SECURITIES AND EXCHANGE COMMISSION
                         Washington, DC 20549

                             FORM 10-K/A
                           AMENDMEMNT NO. 2

             (X) ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF 
                   THE SECURITIES EXCHANGE ACT OF 1934

                  For the Fiscal Year Ended June 30, 1998

            ( ) TRANSITION REPORT PURSUANT TO SECTION 
          13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

                     Commission File Number: 000-24999

                              LOTUS PACIFIC, INC
            (Exact name of registrant as specified in its charter)

                                 Delaware
                          (State of Organization)

                                52-1947160
                  (I.R.S. Employer Identification Number)

        200 Centennial Avenue, Suite 201, Piscataway, New Jersey 08854
                   (Address of principal executive offices)

                              (732) 885-1750
             (Registrant's telephone number, including area code)


     Securities registered pursuant to Section 12(b) of the Act: None
     Securities registered pursuant to Section 12(g) of the Act: None

     Indicate by check mark whether the Registrant (1) filed all reports
required to be filed by Section 13 or 15 (d) of the Exchange Act during the
preceding 12 months (or for such shorter period than the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes  ___X___    No ______

     Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-B is not contained herein, and will not be contained
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. (   )

     The aggregate market value of the voting stock held by non-affiliates of
the Registrant was approximately $160 million as of March 31, 1999, based on
the closing sale price on the OTC Bulletin Board reported for such date. Shares
of common stock held by each executive officer and director and by each person
known by the Company to own 5% of more of the outstanding common stock have
been excluded in that such persons may be deemed to be affiliates. This
determination of affiliate status is not necessarily a conclusive determination
for other purposes.

     The number of shares outstanding of Registrant's Common Stock, $0.001 par
value, was 48,533,804 shares at March 31, 1999. 




                              LOTUS PACIFIC, INC.
                                 FORM 10-K/A
                        FOR THE YEAR ENDED JUNE 30, 1998

                              TABLE OF CONTENTS

Part I

   Item 1.    Business           
   Item 2.    Properties                                                    
   Item 3.    Legal Proceedings                                           
   Item 4.    Submission of Matters to a Vote of Security Holders   

Part II

   Item 5.    Market for Registrant's Common Equity and Related Stockholder
              Matters 
   Item 6.    Selected Financial Data 
   Item 7.    Management's Discussion and Analysis of Financial Condition and
              Results of Operation  
   Item 7A.   Quantitative and Qualitative Disclosures about Market Risk
   Item 8.    Financial Statements and Supplementary Data
   Item 9.    Changes in and Disagreements with Accountants on Accounting
              and Financial Disclosure

Part III

   Item 10.   Directors and Executive officers of the Registrant
   Item 11.   Executive Compensation
   Item 12.   Security Ownership of Certain Beneficial Owners & Management
   Item 13.   Certain Relationship and Related Transactions

Part IV

   Item 14.   Exhibits, Financial Statement Schedules and Reports on Form 8-K

              Signatures



Part I

Item 1. BUSINESS
 
GENERAL

Lotus Pacific, Inc. (the "Company" or "Registrant") is an Internet technology
and services company that, through its five subsidiaries, develops and markets
Internet-related products and services in the United States and international
markets with an emphasis on financial services. Through realizing its Internet
-Wall Street Solutions(TRADEMARK) concept, the Company provides new Internet
solutions, services, and opportunities for its customers and shareholders. The
Company's Common Stock is currently traded on OTC Bulletin Board under the
symbol "LPFC".

The Company operates in two segments: (1) the development and marketing of the
Internet-related products and services. Its products include TeleWeb systems,
TeleWeb/WonderTV set-top boxes, Internet routers, cable modems and cable modem
chips; and (2) on-line trading and brokerage services. Regent Electronics Corp,
Arescom Inc. and Turbonet Communications are the Company's three subsidiaries
engaged in the business of the Internet-related products and services. U.S.
Securities & Futures Corp. and Professional Market Brokerage, Inc. are engaged
in the business of on-line trading and brokerage services.

The Company was incorporated under the laws of the State of Delaware on
June 25, 1985, as Quatech, Inc. to raise capital and investigate and acquire
any suitable asset, property or pursue other business opportunities. In April
1987, the Company completed a public offering of securities registered on
Form 3-18 with the Securities and Exchange Commission. In June 1993, the
Company disposed of all of its interests in other entities and ceased to have
any business operations.

In September 1994, the Company was reorganized and changed its name to Lotus
Pacific, Inc. In January 1997, the Company's majority ownership was changed.
After new directors and executive officers were elected, the Company set up
two wholly owned subsidiaries, Regent Electronics Corp., registered in the
State of Delaware and Richtime Far East Ltd. in Hong Kong. 

In June 1997, the Company, through its subsidiary Regent Electronics Corp.,
acquired Amiga-based multimedia technology and its related assets and rights
from Rightiming Electronics Corp. for an aggregate consideration of US $5
million plus 8 million shares of common stock of Regent Electronics Corp. The
acquired assets included all Amiga-Commodore's patents, licenses, trademarks,
and copyrights to be registered and used in China, Taiwan, Hong Kong, Macao,
and the bordering countries between China and the former Soviet Union. Over
the past years Regent developed a series of multimedia and multi-functional
TV based set-top Internet access devices, including the TeleWeb Broadcasting
System, TeleWeb A6000, A6060, A8000, and A9000.
  
In March 1997, Richtime Far East Ltd., a subsidiary of the Company, started
its garment and textile import-export operation in Hong Kong. The Company
received customer orders from Europe and North America, and then contracted
with garment or textile manufacturers, mainly in China, to fulfill those
orders. The finished goods were then shipped overseas. In February 1998, LPF
International Corp. ("LPF"), a new wholly owned subsidiary of the Company, was
set up to expand the Company's existing textile and apparel business worldwide
and place more emphasis on fashion design. LPF is incorporated in the State of
Delaware and operated in New York, NY. Richtime Far East Ltd. was then merged
into LPF to be an indirect subsidiary of the Company.

In order to concentrate on its Internet-related electronics products and
services, the Company entered into a Stock Purchase Agreement on September 30,
1998 with Clarinet Overseas Ltd. to sell all of its ownership in LPF and
Richtime, including all assets and liabilities, to Clarinet Overseas Ltd. for
an aggregation consideration of $2,500,000 in cash.

On February 12, 1999, the Company signed agreements to acquire US Securities
& Futures Corp. ("USSF") of New York, NY and Professional Market Brokerage,
Inc. ("PMB") of Chicago, IL. After the acquisitions, the Company owns 100% of
both USSF and PMB. 

USSF is a full service financial brokerage firm located on Wall Street in New
York, NY. With over 15 branches worldwide, USSF offers online securities
trading service and other financial and brokerage services to individuals and
institutions all around the world. USSF is registered as a Futures Commission
Merchant (FCM), and is a member of National Association of Securities Dealers
(NASD) and National Futures Association (NFA).

PMB is a Chicago-based securities brokerage firm that provides Internet-based
online trading services to self-directed, broker-assisted, individuals, money
managers, Commodity trading advisers, and introducing brokers. PMB is
registered with the Commodity Futures Trading Commission (CFTC) as a Futures
Commission Merchant (FCM), and is a member of the National Futures Association
(NFA). 

The acquisitions of USSF and PMB are an important part of the Company's 
strategy to integrate the Company's Internet solutions with financial services
and become an Internet-Wall Street company that combines the Company's own
Internet access devices TeleWeb set-top boxed and TeleWeb System with online
trading services. This integration allows the Company to: 1) provide its own
end-user set-top boxes to its online trading customers; 2) constantly upgrade
and enhance its hardware and software in response to market conditions and
customer needs; and 3) minimize its dependence on the third parties to
maintain its online trading systems.

On March 16, 1999, the Company entered into an Acquisition Agreement to acquire
a majority of equity interest of TurboNet Communications, a San Diego,
California corporation ("TurboNet"). Under the terms of the Acquisition
Agreement, the Company will issue $80 million of worth of its restricted stock
shares in exchange for 81% of TurboNet's equity. The Company also agreed to
provide TurboNet with $20 million of cash as working capital. Turbonet agreed
that the Registrant's shares issued to Turbonet's shareholders shall be
prohibited from being sold, in whole or in part, until Turbonet's annual gross
revenue has exceeded $30 million with pretax annual net income of $6 million.

Turbonet designs, develops and markets telecommunications products to cable
operators, network service providers, and communications network users,
primarily in the United States and Asia. Its primary products include cable
modem chipsets, internal and external cable modems and cable modem accessories.
Turbonet was incorporated on February 13, 1996 in San Diego, California, and
Toshiba Corporation of Japan owns 5.5% of Turbonet's equity.

On March 16, the Company entered into an agreement with Arescom Inc., a
Fremont, California corporation ("Arescom"). Under the terms of the agreement,
the Company will issue $30 million of worth of its restricted shares to acquire
81% of Arescom's equity. The Company also agreed to provide Arescom with $10
million of cash as working capital. All shareholders of Arescom agreed that
all the Company's shares issued to them shall be restrictively held from being
sold until the day that Arescom has reached its target of annual sales of $15
million and annual net income before income tax of $3 million.

Arescom designs, manufactures and markets a complete line of high quality
inter-networking equipment, primarily routers, for PSTN, ISDN, xDSL and
Ethernet environments. It provides users with a broad range of remote access
products that integrate voice and data along with Intelligent GUI and 100%
remote management tools for easy set-up and network management. Its customers
include Internet Service Providers (ISPs), resellers, and system integrators,
primarily in North America. Arescom was incorporated in January 1996 in
Fremont, California.

The Company's acquisitions of USSF, PMB, Turbonet and Arescom are expected
to be completed before the close of the Company's fourth fiscal quarter ending
June 30, 1999.

Since June 1997, the Company has invested significant resources in research,
product development, and engineering activities for its TeleWeb Broadcasting
System and its TeleWeb/WonderTV set-top boxes and other related products. As a
result of these R&D activities and the low volume of sales during the initial
commercialization of its products, the Company incurred net operating losses
during the fiscal year ended June 30, 1998. The Company anticipates that it
will continue to make significant expenditures for product development and
marketing of its Internet-related products and services in the foreseeable
future.

BUSINESS SEGMENTS

Internet-Related Products and Services

The Company's Internet-related products and services segment consists of Regent
Electronics Corp. ("Regent"), Turbonet Communications ("Turbonet"), and
Arescom, Inc. ("Arescom").

Regent designs, develops, provides and markets the Internet-related products
and services to electronics manufacturers, commercial cable-TV networks,
hotels, and general individual customers. Regent also generates its income
from granting its technology or license to electronic manufacturers and
commercial cable TV networks. The Company owns 87.3% of Regent's equity
interest.

Turbonet designs, develops and markets telecommunications products to cable
operators, network service providers, and communications network users,
primarily in the United States and Asia. Its primary products include cable
modem chipsets, internal and external cable modems and cable modem accessories. 

Arescom designs, manufactures and markets a complete line of high quality
inter-networking equipment, primarily routers, for PSTN, ISDN, xDSL and
Ethernet environments. It provides users with a broad range of remote access
products that integrate voice and data along with Intelligent GUI and 100%
remote management tools for easy set-up and network management. Its customers
include Internet Service Providers (ISPs), resellers, and system integrators,
primarily in North America. 

Online Trading and Brokerage Services

The Company's online trading and brokerage services segment consists of
U.S. Securities & Futures Corp. and Professional Market Brokerage, Inc.

USSF is a full service financial brokerage firm located on Wall Street in
New York, NY. With over 15 branches worldwide, USSF offers online securities
trading service and other financial and brokerage services to individuals and
institutions all around the world. USSF is registered as a Futures Commission
Merchant (FCM), and is a member of National Association of Securities Dealers
(NASD) and National Futures Association (NFA).

PMB is a Chicago-based securities brokerage firm that provides Internet-based
online trading services to self-directed, broker-assisted, individuals, money
managers, Commodities trading advisers, and introducing brokers. PMB is
registered with the Commodity Futures Trading Commission (CFTC) as a Futures
Commission Merchant (FCM), and is a member of the National Futures Association
(NFA). 
   
PRIMARY PRODUCTS AND SERVICES

The Company recently entered into several acquisition transactions intended to
provide a strong foundation for the Company's future business and to reinforce
its position as a leading provider and developer of the Internet-related
products and services with an emphasis on financial services. The Company also
licenses its technologies to electronics manufacturers, commercial cable TV
networks or contracts to manufacturers for production. While the Company does
not maintain manufacturing facilities, it has arrangements with several
manufacturers in Taiwan and China for the purpose of production. In order to
maximize the Company's benefit, the Company does not fix itself with only one
or two manufacturers.  Instead, based on production quality, cost, and other
factors, the Company chooses different manufacturers from time to time.
 
Teleweb System and TeleWeb/WonderTV Set-Top Boxes

TeleWeb Systems   The TeleWeb system is a WWW broadcasting system that enables
cable-TV networks and cable-TV operators to broadcast the Internet contents and
their own commercial information and services to all cable TV networks
subscribers.

TeleWeb Set-Top Boxes   The Company's TeleWeb set-top boxes are designed either
to be as end-user terminals for its TeleWeb broadcasting system to receive
TeleWeb broadcasting information, or be operated as an independent Internet
access device for going online via telephone connection. Those TeleWeb set-top
boxes are sold at the price range of approximately $250 to $400. The TeleWeb
Broadcasting Systems sell at approximately about $12,000.

There are many advantages for consumers and operators to use TeleWeb system
and its TeleWeb set-top boxes: (1) ISP independent of Internet access and no
phone charges; (2) utilizing existing networks and no new infrastructure
investments needed; (3) information access controlled easily by operators or
by governments (a very important factor for the Chinese markets and for other
Asian countries); and (4) supporting both NTSC and PAL TV systems. In addition
to selling to general customers, those TeleWeb set-top boxes can be installed
in hotel rooms, business conference rooms, and other public places for hassle
-free Internet access.

Supported by its TeleWeb system and TeleWeb set-top boxes, the Company is able
to provide TeleWeb System Channels to cable-TV subscribers, such as electronic
shopping channel, shopping guide channel, community service channel, home
financial channel and online education channel. The Company is currently
negotiating with several big government-run cable TV operators in China to
install its TeleWeb system and TeleWeb terminals.

The WonderTV set-top box to be marketed in the United States is an Internet
access device. It enables users to dial into Internet via regular phone
connection. Customers can use their home television as monitor to browse the
Internet. The WonderTv has a built-in modem and comes with a remote keyboard
and a remote control. Apart from being used in families, the WounderTV can
also be valuable service device in hotel rooms, business conference rooms,
and even other public places. The WonderTV's unique functionality and
easy-to-use attributes open a door for those have little computer experience
to go online, trade online and entertain online.

Client Access Products

The Company's client access products include cable modem chipsets, internal
and external cable modems and cable data bridges.

Cable Modem Chipsets and Cable Modems    Cable modems provide dial-up access
to the Internet, enterprise local area networks (LANs) and a host of
communications services. The Company was first to manufacture cable modem with
its own chipsets in the world, and its OEM modem manufactured for Toshiba is
the first of two DOCSIS cable modems certified by CableLabs.

Cable Data Bridges   Cable data bridge is a device that offer system operators
to hook a managed network interface from a router or wide area network (WAN)
to the broadband CATV network, so that Ethernet traffic can be distributed to
the cable modems in end-users' home or offices. The Company has developed a
flexible configuration allowing the use of multiple return path channels per
downstream channel.

Inter-Networking Routers

Netlinker Routers   Routers are protocol-dependent devices that connect
sub-networks together. The Company offers a variety of backbone and remote
routers for small-to-medium-sized businesses to facilitate enterprise
internetworking under PSTN, ISDN, xDSL and Ethernet environments. With the
router, an unlimited number of Ethernet local area network users can access
a Wide Area Network (WAN) via a single ISDN line. The Company's products
include ISDN BRI HUB/PBX router (for Japanese market), Ethernet HUB/ISDN
/DSU/POTS router, Apex 1100 router (for North American and Korean markets),
Apex 1000 and Flash 200 high-speed leased line routers. The Company is the
first and only router manufacture that offers five methods of router
configuration and management as standard on router products.

Remote Managing Software    Remote managing software is widely used by network
managers and Internet service providers (ISPs) to install, monitor,
troubleshoot, and maintain ISDN connections. The Company's Remote Manager
supports 16 Connection Profiles providing a flexible array of dial-in and
dial-out combinations, caller ID (block) to prevent unwanted solicitors, faxes
and errant dial-ins, while checking SPID registration automatically. The Remote
Manager's comprehensive diagnostic capabilities allows network managers and
ISPs to resolve connectivity conflict problems quickly by using an intuitive
GUI interface or command line administration via the telenet or the local
console. Because the Company's remote managing software is able to set up
client ISDN routers in minutes, rather than three to five hours they were
accustomed to, this software is recommend by their clients nationally.

Online Trading and Brokerage Services

The Company provides securities brokerage and related financial services to
individuals and institutions all around the world, including self-directed,
broker-assisted, individuals, money managers, commodity trading advisers,
introducing brokers, and other corporate accounts.

The Company offers both full services and online financial trading, including
the purchase and sale of listed and OTC securities, options, futures and
commodities. The Company also trade fixed income investments, such as US
Treasuries, listed and OTC corporate bonds and municipal bonds. The Company's
online investing services include automated order placement, portfolio
tracking, real-time market commentary and analysis, and news. Other information
services are also available to all investors at the Company to meet their
varying investment and financial needs.

PATENTS, TRADEMARKS AND LICENSES
 
The Company is pursuing patent applications in certain foreign countries. There
can be no assurance that any of the Company's currently pending patent
applications or future applications will be granted in full or in part or that
claims allowed will be sufficiently broad to protect the Company's technology.
The Company currently holds all right, title, and interest in and to the
trademarks, copyrights, patent license of Amiga-Commodore for registration and
use in the People's Republic of China, Taiwan, Hong Kong, Macao and the Asian
bordering countries between the People's Republic of China and the former
Soviet Union.

COMPETITION
 
As the Company enters the market for Internet related products, it expects to
experience significant competition from both existing competitors and
additional companies that may enter this market. Some of these companies have
greater technical, marketing, manufacturing, and financial resources than the
Company.

To address the competitive nature of the business, the Company is constantly
seeking innovation to maintain its competitive edge. This includes using newly
developed technologies to continuously upgrade its electronic products that our
customers require to stay competitive in the future. 

The markets for the Company's products are highly competitive and are
characterized by rapid technological advances, frequent new product
introductions, evolving industry standards, and competitive price pressures.
The Company will continue to develop and market appropriate products to remain
competitive. The Company believes that one of the factors in its competitive
success is its continued commitment of resources to research and development.

SIGNIFICANT CUSTOMERS

For the year ended June 30, 1998, the Company had three customers with
billings in excess of 10% of the Company's total revenues. Of the total
revenue, Shanghai Hong Sheng Development Corp. accounted for $4,840,000
(38.7%), Full Chance China Ltd. $2,749,000 (21.4%), D&T Corp., and
$1,815,000 (14.2%).

Although the Company believes that its relations with those three customers
are good, the Company does not have written agreements with any of its
customers that require the purchase of any minimum quantities of products
and, therefore, such customers could reduce or curtail their purchases at any
time. As a result, a substantial reduction in orders from existing customers
would have a material adverse effect on the Company unless the Company is able
to attract orders from new customers, of which there can be no assurance.

EMPLOYEES

Upon the consummations of its four newly acquired subsidiaries, the Company
will have 250 full-time employees (Currently 47). The Company also employs
independent contractors and other temporary employees in its software
development programs. None of the Company's employees is represented by a
labor union. The Company considers relations with its employee to be
excellent.


Item 2. PROPERTIES

The Company's corporate headquarters, including Regent's offices and R&D 
facility, is located at 200 Centennial Avenue, Piscataway, New Jersey and
consist of approximately 9,400 square feet under a lease that expires in
June 4, 2002. The other four subsidiaries of the Company are located in San
Diego, CA (13,013 SF), Fremont, CA (11,435 SF), New York, NY (14,000 SF) and
Chicago, IL (4,595 SF). The Company believes that its existing facilities are
adequate to meet its requirements for the near term and that additional space
will be available on commercially reasonable terms if needed.

The following table summarizes the lease agreements held by the Company and
its subsidiaries relating to offices and other facilities:

  Location     Lease Term         Commence Date      Expiration Date        
------------  -------------      ----------------    ----------------
Piscataway       5 years           June 5, 1997        June 4, 2002  
New Jersey

Middlesex        Annual            June 5, 1998        Renewable  
New Jersey       Renewable

San Diego        5 years           July 30, 1997       July 31, 2002
California              

Fremont          5 years           March 30, 1997      March 31, 2002
California

New York         5 years           January 30, 1995    Jan. 30, 2000
New York

Chicago, IL      5 years           March 1, 1997       Feb. 28, 2002
Illinois

Overseas, Regent Electronics Corp. maintains a technical support and sales
office space in Shanghai, China.


Item 3. LEGAL PROCEEDINGS

As of the date hereof, there is no pending, or, to the best knowledge of the
Company, threatened litigation involving the Company.


Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

 No matter was submitted to a vote of the security holders, through
solicitation of proxies or otherwise, during the fiscal year covered by this
report.


Part II

Item 5. MARKET FOR COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

MARKET INFORMATION

The Company's Common Stock, par value $0.001, has been traded on the OTC
Electronic Bulletin Board under the symbol "LPFC" since December 1, 1994, and
there are currently nine (9) market makers for the stock of the Company.

The following table sets forth the high and low closing prices of the Company's
Common Stock as reported on the OTC Bulletin Board from January 1997 through
March 31, 1999. These price quotations reflect inter-dealer prices, without
retail mark-up, mark-down or commission, and may not necessarily represent
actual transactions.

 Quarter Ended                              High             Low
 -------------------------                --------         -------
 1997
 March 31, 1997 ................           $2.50            $0.13
 June 30, 1997 .................           $4.50            $1.50
 September 30, 1997 ............           $7.00            $2.38
 December 31, 1997 .............           $7.13            $4.87
 
 1998
 March 31, 1998 ................           $7.50            $5.50
 June 30, 1998 .................           $10.50           $5.88
 September 30, 1998 ............           $11.50           $8.50
 December 31, 1998 .............           $10.31           $7.38

 1999
 March 31, 1999  ...............           $7.44            $6.13


NUMBER OF REGISTERED HOLDERS

The number of registered holders of the Company's Common Stock as of December
31, 1998 was 533, and the Company believes that there are a greater number of
beneficial owners of shares of its Common Stock.

DIVIDENDS

To date, the Company has not declared or paid any cash dividends on its Common
Stock. The Company currently anticipates that it will retain all available
funds for use in the operation and expansion of its business, and no cash
dividend are expected to be paid on the Common Stock in the foreseeable future.
Further, there can be no assurance that the proposed operations of the Company
will generate the revenue and cash flow needed to declare cash dividends in the
foreseeable future.

RECENT SALES OF UNREGISTERED SECURITIES

The Company believes that the transactions set forth below were exempt from
registration under the Securities Act of 1933, as amended (the "Securities
Act"), by reason of Section 4(2) of the Securities Act. In connection with
each of these transactions, the shares were sold to a limited number of
institutional and accredited individual investors as defined by Item 501 of
Regulation D of the United States Securities and Exchange Commission. All the
investors were provided opportunities to get access to all relevant information
regarding the Company and they were represented to the Company that they were
"sophisticated" investors. They were also represented to the Company that the
shares they purchased were for investment purposes only and not with the view
of the distribution thereof. Restrictive legends were placed on all the stock
certificates issued.

On September 18, 1997, the Company issued 6 million shares of its Common Stock
to Rightiming Electronics Corp. in exchange for 6 million shares of Regent
Electronics Corp., a subsidiary of the Company. The purpose of the share
exchange was to gain more control over the subsidiary of the Company.

On February 8, 1998, the Company entered into a stock subscription agreement
with Hambrecht & Quist Asia Pacific Ltd. and its affiliate Asia Pacific Growth
Fund II, L.P. (collectively "H&Q"). Under the agreement, H&Q invested $6
million to acquire 1,500,000 shares of Preferred Stock of Regent Electronics
Corp., a subsidiary of the Company. H&Q's acquisition represented approximately
5.5% of equity interest of Regent Electronics Corp. Regent also issued Stock
Warrants to H&Q for its intention to subscribe $6 million worth of Regent's
common stock shares on or before December 31, 2002. Pursuant to the Agreement,
the Regent shares held by H&Q may be converted, subject to certain conditions,
into the Common Stock shares of the Company on or after January 1, 2000.

The Company entered into two Commission Agreements with Clarinet Overseas Ltd.
on June 8, 1997 and June 1, 1998, respectively. Pursuant to the Agreements,
Clarinet introduced eight sophisticated investors for the Company's private
placements. These individuals purchased a total of 545,000 shares of the
Company's common stock for $2,495,000. As compensation to its service, the
Company paid Clarinet $109,200, plus 136,250 shares of the Company's common
stock.

On March 4, 1999, pursuant to the Share Purchase and Exchange Agreement, the
Company issued 500,000 shares of its common stock to Mr. Stefan Benger, the
sole shareholder of Professional Market Brokerage, Inc. as part of the
consideration for the Company's acquisition of Professional Market Brokerage,
Inc.

On March 15, 1999, the Company entered into an Acquisition Agreement to acquire
an equity interest in TurboNet Communications ("TurboNet"), a San Diego,
California, corporation. Under the terms of the Acquisition Agreement, the
Company will issue $80 million worth of its restricted common stock shares in
exchange for 81% of TurboNet's equity. TurboNet's existing shareholders agreed
that the shares so issued by the Company are prohibited from being sold, in
whole or in part, until TurboNet's annual gross revenue exceeds $30 million
with annual pretax net profit of not less than $6 million.

On March 15, 1999, the Company entered into an agreement with Arescom Inc.
("Arescom"), a Fremont, California, corporation, whereby the Company will issue
$30 million worth of restricted shares to acquire an 81% equity interest in
Arescom. Arescom's existing shareholders agreed not to sell the shares so
issued until Arescom's annual gross revenue exceeds $15 million with annual
pretax net profit of not less than $3 million.

During the period of July 1, 1997 through March 31, 1999, the Company sold
660,500 shares of the Common Stock to eleven accredited investors for an
aggregate consideration of $2,936,750.


Item 6. SELECTED FINANCIAL DATA

The following selected consolidated financial data as of and for each of the
five fiscal years in the period ended June 30, 1998, 1997, 1996, 1995 and 1994
have been derived from the consolidated financial statements of the Company,
which have been audited by Schiffman Hughes Brown, independent auditors. The
selected consolidated financial data should be read in conjunction with the
attached consolidated Financial Statements and the related notes thereto and 
"Management's Discussion and Analysis or Plan of Operation" appearing in Item 7
of this Form 10-K.

<TABLE>
<CAPTION>
  

                                                 SELECTED CONSOLIDATED FINANCIAL DATA
                                                  (IN THOUSAND, EXCEPT PER SHARE DATA)
                                          --------------------------------------------------------
                                                           FISCAL YEARS ENDED JUNE 30
                                                                   (AUDITED)
                                          ---------------------------------------------------------
                                                 1998        1997       1996       1995      1994
<S>                                        <C>           <C>          <C>        <C>       <C>       
CONSOLIDATED STATEMENT
OF OPERATIONS DATA:
Revenues ...............................    $  12,800          --         --        --         --
Cost of sales ..........................        7,989          --         --        --         --
                                            ---------     --------    -------  --------   --------
Gross profit ...........................        4,810          --         --        --         --
      
Operating Expenses
 General and administrative.............        2,827         221         18        17           1  
 Research and Development ..............        4,372         104         --        --          --
                                            ----------    --------     -------  --------  ---------
  Total operating expenses .............        7,199         325         18        17           1

Operating Income (loss) ................      (2,389)       (325)       (18)      (17)         (1)
                                            ----------    --------    --------  --------   --------
Other income (expenses), net ...........           34         410         40         3          --

Net income before income taxes
 & minority interest  ..................      (2,355)          85         22         --         --

Income tax benefit (expenses) ..........           81       (124)         --         --         --

Minority interest in loss of
 Consolidated subsidiary ...............          218          82         --         --         --

Net income (loss) ......................    $ (2,057)     $    43     $   22     $  (14)    $  (1)
                                            =========     ========    =======    =======    ======

Net income (loss) per share
 
   Basic  ..............................     $ (0.05)     $  0.00    $  0.00    $  0.00    $  0.00
   Diluted .............................     $ (0.05)     $  0.00    $  0.00    $  0.00    $  0.00

Weighted average
 shares outstanding ....................       44,421      29,238     26,799     26,860      17,003


</TABLE>

<TABLE>
<CAPTION>

                                                        FISCAL YEAR ENDED JUNE 30 (Audited)         
                                               ------------------------------------------------       
                                                  1998      1997       1996      1995      1994
                                               --------  --------- --------- --------    -------
<S                                            <C>        <C>        <C>        <C>         <C>       
CONSOLIDATED
BALANCE SHEET DATA:
Cash and cash equivalents ..............      $ 3,193     $  269     $  213     $  221      --
Working capital ........................        6,919        107        213        221      --    
Total assets ...........................       16,404      8,221        385        221      --   
Long-term obligation ...................           --         --         --         --      --
Total shareholders' equity .............      $ 7,821    $ 5,739     $  385     $  217      --


</TABLE>

 
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

The following is a discussion of the consolidated financial condition and
results of operations of Lotus Pacific, Inc. and one of its subsidiaries:
Regent Electronics Corp. for the fiscal years ended June 30, 1998 and 1997.
It should be read in conjunction with the Consolidated Financial Statements of
Lotus Pacific, the Notes thereto and other financial information included
elsewhere herein. This management's discussion includes forward-looking
statements made based on current management expectations. These statements are
not guarantees of future performance, and the actual outcomes may differ
materially from what is expressed or forecasted. There are many factors that
affect the Company's business and its results of operations, including the
factors discussed below.

The United States Securities and Exchange Commission advised the Company to
provide pro forma financial information for its four newly acquired
subsidiaries at its Form 10-Q for the quarter ended March 31, 1999. Therefore,
the management discussion of financial conditions and operating results for
the Company's four newly acquired subsidiaries are not included herewith.

GENERAL

Lotus Pacific, Inc. (the "Company") is an Internet technology and services
company that, through its five subsidiaries, develops and markets Internet-
related products and services in the United States and international markets
with an emphasis on financial services. Through realizing its Internet-Wall
Street Solutions(TRADEMARK) concept, the Company provides new Internet
solutions, services, and opportunities for its customers and shareholders.
The Company's Common Stock is currently traded on OTC Bulletin Board under
the symbol "LPFC".

The Company operates in two segments: (1) the development and marketing of the
Internet-related products and services. Its products include TeleWeb systems,
TeleWeb\WonderTV set-top boxes, Internet routers, cable modems and cable modem
chips; and (2) on-line trading and brokerage services. Regent Electronics Corp,
Arescom Inc. and Turbonet Communications are three subsidiaries of the Company
engaged in the business of the Internet-related products and services. U.S.
Securities & Futures Corp. and Professional Market Brokerage, Inc. are engaged
in the business of on-line trading and brokerage services.

Results of Operations

FISCAL YEARS ENDED JUNE 30, 1998 AND 1997

REVENUES   During the fiscal 1998, the Company generated its revenue primarily
from (1) licensing the rights to its software products to business customers;
(2) resale of chipsets; and (3) sales from its textile and apparel business.
The Company's revenues increased to $12.8 million in fiscal 1998 from zero in
fiscal 1997. This increase was because (1) the Company generated its revenue
mainly through its subsidiaries. The Company's two subsidiaries were not
operational until March - April 1997. The Company had no operating revenue in
fiscal 1997, except $398,805 of gain on sale of investment; and (2) starting
from the fiscal 1998, the Company's product development and marketing strategy
fit the market trend, the Company's revenue has increased.

Two Company's products, TeleWeb broadcasting systems and TeleWebs, are marketed
to electronics manufactures, commercial cable TV networks, and hotels. In order
to manufacture the Company's products, the manufactures must obtain the
dedicated chipsets and the accompanying software. Therefore, the Company sells
the chipsets to those companies that assemble and market TeleWeb set-top boxes
(the chipsets consist of the following chips: GXM 233, 5520&97317, XC9538-VQ44,
AD1819 AC-97, CYBERPRO 2010, BootPROM, and MD2200-8D). For the year ended
June 30, 1998, the Company's revenue from resale of chipsets was $6.16 million,
about 48% of the Company's total revenue.

For the fiscal 1998, the Company has royalty revenue of 1.8 million, about 14%
of the Company's total revenue, which was derived from licensing out its
software to manufactures and cable TV networks. The Company is expected to
continue to receive royalty payments as long as it continues to market its
TeleWebs\WonderTV and TeleWeb System.

The Company's revenue from its textile and apparel business, for the year
ended June 30, 1998, was $4.84 million, approximately 38% of the Company's
total revenue. For the fiscal 1998, the Company's textile and apparel business
generated $90,191 of net income (see Financial Statement Notes 13 for more
information). 

On September 30, 1998, the Company sold all of its textile and apparel business
to Clarinet Overseas Ltd. for an aggregation consideration of $2.5 million in
cash in order to concentrate on its Internet-related electronics products and
services. Since then, the Company has no more revenue from textile and apparel
business. 

SELLING, GENERAL AND ADMINISTRATIVE Selling, general and administrative
expenses consist primarily of personnel costs, including all compensation and
employee benefits, and support costs including utilities, insurance, travel,
communications, office rents, professional fees and all costs associated with
a reporting company. General and administrative expenses increased to $2.83
million in fiscal 1998 from $221,074 in fiscal year ended June 30, 1997. The
primary reason for the increase was due to the fact that the Company has not
fully operated until April 1997. Accordingly, the Company's expenses on office
rent, selling, travel, consulting, legal and accounting expenses significantly
increased in fiscal 1998. 
 
RESEARCH AND DEVELOPMENT    Research and development expenses consist of the
costs associated with the design and testing of new technologies and products.
These costs relate primarily to the costs of materials, personnel, and
engineering design consulting fees. For the year ended June 30, 1998, the
Company spent $4.37 million in research and development, approximately 60% of
the Company's total operating expenses, compared with $103,870, about 32% of
the total operating expenses in fiscal 1997. The significant increase in
research and development expenses was primarily a result of developing the
TeleWeb broadcasting system and setting up electronic commerce services. The
Company's software development costs are recorded in accordance with Statement
of Financial Accounting Standards No. 86. To date, the Company has expensed
all of its internal software development.

NET INCOME (LOSS)   As a result of the factors discussed above, the Company's
operating income decreased from $324,944 of loss in fiscal 1997 to $2.39
million of loss in fiscal 1998. For the year ended June 30, 1998, the Company
has net loss of $.05 per diluted share, compared with $0.00 per diluted shares
in the prior year.

INCOME TAXES   The Company's losses for fiscal 1998 may be utilized as an
offset against future earnings, although there is no assurance that future
operations will produce taxable earnings.


FISCAL 1997 AS COMPARED TO FISCAL 1996

The Company was not fully active until April 1997. For the fiscal years ended
June 30, 1997 and 1996, the Company had no revenue from its operating
operations.

REVENUES  The Company had non-operating income of $409,991 in fiscal 1997,
of which $11,186 was from interest income and $398,805 was from gain on sale
of investment, compared with the total non-operating income of $40,100 in
fiscal 1996.

SELLING, GENERAL AND ADMINISTRATIVE   Selling, general and administrative
expenses increased to $221,074 in fiscal 1997 from $17,934 in fiscal 1996. The
primary reason for the increase was due to the fact that the Company has not
fully operated until April 1997. 

RESEARCH AND DEVELOPMENT     The Company began to carry out its product
development activities in June 1997. For the fiscal year ended June 30, 1997,
the Company had R&D expenses of $103,870. There were no R&D expenses in
fiscal 1996.

NET INCOME (LOSS)   The Company became active in January 1997. For the fiscal
year ended June 30, 1997, the Company had a net income of $43,390 compared
to $22,164 in fiscal 1996.

INCOME TAXES    The Company had no income taxes liabilities in fiscal 1997
and 1996 because those income taxes liabilities were offset by the Company's
net operating losses (NOLs) incurred in previous years.

LIQUIDITY AND CAPITAL RESOURCES

The Company ended the fiscal 1998 with a cash and cash equivalents position
of approximately $3.2 million, compared to $268,679 in fiscal 1997.

Since 1997, the Company has financed a portion of its operations and
expenditures through the sale of capital stock. On February 8, 1998, Hambrecht
& Quist Asia Pacific Ltd. and its affiliate Asia Pacific Growth Fund II, L.P.
(collectively "H&Q") invested $6 million to acquire 1,500,000 shares of
Preferred Stock of Regent Electronics Corp. H&Q's acquisition represented
approximately 5.45% of Regent's equity interest. Pursuant to the agreement,
subject to certain conditions, the Regent shares held by H&Q may be converted
into Common Shares of the Company after January 1, 2000. During the period of
July 1, 1997 through March 31, 1999, the Company sold 660,500 shares of the
Common Stock to eleven accredited investors for an aggregate consideration
of $2,936,750.

At June 30, 1998, the Company had working capital of $6.92 million (an increase
of $6.8 million from $106,924 at June 30, 1997). During the Fiscal 1998,
operating activities provided $766,302 of net cash, investing activities used
$113,854 of net cash for equipment purchases, and financing activities
provided $2.27 million of net cash, primarily from the Company's private
placements. Approximately 60% of net cash used in 1998 were spent on the
Company's research and development activities.

On March 15, 1999, the Company signed two acquisition agreements to acquire
81% of equity interests of TurboNet Communications, a cable modem developer
and manufacturer of San Diego, California, and Arescom Inc., an inter-
networking equipment manufacturer of Fremont, California, respectively, by
issuing the Company's restricted common stock shares. Under the terms of the
acquisition agreements, the Company agreed to provide TurboNet with $20
million of cash as working capital and Arescom Inc. with $10 million of cash
as working capital, if such working capital are needed. 

The Company has no other material commitments for capital expenditures to date.
The Company believes that the anticipated funds from operations and the
existing cash and cash equivalents will be sufficient to meet its cash
requirements for at least the next twelve months. Although the Company's
operating activities may generate cash to cover its operating costs, the
Company's continuing operating and investing activities may require the Company
to obtain additional sources of financing, either from the secondary offerings
or from private placements. There can be no assurance that any necessary
additional financing will be available to the Company on commercially
reasonable terms, if at all.

The Company has no long-term debt and has trade credits available from many
corporations with each credit line up to $50,000, net 30 days.

The current Asian economic crisis will have certain impact on the Company's
operations and marketing in the future. The Company is mainly concentrating on
the Chinese market for its sales of Teleweb Broadcasting Systems and TeleWeb
set-top boxes. The Company's operation may be severely affected by the risks
of slow economic growth, devaluation of the Chinese currency, and restrictions
on transferring foreign currencies. In addition to the Chinese market, the
Company has decided to market its Internet-related products and services in
the U.S. and European markets to reduce its Asian risk.

In fiscal 1999, the Company, through its subsidiary Regent Electronics Corp.,
will actively look for business opportunities in China and its bordering
countries to manufacture and market its TeleWeb broadcasting system and
TeleWeb series products. The Company has been contacting several big TV
manufacturers in China seeking a contractor for such purpose. The Company 
is confident in its market potential based on the continuation of economic
growth and the increasing demand for Internet access and multimedia
entertainment in China. It is part of the Company's business strategy to use
the revenues generated from sales of the TeleWeb system and TeleWeb series
products to finance the Company's research and development activities in its
new generation of products for multimedia home entertainment.

Some international companies with capability of producing similar products are
also trying to enter into the China's multimedia entertainment market. To
improve its competitiveness, the Company focuses on products that are
accustomed to China's cultural tradition and the Company will persist in its
aggressive drive to reduce business cost. While subject to many variables, the
Company anticipates revenue increases in the coming fiscal year. At the same
time, the Company will continue to raise capital necessary for its expansionary
operations and research and development activities.

RECENT DEVELOPMENTS

On September 30, 1998, in order to concentrate on its Internet-based
electronics products and services, the Company entered into a Stock Purchase
Agreement with Clarinet Overseas Ltd. Under the Agreement, the Company sold all
of its ownership in LPF and Richtime, including all assets and liabilities, to
Clarinet Overseas Ltd. for an aggregation consideration of $2.5 million in
cash. 

On February 12, 1999, the Company announced that it had signed agreements to
acquire US Securities & Futures Corp. ("USSF") of New York, NY and Professional
Market Brokerage, Inc. (PMB) of Chicago, IL. Upon completion of the
acquisitions, the Company will own 100% of both USSF and PMB. USSF is a full
service brokerage firm with its headquarters on Wall Street in New York, NY.
With over 15 branches worldwide, USSF offers online securities trading service
and other financial and brokerage services to individuals and institutions all
around the world. PMB is a Chicago-based financial trading firm that provides
online trading service from its advanced Internet-based system to self-
directed, broker-assisted, individuals, money managers, commodity trading
advisers, or introducing brokers. 

The acquisitions of USSF and PMB are an important part of the Company's
strategy to integrate the Internet solutions with the financial industry, and
become an Internet-Wall Street company that combines the Company's own set top
box - TeleWeb A9000 and the TeleWeb System with online financial trading
services. The acquisitions allow the Company to provide its own user-end
terminals to its securities trading customers, constantly upgrade its hardware
and software based on market conditions and customer needs, and to minimize
its dependence on the third parties to maintain its online trading systems. 

On March 15, 1999, the Company entered into an Acquisition Agreement to acquire
a majority of equity interest of TurboNet Communications, a San Diego,
California corporation ("TurboNet"). Under the terms of the Acquisition
Agreement, the Registrant will issue $80 million of worth of its restricted
stock shares in exchange for 81% of TurboNet's equity. The Company also agreed
to provide TurboNet with $20 million of cash as working capital. Turbonet
agreed that the Registrant's shares issued to Turbonet's shareholders shall
be prohibited from being sold, in whole or in part, until Turbonet's annual
gross revenue has exceeded $30 million with annual pretax net income of
$6 million.

TurboNet Communications is a premier developer of advanced cable modem
technologies and products. Its products include DOCSIS compliant cable modem
chipsets, TurboPort-MCNS cable network module, MCNS cable data bridges, and
internal & external cable modems.  TurboNet Communications provides cable modem
and infrastructure equipment on OEM basis as well. Toshiba Corporation of Japan
is one of the shareholders and partners of TurboNet Communications.       

On March 15, the Company entered into an agreement with Arescom Inc., a
Fremont, California corporation ("Arescom"). Under the terms of the agreement,
the Company will issue $30 million of worth of its restricted shares to acquire
81% of Arescom's equity. The Company also agreed to provide Arescom with $10
million of cash as working capital. All shareholders of Arescom agreed that all
the Company's shares issued to them shall be restrictively held from being sold
until the day that Arescom has reached its target of annual sales of $15
million and annual pretax net income of $3 million.

Arescom designs, manufactures and markets a complete line of high quality
inter-networking router equipment for PSTN, ISDN, xDSL and Ethernet
environments. Arescom provides users with a broad range of remote access
products that integrate voice and data along with Intelligent GUI and 100%
remote management tools for easy set-up and network management. Arescom has
established worldwide partners and channels to develop and market its router
products for vertical and mass communication markets. Its customers include
ISPs, resellers, and system integrators in North America. Arescom's worldwide
partners include Telecom Device in Japan, NST in China, EuroBizz in Germany,
Viking Telecom in Sweden, Exer Datacom in France, Dakel Information in Spain,
PcExpress in Italy, etc.

The Company's acquisitions of USSF, PMB, Turbonet and Arescom are expected to
be completed before the close of the Company's fourth fiscal quarter ending
June 30, 1999.

Factors that May Affect Future Results

Factors that could cause future results to differ materially these expectations
include the following: growth in the multimedia electronics industry; lower
than expected customer orders; delays in receipt of orders or cancellation of
orders; competitive factors, such as increased competition, new product
offerings by competitors and price pressures; the availability of parts and
supplies at reasonable prices; changing technologies; changes in product mix;
new product development; the timing of the negotiation of new contracts; and
the general domestic and international economic conditions.

In additional to the information contained in this Report, there are other
factors that could cause the Company's future results to differ materially from
those expressed in any forward-looking statement made by, or on behalf of, the
Company.

Although the Company has been considering entering retail channels in the
future, all of the Company's sales as to date are wholesales. For the year
ended June 30, 1998, the Company had three customers with billings in excess
of 10% of the Company's total revenue. The Company does not have written
agreements with any of its customers that require the purchase of any minimum
quantities of products and, therefore, such customers could reduce or curtail
their purchases at any time. As a result, a substantial reduction in orders
from existing customers would have a material adverse effect on the Company
unless the Company is able to attract orders from new customers, of which
there can be no assurance.

The Company's foreign sales are denominated in the U.S. dollars. The Company
does not incur any foreign currency risks; however, fluctuations in currency
exchange rates could cause the Company's products and services to become
relatively more expensive to foreign customers, which may result in a reduction
in foreign sales or the profitability of any of such sales.

Historically, the size and timing of sale transactions have varied
substantially from quarter to quarter, and the Company expects such variations
to continue into the future. Because a significant portion of the Company's
overhead is fixed in the short-term, the Company's results of operations may be
adversely affected if revenues fall below the Company's expectation.

YEAR 2000

The Company recognizes the need to ensure that its operations will not be
adversely impacted by "Year 2000" issue, which has arisen because many existing
computer programs and chip-based embedded technology systems may recognize a
date using "00" as the year 1900 rather than year 2000.  This could result in
a system failure or miscalculations which may cause disruptions of operations,
including, among other things, a temporary inability to process transactions,
send invoices, or engage in similar normal business activities.

The Company has assembled a team of internal staff to oversee the matter and
is underway in completing its Year 2000 assessment.  Internally, the Company
has upgraded its business system to address the Year 2000 issue.  Externally,
the Company has surveyed and will continue to survey its suppliers, financial
institutions, and other organizations to ensure that those parties have
appropriate plans to be "Year 2000 Compliant."  Costs incurred to date and
estimated costs to complete the Company's Year 2000 compliance efforts are not
expected to be material.

The Company has substantially completed many procedures to test and replace
existing computer systems.  Additionally, the Company continues to assess and
test newly engaged suppliers and their products for Year 2000 compliance as
part of the Company's normal business operations.  The Company will continue
to monitor its Year 2000 Compliance program, address any material issues, and
develop contingency plan as it deems appropriate.

The failure to identify or correct a material Year 2000 problem could result
in an interruption in, or a failure of, certain business activities or
operations such as the Company's ability to service its customers. Such
failures could materially and adversely affect the Company's results of
operations, liquidity, and financial condition.  The Company's Year 2000
assessment process is expected to significantly reduce the Company's level of
uncertainty about the Year 2000 problem and, in particular, about the Year
2000 compliance and readiness of its material suppliers and customers.

RECENTLY ISSUED FINANCIAL ACCOUNTING STANDARDS

Effective for fiscal 1998, the Company adopted SFAS No. 123, "Accounting for
Stock-Based Compensation," and, as permitted by this standard, will continue
to apply the recognition and measurement principles of Accounting Principles
Board Opinion No. 25 to its stock options. This statement requires footnotes
disclosure of the pro forma impact on net income and earnings per share of
the compensation cost that would have been recognized if the fair value of all
stock-based awards were recorded in the income statement.

In March 1997, the Financial Accounting Standards Board issued SFAS No. 128,
"Earnings Per Share" which simplifies the standards for computing EPS
previously found in Accounting Principles Board Opinion No. 15 and makes them
comparable to international EPS standards. The Statement is effective for
financial statements issued for periods ending after December 15, 1997. Had 
this statement been effective for the years ended June 30, 1997 and 1996,
earnings would have been presented as follows:

                        Year ended June 30      1998        1997

  EPS - basic   ........................        $(.05)      $0.00
  EPS - diluted ........................        $(.05)      $0.00


In June 1997, the Financial Accounting Standards Board (FASB) issued two SFASs:
SFAS No. 130, "Reporting Comprehensive Income", and SFAS No. 131, "Disclosures
about Segments of an Enterprise and Related Information". As specified by these
statements, the Company will apply these statements beginning in fiscal 1999.

SFAS 130 establishes standards for reporting and display of comprehensive
income and its components (revenues, expenses, gains, and losses) in a full set
of general-purpose financial statements. This statement requires that all items
that Are required to be recognized under accounting standards as components
of comprehensive income be reported in a financial statement that is displayed
with the same prominence as other financial statements.

SFAS 131 establishes standards for the way that the public business enterprises
report information about operating segments in annual financial statements and
requires that those enterprises report selected information about operating
segments in interim financial reports issued to shareholders. It also
establishes standards for related disclosures about products and services,
geographic areas, and major customers. This Statement supersedes FASB Statement
No. 14, "Financial Reporting for Segments of a Business Enterprise", but
retains the requirement to report information about major customers. It amends
FASB No. 94, "Consolidation of All Majority-Owned Subsidiaries", to remove the
special disclosure requirements for previously unconsolidated subsidiaries.

At this point, the Company has not determined the impact of adopting SFAS 131.


Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company has not entered into any transactions using derivative financial
instruments or derivative commodity instruments and believes that its exposure
to market risk associated with other financial instruments (such as investments)
are not material.
 

Item 8. FINANCIAL STATEMENTS

See Item 14 (a) for an index to the audited consolidated financial statements
and supplementary financial information that are attached hereto.


Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTING AND FINANCIAL DISCLOSURE

The Company appointed the accounting firm of Schiffman, Hughes & Brown to serve
as the independent auditors of its year-end financial statements starting from
its fiscal year of 1995. To the best knowledge of the current management, the
Company did not use an auditor for its fiscal year prior to 1995 and therefore
had no auditors.  

The Company has no disagreement with accounting and financial disclosure. 


Part III

Item 9.     DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT 
 
 
The Company's directors, executive officers and their respective ages and
positions as of March 31, 1999 are as follows: 

<TABLE>
<CAPTION>
  
              Name               Age     Date Appointed        Position
----------------------------   -------   --------------- ------------------------------
<S>                             <C>      <C>           <C>
James Yao (1) (2) ..........     45       Jan. 1997     Chairman of the Board & Director
Jeremy Wang (1) (2) ........     44       March 1999    President & Director
John O. Hing ...............     52       March 1999    Chief Finance Officer
Huaya Lu Tung ..............     46       March 1999    Treasurer
David Leung ................     54       Jan. 1997     Vice President & Director
James Liu ..................     44       Jan. 1997     Vice President & Director
Thomas V. White ............     47       March 1999    Vice President
Stefan H. Benger ...........     31       March 1999    Vice President
De-Liang Wang ..............     41       March 1999    Vice President
Richard Ho .................     45       March 1999    Vice President
C. Jeffrey Gull ............     38       March 1999    Vice President
Simon Gu (1) ...............     44       Sept.  1997   Director
Jason Chang (1) ............     45       March 1999    Director
Gary Huang .................     43       Jan. 1997     Secretary & Director
----------------------------------------------------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee

</TABLE>

The following are biographies of the Company's executive officers and
directors for the recent years.
 
JAMES YAO has been Chairman of the Company's Board of Directors since
January 1997. Previously he also served as President of the Company until
March 1999. He has over 15 years of business experience in multinational
companies as well as new ventures in textile and apparel industry, most
recently with Yao Investment Corp. and Lotus International Holdings Corp.,
where he served as Chairman. Mr. Yao graduated from Miya Gawa University
in Tokyo, Japan.

JEREMY H.WANG has been President of the company since March 1999. He was
elected as Director in 1997. In the past fifteen years, Mr. Wang has worked
for Bell Laboratories and AT&T, and as an independent consultant in the
telecommunications industry. He has extensive experiences in the communications
system development and product and project management. Mr. Wang has an MS in
Engineering from University of Virginia, and an MS in Computer Science from
New Jersey Institute of Technology.

JOHN O. HING has been appointed as the Company's Chief Financial Officer since
March 1999. After earning his MBA from Harvard University in 1974, Mr. Hing
was employed at Merrill Lynch in various capacities of substantial
responsibility for 19 years. Most recently he served as CEO of U.S. Securities
& Futures Corp. in New York, NY. He was a member of the Board Governor of
New York Mercantile Exchange and a former president of Research Division of
the Futures Industry Association.

HUAYA LU TUNG has been the Company's Treasurer since March 1999. Currently she
serves as Chairman of U.S. Securities & Futures Corp. Previously she worked for
AT&T for six years. Mrs. Tung received her bachelor degree from East
Stroudsburg University and MA degree from University of Rochester.  

DAVID LEUNG has been a Director and Vice President of the Company since January
1997. Previously he served as General Manager of Shenzhen New Technology
Development Co., Ltd. in Shenzhen, China. He is a director of Lotus
International Holdings Corp. He was employed as a research fellow with
Electronics Research Institute in Guangzhou, China under Academia Sinica from
1984 to 1992. Mr. Leung had BS from Beijing Institute of Technology.

JAMES LIU has been a director and Vice President of the Company since January
1997. Prior to his joining the Company, Mr. Liu served as President of JBL
International Inc., an apparel agent in New York, NY, that contracts apparel
orders and transfers finished goods between wholesalers and apparel
manufacturers. He is a director of Lotus International Holdings Corp. From
1983 to 1990, he was a manager in charge of international trade in Jiangsu
Provincial Government of the People's Republic of China. He graduated with
a BA degree from Nanjing University, China.

THOMAS V. WHITE has been appointed as Vice President of the Company since
March 1999. He has over 20 years of experience in a management and sales
enhancing the overall productivity of the full-service brokerage operations.
Before joining Lotus Pacific, Mr. White is President of U.S. Securities and
Futures Corp. He has been a senior executive at many companies in the financial
trading industry. Previously he was senior vice president of American Futures
Group and Index Futures Group. Mr. White holds a BA degree in Business
Administration and Quantitative Analysis from Bernard Baruch College.

STEFAN H. BENGER has been appointed as vice president of the company since
March 1999. Mr. Benger has been the CEO and Chairman of Professional Market
Brokerage, Inc. ("PMB") since 1995. Under his leadership, PMB become a leading
FCM with a reputation to be one of the most advanced futures trading firms in
the global marketplace. Before founding PMB, Mr. Benger was president of WB
Werbeagentur Stefan Benger GmbH and trading director at Futures & Options GmbH.
Having experience in Europe and the United States, he is very familiar with the
international aspects of trading various financial products, exchange and
over-the-counter securities. He is a frequent speaker at various industry
associations and conferences. His professional expertise is frequently quoted
in industry publications.

DE-LIANG WANG has been appointed as Vice President of the Company since March
1999. After receiving his MS degree in Electrical Engineering and Mechanical
Engineering from the University of Texas at Austin, Mr. Wang served as a senior
hardware engineer at AT&T Bell Laboratories. He has extensive experience in
leading major system design projects.

RICHARD HO has been appointed as Vice President of the Company since March
1999. Prior to his joining the company, Mr. Ho was President of Rightming
Electronics Corp. He has many years of experience in corporate administration
and planning. Mr. Ho received his B.A in International Business in 1986 in
China.

C. JEFFREY GULL has been appointed as Vice President of the Company since
March 1999. He began with the company on January 1, 1999. Prior to joining
the company, he was the director of Asia Development for Nu Skin International,
Inc. Mr. Gull spent over 8 years with Nu Skin working with New Market
Development and Operations for their Asia Pacific region. He has also worked
in the financial and computer software industries with Dean Witter and Clyde
Digital. Mr. Gull has a B.S. in business finance from Brigham Young University.

SIMON GU has been a director since September 1997. Mr. Gu has more than twelve
years of experience in electronics and computer industries, and has been a
senior computer engineer at AT&T since 1990. He held several senior technology
positions at US Army Armament Research, Development and Engineering Center and
Information Department of Town & County International, Inc. from 1987 to 1990.
Mr. Gu holds a Master of Sciences in computer sciences from Polytechnic
University of New York and a BS in computer sciences at Kean College of New
Jersey.

JASON CHANG has been selected as director of the Company since March 1999.
He has many years of experience in corporate management and international
trade. He was Deputy General Manager of Minmetals International Trading Co,
a Chinese governmental corporation; and had been served as president of
Minmetals U.K. Ltd., president of Chi Mei Corporation (USA), and president of
Harmony Corp. Mr. Chang served as a board member at several domestic and
international corporations.

GARY HUANG has been corporate Secretary of the Company since January 1997.
Prior to joining the Company, Mr. Huang served as Senior Accountant/Financial
Analyst at Rightiming Electronics Corp. with responsibilities in accounting,
financial reporting and treasury functions. He holds an MBA in finance from
University of New Haven and an MA in Economics from Yale University.

All directors hold office for their elected term or until their successors
are duly elected and qualified. Should a director be disqualified or unable
to serve as a director, the vacancy so arising may be filled by the Board
of Directors for the unexpired portion of his term. All officers serve at
the discretion of the Board of Directors. There are no family relationships
among the members of the Board of Directors or any executive officers of the
Company.

COMMITTEES AND BOARD COMPENSATION

The Board of Directors conducts its business through meetings of the Board of
Directors and through its committees. In accordance with the By-laws of the
Company, the Board of Directors has established an Audit Committee and a
Compensation Committee. 

AUDIT COMMITTEE

The Audit Committee acts on behalf of the Board of Directors with respect to
the Company's financial statements, record-keeping, auditing practices and
matters relating to the Company's independent public accountants, including
recommending to the Board of Directors the firm to be engaged as its
independent public accountants for the next fiscal year; reviewing with the
Company's independent public accountants the scope and results of the audit
and any related management letter; consulting with the independent public
accountants and management with regard to the Company's accounting methods
and adequacy of its internal accounting controls; approving the professional
services rendered by the independent public accountants; and reviewing the
independence of the independent public accountants. The Audit Committee
consists of Messrs. James Yao, Jeremy Wang, Simon Gu and Jason Chang.

COMPENSATION COMMITTEE

The Compensation Committee reviews and makes recommendations to the Board of
Directors the appropriate compensation of directors and executive officers of
the Company. The Compensation Committee consists of Messrs. James Yao and
Jeremy Wang.

DIRECTORS' COMPENSATION

Directors are not paid a fee for attending Board of Directors or committee
meetings, but are reimbursed for their travel expenses to and from the meetings.

INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS

None of the officers or directors has been involved in any material legal
proceedings that occurred within the last five years of any type as described
in Section 401(f) of Regulation S-K.


Item 11. EXECUTIVE COMPENSATION

The following Summary Compensation Table sets forth information concerning
the total compensation of the Company's executive officers for services
rendered in all capacities to the Company for the last three fiscal years
ended June 30.

<TABLE>
<CAPTION>

                                     SUMMARY COMPENSATION TABLE 

                                Annual Compensation                           Long Term Compensation
                       ------------------------------------------    ---------------------------------------- 
                                                                         Restricted    Securities
Names and Principle                                       Other Annual     Stock       Underlying      LTIP       All Other
  Position               Year     Salary ($)   Bonus ($)  Compensation     Award       Options/SAR    Payouts    Compensation 
-------------------    -------   -----------  ---------- -------------- ------------  -------------   ---------- ------------   
<S>                     <C>        <C>           <C>         <C>          <C>         <C>              <C>       <C>               
James Yao .........      1998       68, 000       ---         ---           ---           ---           ---           ---       
Chairman                 1997        18,000       ---         ---           ---        180,000          ---           ---
                         1996          ---        ---         ---           ---            ---          ---           ---          

Jeremy Wang*.......      1999       120,000       ---         ---           ---        180,000          ---           ---
President                1998           N/A         

John O. Hing**.....      1999       120,000       ---         ---           ---           ---           ---           ---
Chief Financial Officer  1998           N/A

James Liu  ........      1998        68,000       ---         ---           ---            ---          ---            ---         
Vice President           1997          ---        ---         ---           ---        180,000          ---            ---
                         1996          ---        ---         ---           ---            ---          ---            ---

David Leung .......      1998          ---        ---         ---           ---            ---          ---            ---    
Vice President           1997          ---        ---         ---           ---        500,000          ---            ---
                         1996          ---        ---         ---           ---            ---          ---            ---

---------------------------------------------------------

</TABLE>

* Mr. Jeremy Wang was appointed in March, 1999. The salary indicated above
  is his initial annual base salary.
  
** Mr. John O. Hing was appointed in March, 1999. The salary indicated above
  is his initial annual base salary.


Each of the options issued above is currently exercisable at an exercise price 
of $6.00 per share and shall be expired on May 15 and May 30, 2002. As of
March 31, 1998, no stock options have been exercised.
 
There are no reportable transactions between Lotus Pacific, Inc. and Lotus
International Holdings Corp., Yao Investment Corp., Rightiming Electronics
Corp., Evolving Investments Ltd. other than disclosure as shareholders.


ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS & MANAGEMENT

The following table sets forth certain information known by the Company
regarding the beneficial ownership of the Company's Common Stock as of
March 31, 1999, by (i) each person who is known by the Company to own 
beneficially more than 5% of the Company's outstanding Common Stock; (ii)
each of the Company's officers and directors, and (iii) directors and officers
of the Company as a group.


FIVE PERCENT (5%) SHAREHOLDERS

                                         NO. OF SHARES
                                          BENEFICIALLY        PERCENT
 NAME OF BENEFICIAL OWNER                    OWNED            OF CLASS
 -------------------------               ---------------    ------------
        
 Lotus International Holdings Corp.        8,286,670           13.8%
 308 East Bay Street
 Nassau, Bahamas

 Yao Investment Corp.                      8,000,000           13.4%
 308 East Bay Street
 Nassau, Bahamas

 Rightiming Electronics Corp.              6,000,000           10.0%
 P.O. Box 186
 Piscataweay, NJ 08855-0186

 Evolving Investments Ltd.                 3,100,000           5.2%
 3706 Cricket Circle
 Edison, NJ 08820


The percentages indicated are based on the Company's outstanding Stock Options
and Warrants exercisable as of March 31, 1999 and 48,533,804 shares of Common
Stock issued and outstanding as of March 31, 1999.

As of March 31, 1999, there were 48,533,804 shares of the Company's Common
Stock and 4,300 shares of Series A Preferred Stock issued and outstanding. Each
share of Common Stock is entitled to one vote per share. 

All issued and outstanding 4,300 shares of Preferred Class A Stock of the
Company are owned by Lotus International Holdings Corp.

None of the Company's officers and directors own shares individually, except
stock options. See Item 6. "Executive Compensation".

James Yao, Chairman of the Board of the Company and James Liu, Vice President 
of the Company, are two majority shareholders of Lotus International Holdings
Corp., and both of them serves on the Board of that entity.

James Yao owns Yao Investment Corp.; Sunman Lee owns Evolving Investments Ltd.,
and Robert Wang and John Wang are principal shareholders of Rightiming
Electronics Corp.

In addition to the shares of Common Stock and Series A Preferred Stock issued
and outstanding, the Company also issued 1,090,000 shares of Stock Option in
May 1997 to certain Directors and officers of the Company as part of their
compensation. All options are exercisable at $6.00 per share and will be
expired in May 2002. 

The following table sets forth the certain information known to the Company
with respect to beneficial ownership of the Company's Common Stock Option as
of March 31, 1999. A total of 1,090,000 shares of Common Stock Options were
issued and outstanding as of March 31, 1999.

                BENEFICIAL OWNERS                    NO. OF SHARES
          ----------------------------------        ---------------

           James Yao, Chairman of the Board              180,000

           Jeremy Wang, President & Director             180,000

           David Leung, Vice President & Director        500,000
           James Liu,   Vice President & Director        180,000
           Cheng Wang,  former Director                   50,000


All directors and executive officers
As a group                                             1,090,000


In May 1997, the Company issued 8,000,000 shares of redeemable Common Stock
Warrants to Evolving Investments Limited. Each share of the warrants entitles
the holder to purchase a share of the Company's Common Stock at $3.00 per
share, void after May 5, 2002.

There are no arrangements including pledges by any person of securities of the
Company, the operation of which may at a subsequent date result in a change in
control of the Company.


ITEM 13.  CERTAIN RELATIONSHIP AND RELATED TRANSACTIONS

On December 2, 1997, Lotus International Holdings Corp., a shareholder of the
Company, disposed of the Company's Common Stock shares to its shareholders,
affiliate companies and related parties. From this transaction, Yao Investment
Corp. received 8 million shares of Common Stock of the Company. James Yao,
Chairman of the Company, also serves as President of Yao Investment Corp.

 
ITEM 14.   EXHIBITS AND REPORTS ON FORM 8-K

 (a)   The following documents are filed as a part of this report:

     1.   Financial Statements and Reports of Schiffman Hughes Brown,
          Independent Auditors

          Report of Schiffman Hughes Brown, Independent Auditors

          Consolidated Balance Sheets as June 30, 1998 and 1997

          Consolidated Statements of Operations - for the Fiscal Years ended
          June 30, 1998, 1997 and 1996

          Consolidated Statements of Shareholders' Equity - for the Fiscal
          Years Ended June 30, 1998, 1997 and 1996

          Consolidated Statements of Cash Flows - for the Fiscal Years
          Ended June 30, 1998, 1997 and 1996

          Notes to Consolidated Financial Statements

     2.   Financial Statement Schedule      

     3.   Exhibits

          3.1   Certificate of Incorporation of the Registrant, as amended
                (Exhibit 3.1 to General Form for Registration of Securities
                on Form 10, filed October 27, 1998)

          3.2   Bylaws of the Registrant, as amended (Exhibit 3.2 to General
                Form for Registration of Securities on Form 10, filed October
                27, 1998)

          10.1  Stock Subscription Agreement, dated as of March 18, 1997,
                between Evernew International  Limited and Lotus Pacific, Inc.
                (Exhibit 10.1 to Amendment No. 1 to General Form for
                Registration of Securities on Form 10, filed January 7, 1999)

          10.2  Stock Subscription Agreement, dated as of May 5, 1997, between
                Evolving Investments Ltd. and Lotus Pacific, Inc. (Exhibit 10.2
                to Amendment No. 1 to General Form for Registration of
                Securities on Form 10, filed January 7, 1999)

          10.3  Warrant Purchase Agreement, dated as of May 5, 1997, between
                Evolving Investments Ltd. and Lotus Pacific, Inc. (Exhibit 10.3
                to Amendment No. 1 to General Form for Registration of
                Securities on Form 10, filed January 7, 1999)

          10.4  Stock Exchange Agreement, dated as of September 18, 1997,
                between Rightiming Electronics Corp. and Lotus Pacific, Inc.
                (Exhibit 10.4 to Amendment No. 1 to General Form for
                Registration of Securities on Form 10, filed January 7, 1999)

          10.5  Stock Subscription Agreement, dated as of December 31, 1997,
                between Clarinet Overseas  Limited and Lotus Pacific, Inc.
                (Exhibit 10.5 to Amendment No. 1 to General Form for
                Registration of Securities on Form 10, filed January 7, 1999)

          10.6  Stock Purchase Agreement, dated as of September 30, 1998,
                between Clarinet Overseas Limited and Lotus Pacific, Inc.
                (Exhibit 10.6 to Amendment No. 1 to General Form for
                Registration of Securities on Form 10, filed January 7, 1999)

          10.7  Commission Agreement, dated as of  June 8, 1997, between
                Clarinet Overseas Limited and Lotus Pacific, Inc. (Exhibit
                10.7 to Amendment No. 1 to General Form for Registration of
                Securities on Form 10, filed January 7, 1999)

          10.8  Commission Agreement, dated as of  June 1, 1998, between
                Clarinet Overseas  Limited and Lotus Pacific, Inc. (Exhibit
                10.8 to Amendment No. 1 to General Form for Registration of
                Securities on Form 10, filed January 7, 1999)

          27.1  Financial Data Schedule
 
 (b) Reports on form 8-K

     (1) The Registrant filed a Form 8-K as of September 9, 1997, wherein it
         reported that Mr. Simon Gu was elected as a member of the Board of
         Directors.
 
     (2) The Registrant filed a Form 8-K as of September 18, 1997, wherein it
         reported that the Company issued 6 million shares of common stock to
         Rightiming Electronics Corp. in exchange for its 6 million shares of
         common stock of Regent Electronics Corp. 

     (3) The Registrant filed a Form 8-K as of March 4, 1998, wherein it
         reported that H&Q Asia Pacific and Asia Pacific Growth Fund II
         invested $6 million to acquire 1.5 million shares of preferred stock
         of Regent Electronics Corp., a subsidiary of the Company.
 
     (4) The Registrant filed a Form 8-K as of March 6, 1998, wherein it
         reported that the Company created a new, wholly owned subsidiary, LPF
         International Corp., in order to control and expand its existing
         textile business worldwide. Richtime Far East Ltd. became an indirect
         subsidiary of the Company.

     (5) The Registrant filed a Form 8-K as of October 14, 1998, wherein it
         reported that the Company sold its wholly owned subsidiary, LPF
         International Corp., to Clarinet Overseas Ltd. 

     (6) The Registrant filed a Form 8-K as of February 12, 1999, wherein it
         reported that the Company signed agreements to acquire 100% of equity
         interests of US Securities & Futures Corp. and Professional Market
         Brokerage, Inc., respectively.

     (7) The Registrant filed a Form 8-K as of March 16, 1999, wherein it
         reported that the Company signed agreements to acquire 81% of equity
         interests of TurboNet Communications and Arescom Inc., respectively.

     (8) The Registrant filed a Form 8-K as of March 19, 1999, wherein it
         reported that the Company appointed additional executive officers and
         elected a new director.









                             Signatures


Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant had duly caused this registration statement to be signed
on its behalf by the undersigned, thereto duly authorized.



Date: April 6, 1999                  Lotus Pacific, Inc.

                                                              
                                     By:  /s/  James Yao
                                  --------------------------------------
                                  James Yao, Chairman of the Board
                                                             
      
Pursuant to the requirements of the Securities Exchange Act 1934, this report
has been signed below by the following persons on behalf of the registrants
and in capacities and on the dates indicated.


                                     /s/   Jeremy Wang
                                   --------------------------------------
                                   Jeremy Wang, President & Director


                                     /s/  John O. Hing
                                   ---------------------------------------
                                    John O. Hing, Chief Financial Officer


                                     /s/   David Leung
                                   ----------------------------------------
                                    David Leung, Vice President & Director


                                     /s/   James Liu
                                   -----------------------------------------
                                     James Liu, Vice President & Director


                                     /s/ Jason Chang
                                    ----------------------------------------
                                     Jason Chang, Directoir

                                                     
                                     /s/ Simon Gu
                                    -----------------------------------------
                                     Simon Gu, Director








SCHIFFMAN HUGHES BROWN
A PROFESSIONAL CORPORATION
CERTIFIED PUBLIC ACCOUNTS



                    INDEPENDENT AUDITOR'S REPORT



To the Board of Directors and Stockholders
of Lotus Pacific, Inc. and Subsidiaries

We have audited the accompanying balance sheets of Lotus pacific, Inc. and
Subsidiaries as of June 30, 1998 and 1997 and the related statements of
operations, stockholders' equity, and cash flows for the years ended June 30,
1998, 1997 and 1996. 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 conducted our audits in accordance with generally accepted auditing
standards. 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 the management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
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 Lotus Pacific, Inc. and
Subsidiaries as of June 30, 1998 and 1997, and the results of its operations
and its cash flows for the years ended June 30, 1998, 1997 and 1996 in
conformity with generally accepted accounting principles.




/s/

Schffman Hughes Brown
Blue Bell, Pennsylvania
September 4, 1998




         790 PENLLYN PIKE, SUITE 302, BLUE BELL, PENNSYLVANIA 19422
                (215) 646-2000  FAX (215) 646-1937




<TABLE>
<CAPTION>



                    LOTUS PACIFIC, INC. AND SUBSIDIARIES
                        CONSOLIDATED BALANCE SHEETS
                          JUNE 30, 1998 AND 1997

 
                                  ASSETS

                                         1998                      1997

<S>                                <C>                        <C>
Current Assets
 Cash ..........................    $   3,193,127              $   268,679
 Accounts Receivable ...........        4,979,759                       --
 Prepaid Expenses ..............          760,295                       --
 Advances ......................               --                    2,354
                                     ------------              -----------      
   Total current assets                 8,933,181                  271,033     

Investments (Note 5) ...........          600,000                  600,000

Property and equipments
 Furniture and office equipment..          90,192                   90,000
 Equipment ......................       1,541,231                1,502,120
 Leasehold improvements .........          75,612                    1,041
                                     ------------              -----------
                                        1,707,015                1,593,161
 Less: accumulated depreciation .         348,286                   26,623
                                     ------------              -----------   
                                        1,358,729                1,566,538

Other assets
 Intangible asset, net of
 accumulated amortization of
 $370,477 and $28,480 in 1998
 and 1997, respectively .........       5,439,523                5,781,520
 Deposit ........................          72,792                    1,700
                                     ------------              ------------
                                        5,512,315                5,783,220

Total Assets                         $ 16,404,225              $ 8,220,791
                                     ============              ===========


                        LIABILITY AND STOCKHOLDERS' EQUITY


Current liabilities
 Account payable .................    $ 1,755,654              $    14,946
 Loan Payable (Note 3) ...........        120,000                       --
 Salaries Payable ................         63,819                       --     
 Payroll taxes payable ...........         32,234                   25,771
 Income taxes payable (Note 6) ...         42,110                  123,392
                                      ------------             -----------
    Total current liabilities           2,013,817                  164,109

Minority interest in subsidiary ..      6,569,544                2,317,815
  (note 5)

Commitments (Note 11)                          --                       --

Stockholders' equity
 Common stock (Note 8) ............        47,387                   40,737
 Preferred stock, Series A (Note 8)             4                        4
 Common Stock Warrant (Note 8).....        80,000                       --
 Additional paid-in capital .......    10,240,740                6,188,348   
 Accumulated deficit...............   (2,547,267)                (490,222)
                                     ------------              -----------
  Total stockholders' equity            7,820,864                5,738,867

Total Liabilities and
  Stockholders' equity             $   16,404,225            $   8,220,791
                                   ==============            =============

</TABLE>

  The accompanying notes are an integral part of these financial statements

<TABLE>
<CAPTION>


                        LOTUS PACIFIC, INC. AND SUBSIDIARY
                       CONSOLIDATED STATEMENTS OF OPERATIONS
                 FOR THE YEARS ENDED JUNE 30, 1998,1997 AND 1996

                                                        
                                           1998                1997           1996
<S>                                   <C>               <C>                 <C>                                
Revenues
 Net product sales .................   $ 10,998,875                 --                 --
 Royalty income ....................      1,800,000                 --                 --
                                       ------------       -------------       -----------
  Total gross revenue                     2,798,875                 --                 --

Cost of sales ......................      7,989,318                 --                 --

Gross Profit .......................      4,809,557                 --                 --                                          

Operating expenses                                    
  Selling, general and administrative     2,826,730        $   221,074         $   17,934
  Research and development ..........     4,371,990            103,870                 --       
                                       -------------       -------------       ------------
    Total operating expenses              7,198,720            324,944             17,934

Operating Loss ......................   (2,389,163)           (324,944)          (17,934)

Other income (expenses)
 Interest income ....................        33,675              11,186            11,008
 Gain on sale of investment .........            --             398,805                --
 Equity in earnings of 
  unconsolidated subsidiary .........            --                  --            29,090
                                       -------------       -------------         ----------                   
                                             33,675             409,991            40,098
Net income (loss) before income
 taxes and minority interest in
 income of consolidated subsidiaries .  (2,355,488)              85,047            22,164

Income tax benefit (expenses) (Note 6)       80,714           (123,842)                --

Minority interest in loss of 
 consolidated subsidiaries............      217,729              82,185                --

Net income (loss) .................... $ (2,057,045)         $   43,390         $  22,164
                                      ==============        ============       ===========

Net income (loss) per share

  Basic ..............................      $  (.05)            $   .00            $  .00
  Diluted ............................      $  (.05)            $   .00            $  .00

Weighted average shares ..............    44,421,334         29,238,081        26,799,387
 
</TABLE>

    The accompanying notes are an integral part of these financial statements



<TABLE>
<CAPTION>


                            LOTUS PACIFIC, INC. AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                       FOR THE YEARS ENDED IN JUNE 30, 1998, 1997 AND 1996



                         Common       Preferred        Common                   Additional
                         Shares         Shares         Stock                     Paid-in
                       Outstanding    Outstanding     Warrants      Amount       Capital       Deficit       Total
                     --------------  -------------  ----------- ------------  ------------  ------------  -----------
<S>                    <C>             <C>            <C>       <C>           <C>           <C>          <C>                
Balance
 June 30, 1995.....     26,347,054       4,300           --      $  26,351     $  746,433    $  (555,776)  $  217,008

Issuance of 
 common stock......        590,000          --           --            590        145,715             --      146,305

Net Income for the
 year Ended
 June 30, 1996.....             --          --           --             --             --             --           --              
                        -----------  -------------   ------------  -----------  -----------    ------------  ---------
Balance
 June 30, 1996.....     26,937,054       4,300           --       $  26,941    $  892,148    $  (533,612)  $  385,477

Issuance of 
 common stock......     13,800,000          --           --          13,800     5,296,200          --       5,310,000

Net income for
 the year ended
 June 30, 1997.....             --          --           --              --            --           43,390     43,390
                       ------------  --------------  -------------  ------------ ----------    ------------  ---------
Balance
 June 30, 1997.....     40,737,054       4,300           --        $ 40,741   $ 6,188,348      $ (490,222) $5,738,867 

Issuance of 
 common stock .....        536,000          --           --             536     2,071,464          --       2,072,000

Issuance of
 Common stock
 for services .....        113,750          --           --             114       454,886          --         455,000

Issuance of
 Common Stock
 for purchase
 Of subsidiary.....      6,000,000          --           --           6,000     1,526,042          --       1,532,042

Issuance of Common
 Stock Warrants....             --          --    8,000,000          80,000            --          --          80,000

Net loss for the
 year ended
 June 30, 1998.....             --          --            --              --           --      (2,057,045) (2,057,045)
                       ------------  -----------  -----------     -----------   ----------    ------------ ------------
Balance
 June 30, 1998.....     47,386,804       4,300    8,000,000       $  127,391  $10,240,740     $(2,547,267)  $7,820,864


</TABLE>


    The accompanying notes are an integral part of these financial statements


<TABLE>
<CAPTION>


                          LOTUS PACIFIC, INC. AND SUBSIDIARY
                        CONSOLIDATED STATEMENTS OF CASH FLOWS 
                    FOR THE YEARS ENDED JUNE 30, 1998, 1997 AND 1996


                                                               1998           1997          1996

<S>                                                    <C>                <C>          <C>                  
Cash flows from operating activities:
 Net income (loss) ................................     $ (2,057,045)      $  43,390    $  22,164
 Adjustments to reconcile income (loss) to
  net cash provided by operating activities:
  Depreciation and amortization ...................           663,660         55,103           --
  Common stock issued for services ................           455,000             --           --
  Gain on sale of investment ......................                --      (398,805)           --
  Equity in earnings of unconsolidated subsidiary..                --             --     (29,090) 
 Changes in assets and liabilities:
  Increase in accounts receivable .................       (4,979,759)             --           --
  Increase in prepaid expenses.....................         (760,295)             --           --                            
  Increase (decrease) in advances..................             2,354        (2,354)           --
  Increase in deposit..............................          (71,092)        (1,700)           --
  Increase in accounts payable.....................         1,740,708         14,946      (4,400)
  Increase in payroll taxes payable................             6,463         25,771           --
  Increase in salaries payable.....................            63,819             --           --
  Increase (decrease) in income tax payable........          (81,282)        123,392           -- 
  Increase in minority interest in subsidiary......         5,783,771      2,317,815           --
                                                        --------------    -----------    ---------
Net cash provided by (used in) operating activities           766,302      2,177,558     (11,326)

Cash flows from investing activities:
 Purchase of property and equipment................         (113,854)    (1,593,161)           -- 
 Purchase of intangible asset......................               --     (5,810,000)           --
 Proceeds from sale of investment..................               --         571,200           --
 Acquisition of investment.........................               --       (600,000)           --
                                                        --------------   ------------    ----------
Net cash used in investing activities                       (113,854)    (7,431,961)           --

Cash flows from financing activities:
 Issuance of common stock..........................         2,072,000      5,310,000        3,000
 Issuance of common stock warrants.................            80,000             --           --
 Increase in loans payable.........................           120,000             --           --
                                                        --------------- --------------   -----------
Net cash provided by financing activities                   2,272,000      5,310,000        3,000

Net cash increase (decrease) in cash...............         2,924,448         55,597      (8,326)

Cash, beginning ...................................           268,679        213,082      221,408

Cash, ending ......................................       $ 3,193,127     $  268,679   $  213,082
                                                         =============   ============ ============


Supplemental disclosure of cash flow information:
   Cash paid for taxes ............................            $  500        $  150                     


Supplemental disclosure of non-cash financing activities:

 Issuance of common stock for services ............        $  455,000             --     $  3,000

 Issuance of common stock for
    purchase of subsidiary ........................       $ 1,532,042

</TABLE>
  
    The accompanying notes are an integral part of these financial statements





                       LOTUS PACIFIC, INC. AND SUBSIDIARIES
                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          JUNE 30, 1998, 1997 AND 1996



1.     Description of business:

Lotus Pacific, Inc. (the "Company") is a holding company and its main business
is conducted through its two subsidiaries: Regent Electronics Corp. ("Regent")
and LPF International Corp. ("LPF").

Regent is a New Jersey based cybetech corporation. Regent generates its income
from granting technology patent and licenses to manufactures and from selling
products to China or its neighboring countries through a combination of direct
sales, under reseal agreement, or through distribution channels, such as
governmental authorities and local cable TV stations. The Company owns 87.3%
of Regent's equity interest.

LPF International Corp., a newly formed and wholly owned subsidiary of the
Company, was incorporated in the State of Delaware in February 1998 and
operates in New York City, NY. The formation of this new subsidiary in the
United States is part of the Company's business strategy to develop the
Company's textile and apparel business worldwide.

In January 1997, the Company set up a wholly owned subsidiary, Richtime Far
East, Ltd. (a Hong Kong corporation operated in Hong Kong). The Company is
continuing to investigate business opportunities.

2. Summary of significant accounting policies:

Principle of Consolidation:

The accompanying financial statements include the accounts of Lotus Pacific,
Inc.; its 87.3% owned subsidiary: Regent Electronics Corp.; and its wholly
owned subsidiary, LPF International Corp.   The 12.7% non-owned portion of
Regent Electronics Corp. appears as minority interest in subsidiary on the
balance sheet in accordance with generally accepted accounting principles.
All intercompany transactions have been eliminated in consolidation.

Cash and Cash Equivalents:

For purposes of reporting cash flows, the Company considers all cash accounts
that are not subject to withdrawal restrictions or penalties to be cash or
cash equivalents.

Accounts Receivable:

The allowance for doubtful accounts is based on management's evaluation of
outstanding accounts receivable at the end of the year. No allowance for
doubtful accounts has been provided, since management believes all accounts
are collectable.


                        LOTUS PACIFIC, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                          JUNE 30, 1998, 1997 AND 1996


Revenue recognition:

The revenue from product sales is recognized 15 days after the date of sale
in accordance with the Company's policy which generally allows the sold
products to be returned within 15 business days; revenue from services
rendered is recognized when services have been performed; and revenue from
royalty is recognized as fees accrue on sales of technology (software
products) by licensee. On some contracts the Company charges a one-time,
non-refundable royalty fee which is recognized as revenue on the basis
specified in the agreement.  

Equipment and Depreciation:

Property and equipment are stated at cost.  Depreciation is calculated using
the straight-line method over their estimated useful lives from 3 to 40 years.
Depreciation expense for the years ended June 30, 1998 and 1997 was $321,896
and $26,623, respectively.

Intangible Asset:

Intangible asset consists of the acquisition of patents by the Company in
June 1997. The patents are carried at cost and amortized over the useful life
of 17 years.

Research and Development:

Research and development costs consist of expenditures incurred by the Company
during the course of planned search and investigation aimed at the discovery
of new knowledge that will be used to develop and improve its Internet access
products. The Company expenses all such research and development costs as
they are incurred.

Income Taxes:

Income taxes are provided for the tax effects of transactions reported in the
financial statements and consist of taxes currently due plus deferred taxes
related primarily to differences between the basis of balance sheet items for
financial and income tax reporting. There is no difference between the basis
for financial and income reporting.

Investment in Unconsolidated Subsidiary:

The Company recorded its investment in Richtime Far East, Ltd. (a Hong Kong
company) at cost.

Use of Estimates:

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect certain reported amounts and disclosures. Accordingly, actual
results could differ from those estimates.

Concentration of Credit Risk:

The Company occasionally maintains deposits in excess of federally insured
limits. The risk is managed by maintaining all deposits in high quality
financial institutions.

Earnings (loss) Per Share:

Basic earnings (loss) per share are computed by dividing net income (loss) by
the weighted-average number of shares of common stock during the period.
Diluted earnings (loss) per share reflect the dilutive effect of an equivalent
number of common shares of convertible preferred stock, options and warrants.
For the year ended June 30, 1998, the computation of diluted loss per share was
antidilutive; therefore, the amounts reported for basic and diluted loss per
share were the same.

3. Loans Payable:

Represents money deposited with the Company in June 1998 from a potential
investor who has requested their money back. The $120,000 was refunded to them
in July 1998.

4. Issuance of Stock:

During the year ended June 30, 1998, the Company issued an aggregate of
6,649,750 shares of its common stock. 536,000 shares of common stock were
issued for cash consideration of $2,072,000, 113,750 shares of common stock
were issued for consulting services, and 6,000,000 shares of common stock were
issued to purchase at book value, $1,532,042, an additional 17% interest in
Regent Electronics Corp.

During the year ended June 30, 1997, the Company issued 13,800,000 shares of
its common stock for aggregate cash consideration of $5,310,000.

5. Acquisitions and Dispositions:

Shanghai Union Auto Bicycle Co., Ltd.:

On September 25, 1995 the Company exchanged 560,000 shares of its common stock
for a seventy percent equity interest in Shanghai Union (Shanghai Union) Auto
Bicycle Co., Ltd. in Shanghai, People's Republic of China.  At September 25,
1995, Shanghai Union had stockholder's equity of $ 204,721, 70% thereof was
$143,305.

On June 28, 1996 the Company exchanged its investment in Shanghai Union for
5% of the outstanding common stock of Rightiming Electronics Corp.
("Rightiming"). Rightiming was incorporated on January 4, 1996 to design and
manufacture electronic software and other products to be marketed in the Far
East. Five percent of Rightiming's stockholder's equity was $268,018 upon the
date of acquisition.  The Company recorded its investment in Rightiming at the
value of its investment in Shanghai Union, on the date of the exchange,
$172,395. On May 6, 1997, the Company sold its 5% interest in Rightiming
Electronics Corp. for $571,200.

Regent Electronics Corp.:

In April and May 1997, the Company also acquired 70% of the common stock of
Regent Electronics corp. for $5,388,000. In September 1997, the Company
purchased an additional 17% of the common stock of Regent Electronics Corp.
through the issuance of 6,000,000 shares of common stock. Regent Electronics
Corp. was incorporated to manufacture electronic Interest access equipment
and software to be marketed and sold in the Far East. The accounts of Regent
Electronics Corp. are consolidated with the parents (Lotus Pacific, Inc.)
accounts.

LPF International Corp.:

In February 1998, the Company acquired 100% of the common stock of LPF
International Corp. for $1,300,000. LPF International Corp. was incorporated
to be a fashion designer and a broker in the worldwide textile and apparel
business. The accounts of LPF International Corp. are consolidated with the
parent's (Lotus Pacific, Inc.) accounts.

Richtime Far East, Ltd.:

In April 1997, the Company acquired 100% of the stock of Richtime Far East,
Ltd. (a Hong Kong corporation) for monetary consideration of $600,000.
Richtime Far East, Ltd. operations include sales of garments and related
goods. The management of Lotus Pacific, Inc. has no operational or managerial
control/input upon the operations of Richtime Far East, Ltd., since Richtime
Far East, Ltd. has its own management staff to direct the operations of this
foreign company. In addition, Lotus Pacific, Inc.'s ability to control
Richtime Far East, Ltd. is severely limited by foreign exchange restrictions
and controls by the Hong Kong government and thus carries the investment at
cost. Richtime Far East, Ltd. is not consolidated with Lotus Pacific, Inc. in
accordance with generally accepted accounting principles.

Pertinent financial information for Richtime Far East, Ltd. is as follows:

                                       1998                1997
                                    -----------        ------------

         Current assets             $ 2,247,874         $  780,749
         Fixed assets (net)               2,321              2,527
         Current liabilities          1,467,361            476,167
         Equity                         782,834            307,109
         Sales                        5,699,495          1,990,480
         Gross Profit                   587,095            213,717
         Net Income                  $  475,725         $  177,742
                                    ===========         ==========

6. Income Taxes:

Income taxes for years ended June 30, 1998 and 1997 consisted of the
following:

                                      1998                  1997
                                 ------------           ----------
  Current:
     Federal                      $  (61,917)            $  92,120 
     State                           (18,797)               31,722
                                  ------------          -----------       
                                  $  (80,714)            $ 123,842    
    
 7. Financial Instrument:

Cash accounts are secured by the Federal Deposit Insurance Corporation up to
$100,000.  At June 30, 1998 and June 30, 1997, the uninsured balance was
$2.743,480 and $56,199, respectively.

8. Capital Stock:

Common stock - $.001 par value, 60,000,000 shares authorized, 47,387,644 and
40,737,894 shares issued and outstanding in 1998 and 1997, respectively.

Preferred stock  - $.001 par value, 100,000 shares authorized, there is no
shares issued and outstanding in 1998 and 1997.

Preferred stock, Series A - $.001 par value, 4,300 shares authorized, 4,300 
shares issued and outstanding in 1998 and 1997.

Common stock warrants - 8,000,000 warrants issued and outstanding. Each
warrant entitled the holder to purchase one share of the Company's common
stock at $3.00 per share. Warrants expire May 5, 2002. As of June 30, 1998,
no warrants have been exercised.

9. Significant customers:

For the year ended June 30, 1998, the Company had three customers with
billings in excess of 10% of total revenues. These two customers accounted for
approximately 70% of total revenues. Of the total revenue, Shanghai Hong Sheng
Development Corp. accounted for $4,840,000 (38.7%), Full Chance China Ltd.
$2,749,000 (21.4%), and D&T Corp. $1,815,000 (14.2%).

10. Stock options:

The Company accounts for stock-based compensation in accordance with SFAS
No. 123, Accounting for Stock-Based Compensation which permits the use of the
intrinsic value method described in APB Opinion No. 25, Accounting for Stock
Issued to Employees, and required the Company to disclose the pro forma
effects of accounting for stock-based compensation using the fair value method
as described in the optional accounting requirements of SFAS No. 123. As
permitted by SFAS No. 123, the Company will continue to account for stock-based
compensation under APB Opinion No. 25, under which the Company has recognized
no compensation expense.

Had compensation cost for the Company's stock options been determined based on
the fair value of the Company's common stock at the dates of awards under the
fair value method of SFAS No. 123, the Company's net income and net income per
common share would have been reduced to the pro forma amounts indicated below:


                                   1998               1997
       Net income (loss):

           As reported         $(2,057,045)        $  43,390
           Pro forma            (2,057,045)        (981,210)


       Net income (loss) per common share:

           As reported            $ (0.05)           $  0.00
           Pro forma              $ (0.05)           $(0.03)

Significant assumptions used to calculate the above fair value of the awards
are as follows:

       Risk free interest rates of return              6.00%
       Expected option life                            60 months
       Expected dividends                              $ -0-           


11. Commitments:

The Company leases its principal facilities of total approximately 9,400
square feet in Piscataway, New Jersey. Under the lease, the Company pays
$7,100 per month until expiration of lease in June 2002. Rent expense for
the year ended June 30, 1998 was $85,200.

The Company leases an additional space in Middlesex, NJ. The lease is annually
renewable and the monthly rent is $825. Rent expenses for the year ended
June 30, 1998 was $9,900.

Minimum annual rentals for each year subsequent to June 30, 1998 are
as follows:

           June 30, 1999                  $  95,100
           June 30, 2000                     85,200
           June 30, 2001                     85,200
           June 30, 2002                     85,200
                                          ----------
                                           $350,700


12. Condensed Financial Statements for Regent Electronics Corp. at
    June 30, 1998 and 1997:


                               BALANCE SHEET
 

                                 ASSETS

                                             1998               1997

Current assets................          $  7,232,436        $   205,035
Property and equipment........             1,281,029          1,564,334
Other assets..................             5,461,930          5,783,220   
                                        ------------        ------------
                                         $13,975,395        $ 7,552,589         
                                        ============        ============


                     LIABILITIES AND STOCKHOLDERS' DEFICIT


Current liabilities...........          $  2,134,683          $  38,539

Stockholders' deficit:
 Common stock.................                26,000             26,000
 Preferred stock..............                 1,500                 --
 Stock warrants...............                 1,500                 --      
 Additional paid-in capital...            13,760,500          7,762,000
 Accumulated deficit..........           (1,948,788)          (273,950)
                                         ------------        -----------
                                          11,840,712          7,514,050

                                       $  13,975,395       $  7,552,589
                                       ==============      =============



                                STATEMENT OF OPERATIONS


Revenue
  Sales.........................        $  6,155,000                 --
  Royalty income................           1,800,000                 --
                                        ------------       -------------
    Total revenue                          7,955,000                 --

Cost of sales.................           (3,408,500)                 -- 
Operating costs and expenses..           (6,251,873)        $  (276,513)
Interest income...............                30,535               2,563
                                        ------------       --------------
Net Loss                               $ (1,674,838)        $  (273,950)



                               STATEMENT OF CASH FLOWS


Cash flows used in
 operating activities.........        $  (3,914,716)        $  (235,411)

Cash flows used in
 investing activities.........              (38,083)         (7,347,554)

Cash flows from 
financing activities..........             6,436,500           7,788,000
                                       -------------        -------------
Net increase in cash                    $  2,483,701         $   205,035



13. Condensed Financial Statements for LPF International Corp. at
    June 30, 1998:

                         BALANCE SHEET


                            ASSETS

Current assets.......................           $  1,435,933                
Property and equipment...............                 75,603                
Other assets.........................                 50,617          
                                                ------------
                                                   1,562,153 
                                                 ===========


                LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities..................                171,962                   

Stockholders' deficit:
 Common stock........................              1,300,000             
 Retained earnings...................                 90,191
                                                ------------
                                                   1,390,191 

                                                $  1,562,153           
                                                =============



                   STATEMENT OF OPERATIONS

Sales................................           $  4,843,940
Cost of sales........................            (4,580,823)      
Interest income......................                     67                  
Operating costs and expenses.........              (172,993)              
                                                -------------
Net income...........................            $    90,191           



                    STATEMENT OF CASH FLOWS


Cash flows used in
  operating activities...............           $   (984,919)
            
Cash flows used in
  investing activities...............                (75,603)
 
Cash flows from
  financing activities...............              1,300,000             
                                                 ------------
Net increase in cash.................            $   239,578