SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB/A
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
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Commission File Number: 0-26322
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EAGLE CAPITAL INTERNATIONAL, LTD.
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(Exact Name of Small Business Issuer as Specified in its Charter)
Nevada 88-0303769
- ------------------------ -----------------------
(State of Incorporation) (IRS Employer I.D. No.)
1900 Corporate Blvd., 4th Floor, East Tower, Boca Raton, FL 33431
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(Address of principal executive offices )
(561) 988-2550
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(Issuer's telephone number, including area code)
Check whether the Issuer: (1) filed all reports required to be filed
by section 13 or 15(d) of the Exchange Act during the past 12 months
(or for such shorter period that 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 ___
.
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Exchange Act
after the distribution of securities under a plan confirmed by a
court. Yes ___ No X
APPLICABLE ONLY TO CORPORATE ISSUERS
There were 11,938,686 shares of Common Stock, $.01 par value,
issued and outstanding at September 30, 2000.
EAGLE CAPITAL INTERNATIONAL, LTD.
INDEX
PART I. CONDENSED CONSOLIDATED FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
Balance Sheets - September 30, 2000 (Unaudited) and
December 31, 1999
Statements of Operations - For the three and nine
months ended September 30, 2000 and 1999 (Unaudited).
Statements of Cash Flows - Nine months ended
September 30, 2000 and 1999 (Unaudited).
Notes to Condensed Consolidated Financial Statements.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security-Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
2
EAGLE CAPITAL INTERNATIONAL, LTD.
PART I - FINANCIAL INFORMATION
Item I. Condensed Consolidated Financial Statements
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Tanner + Co. 675 East 500 South, Suite 640
Certified Public Accounts Salt Lake City, Utah 84102
and Business Advisors Telephone (801) 532-7444
Fax (801) 532-4911
Email: mail@bestcpa.com
ACCOUNTANTS' REVIEW REPORT
TO THE BOARD OF DIRECTORS OF
EAGLE CAPITAL INTERNATIONAL, LTD.
We have reviewed the accompanying condensed consolidated balance
sheet of EAGLE CAPITAL INTERNATIONAL, LTD. as of September 30, 2000,
and the related condensed consolidated statements of operations and
cash flows for the three months and nine months then ended. These
financial statements are the responsibility of the management of
EAGLE CAPITAL INTERNATIONAL, LTD.
We conducted our review in accordance with standards established by
the American Institute of Certified Public Accountants. A review of
interim financial information consists principally of applying
analytical procedures to financial data and making inquiries of
persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which
is the expression of an opinion regarding the financial statements
taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to the accompanying condensed consolidated
financial statements referred to above in order for them to be in
conformity with generally accepted accounting principles.
/s/
TANNER + CO.
Salt Lake City, Utah
December 11, 2000
3
EAGLE CAPITAL INTERNATIONAL, LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
September 30, December 31,
2000 1999
(Unaudited) (Audited)
-------------- ------------
CURRENT ASSETS:
Cash $ 2,361,416 $ 20,326
Advance to Bullhide 70,900 -
Advance to
Business Dimensions 14,000 -
Other advances 27,581 -
----------- ----------
TOTAL CURRENT ASSETS 2,473,897 20,326
----------- ----------
PROPERTY AND EQUIPMENT, net 1,239,051 185,100
----------- ----------
OTHER ASSETS -
Equipment deposits 200,000 300,000
Goodwill, net 1,817,759 -
Investment in joint venture 557,632 -
License rights, net 91,812 90,000
Investments:
Bullhide 201,363 -
Great Wall/China - 1,771,018
C.T. India - 1,150,800
C.T. Mexico - 681,830
I.M.S.I. 5,390,000 5,600,000
----------- ----------
TOTAL OTHER ASSETS 8,258,566 9,593,648
----------- ----------
TOTAL ASSETS $11,971,514 $9,799,074
=========== ==========
See accountant's review report and accompanying notes to condensed
consolidated financial statements.
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EAGLE CAPITAL INTERNATIONAL, LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
September 30, December 31,
2000 1999
(Unaudited) (Audited)
------------- ------------
CURRENT LIABILITIES:
Notes payable $ 2,880,000 $ 475,000
Accounts payable 1,051,867 94,173
Advances from officer 1,237,170 5,860
Commitments payable to
unconsolidated subsidiaries - 149,500
Deferred revenue 100,000 -
----------- -----------
TOTAL CURRENT LIABILITIES 5,269,037 724,533
----------- -----------
SHAREHOLDERS' EQUITY:
Preferred Stock A, $.001
par value, 10,000,000 shares
authorized, 897,400 and
1,080,600 shares issued
and outstanding at
September 30, 2000 and
December 31, 1999 897 1,081
Preferred Stock B, $.001
par value, 10,000,000 shares
authorized, 565,846 and 856,021
shares issued and outstanding
at September 30, 2000 and
December 31, 1999 566 856
Common Stock, $.001 par value,
70,000,000 shares authorized,
11,938,686 and 7,103,228 shares
issued and outstanding
at September 30, 2000 and
December 31, 1999 11,938 7,103
Additional paid in capital 14,213,029 13,202,755
Accumulated deficit (7,523,953) (4,137,254)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 6,702,477 9,074,541
----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $11,971,514 $ 9,799,074
=========== ===========
See accountant's review report and accompanying notes to condensed
consolidated financial statements.
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EAGLE CAPITAL INTERNATIONAL, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended Nine months Ended
September 30, September 30,
2000 1999 2000 1999
----------- ------------ ----------- -----------
SALES $ 2,166,667 $ -0- $ 2,166,667 $ -0-
COST OF SALES 766,453 -0- 766,453 -0-
----------- ------------ ----------- -----------
GROSS PROFIT 1,400,214 -0- 1,400,214 -0-
----------- ------------ ----------- -----------
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 1,018,480 93,864 3,006,042 1,266,424
----------- ------------ ----------- -----------
INCOME (LOSS) FORM OPERATIONS 381,734 (93,864) (1,605,828) (1,266,424)
----------- ------------ ----------- -----------
OTHER EXPENSE:
Impairment of goodwill - - 1,714,387 -
Interest Expense 33,414 - 33,656 504
Loss on Sale of Securities 27,828 - 27,828 -
Other - - 5,000
----------- ------------ ----------- -----------
NET INCOME (LOSS) $ 320,492 $ (93,864) $(3,386,699) $(1,266,928)
=========== ============ =========== ===========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING:
- Basic 10,912,738 3,142,118 8,625,446 2,458,940
- Diluted 17,199,958 3,142,118 8,625,446 2,458,940
NET INCOME (LOSS) PER
COMMON SHARE:
- Basic $ .03 $ (.03) $ (.39) $ (.52)
----------- ------------ ----------- -----------
- Diluted $ .02 $ (.03) $ (.39) $ (.52)
=========== ============ =========== ===========
See accountant's review report and accompanying notes to condensed
consolidated financial statements.
6
EAGLE CAPITAL INTERNATIONAL, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine months Ended
September 30, September 30,
2000 1999
------------- -------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss $(3,386,699) $(1,266,928)
Adjustments to reconcile net
loss to net cash provided
by operating activities:
Impairment of goodwill 1,714,387 -
Amortization 259,797 -
Stock issued for services 568,467 688,400
Increase (decrease) in:
Advances (112,481) -
Commitments payable to
unconsolidated subsidiaries (110,500) -
Payable to Lone Wolf 1,000,000 -
Deferred revenue 100,000
Accounts payable 948,694 138,157
----------- -----------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 981,665 (440,371)
----------- -----------
CASH FLOWS USED FROM INVESTING
ACTIVITIES:
Deposits on equipment - (162,000)
Investment in subsidiaries
(net of cash acquired) (485,163) (210,500)
Investment in license rights (5,000) -
Purchase of property, plant
and equipment (951,094) -
----------- -----------
NET CASH USED IN INVESTING
ACTIVITIES (1,441,257) (372,500)
----------- -----------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Advances from officer 1,023,182 -
Proceeds from notes payable 1,705,000 -
Proceeds from issuance of stock 72,500 1,033,923
----------- -----------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 2,800,682 1,033,923
----------- -----------
NET INCREASE IN CASH 2,341,090 221,052
CASH, BEGINNING OF PERIOD 20,326 48
----------- -----------
CASH, END OF PERIOD $ 2,361,416 $ 221,100
=========== ===========
See accountant's review report and accompanying notes to condensed
consolidated financial statements.
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EAGLE CAPITAL INTERNATIONAL, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
SUPPLEMENTAL CASH FLOW INFORMATION
Nine Months Ended
September 30,
2000 1999
---------- ----------
Cash paid during the period for:
Interest $ 33,656 $ 504
During the nine months ended September 30, 2000, the Company's
ownership interest in CT Great Wall of China, CT Mexico and CT India
increased to 100%, 100%, and 70%, respectively. In connection
therewith, the following accounting has been recorded as of
September 30, 2000, and for the nine months then ended:
CT Great Wall CT CT
of China Mexico India
------------- ---------- -----------
Carrying value of investments
as of December 31, 1999 $ 1,771,018 $ 681,830 $ 1,150,800
Issuance of 29,467 shares of
Preferred B Stock 73,668 - -
Cash advances 418,250 - -
Carrying value of investments ------------- ---------- -----------
as of September 30, 2000 $ 2,262,936 $ 681,830 $ 1,150,800
============= ========== ===========
The following represents the accounting recorded as of September 30,
2000, to consolidate the three subsidiaries:
CT Great Wall CT CT
of China Mexico India
------------- ---------- -----------
Goodwill $ 1,864,368 $ 625,837 $ 1,088,550
Equipment 2,857 - -
China Joint Venture 550,382 - -
Accounts payable (9,000) - -
Advances from officer (175,000) (30,028) (3,100)
Eliminate inter-company payable - 12,000 27,000
Other 29,329 74,021 38,350
------------ ---------- -----------
$ 2,262,936 $ 681,830 $ 1,150,800
============ ========== ===========
During the nine months ended September 30, 2000, the Company issued
300,000 shares of common stock in exchange for the forgiveness of a
$300,000 note payable owed by the Company to an officer and
shareholder.
See accountant's review report and accompanying notes to condensed
consolidated financial statements.
8
EAGLE CAPITAL INTERNATIONAL, INC.
NOTES TO REVIEWED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(SEPTEMBER 30, 2000)
NOTE 1 - BASIS OF PRESENTATION - The accompanying interim condensed
consolidated financial statements of Eagle Capital
International, Ltd. are unaudited, but in the opinion of
management reflect all adjustments (consisting of normal
recurring accruals) necessary for fair presentation of the
results for such periods. The results of operations for
any interim period are not necessarily indicative of the
results for the respective full year. These condensed
financial statements should be read in conjunction with
the financial statements and notes thereto contained in
the Company's annual report of Form 10-KSB for the year
ended December 31, 1999 as filed with the Securities and
Exchange Commission.
NOTE 2 - STOCKHOLDERS' EQUITY
Changes in Stockholders' Equity - The following represents
the changes in stockholders' equity from January 1, 2000
through September 30, 2000:
Additional
Preferred A Preferred B Common Paid In
Shares Amount Shares Amount Shares Amount Capital
--------- -------- -------- -------- ---------- -------- -----------
Balance - Jan. 1, 2000 1,080,600 $ 1,081 856,021 $ 856 7,103,228 $ 7,103 $13,202,755
Conversion of Preferred A (183,200) (184) - - 458,000 458 (274)
Conversion of Preferred B - - (319,642) (319) 1,728,590 1,729 (1,410)
Common sold for cash - - - - 75,000 75 72,425
Issuance of Preferred B - - 29,467 29 - - 73,639
Issuance for Services - - - - 1,280,500 1,280 318,845
Issuance for Interest - - - - 993,368 993 247,349
Note payable conversion - - - - 300,000 300 299,700
--------- -------- -------- -------- ---------- -------- -----------
Balance
- September 30, 2000 897,400 $ 897 565,846 $ 566 11,938,686 $ 11,938 $14,213,029
========= ======== ======== ======== ========== ======== ===========
During the nine months ended September 30, 2000, the
Company issued an additional 29,467 shares of Preferred B
for its investment in CT Great Wall of China. Such
issuance increased its investment in CT Great Wall of
China by $73,668 or $.25 per common equivalent share
(Preferred B Converts 1-to-10 common shares of the
Company). In addition, 1,280,500 shares of Common Stock
valued at $.25 per share were issued for services received
during the nine months ended September 30, 2000. Of the
1,280,500 shares, 448,000 shares were issued to the
Company's President and CEO for services (of which 198,000
shares were issued in lieu of cash salary of $198,000
under an employment contract), 210,000 for financial
consulting services, 572,500 for general consulting
services, and 50,000 shares for legal services.
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EAGLE CAPITAL INTERNATIONAL, INC.
NOTES TO REVIEWED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(SEPTEMBER 30, 2000)
NOTE 3 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company's President and Chief Executive Officer,
Anthony D'Amato, has made certain short term loans to the
Company from time to time during the period ending
September 30, 2000 totaling $1,237,170
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
The analysis of the Company's financial condition, liquidity,
capital resources and results of operations should be viewed in
conjunction with the accompanying financial statements including the
notes thereto.
FINANCIAL CONDITION
At September 30, 2000, the Company had total assets of
$11,971,514, as compared to total assets of $9,799,074 at December
31, 1999; current liabilities and total liabilities of $5,269,037 at
September 30, 2000, as compared to current liabilities and total
liabilities of $724,533 at December 31, 1999; and stockholders'
equity at September 30, 2000 of $6,702,477, as compared to
$9,074,541 at December 31, 1999. The decrease in stockholders'
equity was primarily due to the recording during the nine months
ended September 30, 2000 of a $1,000,000 note payable and related
expense thereon to Lone Wolf in exchange for the cancellation of an
earlier purchase commitment the Company had entered into with Lone
Wolf. Current management continues to investigate the facts and
circumstances surrounding the original purchase commitment of the
Company. In addition, the Company recorded impairment of goodwill
of $1,714,387 for the write down of goodwill in CT Mexico and CT
India and amortization expense of $259,797 principally from the
amortization of the Company's investment in IMSI during the nine
months ended September 30, 2000.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 2000, the Company's cash totaled $2,361,416
as compared to $20,326 at December 31, 1999. Net cash provided by
(used in) operations was $981,665 compared to $(440,371) in the same
quarter of 1999. The ability of the Company to generate cash flow
in excess of its operating requirements depends in the short term on
the performance of its operations in India, China and Mexico.
Management believes based upon current results that the Company will
be able to fund its operations entirely from revenue by the second
quarter of 2001. The Company may require additional financing to
fund existing operations until sufficient revenues are generated.
The Company may raise capital from the sale of its securities from
investors; however, in the interim certain directors and officers of
the Company will advance funds sufficient to meet operational
expenses. The timing and amount of the Company's additional
financing needs will depend, inter alia, upon the revenues generated
by the Company. It is anticipated that product development
expenditures will be significantly increased during the fourth
quarter of 2000, but it is also anticipated that such expenditures
will be paid from then existing revenues.
The Company has no present additional commitment that is likely
to result in its liquidity increasing or decreasing in any
significant way. In addition, the Company knows of no trend,
11
additional demand, event or uncertainty that will result in, or that
are reasonably likely to result in the Company's liquidity
increasing or decreasing in any material way.
RESULTS OF OPERATIONS
Sales for the three and nine months ended September 30, 2000
were $2,166,667 compared with sales of $-0- in the same periods of
1999. The Company recorded net income of $320,492 for the quarter
ended September 30, 2000, and a net loss of $3,386,699 for the nine
months ended September 30, 2000 compared to a net loss of $93,864
and $1,266,928 for the same periods of 1999. Net loss recorded for
the nine months ended September 30, 2000, is primarily due to the
recording of a $1,000,000 note payable and related $1,000,000
expense to Lone Wolf in exchange for the cancellation by Lone Wolf
of an earlier purchase commitment entered into by the Company with
Lone Wolf. In addition, the Company recorded impairment of goodwill
of $1,714,387 for the write-down of goodwill in CT Mexico and CT
India and amortization expense of $259,797 principally from the
amortization of the Company's investment in IMSI during the nine
months ended September 30, 2000.
FORWARD LOOKING STATEMENTS
Statements made in this Management's Discussion and Analysis
and elsewhere in this Annual Report that state the Company's or
management's intentions, hopes, beliefs, expectations or predictions
of the future contain forward looking statements. Such forward
looking statements include, without limitation, statements regarding
the Company's planned capital expenditure requirements, cash and
working capital requirements, the Company's expectations regarding
the adequacy of current financing arrangements, product demand and
market growth, other statements regarding future plans and
strategies, anticipated events or trends, and similar expressions
concerning matters that are not historical facts. It should be noted
that the Company's actual results could differ materially from those
contained in such forward looking statements mentioned above due to
adverse changes in any number of factors that affect the Company's
business including, without limitation, risks associated with
investing in and the marketing of IMSI's Wall System, risks
concerning the protection of IMSI's patents, reliance upon
distributors, regulatory risks, risks of expansion, product
liability and other risks described herein.
12
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
On July 21, 1999, the Company was named as a defendant in
a derivative action filed on behalf of the shareholders of
IMSI, Inc. The Company was one of multiple defendants
named in the suit filed in the Third Judicial District
Court for Salt Lake City, Utah. On March 3, 2000 the
parties signed a binding settlement agreement which was
approved by the Court on September 21, 2000.
Item 2. CHANGES IN SECURITIES
Not Applicable
Item 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable
Item 5. OTHER INFORMATION
Not Applicable
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) There are no exhibits required to be filed for the
period covered by this Report.
(b) There were no reports on Form 8-K filed for the
period covered by this Report.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
EAGLE CAPITAL INTERNATIONAL, LTD.
January 4, 2001 By:__/s/Anthony D'Amato__________
Anthony D'Amato, President