SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K12g3/A
AMENDMENT #1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report: June 23, 2004
XIN NET CORP.
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(Exact name of registrant as specified in its charter)
Florida 0-26559 330-751560
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
Suite 900, 789 West Pender Street, Vancouver, B.C. Canada V6C 1H2
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(New address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (604) 632-9638
Item 1. Changes in Control of Registrant
None.
Item 2. Acquisition or Disposition of Assets
The Company has closed on the Definitive Agreement to acquire 51% of a
SMS provider in China, Beijing Quicknet Telecommunications Corp. Ltd. (Beijing
Quicknet), from non-affiliates.
Xin Net Corp. announced in February 2004 that it had entered into an
acquisition agreement with the shareholders of QuickNet Telecommunication Corp.
("QuickNet"), an enterprise mobile services provider based in Beijing, China.
Under the terms of the acquisition, Xin Net Corp. has issued 6,120,000
shares at a deemed price of US$0.50 per share to the shareholders of QuickNet,
in exchange for 49% of the issued and outstanding shares of QuickNet. In addi-
tion, Xin Net entered into an Agreement with the owners of 2% of Beijing
QuickNet who manage and run Beijing QuickNet to acquire their shares. Xin Net
Corp. also retains an option to acquire the remaining 49% of the QuickNet shares
for US$4 million in cash and/or shares within the first year after the closing
date of the acquisition, or for US$5 million in cash and/or shares within the
second year after the closing date of the acquisition.
QuickNet is one of the first companies to focus on mobile solutions for
businesses in China. QuickNet's strategy of targeting corporate users is aimed
at achieving a higher percentage of recurring revenue and better margins.
Management's view is that being an "early bird" provider of mobile
services to enterprises offers more growth potential than if QuickNet targeted
the highly competitive individual consumer segment.
QuickNet's first application "Mobile marketing" is the use of the mobile
medium as a communications and entertainment channel between a brand and an
end-user. Mobile marketing is a enabling spontaneous, direct, interactive,
and/or targeted communications, any time, any place to a mobile device user.
Mobile marketing can be used in a variety of ways:
o For customer acquisition
o For customer retention
o For loyalty building
o As a sales promotion tool
o To support product launches
o To raise brand awareness
o For internal communications
o As a redemption/coupon tool
o For direct marketing
o As an effective business to business communications vehicle
o As an additional revenue stream
o To be able to offer time/location specific offers
o As a channel for delivering ring tones and logos
China has many millions of mobile phone users. Up to one billion Short
Messages are sent every day.
The Company may conduct R&D on various mobile applications for
enterprises in China and intends to expand revenue and client base by several
sales approaches which might include recruiting sales agents, setting up
branches in major cities, co-marketing with major carriers, increased in-house
sales force, marketing campaigns nationwide, and co-branding with industry
leaders to more corporate clients in various industries.
Item 3. Bankruptcy or Receivership
None.
Item 4. Changes in Registrant's Certifying Accountant
None.
Item 5. Other Events and Regulation FD Disclosure
The purpose of this 8-K12g3 is to file the consolidated Pro
Forma financials which are included as pages PF-1 through PF-3.
Item 6. Resignations of Registrant's Directors
None
Item 7. Financial Statements & Exhibits
Financial Statements - Beijing Quicknet Telecommunication
Corporation for period June 5, 2003
through December 31, 2003 (previously
filed, see 8-K filed June 4, 2004)
Pro Forma Financial Statements
Exhibits: 10 Acquisition Agreement (previously filed, see
8-K dated February 17, 2004)
10.1 Amendment to the Share Purchase Agreement
(previously filed, see 8-K dated February 19,
2004)
Item 8. Change in Fiscal Year
None.
Item 9. Regulation FD Disclosure
None.
Item 10. Amendments to the Registrant's Code of Ethics, or Waiver of a
Provision of the Code of Ethics
None.
Item 11. Temporary Suspension of Trading Under Registrant's Employee
Benefit Plans
None.
Item 12. Results of Operations and Financial Condition
None.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: June 23, 2004
XIN NET CORP.
By: /s/ Xiao-qing Du
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Xiao-qing Du, President
Xin Net Corp.
Pro Forma Financial Information
Introductory paragraph:
The following pro forma financial results shows the historical financial
statements of Xin Net Corp. ("Xin Net") and Beijing Quicknet Telecommunication
Corporation ("Quicknet") for the three months ended March 31, 2004, adjusted
to assume that the acquisition of Quicknet by Xin Net has been completed at
the beginning of the period.
By an agreement dated February 20, 2004, Xin Net and Quicknet entered into an
acquisition agreement. Xin Net agreed to acquire 49% equity interest in
Quicknet through issuance of 6,120,000 shares at a deemed price of $0.50 per
share. Xin Net also entered into agreement with the owners of 2% equity
interest in Quicknet who manage and run Quicknet to acquire their shares at a
nominal value. Through this arrangement, Xin Net has an effective control of
51% equity interest in Quicknet. Xin Net also has the option to acquire the
remaining 49% equity interest in Quicknet shares for $4 million in cash and/or
shares within the first year after closing date of the acquisition, or for $5
million in cash and/or shares within the second year after the closing of the
acquisition.
Assumptions :
1. The acquisition occurred on the first day of the period
2. Xin Net has issued 6,120,000 common shares to exchange for 49% equity
interest in Quicknet
3. The owners of the 2% equity interest has assigned all their rights and
interest in Quicknet to Xin Net
PF-1
Pro forma
Pro-forma Consolidated Balance Sheet Pro-forma Consolidated
as at March 31, 2004 Xin Net Quicknet AdjustmentsNote Balance Sheet
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(Unaudited) (Unaudited)
ASSETS
Current Assets
Cash and cash equivalents $ 3,304,019 $ 963,857 $ - $ 4,267,876
Trade receivables, net 103,227 1,329 - 104,556
Deposits and prepayments 24,446 - - 24,446
Other receivables - 92,974 - 92,974
Assets to be disposed of 2,435,485 - - 2,435,485
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Total Current Assets 5,867,177 1,058,160 - 6,925,337
Investment - at equity 253,524 - - 253,524
Property and equipment, net 12,416 - - 12,416
Goodwill 187,436 - 952,705 1 1,140,141
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Total Assets $ 6,320,553 $ 1,058,160 $ 952,705 $ 8,331,418
============= ============ =========== ============
LIABILITIES
Current Liabilities
Accounts payable and accrued liabilities $ 243,082 $ 387,033 $ - $ 630,115
Deferred revenue 20,624 1,159,895 - 1,180,519
Liabilities to be disposed of 3,200,857 10,852 - 3,211,709
Securities deposit from Sino-i.com Ltd. 2,415,800 - - 2,415,800
------------- ------------ ----------- ------------
Total Current Liabilities 5,880,363 1,557,780 - 7,438,143
Minority Interest 43,190 - (209,745) 1 (201,896)
(35,341) 2
SHAREHOLDERS' EQUITY
Capital stock $ 41,360 $ 121,000 $ 6,120 $ 1 47,480
(121,000) 1
Additional paid-in capital 8,194,045 - 728,280 1 8,922,325
Deficit (7,678,545) (621,175) 549,050 1(7,715,329)
35,341 2
Accumulated other comprehensive income (159,860) 555 (159,305)
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397,000 (499,620) 1,197,791 1,095,171
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Total Liabilities and Shareholders' Equity $ 6,320,553 $ 1,058,160 $ 952,705 $ 8,331,418
============= ============ =========== ============
Notes :
1. To record the acquisition of 51% equity interest of Quicknet and elimination
adjustments upon incorporation of assets
2. To record the minority share of the loss of the period
PF-2
Pro forma
Consolidated
Statement
Consolidated Pro-forma Statement of Operations Pro-forma of
for three months ended March 31, 2004 Xin Net Quicknet AdjustmentsNote Operations
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(Unaudited) (Unaudited)
Net sales $ 166,911 $ 431,622 $ 598,533
Cost of sales (33,375) (143,854) (177,229)
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Gross profit 133,536 287,768 421,304
General and administrative (147,872) (300,633) (448,505)
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Total operating loss (14,336) (12,865) (27,201)
Other income 462 214 676
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Income before provision for income taxes (13,874) (12,651) (26,525)
Income taxes - 59,473 59,473
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Net income before minority interest $ (13,874) $ (72,124) $ (85,998)
Minority interest (5,043) - 35,341 2 30,300
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Net income after minority interest (18,917) (72,124) (55,698)
============= ============ ============
Basic and diluted earnings per share $ (0.00) $ (0.00)
============= ============
Pro forma
Consolidated
Statement
Consolidated Pro-forma Statement of Operations Pro-forma of
for twelve months ended December 31, 2003 Xin Net Quick Net AdjustmentsNote Operations
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(Audited) (Audited)
Net sales $ 475,309 $ 221,312 $ 696,621
Cost of sales (206,619) (250,926) (457,545)
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Gross profit 268,690 (29,614) 239,076
General and administrative (461,750) (519,854) (981,604)
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Total operating loss (193,060) (549,468) (742,528)
Other income (loss) (30,929) 418 (30,511)
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Loss before minority interest, taxes and
discontinued operations (223,989) (549,050) (773,039)
Minority interest 26,046 - 269,035 2 295,083
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Loss from continuing operations (197,943) (549,050) (477,956)
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Discontinued operations
Loss from assets held for sale (322,987) - (322,987)
Gain on disposal of subsidiary 206,653 - 206,653
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Loss from discontinued operations (116,334) - (116,334)
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Net loss available to common stockholders $ (314,277) $ (549,050) $ (594,290)
============= ============ ============
Loss per share available to common stockholders:
Loss from continuing operations (0.01) (0.01)
Loss from discontinuing operations (0.00) (0.00)
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Basic and diluted earnings per share $ (0.01) $ (0.01)
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PF-3