SHARE EXCHANGE AGREEMENT
THIS SHARE EXCHANGE AGREEMENT (the "Agreement") is dated as of March
12, 1998 by and between Best Medical Treatment Group, Inc., ("Company") and
Xxxxx Xxxx Ming ("Shareholder").
RECITALS
WHEREAS, Shareholder owns one hundred percent of the issued and
outstanding stock (the "Shares"), of Wonderwide Consultants Limited (B.V.I.),
("Wonderwide"), and;
WHEREAS, Wonderwide owns 99% of all issued and outstanding stock in
Xxxx Xxxx Investment & Development Limited, a Hong Kong Corporation, which in
turn, owns a 100% interest in the Qin Dynasty Hotel (Xian) Co. Limited, a
sino-foreign cooperative joint venture, and;
WHEREAS, Shareholder also owns 100% of Xxxxxx International Development
Limited, a Hong Kong Corporation, which owns a 60% interest in City Hotel (Xian)
Co. Limited, a sino-foreign equity joint venture, and;
WHEREAS, Shareholder has commenced the process of transferring
the ownership of City Hotel (Xian) Co. Limited from Xxxxxx Interna-
tional Development Limited to Wonderwide, and;
WHEREAS, the Company is a Nevada incorporated US public company,
currently traded on the NASD Bulletin Board under the symbol BMTM, and;
WHEREAS, Company desires to acquire the Shares and Shareholder desires
to exchange the Shares for newly issued stock in the Company.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and terms
contained herein and in reliance upon the representations and warranties
hereinafter set forth, the parties agree as follows:
I. EXCHANGE OF THE SHARES AND CONSIDERATION
1.01 Shares Being Exchanged. Effective at the closing of this Agreement
(the "Closing"), and subject to the terms and conditions of this Agreement,
Shareholder shall assign, transfer and deliver to the Company all of the shares.
1.02 Consideration. Subject to the terms and conditions of this
Agreement, and in consideration of the assignment and delivery of the Shares to
the Company, the Company shall at Closing issue to Shareholder and/or its
designees, and Shareholder and/or its designees shall purchase, acquire and/or
accept from the
1
Company, 2,300,000 shares in the Company (the "Consideration"), equal to 85% of
all issued and outstanding stock as of the closing, before payment of
consultant's fees described in Section 7.
1.03 Closing. The Closing of the transaction contemplated by this
Agreement (the "Closing") shall take place at the law offices of Hand & Hand, on
or before March 16, 1998.
1.04 Method of Closing. The method of closing shall require the parties
to satisfy the conditions specified in Section 6.
II. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER
Shareholder represents and warrants to the Company as follows, as of the
closing:
2.01 Organization. Wonderwide is a corporation duly organized, validly
existing and in good standing under the laws of British Virgin Islands.
Wonderwide as well as its subsidiaries have the corporate power and authority to
carry on its business as presently conducted; and is qualified to do business in
all jurisdictions where the failure to be so qualified would have a material
adverse effect on its business.
2.02 Capitalization.
2.02(a) Shareholder owns 100% of all issued and outstanding
shares of Wonderwide. All issued and outstanding shares of Wonderwide
are duly authorized, validly issued, issued for value, fully paid and
non assessable.
2.02(b) There are no outstanding preferred stock, options,
warrants, or any other rights to purchase any securities of Wonderwide.
2.03 Authority. Shareholder has full power and authority to enter into
this Agreement and to carry out the transactions contemplated herein. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, have been duly authorized and approved by
Shareholder and no other corporate proceedings on the part of Wonderwide and/or
Shareholder are necessary to authorize this Agreement and the transactions
contemplated hereby.
2.04 Financial Information & Earnings Guarantee.
2.04(a) Attached as Exhibit A are financial statements compiled
according the PRC accounting standards, which are presented to the
Company by Shareholder regarding the two hotel interests to be acquired
by the Company. The Financial Information provided by Shareholder to
Company is accurate and not misleading, to the best of Shareholder's
knowledge.
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2.04(b) Shareholder warrants that Wonderwide's consolidated net
income, as audited under US GAAP for the fiscal year ending December
31, 1997 will not be less than US $2.5 million. In the event that the
audited earnings fall below this amount, Shareholder will cancel that
number of Company shares necessary to increase Company earnings per
share ("EPS") to the level that would have existed had the earnings met
the minimum level stated above (before adjustments for any splits or
new issuances post closing.) Shareholder agrees that any share
cancellation under this provision will take effect on the date the 1997
Wonderwide US GAAP audit is completed and that the Company's relevant
SEC filing which discloses Wonder-wide's 1997 results will
automatically include any required share cancellation and give effect
to the EPS increase from such share cancellation.
2.05 Litigation. There is no litigation, proceeding or investigation
pending or threatened against Wonderwide affecting any of its properties,
subsidiaries, or assets that might result either in any case or in the aggregate
in any adverse properties or assets, or might call into question the validity of
this Agreement, or any action taken or to be taken pursuant hereto.
2.06 Title to Assets. Shareholder has good and marketable title to
Wonderwide, and Wonderwide has good and marketable title to all of its assets
and properties now carried on its books. Wonderwide is in the process of
perfecting its 60% interest in City Hotel (Xian) Co. Limited. It is anticipated
that the completion of this transfer, which is taking place among entities that
are controlled by the Shareholder, will require 1-3 months due to PRC transfer
procedures. 15% of the Company shares being issued to Shareholder will be held
in escrow with Hand & Hand and will be delivered to Shareholder upon the
perfection of Wonderwide's interest in City Hotel (Xian) Co. Limited. See
Section 7.
2.07 Contracts and Undertakings. Wonderwide and its subsidiary business
operations are not in material default or alleged to be in material default,
under any Contract or Undertaking.
2.08 No Conflict. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not conflict with or
result in a breach of any term or provision of, or constitute a default under
the Memorandum and Articles of Association of Wonderwide, or any agreement,
contract or instrument to which Wonderwide is a party or by which it or any of
its assets are bound.
2.09 Accuracy. No document furnished to the Company by or on behalf of
the Company in connection with the transactions contemplated hereby, contains
any untrue statement of a material fact or when taken as a whole omits to state
a material fact
3
necessary in order to make the statements contained herein or
therein not misleading.
2.10 US GAAP AUDITS. Shareholder acknowledges that it will cause
Wonderwide to complete and file US GAAP audited financial statements for 3
historical years with the appropriate US government authorities no later than 75
days after the Closing.
2.11 Absence of Material Changes. Since December 31, 1997, except as
described in any Exhibit hereto or as required or permitted under this
Agreement, there has not been any material negative change in the condition
(financial or otherwise) of the properties, assets, liabilities or business of
Company, except changes in the ordinary course of business which, individually
and in the aggregate, have not been materially adverse.
III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Shareholder as follows,
as of the Closing:
3.01 Organization. The Company is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Nevada, has the
corporate power and authority to carry on its business as presently conducted
and is qualified to do business in all jurisdictions where the failure to be so
qualified would have a material adverse effect on the business of the Company.
3.02 Capitalization of the Company. The authorized capital stock of the
Company consists of 50,000,000 shares of Common Stock par value $.001 per share.
393,379 shares will be issued and outstanding prior to the closing, after
completion of the divestiture of the company's only subsidiary and before
issuance of new shares to the Shareholder or consultants. All outstanding shares
are duly authorized, validly issued, fully paid and non-assessable. Except for
such outstanding shares, there are no outstanding shares of capital stock or
other securities or other equity interests of the Company or rights of any kind
to acquire stock, other securities or other equity interests.
3.03 Authority. The Company has full power and authority to enter into
this Agreement and to carry out the transactions contemplated herein. The
execution and delivery of this Agreement, the consummation of the transactions
contemplated hereby, and the issuance of the Consideration in accordance with
the terms hereof, have been duly authorized and approved by the Board of
Directors of the Company and no other corporate proceedings on the part of
Company are necessary to authorize this Agreement, the transactions contemplated
hereby and the issuance of the Consideration in accordance with the terms
hereof.
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3.04 Financial Statements. The Company's financial statements have been
prepared in accordance with US generally accepted accounting principles. The
Company has no liabilities other than as set forth in its financial statements
as filed with the SEC. The liabilities which stem from the Company's sole
subsidiary will be removed from the Company with the divesture of the
subsidiary. The Company is not subject to any material undisclosed liability or
obligation of any nature, whether absolute, accrued, contingent, or otherwise
and whether due or to become due.
3.05 Litigation. There is no litigation, proceeding, government
inquiry, or investigation pending or to the knowledge of the Company, threatened
against the Company affecting any of its properties or assets, or, to the
knowledge of the Company that might result, either in any case or in the
aggregate, in any material adverse change in the business, operations, affairs
or condition of the Company or any of its properties or assets, or that might
call into question the validity of this Agreement, or any action taken or to be
taken pursuant hereto.
3.06 Title to Assets. The Company has good and marketable title to all
of its assets and properties now carried on its books including those reflected
in the balance sheet contained in the Company's financial statements, free and
clear of all liens, claims, charges, security interests or other encumbrances,
except as described in the balance sheet included in the Company's financial
statements or on any Exhibits attached hereto.
3.07 Contracts and Undertakings. The Company (including any of its
subsidiaries) has no contracts, agreements, leases, licenses, arrangements,
commitments and other undertakings (collectively "Contracts") to which the
Company or any such subsidiary is a party or by which it or its property is
bound as of the Closing. The Company is not in material default, or alleged to
be in material default, under any Contract and, to the knowledge of the Company,
no other party to any Contract to which the Company is a party is in default
thereunder nor, to the knowledge of the Company, does there exist any condition
or event which, after notice or lapse of time or both, would constitute a
default by any party to any such Contract.
3.08 No Conflict. The execution and delivery of this Agreement and the
consummation of the transaction contemplated hereby will not conflict with or
result in a breach of any term or provision of, or constitute a default under,
the contract or instrument to which the Company is a party or by which it or any
of its assets are bound.
3.09 Accuracy. No public filing, certificate or other document
furnished to Shareholder by or on behalf of the Company in connection with the
transactions contemplated hereby, contains any untrue statement of a material
fact or when taken as a whole
5
omits to state material fact necessary in order to make the statements contained
herein or therein not misleading.
3.10 Divesture and No Liabilities. At the closing, US Medical Access,
Inc., (formerly Best Medical Treatment, Inc.), the Company's sole subsidiary,
will be divested in exchange for a cancellation of 625,000 Company shares. With
this divesture, the Company will have no liabilities from historical operations.
The new principals will not have to fund any liabilities of the subsidiary but
will be responsible to fund the Company's tax filing preparation and transfer
agent fees, as such become due and payable (for the 1997 fiscal year, forward).
3.11 Absence of Material Changes. Since the October 31, 1997 SEC Form
10K filing, except as described in this Agreement or as required or permitted
under this Agreement, there has not been:
3.11(a) any material change in the condition (financial or
otherwise) of the properties, assets, liabilities or business of
Company, except changes in the ordinary course of business which,
individually and in the aggregate, have not been materially adverse.
3.11(b) any undisclosed redemption, purchase or other
acquisition of any shares of the capital stock of Company, or any
issuance of any shares of capital stock or the granting, issuance or
exercise of any rights, warrants, options or commitments by the Company
relating to their authorized or issued capital stock.
IV. COVENANTS AND AGREEMENTS OF THE PARTIES EFFECTIVE PRIOR TO
CLOSING
4.01 Corporate Examinations and Investigations. prior to the Closing,
Shareholder shall be entitled, through its employees and representatives to make
such investigations and examinations of the books, records and financial
condition of the Company as Shareholder may request to verify the Company's
representations. Company shall furnish Shareholder and its representatives
during such period with all such information as Shareholder or its
representatives may reasonably request and cause the Company's officers,
employees, consultants, agents, accountants and attorneys to cooperate fully
with Shareholder or its representatives in connection with such review and
examination and to make full disclosure of all information and documents
requested by Shareholder and/or its representatives. Company shall have the
right to request additional information on Wonderwide. Company acknowledges that
US GAAP audits will not be available on Wonderwide until after the Closing.
Shareholder agrees to supply Company with copies of available financial and
business information as requested. Each party's investigations and examinations
shall be conducted at reasonable times and under reasonable circumstances, with
copies
6
of requested documents to be provided to the other party upon
request.
4.02 Cooperation; Consents. Prior to the Closing Date, each party shall
cooperate with the other parties to the end that the parties shall (i) in a
timely manner make all necessary filings with, and conduct negotiations with,
all authorities and other persons the consent or approval of which, or a license
or permit from which is required for the consummation of the transactions
contemplated by this Agreement and (ii) provide to each other party such
information as the other party may reasonably request in order to enable it to
prepare such filings and to conduct such negotiations.
4.03 Conduct of Business. From the date hereof through the Closing, the
Company and Wonderwide shall (i) conduct its business in the ordinary course and
in such a manner so that the representations and warranties contained herein
shall continue to be true and correct as of the Closing as if made at and as of
the Closing. Without the prior written consent of Shareholder, except as
expressly set forth herein, the Company shall not undertake or fail to undertake
any action if such action or failure would render any of said warranties and
representations untrue as of the Closing.
4.04 Notice of Default. From the date hereof through the Closing, each
party hereto shall give to the other parties prompt written notice of the
occurrence or existence of any event, condition or circumstance occurring which
would constitute a violation or breach of this Agreement by such party or which
would render inaccurate in any material respect any of such party's
representations or warranties contained herein.
V. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
All representations, warranties and covenants of the Company,
Shareholder and Wonderwide contained herein shall survive the closing for a
period of 2 years.
VI. CONDITIONS PRECEDENT TO CLOSING
6.01 Conditions Precedent to Obligations of Shareholder.
The obligations of Shareholder under this Agreement shall be
subject to each of the following conditions:
(a) Representations and Warranties of Company to be True. The
representations and warranties of Company herein contained shall be true in all
material respects at the Closing with the same effect as though made at such
time. The Company shall have performed in all material respects all obligations
and complied in all material respects, to its actual knowledge, with all
covenants and conditions required by this Agreement to be performed or complied
with by it at or prior to the Closing.
7
(b) No Legal Proceedings. No injunction or restraining order
shall be in effect prohibiting this Agreement, and no action or proceeding shall
have been instituted and, at what would otherwise have been the Closing, remain
pending before the court to restrain or prohibit the transactions contemplated
by this Agreement.
(c) Statutory Requirements. All statutory requirements for the
valid consummation by the Company of the transactions contemplated by this
Agreement shall have been fulfilled. All authorizations, consents and approvals
of all governments and other persons required to be obtained in order to permit
consummation by the Company of the transactions contemplated by this Agreement
shall have been obtained.
(d) Director Resignation. Prior to the Closing, all
of the directors and officers of the Company shall have submitted
their resignations to Company to be held in escrow and to become
effective at the Closing.
(e) No Material Adverse Change. Following the execution of this
agreement, there shall not have occurred any material adverse change in the
financial condition, business, or operations of, nor shall any event have
occurred which, with the lapse of time or the giving of notice, may cause or
create any material adverse change in the financial condition, business or
operations of Company.
6.02 Conditions Precedent to Obligations of Company. The
obligation of the Company under this Agreement shall be subject to
the following conditions:
(a) Representations and Warranties of Shareholder and
Wonderwide to be True. The representations and warranties of Shareholder herein
contained shall be true in all material respects as of the Closing, and shall
have the same effect as though made at the Closing; Shareholder shall have
performed in all material respects all obligations and complied in all material
respects, with all covenants and conditions required by this Agreement to be
performed or complied with by them prior to the Closing.
(b) No Legal Proceedings. No injunction or restraining order
shall be in effect, and no action or proceeding shall have been instituted and,
at what would otherwise have been the Closing, remain pending before the court
to restrain or prohibit the transactions contemplated by this Agreement.
(c) Statutory Requirements. All statutory requirements for the
valid consummation by Shareholder of the transactions contemplated by this
Agreement shall have been fulfilled. All authorizations, consents and approvals
of all governments and other persons required to be obtained in order to permit
consummation by Shareholder of the transactions contemplated by this Agreement
8
shall have been obtained, including, but not limited to, requirements imposed by
the government of Hong Kong.
(d) No Material Adverse Change. Following the execution of this
agreement, there shall not have occurred any material adverse change in the
financial condition, business, or operations of, nor shall any event have
occurred which, with the lapse of time or the giving of notice, may cause or
create any material adverse change in the financial condition, business, or
operations, of Wonderwide.
VII MISCELLANEOUS
7.01 Notices. All notices, requests and other communications thereunder
shall be in writing and shall be delivered by courier or other means of personal
service (including by means of a nationally recognized courier service or
professional messenger service), or mailed first class, postage prepaid, by
certified mail, return receipt requested, or by Federal Express or other
reputable overnight delivery service, in all cases, addressed to:
To Company:
Jehu Hand
Law Offices of Hand & Hand
The Pavilion
00000 Xxxx Xxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxx Xxxxx, XX
Fax: 000-000-0000
To Shareholder:
Xxxxx Xxxx Ming (Xxxxxx Xxxxx)
Rm. 1008-9, Shun Tak Centre
Xxxx Xxxxx
000-000 Xxxxxxxxx Xxxx
Xxxxxxx, Xxxx Xxxx
All notices, requests and other communications shall be deemed given on
the date of actual receipt or delivery as evidenced by written receipt,
acknowledgment or other evidence of actual receipt or delivery to the address.
In case of service by telecopy, a copy of such notice shall be personally
delivered or sent by registered or certified mail in the manner set forth above,
within three (3) business days thereafter. Either party hereto may from time to
time by notice in writing served as set forth above designate a different
address or a different or additional person to which all such notices or
communications thereafter are to be given.
7.02 Escrowed Shares. 15% of the Company shares being issued
to Shareholder will be held at Hand & Hand until Shareholder has
provided proper documentation that the ownership of City Hotel
(Xian) Co. Limited has been legally transferred to Wonderwide.
9
These shares will be issued at the closing and will be counted as fully paid and
outstanding. In the event that the ownership of City Hotel (Xian) Co. Limited
has not legally transferred to Wonderwide within 4 months of the closing, the
escrowed shares will be cancelled.
7.03 Consultant Shares. In addition to the shares being issued to
Shareholder, the parties agree that the Company shall issue 140,000 shares,
under SEC Form S8 to the consultants that introduced the Shareholder and the
Company. This issuance shall take place at the closing.
7.04 Parties in Interest. Except as otherwise expressly provided herein,
all the terms and provisions of this Agreement shall be binding upon, shall
inure to the benefit of and shall be enforceable by the respective heirs,
beneficiaries, personal and legal representatives, successors, designees and
assigns of the parties hereto.
7.05 Entire Agreement; Amendments. This Agreement, including any
Schedules, Exhibits and other documents and writings referred to herein or
delivered pursuant hereto, which form a part hereof, contains the entire
understanding of the parties with respect to its subject matter. There are no
restrictions, agreements, promises, warranties, covenants or undertakings other
than those expressly set forth herein or therein. This Agreement supersedes all
prior agreements and understandings between the parties with respect to its
subject matter. This Agreement may be amended only by a written instrument duly
executed by the parties or their respective successors or assigns.
7.06 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
7.07 Termination. In the event that one party's due diligence determines
a material breach or inaccuracy in the other's representation(s) or other terms
of this agreement, the party may terminate its obligations under this agreement
by providing written notice of the breach. If the breach is not cured within 10
calendar days, the agreement is terminated, with no further obligations of the
parties. If this Agreement is closed before March 31, 1998, the Agreement shall
automatically terminate.
7.08 Governing Law. This Agreement shall be subject to
California law and jurisdiction, except insofar as the laws of the
jurisdictions of domicile of the parties shall control in any
conflict of laws dispute.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the parties hereto as of the date first above written.
10
Best Medical Treatment Group, Inc.
By:
Name:
Title: President
Xxxxx Xxxx Ming
By:
Name:
Title: Chairman & President
11
EXHIBIT A
DYNASTY HOTEL XIAN BALANCE SHEET
AS AT:
Described in: RMB
12/31/95 12/31/96 12/31/97
Assets
Current Asset
Cash on Hand 370,369 492,565 328,534
Cash in Bank 379,327 1,060,070 426,773
A/R - City Ledger 3,082,635 3,115,270 2,807,264
Provision for Bad Debts (28,304) (63,458) (9,036)
Uncleared Deposit at Bank 81,640 35,628 69,579
Prepayments 127,576 585,043 243,318
A/R - Others 710,644 436,138 649,424
Inventories 2,837,335 8,047,797 15,740,441
House Fund 34,550 34,250 89,750
Total Current Assets 7,595,773 13,743,303 20,346,047
Fixed Assets
Fixed Assets at Cost 141,706,844 141,154,809 141,492,791
Profit on Revaluation of F.A. 0 0 54,638,234
Total Fixed Assets 141,706,844 141,154,809 196,131,025
Total Assets 149,302,617 154,898,112 216,477,072
Liabilities and Owner's Equity
Current Liabilities
Short Term Loan 11,852,295 11,880,368 13,543,251
Trade Accounts Payable 3,214,233 3,215,622 3,177,997
Accruals 8,830,561 11,683,685 12,539,598
Floating Deposit 113,500 228,100 173,783
Accounts Payable - Others 3,952,157 4,436,792 5,304,169
Provisions 463,098 938,573 808,232
Total Current Liabilities 28,425,844 32,383,140 35,547,030
Long Term Liabilities
Long Term Loan 73,490,670 63,487,678 51,186,721
Total Long Term Liabilities 73,490,670 63,487,678 51,186,721
Total Liabilities 101,916,514 95,870,818 86,733,751
Owner's Equity
Shareholder's Capital 58,266,000 58,266,000 58,266,000
Unappropriated Profit - B/F (17,264,000) (10,879,897) 761,294
Profit(loss) - Current Year 6,384,103 11,641,191 16,077,793
Capital Reserve 0 0 54,638,234
Total Share Capital and Reserve 47,386,703 59,027,294 129,743,321
Total Liabilities and Owner's Equity 149,302,617 154,898,112 216,477,072
12
Exhibit A
DYNASTY HOTEL XIAN PROFIT & LOSS STATEMENT
Described in: RMB
1995 1996 1997
------------------ ----------------- ----------
Operating Income
Rooms 11,336,215 13,779,052 17,300,133
Food & Beverage 11,815,138 13,870,443 16,570,167
Telephone 895,692 1,083,154 1,125,586
Laundry 112,550 175,481 168,196
Business Center 347,968 344,752 335,575
Others 1,005,415 989,953 955,183
Total Operating Income 25,512,978 30,242,835 36,454,840
Sales Tax
Rooms 568,670 688,953 865,007
Food & Beverage 653,169 693,522 828,508
Others 91,343 66,056 54,298
Total Sales Tax 1,313,182 1,448,531 1,747,813
Operating Cost
Food & Beverage 3,860,607 4,633,680 5,311,139
Others 1,027,432 219,409 63,176
Total Operating Cost 4,888,039 4,853,089 5,374,315
Salary & Wages
Rooms 716,324 809,322 939,837
Food & Beverage 1,653,130 1,841,447 2,059,040
Telephone 44,088 50,801 40,850
Laundry 32,604 78,088 90,499
Business Center -- 5,884 21,995
Others 229,694 3,445 --
Total Salary & Wages 2,675,840 2,788,987 3,152,221
Operating Expenses
Rooms 1,406,451 1,601,150 1,807,281
Food & Beverage 733,000 879,361 1,059,833
Laundry 1,656 11,301 29,000
Business Center 441 18,000 23,615
Others 93,347 101,855 118,026
Total Operating Expenses 2,234,895 2,611,667 3,037,755
Departmental Profit
Rooms 8,644,770 10,679,627 13,688,008
Food & Beverage 4,915,232 5,822,433 7,311,647
Telephone 826,047 1,032,353 1,084,736
Laundry 72,667 86,072 48,697
Business Center 335,612 320,868 289,965
Others (393,306) 599,188 837,709
Total Operating Profit 14,401,022 18,540,541 23,260,762
13
Exhibit A
DYNASTY HOTEL XIAN PROFIT & LOSS STATEMENT
Described in: RMB
1995 1996 1997
------------------ ----------------- ----------
Other Expenses
Salary & Wages
Administration & General 3,205,046 3,598,461 4,107,736
Sales & Marketing 665,921 757,763 970,948
Repair & Marketing 553,116 674,705 881,061
Total Salary & Wages 4,424,083 5,030,929 5,959,745
Expenses
Administration & General 2,756,166 3,158,628 4,193,917
Sales & Marketing 421,667 584,660 787,580
Repair & Maintenance 407,807 677,532 976,122
Energy Cost 2,407,196 2,727,601 3,065,605
Total Expenses 5,992,836 7,148,421 9,023,224
Total Other Expenses 10,416,919 12,179,350 14,982,969
Operating Profit for the Year 3,984,103 6,361,191 8,277,793
Extraordinary Income 2,400,000 5,280,000 7,800,000
Net Profit for the Year 6,384,103 11,641,191 16,077,793
14
Exhibit A
City Hotel Xian BALANCE SHEET
AS AT:
Described in: RMB
12/31/95 12/31/96 12/31/97
Assets
Current Asset
Cash on Hand 19,261 13,961 10,194
Cash in Bank 171,864 253,134 289,596
A/R - City Ledger 3,062,004 3,412,161 3,648,589
Provision for Bad Debts (25,266) (25,158) (25,158)
Prepayments 366,816 367,588 505,213
A/R - Others 1,898,261 4,668,169 9,073,809
Inventories 888,852 989,764 1,102,821
Total Current Assets 6,381,792 9,681,619 14,605,064
Fixed Assets
Fixed Assets at Cost 74,655,128 77,263,678 80,948,737
Profit on Revaluation of F.A. 0 0 43,420,209
Total Fixed Assets 74,655,128 77,263,678 124,368,946
Total Assets 83,036,920 86,945,297 138,974,010
Liabilities and Owner's Equity
Current Liabilities
Short Term Loan 7,703,857 7,671,819 7,687,506
Trade Accounts Payable 1,966,119 2,425,853 3,005,015
Accruals 160,975 165,087 212,001
Provisions 140,759 168,799 129,652
Total Current Liabilities 9,971,710 10,431,888 11,034,174
Owner's Equity
Shareholder's Capital 66,400,000 66,400,000 66,400,000
Unappropriated Profit - B.F. 1,428,800 4,665,210 10,113,730
Profit - Current Year 3,236,410 5,448,529 8,005,888
Capital Reserve 0 0 43,420,209
Total Share Capital and Reserve 71,065,210 76,513,739 127,939,836
Total Liabilities and Owner's Equity 81,036,920 86,945,297 138,974,010
15
Exhibit A
CITY HOTEL XIAN PROFIT & LOSS STATEMENT
Described in: RMB
1995 1996 1997
------------------ ----------------- ----------
Operating Income
Rooms 8,578,171 10,790,971 12,488,713
Food & Beverage 4,129,946 5,049,259 6,564,037
Others 676,230 455,390 1,110,255
Total Operating Expense 13,384,347 16,295,630 20,163,005
Sales Tax
Rooms 467,812 578,420 624,482
Food & Beverage 205,369 252,600 328,074
Others 19,570 9,512 57,167
Total Sales Tax 692,751 840,532 1,009,723
Operating Cost
Food & Beverage 1,697,799 2,001,099 2,525,614
Others 66,984 8,129 323,789
Total Operating Cost 1,764,783 2,809,228 2,849,403
Salary & Wages
Rooms 571,613 609,617 809,824
Food & Beverage 778,771 855,361 909,361
Others 74,842 6,813 100,048
Total Salary & Wages 1,425,226 1,471,791 1,819,233
Operating Expenses
Rooms 1,479,879 1,682,408 1,796,170
Food & Beverage 613,424 766,520 900,211
Others 32,480 3,602 131,269
Total Operating Expenses 2,125,783 2,452,530 2,827,650
Departmental Profit
Rooms 6,058,867 7,920,526 9,258,237
Food & Beverage 834,583 1,173,679 1,900,777
Others 482,354 427,334 497,982
Total Operating Profit 7,375,804 9,521,639 11,656,996
Others Expenses
Salary & Wages
Administration & General 1,978,455 2,253,473 2,560,325
Sales & Marketing 335,960 435,227 483,157
Repair & Marketing 346,265 439,737 472,922
Total Salary & Wages 2,660,680 3,128,437 3,516,404
Expenses
Administration & General 1,220,816 1,419,927 1,534,423
Sales & Marketing 225,420 234,991 319,250
Repair & Maintenance 276,183 300,267 409,309
Energy Cost 1,436,295 1,629,388 1,831,722
Total Expenses 3,158,714 3,584,573 4,094,704
Total Other Expenses 5,819,394 6,713,010 7,611,108
Operating Profit for the Year 1,556,410 2,808,529 4,045,888
Extraordinary Income 1,680,000 2,640,000 3,960,000
Net Profit for the Year 3,236,410 5,448,529 8,005,588
16
