SECURITIES AND EXCHANGE COMMISSION
                            Washington, DC 20549

                                FORM 10-K/A
                              Amendment No. 3

                (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 63,784,470 shares at June 10, 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 and 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 subsidiaries, develops and markets
Internet-related products and services in the United States and international
markets. Through realizing its Internet-Wall Street Solutions(TM) 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 set-top boxes, WonderTV set-top boxes, Internet routers, cable modems
and cable modem chips; and (2) on-line trading and full service brokerage
services. Regent Electronics Corp, Arescom Inc. and Turbonet Communications are
three subsidiaries of the Company that are 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 full service brokerage services.

The Company was incorporated under the laws of the State of Delaware on June
25, 1985 as Quatech, Inc. to raise capital, investigate and acquire suitable
assets, property or pursue other business opportunities. In April 1987, the
Company completed a public offering of securities registered on Form S-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, based on the decision made by the Company's
majority shareholder, Lotus International Holdings Corp., the board of the
Company made an unanimous resolution to change all the board members and
officers of the Company. 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 cable TV based
set-top boxes and systems, including the TeleWeb Broadcasting System, TeleWeb/
WonderTV 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 products and services, the
Company entered into a Stock Purchase Agreement on September 30, 1998 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 signed agreements to acquire US Securities
& Futures Corp. ("USSF") of New York, NY and Professional Market Brokerage,
Inc. ("PMB") of Chicago, IL. The acquisitions were consummated on March 1, 1999
and February 25, 1999, respectively. The Registrant now 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, WonderTV set-top box, 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 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 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.
The acquisition was completed on March 31, 1999.

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 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 net income before income tax of $3 million. The acquisition
was completed on March 31, 1999.

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.

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 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 Set-Top Boxes

TeleWeb Systems
The TeleWeb system is an Internet 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.
The TeleWeb Broadcasting Systems sell at approximately $12,000.

TeleWeb Set-Top Boxes
The Company's TeleWeb set-top boxes are primarily designed for the Chinese
market as end-user terminals for the TeleWeb broadcasting system to receive
TeleWeb broadcasting information, and at the same time, they can be operated
as an independent Internet access device for going online via telephone
connection. The TeleWeb set-top boxes are sold at the price range of
approximately $250 to $400, depending on the models and variations.

There are many advantages for consumers and operators to use TeleWeb system
and its TeleWeb set-top boxes in the Chinese market: (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.

Supported by its TeleWeb system and TeleWeb set-top boxes, the Company is able
to compile and broadcast information to the Chinese cable-TV subscribers. These
information are organized into channels, such as shopping channel, shopping
guide channel, community service channel, home financial channel and online
education channel. The Company is currently negotiating with several government
-run cable TV operators in China to install its TeleWeb system and distribute
TeleWeb set-top boxes to cable TV subscribers.

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 a 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 offers 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 the only router manufacturer
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 (26.2%), Full
Chance China Ltd. $2,749,000 (14.9%), D&T Corp., and $1,815,000 (9.8%).

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

The Company and its subsidiaries have 250 full-time employees. 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 good.

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            Jan. 30, 1995      Jan. 30, 2000
  New York

  Chicago            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
June 10, 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
 April 1, 1999 through
 June 10, 1999 .............           $7.44        $6.88


NUMBER OF REGISTERED HOLDERS

The number of registered holders of the Company's Common Stock as of June 10,
1999 was about 526, 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 subscription of $6 million worth of Regent's common 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 February 15, 1999, the Company entered into a Share Purchase and Exchange
Agreement to acquire 100% of US Securities & Futures Corp. ("USSF"). Under the
terms of the Agreement, the Company issued 500,000 shares of its Common Stock
to the shareholders of USSF as part of the consideration for the Company's
acquisition of USSF.

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 issued $80 million worth of its restricted common stock shares to the
shareholders of Turbonet 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 April 5, 1999, 11,091,393 shares of the Company's common stock were
issued to 45 shareholders of Turbonet.

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. 4,159,273 shares of the
Company's common stock were issued to 35 shareholders of Arescom on June 8,
1999.

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 selected consolidated financial data presented below under the captions
"Consolidated Statements of Operations Data" and "Consolidated Balance Sheet
Data" are derived from the consolidated financial statements of the Company and
its subsidiaries, which financial statements have been audited by Schiffman
Hughes Brown, the Company's independent public accountants, to the extent
indicated in their report included elsewhere herein.

RESTATEMENT

The financial date for 1997, 1998 and the first nine months of fiscal 1999
given below has been restated pursuant to the comments of the United States
Securities Exchange Commission. Three transactions have been restated: (1)
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 common
stock of Regent Electronics Corp., a subsidiary of the Company. The acquisition
of Regent's equity was then valued at $1,532,042 on the basis of Regent's book
value at that time, and this transaction was now revised using the fair value
of consideration given, which in this case is the $5 per share of the Company's
common stock as traded on the OTC Bulletin Board; (2) In March 1997, Richtime
Far East Ltd. was created by the Company, as a wholly-owned subsidiary, to
engage in garment and textile import-export business. This Hong Kong-based
operation was previously not consolidated with the Company. The Company has
revised its treatment and Richtime's operating results has been consolidated
with the Company; and (3) the Company's acquisitions of US Securities & Futures
Corp. and Professional Market Brokerage, Inc. in February and March 1999,
respectively, were previously accounted for pooling of interest method on its
Form 10-Q for the quarter ended March 31, 1999. The Company has restated those
acquisitions by using purchase method accounting. The excess of acquisition
cost over the net assets acquired has been amortized on the straight-line basis
over 20 years.

The selected consolidated financial data set forth below is qualified in its
entirely by, and should be read in conjunction with, "Management's Discussion
and Analysis of Financial Condition and Results of Operations", the
Consolidated Financial Statements, the notes thereto and the other financial
information included elsewhere in this report.

<TABLE>
<CAPTION>


                                                              SELECTED CONSOLIDATED FINANCIAL DATA
                                                               (IN THOUSAND, EXCEPT PER SHARE DATA)
                                               --------------------------------------------------------------------------
                                                   NINE MONTHS
                                                  ENDED MARCH 31              FISCAL YEARS ENDED JUNE 30
                                                   (Unaudited)
                                               ------------------  ---------------------------------------------------------
                                                     1999           1998         1997       1996       1995       1994

<S>                                              <C>             <C>          <C>          <C>        <C>        <C>
CONSOLIDATED STATEMENT
OF OPERATIONS DATA:
Revenues .................................        $ 23,630         $ 18,498    $ 1,991       ---        ---        ---
Cost of sales ............................          20,737            3,101      1,777       ---        ---        ---
                                                ----------      -----------  ---------  --------    --------   -------
Gross profit .............................           2,893            5,397        214       ---        ---        ---

Operating Expenses
 General and administrative...............           3,266            3,962        260        18         17          1
 Research and Development ................           1,620            4,372        104       ---        ---        ---
                                                ----------      -----------  ---------  ---------  ---------  ---------
  Total operating expenses ...............           4,886            8,334        364        18         17           1

Operating income (loss)...................         (1,993)          (2,937)      (150)      (18)       (17)         (1)

Other income (expenses), net .............              14             (10)        413        40          3         ---

Income from continuing operations ........         (1,979)          (2,947)        263        22       (14)         (1)
                                                ----------      ------------ ---------- ---------  ---------   ---------
Discontinued operations
 Gain on disposal of LPF, net of
 income taxes.............................             100              ---        ---       ---        ---         ---

Net income before income taxes
  & minority interest  ...................         (1,879)          (2,947)        263        22       (14)         (1)

Income tax benefit (expenses) ............              18               81      (124)       ---        ---         ---

Minority interest in loss of
 Consolidated subsidiary .................            (46)              218         82       ---        ---         ---

Net income (loss) ........................       $ (1,814)        $ (2,649)     $  221     $  22     $ (14)      $  (1)
                                                ==========       ==========  ==========  ========  =========   ========

Net income (loss) per share

   Basic  ................................         $(0.04)          $(0.06)      $0.01     $0.00      $0.00       $0.00
   Diluted ...............................         $(0.04)          $(0.06)      $0.00     $0.00      $0.00       $0.00

 Weighted average
   shares outstanding ....................          48,534           44,421     29,238    26,799     26,860      17,003



                                                  AT MARCH 31                       AT JUNE 30
                                                  (Unaudited)
                                                ----------------  ---------------------------------------------------------
                                                      1999            1998        1997      1996       1995       1994
                                                ----------------  -----------  ---------  --------- ----------  -----------
<S>                                              <C>              <C>          <C>       <C>        <C>         <C>
CONSOLIDATED
BALANCE SHEET DATA:
Cash and cash equivalents ................        $  1,446        $   3,263     $  357    $  213     $  221         ---
Working capital ..........................         107,827           11,181      1,052       213        221         ---
Total assets .............................         208,997           45,455      8,404       385        221         ---
Long-term obligation .....................             ---              ---        ---       ---        ---         ---
Total shareholders' equity ...............         151,100           35,875      5,917       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 its subsidiaries 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.

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.
Through realizing its Internet-Wall Street Solutions(TM) concept, the Company
provides new Internet solutions, services, and opportunities for its customers
and shareholders.

The Company operates in two segments: (1) the development and marketing of the
Internet-related products and services. Its products include TeleWeb systems,
TeleWeb set-top boxes, WonderTV set-top boxes, Internet routers, cable modems
and cable modem chips; and (2) on-line trading and full service brokerage
services. Regent Electronics Corp, Arescom Inc. and Turbonet Communications are
three subsidiaries of the Company that are 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 full service brokerage services.

RESULTS OF OPERATIONS

FISCAL YEARS ENDED JUNE 30, 1998 AND 1997

US Securities & Futures Corp., Professional Market Brokerage, Inc., TurboNet
Communications, and Arescom, Inc. are the subsidiaries that the Company
acquired in February, 1999 and March 1999, respectively. The Company's
acquisitions of those businesses were accounted for purchase method. Their
results of operations were not included in the Company's financial statements
for the year ended June 30, 1998 and 1997.

REVENUES
During the fiscal 1998, the Company generated its revenue primarily from resale
of chipsets and sales from its textile and apparel business. The Company's
revenues increased to $18.5 million in fiscal 1998 from $2.0 million in fiscal
1997. The increase was because the Company then generated its revenue mainly
through its two subsidiaries, Regent Electronics Corp. and Richtime Far East,
Ltd. Those two subsidiaries were not operational until March - April 1997. For
the fiscal year ended June 30, 1997, the Company had only $2.0 million of
sales, wholly from its textile and apparel business. Stating from fiscal 1998,
the Company's revenue began to increase, primarily due to the product
development and marketing efforts of the Company.

The Company's products, TeleWeb broadcasting systems and TeleWeb/WonderTV
set-top boxes, 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 the set-top boxes. For the year ended June 30, 1998, the Company's
revenue from resale of chipsets was $6.16 million, about 33% of the Company's
total revenue.

For the fiscal 1998, the Company has royalty revenue of 1.8 million, about
10% of the Company's total revenue. The royalty revenue was from
non-refundable, one-time fee that permitted the third parties to market and
distribute the Company's products in China. The Company is expected to continue
to receive royalty payments as it continues to market its TeleWeb/WonderTV
set-top boxes and TeleWeb System.

The Company's revenue from its textile and apparel business, for the year ended
June 30, 1998, was $10.54 million, approximately 57% of the Company's total
revenue. For the fiscal 1998, the Company's textile and apparel business
generated $565,916 of net income (see Financial Statement Notes 13 for more
information).

DISCONTINUED OPERATIONS

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 products and services. The
Company had $100,000 of gain from sale of its textile and apparel business.
Since then, the Company had no revenue from its 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,
depreciation and amortization expenses and all costs associated with a
reporting company. Selling, general and administrative expenses increased
$3.70 million, about 14 times, to $3.96 million in fiscal 1998 from $259,887
in fiscal 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.

Of the total selling, general and administrative expenses, approximately 36%,
i.e., $1.41 million, were goodwill amortization expenses. The Company acquired
an additional 17% of equity interest in Regent Electronics Corp. on
September 18, 1997. The excess of acquisition cost over the net assets acquired
(approximately $28.5 million) has been amortization as goodwill on the
straight-line basis over 20 years.

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 designing,
and R&D related consulting fees. For the year ended June 30, 1998, the Company
spent $4.37 million in research and development, approximately 52% of the
Company's total operating expenses, compared with $103,870, about 28% 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 TeleWeb/WonderTV set-top boxes. 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.

GOODWILL AMORTIZATION
The Company has $27.4 million of goodwill from acquisitions of business. The
goodwill is amortized on the straight-line basis over 20 years. For the year
ended June 30, 1998, the Company's goodwill amortization was approximately
$1.1 million, about 13% of the Company's operating expenses. Beginning from
April 1, 1999, goodwill amortization is expected to increase significantly when
an additional $109.6 million of goodwill from acquisition of business (USSF,
PMB, Turbonet and Arescoim) is going to be fully amortized.

NET INCOME (LOSS)
As a result of the factors discussed above, the Company's operating income
decreased from $221,133 of net income in fiscal 1997 to $2.65 million of loss
in fiscal 1998. For the year ended June 30, 1998, the Company has net loss of
$0.06 per diluted share, compared with zero in fiscal 1997.

INCOME TAXES
The Company's loss in 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

REVENUES
The Compant was not fully active until April 1997. For the fiscal year ended
June 30, 1996, the Company had no operating revenue. In fiscal 1997, the
Company had only $2.0 million of sales from its textile and apparel business
in Hong Kong. Regent Electronics Corp. had no sales for the year ended June
30, 1997.

The Company had non-operating income of $412,829 in fiscal 1997, of which
$13,880 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 $259,887 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 $221,133, compared with $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

At March 31, 1999, the Company's liquid assets, consisting of cash and cash
equivalents, total $1.44 million, compared to $3.26 million and $357,212 at
June 30, 1998 and 1997, respectively.

Net cash used by operating activities was $2.1 million for the first nine
months of fiscal 1999, compared with $3.6 million of net cash used by operating
activities during the first nine months of fiscal 1998. The decrease was a
combination of the increases in accounts receivable, inventories, notes
receivable, accounts payable and goodwill amortization. The Company's investing
activities used $490,000 of cash for the nine months ended March 31, 1999,
primarily due to acquisition of business ( $2.5 million for USSF and $240,000
for PMB), as well as $2.5 million of proceeds from sale of the Company's equity
in LPF and Richtime Far East. For the first nine months of fiscal 1999, cash
flow from financing activities was $745,000, which were from issuing 124,500
shares of the Company's common stock, as compared to $8.19 million provided by
financing activities for the first nine months of fiscal 1998, which were
primarily from the equity investment by Hambrecht & Quist Asia Pacific Ltd. As
of March 31, 1999, the Company had 63,784,470 shares of Common Stock with par
value $.001 per share and 4,300 shares of Class A Preferred Stock issued and
outstanding.

For the quarter ended March 31, 1999, the Company issued a total of 16,250,666
shares of its common stock to acquire businesses. Please see Note 3: Business
Acquisition for more detail information ("Notes to Interim Consolidated
Financial Statements for the Quarter Ended March 31, 1999").

Since 1997, the Company has financed a portion of its operations and
expenditures through the sale of its 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 $8.2 million. During the
Fiscal 1998, operating activities provided $748,063 of net cash, investing
activities used $ 114,346 of net cash for equipment purchases, and financing
activities provided $2.27 million of net cash, primarily from the Company's
private placements.

As to date, the Company has no material commitments for capital expenditures.
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 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.

SUBSEQUENT 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 PMB and USSF were
completed on February 25, 1999 and March 1, 1999, respectively.

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 acquisitions of TurboNet and Arescom were completed on march 31, 1999,
respectively. The Purchase method was used to account for each of acquisitions
of USSF, PMB, TurboNet and Arescom. The excess of the purchase prices over the
fair value of net assets acquired (in a total of approximately $109.6 million)
were recorded as goodwill of acquired businesses and is being amortized on the
straight-line basis over 20 years.

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. The
Company adopted its requirements in connection with its annual reporting
for the years ended June 30, 1998 and 1997.

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.

In June 1997, SFAS No. 130, "Reporting Comprehensive Income" and SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information", were
issued. SFAS No. 130 establishes standards for reporting comprehensive income
and its components with the same prominence as other financial statements. The
Company adopted SFAS No. 130 on October 1, 1998; However, the Company does not
have any items of comprehensive income in the period presented. SFAS No. 131
establishes standards for reporting information about operating segments in
annual and interim financial statements, although this statement need not be
applied to interim financial statements in the initial year of its application.
SFAS No. 131 is effective for fiscal years beginning after December 15, 1997.
The Company will adopt its requirements in connection with its annual reporting
for the year ending June 30, 1999.

In June 1998, Statement of Financial Accounting Standards ("SFAS") No. 133,
"Accounting for Derivative and Hedging Activities", was issued. SFAS No. 133
requires companies to record derivatives on the balance sheet as assets or
liabilities at fair value. SFAS 133 is effective for all fiscal quarters of
fiscal years beginning after June 15, 1999. The Company expects the impact of
SFAS 133 on its future earnings and financial position is not material (see
Item. 7A: "Quantitative and Qualitative Disclosure about Market Risk").

In April 1998, Statement of Position ("SOP") 98-5, "Reporting on the Costs of
Start-Up Activities", was issued. This SOP provides guidance on the financial
reporting of start-up and organization costs and requires that these costs be
expensed as incurred. The provisions of SOP 98-5 are effective for financial
statements for fiscal years beginning after December 15, 1998, although early
adoption is allowed. The adoption of SOP 98-5 is not expected to have a
material impact on the Company's financial statements. The Company will adopt
the provisions of this SOP on July 1, 1999.


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 June 10, 1999 are as follows:
<TABLE>
<CAPTION>

         Name                     Age      Date Appointed            Position
----------------------------    -------   ----------------  --------------------------------

<S>                              <C>        <C>             <C>
James Yao ..................      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
Haronld Tuan ...............      45         April 1999      Vice President
Max Lu .....................      45         April 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)(2) ............      44         Sept.  1997     Director
Jason Chang (1)(2)..........      45         March 1999      Director
Gary Huang .................      43         Jan. 1997       Secretary & Director

</TABLE>

(1) Member of the Audit Committee.
(2) Member of the Compensation Committee


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 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 a Director of the Company in 1997. In the past fifteen years,
Mr. Wang worked for Bell Laboratories and AT&T, and has been an independent
consultant in the telecommunications industry. He has extensive experiences in
the communications system development and product /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 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 her 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 a BS degree 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.

Mr. Harold Tuan was appointed as Vice President of the Company and Board
Director of TurboNet Communications in April 1999. Mr. Tuan has over 20 years
of research and development experience in digital TV system, Data-Over-Cable
System, Signal Processing and Communication Systems.  Mr. Tuan is the founder
of TurboNet Communications and currently serves as its President.

Mr. Max Lu was appointed as Vice President of the Company and Board Director
of Arescom Inc. in April 1999. Mr. Lu has more than 11-year management,
marketing and engineering experiences in computer and communication industries.
Mr. Lu was the Vice President of Engineering and marketing at CNet. He had led
CNet to become the technology leader in Taiwan and to go public in December of
1995. Before CNet, Mr. Lu was the founder and Vice President of Lanwan
Technologies in San Jose, California. His engineering experience includes
working for Cisco, Hughes, ERSO, and NEOTECH from 1983 to 1991. Mr. Lu
currently serves as President of Arescom, Inc.

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 in 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 Mr. Benger's leadership, PMB becomes
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. 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. Jeremy Wang, Simon
Gu and Jason Chang.

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       ---           ---           ---          ---         ---          ---
President              1998         N/A         ---           ---           ---          ---         ---          ---

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

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

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

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

</TABLE>

* Messrs. Jeremy Wang and John O. Hing were appointed in March 1999. The salary
 indicated above are their 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 June
10, 1999, 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 June
10, 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           11.3%
 200 Centennial Avenue, Suite 201
 Piscataway, NJ 08854

 Yao Investment Corp.                     8,000,000           10.9%
 200 Centennial Avenue, Suite 201
 Piscataway, NJ 08854

 Rightiming Electronics Corp.             6,000,000            8.2%
 P.O. Box 186
 Piscataweay, NJ 08855-0186

 Evolving Investments Ltd.                3,100,000            4.2%
 3706 Cricket Circle
 Edison, NJ 08820


The percentages indicated are based on the Company's outstanding Stock Options
and Warrants exercisable as of June 10, 1999 and 63,784,470 shares of Common
Stock issued and outstanding as of June 10, 1999.

As of June 10, 1999, there were 63,784,470 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 serve 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 expire
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
June 10, 1999. A total of 1,090,000 shares of Common Stock Options were issued
and outstanding as of June 10, 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 the Company, which
may result in a change in control of the Company at a subsequent date.


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

        Audited Consolidated Balance Sheets as of June 30, 1998 and 1997

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

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

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

        Notes to Audited 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/A,
           filed June 17, 1999)

      3.2  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)

      3.3  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.

      (9)  The Company filed a Form 8-K/A on April 6, 1999 to amend its
           previously report that filed on October 14, 1998.

      (10) The Company filed a Form 8-K on April 23, 1999 to report to appoint
           senior officers and board members.





                               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: June 21, 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
--------------------------------------         Date:    June 21, 1999
Jeremy Wang, President & Director


/s/ John O. Hing
--------------------------------------         Date:    June 21, 1999
John O. Hing, Chief Financial Officer


/s/   David Leung
--------------------------------------          Date:    June 21, 1999
David Leung, Vice President & Director


/s/   James Liu
--------------------------------------          Date:    June 21, 1999
James Liu, Vice President & Director


 /s/ Jason Chang
--------------------------------------          Date:    June 21, 1999
Jason Chang, Directoir


 /s/ Simon Gu
--------------------------------------          Date:    June 21, 1999
Simon Gu, Director


/s/ Gary Huang
--------------------------------------          Date:    June 21, 1999
Gary Huang, Secretary & 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









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


<TABLE>
<CAPTION>


                                                       1998             1997
                                                  ---------------   -------------
                   ASSETS
<S>                                                <C>              <C>
Current Assets
 Cash .......................................       $ 3,262,929      $ 357,212
 Accounts Receivable ........................         7,157,831        692,215
 Prepaid Expenses  ..........................           760,295            ---
 Advance ....................................               ---          2,354
                                                  --------------    -----------
    Total current assets.....................        11,181,055      1,051,781

Property and equipments:
 Furniture and office equipment .............            93,666         93,158
 Equipment ..................................         1,541,231      1,502,120
 Leasehold improvements .....................            75,612          1,041
                                                  --------------    -----------
                                                      1,710,509      1,596,319
    Less: accumulated depreciation ..........           349,460         27,254
                                                  --------------    -----------
                                                      1,361,049      1,569,065
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
 Goodwill, net of accumulated amortization
   Of $1,067,544 in 1998 ....................        27,400,414            ---
 Deposit ....................................            72,792          1,700
                                                  --------------    -----------
                                                     32,912,729      5,783,220

                                                  $  45,454,833    $ 8,404,066
                                                  ==============   ============



      LIABILITY AND STOCKHOLDERS' EQUITY


Current liabilities:
 Account payable ............................      $  2,752,381     $   20,478
 Refundable deposit (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 ................         3,010,544        169,641

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

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 .................       38,708,698       6,188,348
 Accumulated deficit ........................      (2,961,344)       (312,479)
                                                 --------------   -------------
                                                    35,874,745       5,916,610

                                                  $ 45,454,833     $ 8,404,066
                                                 ==============   =============

</TABLE>


  The accompanying notes are an integral part of these financial statements




<TABLE>
<CAPTION>


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


                                                      1998            1997           1996
                                                 --------------   --------------  ------------

<S>                                             <C>               <C>               <C>
Sales .....................................      $16,698,371       $ 1,990,481            ---
Cost of sales .............................       13,101,600         1,776,763            ---
                                                 -----------      ------------      ---------
Gross profit ..............................        3,596,771           213,718            ---

Royalty income (Note 12) ..................        1,800,000               ---            ---

Operating expenses
 Selling, general and admin ...............        3,962,231           259,887         17,934
 Research and development .................        4,371,990           103,870            ---
                                                 -----------       -----------     ----------
   Total operating expenses ...............        8,334,221           363,757         17,934

Operating Loss ............................      (2,937,450)         (150,039)       (17,934)
                                                 -----------        ----------     ----------
Other income (expenses):
 Interest income ..........................           36,302            13,880         11,008
 Interest expense .........................         (46,259)               ---            ---
 Gain on sale of investment ...............              ---           398,805            ---
 Equity in earnings of
  unconsolidated subsidiary ...............              ---               ---         29,090
 Foreign exchange gain ....................               99               144            ---
                                                 -----------        ----------      ---------
                                                     (9,858)           412,829         40,098
Net income (loss) before income taxes
  and minority interest in income
  of consolidated subsidiaries ............      (2,947,308)           262,790         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) .........................   $ (2,648,865)         $  221,133     $   22,164
                                             ==============        ===========   ============

Net income (loss) per share

  Basic ...................................         $(0.06)             $ 0.01          $0.00

  Diluted .................................         $(0.06)             $ 0.00          $0.00

Weighted average shares....................      44,421,334         29,238,081     26,799,387


</TABLE>

  The accompanying notes are an integral part of these financial statements







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

<TABLE>
<CAPTION>


                                 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 ......     ----------   -----------     ----------  --------     ----------        22,164       22,164

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 .....   ------------  ------------      ----------  --------    -----------       221,133     221,133

Balance
 June 30, 1997 ............    40,737,054        4,300           ---       40,741      6,188,348      (312,479)   5,916,610

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     29,994,000             --- 30,000,000

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

Net loss for the year
  ended June 30, 1998 .....    ----------   -----------    ----------   ---------      ---------    (2,648,865)  (2,648,865)

Balance
 June 30, 1998.............   47,386,804          4,300    8,000,000     $127,391    $38,708,698    $(2,961,344) $35,874,745


</TABLE>


   The accompanying notes are an integral part of these financial statements







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

<TABLE>
<CAPTION>

                                                              1998           1997                1996
                                                       ----------------- --------------  ---------------
<S>                                                     <C>               <C>              <C>
Cash flows from operating activities:
 Net income (loss) ................................     $(2,648,865)      $  221,133        $  22,164
 Adjustments to reconcile income (loss) to
  net cash provided by operating activities:
  Depreciation and amortization  ..................        1,731,903          55,734              ---
  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 .................      (6,465,616)       (692,215)              ---
  Increase in prepaid expenses ....................        (760,295)             ---              ---
  Increase (decrease) in advances .................            2,354         (2,354)              ---
  Increase in deposit .............................         (71,092)         (1,700)              ---
  Increase (decrease) in accounts payable .........        2,731,903          20,478          (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          748,063       1,669,249         (11,326)

Cash flows from investing activities:
 Purchase of property and equipment ...............        (114,346)     (1,596,319)              ---
 Purchase of intangible asset .....................              ---     (5,810,000)              ---
 Proceeds from sale of investment .................              ---         571,200              ---
                                                       -------------   -------------    -------------
Net cash used in investing activities..............        (114,346)     (6,835,119)              ---

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 refundable deposit....................          120,000             ---              ---
                                                       -------------     -----------    -------------
Net cash provided by financing activities..........        2,272,000       5,310,000            3,000

Net cash increase (decrease) in cash ..............        2,905,717         144,130          (8,326)

Cash, beginning ...................................          357,212          213,082         221,408

Cash, ending ......................................      $ 3,262,929       $  357,212       $ 213,082
                                                       =============     ============    ============

Supplemental disclosure of cash flow information:
 Cash paid for taxes ..............................            $ 500          $  100             ---

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........................      $30,000,000             ---             ---


</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 three subsidiaries: Regent Electronics Corp.
("Regent"); LPF International Corp. ("LPF"); and Richtime Far East, Ltd.

Regent is a New Jersey based cybetech corporation. Regent generates its income
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 subsidiaries, Richtime Far East, Ltd. and LPF International Corp. The
12.7% non-owned portion of Regent Electronics Corp. appears as minority
interest in subsidiary on the balance sheet. 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 SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                            JUNE 30, 1998, 1997 AND 1996


Goodwill:

Goodwill, which represents the excess of acquisition cost over the net assets
acquired in business combinations, is amortized on the straight-line method
over 20 years. The carrying amount of goodwill is reviewed annually using
estimated undiscounted cash flows for the businesses acquired over the
remaining amortization periods. Amortization expense charged to earnings
amounted to $1,067,544.

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 $322,594
and $27,254, 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.

Foreign currency:

All balance sheet accounts of foreign operations are translated into U.S.
dollars at the year end rate of exchange and statements of earnings items are
translated at the weighted average exchange rates for the year. Gains and
losses from foreign currency transactions are included in the consolidated
statements of earnings.



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


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. Refundable deposit:

Represents money deposited with the Company in June 1998 from a potential
investor who has requested his money be returned. The $120,000 was refunded to
him 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 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.,



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



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 products 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 formed LPF International Corp. for $1,300,000.
LPF International Corp. was incorporated to be 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 formed Richtime Far East, Ltd. (a Hong Kong
corporation) with an investment of $600,000. Richtime Far East, Ltd. operates
as a broker in the worldwide textile and apparel business. The accounts of
Richtime Far East, Ltd. are consolidated with the parent's (Lotus Pacific,
Inc.) accounts.


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
                       ==============    ==============





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


 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 three customers accounted for
approximately 51% of the Company's total revenues. Of the total revenue,
Shanghai Hong Sheng Development Corp. accounted for $4,840,000 (26.2%), Full
Chance China Ltd. $2,749,000 (14.9%), and D&T Corp. $1,815,000 (9.8%).

10. Stock options:

In May 1997, the Company granted 1,090,000 shares of stock options to certain
officers and directors. Exercise price on the options is $6.00 per common
share, are 100% vested and expire five years from grant date. All issuances
were granted at the fair market value of the Company's common stock at time of
grant. As of June 30, 1998 and 1997, no options have been exercised.

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



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


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 ..............       $(2,648,865)       $   221,133
     Pro forma ................        (2,648,865)         (803,467)

  Net income (loss) per common share:

     As reported...............           $ (0.06)          $   0.01
     Pro forma.................           $ (0.06)          $ (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.

12. Royalty income:

In 1998, Regent entered into licensing agreements with two unrelated parties.
Generally, the agreements require a one-time, non-refundable fee which will
permit the unrelated parties to market and distribute Regent's products in
China.


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


13. 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
                                        ==============      ==============




                       STATEMENTS OF OPERATIONS



Sales ................................   $ 6,155,000                  ---
Cost of sales ........................   (3,408,500)                  ---
Interest income ......................        30,535             $  2,563
Royalty income .......................     1,800,000                  ---
Operating costs and expenses .........   (6,251,873)            (276,513)
                                       --------------       --------------
Net Loss ............................. $ (1,674,838)          $ (273,950)
                                       ==============       ==============






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


                       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





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



                                   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



13. Condensed Financial Statements for Richtime Far East, Ltd. at
   June 30, 1998 and 1997:


                                  BALANCE SHEET


             ASSETS                              1998           1997
                                           --------------    ------------

Current assets .......................       $ 2,247,874      $   780,749
Property and equipment ...............             2,321            2,527
                                           -------------     ------------
                                             $ 2,250,195        $ 783,276


  LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities ..................       $ 1,467,362        $ 476,168

Stockholders' equity:
 Common stock ........................           129,366          129,366
 Retained earnings ...................           653,467          177,742
                                           -------------     ------------
                                             $ 2,250,195        $ 783,276




                      STATEMENT OF OPERATIONS


Sales ................................       $ 5,699,496      $ 1,990,481
Cost of sales ........................       (5,112,400)      (1,776,763)
Interest income ......................             2,687            2,693
Interest expense .....................          (46,259)              ---
Foreign exchange gains ...............                99              144
Operating costs and expenses .........          (67,898)         (38,812)
                                            ------------     ------------
Net income ...........................        $  475,725        $ 177,743







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


                           STATEMENT OF CASH FLOWS


Cash flows used
     in operating activities .........        $ (18,395)      $ (508,309)
Cash flows used
    in investing activities ..........             (336)          (3,158)
Cash flows from
   financing activities ..............               ---          600,000
                                             -----------     ------------
Net increase (decrease) in cash ......          (18,731)           88,533

Cash, beginning ......................            88,533              ---

Cash, ending .........................          $ 69,802         $ 88,533