $20.00 $20.00 Net tangible book value before Offering $(.0004) $(.0004) Increase per share attributable to new investors $.0204 $.1004 Pro forma net tangible book value per share after Offering $.0204 $.1004 Dilution per share to new investors $19.98 $19.10 The following table sets forth, on a pro forma basis, the differences between existing shareholders and new investors in the Offering with respect to the number of shares of Common Stock purchased from the Company, the total consideration paid to the Company and the average price per share paid by existing shareholders and by new investors: MINIMUM OFFERING:
Average Outstanding Shares Total Consideration Price Per Number % Paid % Share Existing Shareholders 90,100,000 99.9% $ 90,100 4.3% $0.001 New Investors 100,000 0.1% 2,000,000 95.7% $20.00 Total 90,200,000 100.0% 2,090,100 100%
MAXIMUM OFFERING: Average Outstanding Shares Total Consideration Price Per Number % Paid % Share Existing Shareholders 90,100,000 99.5% $ 90,100 1% $0.001 New Investors 450,000 0.5% 9,000,000 99% $20.00 Total 90,550,000 100.0% 9,090,100 100%
BUSINESS GENERAL The Company intends to engage in the development, operation, acquisition and possible sale of telecommunications and Internet services to offer a broad range of local and regional, international, and enhanced telecommunication and Internet services including but not limited to cellular and fixed line telephone service to individuals, business and residential customers. The Company will concentrate its services in the Far East, including China, and in the United States. The Company may locate an existing telecommunications or Internet systems which it may acquire as part of the development of its operating network. The Company intends to offer local and international calling services, as well as customized telecommunications and Internet services to its clients. Since inception, the principal activity of the Company has been directed to organizational efforts. As of the date hereof, the Company has hired a fulltime President (see "MANAGEMENT") and has entered into preliminary discussions for participation in several telecommunication projects. The Company has not entered into any definitive agreements. Start-up costs incurred by the Company have been provided by the initial sale of certain securities of the Company and by loans from one or more of its current shareholders. No other initial financing has been obtained. There is no agreement or understanding pursuant to which the current shareholders will continue to make such loans or purchase stock. The Company anticipates that if the Minimum Offering is sold it will need to raise funds in the next twelve months to develop and/or construct telecommunications and Internet systems. Even if the Maximum Offering is sold, the Company may determine to raise additional funds in order to develop a greater number of telecommunication systems. Management may use various methods to raise such funds including debt obligations such as loans from banks or other sources or debt securities and/or investors' equity. If financing is arranged, of which there can be no assurance, Management anticipates that repayment of debt and debenture obligations will be made from earnings from operations or sales of the telecommunications and Internet systems and/or equity interest in the Company. The Company has not established any ratio governing its equity to debt limits nor any limit upon the debt which may be incurred. The Company began payment of salaries to one of its officers on September 1, 1997. On November 6, 1997, the Company entered into an employment agreement with Marc F. Mayeres to serve as President of the Company. SEE "MANAGEMENT--Employment Agreements". The Company anticipates that incidental expenses of operations will be provided by loans to the Company or purchases of stock from the Company by one or more current shareholders. There is no binding agreement pursuant to which the current shareholders must make such loans or purchase stock. CURRENT OPERATIONS The Company has begun discussions regarding several opportunities for participation in developing certain telecommunication networks. These discussions are all in the preliminary stages and potential investors should be alerted that there is no assurance that the Company will finalize any of these discussions or that agreements will be reached or conducted on any of the terms outlined below. Joint Venture with a China Telephone System Operator. The Company is currently in discussion with an authorized public telephone system operator and its affiliates for possible participation in the construction and development of wire-line and wireless telephone networks in Hebei Province in China. This company is AN authorized public telephone operator in China. The possible telecommunication construction and development in the Hebei Province would be an expansion of the existing current wire-line and wireless telephone network. The current wire-line telephone penetration rate in Hebei Province is only 5.3 per 100 capita and the penetration rate for wireless telephone is 0.52 per 100. These penetration rates are below the international standards for developed and developing countries and the Company believes that there is a great demand for immediate increase in network capability and services. If the Company were to enter into a joint venture for wireless telephone networks in the Hebei Province, the Company would seek to establish a joint venture company in which the Company would anticipate holding at least a 49% interest. The joint venture would continue for approximately 25 years. Through the joint venture company, the Company would be responsible for constructing and developing the telephone expansion network and would also (i) assist in obtaining equipment, goods and materials not available in China; (ii) introduce and oversee modern and efficient operating and management techniques; (iii) recruit qualified foreign personnel and international consultants; (iv) assist in raising capital for the network construction; and (v) perform such other duties as deemed necessary. Internet Joint Venture. The Company is in preliminary discussions with a Chinese telecommunications partner for the possible development of a nationwide internet network in China. If the Company were to enter into such a joint venture, the Company would form a joint venture company in which the Company would anticipate holding at least a 49% interest. The joint venture company would intend to provide internet access service throughout China commencing its operations in the major metropolitan areas providing its clients with access to the World Wide Web, electronic mail transfer, individual web pages, research engines, news and updates, on-line shopping and other services as are customarily available by Internet Service Providers. The joint venture would continue for a period of 30 years and anticipates being able to admit up to 5,000,000 customers to the network in approximately 7 years. Joint Venture with a California Telecommunications Company. The Company is in preliminary discussions with a California-based telecommunications company for the possible cooperation in developing new telecommunication technologies and using such new technologies, as well as those previously developed by the California company, the construction and development of telecommunications networks in China and, possibly, elsewhere. The current telephone system in China (as well as many other countries in the Far East and Europe) are based on Synchronous Digital Hierarchy ("SDH") technologies while the majority of telephone systems in the United States, for instance, are based on Asynchronous Transfer Mode ("ATM") technologies. Many European countries have started to transfer to the ATM system. The Company would develop ATM access network technologies to enhance the compatibility and efficiency of the current SDH telephone networks and to use the new technologies in constructing and developing telephone and internet networks to ensure those networks would be compatible with international standards. SHAREHOLDER LOAN In October 2, 1997, Finhorn Enterprises Ltd, a shareholder of the Company, loaned the Company $60,000 repayable in 12 months at an annual interest rate of 5%. The loan is renewable upon the expiration of the one-year term for another year at a 7% annual interest rate. The Company anticipates that it will repay the loan from revenues generated from operations or, if no revenues have been generated from operations at such time that the loan is payable, then the Company will use what proceeds from the Offering are available at such time to repay the loan. On October 27, 1997, the Company borrowed an additional $100,000 from Finhorn Enterprises Ltd. on the same terms as the earlier loan. Proceeds from both loans, aggregating $160,000, are for the payment of expenses of this Offering, including legal fees, and initial working capital. SEE "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS". BUSINESS PLAN The Company plans to seek opportunities for the development and construction of telecommunications and Internet networks either by itself or in cooperation with other entities. The Company intends to establish and develop, either through construction and development or through acquisition of existing systems, one or more telecommunications and/or Internet networks consisting of fixed and/or cellular line services to be selected in specific target areas in the Far East, including China, and, if the opportunity is available, in the United States. The Company intends to establish a network communication system for business and residential subscribers to provide intraconnection between cellular and fixed line services and to provide subscribers with capability to make domestic and international long distance calls. The Company plans to establish and offer nationwide an Internet access system in China and anticipates that its network systems will interconnect with the MPT Systems which will allow the Company's subscribers to communicate with fixed line and cellular users of other networks and to make and receive domestic and international long distance calls. The Company anticipates that it will commence operations by entering into joint venture relationships with other established telecommunication companies, either in the United States or elsewhere, for the initial development and construction of telecommunication and Internet networks or for the expansion and improvement of existing network. The Company anticipates that it will participate in a series of such joint ventures while, if funds are available therefor, initiating telecommunications projects in which it is the sole participant. The Company anticipates that as it participates in a growing number of such projects, it will be able to develop, in China initially, compatible telecommunications systems and Internet access to a wide variety of geographic locations. The Company anticipates that it will be able to work with the MPT and its agents to establish an interconnection arrangement to allow the Company to utilize the existing MPT network equipment and connections. Fees charged for such usage will be passed to the customer as part of the utilization tariff. The Company intends to utilize current computer systems to provide network operation management, customer service and marketing. The Company intends to construct its own transceiver station sites or to lease such sites from the MPT or third-party owners or acquire receiving stations already existing. The Company intends to focus on controlling costs and providing efficient operations through the use of advanced management information systems and by retaining and attracting qualified personnel. The Company intends to focus on marketing its telecommunications system in its selected target areas. The Company intends to offer subscribers certain value added services such as call forwarding, call waiting, conference calling, facsimile transmission services, and modem access to the Internet and World Wide Web. The Company will develop its value added services package as it identifies its target market and the demographics therein. The Company's principal business objective is to provide telecommunications systems, including cellular, fixed line and Internet services, to residential and businesses customers in countries in the Far East, including China, and in the United States. The Company intends to reach its objectives through the development of its telecommunication network and/or by the acquisition of existing telecommunication networks, or both. TELECOMMUNICATIONS IN GENERAL The global market for telecommunications services is undergoing significant deregulation and reform. The Company believes that the industry is being shaped by the (i) deregulation and privatization of telecommunication markets worldwide; (ii) diversification of services through technological innovation; and (ii) globalization of major carriers. It is anticipated that the industry generally will experience considerable growth in terms of traffic volume and revenue and development of new markets. According to the International Telecommunication Union ("ITU"), a worldwide telecommunications organization under the auspices of the United Nations, the international telecommunications industry accounted for $52.8 billion in revenues and 60.3 billion minutes of use in 1995. The ITU projects that international telecommunications revenues will approach $76 billion by the year 2000 with the volume of traffic expanding to 107.0 billion minutes of use. TELECOMMUNICATIONS INDUSTRY IN CHINA According to the PRC Ministry of Posts and Telecommunications (the "MPT"), with a population of 1,198,000,000 in 1994 China had 27,300,000 fixed line telephone subscribers (2.17% penetration) and 1,570,000 cellular subscribers (.13% penetration). By 1996 with a population of 1,226,000,000 (2.28% growth) the telecommunications usage doubled to 54,950,000 fixed line telephone subscribers (4.49% penetration) and 6,950,000 cellular subscribers (.57% penetration). As the Chinese economy shifts from a centrally planned economy to a more market-oriented economy, the telecommunications industry has become one of the fastest developing industries in China. Although the Chinese telecommunications network has become one of the largest in the world in terms of number of subscribers, the penetration rates remain relatively low indicating significant potential for further rapid growth. The Company believes that the market will be driven by the demand for telecommunication services from the increase of world-competitive businesses and industries and from individual personal use. THE MINISTRY OF POSTS AND TELECOMMUNICATIONS AND GOVERNMENT REGULATION The PRC has developed its Ninth Five-Year Plan in which development of the telecommunications industry in China will continue to be a high prior for the government. The Five-Year Plan's goal is to double, by the year 2000, China's telecommunications capacity and business volume from that of 1995. The MPT System has primary responsibility for implementing the plan in regard to the telecommunications industry. The MPT System has historically regulated all public telecommunications services in China. The MPT directly or indirectly regulates entry into the telecommunications industry, scope of permissible business, interconnection and transmission line arrangements, technology and equipment standards, and other aspects of the Chinese telecommunications industry. The Company believes that such emphasis on growth of the telecommunications industry, coupled with Management's familiarity with working with the MPT, will facilitate the obtaining of support for development of the Company's operations from the MPT. ACQUISITION OF EXISTING TELECOMMUNICATIONS SYSTEMS AND PURCHASES OF EQUIPMENT In addition to constructing or developing its own telecommunications and Internet systems by itself or in joint venture with others, the Company may acquire existing telecommunications systems. It is possible that the consideration paid for the acquisition of existing telecommunications systems, if any such acquisitions are made of which there can be no assurance, and/or the purchase of telecommunications and Internet equipment, if any such purchases are made of which there can be no assurance, or the payment for services of technicians, professionals or employees, if any such services are used of which there can be no assurance, may consist in whole or in part of the Company's Common Stock, although the Company may also use cash and/or debt. If the Company were to issue substantial additional securities for acquisitions, such issuance may dilute the value of Shares, and might have an adverse effect on any trading market that may develop in the Company's securities in the future. If the Company were to incur indebtedness that substantially changed the capital structure of the Company, the Company's shareholders would most likely be exposed to a greater risk of loss of their investment in the Company. Securities issued in any such transaction are likely to rely on exemptions from registration under applicable federal and state securities laws. In some circumstances, however, as a negotiated element of such a transaction, the Company may agree to register the securities either at the time the transaction is consummated or at specified times thereafter. The issuance of substantial additional securities and their potential sale into any trading market which may develop in the Common Stock may have a depressive effect on such market. COMPUTER SYSTEMS REDESIGNED FOR YEAR 2000 Many existing computer programs use only two digits to identify a year in such program's date field. These programs were designed and developed without consideration of the impact of the change in the century for which four digits will be required to accurately report the date. If not corrected, many computer applications could fail or create erroneous results by or following the year 2000. Many of the computer programs containing such date language problems have been corrected by the companies or governments operating such programs. In acquiring any existing telecommunication system or Internet network, the Company will consider the existence of a date language problem and the costs to correct such problem as one of the factors in determining whether such acquisition would be appropriate. Management does not know what steps, if any, have been taken by the governments in the countries in the Far East, particularly China, to correct or address such date language problem or if any such steps are required. The Company anticipates that it will be leasing some telecommunication equipment, including switching stations, landlines, etc., from the PRC and interconnecting with the telecommunications systems now operated by the PRC and that any failure of the PRC's computer systems or telecommunication delivery systems due to such computer date language problem could have a severe impact on any operations of the Company that have been developed. BUSINESS ENVIRONMENT FOR OPERATIONS The Company believes that the Far East, including Hong Kong and China, has a vigorous economy. Foreign investment in the Far East has grown considerably in the last 10 years. China has allowed the establishment of foreign private enterprise and has encouraged development of China as a manufacturing and business center. However, China remains a Communist country with tight governmental controls. There can be no assurance of the government's continued encouragement or permission of private investment in China. Nor can there be any assurance as to continued ownership of businesses by foreign entities in China. COMPETITION There are a great number of participants in the telecommunications and Internet services field. Some of the participants are large international corporations that have substantial resources and technical expertise while there are also many start-up companies. All these companies will compete with the Company for acquisition of existing telecommunications systems and for development of new markets. Although the market penetration of telecommunications services in China is small, the Company anticipates that many international and start-up firms will begin entering the Chinese telecommunications market. The Company will be a small participant. In view of the Company's limited financial resources and limited Management experience, the Company may be at a competitive disadvantage compared to the Company's competitors. Management believes that the close familiarity of certain of its officers and directors with business and economic conditions in China and other areas in the Far East and elsewhere, and knowledge of the Chinese language, as well as the familiarity of certain of its officers and directors with the United States, the English language and, generally, the American and international business communities, will be useful in meeting such competition. THE OFFERING The Company is offering 450,000 Company Shares for sale at a per Company Share price of $20. The Minimum Offering is 100,000 Company Shares and the Maximum Offering is 450,000 Company Shares. The Company Shares are being offered for sale by the officers and director of the Company. The offering price of the Company Shares was determined arbitrarily by the Company and is not necessarily related to asset or book value, net worth or any other established criteria of value. There is no current public trading market for the Shares. SEE "PLAN OF DISTRIBUTION". The Selling Securityholders are offering 9,010,000 Selling Securityholder Shares for sale on a continuous or delayed basis pursuant to Rule 415 under the Securities Act. SEE "RISK FACTORS--Shares Available for Sale Pursuant to Rule 415" and "RISK FACTORS--Additional Shares Entering Public Market without Additional Capital Pursuant to Rule 144. The amount of discounts or commissions, if any, which may be paid by the Selling Securityholders on the sale of their securities registered herein is not now known. The Company is applying for admission to the NASD OTC Bulletin Board for the Shares; however, there can be no assurance that the Shares will be so listed. SEE "RISK FACTORS--No Current Trading Market for the Company's Securities" and "DESCRIPTION OF SECURITIES-- Admission to Quotation on the Nasdaq SmallCap Market or NASD OTC Bulletin Board". MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS PLAN OF OPERATIONS The Company is a development stage company, the objective of which is to develop telecommunication systems and Internet networks in the Far East, including China, and in the United States. To date, the Company's efforts have been limited to organizational activities, including developing a business plan, identifying and commencing discussions with potential joint venture participants for telecommunication projects and identifying and negotiating with qualified management necessary for the successful implementation of the Company's business plan. LIQUIDITY The Company has generated no revenues to date and does not anticipate to being able to generate revenues in the near future until that time, if ever, that it has begun offering telecommunication and Internet services. The Company believes that the acquisition of existing systems will provide the Company with the quickest method to begin operations and, possibly, receipt of revenues. The Company has incurred a loss since inception, resulting in an unaudited net loss as of November 30, 1997, of $128,478. The Company anticipates that it will continue to incur losses for the foreseeable future until such time, if ever, that the Company is able to generate sufficient revenues to finance its operations. In October 2, 1997, Finhorn Enterprises Ltd, a shareholder of the Company, loaned the Company $60,000 repayable in 12 months at an annual interest rate of 5%. The loan is renewable upon the expiration of the 12-month term for another 12 months at a 7% annual interest rate. The Company anticipates that it will repay the loan from revenues generated from operations or, if no revenues have been generated from operations at such time that the loan is payable, then the Company will use what proceeds from the Offering are available at such time to repay the loan. On October 27, 1997, the Company borrowed an additional $100,000 from Finhorn Enterprises Ltd. on the same terms as the earlier loan. Proceeds from both loans, aggregating $160,000, are for the payment of expenses of this Offering, including legal fees, and initial working capital. There are no agreements or understandings for additional loans to be provided by Finhorn Enterprises Ltd., or any other shareholder or entity, to the Company. Capital Resources Substantially all of the Company's expenditures subsequent to this offering will be attributable to the development or acquiring telecommunication networks. The Company may use the Company Shares registered herein to purchase existing telecommunications systems and equipment and other materials. The Company may also incur debt in the development of such telecommunication systems. The Company has made no commitments to date for any specific expenditure. MANAGEMENT OFFICERS AND DIRECTORS The officers and directors of the Company are as follows: NAME TITLE Marc F. Mayeres President Ming Zhang Secretary Liancheng Ji Director All directors of the Company hold office until the next annual meeting of shareholders or until their successors are elected and qualified. The By-laws permit the Board of Directors to fill any vacancy and such director may serve until the next annual meeting of shareholders or until a successor is elected and qualified. The Director does not receive any remuneration for his services as a director. The Director may be reimbursed by the Company for expenses incurred in attending meetings of the Board of Directors. The principal occupation and business experience for each officer and director of the Company for at least the last five years are as follows: Marc F. Mayeres, 56, has served as President of the Company since November, 1997. From 1996 to 1997, Mr. Mayeres was Vice President of Finance & Administration and Chief Financial Officer of Thomsen Machinery, Inc., Gardena, California. Thomsen Machinery, Inc. is a subsidiary of Putzmeister Werk AG Germany, an international supplier of industrial and commercial cement and concrete pumping equipment. From 1994-1995, Mr. Mayeres served as a business consultant, including developing accounting systems and preparing feasibility studies regarding certain proposed corporate activities. From 1992-1994, Mr. Mayeres was Vice President and Treasurer-Worldwide of SPI Pharmaceuticals, Inc., Costa Mesa, California. SPI Pharmaceuticals has over 3200 employees worldwide with 7 subsidiaries. Mr. Mayeres handled worldwide treasury functions including the global cash management, foreign exchange management, banking contracts and negotiations, fund sourcing, international refinancings, and repatriation of a $7.5 million dividend from Yugoslavia. From 1989 to 1991, Mr. Mayeres was Director of International Finance for Whirlpool Corporation, Benton Harbor, Michigan. The Whirlpool Corporation has approximately 16,000 employees with 31 subsidiaries. From 1967 to 1989, Mr. Mayeres was employed by The Quaker Oats Company, Chicago, Illinois in several positions, culminating from 1983 to 1989 as Director of International Finance. The Quaker Oats Company has approximately 9,000 employees with 28 subsidiaries. Mr. Mayeres received his Chartered Accountant degree from the Belgian College of Chartered Accounts in Antwerp, Belgium in 1967 and the equivalent of a Bachelors of Science Degree in Chemistry from the Catholic University of Louvain, Louvain, Belgium, in 1962. Ming Zhang, 26, serves as Secretary of the Company. Ms. Zhang, a resident of Los Angeles, was born in Hunan, China and is fluent in Chinese and English. Ms. Zhang is a Certified Public Accountant candidate and received her Bachelor of Science in Accounting from the University of Kentucky in December, 1994. From 1995-1997 was employed by America Catch, Inc., Los Angeles, California, a wholly-owned subsidiary of Beijing Catch Telecommunication Group, as the Assistant to the President. America Catch's primary business is to seek investment opportunities in the United States and to expand its Beijing business and operations in the United States. Liancheng Ji, 58, serves as a Director of the Company. Mr. Ji is a citizen of China and resides in Beijing, China. Since 1995, Mr. Ji has been the Senior Engineer and Vice President of Hebei United Telecommunications, Inc. ("Hebei Unicom"), Hebei Province, China which specializes in telecommunication projects in Beijing and Hebei Province. Hebei Unicom is the Hebei branch of China Unicom, the second largest telecommunications provider in China. From 1994-1995 Mr. Ji was the president of Beijing United Telecommunications, Inc., the Beijing branch of China Unicom, specializing in telecommunication projects in Beijing. From 1990-1994, Mr. Ji was the Vice President of Beijing Catch Telecommunication Group which is the third largest telecommunication service provider in China. From 1967 to 1989, Mr. Ji was the Senior Engineer and Senior Operating Officer of China Institute of Electronic System Engineering. Mr. Ji received his Bachelor of Science degree in Telecommunication Engineering from China Northwestern Electronic Engineering University. EXECUTIVE COMPENSATION Officers and directors receive compensation as determined by the Company from time to time by vote of the Board of Directors. Such compensation might be in the form of stock options. The Secretary of the Company receives a salary of $3,500 per month but has agreed to defer payment of such if requested by the Company in order to minimize cash requirements. The President of the Company receives $7,000 per month but has agreed to defer $3,500 per month until closing of the Offering. The following table sets forth the total compensation paid or accrued by the Company on behalf of the President of the Company during 1997. The Company commenced paying salaries in September, 1997. No officer of the Company receives a salary and/or bonus in excess of $100,000. SEE "MANAGEMENT--Employment Agreements". [COMPENSATION] SUMMARY COMPENSATION TABLE ANNUAL COMPENSATION Long All Other Term Other POSITION Year Salary Bonus Awards Compen- Compen- sation sation Marc F. Mayeres 1997 7,000/ --- --- --- --- President Month
(1) Mr. Mayeres employment begin on November 6, 1997 and he has agreed to defer $3,500 per month of his compensation until closing of the Offering. EMPLOYMENT AGREEMENTS On November 6, 1997, the Company entered into an employment agreement with Mr. Marc F. Mayeres to serve as President of the Company. The terms of the agreement require the fulltime services of Mr. Mayeres to the activities of the Company and provide for compensation at the rate of $7,000 per month, one-half of which is deferred until the closing of the Offering. The agreement provides for medical insurance and payment of expenses incurred on behalf of the Company. The agreement expires at the end of six months with the option that upon the agreement of both parties, a new agreement will be executed providing a salary of $100,000 annually. PAYMENT OF FEES TO DIRECTORS, ADVISORS AND AFFILIATES Under certain circumstances, the Company may pay fees to individuals or entities who are directors, advisors or affiliates of the Company. In the event that an unsalaried affiliate arranged financing, or identified a subsequently acquired telecommunications system or available equipment or otherwise in an arms length transaction that ordinarily would generate a "finders" fee, such a fee, calculated in a reasonable and customary manner, might be paid. In general, an "affiliate", as defined under federal securities law, is any person directly or indirectly controlling, controlled by, or under common control with, such other person, including any officer, director, partner or employee of such other person. No such payments have been made or incurred to date by the Company to its director. TIME DEVOTED TO COMPANY OPERATIONS The officers of the Company devote full working time to the affairs of the Company. Mr. Ji, a Director of the Company, anticipates devoting substantial time to the affairs of the Company. INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS The Certificate of Incorporation and By-laws of the Company provide that the Company shall, to the fullest extent permitted by applicable law, as amended from time to time, indemnify all directors of the Company, as well as any officers or employees of the Company to whom the Company has agreed to grant indemnification. Section 145 of the Delaware General Corporation Law ("DGCL") empowers a corporation to indemnify its directors and officers and to purchase insurance with respect to liability arising out of their capacity or status as directors and officers provided that this provision shall not eliminate or limit the liability of a director (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) arising under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit. The Delaware General Corporation Law provides further that the indemnification permitted thereunder shall not be deemed exclusive of any other rights to which the directors and officers may be entitled under the corporation's by-laws, any agreement, vote of shareholders or otherwise. The effect of the foregoing is to require the Company to indemnify the officers and directors of the Company for any claim arising against such persons in their official capacities if such person acted in good faith and in a manner that he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. INSOFAR AS INDEMNIFICATION FOR LIABILITIES ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, MAY BE PERMITTED TO DIRECTORS, OFFICERS OR PERSONS CONTROLLING THE COMPANY PURSUANT TO THE FOREGOING PROVISIONS, IT IS THE OPINION OF THE SECURITIES AND EXCHANGE COMMISSION THAT SUCH INDEMNIFICATION IS AGAINST PUBLIC POLICY AS EXPRESSED IN THE ACT AND IS THEREFORE UNENFORCEABLE. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth certain information as of the Effective Date of this Prospectus regarding the beneficial ownership of the Company's Common Stock by each officer and director of the Company and by each person who owns in excess of five percent of the Company's Common Stock.
Shares of Common Stock Percentage Name, Position Beneficially (1) Of Shares Address Owned Owned Finhorn Enterprises Limited (2) 55,100,000 61.15% c/o East Asia Corporate Services Limited Columbus Centre Building Wickhams Cay PO Box 901 Road Town, Tortola, B.V.I. Serenadia Investment Limited (2) 20,000,000 22.20% 2555 Huntington Drive, Suite 249 Superior Gain Enterprises Limited 1108 West Valley Boulevard Suite 438 Alhambra, California 91803-2477 Marc F. Mayeres -0- 0% 30902 Clubhouse Drive, #44F Laguna Niguel, California 92677 Ming Zhang -0- 0% 3701 Glendon Avenue Los Angeles, California 90034 Liancheng Ji -0- 0% Building #2 Shizipuo Dongli Dongcheng District Beijing, China All Officers, Directors -0- 0% and Shareholders as a Group (3 Persons)
_________________ (1) Includes warrants, options or other rights to purchase common stock exercisable within 60 days hereof. (2) A British Virgin Islands corporation. SALES BY SELLING SECURITYHOLDERS The registration statement of which this Prospectus is a part also relates to the offer and sale of up to 9,010,000 Selling Securityholders' Shares being offered and sold by the Selling Securityholders. All of such securities are expected to become tradeable on or about the date of this Prospectus. Sales of the securities being offered by Selling Securityholders, or even the potential of such sales, would likely have an adverse effect on the market price of the Company Shares being offered for sale by the Company. The freely tradeable Shares of the Common Stock (the "public float") upon effectiveness of the Registration Statement of which this Prospectus is a part and upon consummation of the transactions contemplated herein will be 90,550,000 shares of Common Stock, of which 9,010,000 are to be sold by the Selling Securityholders. SELLING SECURITYHOLDERS The following table sets forth the beneficial ownership of the securities of the Company held by each person who is a Selling Securityholder and by all Selling Securityholders as a group.
Percent of Common Common Stock Owned Common Stock Owned Name and Address Prior to After Prior to After of Beneficial Offering Offering Offering Offering Owner Finhorn Enterprises Limited(3 55,100,000 49,590,000 61.15% 54.8% c/o East Asia Corporate Services Limited Columbus Centre Building Wickhams Cay PO Box 901 Road Town, Tortola, B.V.I. Serenadia Investment Limited(4) 20,000,000 18,000,000 20.20% 19.9% 2555 Huntington Drive Suite 249 Superior Gain Enterprises Limited 1108 West Valley Boulevard Suite 438 Alhambra, California 91803-2477 Gain Best International Limited(5) 4,500,000 4,050,000 4.9% 4.5% 1 Dakengyan, Haidian District Beijing, China Global Bridge Profits Limited(6) 4,000,000 3,600,000 4.4% 4.0% c/o Trident Trust Company Limited P.O. Box 146, Road Town Tortola, B.V.I Superior Gain Enterprises Limited(7) 3,500,000 3,150,000 3.9% 3.5% 1108 West Valley Boulevard Suite 438 Alhambra, California 91803-2477 Crowned Eagle Worldwide, Ltd.(8) 3,000,000 2,700,000 3.3% 3.0% 2168 Atlantic Boulevard Suite 125 Monterey Park, California 91754
_________ (1) Based upon 90,100,000 shares of Common Stock outstanding prior to offering. (2) Assumes sale of all Shares offered herein including Company Shares and Selling Securityholders' Shares resulting in 90,550,000 number of shares of Common Stock outstanding. (3) The named Selling Securityholder is a British Virgin Island company engaged in investing in telecommunication networks and telecommunication-related companies. Mr. Ma, Guang-Ming is its beneficial owner and sole director. (4) The named Selling Securityholder is a British Virgin Island company engaged in researching and developing telecommunication equipment and investing in telecommunication networks. Mr. Song, Yong-An is its beneficial owner and sole director. (5) The named Selling Securityholder is a British Virgin Island company engaged in investing in researching and developing electronic equipment and financial investment. Mr. Chen, Yan is its beneficial owner and sole director. (6) The named Selling Securityholder is a British Virgin Island company engaged in developing paging technologies and manufacturing pagers and investing in telecommunications networks. Mr. He, Yi is its beneficial owner and sole director. (7) The named Selling Securityholder is a British Virgin Island company engaged in international trade and financial investment. Mr. Wang, Li-Ping is its beneficial owner and sole director. (8) The named Selling Securityholder is a British Virgin Island company engaged in researching and developing electronic technologies and financial investment. Mr. He, Lei is its beneficial owner and sole director. None of the Selling Securityholders nor their beneficial owners have any relationship with each other or with officers or the director of the Company. The Shares owned by the Selling Securityholders are being registered pursuant to Rule 415 of the General Rules and Regulations of the Securities and Exchange Commission, which Rule pertains to delayed and continuous offerings and sales of securities. In regard to the Selling Securityholders' Shares offered under Rule 415, the Company has given certain undertakings in Part II of the Registration Statement of which this Prospectus is a part which, in general, commit the Company to keep this Prospectus current during any period in which offers or sales are made pursuant to Rule 415. The Company is bearing all expenses in connection with the registration of the Selling Securityholders' Shares offered by this Prospectus. DESCRIPTION OF SECURITIES AUTHORIZED CAPITAL The total number of authorized shares of stock of the Company is one hundred million (100,000,000) shares of Common Stock having a par value of $.0001 per share and twenty million (20,000,000) shares of non- designated preferred shares. INCORPORATION The Company was incorporated in the state of Delaware on June 1, 1994 under the name TPG Management Corporation. The Company's Certificate of Incorporation, By-laws and corporate governance, including matters involving the issuance, redemption and conversion of securities, are subject to the provisions of the Delaware General Corporation Law, as amended and interpreted from time to time. COMMON STOCK The Company's Certificate of Incorporation authorizes the issuance of 100,000,000 shares of Common Stock, $.0001 value per share, of which 90,100,000 shares were outstanding prior to the commencement of this Offering. Holders of shares of Common Stock are entitled to one vote for each share on all matters to be voted on by the stockholders. Holders of Common Stock do not have cumulative voting rights. Holders of Common Stock are entitled to share ratably in dividends, if any, as may be declared from time to time by the Board of Directors in its discretion from funds legally available therefor. In the event of a liquidation, dissolution or winding up of the Company, the holders of Common Stock are entitled to share pro rata all assets remaining after payment in full of all liabilities. All of the outstanding shares of Common Stock are, and the shares of Common Stock offered by the Company pursuant to this offering will be, when issued and delivered, fully paid and non-assessable. Holders of Common Stock have no preemptive rights to purchase the Company's Common Stock. There are no conversion or redemption rights or sinking fund provisions with respect to the Common Stock. All outstanding shares of Common Stock are validly issued, fully paid and nonassessable, and all Shares to be sold and issued as contemplated hereby will be fully paid and nonassessable when sold in accordance with the terms hereof and pursuant to a valid and current prospectus. The Board of Directors is authorized to issue additional shares, on such terms and conditions and for such consideration as the Board may deem appropriate without further stockholder action. LOCK-UP AGREEMENT In connection with the purchase of the Company Shares, purchasers will enter into a lock-up agreement with the Company providing that the Company Shares registered herein held purchased by such purchaser will not be transferred, sold, assigned, pledged, hypothecated, distributed or otherwise disposed of, directly or indirectly, for a period of 60 days following admission for trading of the Company's Common Stock for trading on any market. The Company Shares will be eligible to be transferred, sold, assigned, pledged, hypothecated, distributed or otherwise disposed of after expiration of such 60 day period with the Company's approval, which permission shall not be withheld unless market conditions so dictate. 90 days following the admission for trading on any market of the Company's Common Stock, the Company Shares can be transferred, sold, assigned, pledged, hypothecated, distributed or otherwise disposed of without the permission of the Company. In all events, the lock-up provisions will terminate six months after the Effective Date. PREFERRED STOCK The Company's Certificate of Incorporation authorizes the issuance of 20,000,000 shares of Preferred Stock, $.0001 par value per share, of which no shares were issued prior to this Offering. The Board of Directors is authorized to provide for the issuance of shares of Preferred Stock in series and, by filing a certificate pursuant to the applicable law of the State of Delaware, to establish from time to time the number of shares to be included in each such series, and to fix the designation, powers, preferences and rights of the shares of each such series and the qualifications, limitations or restrictions thereof without any further vote or action by the shareholders. Any shares of Preferred Stock so issued would have priority over the Common Stock with respect to dividend or liquidation rights. Any future issuance of Preferred Stock may have the effect of delaying, deferring or preventing a change in control of the Company without further action by the shareholders and may adversely affect the voting and other rights of the holders of Common Stock. At present, the Company has no plans to issue any Preferred Stock nor adopt any series, preferences or other classification of Preferred Stock. ADDITIONAL INFORMATION DESCRIBING STOCK The above descriptions concerning the Common and Preferred Stock of the Company do not purport to be complete. Reference is made to the Company's Certificate of Incorporation and By-Laws which are included in the registration statement of which this Prospectus is a part and which are available for inspection at the Company's offices. Reference is also made to the applicable statutes of the State of Delaware for a more complete description concerning rights and liabilities of shareholders. ADMISSION TO QUOTATION TO NASDAQ SMALLCAP MARKET OR NASD OTC BULLETIN BOARD To qualify for admission to quotation on the Nasdaq SmallCap Market, an equity security must, in relevant summary, (1) be registered under the Securities Exchange Act of 1934; (2) have at least three registered and active market makers, one of which may be a market maker entering a stabilizing bid; (3) for initial inclusion, be issued by a company with $4,000,000 in net tangible assets, or $50,000,0000 in market capitalization, or $750,000 in net income in two of the last three years (if operating history is less than one year than market capitalization must be at least $50,000,000); (4) have at a public float of at least 1,000,000 shares with a value of at least $5,000,000; (5) have minimum a bid price of $4.00 per share; and (6) have at least 300 beneficial shareholders. If a company's securities do not qualify for admission to quotation on the Nasdaq SmallCap Market they will trade over-the-counter until such future time, if any, at which the securities qualify for admission to quotation on the Nasdaq Stock Market and the Company then applies. The Company will apply for listing of the Shares on the NASD OTC Bulletin Board if it does not meet the requirements for admission to quotation on the Nasdaq SmallCap Market. The over-the-counter market differs from national and regional stock exchanges in that it (1) is not cited in a single location but operates through communication of bids, offers and confirmations between broker-dealers and (2) securities admitted to quotation are offered by one or more broker-dealers rather than the "specialist" common to stock exchanges. To qualify for listing on the NASD OTC Bulletin Board, an equity security must have one registered broker-dealer, known as the market maker, willing to list bid or sale quotations and to sponsor such a Company listing. TRADING OF SHARES There are no outstanding options, warrants to purchase, or securities convertible into, the shares of the Company. The Company has not agreed with any shareholders, to register their shares for sale, other than for this registration. The Company does not have any other public offerings in process or proposed. TRANSFER AGENT AND REGISTRAR The transfer agent for the Company's securities will be selected by the Company. REPORTS TO SHAREHOLDERS The Company will furnish to holders of the Shares annual reports containing audited financial statements examined and reported upon, and with an opinion expressed by, an independent certified public accountant. The Company may issue other unaudited interim reports to its shareholders as it deems appropriate. PLAN OF DISTRIBUTION THE OFFERING The Company is offering 450,000 Company Shares at an offering price of $20 per Company Share. The Company may, without liability, accept or reject subscriptions, in whole or in part. The Company is offering a minimum of 100,000 Company Shares ($2,000,000) and a maximum of 450,000 Company Shares ($9,000,000). Once funds from the sale of 450,000 Company Shares have been received, the Company will not accept any further purchasers and any funds tendered therefor will be returned. There can be no assurance that the Maximum Offering will be sold or that the Minimum Offering will be sold. MINIMUM OFFERING AND ESCROW ACCOUNT All funds received by the Company with respect to the sale of the first 100,000 Company Shares will be deposited in a special escrow account to be established by the Company at Wells Fargo Bank, N.A. If 100,000 Company Shares are not sold within one hundred eighty days (180) following the effective date of the registration statement of which this Prospectus is a part, the Offering will automatically terminate and all funds received from the sale of the Company Shares will be returned to the purchasers thereof without deductions and without interest. At the time that the 100,000 Company Shares have been sold (the Minimum Offering) prior to the 180-day period, the Company will release the funds from the escrow account for deposit into the working account of the Company. Although the Company will continue to sell the Offering to attempt to reach the Maximum Offering (450,000 Shares), such released funds will be used at that time by the Company as described herein. SEE "USE OF PROCEEDS". ARBITRARY DETERMINATION OF OFFERING PRICE The offering price of the Company Shares has been determined arbitrarily by the Company. Among the factors considered were the Company's potential operations, current financial conditions and financial requirements of the Company, estimates of the business potential and prospects of the Company, the market demand for telecommunication and Internet services particularly in the Far East and China, the economics of the industry in general, the general condition of the equities market, and other factors. LIMITED STATE REGISTRATION The Company anticipates that it will primarily sell the Company Shares outside the United States. The Company will qualify or register the sales of the Company Shares only in the states of New York, California, Washington, Florida, Illinois, Texas and Nevada. The Company will not accept subscriptions from investors resident in other states. SEE "RISK FACTORS--Limited State Offering" SALE OF THE COMPANY SHARES The Company anticipates that the majority of its Company Shares will be sold outside the United States. The Company Shares are being offered through the Company's officers and director and no sales commission will be paid to any officer or director of the Company but the Company will reimburse its officers and director for expenses incurred in connection with the offer and sale of the Company Shares. The officers and director of the Company are relying on Rule 3a4-1 of the Exchange Act as a "safe harbor" from the registration as a broker-dealer in connection with the offer and sales of the Company Shares. In order to rely on such "safe harbor" provisions provided by Rule 3a4-1, an officer or director must (1) not be subject to a statutory disqualification; (2) not be compensated in connection with such selling participation by payment of commissions or other remuneration based either directly or indirectly on such transactions; and (3) not be an associated person with a broker or dealer; and (4) (i) restrict participation to transactions involving offers and sale of the securities, and (ii) perform substantial duties for the issuer after the close of the offering not connected with transactions in securities, and has not been associated with a broker or dealer for the preceding 12 months, and does not participate in selling an offering of securities for any issuer more than once every 12 months, and (iii) restrict participation to written communications or responses to inquiries of potential purchasers. The officers and directors of the Company intend to comply with the guidelines enumerated in Rule 3a4-1. COMPANY USE OF A BROKER-DEALER The Company may locate a broker-dealer who may offer and sell the Company Shares on terms acceptable to the Company. If the Company determines to use a broker-dealer, such broker-dealer must be a member in good standing of the National Association of Securities Dealers, Inc. and registered, if required, to conduct sales in those states in which it would sell the Company Shares. The Company anticipates that it would not pay in excess of 10% as a sales commission for any sales of the Company Shares. If a broker-dealer were to sell the Company Shares, it is likely that such broker-dealer would be deemed to be an underwriter of the securities as defined in Section 2(11) of the Securities Act and the Company would be required to obtain a no-objection position from the National Association of Securities Dealers, Inc. regarding the underwriting and compensation terms entered into between the Company and such potential broker-dealer. In addition, the Company would be required to file a post-effective amendment to the registration statement of which this Prospectus is a part to disclose the name of such selling broker-dealer and the agreed underwriting and compensation terms. SALE OF THE SELLING SECURITYHOLDER SHARES The Company will receive the proceeds from the sale of the Company Shares. The Company will not receive any proceeds from the sale of the Selling Securityholders' Shares by the Selling Securityholders pursuant to this Prospectus. The Selling Securityholders' Shares may be sold to purchasers from time to time directly by and subject to the discretion of the Selling Securityholders. In the event that the Selling Securityholders offer their securities for sale, the Selling Securityholders may from time to time offer for sale their Selling Securityholder Shares through underwriters, dealers or agents, who may receive compensation in the form of underwriting discounts, concessions or commissions from the Selling Securityholders and/or the purchasers of the Shares for whom they may act as agents. Any underwriters, dealers or agents who participate in the distribution of the Selling Securityholders' Shares may be deemed to be "underwriters" under the Securities Act and any discounts, commissions or concessions received by any such underwriters, dealers or agents may be deemed to be underwriting discounts and commissions under the Securities Act. At the time a particular offer is made by or on the behalf of the Selling Securityholders, a Prospectus, including any necessary supplement thereto, will be distributed which will set forth the number of Shares being offered and the terms of the offering, including the name or names of any underwriters, dealers or agents, the purchase price paid by any underwriter for Shares purchased from the Selling Securityholders, any discounts, commissions and other items constituting compensation from the Selling Securityholders, any discounts, commissions or concessions allowed, reallowed or paid to dealers, and the proposed selling price to the public. Selling Securityholders' Shares may be sold from time to time in one or more transactions: (i) at an offering price that is fixed or that may vary from transaction to transaction depending upon the time of sale or (ii) at prices otherwise negotiated at the time of sale. Such prices will be determined by the Selling Securityholders or by agreement between the Selling Securityholders and any underwriters. Under applicable rules and regulations promulgated under the Exchange Act, any person engaged in a distribution of securities may not simultaneously bid for or purchase securities of the same class for a period of two business days prior to the commencement of such distribution. In addition and without limiting the foregoing, the Selling Securityholders will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, in connection with transactions in Shares during the effectiveness of the registration statement of which this Prospectus is a part. The Company will pay all of the expenses incident to the registration of the Shares (including registration pursuant to the securities laws of certain states) other than commissions, expenses, reimbursements and discounts of underwriters, dealers or agents, if any. LEGAL MATTERS LEGAL PROCEEDINGS The Company is not a party to any litigation and Management has no knowledge of any threatened or pending litigation against the Company. LEGAL OPINION Cassidy & Associates, Washington, D.C. has given its opinion as attorneys-at-law that the Shares, when sold pursuant to the terms hereof, will be fully paid and non-assessable. Excepting the above referenced legal opinion of Cassidy & Associates, persons making any decision to acquire or dispose of the Shares offered hereby are not entitled to, and should not, rely upon any activities of Cassidy & Associates in connection with the Company or this Offering. EXPERTS The financial statements in this Prospectus have been included in reliance upon the report of John P. MacLean, Certified Public Accountants, and upon the authority of such firm as expert in accounting and auditing. The Company's fiscal year end is September 30. AVAILABLE INFORMATION The Company has filed with the Securities and Exchange Commission (the "Commission") a Registration Statement on Form S-1 (the "Registration Statement") under the Securities Act with respect to the securities offered hereby. This Prospectus does not contain all the information contained in the Registration Statement. For further information regarding the Company and the securities offered hereby, reference is made to the Registration Statement, including all exhibits and schedules thereto, which may be inspected without charge at the public reference facilities of the Commission's Washington, D.C. office, 450 Fifth Street, N.W., Washington, D.C. 20549. Each statement contained in this Prospectus with respect to a document filed as an exhibit to the Registration Statement is qualified by reference to the exhibit for its complete terms and conditions. The Company will be subject to the informational requirements of the Exchange Act and in accordance therewith will file reports and other information with the Commission. Reports, proxy statements and other information filed by the Company can be inspected and copied on the Commission's home page on the World Wide Web at http://www.sec.gov or at the public reference facilities of the Commission, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, as well as the following Regional Offices: 7 World Trade Center, Suite 1300, New York, N.Y. 10048; and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois. 60661-2511. Such material can also be inspected at the New York, Boston, Midwest, Pacific and Philadelphia Stock Exchanges. Copies can be obtained from the Commission by mail at prescribed rates. Request should be directed to the Commission's Public Reference Section, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. The Company intends to furnish its stockholders with annual reports containing audited financial statements and such other reports as may be required by law. INDEX TO FINANCIAL STATEMENTS ASPAC COMMUNICATIONS, INC. (A Development Stage Company) FINANCIAL STATEMENTS with REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Report of Independent Certified Public Accountants F-1 Financial Statements: Assets F-2 Stockholders' Equity F-2 JOHN P. MACLEAN CERTIFIED PUBLIC ACCOUNTANT 15701 Alameda Drive Bowie, Maryland 20716 301/249-4900 FAX 301/249-9296 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Aspac Communications, Inc. I have audited the accompanying Balance Sheet of Aspac Communications, Inc. as of October 2, 1997. This financial statement is the responsibility of the Corporation's management. My responsibility is to express an opinion on this financial statement based on my audit. I conducted my audit in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion. In my opinion, the financial statement referred to above presents fairly, in all materials respects, the financial position of Aspac Communications, Inc. as of October 2, 1997, in conformity with generally accepted accounting principles. /s/ John P. MacLean, CPA, CFP October 6, 1997 ASPAC COMMUNICATIONS, INC. Balance Sheet October 2, 1997 ASSETS Cash $ 200 Total assets $ 200 Shareholder Equity Common Stock (200,000 shares outstanding, 100,000,000 shares authorized, $.0001 par value) $ 20 Additional Paid In Capital 180 Total Equity $ 200 See Auditor's Report ASPAC COMMUNICATIONS, INC. Notes to Financial Statement Summary of Significant Accounting Policies A summary of the significant accounting policies consistently applied in the preparation o fthe accompanying financial statement follows: (A) DESCRIPTION OF BUSINESS. The Company was organized for the purpose of engaging in any lawful business. The Company is in the development stage and operations have not commenced. The Company has selected the September 30 as its fiscal year. (B) COMMON STOCK ISSUED. The Company has authorized 100,000,000 shares of Common Stock having a par value of $.0001 per share and 20,000,000 shares of preferred stock having a par value of $.0001 per share. As of October 2, 1997, 200,000 shares of Common Stock had been issued and were outstanding. (C) As of October 2, 1997, no shareholders, officers, directors or other related parties had incurred costs on behalf of the Company. No dealer, salesman or any other person has been authorized to give any information or to make any representations other than those contained in this prospectus, and, if given or made, such information or representations may not be relied on as having been authorized by the Company or by any of the Underwriters. Neither the delivery of this Prospectus nor any sale made hereunder shall under any circumstances create an implication that there has been no change in the affairs of the Company since the date hereof. This Prospectus does not constitute an offer to sell, or solicitation of any offer to buy, by any person in any jurisdiction in which it is unlawful for any such person to make such offer or solicitation. Neither the delivery of this Prospectus nor any offer, solicitation or sale made hereunder, shall under any circumstances create any implication that the information herein is correct as of any time subsequent to the date of the Prospectus. ------------------------ TABLE OF CONTENTS Page Prospectus Summary The Company Use of Proceeds Dilution Risk Factors Business The Offering Management's Discussion and Analysis of Financial Condition and Results of Operations Management Security Ownership of Certain Beneficial Owners and Management Sales by Selling Securityholders Selling Securityholders Description of Securities Plan of Distribution Legal Matters Experts Available Information Index to Financial Statements Until 90 days after the release of the registered securities from the Escrow Account, all dealers effecting transactions in the registered securities, whether or not participating in this distribution, may be required to deliver a prospectus. This is in addition to the obligations of dealers to deliver a Prospectus when Acting as underwriters and with respect to their unsold allotments or subscriptions. ASPAC COMMUNICATIONS, INC. 450,000 Shares of Common Stock; 9,010,000 Shares of Common Stock to be Sold by the Holders Thereof ---------- PROSPECTUS ---------- December ____, 1997 ======================= PART II INFORMATION NOT REQUIRED IN THE PROSPECTUS ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION The following table sets forth the expenses in connection with this Registration Statement. All of such expenses are estimates, other than the filing fees payable to the Securities and Exchange Commission. Filing Fee - Securities and Exchange Commission $ 2,700 Fees and Expenses of Accountants 2,000 Fees and Expenses of Counsel 150,000 Blue Sky Fees and Expenses 1,000 Printing and Engraving Expenses 1,000 Miscellaneous Expenses 1,000 Total $ 157,700 (1) (1) The Company has obtained a loan from one of the shareholders of the Company for payment of these expenses which loan will be repaid from proceeds of the Offering. ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS The Company is incorporated in Delaware. Under Section 145 of the General Corporation Law of the State of Delaware, a Delaware corporation has the power, under specified circumstances, to indemnify its directors, officers, employees and agents in connection with actions, suits or proceedings brought against them by a third party or in the right of the corporation, by reason of the fact that they were or are such directors, officers, employees or agents, against expenses incurred in any action, suit or proceeding. The Certificate of Incorporation and the By-laws of the Company provide for indemnification of directors and officers to the fullest extent permitted by the General Corporation Law of the State of Delaware. The General Corporation Law of the State of Delaware provides that a certificate of incorporation may contain a provision eliminating the personal liability of a director to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director provided that such provision shall not eliminate or limit the liability of a director (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 (relating to liability for unauthorized acquisitions or redemptions of, or dividends on, capital stock) of the General Corporation Law of the State of Delaware, or (iv) for any transaction from which the director derived an improper personal benefit. The Company's Certificate of Incorporation contains such a provision. ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES As listed below, the Company issued shares of its Common Stock par value $.0001 per share to the following entities for the consideration as listed. These sales were not made within the United States or to United States citizens or residents. However, such sales were made in compliance with Regulation D of the Securities Act of 1933. Date Shareholder Number of Shares Consideration 11/1/97 Finhorn Enterprises Limited 55,100,000 $55,100 11/1/97 Serenadia Investment Limited 20,000,000 20,000 11/1/97 Gain Best International Limited 4,500,000 4,500 11/1/97 Global Bridge Profits Limited 4,000,000 4,000 11/1/97 Superior Gain Enterprises Limited 3,500,000 3,500 11/1/97 Crowned Eagle Worldwide, Ltd. 3,000,000 3,000 ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) Exhibits 3.1 Restated Certificate of Incorporation of the Company 3.2** By-Laws of the Company 4.1* Form of Common Stock Certificate 4.2* Lock-Up Agreement 5.1* Opinion of Cassidy & Associates 10.1 Lease Agreement 10.2 Employment agreement with Marc F. Mayeres 10.3* Promissory Note with Finhorn Enterprise Limited 24.1 Consent of Accountant 24.2* Consent of Cassidy & Associates (included in Exhibit 5) 27* Financial Data Schedule - --------------- * To be filed by Amendment. ** Already filed. (b) The following financial statement schedules are included in this Registration Statement. None. ITEM 17. UNDERTAKINGS. The undersigned registrant hereby undertakes: (a) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post- effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. (b) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission is that such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. (c) The undersigned registrant hereby undertakes that: (i) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. (ii) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, Aspac Communications, Inc. certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-1 and has duly caused this Amendment #1 to the Registration Statement on Form S-1 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Los Angeles, California on the 10th day of December, 1997. ASPAC COMMUNICATIONS, INC. By: /s/ Marc F. Mayeres Marc Mayeres President Pursuant to the requirements of the Securities Act of 1933, as amended, this Amendment #1 to the Registration Statement has been signed below by the following persons in the capacities and on the dates indicated. Signature Title Date /s/ Liancheng Ji Director December 10, 1997 Liancheng Ji EX-1 2 RESTATED CERTIFICATE OF INCORPORATION of ASPAC COMMUNICATIONS, INC. The original Certificate of Incorporation was filed on June 1, 1994. The Corporation was originally incorporated as TPG Management Corporation. This Restated Certificate of Incorporation has been duly adopted in accordance with Section 245 of the Delaware General Corporation Code and restates and integrates provisions of the Corporation's Certificate of Incorporation and does not further amend any such provisions. ARTICLE ONE Name The name of the Corporation is Aspac Communications, Inc. (the "Corporation"). ARTICLE TWO Duration The Corporation shall have perpetual existence. ARTICLE THREE Purpose The purpose for which this Corporation is organized is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. ARTICLE FOUR Shares Authorized Capital. The total number of shares of stock which the Corporation shall have authority to issue is 120,000,000 shares, consisting of 100,000,000 shares of Common Stock having a par value of $.0001 per share and 20,000,000 shares of Preferred Stock having a par value of $.0001 per share. The Board of Directors is authorized to provide for the issuance of the shares of Preferred Stock in series and, by filing a certificate pursuant to the applicable law of the State of Delaware, to establish from time to time the number of shares to be included in each such series, and to fix the designation, powers, preferences and rights of the shares of each such series and the qualifications, limitations or restrictions thereof. The authority of the Board of Directors with respect to each series of Preferred Stock shall include, but not be limited to, determination of the following: A. The number of shares constituting that series and the distinctive designation of that series; B. The dividend rate on the shares of that series, whether dividends shall be cumulative, and, if so, from which date or dates, and the relative rights of priority, if any, of payment of dividends on share of that series; C. Whether that series shall have voting rights, in addition to the voting rights provided by law, and, if so, the terms of such voting rights; D. Whether that series shall have conversion privileges, and, if so, the terms and conditions of such conversion, including provision for adjustment of the conversion rate in such events as the Board of Directors shall determine; E. Whether or not the shares of that series shall be redeemable, and, if so, the terms and conditions of such redemption, including the date or dates upon or after which they shall be redeemable, and the amount per share payable in case of redemption, which amount may vary under different conditions and at different redemption dates; F. Whether that series shall have a sinking fund for the redemption or purchase of shares of that series, and, if so, the terms and amount of such sinking fund; G. The rights of the shares of that series in the event of voluntary or involuntary liquidation, dissolution or winding up of the Corporation, and the relative rights of priority, if any, of payment of shares of that series; and H. Any other relative rights, preferences and limitations of that series. ARTICLE FIVE Commencement of Business The Corporation is authorized to commence business as soon as its certificate of incorporation has been filed. ARTICLE SIX Principal Office and Registered Agent The post office address of the initial registered office of the Corporation and the name of its initial registered agent and its business address is The Prentice Hall Corporation System, Inc. 1013 Centre Road Wilmington, Delaware 19805 The initial registered agent is a resident of the State of Delaware. ARTICLE SEVEN Incorporator James M. Cassidy, 1504 R Street, N.W., Washington, D.C. 20009. ARTICLE EIGHT Pre-Emptive Rights No Shareholder or other person shall have any pre-emptive rights whatsoever. ARTICLE NINE By-Laws The initial by-laws shall be adopted by the Shareholders or the Board of Directors. The power to alter, amend, or repeal the by-laws or adopt new by-laws is vested in the Board of directors, subject to repeal or change by action of the Shareholders. ARTICLE TEN Number of Votes Each share has one vote on each matter on which the share is entitled to vote. ARTICLE ELEVEN Majority Votes A majority vote of a quorum of Shareholders (consisting of the holders of a majority of the shares entitled to vote, represented in person or by proxy) is sufficient for any action which requires the vote or concurrence of Shareholders, unless otherwise required or permitted by law or the by-laws of the Corporation. ARTICLE TWELVE Non-Cumulative Voting Directors shall be elected by majority vote. Cumulative voting shall not be permitted. ARTICLE THIRTEEN Interested Directors, Officers and Security holders A. Validity. If Paragraph (B) is satisfied, no contract or other transaction between the Corporation and any of its directors, officers or Security holders, or any corporation or firm in which any of them are directly or indirectly interested, shall be invalid solely because of this relationship or because of the presence of the director, officer or security holder at the meeting of the Board of directors or committee authorizing the contract or transaction, or his participation or vote in the meeting or authorization. B. Disclosure, Approval, Fairness. Paragraph (A) shall apply only if: (1) The material facts of the relationship or interest of each such director, officer or security holder are known or disclosed: (a) to the Board of directors or the committee and it nevertheless authorizes or ratifies the contract or transaction by a majority of the directors present, each such interested director to be counted in determining whether a quorum is present but not in calculating the majority necessary to carry the vote; or (b) to the Shareholders and they nevertheless authorize or ratify the contract or transaction by a majority of the shares present, each such interested person to be counted for quorum and voting purposes; or (2) the contract or transaction is fair to the Corporation as of the time it is authorized or ratified by the Board of directors, the committee or the Shareholders. ARTICLE FOURTEEN Indemnification and Insurance A. Persons. The Corporation shall indemnify, to the extent provided in Paragraphs (B), (D) or (F): (1) any person who is or was director, officer, agent or employee of the Corporation, and (2) any person who serves or served at the Corporation's request as a director, officer, agent, employee, partner or trustee of another corporation or of a partnership, joint venture, trust or other enterprise. B. Extent--Derivative Suits. In case of a suit by or in the right of the Corporation against a person named in Paragraph (A) by reason of his holding a position named in Paragraph (A), the Corporation shall indemnify him, if he satisfies the standard in Paragraph (C), for expenses (including attorney's fees but excluding amounts paid in settlement) actually and reasonably incurred by him in connection with the defense or settlement of the suit. C. Standard--Derivative Suits. In case of a suit by or in the right of the Corporation, a person named in Paragraph (A) shall be indemnified only if: (1) he is successful on the merits or otherwise, or (2) he acted in good faith in the transaction which is the subject of the suit, and in a manner he reasonably believed to be in, or not opposed to, the best interests of the Corporation. However, he shall not be indemnified in respect of any claim, issue or matter as to which he has been adjudged liable for negligence or misconduct in the performance of his duty to the Corporation unless (and only to the extent that) the court in which the suit was brought shall determine, upon application, that despite the adjudication but in view of all the circumstances, he is fairly and reasonably entitled to indemnity for such expenses as the court shall deem proper. D. Extent--Nonderivative Suits. In case of a suit, action or proceeding (whether civil, criminal, administrative or investigative), other than a suit by or in the right of the Corporation against a person named in Paragraph (A) by reason of his holding a position named in Paragraph (A), the Corporation shall indemnify him, if he satisfies the standard in Paragraph (E), for amounts actually and reasonably incurred by him in connection with the defense or settlement of the suit as (1) expenses (including attorneys' fees), (2) amounts paid in settlement (3) judgments, and (4) fines. E. Standard--Nonderivative Suits. In case of a nonderivative suit, a person named in Paragraph (A) shall be indemnified only if: (1) he is successful on the merits or otherwise, or (2) he acted in good faith in the transaction which is the subject of the nonderivative suit, and in a manner he reasonably believed to be in, or not opposed to, the best interests of the Corporation and , with respect to any criminal action or proceeding, he had no reason to believe his conduct was unlawful. The termination of a nonderivative suit by judgement, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent shall not, of itself, create a presumption that the person failed to satisfy this Paragraph (E) (2). F. Determination That Standard Has Been Met. A determination that the standard of Paragraph c or (E) has been satisfied may be made by a court of law or equity or the determination may be made by: (1) a majority of the directors of the Corporation (whether or not a quorum) who were not parties to the action, suit or proceeding, or (2) independent legal counsel (appointed by a majority of the directors of the Corporation, whether or not a quorum, or elected by the Shareholders of the Corporation) in a written opinion, or (3) the Shareholders of the Corporation. G. Proration. Anyone making a determination under Paragraph (F) may determine that a person has met the standard as to some matters but not as to others, and may reasonably prorate amounts to be indemnified. H. Advance Payment. The Corporation may pay in advance any expenses (including attorney's fees) which may become subject to indemnification under paragraphs (A) - (G) if: (1) the Board of directors authorizes the specific payment and (2) the person receiving the payment undertakes in writing to repay unless it is ultimately determined that he is entitled to indemnification by the Corporation under Paragraphs (A) - (G). I. Nonexclusive. The indemnification provided by Paragraphs (A) - (G) shall not be exclusive of any other rights to which a person may be entitled by law or by by-law, agreement, vote of Shareholders or disinterested directors, or otherwise. J. Continuation. The indemnification and advance payment provided by Paragraphs (A) - (H) shall continue as to a person who has ceased to hold a position named in paragraph (A) and shall inure to his heirs, executors and administrators. K. Insurance. The Corporation may purchase and maintain insurance on behalf of any person who holds or who has held any position named in Paragraph (A) against any liability incurred by him in any such positions or arising out of this status as such, whether or not the Corporation would have power to indemnify him against such liability under Paragraphs (A) - (H). L. Reports. Indemnification payments, advance payments, and insurance purchases and payments made under Paragraphs (A) - (K) shall be reported in writing to the Shareholders of the Corporation with the next notice of annual meeting, or within six months, whichever is sooner. ARTICLE FIFTEEN Limitation On Director Liability A. Scope of Limitation. No person, by virtue of being or having been a director of the Corporation, shall have any personal liability for monetary damages to the Corporation or any of its Shareholders for any breach of fiduciary duty except as to the extent provided in Paragraph (B). B. Extent of Limitation. The limitation provided for in this Article shall not eliminate or limit the liability of a director to the Corporation or its Shareholders (I) for any breach of the director's duty of loyalty to the Corporation or its Shareholders (ii) for any acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law (iii) for any unlawful payment of dividends or unlawful stock purchases or redemptions in violation of Section 174 of the General Corporation Law of Delaware or (iv) for any transaction for which the director derived an improper personal benefit. C. Amendment of Article. Any changes in the General Corporation Law of Delaware increasing, decreasing, amending, changing or otherwise effecting the indemnification of directors, officers, agents, or employees of the Corporation shall be incorporated by reference in this Article as of the date of such changes without further action by the Corporation, its Board of directors, of Shareholders, it being the intention of this Article that directors, officers,agents and employees of the Corporation shall be indemnified to the maximum degree allowed by the General Corporation Law of the State of Delaware at all times. IN WITNESS WHEREOF, I have hereunto set my hand this 29th day of September, 1997. __________________________________ Incorporator EX-2 3 THIS LEASE IS NOT TO BE CONSTRUED AS AN OFFER AND IS NOT BINDING ON BARRISTER EXECUTIVE SUITES, INC. UNTIL IT IS SIGNED BY AN OFFICER OF BARRISTER EXECUTIVE SUITES, INC. LEASE AGREEMENT THIS LEASE is made on August 28, 1997 between Barrister Executive Suites, Inc., a California Corporation, (hereinafter referred to as "Lessor") and Aspac Communications, Inc. (hereinafter referred to as "Lessee"). Lessor has entered into a master lease for the floor (the "Suite") described below: Floor or Suite Number: 12TH FLOOR OR SUITE 1200 Name of Building: TWO CENTURY PLAZA Address: TWO CENTURY PARK EAST City and State: LOS ANGELES, CALIFORNIA 90067 This Lease is subordinate to the lease with the Building ("Master Lease"), dated October 9, 1992 (as amended). See Paragraph 10. Lessee desires to lease from Lessor a certain portion of the Suite for the purpose of conducting Lessee's business together with rights in common to the "common areas" of the Suite. In consideration of the covenants and promises each to the other made herein, the parties hereto agree as follows: 1. LEASED PREMISES. Lessor agrees to lease to Lessee and Lessee agrees to lease from Lessor portions of the Suite described below (the "Premises") and on the floor plan attached hereto as Exhibit A. In addition to the exclusive use of the Premises, Lessee shall have the non- exclusive right in common with Lessor's other lessees to use all common areas and facilities available in the Suite. Except as otherwise agreed to in writing, Lessee takes the Premises in an "as is" condition. (a) Office No(s). 24 (b) Desk Space No(s). N/A Lessee shall be prohibited from using or occupying any premises other than those premises designated in the Lease as the Premises. In the event that Lessee uses or occupies any space other than the Premises without Lessor's written consent, Lessee shall pay Lessor a sum designated by Lessor for the unauthorized use of said Premises. 2. TERM. Except as it may be modified by the applicable provisions of this Agreement, the term of this Lease shall be for a period of * year, commencing on September 1, 1997, and expiring on February 28, 1998, unless terminated sooner pursuant to paragraph 10.c of this Lease. If the term commences on a day other than the first of the month, the term shall expire on the last day of the month identified herein. In the event the Premises are not ready for occupancy on the commencement date, this Lease shall remain in full force and effect provided Lessor makes the Premises available for occupancy with forty-five (45) days of the scheduled commencement date. In such case, all rent shall be abated until Lessor makes the Premises available for occupancy. Lessor shall not be liable to Lessee for any loss or damage arising from any delays: Lessee's sole remedy shall be the right to cancel this Lease in the event Lessor fails to deliver possession of the Premises as set forth herein. Lessee is advised that any floor plans provided by Lessor are not to scale, the measurements are not always accurate, and the Premises are not always built exactly as shown on the floor plans. Either party may terminate this Lease at the expiration date set forth herein by given thirty (30) days advance written notice effective on the expiration date set forth on page one (1) of this Lease. If neither party sends written notice of termination to the other party thirty (30) days in advance of the expiration date, this Lease shall automatically become a month-to- month agreement requiring at least thirty (30) days advance written notice to terminate the Lease, effective the end of the month. If the Lease has expired and become a month-to-month agreement, or if the original term of the Lease is month-to-month , thirty (30) days advance written notice of termination is required, and any such termination shall only be effective the end of the month. For Example: If written notice of termination is received by either party by the first working day of the month, any such notice shall be effective at the end of that same month. If written notice of termination is received by either party after the first working day of the month, any such notice shall not be effective until the end of the following month. Lessor's rent increase notice is not to be construed as a termination notice. 3. RENT, Lessee agrees to pay Lessor as rental for the Premises the following monthly sums: $ 1,600.00 Office(s) $ -0- Desk Space(s) $ 1,600.00 Total monthly rent The above rent shall apply during the first six (6) full calendar months of the term of this Lease only. In addition to the above rent, Lessee shall be obligated to pay rent for any space within the Suite which Lessee occupies but which is not included in the Premises (the "unrented space"). Lessee's obligation for said unrented space shall be at the rate set forth in Lessor's written notice to Lessee concerning Lessee's occupancy of the unrented space. Lessees's obligation to pay rent for the unrented space shall be effective as of the day in which Lessor gives Lessee written notice of the rent to be paid for said space, and occupancy of the unrented space shall be subject to all terms and conditions of this Lease. The terms and conditions of this Lease are confidential, and Lessee agrees not to reveal said terms and conditions to any third parties. Lessee's disclosure of the terms and conditions of this Lease shall be cause for Lessor at Lessor's sole discretion to immediately terminate this Lease, or adjust Lessee's rental rates to Lessor's current asking price. Rent shall be payable on or before the first day, of each and every calen- dar month during the term hereof. If the term commences on a day other than the first day of the calendar month, rent shall be prorated based on the portion of the calendar month remaining. Lessee's first payment shall include one mont's full rent plus the security deposit. In addition to payment of the rent set forth herein, Lessee agrees to the following: from the payment made by Lessee, Lessor shall first apply such sums as are necessary to meet any of Lessee's outstanding obligations to Lessor. Said obligation may arise from matters such as services Lessor provides Lessee. Any remaining balance shall then be applied to Lessee's rent obligation in the amount set forth above. In the event such remaining balance is not sufficient to meet Lessee's rental obligation, Lessee shall pay upon written demand by Lessor any remaining sums due. Failure to pay said sums when so demanded shall constitute an event of default under this Lease. Any and all sums Lessee is obligated to pay under the terms of this Lease shall be construed as rent obligations in addition to the monthly rent set forth herein. Such additional rent shall include a service charge of Twenty-Five Dollars ($25.00) for each of Lessee's dishonored checks returned by the institution on which said checks are drawn. If at any time during the term of this Lease Lessee has tendered payment by check and Lessee's bank returns more than one such payment for any reason including insufficient funds, Lessor may, at its option, require all future payments be made by cashier's check. A Two Hundred Dollar ($200.00) handling charge for each Three Day Notice or Notice of Termination of Services which Lessor is required to serve upon Lessee due to the Lessee's failure to make timely rent payments or breach of any other term or condition of this Lease shall be assessed against Lessee to be paid with the monthly rent in the event more than one of either notice is served during the term of the Lease. Should Lessee not tender payment of the rent by the first (1st) day of each month, a late charge shall be assessed in an amount of five cents ($0.05) for each dollar ($1.00) so overdue for the purpose of defraying the expense incident to handling such delinquent payment. In addition, Lessor may discontinue any and all services provided Lessee, including, but not limited to, use of all common areas, e.g., library and conference room, telephone answering service, photocopying, word processing and legal research. Lessee hereby releases Lessor, its employees, agents, principals and contractors from any liability for damages which Lessee may suffer as a result of Lessor's suspension of services for the reasons stated herein. 4. SECURITY DEPOSIT. Upon execution of this Lease by Lessee, Lessee will pay a security deposit in an amount of $2,400.00 which is equal to one and one-half (1 1/2) times the monthly rent, as security for the performance by Lessee of its obligations under this Lease. The security deposit will not be interest-bearing to Lessee. Lessor will retain the security deposit during Lessee's tenancy. Lessee shall not apply the security deposit as rent. If Lessee remains in the Premises after the expiration date of this Lease, the security deposit will be retained by Lessor until Lessee moves out of the Premises. Lessor may claim and retain such amount of Lessee's security deposit as is reasonable necessary to remedy any defaults of the Lessee in the payment of rent or services, to repair damages to the Premises caused by the Lessee (normal wear and tear excepted) replacement of keys any other outstanding obligations to Lessor, and Lessor may, at its option and at any time during the term of this Lease, treat the security deposit as a partial payment applied toward Lessee's obligation for the Premises during Less's last month of occupancy of the same. The parties expressly agree that the security deposit is made for all of the aforesaid specific purposes. At all times Lessee shall maintain a security deposit with Lessor in an amount equal to one and one-half (1 1/2) times the monthly rent paid by Lessee for the Premises. Lessor shall bill Lessee for any such additional security deposit as required. 5. USE. Lessee shall use the Premises solely for TELECOMMUNICATIONS and for no other purpose. Lessee shall not do or permit anything to be done in or about the Suite and Premises which will in any way obstruct or interfere with the right of other tenants or occupants of the Suite, or injure or annoy them, or use or allow the Premises to be used for any improper, immoral, unlawful or objectionable purpose, nor shall Lessee cause, maintain or permit any nuisance in, on or about the Premises. Lessee shall not commit or suffer to be committed any waste in or upon the Premises. Lessee agrees that Lessee will not offer or use Premises to provide to others, services provided by Lessor to Lessor's other lessees. (I.E. Fax Machine, Copiers, etc.) 6. DEFAULTS AND REMEDIES. Lessee's Defaults. Any of the following occurrences shall constitute a "material" default by Lessee: (a) If Lessee fails to make any payment of rent, additional security deposit or any other payment required to be made by Lessee hereunder as and when due. (b) If Lessee withholds rent, deducts or offsets from rent or services due hereunder any amount for any reason. (c) If Lessee occupies, uses or stores any personal property in any unrented office in the Suite, or stores any personal property in any unrented office in the Suite, or stores any personal property in any common area. (d) If Lessee fails to observe or perform any of the provisions of this Lease other than those described in this Paragraph 6, where such failure shall continue for a period of ten (10) days after written notice thereof from Lessor to Lessee. If Lessee defaults under this Lease, (i) Lessor may terminate this Lease, (ii) Lessor may recover, in addition to any rent and other charges already due and payable, all rent for the entire unexpired balance of the stated term of this Lease and all costs incurred by Lessor to recover such sums from Lessee, including reasonable attorney's fees and/or Lessor may recover damages from Lessee. All rights and remedies of Lessor under this Lease shall be cumulative and in addition to any other rights or remedies available at law or in equity. No failure by Lessor to exercise any right or remedy or to insist upon strict performance following a default by Lessee shall constitute a waiver of such default by Lessor. 7. HIRING LESSOR'S EMPLOYEES. Lessor spends a great deal of time to hire and train employees for the operation of the Suite and other suites. Lessee derives the benefit of Lessor's experience in operating the Suite and of such hiring and training procedures. Lessee realizes the time and expense Lessor incurs to obtain personnel, and Lessee therefore agrees not to offer or accept for hire any of Lessor's employees at any time during the term or any extension or renewal of this Lease. "Lesser's employees" include Lessor's employees during the period of their employment with Lessor and for a period of sixty (60) days thereafter. Lessor and Lessee have considered the matter and have reasonably endeavored to estimate the actual damages to Lessor in the event Lessee breaches this provision and offers or accepts for hire any of Lessor's employees, and both realizing that it would be impractical or extremely difficult to fix the actual damage to Lessor resulting from such offer or hiring of Lessor's employees at any time during the term or any extension of renewal of this Lease, or within sixty (60) days after Lessee moves out of Lessor's offices, Lessee agrees to pay Lessor the sum of Two Thousand Dollars ($2,000.00) for the employees so hired to compensate Lessor for Lessor's loss in hiring and training said employee. Said sum represents the amount agreed upon by the parties as Lessor's liquidated damages. Notwithstanding the foregoing, Lessee may hire any of Lessor's employees for part-time work outside the hours of 9:00 a.m. to 6:00 p.m. normal business days. 8. INSURANCE. Lessor has blanket liability insurance coverage for the common areas in the Suite. Lessor's insurance does not cover the Lessee's Premises or Lessee's property in the Suite and Premises. Lessor shall not be liable to Lessee, or to any other person, for any damages on account of loss, damage, fire or theft of any personal or business property, including, but not limited to, property left with the floor receptionist or telephone operators, door lettering or other property purchased by, or belonging to, Lessee. Lessee shall indemnify and hold harmless Lessor and Lessor's landlord from and against any and all claims arising from Lessee's use of the Premises, or from the conduct of Lessee's business or from any activity, work or things done, permitted or suffered by Lessee in the Premises and shall further indemnify and hold harmless Lessor and Lessor's landlord from and against any and all claims arising from any breach or default in the performance under the terms of this Lease, or arising from any negligence of the Lessee or any of Lessee's agents, contractors, visitors, or employees, and from and against all costs, attorney's fees, expenses and liabilities incurred in the defense of any such claim or any action or proceeding brought thereon, and in case any action or proceeding be brought against Lessor and Lessor's landlord by reason of any such claim, Lessee upon notice from Lessor and Lessor's landlord shall defend the same at Lessee's expense by counsel satisfactory to Lessor and Lessor's landlord. Lessee, as a material part of the consideration to Lessor and Lessor's landlord, hereby assumes all risk of damage to property or injury to persons in the Premises and Lessee hereby waives all claims in respect thereof against Lessor and Lessor's landlord. 9. COMMON AREA. All areas not designated for exclusive use of tenants or available for lease to prospective tenants constitute the Suite's common areas. Lessee shall have the non-exclusive right of access and use of the common areas and facilities contained therein. Conference room(s) may be used on a reservation basis only subject to Lessor's rules and regulations governing use of the same. 10. MASTER LEASE. a. Lessee shall have no greater rights to the use and occupancy of the Suite and Premises than Lessor has with the Building under Lessor's Master Lease; in particular, Lessee's term under this agreement shall be no greater than Lessor's term under the Master Lease, and is subject to any early termination provisions contained therein. Lessee is bound to Lessor in the same manner as Lessor is bound to the Building with respect to all standard lease provisions (e.g., eminent domain, destruction of building, early termination, etc.), as well as the rules and regulations of the Building attached hereto as Exhibit C. b. Lessor hereby irrevocably assigns to Lessor's landlord all of Lessor's interest in all rentals and income arising from any sublease, license, concession or other consensual arrangement for possession of all or a portion of the suite entered into by Lessor, and Lessor's landlord may collect such rent and income and apply same towards Lessor's obligations under the Master Lease; provided, however, that until a default occurs in the performance of Lessor's obligations under the Master Lease (taking into account any applicable notice and cure periods), Lessor shall have the right to receive and collect such amounts. Lessor's landlord shall not, by reason of this assignments or the collection of rentals, be deemed liable to the Lessee, licensee, concessionaire, or third party for the performance of any of Lessor's obligations under the Lease, license, concession or other consensual arrangement for possession of all or a portion of the premises. Lessor hereby irrevocably authorizes and directs any Lessee, licensee, concessionaire, or other third party, upon receipt of a written notice from Lessor's landlord stating that an uncured default exists in the performance of Lessor's obligations under the Master Lease, to pay to Lessor's landlord all sums then and thereafter due under the Lease, license, concession or other consensual arrangement for possession of all or a portion of the premises. Lessor agrees that the Lessee, licensee, concessionaire, or other third party may rely on that notice without any duty of further inquiry and notwithstanding any notice or claim by Lessor to the contrary. c. At any time, Lessor may terminate this Lease upon sixty (60) days written notice to Lessee in the event that Lessor's interest in the Master Lease is terminated. In the event Lessor's interest in the Master Lease is terminated, Lessee shall, at the option of Lessor's landlord, attorn to Lessor's landlord or Lessor's landlord's designee, and recognize Lessor's landlord or Lessor's landlord's designee as Lessor under this Sublease. Lessee shall execute and deliver at any time when requested by Lessor's landlord an instrument to evidence such attornment. In no event, however, shall Lessor's landlord or Lessor's landlord's designee be liable for any previous act or omission by Lessor under this Sublease, or for the return of any advance rental payments or deposits under such agreements that have not been actually delivered to Lessor's landlord or Lessor's landlord's designee, nor shall Lessor's landlord or Lessor's landlord's designee be bound by any modification to any such agreements executed without Landlord's consent, or for any advance rental payments in excess of one month's rent. Lessee waives the provision of any law which may give Lessee any right of election to terminate this Lease or to surrender possession of the Premises by reason of the termination of the Master Lease. 11. SUBLETTING. Lessee shall sublet or assign the Premises or any part thereof for any period of time without the prior written consent of Lessor. Any subletting or assignment of this Lease which is not in compliance with the provisions of this paragraph shall be void and shall, at the option of Lessor, terminate this Lease. In such event, Lessee shall be liable for any expenses Lessor may incur in regaining possession of the Premises or so much of the Premises as Lessee may have subleased or assigned without Lessor's consent. The consent by Lessor to a subletting or assignment shall not be construed as releasing Lessee from any liability or obligation hereunder. If Lessee leases one or more desk spaces, no desk space may be occupied by more than one person. A desk space may be occupied by more than one person only if Lessee leases the entire room in which the desk is located and the desk space is not within a mini-suite. 12. NOTICE TO LESSOR. Any notice regarding a breach of this lease or termination thereof shall be in writing and sent by certified mail or personal delivery to Barrister Executive Suites, Inc., Attention: Lease Termination Department, 233 Wilshire Boulevard, Suite 500, Santa Monica, California 90401 (in the case of Lessor), or to Lessee c/o the address of the Premises (in the case of Lessee). Certified mail notice shall be deemed given twenty-four (24) hours after the date it is placed, postage prepaid, in a depository for United States mail. Personal delivery to the floor manager, receptionist or telephone operator does not constitute notice to either Lessor or Lessee. Either party may provide for a different address by notifying the other party of said change as provided for herein. Provided Lessee provides Lessor written notice of no less than thirty (30) days, any termination notice shall be effective the last day of the month. If Lessee occupies any portion of the terminated space beyond the last calendar day of the month, Lessee will be liable for rent for the full calendar month. If Lessee fails to vacate the premises for any reason after the termination date or purports to rescind the termination notice after Lessor has already leased Lessee's terminated space, Lessee will pay the rent the new tenant had agreed to pay, plus any and all resulting damages and losses incurred by Lessor because the new tenant cannot move into the space previously terminated by Lessee. 13. SUCCESSORS AND ASSIGNS. The covenants and conditions herein contained shall apply to and bind the heirs, successors, executors, administrators and assigns of the parties hereto, except as expressly provided to the contrary elsewhere herein. In the event of Lessee's death or disability, Lessee's legal representative may terminate this Lease upon thirty (30) days' written notice to Lessor (without penalty) and the security deposit will be refunded in full, subject to the provisions of this Lease. 14. SUBSTITUTION. At any time after the execution of this Lease, Lessor may substitute for the Leased Premises other premises elsewhere in the suite, or in another Barrister Suite (the "New Premises") in which event the New Premises shall be deemed to be the Leased Premises for all purposes hereunder, provided: (a) That New Premises shall be similar in area and appropriateness for Lessee's purposes in Lessor's reasonable determination; and (b) If Lessee is occupying the Leased Premises at the time of any such substitution, Lessor shall pay the reasonable expense of moving Lessee, its property and equipment to the New Premises and shall, at its sole cost, improve the New Premises with Lessor's standard improvements. 15. RULES AND REGULATIONS. Lessee shall observe at all times Lessor's Rules and Regulations, a copy of which is attached hereto as Exhibit D. 16. REPAIRS. The landlord which leased the Suite to the Lessor shall maintain the structural integrity of the Building shell and make all necessary repairs to the roof, exterior wall, exterior doors, windows, corridors and other common areas of the Building and the Project, and Landlord shall keep the building and the Project in a safe, clean and neat condition, and use reasonable efforts to keep all equipment used in common with other tenants such as elevators, plumbing, heating, air conditioning and similar equipment, in good condition and repair. Lessor is not liable to Lessee by reason of any defect, inadequacy or insufficiency in same. Lessee may not deduct or offset any amount from rent due herein because of any problem regarding construction, repairs or lack thereof. Lessor will coordinate any repair complaint of Lessee. However, any claim by Lessee with respect thereto shall be made solely against the Building and Lessor hereby assigns to Lessee, solely for the purpose of making and prosecuting any such claim, all rights which Lessor has under the Master Lease. Lessor will coordinate all repairs for dangerous conditions existing in the common areas within the Suite. Lessee is responsible for, and shall indemnify and hold Lessor harmless from and against, any damage to persons or property caused by Lessee, or Lessee's employees, agents, clients, guests or invites. Lessee is not responsible for repairing wall holes from normal-sized nails used to hang pictures. 17. RIGHT OF ENTRY. If Lessee has given notice to terminate or Lessee is in default of rental payments, Lessor's employees may show the Premises to prospective tenants between 9:00 a.m. and 6:00 p.m., Monday through Friday. If during the last month of the term Lessee shall have removed all or substantially all of Lessee's property, Lessor may immediately allow anyone else to occupy the premises without relieving Lessee of liability for rent for that period of time unless Lessor receives rental income from Lessee's space, in which event such payment will be credited against Lessee's rent obligation for the period of time the space is occupied by someone else. 18. UTILITIES, SERVICES, MAINTENANCE AND CONSTRUCTION. Under Lessor's Master lease, the Building provided utilities, services (janitorial, heat and air conditioning) and maintenance. Janitorial services include carpet vacuuming, but not cleaning. Heat and air conditioning is provided during generally recognized business days and hours. Lessee is allowed access to the Premises twenty-four (24) hours a day, seven (7) days a week, subject to the Building's rules requiring proper identification after normal business hours, Lessor is not liable to Lessee by reason of any failure to provide or the inadequacy of utilities, janitorial, heat or air conditioning services or maintenance. Lessor is not responsible for any negligence of the Building's agents, servants or employees. Lessee may not deduct or offset any amount from rent due herein because of any problem regarding utilities, heat, air conditioning, janitorial services, maintenance services or defective construction of Premises. Upon request by Lessee, Lessor will write the Building regarding any complaint by Lessee regarding utilities, heat, air conditioning, janitorial services, maintenance or construction; however, any claim by Lessee with respect thereto shall be made by Lessee directly to the Building, and Lessor hereby assigns to Lessee, solely for the purpose of making and prosecuting any such claim, all rights which Lessor has against the Building under the Master Lease. Lessor is responsible for maintaining the common areas with the Suite, however, Lessor is not responsible for maintaining, repairing or cleaning the floor covering, wall covering or drapes/window blinds within Lessee's Premises, other than the normal janitorial service provided by the Building. Non-recurring operating and capital improvements may be passed on to the Lessee. 19. ATTORNEY'S FEES. In the event legal proceedings to regain possession of the Premises or to collect moneys owed are instituted because of Lessee's failure to pay rent, security deposit, cost of repair of the Premises or to cure any breach of this Lease by Lessee, the prevailing party shall be entitled to recover as an element of his cost of suit, and not as damages, reasonable attorney's fees to be fixed by the court. The "prevailing party" shall be the party who is entitled to recover his costs of suit, whether or not the suit proceeds to final judgement. The party not entitled to recover his costs shall not recover attorney's fees. No sum for attorney's fees shall be counted in calculating the amount of a judgment for purposes of determining whether a party is entitled to recover his costs of attorney's fees. 20. ENTIRE AGREEMENT, MERGER AND WAIVER. This Lease Agreement supersedes and cancels any and all previous negotiations, arrangements. offers, brochures, agreements or understandings, if any, between the parties hereto. This Lease Agreement expresses and contains the entire agreement of the parties hereto and there are no expressed or implied representations, warranties or agreements between them, except as herein contained. This Lease Agreement may not be modified, amended or supplemented except by a writing signed by both Lessor and Lessee. No consent given or waiver made by Lessor of any breach by Lessee of any provision of this Lease Agreement shall operate or be construed in any manner as a waiver of any subsequent breach of the same or of any other provision. ASPAC COMMUNICATIONS, INC. BARRISTER EXECUTIVE SUITES, INC. LESSEE LESSOR /s/ Ming Zhang MING ZHANG, SECRETARY DATE: 8-28-97 DATE: 9-9-97 LEASE AGREEMENT ADDENDUM The parties to the attached Lease hereby agree that the Lease shall be amended or supplemented in the following respects. (All terms defined in the Lease shall have the same meanings when used in this Addendum.) 1. Section 3: The last sentence of the third paragraph shall be amended to read as follows: Lessee's first payment shall include one month's full rent plus the security deposit and a set-up fee of $150.00 2. Section 7: In the fifth sentence, "the sum of Two Thousand Dollars ($2,000.00)" shall be deleted and replaced with "the sum of Five Thousand Dollars ($5,000.00)." The last sentence of the paragraph shall be deleted entirely. 3. First Signature Page: On the first signature page of the Lease, the following section shall be added: 21. CONFLICT OF INTEREST. Lessee agrees that conflict of interest would be created if Lessee were to represent or act as Legal counsel for the employees, officers, vendors, contractors, landlords and/or tenants of Lessor. Therefore, so long as Lessee is a tenant of Lessor, Lessee shall be prohibited from representing Lessor's employees, officers, vendors, contractors, landlords and/or tenants in any legal action lawsuit which involves Lessor, or Lessor's Managing Agent (if applicable). Failure to comply with this provision shall constitute an event of default under the Lease and shall be cause for Lessor to terminate this Lease. 4. Section 3, Exhibit D: The last sentence shall be deleted and replaced with the following: The set-up fee described on page 2 of the Lease shall include one Lobby Directory Listing and (if applicable) one Parking-Level Directory Listing. Lessee shall pay the building's prevailing charge for any additional Directory Listings. 5. Section 4, Exhibit D: The following shall be inserted after the first sentence of the paragraph. The set-up fee described on page 2 of the Lease shall include on standard door sign. If Lessee requires additional door signs, Lessee shall pay Lessor for same at Lessor's prevailing rate. 6. Section 6, Exhibit D: The following shall be added to the end of the paragraph: Upon termination of the Lease, whether upon expiration of the term or sooner, Lessee agrees to pay Lessor One Hundred Dollars ($100.00) per leased office and Fifty Dollars ($50.00) per leased desk space to cover painting and cleaning costs for each such space. The applicable amounts for such painting and cleaning costs shall be deducted from Lessee's security deposit should Lessee fail to pay Lessor for same upon lease termination. ACKNOWLEDGED AND AGREED TO: LESSEE LESSOR ASPAC COMMUNICATIONS, INC. BARRISTER EXECUTIVE SUITES, INC. /s/ Ming Zhang MING ZHANG, SECRETARY DATE: 8-28-97 DATE: 9-9-97 EX-4 4 JOHN P. MACLEAN CERTIFIED PUBLIC ACCOUNTANT 15701 ALAMEDA DRIVE BOWIE, MARYLAND 20716-1312 301/249-4900 CONSENT OF CERTIFIED PUBLIC ACCOUNTANT I hereby consent to the use in Amendment No. 1 to the Registration Statement on Form S-1 of my report dated October 2, 1997, relating to the audited financial statements of Aspac Communications, Inc. and the reference to my firm under the caption "experts" in the Prospectus. /s/ John P. MacLean December 9, 1997 EX-4 5 EMPLOYMENT AGREEMENT This Employment Agreement dated as of the 6th day of November 1997, between ASPAC Communications, Inc., a California corporation ("Employer"), and Marc Mayeres ("Executive"). WITNESSETH: 1. TERM. Employer hereby employs Executive and Executive hereby accepts employment on the terms and conditions hereinafter set forth. Subject to the provisions of Section 7 hereof, the term of this Agreement shall be of six (6) months, commencing on the date that the company is approved for public trading by SEC or ninety (90) days after signing this Agreement whichever comes first (the "Commencing Date"). 2. DUTIES. Executive agrees to serve Employer as Executive President and in such capacity Executive agrees to render his services to the best of his ability. Executive will report to the Chairman of the Board of the Company. During the term of this Agreement, Executive will devote his full time and attention to, and use his best efforts to advance, the business and welfare of Employer subject to the direction and control of the Board of Directors. 3. CONFIDENTIAL INFORMATION AND COVENANT NOT TO COMPETE. (a) Executive hereby agrees that, during the term of this Agreement and thereafter, he will not disclose to any person, or otherwise use or exploit any of the proprietary or confidential information or knowledge, including without limitation, trade secrets, processes, records of research, proposals, reports, methods, processes, techniques, computer software or programming, or budgets or other financial information, regarding Employer, its business, properties or affairs obtained by him at any time prior to or subsequent to the execution of this Agreement. (b)Upon termination of employment Executive will deliver to Employer all processes, records of research, proposals, reports, memoranda, computer software and programming, budgets and other financial information, and other materials or records or writings of any other type (including any copies thereof) made, used or obtained by Executive in connection with his employment by Employer. (c) During the term of this Agreement, Executive agrees that he will: (i) neither authorize his name to be used by, (ii) nor engage in or carry on, directly or indirectly, for himself as a member of a partnership or as a stock- holder (other than as a stockholder of less than five percent (5%) of the issued and outstanding stock of a publicly held corporation having assets in excess of $10,000,000), investor, officer, or director of a corporation (other than Employer, or any parent, subsidiary, affiliate or successor of Employer), or as an employee, agent, associate, or consultant of any person, partnership, corporation or other business entity, in competition with any business carried on, directly or indirectly, by Employer prior to the date hereof or hereafter conducted, directly or indirectly, by Employer during the term of this Agreement, in any country where business is then carried on or conducted by Employer. (d) Executive agrees that the remedy at law for any breach by him or any of the covenants and agreements set forth in this Section 3 will inadequate and that in the event of any such breach, Employer may, in addition to the other remedies which may be available to it at law, obtain injunctive relief prohibiting him (together with all those persons associated with him) from the breach of such covenants and agreements. (e)The parties hereto intend that the covenants and agreements contained in this Section 3 shall be deemed to include a series of separate covenants and agreements. If in any judicial proceeding a court shall refuse to enforce all of the separate covenants deemed included in such action, then such unenforce- able covenants shall be deemed eliminated from the provisions hereof for the purposes of such proceeding to the extent necessary to permit the remaining separate covenants to be enforced in such proceeding. 4. COMPENSATION. 4.1 Salary. Under this Agreement, Executive will be paid Seven Thousand Dollars ($7,000.00) per month, from which Three Thousand Five Hundred Dollars ($3,500.00) will be payable monthly subject to income tax withholdings and other payroll deductions as customary in respect of Employer's salaried employees in general, and the remaining Three Thousand Five Hundred Dollars ($3,500.00) will be accrued and deferred until the Employer completes the first offering. 4.2 Signing Bonus. Upon execution of this Agreement, Executive shall receive a signing bonus of five-thousand dollars, ($5,000.00). In consideration for such signing bonus, Executive shall, at no charge to Employer, provide consulting services or work part-time for the employer up to the Commencing Date or sixty (60) days from signing of this Agreement, whichever comes first. If further consulting services are requested by Employer after sixty (60) days from signing of this Agreement and before the Commencing Date, Executive shall be paid Two Thousand Dollars ($2,000.00) per month for such services. Performance of said consult- ing services shall be premised upon reasonable notice of the need for such services, and shall not exceed twenty (20) hours per week. 4.3 Medical Insurance. During the term of this Agreement Employer shall furnish Executive with the same medical and hospital insurance furnished to other employees of Employer. 4.4 Continuing Employment. If both Employer and Executive wish to continue the employment at the end of this Agreement, both party shall sign a new contract with which Executive shall be paid $100,000.00 annually with the same vacation, bonus, medical insurance, stock options and other benefits provided to other executives of the Employer. 5. EXPENSES. Employer will pay or reimburse Executive for such reasonable travel, entertain- ment, or other expenses as he may incur at the request of Employer during the term of this Agreement in connection with the performance of his duties hereunder. Executive shall furnish Employer with such evidence that such expenses were incurred as Employer may from time to time reasonably require or request. 6. DEATH OR TOTAL DISABILITY OF EXECUTIVE. If Executive dies, or becomes totally disabled (for a period of more than six (6) consecutive weeks), during the term of this Agreement, Executive's employment under this Agreement shall automatically terminate and all of Executive's benefits and all payments to Executive under this Agreement shall immediately terminate. 7. TERMINATION FOR CAUSE. Executive's employment under this Agreement may be terminated by Employer for "good cause." The term "good cause" is defined as any one or more of the following occurrences: (a)Executive's breach of any of the covenants contained in Section 3 of this Agreement; (b)Executive's conviction by, or entry of a plea of guilty or nolo contendere in, a court of competent and final jurisdiction for any crime involving moral turpitude or punishable by imprisonment in the jurisdiction involved; (c)Executive's commission of an act of fraud, whether prior to or subsequent to the date hereof upon Employer; (d)Executive's continuing failure or refusal to perform his duties as required by this Agreement; (e)Gross negligence, insubordination, material violation by Executive of any duty of loyalty to Employer or any other material misconduct on the part of Executive; or (f)Executive's commission of any act which is detrimental to Employer's business or goodwill. 8. MISCELLANEOUS. 8.1 Modification and Waiver of Breach. No waiver or modification of this Agreement shall be binding unless it is in writing signed by the parties hereto. No waiver of a breach hereof shall be deemed to constitute a waiver of a future breach, whether of a similar of dissimilar nature. 8.2 Complete Agreement. This Agreement contains the entire agreement between the parties hereto with respect to the transactions contemplated by this Agreement and supersedes all previous oral and written and all contemporaneous oral negotiations, commit- ments, writings, and understandings. 8.3 Legal Fees. If any legal action, arbitration or other proceeding is brought for the enforce- ment of this Agreement, or because of any alleged dispute, breach, default or misrepresentation in connection with this Agreement, the successful or prevailing party shall be entitled to recover reasonable attorneys fees and other costs it incurred in that action or proceeding, in addition to any other relief to which it may be entitled. 8.4 Assignment. This Agreement may not be assigned in any manner whatsoever. IN WITNESS WHEROF: the undersigned have executed this Agreement on the day and year first above written. EXECUTIVE: EMPLOYER: ASPAC COMMUNICATIONS, INC. /s/ Marc Mayeres /s/ Amy Ming Zhang Secretary Address of Executive: 30902 Clubhouse Dr. #44F Laguana Niguel, CA 92677 -----END PRIVACY-ENHANCED MESSAGE-----