SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): February 9, 2004
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Stonepath Group, Inc.
(Exact Name of Registrant as Specified in Charter)
Delaware 001-16105 65-0867684
(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
1600 Market Street, Suite 1515
Philadelphia, Pennsylvania 19103
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (215) 979-8370
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
Item 2. Acquisition or Disposition of Assets.
On February 9, 2004, Stonepath Group, Inc. (the "Company"), through its
wholly owned subsidiary, Stonepath Holdings (Hong Kong) Limited, acquired a 55%
interest in Shaanxi Sunshine Cargo Services International Co., Ltd. ("Shaanxi").
Shaanxi is a Class A licensed freight forwarder headquartered in Shanghai, PRC,
that provides its clients with a wide range of customized transportation and
logistics services and supply chain solutions, including global freight
forwarding, warehousing and distribution, shipping services and special freight
handling.
Shaanxi will continue as a neutral provider of services to the freight
forwarding community, while operating a separate division dedicated to the
emerging global logistics business of the Company and Shaanxi's existing
commercial clientele.
Shaanxi is the successor, by way of asset acquisition, to the freight
forwarding business formerly operated by Andy Tsai since 1993 as the Shanghai
branch of Shaanxi Sunshine Express International Co., Ltd. (the "Business"). The
substance of the transaction resulted in the contribution by Andy Tsai of the
Business to Shaanxi, in exchange for a 45% interest in Shaanxi (of which 5%
ultimately was retained by a third party), concurrent with an acquisition of a
55% interest in Shaanxi by the Company for the purchase consideration identified
below.
The assets acquired consist primarily of the goodwill and other
intangibles such as intellectual property, employee base, operating methods,
systems and customer relationships associated with the operations of the
Business. Personal property consisting primarily of office equipment, cash and
eligible accounts receivable were also acquired. In addition, accounts payable
and certain leases were assumed as part of the acquisition.
In consideration for its interest in the acquired Business, the Company
paid $5.5 million at closing through a combination of $3.5 million cash and $2.0
million in value of the Company's stock, consisting of 630,915 shares of the
Company's common stock valued at $3.17 per share. The shares are subject to a
one year restriction upon resale, and are subject to pro rata forfeiture based
upon a formula that measures the actual pre-tax net income of the Business
through December 31, 2004, versus the targeted level of income of $4 million (on
an annualized basis). The Company has agreed to issue additional shares of its
common stock to Mr. Tsai if at the end of the one year restrictive period, the
Company's common shares are trading at a price of less than $3.17 per share. The
Company also agreed to an earn-out arrangement over a period of five (5) years
of up to $5.5 million ($1.1 million per year) contingent upon Shaanxi realizing
pre-tax net income of at least $4 million per year during the earn-out period.
As additional purchase price, on a post-closing basis, the Company has also
agreed to pay for excess closing date working capital estimated at between $1
and $2 million.
To facilitate a smooth transition, the transaction is scheduled to take
effect as of March 1, 2004. Additionally, because the Company reports its
offshore operations on a one month lag, the earnings impact of the acquisition
will first be reflected in the Company's consolidated second quarter.
2
The funds required for the cash payment at the closing were obtained by
the Company from its credit facility with LaSalle Business Credit, Inc. The
consideration for the transaction was determined based on arms length
negotiations between the parties.
For the ten (10) months ended October 31, 2003, the Business reported
pre-tax income of approximately $ 2.3 million on revenues of approximately $ 55
million.
The acquisition also included the employment of the senior managers of
the Business.
On February 10, 2004, the Company issued a press release announcing the
transaction. A copy of the press release is attached to this Form 8-K as Exhibit
99.1.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Acquired Business.
(i) Financial Statements of Shaanxi Sunshine Express International
Co., Ltd. (Shanghai branch).
Independent Auditors' Report
Balance Sheet as of October 31, 2003
Statement of Income for the ten months ended October 31, 2003
Statement of Branch Equity for the ten months ended
October 31, 2003
Statement of Cash Flows for the ten months ended
October 31, 2003
Notes to the Financial Statements
(b) Pro Forma Financial Information.
It is impracticable at the time of the filing of this Current
Report on Form 8-K to provide the pro forma financial
information that will show the acquisition of the Business by
the Company as required by Regulation S-X. Accordingly, the
Company will file the required pro forma financial information
under cover of an Amendment to the Current Report on Form 8-K
as soon as practicable, but in any event not later than sixty
(60) days after the date on which this Current Report must be
filed with the Commission.
(c) Exhibits (referenced to Item 601 of Regulation S-K).
2.9 Amended and Restated Contract for the Sale of Assets by and
between Stonepath Holdings (Hong Kong) Limited and Andy Tsai,
dated November 10, 2003.
3
2.10 Amendment Letter Agreement dated February 9, 2004, to the
Amended and Restated Contract for the Sale of Assets by and
between Stonepath Holdings (Hong Kong) Limited and Andy Tsai.
23.1 Independent Auditors' Consent
99.1 Press Release dated February 10, 2004
4
FINANCIAL STATEMENTS PROVIDED UNDER ITEM 7(A)
SHAANXI SUNSHINE EXPRESS INTERNATIONAL CO., LTD. (SHANGHAI BRANCH)
REPORT ON AUDIT OF FINANCIAL STATEMENTS
FOR THE TEN MONTHS ENDED OCTOBER 31, 2003
5
SHAANXI SUNSHINE EXPRESS INTERNATIONAL CO., LTD. (SHANGHAI BRANCH)
TABLE OF CONTENTS
Independent Auditors' Report...................................................7
Balance Sheet..................................................................8
Statement of Income............................................................9
Statement of Branch Equity....................................................10
Statement of Cash Flows.......................................................11
Notes to the Financial Statements.............................................12
6
INDEPENDENT AUDITORS' REPORT
To the Owner of
Shaanxi Sunshine Express International Co., Ltd. (Shanghai Branch)
We have audited the accompanying balance sheet of Shaanxi Sunshine Express
International Co., Ltd. (Shanghai Branch) as of October 31, 2003 and the related
statements of income, branch equity and cash flows for the ten months ended
October 31, 2003. These financial statements are the responsibility of the
Branch's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
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 audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Shaanxi Sunshine Express
International Co., Ltd. (Shanghai Branch) as of October 31, 2003 and the results
of its operations and its cash flows for the ten months ended October 31, 2003
in conformity with accounting principles generally accepted in the United States
of America.
Ho, Sneddon, Chow,
Certified Public Accountants Limited
Hong Kong
February 6, 2004
7
SHAANXI SUNSHINE EXPRESS INTERNATIONAL CO., LTD. (SHANGHAI BRANCH)
BALANCE SHEET
October31,
2003
Note US$
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 2,098,433
Accounts receivable, net of provision for doubtful debts of US$ Nil 13,619,683
Prepayments and other assets 973,094
Due from Principal 7 2,603,369
TOTAL CURRENT ASSETS 19,294,579
FIXED ASSETS, NET 8 88,539
TOTAL ASSETS $ 19,383,118
LIABILITIES AND BRANCH EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 11,634,499
Other payable 166,050
Provision for taxation 4 3,043,618
TOTAL CURRENT LIABILITIES 14,844,167
COMMITMENTS AND CONTINGENCIES 1, 6
BRANCH EQUITY
Invested capital 112,048
Retained earnings 4,426,903
TOTAL BRANCH EQUITY 4,538,951
TOTAL LIABILITIES AND BRANCH EQUITY $ 19,383,118
See accompanying notes to the financial statements.
8
SHAANXI SUNSHINE EXPRESS INTERNATIONAL CO., LTD. (SHANGHAI BRANCH)
STATEMENT OF INCOME
Ten months
ended
October 31,
2003
Note US$
Gross revenues $ 55,438,208
Direct cost of service 51,020,849
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Net revenues 4,417,359
Personnel costs 1,145,238
Other selling, general and administrative costs 6, 7 1,008,199
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Income from operations 2,263,922
Other non-operating income 66,629
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Income before income taxes 2,330,551
Income tax expense 4 1,032,895
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Net income $ 1,297,656
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See accompanying notes to the financial statements.
9
SHAANXI SUNSHINE EXPRESS INTERNATIONAL CO., LTD. (SHANGHAI BRANCH)
STATEMENT OF BRANCH EQUITY
TEN MONTHS ENDED OCTOBER 31, 2003
Invested Retained Branch
capital earnings equity
US$ US$ US$
Balance at December 31, 2002 $ 112,048 $ 3,163,247 $ 3,275,295
Net income 1,297,656 1,297,656
Dividends (34,000) (34,000)
--------------- ---------------- ----------------
Balance at October 31, 2003 $ 112,048 $ 4,426,903 $ 4,538,951
=============== ================ ================
See accompanying notes to the financial statements.
10
SHAANXI SUNSHINE EXPRESS INTERNATIONAL CO., LTD. (SHANGHAI BRANCH)
STATEMENT OF CASH FLOWS
Ten months
ended
October 31,
2003
US$
Cash flow from operating activities
Net income $ 1,297,656
-----------------
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation 49,161
Changes in assets and liabilities
Accounts receivable (4,538,891)
Other assets (243,887)
Accounts payable and other liabilities 3,313,166
Taxation 1,007,683
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Net cash provided by operating activities 884,888
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Cash flow from investing activities
Purchases of furniture and equipment (54,073)
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Net cash used in investing activities (54,073)
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Cash flow from financing activities
Advances from Principal 272,635
Dividends paid (34,000)
-----------------
Net cash provided by financing activities 238,635
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Net increase in cash and cash equivalents 1,069,450
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Cash and cash equivalents at beginning of period 1,028,983
-----------------
Cash and cash equivalents at the end of period $ 2,098,433
=================
Supplementary disclosures of cash flow information
Cash paid during the period for income taxes $ 25,212
=================
See accompanying notes to the financial statements.
11
SHAANXI SUNSHINE EXPRESS INTERNATIONAL CO., LTD. (SHANGHAI BRANCH)
NOTES TO THE FINANCIAL STATEMENTS
TEN MONTHS OCTOBER 31, 2003
1. CHANGE IN LICENSING REGIME
On June 29, 2003, the governments of the Peoples Republic of China ("PRC") and
the Hong Kong Special Administrative Region signed the Mainland and Hong Kong
Closer Economic Partnership Arrangement ("CEPA"). Under the terms of CEPA, after
January 1, 2004 Hong Kong Service Suppliers ("HKSS") engaged in the freight
forwarding business may apply for unrestricted freight forwarding licenses (""A"
Licenses"), a permit previously reserved for domestic PRC enterprises. This
development will likely result in a substantial increase in such "A" Licenses
and will eliminate the need for such companies to seek an "A" License holder to
transact through.
A substantial portion of the airfreight business of Shaanxi Sunshine Express
International Co., Ltd. (Shanghai Branch) (the "Branch"), which accounts for
most of the Branch's profit, relates to the provision of "A" License services to
those companies lacking such license. Thus, CEPA may have an adverse impact on
the Branch's operations and profit. The magnitude of the impact of CEPA is not
quantifiable due to the difficulty of assessing the impact of the various
factors involved and the unique features inherent in the PRC forwarding
business.
2. ORGANIZATION AND BASIS OF FINANCIAL STATEMENTS
Nature of Operations
Shaanxi Sunshine Express International Co., Ltd. ("Shaanxi") is a company
incorporated in the PRC. The entire share capital of the company is held by the
State Economic & Trade Department, Shaanxi division that is headquartered in
Xi'an, Shaanxi, PRC. Shaanxi has granted a license to the Branch to operate
independently, retaining all profits, for which the Branch pays a negotiated
fee, the amount of which is a function of the revenue and profitability of the
operation. Such fees amounted to US$ 86,232 for the ten months ended October 31,
2003.
Shaanxi Sunshine Express International Co., Ltd. (Xian Branch) (the "Xian
Branch"), Shaanxi Sunshine Express International Co., Ltd. (Nanjing Branch) (the
"Nanjing Branch") and Shaanxi Sunshine Express International Co., Ltd., a
company incorporated under the laws of Hong Kong Special Administrative Region,
("Shaanxi Sunshine Hong Kong") are all owned by the beneficial owner of the
Branch (the "Principal"), are under the management of the Branch and function as
special purpose booking vehicles only to meet licensing or operational needs.
The Branch is a freight forwarding company, offering a full range of
international logistics services including international air and ocean
transportation. The Branch services a customer base of manufacturers and
distributors through a network of agent offices in Asia and in the principal
global centers.
12
SHAANXI SUNSHINE EXPRESS INTERNATIONAL CO., LTD. (SHANGHAI BRANCH)
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
2. ORGANIZATION AND BASIS OF FINANCIAL STATEMENTS - continued
Basis of Preparation
The financial statements of the Branch have been prepared in accordance with
accounting principles generally accepted in the United States of America ("U.S.
GAAP"). As the Xian Branch, the Nanjing Branch and Shaanxi Sunshine Hong Kong
have neither staff nor independent operations and function only as special
purpose booking entities, they have been treated as extensions of the Branch,
rather than separate entities and thus their financial results have been
combined with those of the Branch so as to provide a more accurate presentation
of the results. The operations of Xian Branch, Nanjing Branch and Shaanxi
Sunshine Hong Kong are not material individually or in the aggregate.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition
The Branch derives its revenues from three principal sources: freight
forwarding, customs brokerage and warehousing and other value added services.
As a freight forwarder, the Branch is primarily a non-asset based carrier that
does not own or lease any significant transportation assets. The Branch
generates the majority of its revenues by purchasing transportation services
from direct (asset-based) carriers and using those services to provide
transportation of property for compensation to its customers. The Branch is able
to negotiate favorable buy rates from the direct carriers by consolidating
shipments from multiple customers and concentrating its buying power, while at
the same time offering lower sell rates than most customers would otherwise be
able to negotiate. When acting as an indirect carrier, the Branch will enter
into a written agreement with its customers or issue a tariff and a house bill
of lading to customers as the contract of carriage. When the freight is
physically tendered to a direct carrier, the Branch receives a separate contract
of carriage, or master bill of lading. In order to claim for any loss associated
with the freight, the customer is first obligated to pay the freight charges.
Based on the terms in the contract of carriage, revenues related to shipments
where the Branch issues a house bill of lading are recognized when the freight
is delivered to the direct carrier at origin. Costs related to the shipment are
also recognized at this same time.
All other revenues, including revenues for customs brokerage and warehousing and
other value added services, are recognized upon completion of the service.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand and investments in money market
funds and investment grade securities held with high quality financial
institutions. The Branch considers all highly liquid instruments with a
remaining maturity of 90 days or less at the time of purchase to be cash
equivalents.
Evaluation of Trade Receivables
Management must make estimates of the uncollectability of accounts receivable.
Management specifically analyzed accounts receivable and analyzes historical bad
debts, customer concentrations, customer credit-worthiness, current economic
trends and changes in customer payment terms when evaluating the adequacy of the
allowance for doubtful accounts.
13
SHAANXI SUNSHINE EXPRESS INTERNATIONAL CO., LTD. (SHANGHAI BRANCH)
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
Furniture and Equipment
Furniture and equipment are stated at cost, less accumulated depreciation
computed on a straight-line basis over the estimated useful lives of the
respective assets. Depreciation is computed using three-year lives for all
furniture and equipment. Upon retirement or other disposition of these assets,
the cost and related accumulated depreciation are removed from the accounts and
the resulting gain or loss, if any, is reflected in results of operations.
Expenditures for maintenance, repairs, and renewals of minor items are charged
to expense as incurred. Major renewals and improvements are capitalized.
Use of Estimates
The presentation of financial statements in accordance with accounting
principles generally accepted in the United States of America 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. Such estimates include the establishment
of an allowance for doubtful accounts. Actual results could differ from those
estimates.
Income Taxes
Taxes on income are provided in accordance with Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes". Deferred
income tax assets and liabilities are recognized for the expected future tax
consequences of events that have been reflected in the financial statements.
Deferred tax assets and liabilities are determined based on the differences
between the book values and the tax bases of particular assets and liabilities
and the tax effects of net operating loss and capital loss carry forwards.
Deferred tax assets and liabilities are measured using tax rates in effect for
the years in which the differences are expected to reverse. A valuation
allowance is provided to offset the net deferred tax assets if, based upon the
available evidence, it is more likely than not that some or all of the deferred
tax assets will not be realized.
Foreign Currency Translation
Balance sheet accounts are translated using year-end exchange rates. The
resulting translation adjustment is recorded as a separate component of branch
equity, if material. Statement of income accounts are translated at the average
exchange rate during the year. Gains and losses from foreign currency
transactions are included in income. Most of the Branch's business is transacted
in United States Dollars, with the balance being transacted in Renminbi, the
value of which in relation to the United Stated Dollar is managed and did not
fluctuate during the period. As such, the translation amounts were not material
for the ten months ended October 31, 2003.
14
SHAANXI SUNSHINE EXPRESS INTERNATIONAL CO., LTD. (SHANGHAI BRANCH)
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
Translation into United States Dollars
The financial statements of the Branch are maintained and expressed in PRC
Renminbi. The translation of PRC Renminbi amounts into US dollars for balance
sheet amounts have been made at the rate of RMB8.3 to US$ 1, the approximate
free rate of exchange at October 31, 2003. Revenues and expenses are translated
at average exchange rate during the year. The resulting translation adjustment
is recorded as a separate component of branch equity. Gains and losses from
foreign currency transactions are included in income.
Such translation should not be construed as representations that the PRC
Renminbi amounts could be converted into US dollars, at that rate or any other
rate.
Staff Retirement Plan Costs
The Branch's costs related to the staff retirement plans are charged to the
statement of income as incurred.
Major Customers and Concentration of Credit Risk
Financial instruments that potentially subject the Branch to concentrations of
credit risk consist principally of cash investments and accounts receivable.
The Branch maintains its cash accounts with high quality financial institutions.
With respect to accounts receivable, such receivables are primarily from
manufacturers and distributors with whom the management has maintained long term
business relationships. Credit is granted to customers on an unsecured basis,
and generally provides for 45-60 day payment terms. To reduce credit risk, the
Branch performs ongoing credit evaluations of its customers' financial
conditions. Credit losses, have occurred from time to time, but have not been
material to the overall operations of the Branch.
For the ten months ended October 31, 2003, no one customer accounted for 10% or
more of revenue. At October 31, 2003, no one customer accounted for 10% or more
of accounts receivable.
New Accounting Pronouncements
In January 2003, the Financial Accounting Standards Board issued Interpretation
No. 46, "Consolidation of Variable Interest Entities," which provides new
guidance with respect to the consolidation of all unconsolidated entities,
including special purpose entities. With the adoption of Interpretation No. 46,
the Branch included the assets and operations of Shaanxi Sunshine Express
International Co., Ltd., a company incorporated under the laws of Hong Kong
Special Administrative Region, the shares of which are held by the Principal for
the benefit of the Branch, in the accounts of the Branch.
4. INCOME TAXES
Income is subject to taxation only in the PRC. PRC companies are subject to PRC
taxation on their activities conducted in the PRC. For the ten months ended
October 31, 2003, income tax expense was composed of current taxes of
US$ 1,032,895 and US$ nil deferred taxes.
As at October 31, 2003 there were no temporary differences giving rise to
deferred taxes.
15
SHAANXI SUNSHINE EXPRESS INTERNATIONAL CO., LTD. (SHANGHAI BRANCH)
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
5. STAFF RETIREMENT PLAN
According to the Social Security System legislation, the Shanghai City
Government has established a social security system based on the basic social
security, supplementary insurance and social relief. The Branch is required to
participate in this system and to make contributions for its eligible employees.
The retirement related liabilities of the Branch are limited to the amount of
such payments. The contributions borne by the Branch are calculated as a
percentage of the salaries and wages for each eligible employee as calculated
under the legislation. Contributions for the ten months ended October 31, 2003
were US$ 29,578.
6. COMMITMENTS AND CONTINGENCIES
The Branch leases equipment, office and warehouse space under operating leases
expiring at various times through 2006. Total rent expense related to continuing
operations for the ten months ended October 31, 2003 was US$ 167,565. As of
October 31, 2003, future minimum lease payments are as follows:
US$
2003 $ 30,638
2004 183,824
2005 147,657
2006 36,578
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Total $ 398,697
==============
7. RELATED PARTY TRANSACTIONS
The amount due from the Principal, being the beneficial owner of the operations
of the Branch, is unsecured, interest free and bears no fixed term of repayment.
Some of the premises occupied by the Branch are owned by related parties, being
persons related to the Principal. During the ten months ended October 31, 2003,
rent in the amount of US$ 2,410 was charged to the Branch for using these
premises, the fair market rent for such premises being US$ 89,629.
16
SHAANXI SUNSHINE EXPRESS INTERNATIONAL CO., LTD. (SHANGHAI BRANCH)
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
8. FURNITURE AND EQUIPMENT
Furniture and equipment consists of the following:
October 31,
2003
US$
Furniture and fixtures $ 11,070
Office equipment and computers 122,378
Leasehold improvement 4,253
Less: Accumulated depreciation (49,161)
--------------
Total $ 88,539
==============
9. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following disclosure of the estimated fair value of financial instruments is
made in accordance with the requirements of SFAS No.107, "Disclosure about Fair
Value of Financial Instruments". The estimated fair value amounts have been
determined by the Branch using available market information and appropriate
valuation methodologies. The estimates presented herein are not necessarily
indicative of amounts that the Branch could realize in a current market
exchange.
At October 31, 2003 the carrying values of cash equivalents, accounts receivable
and accounts payable approximated their fair values as they are short term and
are generally receivable or payable on demand.
10. SUBSEQUENT EVENT
The beneficial owner of the Branch has agreed in principle for the sale of 55%
of the Branch's assets, including the "A" license, for a base price of US$
11,000,000, with approximately US$ 5,500,000 to be received at closing, and the
balance to be received ratably under a five-year earn-out arrangement based upon
the future financial performance of the Branch.
17
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.
STONEPATH GROUP, INC.
Date: February 20, 2004 By: /s/ Dennis L. Pelino
-------------------------------------------
Name: Dennis L. Pelino
Title: Chairman and Chief Executive Officer
18
Exhibit Index
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Exhibit Number Description
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2.9 Amended and Restated Contract for the Sale of
Assets by and between Stonepath Holdings (Hong
Kong) Limited and Andy Tsai, dated November 10,
2003.
2.10 Amendment Letter Agreement dated February 9, 2004,
to the Amended and Restated Contract for the Sale
of Assets by and between Stonepath Holdings (Hong
Kong) Limited and Andy Tsai.
23.1 Independent Auditors' Consent
99.1 Press Release dated February 10, 2004
19