SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2001
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Commission File Number: 0-26322
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EAGLE BUILDING TECHNOLOGIES, INC.
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(Exact Name of Small Business Issuer as Specified in its Charter)
Nevada 88-0303769
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(State of Incorporation) (IRS Employer I.D. No.)
20283 Powerline Road, Suite 213, Boca Raton, Florida 33498
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(Address of principal executive offices)
(561) 487-3600
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(Issuer's telephone number, including area code)
EAGLE CAPITAL INTERNATIONAL, LTD.
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(Former name, former address, and former fiscal year,
if changed since last report)
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 CORPORATE ISSUERS
There were 5,200,186 shares of Common Stock, $.001 par value, issued and
outstanding at June 30, 2001.
1
EAGLE BUILDING TECHNOLOGIES, INC.
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets - June 30, 2001 (Unaudited) and December
31, 2000
Statements of Operations - Three months and six months
ended June 30, 2001 and 2000 (Unaudited).
Statements of Cash Flows - Six months ended June 30,
2001 and 2000 (Unaudited).
Notes to 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 BUILDING TECHNOLOGIES, INC.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
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3
EAGLE BUILDING TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
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June 30, December 31,
2001 2000
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(Unaudited)
CURRENT ASSETS:
Cash $ 6,031,255 $ 717,847
Investments 1,319,056 -
Accounts Receivable 932,099 559,415
Other Advances 668,894 236,232
Inventories 1,178,342 1,348,518
Prepaid expenses 482,861 -
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TOTAL CURRENT ASSETS 10,612,507 2,862,012
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PROPERTY AND EQUIPMENT, net 2,737,980 3,199,811
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OTHER ASSETS -
Deposits 47,700 120,146
Goodwill, net 2,984,234 3,063,170
Investment in joint venture 583,119 583,119
License rights, net 5,277,250 5,419,750
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TOTAL OTHER ASSETS 8,892,303 9,186,185
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TOTAL ASSETS $22,242,790 $15,248,008
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and
accrued expenses $ 604,265 $ 939,304
Notes payable 548,418 3,658,373
Advances from officer 139,107 719,479
Deposits 427,656 652,692
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TOTAL CURRENT LIABILITIES 1,719,446 5,969,848
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LONG TERM LIABILITIES 4,900,106 947,116
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SHAREHOLDERS' EQUITY:
Common Stock, $.001 par value
11,666,666 shares authorized
5,200,186 and 3,310,853 shares
issued and outstanding at June 30,
2001 and December 31, 2000 5,200 3,311
Additional paid in capital 22,844,947 16,078,621
Accumulated deficit (7,145,420) (9,875,888)
Foreign currency translation
adjustment (81,489) -
Convertible note/equity instrument - 2,125,000
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TOTAL STOCKHOLDERS' EQUITY 15,623,238 8,331,044
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TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $22,242,790 $15,248,008
=========== ===========
See accompanying notes to condensed
consolidated financial statements.
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EAGLE BUILDING TECHNOLOGIES, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2001 2000 2001 2000
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SALES $ 5,290,120 $ - $ 9,388,781 $ -
COSTS OF SALES 2,707,485 - 4,389,929 -
----------- ----------- ----------- -----------
GROSS PROFIT 2,582,635 - 4,998,852 -
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 1,218,887 2,530,243 2,545,992 3,707,190
----------- ----------- ----------- -----------
INCOME (LOSS) FROM OPERATIONS 1,363,748 (2,530,243) 2,452,860 (3,707,190)
OTHER INCOME (EXPENSES):
Investment income 318,500 - 318,500 -
Interest expense (36,990) - (40,892) -
----------- ----------- ----------- -----------
INCOME (LOSS) BEFORE INCOME TAXES 1,645,258 (2,530,243) 2,730,468 (3,707,190)
PROVISION FOR INCOME TAXES - - - -
----------- ----------- ----------- -----------
NET INCOME (LOSS) $ 1,645,258 $(2,530,243) $ 2,730,468 $(3,707,190)
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
- Basic 4,733,065 1,460,855 4,288,227 1,347,449
- Diluted 4,733,065 1,460,855 4,288,227 1,347,449
NET INCOME (LOSS)
PER COMMON SHARE
- Basic $ .35 $ (1.73) $ .64 $ (2.75)
----------- ----------- ----------- -----------
- Diluted $ .35 $ (1.73) $ .64 $ (2.75)
=========== =========== =========== ===========
See accompanying notes to condensed consolidated financial statements.
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EAGLE BUILDING TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
June 30, June 30,
2001 2000
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CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss) $ 2,730,468 $(3,707,190)
Adjustments to reconcile net
income (loss) to net cash
provided by operating activities:
Amortization 221,436 165,430
Stock issued for services
and interest 199,002 220,750
Depreciation 44,278 -
Reinvested investment income (318,500) -
Impairment of goodwill - 1,714,387
Changes in operating assets
and liabilities:
Advances (432,662) (60,778)
Accounts receivable (372,684) -
Inventories 643,676 -
Prepaid expenses (77,861) -
Deposits (225,036) -
Accounts payable and
accrued expenses (233,554) 1,682,360
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NET CASH PROVIDED BY
OPERATING ACTIVITIES 2,178,563 14,959
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CASH FLOWS FROM INVESTING ACTIVITIES:
Decrease in other assets 72,446 -
Investment in subsidiaries
(net of cash acquired) - (477,913)
Investment in license rights - (5,000)
Increase in investments (1,000,556) -
Foreign currency translation (81,489) -
Purchase of property, plant
and equipment (55,947) (869,012)
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NET CASH USED IN
INVESTING ACTIVITIES (1,065,546) (1,351,925)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Net advances from officer 932,357 649,002
Proceeds from notes payable 4,071,000 1,350,000
Payments on notes payable (3,227,965) -
Purchase of treasury stock (50,000) -
Proceeds from issuance of stock 2,474,999 72,500
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NET CASH PROVIDED BY
FINANCING ACTIVITIES 4,200,391 2,071,502
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NET INCREASE IN CASH 5,313,408 734,536
CASH AT BEGINNING OF PERIOD 717,847 20,326
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CASH AT END OF PERIOD $ 6,031,255 $ 754,862
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See accompanying notes to condensed consolidated financial statements.
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EAGLE BUILDING TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Cont'd)
(Unaudited)
Six Months Ended
June 30, June 30,
2001 2000
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CASH PAID DURING PERIOD FOR INTEREST $ 40,892 $ -
SUPPLEMENTAL DISCLOSURE:
During the six months ended June 30,
2001, the Company issued stock at the
following values:
Prepaid legal and advisory services $ 405,000
Note payable conversions 3,637,729
Settlement of accrued expense 101,485
Consulting and interest expense 199,002
See accompanying notes to condensed consolidated financial statements.
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EAGLE BUILDING TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2001
NOTE 1 - BASIS OF PRESENTATION - The accompanying interim condensed
consolidated financial statements of Eagle Building
Technologies, Inc. (the "Company") are unaudited, but in the
opinion of management reflect all adjustments (consisting of
normal recurring accruals) necessary for a 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 on Form 10-KSB for the year ended
December 31, 2000 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 June 30, 2001:
Additional
Common Paid In
Shares Amount Capital
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Balance - Jan. 1, 2001 3,310,853 $ 3,311 $16,078,621
Common stock sold for cash 550,000 550 2,474,449
Issuance of Common Stock
for services 78,334 78 159,924
Issuance of Common Stock
for Interest 26,000 26 38,974
Note payable conversions 716,743 716 3,637,013
Cancellation of treasury
shares (8,333) (8) (49,992)
Prepaid legal and
advisory fees 135,000 135 404,865
Settlement of prior
accrued expense 51,499 52 101,433
Settlement on prior
cancelled shares 340,090 340 (340)
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Balance - June 30, 2001 5,200,186 $ 5,200 $22,844,947
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NOTE 3 - RECLASSIFICATION
Certain liability amounts in the Company's December 31, 2000,
balance sheet have been reclassified to conform to the June
30, 2001 presentation.
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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
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At June 30, 2001, the Company had total assets of $22,242,790, as
compared to total assets of $15,248,008 at December 31, 2000; current
liabilities of $1,719,446 at June 30, 2001, as compared to current
liabilities of $5,969,848 at December 31, 2000; and stockholders' equity
at June 30, 2001 of $15,623,238, as compared to $8,331,044 at December
31, 2000. The increase in stockholders' equity was primarily due to net
income for the six months ended June 30, 2001 of approximately $2.7
million and sales of the Company's common stock.
Liquidity and Capital Resources
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As of June 30, 2001, the Company's cash totaled $6,031,255 as
compared to $717,847 at December 31, 2000. Net cash provided by
operations was $2,178,563 compared to $14,959 in the same six month
period of 2000. The Company is currently generating cash flow in excess
of its operating requirements. Management believes based upon current
results that the Company will continue to be able to fund its operations
entirely from revenues on a going forward basis. The Company required
additional financing to fund the acquisition of Master Door, an Italian
door and hardware manufacturer. This funding came from $5 million in
loans to the Company from a group of accredited investors led by Mr.
Meyer Berman. The notes are convertible into the Company's restricted
common stock at $10 per share. It is anticipated that product
development expenditures will be significantly increased during the
third quarter of 2001, but it is also anticipated that such expenditures
will be paid from then existing revenues.
The Company's liquidity will decrease in the third quarter of 2001
should the purchase of Master srl be finalized. In addition to the
Master srl closing, the Company knows of no trend, 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
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Sales for the three and six months ended June 30, 2001 were
$5,290,120 and $9,388,781 compared with sales of $0 in the same periods
of 2000. Based upon current contracts, the Company anticipates sales of
$10 million for third quarter 2001. The Company experienced a net
profit of $1,645,258 for the quarter ended June 30, 2001, and a net
profit of $2,730,468 for the six months ended June 30, 2001 compared to
a net (loss) of ($2,530,243) and ($3,707,190) for the same periods of
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2000. Net profit recorded for the six months ended June 30, 2001, is
primarily due to revenue from Eagle Building Technologies, PL of India
and Fleming Manufacturing Company operations and investment income.
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.
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PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
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Not Applicable.
Item 2. CHANGE IN SECURITIES
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Not Applicable
Item 3. DEFAULTS UPON SENIOR SECURITIES
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Not Applicable
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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Not Applicable
Item 5. OTHER INFORMATION
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On August 2, 2001, Eagle Capital International, Ltd.
("Eagle") entered into an agreement with Aquila Ventures
Corporation ("Aquila") to form a Joint Venture entity, Aquila
Squared Building Corporation (the "Joint Venture"), to
develop large scale social housing in Mexico. Eagle will
work exclusively with the Joint Venture to manufacture and
distribute the IMSI Building System throughout Mexico. As
part of the Agreement, Aquila will purchase two million
dollars ($2,000,000 US) of new equipment from Fleming
Manufacturing Co., Inc. ("Fleming"), a wholly-owned
subsidiary of Eagle. Eagle is responsible for quality control
standards, structural engineering specifications, engineering
and design supervision, and assistance in the sale and
marketing of Eagle's products. Aquila will provide
$2,000,000 to purchase the Fleming mobile block plant and
necessary equipment, appropriate facilities for the Joint
Venture's operations, assist in the procurement of all
necessary licenses and permits, and other matters related to
operations in a foreign country. Eagle will own fifty-five
percent (55%) of the Joint Venture and Aquila will own forty-
five percent (45%) of the Joint Venture. Eagle anticipates
the Joint Venture being fully operational by the end of 2001.
In June 2001, William Fleming elected to convert at $10.00
per share his Convertible Promissory Note dated December 30,
2000, in the principal amount of $2,125,000 into 212,500
shares of the Company's restricted common stock.
On April 16, 2001, Eagle Building Technologies, Inc. (the
"Company") acquired eighty-five percent (85%) of the issued
and outstanding securities of Master srl ("Master"), an
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Italian corporation located in Piacenza, Italy for an
aggregate purchase price of 15,462,350,000 Lire or
approximately $7,191,000 U.S. The acquisition was subject
to due diligence and a final audit. The audit, as completed
to date, has raised certain issues concerning Master's sales
revenues which the Company believes require further
investigation. The Company has not previously, nor does the
Company intend to, consolidate any financial information
concerning Master's operations in the Company's financial
statements until such time as the Company's due diligence and
final audit is completed to the Company's satisfaction.
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)(i) On or about May 1, 2001, the Company filed a
Report on Form 8-K announcing the acquisition of
eighty-five percent (85%) of the issued and
outstanding securities of Master srl ("Master"),
an Italian corporation located in Piacenza, Italy,
subject to completion of due diligence and a final
audit.
(ii) On or about May 10, 2001, the Company filed a
Report on Form 8-K announcing the Company's name
change to Eagle Building Technologies, Inc. and
the new trading symbol to "EGBT".
(iii) On or about May 18, 2001, an Amendment to the
January 10, 2001 Form 8-K was filed providing the
audited financials of Fleming Manufacturing
Company, Inc. ("Fleming"), a wholly owned
subsidiary of the Company, for the fiscal year
ended December 31, 2000, and the Company's
unaudited consolidated Proforma Financial
Statement for the fiscal year ended December 31,
2000, inclusive of Fleming.
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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 BUILDING TECHNOLOGIES, INC.
August 13, 2001 By:/s/ Anthony D'Amato
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Anthony D'Amato, Chairman and CEO
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