SECURITIES AND EXCHANGE COMMISSION
WASHINGTON DC 20549
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FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) March 5, 2003
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CHINA AUTOMOTIVE SYSTEMS, INC.
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(Exact name of Registrant as Specified in Charter)
Delaware 000-33123 33-0885775
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(State of Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
No. 1, Henglong Road, Yu Qiao Development Zone
Shashi District, Jingzhou City, Hubei Province
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(Address of Principal Executive Offices)
Registrant's telephone number, including area code 0716-8324631
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VISIONS-IN-GLASS
(Former Name or Former Address, if changed since last report)
Item 7. Financial Statement, Pro Forma Financial Information and Exhibits.
Set forth below are the Financial Statements related to the Registrant's
acquisition of all of the equity interest of Great Genesis Holding Limited which
acquisition was reported on Form 8-K filed with the Securities and Exchange
Commission on March 20, 2003.
(a) Financial Statements of Businesses Acquired.
JI LONG ENTERPRISES INVESTMENT LIMITED
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2002 AND 2001
Together With Report of Independent Auditors
(Amounts Expressed in U.S. Dollars)
JI LONG ENTERPRISES INVESTMENT LIMITED
FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
Together With Report of Independent Auditors
(Amounts Expressed in U.S. Dollars)
TABLE OF CONTENTS
Report of Independent Auditors 1
Balance Sheets 2
Statements of Income 3
Statements of Cash Flows 4
Statements of Stockholders' Equity 5
Notes to Financial Statements 6 - 14
Schwartz Levitsky Feldman llp
CHARTERED ACCOUNTANTS
TORONTO, MONTREAL, OTTAWA
INDEPENDENT AUDITORS' REPORT
To The Stockholders and Board of Directors of
Ji Long Enterprises Investment Limited
We have audited the accompanying balance sheets of Ji Long Enterprises
Investment Limited as of December 31, 2002 and 2001, and the related statements
of operations, changes in stockholders' equity and cash flows for each of the
years ended December 31, 2002 and 2001. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits. We did not audit the
consolidated financial statements of Ji Long Enterprises Investment Limited
which include the operations of its corporate joint ventures, Jingzhou Henglong
Automotive Parts Co. Ltd., Shenyang Jiubei Henglong Automotive Steering System
Co. Ltd., Shashi Jiulong Power Steering Co. Ltd and Zhejiang Henglong & Vie
Pump-Manu Co. Ltd, the investment in which, as discussed in Note 3 to the
financial statements, is accounted for by the equity method of accounting. The
investment in these joint ventures was $20,329,000 and $11,533,000 as of
December 31, 2002 and 2001, respectively, and the equity in its net income was
$4,732,000 and $3,029,000 respectively, for the years then ended. The
consolidated financial statements of Ji Long Enterprises Investment Limited
under International generally accepted accounting principles and generally
accepted auditing standards were audited by other auditors whose report has been
furnished to us, and our opinion, insofar as it relates to the amounts included
for Ji Long Enterprises Investments Limited, is based solely on the report of
the other auditors.
We conducted our audits in accordance with generally accepted auditing standards
in the United States of America. Those standards require that we 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. We believe that our audits and the report of
other auditors provide a reasonable basis for our opinion.
In our opinion, based on our audits and the report of other auditors, the
financial statements referred to above present fairly, in all material respects,
the financial position of Ji Long Enterprises Investments Limited as of December
31, 2002 and 2001 and the results of its operations and its cash flows for each
of the years ended December 31, 2002 and 2001 in conformity with generally
accepted accounting principles in the United States of America.
/s/ Schwartz Levitsky Feldman llp
Toronto, Ontario
March 5, 2003 Chartered Accountants
1167 Caledonia Road
Toronto, Ontario M6A 2X1
Tel: 416 785 5353
Fax: 416 785 5663
1
JI LONG ENTERPRISES INVESTMENT LIMITED
Balance Sheets
As at December 31, 2002 and 2001
(Expressed in US Dollars in Thousands)
2002 2001
$ $
ASSETS
CURRENT ASSETS
Other receivables -- 216
EQUITY INVESTMENTS IN JOINT VENTURES (note 3) 20,329 11,533
---------- ----------
20,329 11,749
========== ==========
LIABILITIES
CURRENT LIABILITIES
Amounts due to shareholders/directors (note 4) 14,826 7,368
---------- ----------
STOCKHOLDERS' EQUITY
SHARE CAPITAL (note 5) 195 195
RETAINED EARNINGS 5,308 4,186
---------- ----------
5,503 4,381
---------- ----------
20,329 11,749
========== ==========
The accompanying notes are an integral part of these financial statements.
APPROVED ON BEHALF OF THE BOARD
Director
------------------------------------
Director
------------------------------------
2
JI LONG ENTERPRISES INVESTMENT LIMITED
Statements of Income
For the years ended December 31, 2002 and 2001
(Expressed in US Dollars in Thousands)
2002 2001
$ $
EQUITY IN INCOME OF JOINT VENTURES (note 3) 4,732 3,029
--------- ---------
GENERAL AND ADMINISTRATIVE EXPENSES 1 5
LOSS ON DISPOSITION OF EQUITY INVESTMENTS -- 798
--------- ---------
1 803
--------- ---------
INCOME BEFORE INCOME TAXES 4,731 2,226
Income taxes (note 6) -- --
--------- ---------
NET INCOME 4,731 2,226
========= =========
The accompanying notes are an integral part of these financial statements.
3
JI LONG ENTERPRISES INVESTMENT LIMITED
Statements of Cash Flows
For the years ended December 31, 2002 and 2001
(Expressed in US Dollars in Thousands)
2002 2001
$ $
CASH FLOWS FROM OPERATING ACTIVITIES
Net income 4,731 2,226
Adjustments to reconcile net income to net cash
used in operating activities
Equity in income of joint ventures (4,732) (3,029)
Loss on disposal/reduction of investments -- 798
--------- ---------
Net cash used in operating activities (1) (5)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from disposition (acquisition of)
equity investments (7,139) 2,487
Dividends received 3,074 12
Decrease (increase) in other receivables 216 (216)
--------- ---------
Net cash provided by (used in) investing activities (3,849) 2,283
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in amount due to shareholders/directors 7,459 15,336
Dividends Paid (3,609) (17,614)
--------- ---------
Net cash provided by (used in) financing activities 3,850 2,278
--------- ---------
Change during the year -- --
Cash beginning of year -- --
--------- ---------
Cash end of year -- --
========= =========
The accompanying notes are an integral part of these financial statements.
4
JI LONG ENTERPRISES INVESTMENT LIMITED
Statements of Stockholders' Equity
For the years ended December 31, 2002 and 2001
(Expressed in US Dollars in Thousands)
Common Stock Retained
Number Amount Earnings Total
$ $ $
BALANCE, DECEMBER 31, 2000 1,500 195 19,574 19.769
Add: Net income -- -- 2,226 2,226
Less: Dividends -- -- (17,614) (17,614)
---------- ---------- ---------- ----------
BALANCE, DECEMBER 31, 2001 1,500 195 4,186 4,381
Add: Net income -- -- 4,731 4,731
Less: Dividends -- -- (3,609) (3,609)
---------- ---------- ---------- ----------
BALANCE, DECEMBER 31, 2002 1,500 195 5,308 5,503
========== ========== ========== ==========
The accompanying notes are an integral part of these financial statements.
5
JI LONG ENTERPRISES INVESTMENT LIMITED
Notes to Financial Statements
December 31, 2002 and 2001
(Expressed in US Dollars in Thousands)
1. GENERAL
a) Organization and Description of Business
Ji Long Enterprise Investment Limited (hereinafter referred to as the
"Company") was incorporated in Hong Kong with limited liability on
October 8, 1992. The Company is an investment holding company. The
principal activities of the company's corporate joint venture
investments are manufacturing and selling of automotive components in
the People's Republic of China (the "PRC").
The Company's financial statements for the years 2002 and 2001 reflect
its equity interest in the following corporate joint ventures ("Joint
Ventures"), whose principal activity is the manufacture of power
steering systems and related products for different segments of the
automobile industry in China:
Proportion of
Ownership Interest
Country of December 31, December 31,
Names Incorporation 2002 2001
----- ------------------------ ------------------ -----------------
Jingzhou Henglong The People's Republic 42% 42%
Automotive Parts Co. Limited of China
("Henglong")
Shashi Jiulong Power The People's Republic 81% 49%
Steering Co. Limited of China
("Jiulong")
Shenyang Jiubei Henglong The People's Republic 37.6% -
Automotive Steering System of China
Co. Limited
("Shenyang")
Zhejiang Henglong & Vie The People's Republic 51% -
Pump-Manu Co. Limited of China
("Zhejiang")
In December, 2002, the Company increased its equity interest in
Jiulong from 49% to 81%.
In December, 2001, the Company reduced its equity interest in Henglong
from 66% to 42%.
6
JI LONG ENTERPRISES INVESTMENT LIMITED
Notes to Financial Statements
December 31, 2002 and 2001
(Expressed in US Dollars in thousands)
1. GENERAL (cont'd)
b) Certain Significant Risks and Uncertainties
The Company is subject to the consideration and risks of operating in
the PRC. These include risks associated with the political and
economic environment, foreign currency exchange and the legal system
in the PRC.
The economy of the PRC differs significantly from the economies of the
"western" industrialized nations in such respects as structure, level
of development, gross national product, growth rate, capital
reinvestment, resource allocation, self-sufficiency, rate of inflation
and balance of payments position, among others. Only recently has the
PRC government encouraged substantial private economic activities. The
Chinese economy has experienced significant growth in the past several
years, but such growth has been uneven among various sectors of the
economy and geographic regions. Actions by the PRC government to
control inflation have significantly restrained economic expansion in
the recent past. Similar actions by the PRC government in the future
could have a significant adverse effect on economic conditions in the
PRC.
Many laws and regulations dealing with economic matters in general and
foreign investment in particular have been enacted in the PRC.
However, the PRC still does not have a comprehensive system of laws,
and enforcement of existing laws may be uncertain and sporadic.
Any devaluation of the Renminbi (RMB) against United States dollar
would consequently have adverse effects on the financial performance
and the Company's asset values when measured in terms of the United
States dollars. Should the RMB significantly devalue against the
United States dollar, such devaluation could have a material adverse
effect on the Company's earnings and the foreign currency equivalent
of such earnings. The Company does not hedge its RMB - United States
dollar exchange rate exposure.
On January 1, 1994, the PRC government introduced a single rate of
exchange as quoted daily by the People's Bank of China (the "Unified
Exchange Rate"). No representation is made that the RMB amounts have
been or could be, converted into US$ at that rate. This quotation of
exchange rates does not imply free convertibility of RMB to other
foreign currencies. All foreign exchange transactions continue to take
place either through the Bank of China or other banks authorized to
buy and sell foreign currencies at the exchange rate quoted by the
People's Bank of China. Approval of foreign currency payments by the
Bank of China or other institutions requires submitting a payment
application form together with suppliers' invoices, shipping documents
and signed contracts.
7
JI LONG ENTERPRISES INVESTMENT LIMITED
Notes to Financial Statements
December 31, 2002 and 2001
(Expressed in US Dollars in thousands)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Basis of Presentation
The accompanying financial statements have been prepared in accordance
with generally accepted accounting principles in the United States of
America.
b. Equity Method of Accounting
The Company uses the equity method of accounting to record its
investments in Joint Ventures. Under the equity method, original
investments are recorded at cost and adjusted by the Company's share
of undistributed earnings or losses of those entities. The Company
determined that the Joint Venturers had retained certain rights under
the Joint Venture Agreements that provided the Joint Venturers with
the ability to participate in management. Under Emerging Issues Task
Force Issue No. 96-16, if a minority joint venture partner has such
rights, the majority joint venture partner is required to account for
its interest in the joint venture under the equity method of
accounting.
The Company has not guaranteed any of the debts of its joint ventures.
c. Translation of Foreign Currencies
The Company maintains its books and records in Hong Kong Dollars ("HK
Dollars"), the functional currency, and the Joint Ventures maintain
their books and records in Renminbi: ("RMB") the PRC's currency.
Translation of amounts in United States dollars ("US$") has been made
at the single fixed rate of exchange of US$ 1.00 : 7.8 HK Dollars and
the translation of amounts in HK Dollars has been made at an
approximate rate of 1 HK Dollar: 1.06 RMB.
Foreign currency transactions, in HK Dollars and RMB, are reflected
using the temporal method. Under this method, all monetary items are
translated into the functional currency at the rate of exchange
prevailing at balance sheet date. Non-monetary items are translated at
historical rates. Income and expenses are translated at the rate in
effect on the transaction dates. Transaction gains and losses if any,
would be included in the determination of earnings for the year.
The translation of the financial statements of the Company from its
functional currency into its reporting currency in United States
dollars is performed as follows: Balance sheet accounts are translated
using closing exchange rate in effect at the balance sheet date and
income and expense accounts are translated using an average exchange
rate prevailing during each reporting period. Adjustments resulting
from the translation, if any, would be included in cumulative other
comprehensive income in stockholders' equity.
The RMB is not readily convertible into United States dollars or other
foreign currencies. The foreign exchange rate between United States
dollars and RMB ranged from 1 RMB to US$0.1204 to US$0.1211, since
inception to the fiscal periods covered in these financial statements.
No representation is made that the Renminbi amounts could have been,
or could be, converted into United States dollars at that rate or at
any other rate.
8
JI LONG ENTERPRISES INVESTMENT LIMITED
Notes to Financial Statements
December 31, 2002 and 2001
(Expressed in US Dollars in thousands)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
d. Current Assets and Liabilities
Current assets are expected to be realized within twelve months of the
balance sheet date or in the normal course of the operating cycle.
Current liabilities are expected to be settled within twelve months of
the balance sheet date or in the normal course of the operating cycle.
e. Income Taxes
The Company accounts for income tax using Statement of Financial
Accounting Standards ("SFAS") No. 109 "Accounting for Income Taxes".
SFAS No. 109 requires an asset and liability approach for financial
accounting and reporting for income taxes and allows recognition and
measurement of deferred tax assets based upon likelihood of
realization of tax benefits in future years. Under the asset and
liability approach, deferred taxes are provided for the net tax
effects of temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the
amounts used for income tax purposes. A valuation allowance is
provided for deferred tax assets if it is more likely than not these
items will expire before the Company is able to realize their
benefits, or that future deductibility is uncertain.
f. Fair Value of Financial Instruments
The fair values of amounts due to directors/shareholders are not
practical to estimate due to the related party nature of the
underlying transactions. The carrying value of company's other
receivables approximate fair values primarily because of the short
maturities of these instruments.
g. Comprehensive Income
SFAS No. 130 establishes standards for the display and reporting of
comprehensive income. SFAS No. 130 defines comprehensive income to
include all changes in equity except those resulting from investments
by owners and distributions to owners. The company's only current
component of comprehensive income is foreign currency translation
adjustments.
h. Long-Lived Assets
The company adopted the provisions of FAS No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed of which has been superseded by FAS No. 144. FAS No. 144
requires that long-lived assets to be held and used by an entity be
reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable.
Management used its best estimate of the undiscounted cash flows as
well as obtained a valuation, to evaluate the carrying amount and have
determined that no impairment has occurred.
9
JI LONG ENTERPRISES INVESTMENT LIMITED
Notes to Financial Statements
December 31, 2002 and 2001
(Expressed in US Dollars in thousands)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
i. Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management
to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimated.
j. Recently Issued Accounting Pronouncements
In April 2002, the FASB issued SFAS No. 145: "Rescission of FASB
Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and
Technical Corrections". This statement made revisions to the
accounting for gains and losses from the extinguishment of debt,
rescinded Statement No. 44, and required certain lease modifications
that have economic effects similar to sale-leaseback transactions be
accounted for in the same manner as sale-leaseback transactions. The
Company is required to and will adopt SFAS No. 145 on January 1, 2002.
The adoption of SFAS No. 145 does not have a material impact on the
Company's financial statements.
In June 2002, the FASB issued SFAS No. 146 "Accounting for Costs
Associated with Exit or Disposal Activities". SFAS No. 146 requires
that a liability for a cost that is associated with an exit or
disposal activity be recognized when the liability is incurred. This
standard nullifies the guidance of EITF Issue No. 94-3, "Liability
Recognition for Certain Employee Termination Benefits and Other Costs
to Exit an Activity (including Certain Costs Incurred in a
Restructuring)". Under EITF Issue No. 94-3, an entity recognized a
liability for an exit cost on the date that the entity committed
itself to an exit plan. Under SFAS No. 146, the FASB concludes that an
entity's commitment to an exit plan does not, by itself, create a
present obligation to other parties that meets the definition of a
liability. SFAS No. 146 also establishes that fair value is the
objective for the initial measurement of the liability. SFAS No. 146
will be effective for exit or disposal activities that are initiated
after December 31, 2002. The Company considers this standard does not
have material effect on its financial statements.
In October 2002, the FASB issued SFAS No. 147, "Acquisitions of
Certain Financial acquisitions of financial institutions, except
transactions between two or more mutual enterprises. The Company does
not expect that this standard will have any effect on its financial
statements.
In December 2002, the FASB issued SFAS No. 148, "Accounting for
Stock-Based Compensation - Transition and Disclosure". SFAS No. 148
amends SFAS No. 123 "Accounting for Stock-Based Compensation," to
provide alternative methods of transition for a voluntary change to
the fair value based method of accounting for stock-based employee
compensation. In addition, SFAS No. 148 amends the disclosure
requirements of SFAS No. 123 to require prominent disclosures in both
10
JI LONG ENTERPRISES INVESTMENT LIMITED
Notes to Financial Statements
December 31, 2002 and 2001
(Expressed in US Dollars in thousands)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
j. Recently Issued Accounting Pronouncements (cont'd)
annual and interim financial statements about the method of accounting
for stock-based employee compensation and the effect of the method
used on reported results. SFAS No. 148 is effective for fiscal years
beginning after December 15, 2002. The interim disclosure provisions
are effective for financial reports containing financial statements
for interim periods beginning after December 15, 2002. The Company
does not consider the adoption of SFAS No. 148 will have a material
effect on its financial position, results of operations, or cash
flows.
In August 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations". SFAS No. 143 addresses the diverse accounting
practices for obligations associated with the retirement of tangible
long-lived assets and the associated asset retirement costs. The
Company will be required to adopt SFAS No. 143 effective January 1,
2003. The Company does not expect that the adoption of SFAS No. 143
will have a significant effect on the Company's financial statement
presentation or disclosures.
In November 2002, the FASB issued FASB Interpretation ("FIN") No. 45,
"Guarantors Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness of Others". FIN No. 45
clarifies disclosures that are required to be made for certain
guarantees and establishes a requirement to record a liability at fair
value for certain guarantees at the time of the guarantee's issuance.
The disclosure requirements of FIN No. 45 have been applied in the
Company's financial statements at December 31, 2002. The requirement
to record a liability applies to guarantees issued or modified after
December 31, 2002. The Company will adopt the measurement and
recording provisions of FIN No. 45 prospectively beginning January 1,
2003.
In January 2003, the FASB issued FIN No. 46, "Consolidation of
Variable Interest Entities, an Interpretation of ARB 51". FIN No. 46
requires that the primary beneficiary in a variable interest entity
consolidate the entity even if the primary beneficiary does not have a
majority voting interest. The consolidation requirements of FIN No. 46
are required to be implemented for any variable interest entity
created on or after January 31, 2003. In addition, FIN No. 46 requires
disclosure of information regarding guarantees or exposures to loss
relating to any variable interest entity existing prior to January 31,
2003 in financial statements issued after January 31, 2003. FIN No. 46
is effective for the Company on January 31, 2003, and is not expected
to have a significant impact on the Company's financial statement
presentation or disclosures.
3. EQUITY INVESTMENTS IN JOINT VENTURES
The financial statements of the Joint Ventures were prepared in accordance
with International Accounting Standards issued by the International
Accounting Standards Committee ("IASC") and were audited by an independent
certified public accountants firm practicing in Hong Kong in accordance
with International Standards on Auditing. There are no material differences
between International Accounting Standards and generally accepted
accounting principles in the United States of America as it relates to the
Joint Ventures' financial statements.
As of December 31, 2002 and 2001, the condensed balance sheets of the Joint
Ventures were as follows (Expressed in US Dollars in thousands):
Henglong Jiulong Shenyang Zhejiang
2002 2001 2002 2001 2002 2001 2002 2001
$ $ $ $ $ $ $ $
-------- -------- -------- -------- -------- ------- -------- --------
Current assets 27,358 16,491 20,314 24,043 2,406 - 2,450 --
Non-current 11,396 5,616 1,519 1,894 2,545 - 3,002 --
-------- -------- -------- -------- -------- ------- -------- --------
assets
Total assets 38,754 22,107 21,833 25,937 4,951 - 5,452 --
======== ======== ======== ======== ======== ======= ======== ========
Current 22,880 7,312 9,789 14,859 1,258 - 494 --
liabilities
Non-current
liabilities 196 -- -- 490 9 - -- --
Capital and
reserves 15,678 14,795 12,044 10,588 3,684 - 4,958 --
-------- -------- -------- -------- -------- ------- -------- --------
Total liabilities
And equity 38,754 22,107 21,833 25,937 4,951 - 5,452 --
======== ======== ======== ======== ======== ======= ======== ========
11
JI LONG ENTERPRISES INVESTMENT LIMITED
Notes to Financial Statements
December 31, 2002 and 2001
(Expressed in US Dollars in Thousands)
3. EQUITY INVESTMENTS IN JOINT VENTURES (cont'd)
As of December 31, 2002 and 2001, the condensed income statements of the
Joint Ventures were as follows (expressend in US Dollars in thousands)
Henglong Jiulong Shenyang Zhejiang Total
2002 2001 2002 2001 2002 2001 2002 2001 2002 2001
$ $ $ $ $ $ $ $ $ $
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Proportionate
ownership 42% 42% 81% 49% 37.6% - 51% -
interest
See note 1a) for changes on ownership interest during the periods.
Net sales 26,007 14,425 10,789 13,654 4,022 -- 66 -- 40,884 28,079
Cost of goods
sold 14,841 7,862 5,881 6,839 3,814 -- 69 -- 24,605 14,701
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Gross profit 11,166 6,563 4,908 6,815 208 -- (3) -- 16,279 13,378
Operating
expenses
General and
administrative
expenses 2,981 1,640 3,347 2,826 277 -- 128 -- 6,733 4,466
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Income (loss) from
operations 8,185 4,923 1,561 3,989 (69) -- (131) -- 9,546 8,912
Finance costs (145) (64) (17) (161) 2 -- 6 -- (154) (225)
Other income 451 118 216 31 9 -- -- -- 676 149
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Income (loss) before
provision for
income taxes 8,491 4,977 1,760 3,859 (58) -- (125) -- 10,068 8,836
Provision for
income taxes 1,303 778 302 616 -- -- -- -- 1,605 1,394
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net income (loss) 7,188 4,199 1,458 3,243 (58) -- (125) -- 8,463 7,442
======= ======= ======= ======= ======= ======= ======= ======= ======= =======
Equity in joint
ventures'
income 3,983 1,394 840 1,635 (21) -- (70) -- 4,732 3,029
======= ======= ======= ======= ======= ======= ======= ======= ======= =======
During two years ended 31 December 2002, the Joint Ventures had entered
into related party transactions as shown below (expressed in US Dollars in
Thousand):
Nature of related Nature of
party transactions transactions
2002 2001
----------- -----------
$ $
Companies with common
director Sales
- received -- --
- receivable 1,589 170
Purchases
- paid 491 3,286
- payable 1,765 192
These transactions were consummated under similar terms as those with the
Company's customers and suppliers. The Company also purchased and disposed
of equity interests in its Joint Ventures, to a director of and a party
related to the company.
4. AMOUNTS DUE TO SHAREHOLDERS / DIRECTORS
The amounts due to shareholders / directors are unsecured, interest free
and repayable on demand.
12
JI LONG ENTERPRISES INVESTMENT LIMITED
Notes to Financial Statements
December 31, 2002 and 2001
(Expressed in US Dollars in Thousands)
5. SHARE CAPITAL
2002 2001
------------ ------------
$ $
Authorized, issued and fully paid
1,500 common shares with a par 195 195
value of HK$1,000 each (USD ------------ ------------
130)
The Company had no stock options or warrants outstanding.
6. INCOME TAXES
No provision for Hong Kong profits tax has been made as the Company is an
investment holding company and does not have any assessable profits in Hong
Kong for the years ended December 31, 2002 and 2001.
The Company also does not carry on any business and does not maintain any
offices in the United States of America. Consequently, no provision for
income taxes or tax benefits for the Company has been made in connection
with the tax laws in the Unites States of America.
13
JI LONG ENTERPRISES INVESTMENT LIMITED
Notes to Financial Statements
December 31, 2002 and 2001
(Expressed in US Dollars in Thousands)
7. SUBSEQUENT EVENTS
a) As at December 31, 2002, the investors of Shenyang are the Company,
Henglong, Shengyang Automotor Industry Investment Corporation and
Shenyang Jinbei Automotor Industry Co., Ltd. On December 12, 2002,
according to a decision made at the meeting of the board of directors,
30% of the stock rights held by Henglong was transferred to the
Company, and 17% of the stock rights held by Shengyang Automotor
Industry Investment Corporation was transferred to Shenyang Jinbei
Automotor Industry Co., Ltd. On January 8, 2003, the Company and
Henglong signed an agreement for the transfer of stock rights, which
agreement should be completed within 6 months.
b) Share Exchange Agreements and Reverse Merger
On January 3, 2003, Great Genesis Holdings Limited ("Great Genesis")
was incorporated under The Companies Ordinance in Hong Kong as a
limited liability company. On March 4, 2003, all of the shareholders
of the Company exchanged their 100% shareholder interest in the
Company for a 100% shareholder interest in Great Genesis.
Consequently, the Company became a wholly-owned subsidiary of Great
Genesis.
Effective March 5, 2003, Visions-In-Glass, Inc., a United States
public company incorporated in the State of Delaware ("Visions"),
entered into a Share Exchange Agreement, as a result of which Great
Genesis became a wholly-owned subsidiary of Visions. Visions
subsequently changed its name to China Automotive Systems, Inc.
In exchange for the acquisition of 100% of the shareholder interests
in Great Genesis, the shareholders of Great Genesis were issued
20,914,250 shares of common stock of Visions. In addition, the
shareholders of Great Genesis separately purchased 1,100,750 shares of
the 5,293,000 shares of common stock of Visions outstanding prior to
the acquisition of Great Genesis by Visions, for $275,000.
Accordingly, the former shareholders of Great Genesis currently own
22,015,050 shares of the 26,207,260 shares of common stock of Visions
currently outstanding.
The acquisition of Great Genesis by Visions will be accounted for as a
recapitalization of Great Genesis, pursuant to which the accounting
basis of Great Genesis will continue unchanged subsequent to the
transaction date. Accordingly, the pre-transaction financial
statements of Great Genesis will become the historical financial
statements of Visions.
In conjunction with this transaction, Visions issued common stock
purchase warrants to three consultants to acquire an aggregate of
550,375 shares of common stock, exercisable for a period of one year
at $1.20 per share.
14
(b) Proforma Financial Information.
The following Unaudited pro forma combined financial statements give
effect to the merger using the purchase method of accounting as
prescribed by Statement of Finacnial Accounting Standards No. 141
"Business Combination". The following Unaudited financial pro forma
combined financial statements and the accompanying notes should be read
in conjunction with the historical financial statements and related
notes of Visions-In-Glass Inc. (subsequently named China Automotive
Systems Inc. ("China Automotive"), New Genesis Holdings Limited ("New
Genesis") and Ji Long Enterprises Investments Limited ("Ji Long") which
are included in the notes to the financial statements, or elsewhere, in
this document.
The Unaudited pro forma combined financial statements are provided for
information purposes only and do not purport to represent what the
combined financial position and results of operations would have been
had the merger in fact occurred on the dates indicated. The following
Unaudited pro forma combined balance sheet represents the combined
financial position of China Automotive, Great Genesis and Ji Long as of
December 31, 2002. The Unaudited pro forma combined statement of
operations give effect to the proposed merger of China Automotive,
Great Genesis and Ji Long for the period ended December 31, 2002,
assuming the merger occurred in the earliest period. The Unaudited pro
forma combined financial statements are presented for illustrative
purposes only. The pro forma adjustments are based upon available
information and assumptions that management believes are reasonable.
CHINA AUTOMOTIVE SYSTEMS INC.
(FORMERLY VISION-IN-GLASS INC.)
(SUCCESSOR TO JI LONG ENTERPRISES INVESTMENT LIMITED AND
GREAT GENESIS HOLDINGS LIMITED)
BALANCE SHEETS
DECEMBER 31, 2002
(EXPRESSED IN US DOLLARS IN THOUSANDS)
(UNAUDITED)
China Great Ji Long Pro Forma Pro Forma
Automotive Genesis Adjustments
(formerly
Vision-in-
Glass Inc.)
$ $ $ $ $
CURRENT ASSETS -- -- -- --
EQUITY INVESTMENTS -- 10 20,329 (10) 20,329
----------- ----------- ----------- -----------
TOTAL ASSETS -- 10 20,329 (10) 20,329
=========== =========== =========== =========== ===========
CURRENT LIABILITIES
Accounts payable and accrued
liabilities 1 -- -- 1
Amounts due to
shareholders/directors -- 14,826 -- 14,826
----------- ----------- ----------- ----------- -----------
TOTAL CURRENT LIABILITIES 1 14,826 14,827
STOCKERHOLDERS' EQUITY
Common stock 1 10 195 (205) 1
Additional paid-in 9 -- 184 193
Accumulated retained earnings
(deficit) (11) 5,308 11 5,308
----------- ----------- ----------- ----------- -----------
TOTAL STOCKHOLDERS EQUITY (1) 10 5,503 (10) 5,502
----------- ----------- ----------- ----------- -----------
-- 10 20,329 (10) 20,329
=========== =========== =========== =========== ===========
1. To record the acquisition of Ji Long by Great Genesis and the
subsequent acquisition of Great Genesis by China Automotive as more
fully set out in note 7(b) of the financial statements of Ji Long.
CHINA AUTOMOTIVE SYSTEMS INC.
(FORMERLY VISION-IN-GLASS INC.)
(SUCCESSOR TO JI LONG ENTERPRISES INVESTMENT LIMITED AND
GREAT GENESIS HOLDINGS LIMITED)
INCOME STATEMENT
DECEMBER 31, 2002
(EXPRESSED IN US DOLLARS IN THOUSANDS)
(UNAUDITED)
China Great Ji Long Pro Forma Pro Forma
Automotive Genesis Ajustments
(formerly
Vision-in-
Glass Inc.)
$ $ $ $ $
REVENUE -- -- -- --
-----------
EQUITY IN EARNINGS -- -- 4,732 --
----------- ----------- ----------- -----------
COSTS AND EXPENSES
GENERAL AND ADMINISTRATIVE
EXPENSES (10) -- (1) (11)
----------- ----------- ----------- -----------
LOSS FROM OPERATIONS (10) -- (1) (11)
=========== =========== =========== ===========
INCOME (LOSS) BEFORE PROVISION
FOR INCOME TAX (10) -- 4,731 4,721
INCOME TAX -- -- 4,731 4,721
----------- ----------- ----------- -----------
NET INCOME (LOSS) (10) -- 4,731 4,721
=========== =========== =========== ===========
INCOME LOSS PER COMMON SHARE
BASIC AND DILUTED -- (0.18)
=========== ===========
WEIGHTED AVERAGE NO. OF
COMMON SHARES OUTSTANDING
BASIC AND DILUTED -- 26,757,635
=========== ===========
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
VISIONS-IN-GLASS, INC.
Date: May 16, 2003 By: /s/ Hanlin Chen
---------------
Name: Hanlin Chen
Title: Chief Executive Officer