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SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
__ Annual report under section 13 or 15(d)
of the Securities Exchange Act of 1934 [Fee
Required] for the fiscal year ended June 30,
1996.
X Transition report under section 13 or
15(d) of the Securities Exchange Act of
1934 [No Fee Required] for the transition
period from January 1, 1996 to June 30,
1996.
Commission file number: 33-27707
TENGTU INTERNATIONAL
CORP.
(Name of small business
issuer in its charter)
Delaware
(State or other jurisdiction of incorporation)
(I.R.S. Employer Identification Number):
77-0407366
19105 36th Avenue, Suite 207
Linwood, Washington 98037
(Address of principal executive offices) (Zip
Code)
Issuer's telephone number: (604)685-3234
Securities to be registered under Section
12(b) of the Act:
Not Applicable
Securities to be registered under Section
12(g) of the Act: Not Applicable
Check whether the issuer (1) filed all
reports required to be filed by
Section 13 or 15(d) of the Securities
Exchange Act during the past 12
months (or for such shorter period
that the registrant was required to
file such reports), and (2) has been
subject to such filing requirements
for the past 90 days.
X - Yes __ No
Check if there is no disclosure of
delinquent filers in response to Item
405 of Regulation S-B contained in
this form, and no disclosure will be
contained, to the best of registrant's
knowledge, in definitive proxy or
information statements incorporated
by reference in Part III of this Form
10-KSB or any amendment to this
Form 10-KSB. X - Yes ___ No
State Issuer's revenues for its most recent
fiscal year: $0.00
State the aggregate market value of the
voting stock held by non-affiliates computed
by reference to the price at which the stock
was sold, or the average bid and asked
prices of such stock, as of a specified date
within the past 60 days: Aggregate market
value of voting stock held by non-affiliates
was $0.00 (NO PUBLISHED QUOTATION) as of June
30, 1996, based upon the average of the bid
and asked prices as of such date, and a total
of 9,992,750 shares held by non-affiliates.
(See definition of affiliate in Rule 12b-2 of
the Exchange Act.)
Note: If determining whether a person is an
affiliate will involve an unreasonable effort
and expense, the issuer may calculate the
aggregate market value of the common
equity held by non-affiliates on the basis of
reasonable assumptions, if the assumptions
are stated.
(Issuers involved in bankruptcy
proceedings during the past five
years) Check whether the issuer has
filed all documents and reports
required to be filed by Section 12,
13 or 15(d) of the Exchange Act
after the distribution of securities
under a plan confirmed by a court.
__Yes __ No
(Applicable only to corporate
registrants) State the number of
shares outstanding of each of the
issuer's classes of common equity, as
of the latest practicable date:
15,377,750 shares outstanding as of
June 30, 1996.
Documents incorporated by
reference. If the following
documents are incorporated by
reference, briefly describe them and
identify the part of the Form 10-KSB
(e.g., Part I, Part II, etc.) into which
the document is incorporated: (1)
any annual report to security holders;
(2) any proxy or information
statement; and (3) any prospectus
filed pursuant to Rule 424(b) or (c)
of the Securities Act of 1933
("Securities Act"). The listed
documents should be clearly
described for identification purposes
(e.g., annual report to security
holders for fiscal year ended
December 24, 1990).
Transitional Small Business Disclosure
Format (Check one):
Yes X No__
Part I
DESCRIPTION OF BUSINESS.
Background Information on Tengtu International
Corp.
The corporation now known as Tengtu
International Corp. (the "Company") was
incorporated on May 6, 1988, in the State of
Delaware, under the name of Galway Capital
Corporation. The Company was formed as a
development stage enterprise for the purpose of
seeking potential business ventures. The Company
ceased operations during fiscal year 1990 - 1991,
and was inactive until May, 1996. On August 20,
1993, the Company changed its name to Tower
Broadcast, Inc.
On March 20, 1996, the Company, under
the name Tower Broadcast, Inc., was cleared by the
National Association of Securities Dealers for an
unpriced quotation on the over-the-counter
electronic bulletin board. The Company sought
such clearance because successful negotiation of one
or more acquisition or joint-venture opportunities
seemed imminent and management foresaw a
resultant need to raise capital.
On May 28, 1996, the Company changed its
name to the present name, Tengtu International
Corp. This name change was accomplished to
reflect the Company's current intended business
direction and its likely future affiliation with
certain Chinese firms in the Chinese educational
software industry.
The Business of Tengtu International Corp.
On June 30, 1996, the Company, through
its wholly owned Barbadian subsidiary, Tengtu
Enterprises Limited (the "Subsidiary"), became a
joint venture partner in a People's Republic of
China ("PRC") chartered corporation known as
"Beijing Tengtu United Electronics Development
Co., Ltd." ("Tengtu United"). The Company
became Tengtu United's partner when BlueLake
Industries, Ltd. ("BlueLake"), a Washington State
corporation, assigned its joint venture position
with Tengtu United to the Company's Subsidiary.
The Company's Joint-Venture Partner
Tengtu United is positioned as a producer
and distributor of Chinese educational software.
The PRC, on June 12, 1995, approved the formation
of Tengtu United as a sino foreign joint venture
company that would take over the operations of
Beijing Tengtu Culture & Educational Electronics
Development Co., Ltd. ("Tengtu China"). Tengtu
China is a PRC state company controlled by three
other PRC state companies: Legend Computer Group,
Taiji Computer Corporation, and Great Wall Computer
Group. These companies, in turn, are controlled
either by the Chinese Academy of Science or the
Ministry of Electronics.
Tengtu China was formed by the PRC to
foster the production and distribution of Chinese
educational software to the Chinese elementary,
junior, and middle school systems. Tengtu United
works exclusively with The Peoples Education Press
to produce and distribute educational software to
the elementary, junior and middle schools in China.
The Peoples Education Press is the exclusive producer
and distributor of text material in China. Since
its inception, Tengtu China has produced over 120
educational software titles which are distributed
to Chinese schools and also to the Chinese home
market.
Tengtu United was approved by the PRC to
take over the business of Tengtu China and to
access western capital and technology sources. At
the same time the PRC approved Tengtu United, it
also approved BlueLake as a foreign investor
entitled to invest up to twelve million dollars U.S.
(U.S. $12,000,000) in exchange for a 49% interest
in the profits of Tengtu United. BlueLake has, by
agreement dated June 30, 1996, assigned its interest
to the Company's Subsidiary, Tengtu Enterprises
Limited. This assignment is contingent upon the
Company's ability to assume BlueLake's obligations
to Tengtu United, including the obligation to
provide twelve million dollars U.S. (U.S.
$12,000,000) to Tengtu United by July 30, 1997. In
exchange for the assignment, BlueLake will receive
two million fully paid and non assessable shares of
the Company's stock and one hundred thousand
dollars U.S. (U.S. $100,000).
The Company's Role in the Joint-Venture
Assuming completion of the joint venture
agreement, the Company, through its Subsidiary,
will be engaged as the joint venture partner of
Tengtu United. The Company would then hold a
49% interest in the profits of Tengtu United. The
Company's activities would next focus on the
provision of key management personnel for Tengtu
United, raising further capital for Tengtu United,
and also establishing a Technology Resource Center
in North America that will work with western
companies wishing to establish business
relationships with Tengtu United.
Business Factors
The following factors may affect the
Company's business: PRC regulation of intellectual
property, software and state licensing of the same;
PRC regulation of Chinese partnerships with foreign
companies; software piracy; and unanticipated
technological changes rendering current software
formats obsolete.
Plan of Operation
The Company has the following plan of
operation for the next twelve months: to ensure
that the Subsidiary fulfills all of its obligations
under the joint venture agreement with Tengtu
United, including the provision of twelve million
dollars U.S. (U.S. $12,000,000) before July 30,
1997.
The Company also intends to explore other
opportunities available to it through its affiliation
with Tengtu United, including: assisting Tengtu
United as the initial PRC state licensed electronic
publisher and foreign electronic publishing gateway
into China; assisting Tengtu United in its work with
"China 5000", a state organization charged with the
funding, production, and distribution of cartoons
and features based on China's 5,000 year history
and culture; assisting Tengtu United in its activities
as one of four Chinese company's mandated by the
PRC to provide financing, production support, and
distribution channels for a series of general
entertainment cartoons for broadcast on Chinese
television; and assisting Tengtu United with the
distribution, throughout China, of selected western
film libraries oriented towards Chinese youth.
DESCRIPTION OF PROPERTY.
The Company has no significant physical
properties.
DIRECTORS, EXECUTIVE OFFICERS AND
SIGNIFICANT EMPLOYEES.
The current Directors and Officers of the Company
are:
Pak Cheung, Chairman of the Board, President, and
C.E.O. During the past five years, Mr. Cheung
has served and continues to serve as President of
BlueLake Industries, Ltd., Seattle, Washington, and
Comadex Industries, Ltd. Vancouver, Canada.
Both companies are computer technology and
software firms. Age: 47
Jing Lian, Director and Vice-President. Vice-
President of BlueLake Industries, Ltd., Seattle,
Washington from February 1992 - August 1996.
Bluelake is a computer software and technology
firm. Age: 45
Stephen Dadson, Director and Secretary.
Businessman and CEO of New Pacific Sino
Investments Limited, Vancouver, Canada. Mr.
Dadson has also served in the following capacities
in the following companies: Serra Investments,
Ltd., Vancouver, Canada, Director/Secretary (July
1974 - June 1995); Disc Enterprises, Ltd.,
Vancouver, Canada, Director (January 1983 - June
1995); Fountain Fresh Canada, Vancouver, Canada,
Director (January 1994 - June 1995); Excel
International, Inc., Ottoman, Canada, Director
(May 1995 - present); Pollution Control
International, Phoenix, Arizona, Director (May
1993 - present); Sel-Drum International, Inc., a
publicly traded company, Toronto, Canada,
Director/Secretary (May 1995 - present); AGX
Resources, Inc., Vancouver, Canada,
Directory/Secretary (February 1994 - present); and,
Multi Corp., Calgary, Canada, Director (June 1996
- - present). Age: 52
Francis Fox, Director. Former Solicitor General
for Canada and now counsel with Martineau Walker
Advocates, Montreal, Quebec. Age: 57
John Donald Watt, Director. Businessman and
former Director General of Federal Department of
Communications, Hull Quebec, Canada. Mr. Watt
served as President of the Kerr-Watt Group,
Ottawa, Canada, from October 1990 to October
1992. Mr. Watt has been President of John D.
Watt & Associates, Ottawa, Canada, from
November 1992 to the present. Mr. Watt has also
served as a director for Law Protection Benefits,
Canada, from December 1994 to the present.
Age: 51
Gordon Campbell Reid, Director. Businessman and
Director of Canadian Tire, Ottawa, Canada.
During the past five years, Mr. Reid has served as
President of both Gordon C. Reid, Ltd. and
GenCon Investments, Ltd. Age: 58
Nan Hai, Director. President of Taiji Computer
Company, Beijing, Peoples Republic of China.
Taiji Computer Company is a computer technology
company. Age: 49
There are no persons nominated to become
future directors of the Company.
There are no persons chosen to become Executive
Officers not currently serving as such.
There currently are no employees aside from the
Executive Officers listed above.
REMUNERATION OF DIRECTORS AND
OFFICERS
(a) As of June 30, 1996, no directors or officers
had received compensation for their efforts.
Name of Individual Capacity Aggregate
or identity of in which remuneration
group remuneration
was received
Directors Directors 0
Officers Officers 0
(b) There currently are no plans or proposals for
future remunerations to Directors and Officers of
the Company.
SECURITY OWNERSHIP OF MANAGEMENT
AND CERTAIN SECURITYHOLDERS.
TABLE 1 -- OFFICERS AND DIRECTORS
COMMON STOCK
Name and Address Shares Held Percent
of Class
Pak Cheung 2,000,000 13%
7089 Frederick Ave.
Burnaby, BC
Canada V5J 3X8
Jing Lian 2,000,000 13%
3806 169th St.
Linwood, WA 98037
Stephen Dadson 250,000 1.6%
2988 W. 42nd St.
Vancouver, BC
Canada
John Watt 400,000 2.6%
335 Nepean St.
Ontario, Ottawa
Canada
Francis Fox 185,000 1.2%
90 Berlioz'
Apt. 1005
Nuns Island, Quebec
Canada H3B 1N1
Gordon Reid 550,000 3.6%
29 Riverbrook Rd.
Nepean, Ontario
Canada K2H7W7
Holdings of Officers
and Directors as
a Group 5,385,000 35%
NOTE: DOES NOT INCLUDE WARRANTS TO
PURCHASE ADDITIONAL SHARES AS
SET FORTH IN THE WARRANT TABLE BELOW.
TABLE 2 - SHAREHOLDERS OWNING MORE THAN
10% OF ANY CLASS:
Pak Cheung 2,000,000 13%
7089 Frederick Ave.
Burnaby, BC
Canada V5J 3X8
Jing Lian 2,000,000 13%
3806 169th St.
Lynnwood, WA 98037
Geomat Holdings,
Inc. 1,940,000 12%
Charlotte House
PON 4825
Nassau NP, Bahamas
NOTE: DOES NOT INCLUDE WARRANTS TO PURCHASE
ADDITIONAL SHARES AS SET FORTH IN THE WARRANT
TABLE BELOW.
TABLE 3 - SHAREHOLDERS OWNING MORE THAN 10% OF
ANY CLASS IF ALL OUTSTANDING WARRANTS
WERE EXERCISED:
Table 2 above shows which shareholders currently
own ten percent (10%) or more of the Company's issued
and outstanding shares. The Company currently has
warrants outstanding allowing for the purchase of
8,750,000 shares of the Company's Common Stock. SEE
TABLE 4 BELOW. The following table shows which
shareholders would own 10% or more of the Company
ASSUMING ALL OUTSTANDING WARRANTS ARE EXERCISED:
Geomat Holdings, Ltd. 3,395,000 14%
Charlotte House
PON 4825
Nassau NP, Bahamas
Jing Lian 2,675,000 11%
3806 169th St.
Lynnwood, WA 98037
Pak Cheung 2,825,000 11.7%
7089 Frederick Ave.
Burnaby, BC
Canada V5J 3X8
574186 Alberta Ltd. 2,775,000 13.6%
TABLE 4 -- OUTSTANDING WARRANTS
Shares of Common
Stock Subject to
Outstanding
Name of Holder Warrants Exercise Price Expiration Date
Jing Lian 675,000 $1.00 7/30/98
574186 Alberta,
Ltd. 2,000,000 $1.00 7/30/97
Steve Dadson 187,500 $1.00 7/30/98
Kensington
Enterprises, Ltd. 783,750 $1.00 7/30/98
Pak Cheung 825,000 $1.00 7/30/98
Brooks Tyne, Ltd. 885,000 $1.00 7/30/98
Beaumont Forest,
Ltd. 851,250 $1.00 7/30/98
Southwood
Holdings, Inc. 1,087,500 $1.00 7/30/98
Geomat
Holdings, Ltd. 1,455,000 $1.00 7/30/98
TOTAL 8,750,000
INTEREST OF MANAGEMENT AND OTHERS
IN CERTAIN TRANSACTIONS.
Messrs. Pak Cheung and Jing Lian are the
beneficial owners of BlueLake Industries, Ltd
("BlueLake"), a Washington State company. The
Company and BlueLake are currently negotiating
assignment of BlueLake's interest in a joint venture
with Tengtu United. See "Business of the
Company", above. Messrs. Cheung and Lian are
directors, officers and shareholders of the
Company; they are also directors, officers, and
shareholders of BlueLake. BlueLake will receive
two million (2,000,000) shares of the Company's
common stock in exchange for assignment of this
opportunity to the Company together with one
hundred thousand dollars U.S. (U.S. $100,000) in
cash.
The Company anticipates entering into an agreement
with Multi Corp, a computer technologies company.
Under the proposed agreement, the Company would
represent Multi Corp's products in China and would
purchase 20,000 units of Multi Corp products for
five hundred thousand dollars U.S. ($500,000).
Mr. Stephen Dadson is a director of Multi Corp and
will not participate in discussion or resolution of
this proposed agreement.
Part II
Item 1. Market Price of and Dividends on the
Registrant's Common Equity and Other Shareholder
Matters.
The principal market where the issuer's
common equity is traded is on the NASD Bulletin
Board. No trades in the issuer's stock occurred
during the fiscal year ending June 30, 1996.
The source of this information is J. Alexander
Securities, Los Angeles, California.
As of June 30, 1996, there were
approximately 360 holders of record of the
company's common equity. No dividends have
been declared during the past two fiscal years. The
following restrictions affect or are likely to affect
the company's ability to pay dividends in the future:
NONE.
Item 2. Legal Proceedings.
The Company is not currently a party to any
pending legal proceeding, nor does the Company
know of any proceeding that any governmental
authority may be contemplating against the
Company.
Item 3. Changes in and Disagreements with
Accountants.
No independent accountant has resigned or
been dismissed within the past two fiscal years.
Item 4. Submission of Matters to a Vote of
Security Holders.
The following amendments to the
Company's Certificate of Incorporation were
adopted by the Company's shareholders by
shareholder consent pursuant to section 228 of the
Delaware corporate statute, and after the
recommendation of such amendments by resolution
of the Company's Board of Directors, during the
last quarter of the fiscal year covered by this report:
1. On May 28, 1996, the Company changed its
name from "Tower Broadcast, Inc." to "Tengtu
International Corp."
2. Effective June 3, 1996, the Company
amended Paragraph 5 of its Certificate of
Incorporation to read as follows:
"5. The maximum number of shares which the
Corporation shall have the authority to issue is:
(a) 100,000,000 (One Hundred Million) Shares
of Common Stock having a par value of $.01 per
share; and
(b) 10,000,000 (Ten Million) Shares of
Preferred Stock, having a par value of $.01 per
share, being issuable in one or more series as
hereinafter provided.
Effective on the date upon which this
Certificate of Amendment of Certificate of
Incorporation is duly filed (the "Effective Date"),
every two (2) shares of the Common Stock
outstanding is reverse split into one (1) share of
Common Stock. The Board of Directors is
authorized to determine by resolution all matters
reasonably required by, or ancillary to, said reverse
stock split, including but not limited to the manner
and terms upon which new share certificates shall
be issued, certificates for existing shares shall be
surrendered, and fractional shares (if any) shall be
issued."
Item 5. Compliance with Section 16(a) of the
Exchange Act.
Not Applicable.
Item 6. No reports of Form 8-K were filed during
the last quarter of the period covered by this report.
Part F/S
TENGTU INTERNATIONAL CORP.
FINANCIAL STATEMENTS
For the Years Ended June 30, 1995 and 1996
GERALD R. PERLSTEIN
Certified Public Accountant
1260 S. Beverly Glen Blvd., Suite 106
Los Angeles, CA 90024
--
Telephone (310) 275-4650
Board of Directors
TENGTU INTERNATIONAL CORP.
Lynnwood, Washington
I have audited the accompanying statements of financial position
of TENGTU INTERNATIONAL CORP. as of June 30, 1995 and
1996 and the related statements of operations, shareholders' equity,
and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management.
My responsibility is to express an opinion on these financial
statements 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 statements are 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 statements referred to above present
fairly, in all material respects, the financial position of TENGTU
INTERNATIONAL CORP. as of June 30, 1995 and 1996 and the
results of the operations, shareholders' equity and cash flows for
the years then ended in conformity with generally accepted
accounting principles.
Gerald R. Perlstein
Los Angeles, California
August 27, 1996
TENGTU INTERNATIONAL CORP.
Statements of Financial Position
ASSETS
June 30
1996 1995
CURRENT ASSETS:
Cash 500,000 -
TOTAL CURRENT ASSETS $500,000 -
OTHER ASSETS:
Investment in Joint Venture 250,000 -
Revivor Costs 576 576
TOTAL OTHER ASSETS 250,576 576
TOTAL ASSETS 750,576 576
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts Payable 2,989 -
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Preferred Stock, Par Value $.01,
10,000,000 shares and 5,000,000
Shares Authorized at June 30, 1996
and 1995, respectively
Issued and Outstanding - None -- --
Common Stock, Par Value $.01,
100,000,000 Shares and 50,000,000
Shares Authorized;
Issued and Outstanding
15,377,750 and 385,500
at June 30, 1996 and 1995,
respectively 153,778 3,856
Paid-in capital 859,095 249,767
Accumulated deficit during
the development stage (265,286) (253,047)
TOTAL SHAREHOLDERS'
EQUITY 747,587 576
TOTAL LIABILITIES AND
SHAREHOLDER'S EQUITY
$750,576 $576
TENGTU INTERNATIONAL CORP.
Statements of Operations
For the Years Ended June 30, 1996 and 1995
June 30
1996 1995
REVENUES None None
GENERAL AND
ADMINISTRATIVE EXPENSES $12,239 None
NET LOSS $12,239 None
TENGTU INTERNATIONAL CORP.
Statements of Shareholders' Equity
For the Years Ended June 30, 1996 and 1995
Common No. Stock Paid-In
of Shares Amount Capital
Balance June 30, 1994 1,190,600 $11,906 $289,101
Adjustment of Treasury Stock (419,600) (4,196) (42,764)
One for Four Stock Split (578,250) (5,782) 5,782
Two for One Stock Split 192,750 1,928 (1,928)
Revalue Asset (1,000)
Contributed Capital 576
Net Profit
Balance June 30, 1995 385,500 3,856 249,767
One for Two Stock Split (192,750) (1,928) 1,928
Issu. of Common Stock
for Services Rendered 185,000 1,850 7,400
Issu. of Common Stock 13,000,000 130,000 520,000
Issu. of Common Stock
for Acquisition 2,000,000 20,000 80,000
Net Loss
Balance June 30, 1996 15,377,750 $153,778 $859,095
There are 10,000,000 shares of Preferred Stock authorized. None have been
issued.
TENGTU INTERNATIONAL CORP.
Statements of Shareholders' Equity
For the Years Ended June 30, 1996 and 1995
Total
Treasury Retained Shareholders'
Stock Deficit Equity
Balance June 30, 1994 $(46,960) $(253,047) $1,000
Adjustment of Treasury Stock 46,960 -0-
One for Four Stock Split -0-
Two for One Stock Split -0-
Revalue Asset (1,000)
Contributed Capital 576
Net Profit -0- -0-
Balance June 30, 1995 -0- (253,047) 576
One for Two Stock Split -0-
Issu. of Common Stock
for Services Rendered 9,250
Issu. of Common Stock 650,000
Issu. of Common Stock
for Acquisition 100,000
Net Loss (12,239) (12,239)
Balance June 30, 1996 -0- $(265,286) $747,587
Accumulated deficit during the development stage.
There are 10,000,000 shares of Preferred Stock authorized. None have been
issued.
TENGTU INTERNATIONAL CORP.
Statements of Cash Flows
For the Years Ended June 30, 1996 and 1995
June 30
1996 1995
OPERATING ACTIVITIES:
Net Loss $(12,239)
Adjustments to reconcile net income to
net cash provided by operating activities:
Changes in operating assets $424
Increase in accounts payable 2,989
Issuance of common stock for
services 9,250
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES: -0- 424
INVESTING ACTIVITIES:
Investment in Joint Venture (150,000)
NET CASH USED IN INVESTING
ACTIVITIES: (150,000)
FINANCING ACTIVITIES:
Issuance of Common Stock 650,000
Contributed capital 576
Revaluation of assets (1,000)
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES: 650,000 (424)
Increase in Cash 500,000 -0-
Cash at beginning of year -0- -0-
CASH AT END OF YEAR $500,000 $-0-
SUPPLEMENTAL CASH FLOW INFORMATION:
Issuance of common stock for
acquisition (2,000,000) shares 100,000
TENGTU INTERNATIONAL CORP.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996 AND 1995
1. ORGANIZATION AND NATURE OF BUSINESS:
Tengtu International Corp. (the Company) was incorporated in the
State of Delaware on May 6, 1988 (as Galway Capital
Corporation), as a Development Stage Enterprise. The Company's
business was to seek potential business ventures. During fiscal
year 1990-1991, the Company ceased operations and was inactive
until May, 1996. In August, 1993 the Company was renamed
Tower Broadcast, Inc.
In May, 1996 the control of the Company was acquired by several
individuals for the purpose of acquiring certain interests in a
Chinese foreign joint venture company. This joint venture has
been licensed by the Chinese government to produce and distribute
electronic educational software to the Chinese elementary, junior
and middle school system which number approximately 900,000
schools. On May 24, 1996 the Company was renamed to its
current name.
The Company has changed from a year-end basis of reporting for
financial and tax purposes to a fiscal year beginning July 1.
2. SHAREHOLDERS' EQUITY:
The Board of Directors, which had obtained formal consent from
shareholders, authorized the following resolutions on the dates
indicated:
March 30, 1995:
a. Increased the authorized Common Stock to
50,000,000 shares at $.01 par value
b. Increased the authorized Preferred Stock to
5,000,000 shares at $.01 par value
c. Reverse split the outstanding common shares one
for four shares
June 15, 1995:
a. Split the outstanding common shares two for one
shares
May 29, 1996:
a. Increased the authorized Common Stock to
100,000,000 shares at $.01 par value
b. Increased the authorized Preferred Stock to
10,000,000 shares at $.01 par value
c. Reverse split the outstanding common shares one
for two shares
d. Issued 185,000 common shares, under Rule 701,
for services rendered.
Effective on June 30, 1996 the Company issued 13,000,000 shares
(6,170,000 under Rule 504 and 6,830,000 under Section 4(II)) of
its Common Stock for cash at $.05 per shares, or in kind, and an
additional 2,000,000 shares (Rule 144 restrictions) for the
acquisition of a 49% interest in a Chinese foreign joint venture.
3. WARRANTS
The Company has 8,750,000 warrants outstanding which are
exercisable at $1.00 each. Two million of the warrants are
exercisable on or before July 31, 1997, and six million seven
hundred and fifty thousand warrants are exercisable on or before
July 31, 1998.
4. INVESTMENT IN JOINT VENTURE
Bluelake Industries Limited, (Bluelake) a Washington State
company, owned a 49% profit interest in a Chinese foreign joint
venture named Beijing Tengtu United Electronic Development Co.
(Tengtu United). Effective June 30, 1996, Bluelake sold its
interest in the joint venture to the Company for 2,000,000 common
shares of the Company, valued at $.05 per share, and $100,000
cash. The Company has agreed to raise $12,000,000 to provide
working capital for Tengtu United, in increments ending July 31,
1997. Tengtu United is a Chinese foreign joint venture company
that was formed for the purpose of assuming the business of
Tengtu China, which is an operating Chinese company owned by
three major Chinese State computer companies, whose focus is the
production and distribution of Chinese educational software in
China. Funds provided by the Company are for the working
capital of the joint venture, and have been capitalized.
Two of the major shareholders and directors of the Company are
also major shareholders and directors of Bluelake.
5. COMMITMENTS AND CONTINGENCIES
The Company is committed to raise not less than $12,000,000 in
working capital to be provided to the joint venture (see subsequent
note). The Company intends to make its investment of the
$12,000,000 through a wholly owned Barbadian subsidiary.
The Company is not presently a party to any litigation.
The Company has offices in Lynnwood, Washington and
Vancouver, Canada which it shares with shareholders of the
Company and for which it pays no rent.
6. REVIVOR COSTS
In March, 1995, in order to revive the Company's charter with the
State of Delaware, which had been suspended for non-payment of
taxes, a major shareholder paid the outstanding taxes, and
contributed these funds to the capital of the Company. These costs
have been capitalized and will be amortized over sixty months
beginning July 1, 1996.
7. INCOME TAXES
The Company owes no Federal Income Taxes. Tax returns have
been filed through December 31, 1995. The Company has
requested a change of its tax accounting fiscal year to end on June
30, 1996. A short period tax return will be filed. Net operating
loss carry forwards have been lost due to the change of ownership
in 1995.
8. SUBSEQUENT EVENTS
In August 1996 the Company issued a private placement
memorandum offering to raise $13,500,000 by the issuance of
3,000,000 units at $4.50 per unit. This is an offshore transaction
and units will not be offered to any person in the United States nor
will the offering be registered under the United States Securities
Act of 1933. Since July 1, 1996 the Company has provided
approximately $500,000 towards its commitment to provide
working capital for the joint venture.
Part III
Item 1. Index to Exhibits
NOT APPLICABLE -- THERE ARE NO EXHIBITS
Item 2. Description of Exhibits
NOT APPLICABLE -- THERE ARE NO EXHIBITS
SIGNATURES
In accordance with Section 13 or 15(d) of the
Exchange Act, the registrant caused this report to
be signed on its behalf by the undersigned,
thereunto duly authorized.
(Registrant) TENGTU INTERNATIONAL CORP.
By: /s/Pak Kwan Cheung
By: /s/Steven P. Dadson
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH
REPORTS FILED PURSUANT TO SECTION 15(D) OF THE
EXCHANGE ACT BY NON-REPORTING ISSUERS
There were no annual reports to security holders covering the
registrant's last fiscal year. There were no proxy statements,
forms of proxy or other proxy soliciting materials sent to more
than ten of the registrant's security holders with respect to any
annual or other meeting of shareholders.