As filed with the Securities and Exchange Commission on August 31, 2000
Registration No. _________
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Eagle Capital International, Ltd.
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(Name of Small Business Issuer in Its Charter)
Nevada 5032 88-0303769
- -------------------------------- ------------------------- -------------------
(State or other jurisdiction (Primary Standard (IRS Employer
of incorporation or organization) Industrial Classification) Identification No.)
Anthony D'Amato
Chief Executive Officer
1900 Corporate Blvd. Eagle Capital International, Ltd.
Suite 400E 1900 Corporate Blvd., Suite 400E
Boca Raton, FL 33431 Boca Raton, FL 33431
Telephone (561) 988-2550 Telephone: (561) 988-2550
Facsimile (561) 988-2552 Facsimile: (561) 988-2552
- ----------------------------------- ----------------------------------
(Address and telephone number, (Name, address and telephone
including area code of Registrant's number of agent for service)
principal executive offices)
----------------------------
Copy to:
David A. Carter, Esq.
David A. Carter, P.A.
2300 Glades Road
Suite 210, West Tower
Boca Raton, Florida 33431
Telephone: (561) 750-6999
Facsimile: (561) 367-0960
Approximate Date of Commencement of Proposed Sale to the Public: As Soon as
practicable after the Registration Statement becomes effective.
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If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering.[ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the Registration Statement is expected to be made pursuant
to Rule 434, check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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Title of Each Class of Proposed Maximum Proposed Maximum
Securities to be Amount to be Offering Price per Aggregate Offering Amount of Registration
Registered Registered (1) Security(2) Price(2) Fee
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Common Stock 4,750,500 $1.00 $4,750,000 $1,254.00
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(1) Pursuant to Rule 416, there are also registered hereby such additional
indeterminate number of shares of common stock as may become issuable by
reason of stock splits, stock dividends and other adjustments to the
securities registered hereby.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 under the Securities Act of 1933, as amended.
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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The information in this Prospectus is not complete and may be changed. We may
not sell these securities until the Registration Statement filed with the
Securities and Exchange Commission is effective. This Prospectus is not an offer
to sell these securities and it is not soliciting on offer to buy these
securities in any state where the offer or sale is not permitted.
Subject to Completion, Dated August 30, 2000
PROSPECTUS
4,750,500 shares of Common Stock
Eagle Capital International, Ltd.
This is an offering of 4,750,500 shares of common stock of Eagle
Capital International, Ltd., held by certain of our Securityholders. Of the
4,750,500 shares being offered, 850,000 Shares are issuable upon the conversion
of Convertible Promissory Notes owned by certain of the Selling Securityholders,
850,000 shares are issuable upon exercise of Warrants held by certain of the
Selling Securityholder, 2,300,500 Shares comprise common stock held by certain
Selling Securityholders, and 750,000 shares are being offered by the Company. We
will not receive any proceeds from the sale of the Shares, but we will receive
proceeds from the Selling Securityholders if they exercise their Warrants.
Our common stock is quoted on the OTC Bulletin Board under the symbol
"ECIC". On August 30, 2000, the closing bid price per share of our common stock
as reported by the OTC Bulletin Board was $1.00.
This investment involves a high degree of risk. You should purchase
shares only if you can afford a complete loss of your investment. See "Risk
Factors" beginning on page 8.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities, or determined if
this prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this Prospectus is ___, 2000.
TABLE OF CONTENTS
Prospectus Summary...........................................................................................3
Risk Factors.................................................................................................5
Use of Proceeds.............................................................................................13
Dividend Policy.............................................................................................14
Market Price of Common Stock................................................................................15
Selected Financial Data.....................................................................................16
Management's Discussion and Analysis of Financial Condition and Results of Operations.......................17
Business....................................................................................................23
Management..................................................................................................30
Certain Transactions........................................................................................35
Principal Securityholders...................................................................................36
Description of Securities...................................................................................39
Selling Securityholders.....................................................................................44
Plan of Distribution........................................................................................45
Legal Matters...............................................................................................47
Experts.....................................................................................................47
Where You Can Find Additional Information.................................................................. 47
Index to Consolidated Financial Statements.................................................................F-1
We have not authorized any dealer, sales person or other person to give you
written information other than this prospectus or to make representations as to
matters not stated in this Prospectus. You must not rely on unauthorized
information. This prospectus is not an offer to sell these securities or our
solicitation of your offer to buy these securities in any jurisdiction where
that would not be permitted or legal. Neither the delivery of this prospectus
nor any sale made hereunder after the date of this prospectus shall create an
implication that the information contained herein or the affairs of Eagle
Capital International, Ltd. have not changed since the date hereof.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there by any sale of these securities
in any state in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state.
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PROSPECTUS SUMMARY
The following summary may not contain all the information that may be
important to you. Before making an investment decision, you should read this
entire prospectus. Upon the completion of this offering, we will have
outstanding common and preferred stock. Except where otherwise indicated, all
information in this prospectus assumes the conversion of all Warrants and
Preferred Stock into common stock. In this prospectus, the "Company", "Eagle
Capital", "we", "us" and "our" refer to Eagle Capital International, Ltd.,
unless the context otherwise requires.
The Company
We incorporated in Nevada in 1994, and together with and through our
wholly owned subsidiaries, engage in the production and distribution of concrete
masonry block and tile, a concrete masonry block building system, a surface
exterior sealing bond and an interior and exterior flooring and roofing
sealant.. Our products are marketed under the IMSI(R) and Bullhide(R)
trademarks. Our corporate offices are located at 1900 Corporate Blvd., Suite
400E, Boca Raton, Florida 33431, and our telephone number is (561) 988-2550.
The Offering
Common stock offered............................... 4,750,500 shares of Common
Stock
Common stock issued and
outstanding prior to this offering................ 11,182,692
Common stock issued and
outstanding after this offering................... 12,882,692(1)
Use of proceeds.................................... Working capital and general
corporate purposes
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(1) assuming full exercise of all Warrants and full conversion of the
Convertible Promissory Notes.
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Selected Financial Information
The selected financial information set forth below is derived from, and
should be read in conjunction with, the more detailed financial statements
(including the notes thereto) appearing elsewhere in this Prospectus. See
("Consolidated Financial Statements")
Income Statement Items
Year Ended December 31, Six Months Ended June 30,
1998 1999 1999 2000
------------ ------------ ------------ ------------
(Unaudited) (Unaudited)
Net Sales $ -- $ -- $ -- $ 750,000
Selling, General and
Administrative Expenses 53,786 677,414 338,700 606,449
Issuance of common stock
for services -- 2,557,270 944,200 220,750
Loss in unconsolidated
subsidiaries -- 140,102 -- --
Lone Wolf settlement -- -- -- 1,000,000
------------ ------------ ------------ ------------
Loss from operations (53,786) (3,374,786) (1,282,900) (1,077,199)
Net tax benefit none none none none
------------ ------------ ------------ ------------
Net loss $ (53,786) $ (3,374,786) $ (1,282,900) $ (1,077,199)
============ ============ ============ ============
Net loss per common
share - basic $ (.03) $ (.59) $ (.28) $ (.12)
Net loss per common
share - diluted $ (.01) $ (.27) $ (.14) $ (.06)
Shares used in computing
net loss per common
share - basic 1,997,918 5,712,378 4,588,128 9,015,578
Shares used in computing
net loss per common
share - diluted 4,086,967 12,775,755 9,489,340 17,251,636
Balance Sheet Items
December 31, June 30,
1999 1998 2000
------------ ------------ -------------
(Unaudited)
Cash $ 20,326 $ 48 $ 755,036
Working capital (deficit) (704,207) (55,216) (2,771,737)
Total Assets 9,799,074 117,148 12,198,283
Current liabilities 724,533 55,264 3,584,023
Long term obligations none none none
Total shareholders' equity 9,074,541 61,884 8,614,260
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RISK FACTORS
An investment in our common stock involves a high degree of risk. You
should carefully consider the risks described below before making an investment
decision. The risks and uncertainties described below are not the only ones
facing our company. Additional risks and uncertainties not presently known to us
or that we currently deem immaterial may also impair our business operations.
These factors, among others, may cause actual results, events, or performance to
differ materially from those expressed in any forward-looking statements made in
this registration.
If any of the following events actually occurs, our business, financial
condition, or operating results could be materially and adversely affected. In
such case, the value of your investment may decline, and you may lose all or
part of your investment.
We do no generate At our current level of development, we do not
enough cash from generate net cash from operations sufficient to meet
operations to fund our our rapid growth. To fund our growth plan, we
growth plan. require additional financing to meet the ongoing
liquidity needs of our operations. There can be no
assurance, however, that our liquidity goals will be
reached in the immediate future, if ever. If
adequate funds are not available on acceptable
terms, or at all, we may be unable to sustain our
rapid growth, which would have a material adverse
effect on our business, results of operations, and
financial condition.
Your investment may If additional funds are raised through the issuance
be diluted of equity securities, your percentage ownership in
the Company's equity will be reduced. Also, you may
experience additional dilution in net book value per
share, and the equity securities may have rights,
preferences, or privileges senior to those of yours.
Our inability to manage To manage our growth, we must implement systems, and
growth could hurt our train and manage our employees. We may not be able
business to implement these action items in a timely manner,
or at all. Our inability to manage growth
effectively could have a material adverse effect on
our business operating results, and financial
conditions. There can be no assurance that we will
achieve our planned expansion goals, manage our
growth effectively, or operate profitably.
Our inability to The high technology construction-related services
compete and maintain business in which we are engaged is highly
our niche in the high competitive. Competition in the Company's markets is
technology construction based primarily on price, product performance,
industry could hurt our reputation, delivery times, and customer support. We
business believe that new product introduction and
enhancements of existing products are material
factors for our continuing growth and
profitability. No assurance can be given that we
will continue to be successful in introducing new
products or further enhancing existing products.
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We are subject to the We are dependent upon foreign suppliers for some of
risks of doing business our materials and supplies. Our arrangements with
abroad suppliers are subject to the risks of doing business
abroad, such as import duties, trade restrictions,
work stoppages, foreign currency fluctuations,
political instability, and other factors which could
have an adverse impact on the business of the
Company. We believe that the loss of any one or more
of our suppliers would not have a long-term material
adverse effect on us, because other suppliers with
whom we do business would be able to increase
production to fulfill our requirements. However, the
loss of certain of our suppliers, could, in the
short-term, adversely affect our business until
alternative supply arrangements were secured. If
Most Favored Nation ("MFN") status for China is
restricted or revoked in the future, the costs of
goods purchased from Chinese vendors is likely to
increase. Management continues to closely monitor
the situation and has determined that the production
capabilities in countries outside China which have
MFN status and, therefore, have favorable duty
rates, would meet production needs. Such a change in
suppliers may have a short-term adverse effect on
operations and, possibly, earnings.
Our proprietary Our success depends on our proprietary technology
technology may not obtained through licensing agreements. We rely on a
be sufficiently combination of contractual rights, patents, trade
protected secrets, know-how, trademarks, non-disclosure
agreements and technical measures to establish and
protect our rights. We cannot assure you that the
proprietary technology will not be copied or
duplicated by competition.
Changes in technology The markets for our products change rapidly because
may adversely affect of technological innovation, changes in customer
our financial results requirements, declining prices, and evolving
industry standards, among other factors. As a
result, our success depends on our ability to timely
innovate and integrate new technologies into our
current products and service offerings. We cannot
guarantee that we will successfully integrate new
technologies into our services or develop new
services in a timely manner.
Advances in technology also require us to commit
substantial resources to acquiring and applying new
technologies for use in our operations. We have to
continually commit resources to train our personnel
to use these new technologies and maintain the
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compatibility of existing software systems with
these new technologies. We cannot be sure that we
will be able to continue to commit the resources
necessary to refresh our technology infrastructure
at the rate demanded by our markets.
We may not be The development of our business has been largely
able to attract dependent on the efforts of Anthony D'Amato and Don
and retain key Pollock. Although we have entered into employment
personnel contracts with Messrs. D'Amato and Pollock, the loss
of the services of either of these individuals could
have a material adverse affect on the Company. We
believe that our future success also will depend
significantly upon our ability to attract, motivate,
and retain additional highly skilled managerial
personnel. Competition for such personnel is
intense, and there can be no assurance that we will
be successful in attracting, assimilating, and
retaining the personnel we require to grow and
operate profitability. Some of our senior management
have only recently joined us. Of the employees
listed in the management section of this prospectus,
all have worked for us for less than two years.
If qualified employees are Our ability to provide high-quality services on a
not available to us, our timely basis requires that we employ an adequate
operations and growth number of skilled engineers, scientists, design and
strategy will be adversely technology professionals and project managers.
affected Accordingly, our ability to increase our operating
efficiency and profitability will be limited by our
ability to employ, train and retain skilled
personnel necessary to meet our requirements. We,
like many of our competitors, may experience
shortages of qualified personnel. We may not be able
to maintain an adequate level of skilled labor
necessary to operate efficiently and to support our
growth strategy and our labor expenses may increase
as a result of a shortage in the supply of skilled
personnel.
There is only a limited Our securities are currently not listed in the
market for our stock and Nasdaq Small Cap Market. Our Common Stock is traded
we cannot assure a more on the OTC Bulletin Board under the symbol "ECIC".
significant market will As a result, an investor may find it more difficult
ever develop to dispose of, or to obtain accurate quotations as
to the market value of, our Common Stock.
Our securities may If no exclusions from the definition of a "penny
be subject to "penny stock" under applicable SEC regulations are
stock" trading available, our securities would be subject to the
requirements penny stock rules, which impose additional sales
practice requirements on broker-dealers who sell
such securities to persons other than established
customers and accredited investors. Consequently,
the ability of broker-dealers to sell our securities
to prospective purchasers and your ability to sell
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your securities in the secondary market may be
limited.
We have limited We only commenced operations in 1997. Accordingly,
operating history our limited operating history makes predicting our
upon which you may future operating results, including operating
evaluate us expenses, difficult. Our revenues may not grow at
the rate that we anticipate. or may not continue at
their current levels.
Our profits which We mainly carry out our projects and business
may be available for through our subsidiaries and foreign equity joint
distribution may be ventures established in China, India, Mexico and
limited other foreign countries. Profits available for
distribution by these companies are determined in
accordance with accounting principles and financial
regulations in each respective country, and profits
as so determined may differ from profits determined
in accordance with GAAP in certain significant
aspects, which include the use of different bases
for recognition of revenues and expenses. For
example, under relevant Chinese foreign investment
laws and regulations, profits available for
distribution are determined after transfers to
statutory reserve funds and the payment of taxes.
Under the "Law of the People's Republic of China on
Chinese Foreign Equity Joint Ventures" and its
implementing rules, the "Regulations of the People's
Republic of China Concerning Financial
Administration of Foreign Investment Enterprise" and
the "Accounting System of the People's Republic of
China for Foreign Investment Enterprises," profits
may be distributed as dividends only after the
following payments are made: (1) enterprise income
tax (2) compensation, liquidated damages,
late-payment penalties, penalty interest and fines;
(3) to cover previous years' losses; and (4)
payments to the reserve fund,. enterprise
development fund, the bonus and welfare fund for
staff and workers. As of June 30, 2000, we had no
profits of RMB which were available for distribution
to shareholders as dividends.
Our operations are subject Extensive governmental regulations in these areas
to extensive governmental may delay or otherwise adversely impact the
regulation in the areas development of our projects. We are subject to
of planning and zoning, various laws and regulations concerning planning and
building design and zoning, building design, and construction. We may
construction, human health, experience delays or other problems in the issuance
and the environment. Our of the necessary permits and/or licenses to complete
projects may be delayed by our projects. We cannot assure you that we will be
extensive governmental able to obtain the necessary licenses or permits in
regulations a timely manner.
We may encounter Construction projects that we have undertaken and
construction delays expect to undertake in the future typically require
and cost overruns substantial capital expenditures during the
construction period, and it may take many
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months or years before the project can be completed
to generate positive cash flow. The duration and the
costs involved in completing a project can be
adversely affected by many factors including
shortages of materials, equipment and labor, natural
catastrophe. labor disputes, accidents and other
unforeseeable circumstances. Delays in obtaining the
requisite licenses, permits or approval from
governmental agencies or authorities can also
increase the costs, delay or prevent the pre-sale or
completion of a project. Construction delays or
failure to complete the construction of a project to
its planned specifications or schedule may result in
liabilities, loss of revenues and less attractive
returns.
We may suffer capital The climate and geology of China and India present
investment losses as well increased risk of natural disasters as compared to
as lost revenues if natural many other regions in the world. Our business may be
disasters and other events adversely affected to the extent that hurricanes,
resulting in losses in severe storms, earthquakes. droughts, floods,
excess of our insurance wildfires or other natural disasters or similar
proceeds events occur in an area where our projects are
underway. Although we have appropriate public
liability insurance and comprehensive insurance for
our projects, certain types of losses, such as
losses from natural disasters, are generally not
insured because they are either uninsurable or not
cost justifiable. If an uninsured loss or a loss in
excess of our insured limits occur, we may suffer
losses of capital investment which would adversely
affect future revenue streams while we remain liable
for any financial obligations relating to the
relevant project.
Fixed price contracts may We currently generate, and expect to continue to
result in reduced generate, a significant portion of our revenues
profitability on projects under fixed price contracts. We must estimate the
costs of completing a particular project to bid for
such fixed price contracts. The cost of labor and
materials, however, may vary from the costs we
originally estimated. These variations, along with
other risks inherent in performing fixed price
contracts, may result in actual revenue and gross
profits for a project differing from those we
originally estimated and could result in reduced
profitability and losses on projects. Depending upon
the size of a particular project, variations from
estimated contract costs can have a significant
negative impact on our operating results for any
fiscal quarter or year.
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Many of our fitting out Since 1978, the PRC government has been reforming,
and installation projects and is expected to continue to reform, the PRC's
have been located in the economic and political systems. Such reforms have
PRC. Our results of resulted in significant social progress. Other
operations and financial political, economic and social factors could also
condition may therefore lead to further readjustment of the reform measures.
be influenced by the This refinement and readjustment process may not
economic, political, always have a positive effect on our operations in
legal and social the PRC. At times, we may also be adversely affected
conditions in the PRC. by changes in policies of the PRC's government such
as changes in laws and regulations or their
interpretation, the introduction of additional
measures to control inflation, changes in the rate
or method of taxation and imposition of additional
restrictions on currency conversion and remittances
abroad.
Our holding company We have no direct business operations, other than
structure creates our ownership of our subsidiaries. While we have no
restrictions on the current intention of paying dividends, should we
payment of dividends. decide in the future to do so, as a holding company,
our ability to pay dividends and meet other
obligations depends upon the receipt of dividends or
other payments from our operating subsidiaries and
other holdings and investments. In addition, our
operating subsidiaries, from time to time, may be
subject to restrictions on their ability to make
distributions to us, including as a result of
restrictive covenants in loan agreements,
restrictions on the conversion of local currency
into U.S. dollars or other hard currency and other
regulatory restrictions.
Risks relating to the The economy of China differs from the economies of
economy of China most countries belong to the Organization for
Economic Cooperation and Development in such
respects as structure, government involvement, level
of development, growth rate, capital reinvestment,
allocation of resources, rate of inflation and
balance of payments position. Since 1949, the
economy of China has been a planned economy subject
to one and five year state plans adopted by central
Chinese government authorities and implemented, to a
large extent, by provincial and local authorities,
which plans set out production and development
targets. Although the majority of productive assets
in China are still owned by the government, economic
reform policies since 1978 have emphasized
decentralization and the utilization of market
mechanisms in the development of the Chinese
economy. Such economic reform measures adopted by
the Chinese government may be inconsistent or
ineffectual, and the Company may not be able to
benefit from all such reforms.
Since 1978, the PRC government has been reforming,
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and is expected to continue to reform, the PRC's
economic and political systems. Such reforms have
resulted in significant social progress. Other
political, economic and social factors could also
lead to further readjustment of the reform measures.
This refinement and readjustment process may not
always have a positive effect on the Company's
operations in the PRC. The Company, at times, may
also be adversely affected by changes in policies of
the PRC's government such as changes in laws and
regulation (or the interpretation thereof), the
introduction of additional measures to control
inflation, changes in the rate or method of taxation
and imposition of additional restrictions on
currency conversion and remittances abroad. The
management of the Company believes that because of
the broad support as a result of the success of such
reforms, the basic principles underlying the reforms
will continue to provide an acceptable framework for
the PRC's political and economic systems.
China's legal system is The Chinese legal system is based on written
relatively new, and the statutes and, unlike common law systems, decided
application, interpretation legal cases in China have little precedential value.
and enforcement of laws is In 1979, China began the process of developing its
difficult to predict legal system by undertaking to promulgate a
comprehensive system of laws. On December 29, 1993,
the National People's Congress promulgated the
Company Law of The People's Republic of China (the
"Company Law"), which became effective on July 1,
1994. The Company Law, the rules and regulation
promulgated under it and legal prescriptions
relating to Chinese companies provide the core of
the legal framework governing the corporate behavior
of companies, such as the Company's subsidiaries,
and their directors and shareholders. Because these
laws, regulation and legal requirements are
relatively recent, their interpretation and
enforcement involve significant uncertainty.
If the government decides In 1994, the People's Bank of China ("PBOC")
to devalue the Renminbi, eliminated the prior system of fixed exchange rates
our results of operations for conversion of Renminbi into other currencies in
could be affected in ways favor of a system in which published exchange rates
that might be positive reflect buying and selling rates (within a
or negative. prescribed range) quoted by foreign exchange bank
participants in an interbank market. Since that
time. the exchange rates for conversion of the
Renminbi to the U.S. dollar have remained relatively
stable, with the Renminbi appreciating slightly
against the dollar. Although authoritative Chinese
government sources confirm that there is no current
intention to devalue the Renminbi. many independent
economists believe that with domestic growth slowing
and currency devaluations by other Asian countries
-11-
putting pressure on the competitiveness of Chinese
exports. the possibility exists of a future
devaluation of the Renminbi. We have not entered
into any agreements or purchased any instruments to
hedge our exchange rate risks, although we may do so
in the future.
If we fail to obtain We rely on the revenue generated by our joint
and maintain foreign venture subsidiaries. Under Chinese law, joint
exchange registration venture companies must complete the procedures for
certificates, we obtaining their foreign exchange registration
may not be able to certificates and have such certificates annually
repatriate our income. examined by the foreign exchange administrative
authorities of China, before principal and interest
income in Renminbi generated in China can be
converted into foreign currency and repatriated from
the country in foreign currency. If we are unable to
obtain the necessary foreign exchange registration
certificates or fail to have such certificates
examined annually for any of our joint venture
companies, we may not be able to repatriate the
Renminbi income earned by these companies in China,
which may have an adverse impact on our business
operations and financial position.
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USE OF PROCEEDS
The Company will receive no proceeds from the sale of the Shares by the
Selling Securityholders. The Company will receive net proceeds of approximately
$1,700,000 if all our Warrants are exercised.
The Company does not anticipate receiving any proceeds from the sale of
the 750,000 Shares offered by the Company pursuant to this Prospectus.
Furthermore, the price or prices at which the Company sells the Shares, if any
are sold, cannot be predicted; nor, can the Company predict the uses and needs
it may have for the proceeds at the time of such sale or sales. Accordingly, the
Company cannot predict either the total amount of the actual proceeds, if or
when they may be received or how they may be used. In general, the Company
anticipates using the Shares offered by the Company pursuant to this Prospectus
to acquire other businesses.
We currently intend to use the proceeds, assuming all Warrants are
exercised, approximately as set forth below:
Use Amount Percent
- --- ------ -------
Working Capital and other General Corporate Purposes $1,700,000 100.00%
TOTAL $1,700,000 100.00%
The foregoing represents our best estimate of the allocation of the
proceeds of the offering based upon the present state of our business,
operations, and plans, and current business conditions. We will have broad
discretion to determine the use of a substantial portion of the proceeds of the
offering. Conditions may develop which could cause us to reallocate proceeds
from the categories listed above.
Pending the above uses, we will invest the net proceeds in government
securities and other short-term, investment-grade, interest-bearing instruments.
The proceeds received from the exercise of the Warrants will be used entirely by
us and will not benefit parties affiliated with us.
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DIVIDEND POLICY
Holders of the Company's Common Stock are entitled to dividends when,
as and if declared by the Board of Directors out of funds legally available
therefor. We do not anticipate the declaration or payment of any dividends in
the foreseeable future. We intend to retain earnings, if any, to finance the
development and expansion of its business. Future dividend policy will be
subject to the discretion of the Board of Directors and will be contingent upon
future earnings, if any, the Company's financial condition, capital
requirements, general business conditions and other factors. Therefore, there
can be no assurance that any dividends of any kind will ever be paid by the
Company.
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MARKET PRICES OF COMMON STOCK
Our Common Stock trades on the National Association of Securities
Dealers, Inc.'s OTC Bulletin Board under the symbol "ECIC". Set forth below is
the range of high and low bid information for the Company's Common Stock for the
two most recent fiscal years. This information represents prices between dealers
and does not reflect retail mark-up or mark-down or commissions, and may not
necessarily represent actual market transactions.
Fiscal Period High Bid Low Bid
1998:
First Quarter............................... $ .06 $ .06
Second Quarter.............................. 1.81 .05
Third Quarter............................... 2.38 .25
Fourth Quarter.............................. 2.06 .81
1999:
First Quarter............................... $ 2.9375 $ 2.25
Second Quarter.............................. 2.25 2.15
Third Quarter............................... 2.0625 1.875
Fourth Quarter.............................. 1.8125 1.625
2000:
First Quarter............................... $ 1.50 $ 1.375
Second Quarter.............................. .8125 .8125
On August 29, 2000, the closing sale price of our Common Stock as
reported on the OTC Bulletin Board was $1.00 per share.
As of August 30, 2000, there were approximately 446 record holders of
the Company's outstanding Common Stock. Since additional shares of the Company's
Common Stock are held for stockholders at brokerage firms and/or clearing
houses, the Company was unable to determine the precise number of beneficial
owners of its Common Stock as of August 30, 2000.
-15-
SELECTED FINANCIAL DATA
Income Statement Items
Year Ended December 31, Six Months Ended June 30,
1998 1999 1999 2000
------------ ------------ ------------ ------------
(Unaudited) (Unaudited)
Net Sales $ -- $ -- $ -- $ 750,000
Selling, General and
Administrative Expenses 53,786 677,414 338,700 606,449
Issuance of common stock
for services -- 2,557,270 944,200 220,750
Loss in unconsolidated
subsidiaries -- 140,102 -- --
Lone Wolf settlement -- -- -- 1,000,000
------------ ------------ ------------ ------------
Loss from operations (53,786) (3,374,786) (1,282,900) (1,077,199)
Net tax benefit none none none none
------------ ------------ ------------ ------------
Net loss $ (53,786) $ (3,374,786) $ (1,282,900) $ (1,077,199)
============ ============ ============ ============
Net loss per common
share - basic $ (.03) $ (.59) $ (.28) $ (.12)
Net loss per common
share - diluted $ (.01) $ (.27) $ (.14) $ (.06)
Shares used in computing
net loss per common
share - basic 1,997,918 5,712,378 4,588,128 9,015,578
Shares used in computing
net loss per common
share - diluted 4,086,967 12,775,755 9,489,340 17,251,636
Balance Sheet Items
December 31, June 30,
1999 1998 2000
------------ ------------ ------------
(Unaudited)
Cash $ 20,326 $ 48 $ 755,036
Working capital (deficit) (704,207) (55,216) (2,771,737)
Total Assets 9,799,074 117,148 12,198,283
Current liabilities 724,533 55,264 3,584,023
Long term obligations none none none
Total shareholders' equity 9,074,541 61,884 8,614,260
-16-
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction
with the consolidated financial statements and the notes appearing elsewhere in
this prospectus.
Plan of Operation
Introduction
The Company's Plan of Operation for the next twelve (12) months is to
continue to aggressively market the Company's concrete masonry blocks and tile,
the IMSI(R) masonry block building system, a surface exterior sealing bond, and
the Bullhide(R) interior and exterior flooring and roofing sealant worldwide.
The Company currently has operations in India, China, Mexico and the United
States.
The Company is presently making the transition from a development stage
company to a fully operational company. The Company has become current in its
reporting obligations under the Securities and Exchange Act of 1934 through the
preparation and filing of its 1999 Annual Report on Form 10-KSB and subsequent
quarterly reports. Since the Company has become current in its reporting
obligations, and now that management has taken steps to secure the interim
financing required to build out the Company. The Company removed the development
stage classification with the filing of its June 30, 2000 Form 10-Q.
The financial statements as of December 31, 1999, have been prepared on
the going concern basis. The Company did not generate revenues for fiscal year
ended 1999 due to the developmental stage of the Company. The Company financed
its operations during the fiscal quarter ended March 31, 2000 and June 30, 2000
with short term loans from investors and directors of the Company totaling
approximately $725,000. The Company anticipates that all non-director short term
loans will be paid in full by September 30, 2000.
Cash Requirements
On estimated revenues of $23 million for fiscal year 2000, the Company
expects a pre-tax profit of approximately $9 million. The Company has secured
financing from Starpoints Capital, Inc. to finance the purchase of equipment and
machines to assist in the expanded operations. The Company does not anticipate
the need for additional borrowing during the remainder of fiscal year 2000
unless the Company makes another acquisition. The Company should generate
revenues sufficient to meet its operational costs for the remainder of fiscal
year 2000.
Product Development
The Company plans to continue the research and development of its
construction related specialty products. Currently, the Company is focusing on
the continued development of an infrared scanning technology which enables the
user to pinpoint with accuracy the source of roof leaks, Bullhide(R) sealant
products and research concerning the application of structure bond
sealants on wet surfaces.
-17-
Purchase of Equipment
The Company anticipates purchasing two (2) additional mobile block
plants during fiscal year 2000. During fiscal year 2001, the Company plans to
purchase an additional four (4) mobile block plants resulting in the Company
owning a total of ten (10) mobile block plants by the end of fiscal year 2001.
Staffing
Consistent with its objective of making the transformation from a
startup enterprise to a fully operation business, the Company during the next
twelve (12) months plans to hire a significant number of employees, including
senior executives in key management positions. Specifically, the Company plans
to add approximately 167 employees, as follows:
Aggregate Monthly General
and Administrative Expenses
Company No. of Employees Including Existing Employees
- ------- ---------------- ----------------------------
Construction Technologies, India 60 $30,000/month
Construction Technologies, Mexico 1 10,250/month
Great Wall New Building Systems, Ltd. 100 12,500/month
Eagle Capital International, Ltd. 6 25,000/month
Six Months Ended June 30, 2000, as Compared
to Six Months Ended June 30, 1999
Revenues - At June 30, 2000, the Company had total assets of
$12,198,283, as compared to total assets of $9,799,074 at December 31, 1999;
current liabilities and total liabilities of $3,584,023 at June 30, 2000, as
compared to current liabilities and total liabilities of $724,533 at December
31, 1999; and stockholders' equity at June 30, 2000 of $8,614,260, as compared
to $9,074,541 at December 31, 1999. The principal reason for the decrease in
stockholders' equity was due to the recording during the six months ended June
30, 2000 of a$1,000,000 note payable and related expense thereon to Lone Wolf
Energy in exchange for the cancellation of an earlier purchase commitment the
Company had entered into with Lone Wolf.
Liquidity and Capital Resources - As of June 30, 2000, the Company's
cash totaled $755,036 as compared to $20,326 at December 31, 1999. Net cash used
in operations was $14,867 compared to $298,571 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 India, China
and Mexico subsidiaries. Management believes based upon current results that the
company will be able to fund its operations entirely from revenue by the third
quarter of 2000. The Company may require additional financing to fund existing
operations until sufficient revenues are generated. The Company anticipates
raising capital from the sale of its securities during the third quarter of
2000; however, in the interim for the months of July, August and September,
2000, certain directors and officers of the Company will advance funds
-18-
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 third quarter of 2000, but it is also
anticipated that such expenditures will be paid from then existing revenues.
Results of Operations - Sales for the period ended June 30, 2000 were
$750,00 compared with sales of $0 in the same quarter of 1999. Based upon
current contracts, the Company expects sales of $23 million for fiscal 2000. In
June 2000, Eagle received a non-refundable commission of $750,000 on a project
in Bombay, India that will ultimately use over 3,000,000 of the patented IMSI
System(R) blocks. It is anticipated that production will commence on this
project in September 2000. The Company experienced net income of $99,748 for the
quarter ended June 30, 2000, and a net loss of $1,077,199 for the six months
ended June 30, 2000 compared to a net loss of $641,452 and $1,282,900 for the
same periods of 1999. Net loss recorded for the six months ended June 30, 2000,
is primarily due to the recording of a $1,000,000 note payable and related
$1,000,000 expense to Lone Wolf Energy in exchange for the cancellation by Lone
Wolf of an earlier purchase commitment entered into by the Company with Lone
Wolf.
The Year Ended December 31, 1999 As Compared
to the Year Ended December 31, 1998
Financial Condition - At December 31, 1999, the Company had total
assets of $9,799,074, as compared to total assets of $117,148 at December 31,
1998; current liabilities and total liabilities of $724,533, as compared to
current liabilities and total liabilities of $55,264 at December 31, 1998; and a
net worth of $9,074,541, as compared to a net worth of $61,884 in 1998. The
principal reason for the increases in both total assets and net worth was due to
the issuance of the Company's Preferred B securities in exchange for the
Company's interests in IMSI, CTI, CTM, GWNBS. The Preferred B securities issued
in connection with these acquisitions was recorded at a value of $10 per share
($1 value of common stock, conversion rate of 10:1).
Liquidity and Capital Resources - As of December 31, 1999, the
Company's cash totaled $20,326 as compared to $48 at December 31, 1998, an
increase of $20,278. Net cash used in operations was $638,505 compared to $48
provided by operations in 1998. The increase in cash used in operations is
primarily due to the increased net loss for 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 India, China and Mexico subsidiaries. Management
believes based upon current results that the company will be able to fund its
operations entirely from revenue by the third quarter of 2000. The Company
believes that it may require additional financing to fund existing operations
until sufficient revenues are generated. The Company anticipates raising capital
from the sale of its securities during the second quarter of 2000. The timing
and amount of the Company's additional financing needs will depend, among other
things, upon the revenues generated by the Company. It is anticipated that
product development expenditures will be significantly increased during the
third quarter of 2000, but it is also anticipated that such expenditures will be
paid from then existing revenues.
-19-
The Company has no present commitment that is likely to result in its
liquidity increasing or decreasing in any significant way. In addition, 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 - Sales for 1999 were $0 compared with sales of
$0 in 1998. Based upon current contracts, the Company expects sales of $25
million for fiscal 2000. The Company experienced a net loss of $3,374,786 in
1999 compared to a net loss of $53,786 in 1998. Of the $3,374,786 net loss in
1999, $2,557,270 or 76% was from the issuance of common and Preferred B
securities in exchange for services to the Company.
The Year Ended December 31, 1998 As Compared
to the Year Ended December 31, 1997
As stated in the Company's 1997 Form 10-KSB filing, the Company had no
active business at the end of that year. In the third quarter of 1998,
negotiations for the acquisition of IMSI Cap Fund, Inc. were conducted. As a
result of those discussions, the Company acquired IMSI Cap Fund on July 23, 1998
by issuing 1,286,400 shares of Class A convertible preferred stock valued at
$118,423. The principal purpose of Cap Fund was to support the rapid development
and expansion of IMSI block building system products by providing the necessary
equipment funding. In addition, the following transpired on the date of
acquisition or shortly thereafter: (i) 4,687,868 shares of outstanding common
stock of the Company were exchanged for 1,171,967 shares of common stock under
the terms of a 1-for-4 reverse stock split. All references to shares of the
Company's common stock have been retroactively restated; (ii) holders of 330,000
shares of existing preferred stock of the Company converted such shares into
825,000 shares of the Company's common stock; (iii) IAC, Inc. changed its name
to Eagle Capital International, Ltd. (iv) The former officers and directors of
the Company were replaced by former Cap Fund officers and directors.
The balance of the year was devoted to capital raising efforts and to
positioning the Company for profitability.
On January 15, 1999, the Company issued 257,027 shares of its Class B
preferred stock to Great Wall New Building Systems, Inc. (Great Wall) in
exchange for 64% of the Great Wall's outstanding common stock. Great Wall is an
entity which has conducted the development of the IMSI block system in the
Peoples Republic of China. Prior to the Company's purchase of Great Wall's
common stock, Great Wall had raised approximately $425,000 from private
investors. This acquisition will be accounted for as a purchase in 1999 with the
assets and liabilities of Great Wall recorded as of the date of purchase at
their fair market value and the operations consolidated from June 30, 1999
forward.
On January 19, 1999, the Company issued 103,600 shares of its Class B
preferred stock to Construction Technologies of India, Inc. (CT India) in
exchange for approximately 40% of CT India's outstanding common stock. In
addition, the Company agreed to purchase an additional 600,000 shares from CT
India at $0.25 per share for a total purchase price of $150,000. Through July 1,
1999, the Company has purchased an additional 200,000 shares
-20-
under this $150,000 commitment. Following the purchase of the additional 600,000
shares, the Company will own approximately 51% of CT India. CT India is an
entity which has conducted the development of the IMSI block system in India.
Prior to the Company's purchase of CT India's common stock, CT India had raised
approximately $175,000 from private investors. This acquisition will be
accounted for as a purchase in 1999 with the assets and liabilities of CT India
recorded as of the dates of purchase at their fair market values and the
operations consolidated from June 30, 1999 forward.
On January 19, 1999, the Company issued 57,250 shares of its Class B
preferred stock to Construction Technologies of Mexico, Inc. (CT Mexico) in
exchange for approximately 50% of CT Mexico's outstanding common stock. In
addition, the Company agreed to purchase an additional 600,00 shares from CT
Mexico at $0.25 per share for a total purchase price of $150,000. Through July
1, 1999, the Company has purchased an additional 150,000 shares under this
$150,000 commitment. Following the purchase of the additional 600,000 shares,
the Company will own approximately 67% of CT Mexico. CT Mexico is an entity
which has conducted the development of the IMSI block system in Mexico. Prior to
the Company's purchase of CT Mexico's common stock, CT Mexico had raised
approximately $150,000 from private investors. This acquisition will be
accounted for as a purchase in 1999 with the assets and liabilities of CT Mexico
recorded as of the dates of purchase at their fair market values and the
operations consolidated from June 30, 1999 forward.
Had the Company purchased their interests in the above three described
transactions as of January 1, 1998, the following amounts presented on a
proforma basis would have been recorded by the Company for the year ended
December 31, 1998:
Sales $ -0-
Net loss $ 541,361
Basic loss per weighted average
common share $ 0.89
In addition to the above transactions, the Company is negotiating the
acquisition of an interest in IMSI in exchange for shares of the Company's Class
B preferred stock. This acquisition will be accounted for by the Company using
the cost method and valued at the to be determined fair value of the shares of
Class B preferred stock issued.
Liquidity - The Company's financial statements are prepared using
generally accepted accounting principles applicable to a going concern which
contemplates the realization of assets and liquidation of liabilities in the
normal course of business. However, the Company does not have significant cash
or other material assets, nor does it have an established source of revenues
sufficient to cover its operating costs and to allow it to continue as a going
concern. Management of the Company believes that proceeds received from the
planned sales of Company stock will enable the Company to continue as a going
concern until the Company becomes profitable. In June 1999, the Company sold
600,000 shares of its common stock at $1.25 per share. The net proceeds received
by the Company amounted to $652,000 after a 13% sales commission.
-21-
Liquidity and Capital Resources
Liquidity - At December 31, 1999, the Company had current assets of
$6,075,091, compared to $1,813,098 at March 31, 1999; total assets of $6,610,985
as compared to $2,379,335 at March 31, 1999; current liabilities of $2,126,916
as compared to $1,414,595 at March 31, 1999, and a current net worth of
$4,484,069 as compared to $964,740 at March 31, 1999. The increase is primarily
due to additional capital raised through the sale of preferred shares of the
Company in a Private Placement Offering during the quarter ended June 30, 1999
(See Note 4 to Financial Statements), and the increase in net income for the
nine months ended December 31, 1999.
Capital Resources - The Company has obtained significant financing for
continuing operations and growth. Five specific lines of credit have been
opened, two financing agreements in Hong Kong and three financing agreements
through its U.S. operations.
We have no present commitment that is likely to result in liquidity
increasing or decreasing in any material way. In addition, we know of no trend,
additional demand, event or uncertainty that will result in, or that are
reasonably likely to result in, liquidity increasing or decreasing in any
material way.
We have no material commitments for capital expenditures. We know of no
material trends, favorable or unfavorable, in our capital resources. We have no
additional outstanding credit lines or credit commitments in place and has no
additional current need for financial credit.
Year 2000
All of our computer systems are Year 2000 compliant. The Year 2000
compliance issue has not and it is anticipated that it will not pose operational
problems.
-22-
BUSINESS
Cautionary Statement Relating
to Forward Looking Information
We have included some forward-looking statements in this section and
other places in the prospectus regarding our expectations after completion of
this offering. These forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause our actual results, levels of
activity, performance or achievements, or industry results, to be materially
different from any future results, levels of activity, performance or
achievements express or implied by these forward-looking statements. Some of
these forward-looking statements can be identified by the use of forward-looking
terminology including "believes", "expects", "may", "will", "should" or
"anticipates" or the negative thereof or other variations thereon or comparable
terminology, or by discussions of strategies involve risks and uncertainties.
You should read statements that contain these words carefully because they:
o discuss our future expectations
o contain projections of our future operating results or of our
future financial condition; or
o state other "forward looking" information
We believe it is important to communicate our expectations to you, but
events may occur in the future over which we have no control and which we are
not accurately able to predict.
Introduction to Business
Eagle Capital International, Ltd. (the "Company") is a Nevada
corporation in the business of the manufacture, distribution and application of
technologically advanced building products through a series of licensing
agreements with Integrated Masonry Systems International, Inc. ("IMSI"), a
Nevada corporation, and other companies.
Corporate History
International Association Services, Limited, a British Virgin Islands
corporation, was formed on November 21, 1990, as an association of podiatrists
who wanted to meet to discuss and address common concerns and interests. This
group of podiatrists had a management agreement with Dr. Michael Wener. In 1991,
The Academy of Ambulatory Foot Surgery, Inc. requested Dr. Wener to look into
the possibilities of obtaining a group medical malpractice insurance policy for
members of The Academy and the Association. On April 10, 1992, the Company filed
a DBA registration in California as International Associations' Coalition, Inc.
On June 25, 1993, Dr. Wener formed a Nevada corporation, International
Associations' Coalition, Inc. and did not renew the BVI registration and the
California DBA was terminated.
In late 1994, Lease Rite, Inc., a former subsidiary of an S-1
registration company, Tyvlsys, Inc., formed a wholly owned subsidiary IAC, Inc.,
a Nevada corporation, and merged with International Associations' Coalition,
Inc. In January, 1995, Dr. Wener assigned his
-23-
management contract with International Associations' Coalition, Inc. to IAC,
Inc. In October, 1998, IAC, Inc. changed the Company's name to Eagle Capital
International, Ltd.
During 1998, the Company agreed to acquire the assets of IMSI Cap Fund,
Inc., a private company. On July 23, 1999, the Company issued 1,286,400 of its
Series A Preferred Stock in exchange for the assets of IMSI Cap Fund, Inc. The
Company is reviewing the transaction with IMSI Cap Fund, Inc.
Trademarks and Licenses
IMSI Products
The Company has the exclusive right to market the IMSI products in
China, India and Mexico through licensing agreements with IMSI. The Company
currently is finalizing licensing agreements with IMSI for Romania and the
Balkan territories. The license agreements provide the Company with the right to
market and use the IMSI patented technology and trademarks.
Bullhide Products
With the Company's acquisition of forty-four percent (44%) of Bullhide
Corporation, the Company acquired the rights to market and use the Bullhide(R)
System and trademarks.
Product Lines
IMSI(R)Block System
The IMSI Wall System features insulated reinforced masonry that is
mortarless and dry-stacked. The bricks have pockets in which insulation is
embedded within the wall, but it is done without sacrificing structural
integrity. The bricks are stacked without the need for a layer of mortar between
bricks. Instead, the IMSI system uses a patented combination of interlocking,
along with a Structure Coat/Surface Bonding Cement which provides a weather
resistant, structurally sound, and impermeable surface. The advantage of the
IMSI(R)Block System are:
o Cost competitive
o Airtight
o Engineered for seismic conditions
o Low maintenance costs
o Environmentally friendly
o Quick installation
o Ease of installation; semi-skilled workers can be quickly and
easily trained
o Flexibility of use; commercial, industrial, residential,
institutional, and governmental construction
-24-
The Bullhide(R) System
The Bullhide(R) system consists of a patent pending proprietary
polyurethane material and certain technologies for the manufacturing and
application of the product. Bullhide's primary products are Bullhide 2000 and
QUARRA 2000.
Bullhide 2000 is the primary product used in the Bullhide(R) system. It
is a two-component fast reacting polyurethane elastomer that is 100% solid,
surpassing all other known 100% solid linings in the "combined toughness index
(PSI tensile strength and elongation). The product is (i) resistant to water,
fuels, oils and most chemicals, (ii) available in a variety of colors, (iii)
available with either a smooth or non-slip surface, (iii) permanently flexible
to -40F, (iv) adheres to virtually anything and (v) retains toughness up to
+250F. Other products include Bullhide 1500 and certain primers used to prepare
the surface for the Bullhide(R) product.
QUARRA 2000 is the primary product in the QUARRA(R) product line, which
markets industrial formulations of the well-established bed liner products.
QUARRA 2000 is a rubbery tough coating (up to 1/4") with extreme abrasion and
impact resistance, stretchability and non-slip properties. Applications include
parking decks, warehouse floors, shipping docks, rail ore cars, secondary
chemical and waste water containment and waterproofing. Other products in the
QUARRA(R) line include QUARRA 1500 and QUARRA 2400.
The heart and the brains of the Bullhide(R) system is the Spray Master
3030. This is a plural component, high volume low pressure spray molding
machine. The electronically controlled metering system assures a perfectly
"on-ratio" application every time. In conjunction with the new Quarra(R)
products, Bullhide developed a high output application machine to shorten the
industrial job times. The Spraymaster 3050 is a high-output application machine
with four times the output of the 3030 machine and the capacity to coat 10,000
square feet per day of QUARRA coatings.
Development of Markets
The Company relies on it's management's ability to determine the
existence and extent of available markets for its products. Company management
has considerable marketing background and devotes a significant portion of its
time to marketing related activities. The Company also utilizes the local
marketing knowledge of its joint venture partners and subsidiaries to network in
the countries covered by the Company's licensing agreements.
The Company markets it's building related products under the
IMSI(R)Block trademark and the polyurethane elastomer and application system
marketed by subsidiary Bullhide Corporation under the QUARRA(R) trademark.
The contracts obtained by the Company have resulted in the Company
being positioned to capture a substantial segment of the enormous demand for
labor-friendly, energy-efficient, rapid-deployment, low-cost construction
technologies and building methods. The Company is developing established and
emerging global markets by utilizing its own comparative strengths in concert
with those of its technology partner, IMSI, and those of other selected
strategic partners. Current strategic relationships have been established in
America, Asia, the Middle East, and the Mediterranean Basin. Two (2) such
strategic joint ventures and license arrangements have been organized with
Arabian Masonry Systems, Inc. and U.S. Tech Building Systems, Inc.
-25-
The Company is focusing on the following core competencies:
o Strategic planning and implementation of finance, marketing
and sales objectives
o Training
o Administrative oversight of manufacturing activities
o Establishment of cooperative joint ventures with strategic
partners operating in target markets
One of the greatest benefits of the Company's focus on creating joint
ventures in local markets is that it minimizes the Company's exposure in terms
of capital outlay while providing a tremendous advantage for the Company in
terms of the utilization of local labor and materials. This allows the Company
to effectuate the transfer of technology and training while gaining the
political benefit of "keeping it local" which reflects positively on the
Company, our local partners, and the local or foreign government of the
jurisdiction in which the contract is being fulfilled.
Each of the Company's selected global partners and licensees provides
the Company with essential political and business relationships with prominent
local business and government entities, as well as specific knowledge of
commercial opportunities and cultural, legal and business marketing into the
markets in which such knowledge and relationships are virtually impossible for
an outside company to acquire.
The three major prime market areas where the Company has established
joint ventures are as mentioned earlier: China, India, and Mexico. In each joint
venture, the Company has a controlling interest.
Operations of Subsidiaries
China
For centuries, the Chinese have built their homes and buildings with
brick made from red clay. The harvesting of this clay has destroyed millions of
acres of precious agricultural topsoil, putting additional pressure on the
government of the Peoples Republic of China (the "PRC") to feed its 1.3 billion
citizens. In reaction, the Chinese government has implemented a program to phase
out the use of red clay brick for residential construction in China. The PRC has
recognized that the IMSI wall system offers environmental benefits, as well as
advantages in terms of energy saving and ease of construction. On that basis,
and in the face of ongoing critical shortages of quality housing, the State
Building Materials Bureau of the PCR has joined with the Company's Great Wall
New Building System ("GWNRS") subsidiary to promote the establishment of the
wall system as a standard construction method for China's housing market.
Heating cost is another big factor effecting China's housing market.
China wastes 1.6 million metric tons of energy annually as a result of
insufficient insulation. Though most of China heats its buildings only four
months of the year, it uses three times as much energy for
-26-
heating as does the United States. According to the Director of China's program
for new building materials, Chen Fu Guang, the insulated masonry system will
address this crisis in residential energy use.
To launch the program for China's adoption of the insulated masonry
system nationwide, the Bureau, together with officials of the Beijing
municipality, has authorized the construction of multi-story residential
buildings in Beijing Mi Yun County, an affluent suburb of Beijing City. In
addition, plans are in place for an industrial symposium to be hosted by the
central PRC government and to chronicle the Mi Yun project and produce a
documentary for airing on China's State run television in order to increase
awareness of the new building system.
The Company's subsidiary, Great Wall New Building Systems, controls a
$4 million registered capital joint venture in Beijing Mi Yun county. The Joint
Venture, which is in partnership with the Beijing Shuanglong ("Double Dragon")
Cement Works (annual production 500,000 metric tons), occupies a 12 acre site,
and in June of 1999 was commissioned by Double Dragon to construct 5 million
square feet of mid-rise residential construction for fiscal 2000- 2001 based on
the IMSI(R)Block manufactured at joint venture facilities. The joint venture
also will market IMSI block and conventional masonry products to the general
market. It expects to double capacity in 2001 and to replicate its operation in
Lioaning Province in Northern China, where the need for energy efficiencies
offered by the IMSI(R)Block system is particularly acute. Based upon our joint
venture contract, the Company expects sales to exceed $100 million over the next
4 years.
India
In India, the world's second largest country in terms of population
(over I billion inhabitants), the Company has entered into partnership with
prominent Indian developers which together form Construction Technologies of
India (CTI). Again, the Company holds a controlling interest in this joint
venture.
In May of 2000, the Company finalized contracts with Mr. Jayant Tipnis
for orders of over 5 million system block of the patented IMSI(R)Block system
valued at over $10 Million USD. Production in Bombay will begin in the second
quarter of 2000. The Company is currently negotiating several large contracts
with major Indian developers that would dramatically increase the aforementioned
numbers. In addition to Bombay, Eagle/CTI is working with CITCO, MHADA, HUDCO
and NPPI to be part of the construction of 254 buildings, each three to seven
stories in the State of Maharastra.
As in China, the Company anticipates its opportunities in India will
expand dramatically both within the two regions in which it has existing
commitments and into other identified main population centers. The British
influence on India helps facilitate both language and governmental functions. As
in China, the Company's Indian joint venture is the exclusive authorized
representative of IMSI technologies and related business development activities.
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Mexico
In Mexico, the Company has the added advantage of proximity to the
United States in addition to the opportunities and protections afforded by the
North American Free Trade Agreement (NAFTA). A number of sizeable projects with
the Company's politically and commercially prominent Mexican joint venture
partners are ready for near-term implementation. The Company has become the
majority owner of Construction Technologies of Mexico(CTM) which will function
as the Company's Mexican operating arm.
The Company foresees that both short and long term business prospects
in Mexico are robust as the country continues to aggressively expand its
economic and physical infrastructure. A major social and political goal of the
Federal Government of Mexico and of key local Mexican governmental authorities
is the rapid development of low-cost, proven housing technologies.
In May of 2000, the Company signed a contract with Probesa, Inc. a
Juarez, Mexico cement manufacturer to lease Probesa one of our Mobile Surface
Bonding Machines to augment their existing capacity. The Company will have full,
unencumbered access to the plant when is not running standard concrete block for
Probesa. The contract with Probesa will generate a minimum of $70,000.00 USD per
month over the next six months.
Employees
As of August 1, 2000 the Company had 11 employees. 7 people worked for
the Corporate entity, 2 people for the China subsidiary, 2 people for the
Mexican subsidiary and 18 people for the Indian subsidiary.
Competition
Presently, the Company is unaware of other construction technology
which will withstand environments prone to natural disasters and extreme weather
conditions that commonly occur in the countries in which the Company has
operations. With the enormous demand for new construction technologies from
developing countries, the Company anticipates competition at some point in the
future.
Government Regulation
In the spring of 1999, the President of the United States renewed the
People's Republic of China's "Most Favored Nation" ("MFN") treatment for entry
of goods into the United States for an additional year. In the context of United
States tariff legislation, MFN treatment means that products are subject to
favorable duty rates upon entry into the United States. IF MFN status for China
is restricted or revoked in the future, our cost of goods purchased from Chinese
vendors is likely to increase. A resultant change in suppliers would likely have
an adverse effect on our operations and, possibly, earnings, although management
believes such adversity would be short-term as a result of its ability to find
alternative suppliers. We continue to closely monitor the situation and have
determined that the production capabilities in countries outside China which
have MFN status and, therefore, have favorable duty rates, would meet our
production needs.
The United States and Mexico are part of the North American Free Trade
Agreement (NAFTA) which is the most comprehensive regional free trade agreement
ever negotiated. NAFTA created the world's largest free trade area. NAFTA
provides for certain U.S. exports such as machines tools and equipment to be
eligible for duty-free treatment or reduced tariffs. If NAFTA is restricted or
revoked in the future, our operation in Mexico would be adversely impacted.
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MANAGEMENT
Directors and Executive Officers
The following table sets forth certain information with respect to our
executive officers (including subsidiaries) and directors as of the date of this
prospectus.
Name Age Position
- ---- --- --------
Anthony D'Amato 31 President and Director
Ralph Thomson 60 Secretary and Director
Andros Savvides 37 Director
Donald Pollock 56 Director
Robert P. Kornahrens 42 Director
Charles A. Gargano 62 Director
Wilford G. Mango, Jr. 60 Chief Operating Officer
Dr. Steven Levy 49 President, Great Wall New
Building Systems, Ltd.
S.C. Gupta 66 Director of India Operations
Noah Sifuentes 47 President, Construction
Technologies of Mexico, Inc.
There are no other significant employees. There are no family
relationships between the above listed persons, nor is there any involvement in
certain legal proceedings.
ANTHONY D'AMATO joined the Company in April 1999 as a Director and has
served as Chairman since May 1999. Since June 1, 1999, Mr. D'Amato has served as
President and CEO of the Company. Since May 1997, he has served as a Director of
Drake Alexander & Associates, Inc. and was elected Chairman of the Board of
Directors in 1998. From 1992 to June 1999, Mr. D'Amato held various positions
with KB Electronics, Inc., a mid-size electronics manufacturer and served as a
director from 1995 to June 1999. Mr. D'Amato has also served as an officer and
director of UC'NWIN Systems Corporation, a publicly traded company since June
1998. Mr. D'Amato earned a BA in Finance from C.W. Post College in 1993.
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DR. RALPH THOMSON joined the Company as a director in November, 1998,
and was later named Corporate Secretary. Dr. Thomson's career spans over thirty
years and involves experience in International and Domestic market development,
trade policy, as well as regulatory and legislative activity. He is currently
the president and CEO of International Business Catalyst, a firm devoted to
International Marketing, Executive Sales, mergers and acquisitions. Dr. Thomson
has served as an advisor on employment, economic development, trade and export
issues for the Nixon, Ford, Carter, and Reagan administrations. Dr. Thomson
directed the establishment of Electronic Industry relations with the governments
of Canada, Brazil, Hong Kong, Singapore, Korea, the Philippines, and India. Dr.
Thomson has Master's Degrees and a PhD in International Affairs, Economics, and
Law & Diplomacy from the Fletcher School of Law and Harvard University with
dissertation under Dr. Henry Kissinger.
ANDROS S. SAVVIDES joined the Company as a director in November, 1999.
Mr. Savvides is one of the founders of Excel Group Inc. a large New York
Construction and Engineering firm founded in 1988. Mr. Savvides is a leader in
many cutting edge industry trends and his company is one of the few ISO-9000
certified companies in the construction industry. Mr. Savvides received his B.A.
in Computer Science/Business from C.W. Post College in 1995.
DONALD POLLOCK joined the Company as Treasurer in April, 2000. Mr
Pollock has owned his own consulting company since early 1999. Previously, Mr.
Pollock was with JM Family Enterprises, Inc., whose subsidiaries include
Southeast Toyota Distributions, Inc. and World Omni Financial Corp. During his
15-year tenure with JM, Mr. Pollock was the Vice President of The Dealer
Development Group, Inc., a dealer investment program that he developed from
inception. In addition to overseeing the investments of the various dealerships,
his duties included establishing operating and financial controls. While with
JM, Mr. Pollock was also the Director of Business Management for Southeast
Toyota Distributors, Inc., and held numerous other executive positions with
World Omni Financial Corp. Mr. Pollock also has an extensive background with
Ford Motor Credit Corporation. Mr. Pollock earned a Bachelor of Science Degree
in Economics in 1966 from Jacksonville University.
ROBERT P. KORNAHRENS joined the Company as a director in April, 2000.
In 1983, Mr. Kornahrens started Advanced Roofing, Inc., one of the largest
roofing contractors in South Florida with annual revenues in excess of twenty
million dollars. Prior to 1983, Mr. Kornahrens was employed in several
management positions with Triple M Roofing Corporation in New York. Mr.
Kornahrens is considered an expert in the roofing industry and has authored
numerous articles that have appeared in trade and education publications. Mr.
Kornahrens earned a Bachelor of Science Degree in Business Administration from
the University of Arizona in 1979.
CHARLES A. GARGANO joined the Company as a director in June, 2000. Mr.
Gargano is the Chairman and Commissioner of the Empire State Development
Corporation and
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Vice Chairman of the New York/New Jersey Port Authority. He has had a long and
distinguished career in public serve as both a Diplomat and an Administrator.
Following a very successful career in the private sector as a principal at J.D.
Posillico Engineering and Construction. He helped build J.D. Posillico from 30
person in 1963 to over 800 persons in 1978. He was appointed Deputy
Administrator of the Federal Urban Mass Transportation Administration by
President Reagon in 1981, and then as Ambassador to Trinidad and Tobago from
1988 to 1991. Chairman Gargano has B.S. and M.B.A. degrees from Fairleigh
Dickinson University and an M.S. in Civil Engineering from Manhattan College.
WILFRED G. MANGO, JR. joined the Company in August 2000 as Chief
Operating Officer and Director. Since 1980, Mr Mango has been Chairman and CEO
of George A. Fuller Company and its parent company, The Fuller Group, Inc.,
specializing in major building construction and real estate development. Prior
to 1980, Mr. Mango held executive positions at ITT and the Crimmins Companies.
Throughout his career, Mr. Mango has had extensive international experience. In
recent years, he has concentrated on business in China, Mexico, Russia, Eastern
Europe and other developing areas. He has been responsible for billions of
dollars of development and construction work throughout the world. Mr Mango
holds a B.S. degree from Lehigh University and an MBA from New York University.
DR. STEVEN LEVY joined the Company in September 1999 as President of
Eagle's China subsidiary, Great Wall New Building Systems, Ltd. Dr. Levy has
fifteen years business experience in emerging economies, including China and the
former Soviet Union. Previously, Dr. Levy was in private law practice as
corporate counsel to international organizations and businesses. Other
affiliations include service as adjunct faculty - University of Baltimore,
Merrick School of Business and as a member of the President's Export Council
(1990 - 1993), Subcommittee on Export Administration. Among his achievements in
China before joining Great Wall New Building Systems, Ltd. was to arrange a
commitment by the PRC government for investment support for new venture activity
in China. Dr. Levy holds a Juris Doctor degreem from the University of Chicago
Law School and a Ph.D. from Cornell University, Ithaca, New York. Dr. Levy has
numerous publications on international law and business and is active in
interfaith philanthropy, the Catholic Archdiocese of Maryland, and serves as the
Honorary Co-Chair of the Papal Millennium Concert Series.
S.C. GUPTA joined the Company in October, 1999, as Director of India
operations. Mr. Gupta has enjoyed a business career that has spanned over 40
years in the public and private sector. Most recently, before joining Eagle, Mr.
Gupta was executive vice president of Cummings, LLC, a British company
specializing in construction and public works in India. Mr. Gupta is also a past
President of the World's Hindu Foundation. Mr. Gupta has advanced degrees from
the University of London, London, England.
NOAH SIFUENTES joined the Company in February, 2000 as President of the
Company's Mexico subsidiary, Construction Technology of Mexico. Mr. Sifuentes
has twenty years of business experience in sales, marketing and advertising as a
corporate executive and consultant in the United States and Latin America. In
the last seven years, Mr. Sifuentes has worked exclusively in Mexico and Latin
America. Prior to joining the Company, beginning in
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1995, Mr. Sifuentes was the President and Chief Executive Officer of Sifuentes
Enterprises and Adcorp International headquartered in Mexico City. Mr. Sifuentes
is a member of several professional associations including the Mexican Direct
Selling Association (Executive Committee), the Young Presidents Association
(Mexico City Chapter) and the Utah Entrepreneurial Forum. Mr. Sifuentes holds a
B.S. degree in International Relations and a B.A. degree in Public Relations
from Brigham Young University.
Board Committees
In June, 2000, the Board of Directors appointed Audit and Executive
Compensation/Stock Option Committees. The Audit Committee consists of Messrs.
Savvides, and Gargano, and the Executive Compensation/Stock Option Committee
consists of Messrs. Gargano, Savvides and Pollock. The Audit Committee
recommends the engagement of independent auditors to the board, initiates and
oversees investigations into matters relating to audit functions, reviews the
plans and results of audits with the Company's independent auditors, reviews the
Company's internal accounting controls, and approves services to be performed by
the Company's independent auditors. The Executive Compensation/Stock Option
Committee considers and authorizes remuneration arrangements for senior
management and grants Options under, and administers, the Company's 1994
Employee Stock Option Plan. The entire Board of Directors operates as a
nominating committee.
Director's Compensation
We currently reimburse each director for expenses incurred in
connection with attendance at each meeting of the Board of Directors or a
committee on which he serves. In addition, currently, non-employee directors are
entitled to be paid a fee of $5,000 per year and are required to attend one (1)
meeting per month and each Director is entitled to receive 62,500 restricted
common stock per year.
Limitations on Liability and Indemnification Matters
We have adopted provisions in our articles of incorporation and bylaws
that will limit the liability of our directors to the fullest extent permitted
by the by the Delaware General Corporation Law. Pursuant to such provisions, no
director will be liable to the Company or its Securityholders for monetary
damages for breaches of certain fiduciary duties as a director of the Company.
The limitation of liability will not affect a director's liability for a breach
of the director's duty of loyalty to the company or its Securityholders, an act
or omission not in good faith or that involves intentional misconduct or a
knowing violation of the law, any unlawful distributions, or a transaction from
which the director receives an improper personal benefit. The limitation of
liability also will not affect the availability of equitable remedies such as
injunctive relief or rescission.
Our articles of incorporation will permit, and our bylaws will require,
us to indemnify officers and directors to the fullest extent permitted by law.
We have also entered into
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agreements to indemnify our directors and executive officers, in addition to
indemnification provided for in our bylaws. These agreements, among other
things, indemnify our directors and executive officers for certain expenses,
judgments, fines and settlement amounts incurred by them in any action or
proceeding, including any action by or in the right of the company, arising out
of the person's services as a director or executive officer of the company or
any other company or enterprise to which the person provides services at our
request. We believe that these provisions and agreements are necessary to
attract and retain qualified directors and executive officers.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to our directors, officers and controlling person based on
the foregoing provisions, we have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
and is, therefore, unenforceable.
Executive Compensation
The following table sets forth annual remuneration of $100,000 or more
paid for the fiscal years ended December 31, 1998 and 1999 and proposed to be
paid for the fiscal year ended December 31, 2000 to certain officers and
directors of the Company:
The following table sets forth certain compensation information for the
fiscal years ended December 31, 1997, 1998 and 1999 with regard to the Company's
Chief Executive Officer and other officers and directors whose combined salary
and bonus was in excess of $100,000 (the "Named Officers"):
SUMMARY COMPENSATION TABLE
-------------------------------------------- ---------------------------------------
Annual Compensation Long Term Compensation
-------------------------------------------- ---------------------------------------
Awards Payments
------------------------- --------
Restricted Securities
Name of Individual Other Annual Stock Underlying/ LTIP All Other
and Principal Position Year Salary Bonus Compensation(1) Award(s) Options/SARs Payouts Compensation
- ---------------------- ---- ------ ----- --------------- -------- ------------ ------- ------------
Anthony D'Amato
President 1999 $-0- $-0- 625,000(2) -0- -0- -0- -0-
Richard Lahey
Treasurer 1999 $-0- $-0- 375,000 -0- -0- -0- -0-
Dr. Ralph Thompson
Secretary 1999 $63,000 $-0- 125,000 -0- -0- -0- -0-
- ------------------
(1) Other Annual Compensation for all officers and directors was in the
form of shares of the Company's restricted common stock.
(2) Pursuant to an Employment Agreement, Anthony D'Amato received 625,000
shares of the Company's restricted common stock in 1999, and it is
anticipated Mr. D'Amato will receive 198,000 additional shares of the
Company's restricted common stock in lieu of his annual compensation.
-33-
CERTAIN TRANSACTIONS
Guaranty of Bank Line of Credit
In April, 2000, we arranged a line of credit with Republic Security
Financial Corporation in the amount of $225,000. To secure the line of credit,
Anthony D'Amato, our Chief Executive Officer and President, provided his
personal payment guaranty. The average outstanding balance of this line of
credit is $225,000.
IMSI Licensing Agreement
The Company operates in China, India, and Mexico pursuant to three (3)
licensing agreements with Integrated Masonry Systems International, Inc. The
Company owns thirty-eight percent (38%) of the issued and outstanding shares of
IMSI.
-34-
PRINCIPAL SECURITYHOLDERS
The following table sets forth, as of the date of this Prospectus,
certain information concerning beneficial ownership of our Common Stock by (i)
each person known to us to own 5% or more of our outstanding Common Stock, (ii)
all directors of the Company and (iii) all directors and officers of the Company
as a group:
Percentage of Shares (1)
Number Before After
Name & Address Position with Company of Shares(2) Offering Offering(3)
- -------------- --------------------- --------- -------- -----------
Anthony D'Amato Chairman, CEO, 1,496,750 7.7% 7.1%
19244 Natures View Ct. President and Director
Boca Raton, FL 33431
Dr. Ralph Thomson Secretary and Director 130,000 0.7% 0.6%
8120 Royal Lane
Sandy, Utah 84093
Mr. Andros Savvides Director 287,500 1.5% 1.4%
1900 Corporate Blvd.
Suite 400E
Boca Raton, FL 33431
Wilfred G. Mango, Jr. Chief Operating 0 0 0
30 Winding Lane Officer
Greenwich, CT 06831
Donald Pollock Director 0 0 0
1900 Corporate Blvd., Ste 400E
Boca Raton, FL 33431
Robert Kornahrens Director 0 0 0
1900 Corporate Blvd., Ste 400E
Boca Raton, FL 33431
Charles A. Gargano Director 0 0 0
1900 Corporate Blvd., Ste 400E
Boca Raton, FL 33431
Richard W. Lahey 1,515,700(4) 5.9% 5.4%
8 Woodland Place
Kentfield, CA 94904
IMSI Capital Fund, Inc. 1,783,500(5) 9.2% 8.5%
543 East 800 South
Orem, UT 84097
Randy D. Gleave Contract Employee 364,800(6) 1.9% 1.7%
1890 North 820 West
Orem, UT 84057
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Percentage of Shares (1)
Number Before After
Name and Address Position with Company of Shares(2) Offering Offering(3)
- ---------------- --------------------- --------- -------- --------
Media Synergistics 589,110(6) 3.0% 2.8%
935 N. Industrial Park Drive
Orem, UT 84057
Ledeor International Ltd. 310,000(7) 1.6% 1.5%
c/o ICS (USA), Inc.
Atlantic Professional Building
1591 East Atlantic Blvd.
Suite 200
Pompano Beach, Florida 33060
Patronus Industries, LC 418,460(8) 2.2% 2.0%
Attn: Richard J. Anderson
57 West 300 South
Farmington, UT 84025
Sonoma T. Corporation 403,750(9) 2.1% 1.9%
543 East 800 South
Orem, UT 84097
- ---------------------------------
All Officers and Directors
as a Group (8) 1,789,250 8.9% 8.7%
- ---------------------------------
(1) As used herein, the term beneficial ownership with respect to a
security is defined by Rule 13d-3 under the Securities Exchange Act of
1934 as consisting of sole or shared voting power (including the power
to vote or direct the vote) and/or sole or shared investment power
(including the power to dispose or direct the disposition of) with
respect to the security through any contract, arrangement,
understanding, relationship or otherwise, including a right to acquire
such power(s) during the next 60 days. Unless otherwise noted,
beneficial ownership consists of sole ownership, voting and investment
rights.
(2) Assumes conversion of all Convertible Preferred A and Preferred B
shares to Common Stock.
(3) Assumes conversion of all Convertible Promissory Notes and Warrants to
Common Stock.
(4) Mr. Lahey is a former director of the Company. Mr. Lahey owns 250,000
Convertible Preferred A shares, which shares comprise 25.9% of the
issued and outstanding Preferred A shares, immediately convertible into
625,000 shares of Common Stock. Additionally, Mr. Lahey's number of
shares includes 40,000 shares controlled by Mr. Lahey as a Trustee.
(5) Includes 714,400 Convertible Preferred A shares which shares comprise
74.1% of the issued and outstanding Preferred A shares immediately
convertible into 1,793,500 shares of Common Stock.
(6) Mr. Gleave is a contract employee of the Company who specializes in
public relations. Mr. Gleave is the principal shareholder of Media
Synergistics. Mr. Gleave, individually, and through Media Synergistics
controls a total of 95,391 Convertible Preferred B shares, which shares
comprise 16.3% of the issued and
-36-
outstanding Preferred B shares, and which shares are immediately
convertible into 953,910 shares of Common Stock in the aggregate.
(7) Includes 31,000 Convertible Preferred B shares which shares comprise
5.3% of the issued and outstanding Preferred B shares immediately
convertible to 310,000 shares of Common Stock.
(8) Includes 41,846 Convertible Preferred B shares which shares comprise
7.1% of the issued and outstanding Preferred B shares immediately
convertible to 418,460 shares of Common Stock.
(9) Includes 40,375 Convertible Preferred B shares which shares comprise
6.9% of the issued and outstanding Preferred B shares immediately
convertible into 403,750 shares of Common Stock.
-37-
DESCRIPTION OF SECURITIES
The Company is authorized to issue 70,000,000 shares of Common Stock,
$.001 par value per share, and 20,000,000 shares of Preferred Stock, $.001 par
value per share. As of the date of this Prospectus, there are 10,432,692 shares
of Common Stock issued and outstanding, 967,400 shares of Series A Preferred
Stock, and 585,942 shares of Series B Preferred Stock.
Common Stock
The holders of Common Stock are entitled to one vote for each share
held of record on all matters to be voted on by stockholders. There is no
cumulative voting with respect to the election of directors, with the result
that the holders of more than 50% of the shares voted for the election of
directors can elect all of the directors. The holders of Common Stock are
entitled to receive dividends when, as and if declared by the Board of Directors
out of funds legally available therefor. In the event of liquidation,
dissolution or winding up of the Company, the holders of Common Stock are
entitled to share ratably in all assets remaining available for distribution to
them after payment of liabilities and after provision has been made for each
class of stock, if any, having preference over the Common Stock. Holders of
shares of Common Stock, as such, have no conversion, preemptive or other
subscription rights, and, except as noted herein, there are no redemption
provisions applicable to the Common Stock. All of the outstanding shares of
Common Stock are, and the Shares, when issued and paid for as set forth in this
Prospectus, will be, fully paid and nonassessable.
The holders of Common Stock do not have any subscription, redemption or
conversion rights, nor do they have any preemptive or other rights to acquire or
subscribe for additional, unissued or treasury shares. Accordingly, if the
Company were to elect to sell additional shares of Common Stock following this
Offering, persons acquiring Common Stock in this Offering would have no right to
purchase additional shares, and, as a result, their percentage equity interest
in the Company would be reduced. Pursuant to the Company's Bylaws, except for
any matters which, pursuant to corporate law, require a greater percentage vote
for approval (including, for example certain mergers and consolidations and the
amendment of certain provisions of the Company's Bylaws) , the holders of
majority of the issued and outstanding Common Stock entitled to vote, if present
in person or by proxy, are necessary and sufficient to constitute a quorum for
the transaction of business at meetings of the Company's stockholders. Further,
except as to any matter which, pursuant to corporate law, requires a greater
percentage vote for approval (including, for example, certain mergers,
consolidations, sales of substantially all of the assets, and amendments to
certain provisions of the charter and Bylaws, of the Company), the affirmative
vote of the holders of a majority of the Common Stock voted on the matter
(provided a quorum as aforesaid is present) is necessary and sufficient to
authorize, affirm or ratify any act or action except the election of directors,
which is by a plurality of the votes cast.
The holders of Common Stock do not have cumulative voting rights.
Accordingly, the holders of more than half of the outstanding shares of Common
Stock can elect all of the
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directors to be elected in any election. In such event, the holders of the
remaining shares of Common Stock would not be able to elect any directors. The
Board of Directors is empowered to fill any vacancies on the Board of Directors
created by the resignation, death or removal of directors.
In addition to voting at duly called meetings at which a quorum is
present in person or by proxy, corporate law, the Charter and the Company's
Bylaws provide that stockholders may take action without the holding of a
meeting by written consent or consents signed by the holders of that number of
the outstanding shares of the capital stock of the Company entitled to vote
thereon which would be required to take the subject action. Prompt notice of the
taking of any action without a meeting by less than unanimous consent of the
stockholders will be given to those stockholders who do not consent in writing
to the action. The purposes of this provision are to facilitate action by
stockholders and to reduce the corporate expense associated with annual and
special meetings of stockholders. Pursuant to the rules and regulations of the
Commission, if stockholder action is taken by written consent, the Company will
be required to send to each stockholder entitled to vote on the matter acted on,
but whose consent was not solicited, an information statement containing
information substantially similar to that which would have been contained in a
proxy statement.
After the offering and after giving effect to the conversion of all
preferred stock, exercise of all Warrants and the conversion of all Convertible
Promissory Notes, the Company's executive officers and directors will
beneficially own approximately 9.8% of the outstanding shares of Common Stock,
and may accordingly be in a position to significantly influence the voting
results of certain actions required or permitted to be taken by stockholders of
the Company, including the election of directors. As a result, the officers and
directors of the Company may be in a position to control the outcome of
substantially all matters on which stockholders are entitled to vote, including
the election of directors.
Convertible Preferred Stock
The Company's Board of Directors has the authority, without further
action by the stockholders, to issue up to 20,000,000 shares of preferred stock
in one or more series and to fix the rights, preferences, privileges and
restrictions thereof, including dividend rights, conversion rights, voting
rights, terms of redemption, liquidation preferences, sinking fund terms and the
number of shares constituting any series or the designation of such series,
without any further vote or action by shareholders as of the date of this
Prospectus.
As of the date of this Offering, the Company has issued 967,400 shares
of Series A Preferred Stock and 600,536 shares of Series B Preferred Stock, each
series $.001 par value. The issuance of additional preferred stock could
adversely affect the voting power of holders of common stock and the likelihood
that such holders will receive dividend payments and payments upon liquidation
and could have the effect of delaying, deferring or preventing a change in
control of the Company. Accordingly, the issuance of shares of preferred stock
may discourage bids for the common stock or may otherwise adversely affect the
market price of the common stock. The Company has no present plan to issue any
additional shares of preferred stock.
-39-
A brief description of the Company's "Convertible Preferred Stock"
including the preferences, dividends, conversion and other rights, all as set by
the Board of Directors of the Company, is as follows. A more detailed
explanation regarding the Preferred Stock may be found in the Amendment to the
Company's Articles of Incorporation.
Series A Convertible Preferred Stock
Designation and Initial
Number
The class of shares of Preferred Stock hereby classified shall be designated the
"Series A Preferred Stock" (hereinafter referred to as the "Preferred Stock").
The initial number of authorized shares of the Preferred Stock is 10,000,000.
Voting Rights
Each share of Series A Preferred Stock shall entitle the holder thereof to such
number of votes per share on each such action as shall equal the number of
shares of common stock into which such share of Series A Preferred Stock is then
convertible.
Dividends
The holders of Series A Preferred Stock shall be entitled to receive, when and
as declared by the Board of Directors, prior and in preference to any
declaration or payment of any dividend on the Common Stock of the corporation or
any other series of Preferred Stock on the corporation, cumulative dividends in
an aggregate annual amount equal to twenty percent (20%) of the corporation's
after-tax earnings, if any, for each fiscal year (commencing with the year
ending December 31, 1999), as determined by the corporation's independent
accountants, in accordance with generally accepted accounting principles applied
on a basis consistent with prior period.
Liquidation and Dissolution
Upon any liquidation, dissolution or winding up of the corporation, whether
voluntary or involuntary, the holders of shares of Series A Preferred Stock
shall be entitled to a preferential liquidation payment, before any distribution
or payment is made to the holders of Common Stock or Series B Preferred Stock,
in an amount equal to any dividends accrued but unpaid with respect to the
Series A Preferred Stock (whether or not declared), computed to the date payment
thereof is made available.
Conversion
The holder of any share or shares of Series A Preferred Stock shall have the
right, at its option at any time, to covert any such shares of Series A
Preferred Stock into two and one-half shares of the Company's fully paid and
non-assessable Common Stock.
-40-
Series B Convertible Preferred Stock
Designation and Initial
Number
The class of shares of Preferred Stock hereby classified shall be designated
"Series B Preferred Stock" (hereinafter referred to as the "Preferred Stock").
The initial number of authorized shares of the Preferred Stock is 1,000,000.
Voting Rights
Each share of Series B Preferred Stock shall entitle the holder thereof to such
number of votes per share on each such action as shall equal the number of
shares of common stock into which such share of Series B Preferred Stock is then
convertible.
Dividends
Dividends may be paid on the outstanding shares of Series B Preferred Stock when
and if declared by the Board of Directors, out of funds legally available
therefore, provided, however, that no dividends shall be declared or paid with
respect to the Series B Preferred Stock until the preferential dividends
specified for the Series A Preferred Stock or any other shares or series of
Preferred Stock having preferential dividend rights have been paid or set apart.
The right to dividends on shares of Series B Preferred Stock shall not be
cumulative, and no right shall accrue to the holders of Series B Preferred Stock
by reason of the fact that dividends are not declared with respect to any
period.
Liquidation and Dissolution
Upon any liquidation, dissolution or winding up of the corporation, whether
voluntary or involuntary, and after the payment of the holders of Series A
Preferred Stock of the full preferential amount to which they are entitled as
set forth above, the holders of shares of Common Stock, Series A Preferred Stock
and Series B Preferred Stock shall be entitled to receive all remaining assets
of the corporation on a pro-rata basis, with each share of Series A Preferred
Stock and Series B Preferred Stock being treated as if converted into shares of
Common Stock, at the Conversion Rates provided for herein.
Conversion
Each holders of any share or shares of Series B Preferred Stock shall have the
right, at its option at any time, to covert any such shares of Series B
Preferred Stock into ten shares of the Company's fully paid and non-assessable
Common Stock.
A merger or consolidation of the Company with or into any other
corporation, share exchange or a sale or conveyance of all or any part of the
assets of the Company (which shall not in fact result in the liquidation of the
Company and the distribution of assets to stockholders) shall not be deemed to
be a voluntary or involuntary liquidation, dissolution or winding up of the
Company.
Transfer Agent
The transfer agent for our Common Stock is General Securities Transfer
Agency, Inc., 3614 Calle Del Sol N.E., Albuquerque, New Mexico 87110-6112.
-41-
SELLING SECURITYHOLDERS
The following table sets forth, for each Selling Securityholder, the
amount of Common Stock of the Company owned, the number of shares of Common
Stock offered hereby, and the number of shares of Common Stock owned after the
offering (assuming the sale of all shares offered under this Prospectus).
Shares of Common Stock Shares that May be Shares of Common
Selling Beneficially Owned Prior Offered Pursuant to Stock Owned
Securityholder to this Offering this Prospectus After Offering
---------------- ------------------ ----------------- ---------------
Meir Barclay 150,000 150,000 0
Judith Barclay 476,330 150,000 326,330
Burstein & Lindsay 150,000 150,000 0
Robert E. Morris 175,000 150,000 25,000
Clearview International
Investments, Ltd. 200,000 200,000 200,000
Madison Trading 275,000 275,000 0
Maslo Fund, Ltd. 100,000 100,000 0
Cheryl Ray 500,000 500,000 0
Jane Lucci 312,500 312,500 0
Michael E. Fasci 35,000 35,000 0
Richard D. Steed, Jr. 300,000(1)(2) 300,000 0
Yassar M. Zaidan 300,000(1)(2) 300,000 0
EMS Investments, LLC 400,000(1)(2) 400,000 0
Ohoud Sharbatly 700,000(1)(2) 700,000 0
David A. Carter 155,500 155,500 0
Bert L. Gusrae 97,500 97,500 0
Susan Massinger 5,000 5,000 0
Knell Architects, P.C. 10,000 10,000 0
Warner Electric, Inc. 10,000 10,000 0
Profit Sharing Plan
- ----------------------
(1) Assumes that all Warrants are exercised into Shares. No assurance can
be given as to the timing of the exercise of the Warrants or as to
whether all or any of the Warrants will be exercised.
(2) Assumes that all Convertible Promissory Notes are converted into
Shares. No assurance can be given as to the timing of the conversion of
the Promissory Notes or as to whether all or any of the Promissory
Notes will be exercised.
-42-
PLAN OF DISTRIBUTION
Distribution by the Company
The Company is offering 750,000 shares of its authorized but unissued
Common Stock for sale by this Prospectus in a "self underwritten" public
offering. The Company does not anticipate receiving any proceeds from the sale
of the shares offered by the Company pursuant to this Prospectus. There is no
assurance the Company will be able sell all or any of these Shares. The Shares
offered by the Company are expected to be sold in negotiated transactions in
connection with the acquisition of other businesses. The price of the Shares is
expected to be negotiated between the Company and the principals of the business
being acquired, but the price is expected to be related to the bid and asked
quotations for the Common Stock on the OTC Bulletin Board at the date of any
such transaction.
Distribution by Selling Securityholders
The securities registered pursuant to this Prospectus (the "Offered
Stock") may be sold from time to time by the Selling Securityholders or by
pledgees, donees, transferees or other successors-in interest. The Offered Stock
may be sold in transactions on the OTC Bulletin Board, in privately negotiated
transactions, through the writing of Options on the shares, or a combination of
such methods of sale, at fixed prices that may be changed, at market prices
prevailing at the time of the sale, at prices related to such prevailing market
prices or at negotiated prices. The Selling Securityholders may effect such
transactions by the sale of the Offered Stock to or through broker-dealers, and
such broker-dealers may receive compensation in the form of discounts,
concessions or commissions from the Selling Securityholders and/or the
purchasers of the Offered Stock for whom such broker-dealers may act as agent or
to whom they may sell as principal, or both.
The Selling Securityholders may also pledge the Offered Stock to a
broker-dealer and upon default under such pledge the broker-dealer may effect
sales of the Offered Stock pledged pursuant to this Prospectus. In addition, the
Offered Stock covered by this Prospectus may be sold in private transactions or
under Rule 144, rather than pursuant to this Prospectus.
The Company will not receive any of the proceeds from the sale of the
Offered Stock by the Selling Securityholders. We will receive the exercise price
of the Warrants and Options, if such Warrants and Options are exercised, but
will receive no proceeds from the resale of the underlying shares which may be
offered hereby.
In order to comply with the securities laws of certain states, if
applicable, the shares will be sold in jurisdictions only through registered or
licensed brokers or dealers. In addition, in certain states the shares may not
be sold unless they have been registered or qualified for sale in the applicable
state or an exemption from the registration or qualification requirement is
available and is complied with.
The Selling Securityholders and any broker-dealers or agents that
participate with the Selling Securityholders in the distribution of the shares
may be deemed to be "underwriters" within the
-43-
meaning of the Securities Act, and any commissions received by them and any
profit on the resale of the shares purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act of 1933 as
amended (the "Securities Act").
We will pay all costs and expenses incurred in connection with the
registration under the Securities Act. This includes:
o all registration and filing fees;
o printing expenses; and
o fees and disbursements of our counsel and accountants.
The Selling Securityholders will bear all commissions and discounts, if
any, attributable to the sales of the shares.
The Selling Securityholders are under no obligation to sell all or any of
the shares. The Selling Securityholders are not restricted as to the prices at
which they may sell their shares and sales of such shares at less than the
market price may depress the market price of our common stock.
-44-
LEGAL MATTERS
The validity of the securities being offered hereby will be passed upon
by David A. Carter, P.A., 2300 Glades Road, Suite 210, West Tower, Boca Raton,
Florida 33433. The sole stockholder of and counsel to David A. Carter, P.A. are
the beneficial owners of an aggregate of 260,000 shares of common stock of the
Company.
EXPERTS
The consolidated balance sheets as of December 31, 1998 and the
consolidated statements of operations, stockholders' equity, and cash flows for
the year ended December 31, 1998, included in this prospectus, have been
included herein in reliance on the report of Jones, Jensen & Company, LLC, CPA's
as independent accountants for the consolidated balance sheets, given on the
authority as experts in accounting and auditing.
The consolidated balance sheets as of December 31, 1999 and the
consolidated statements of operations, stockholders' equity, and cash flows for
the year ended December 31, 1999 and six months ended June 30, 2000, included in
this prospectus, have been included herein in reliance on the report of
Christensen & Duncan, CPA's LC, as independent accountants for the consolidated
balance sheets, given on the authority as experts in accounting and auditing.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form SB-2 (the "Registration
Statement"), pursuant to the Securities Act of 1933, as amended (the "Act"),
with respect to the offer, issuance and sale of 3,280,500 shares of Eagle
Capital International, Ltd. Common Stock (the "Shares"). This Prospectus does
not contain all of the information set forth in the Registration Statement and
the exhibits thereto. The statements contained in this Prospectus as to the
contents of any contract or other document identified as exhibits in this
Prospectus are not necessarily complete, and in each instance, reference is made
to a copy of such contract or document filed as an exhibit to the Registration
Statement, each statement being qualified in any and all respects by such
reference. For further information with respect to the Company and the
securities offered hereby, reference is made to the Registration Statement and
exhibits thereof which may be inspected without charge at the principal office
of the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, DC
20549.
The Company is subject to the reporting requirements of the Securities
Exchange Act of 1934, and in accordance therewith, files reports, proxy
statements and other information with the Commission. Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549; at its New York Regional Office, Room 1400, 7 World Trade Center,
New York, New York 10048; and at its Chicago Regional Office, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661, and copies of such material can be
obtained from the Public Reference Section at prescribed rates.
-45-
The Commission maintains a Web site that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the Commission at http://www.sec.gov. The Company intends to furnish its
Securityholders with annual reports containing audited financial statements and
such other reports as the Company deems appropriate or as may be required by
law.
-46-
EAGLE CAPITAL INTERNATIONAL, LTD.
INDEX TO FINANCIAL STATEMENTS
Six Month Period Ending June 30, 2000
Financial Statements:
Consolidated Balance Sheets..........................................F-2
Consolidated Statement of Income.....................................F-3
Consolidated Statements of Shareholders' Equity......................F-4
Consolidated Statement of Cash Flows.................................F-6
Notes to Consolidated Financial Statements...........................F-7
YEAR ENDED DECEMBER 31, 1999
Financial Statements:
Report of Independent Accountants...................................F-14
Balance Sheets......................................................F-15
Statement of Operations.............................................F-17
Statement of Cash Flows.............................................F-18
Statements of Stockholders' Equity..................................F-20
Notes to Financial Statements.......................................F-22
F-1
EAGLE CAPITAL INTERNATIONAL, LTD.
CONSOLIDATED BALANCE SHEETS
ASSETS
June 30, December 31,
2000 1999
----------- ------------
(Unaudited) (Audited)
CURRENT ASSETS:
Cash $ 755,036 $ 20,326
Advances to Bullhide 51,250 -
Advances to
Business Dimensions 6,000 -
Employee advances 3,528 -
---------- ---------
TOTAL CURRENT ASSETS 815,814 20,326
---------- ---------
FIXED ASSETS -
Mobile Block Plant #1 550,612 -
Fixed Block Plant #2 680,382 -
Mobile Block Plant #3 200,000 -
Mobile Block Plant #4 255,000 -
Mobile SB Machine 218,500 185,100
Other 2,857 -
---------- ---------
TOTAL FIXED ASSETS 1,907,351 185,100
---------- ---------
OTHER ASSETS -
Equipment Deposits - 300,000
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. 5,600,000 5,600,000
Purchased goodwill in
consolidated subsidiaries 3,578,755 -
License Rights 95,000 90,000
---------- ---------
TOTAL OTHER ASSETS 9,475,118 9,593,648
---------- ---------
TOTAL ASSETS $12,198,283 $9,799,074
========== =========
See notes to financial statements.
F-2
EAGLE CAPITAL INTERNATIONAL, LTD.
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
June 30, December 31,
2000 1999
----------- ------------
(Unaudited) (Audited)
CURRENT LIABILITIES:
Accounts payable $ 146,033 $ 94,173
Advances from officer 862,990 5,860
Commitments payable to
unconsolidated subsidiaries - 149,500
Other short term notes payable 2,575,000 475,000
---------- ----------
TOTAL CURRENT LIABILITIES 3,584,023 724,533
---------- ----------
SHAREHOLDERS' EQUITY:
Preferred Stock A, $.001
par value, 10,000,000 shares
authorized, 967,400 and
1,080,600 shares issued
and outstanding at
June 30, 2000 and
December 31, 1999 967 1,081
Preferred Stock B, $.001
par value, 10,000,000 shares
authorized, 605,531 and 856,021
shares issued and outstanding
at June 30, 2000 and
December 31, 1999 606 856
Common Stock, $.001 par value,
70,000,000 shares authorized,
9,925,968 and 7,103,228 shares
issued and outstanding
at June 30, 2000 and
December 31, 1999 9,926 7,103
Additional paid in capital 13,817,214 13,202,755
Deficit accumulated prior to
January 1, 1998 (708,682) (708,682)
Deficit accumulated during
development stage (from
January 1, 1998) (4,505,771) (3,428,572)
---------- ----------
TOTAL STOCKHOLDERS' EQUITY 8,614,260 9,074,541
---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $12,198,283 $ 9,799,074
========== ==========
See notes to financial statements.
F-3
EAGLE CAPITAL INTERNATIONAL, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
------------ ----------- ------------ ------------
TOTAL REVENUES $ 750,000 $ -0- $ 750,000 $ -0-
GENERAL AND ADMINISTRATIVE
EXPENSES:
Accounting 26,347 8,451 26,347 16,903
Advertising/marketing 32,680 7,005 37,680 14,010
Bank charges 1,950 - 2,740 -
Management Fees 30,085 32,500 40,085 65,000
Common stock for services 220,750 472,100 220,750 944,200
Consulting fees 9,040 28,910 18,040 57,820
Contributions - - 5,000 -
Contract labor 15,061 - 15,061 -
Employee costs 80,031 - 80,031 -
Financing fees 67,241 - 152,241 -
Legal fees 55,218 33,397 80,248 66,794
Lone Wolf settlement - - 1,000,000 -
Miscellaneous 2,058 - 2,178 -
Office 4,738 19,271 5,076 38,542
Postage and freight 20,849 - 20,849 -
Rent 13,906 27,710 47,414 55,420
Taxes and licenses 455 - 455 -
Telephone 11,620 - 11,620 -
Travel 58,223 12,108 61,384 24,211
---------- ---------- ---------- ----------
TOTAL EXPENSES 650,252 641,452 1,827,199 1,282,900
PROVISION FOR INCOME TAXES - - - -
---------- ---------- ---------- ----------
NET INCOME (LOSS) $ 99,748 $ (641,452) $(1,077,199) $(1,282,900)
========== ========== ========== ==========
F-4
EAGLE CAPITAL INTERNATIONAL, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS (Cont'd)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
------------ ----------- ------------ ------------
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING:
- Basic 8,244,178 4,388,528 9,015,578 4,588,128
- Diluted 17,608,333 7,090,028 17,251,636 9,489,340
NET INCOME (LOSS) PER
COMMON SHARE:
- Basic $ .01 $ (.15) $ (.12) $ (.28)
---------- ---------- ---------- ---------
- Diluted $ .01 $ (.09) $ (.06) $ (.14)
========== ========== ========== =========
See notes to financial statements.
F-5
EAGLE CAPITAL INTERNATIONAL, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
June 30, June 30,
2000 1999
------------ ------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss $(1,077,199) $(1,282,900)
Stock issued for services 220,750 944,200
Net change in operating assets
and liabilities:
Prepaid expenses and advances (60,778) -
Commitments payable to
unconsolidated subsidiaries (149,500) -
Note payable - Lone Wolf 1,000,000 -
Accounts payable 51,860 40,129
---------- ----------
NET CASH USED IN OPERATIONS (14,867) (298,571)
---------- ----------
CASH USED IN INVESTING
ACTIVITIES:
Deposits on equipment - (73,000)
Investment in unconsolidated
subsidiaries (655,684) (339,541)
Investment in license rights (5,000) (60,000)
Purchase of property and
equipment (871,869) -
---------- ----------
NET CASH USED IN INVESTING
ACTIVITIES (1,532,553) (472,541)
---------- ----------
CASH PROVIDED BY FINANCING
ACTIVITIES:
Advances from officer 857,130 -
Short term loans 1,350,000 -
Cash for sale of stock 75,000 852,500
---------- ----------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 2,282,130 852,500
---------- ----------
NET INCREASE IN CASH 734,710 81,388
CASH AT BEGINNING OF PERIOD 20,326 48
---------- ----------
CASH AT END OF PERIOD $ 755,036 $ 81,436
========== ==========
See notes to financial statements.
F-6
EAGLE CAPITAL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(June 30, 2000)
NOTE 1 - THE COMPANY
Eagle Capital International, Ltd. and its wholly-owned and
majority owned subsidiaries ("the "Company") is a Nevada
corporation in the business of the manufacture, distribution
and application of technologically advanced building products
through a series of licensing agreements with Integrated
Masonry Systems International, Inc. ("IMSI"), a Nevada
corporation, and through license and distribution rights of
other technologically advanced building products.
In March 2000, the Company acquired approximately 44% of
Bullhide Liner Corporation ("Bullhide") in exchange for
approximately $200,000. Bullhide has patented technologies and
methods which management believes will compliment the
Company's international plans.
On April 25, 2000, proxies were submitted by a majority of the
shareholders of the Company approving a change of the
Company's name to Eagle Building Technologies, Ltd. It is
anticipated that the name change will take effect in the third
quarter of 2000.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation - The accompanying unaudited
consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for
interim financial information and with instructions to Form
10-Q and Regulation S-B. Accordingly, they do not include all
of the information and footnotes required by generally
accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments
(which include only normal recurring adjustments) considered
necessary for a fair presentation have been included. For
further information, refer to the consolidated financial
statements and footnotes thereto included in the Company's
annual report on Form 10-KSB for the year ended December 31,
1999.
In order to maintain consistency and comparability between
periods presented, certain amounts have been reclassified from
the previously reported financial statements in order to
conform with the financial statement presentation of the
current period.
F-7
EAGLE CAPITAL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(June 30, 2000)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
Principles of Consolidation - As of June 30, 2000 and for the
six months then ended, the accompanying financial statements
included the accounts of Eagle Capital International, Ltd, and
its wholly-owned subsidiaries, CT Great Wall of China and CT
Mexico and its majority owned (70%) subsidiary, CT India. All
intercompany accounts and transactions are eliminated in
consolidation. The Company has recorded purchased goodwill in
the amount of $3,578,755 as of June 30, 2000, which represents
the recorded cost of such subsidiaries in excess of the fair
market value of the subsidiaries net assets.
Organizational Costs - The Company has adopted statement of
Position (SOP) No. 98-5, Reporting on the Costs of Start-up
Activities. In accordance with SOP No. 98-5, the Company has
expensed all organizational costs.
Cash and Cash Equivalents - For purposes of the statements of
cash flows, the Company considers investments with an original
maturity of less than three months to be cash equivalents.
Accounting Method - The Company's financial statements are
prepared using the accrual method of accounting. The Company
has elected a December 31 year-end.
NOTE 3 - STOCKHOLDERS' EQUITY
Net Loss Per Common Share - Net loss per common share (basic)
is based on the weighted average of common shares outstanding
during the periods. Net loss per common share (diluted) is
based on the weighted average of common shares plus all common
stock equivalents including the conversion of outstanding
preferred stock and convertible notes payable.
Class A Preferred - The Company has authorized 10,000,000
shares of Class A preferred stock (Class A), which may be
converted at the holders' option into 2.5 shares of common
stock for each share of Class A. Class A also has cumulative
dividend and liquidation preferential rights over all other
classes of stock, with dividend rights equal to 20% of net
income commencing with the year ended December 31, 1998.
F-8
EAGLE CAPITAL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(June 30, 2000)
NOTE 3 - STOCKHOLDERS' EQUITY (Cont'd)
Class B Preferred - The Company has authorized 10,000,000
shares of Class B preferred stock (Class B) which may be
converted at the holders' option into 10 shares of common
stock for each share of Class B held. Class B does not have
preferential cumulative dividend or liquidation rights.
NOTE 4 - SHORT-TERM LOANS
In March 2000, the Company commenced a Private Placement
Offering (the "Offering") of an $850,000 convertible note to
"accredited investors" under the Securities Act of 1933, as
amended. The Note is convertible into shares of the Company's
common stock at a conversion price of $1.00 per share. The
Offering was completed on March 13, 2000.
On February 18, 2000, the Company entered into an Agreement
for Termination of Master Equipment Sales Agreement
("Termination Agreement") with Lone Wolf. Under this
Termination Agreement, Lone Wolf agreed to cancel a Master
Equipment Sales Agreement dated February 26, 1999, entered
into between Lone Wolf Energy Inc. ("Lone Wolf") and the
Company wherein the Company was obligated to purchase a
minimum of ten Mobile Block Plants from Lone Wolf and pay Lone
Wolf $.035 per block produced. As consideration to Lone Wolf
for their agreement to cancel the Company's purchase
obligations under the Master Equipment Sales Agreement, the
Company entered into a $1,000,000 non-interest bearing note
payable to Lone Wolf. The note is due on July 31, 2000 (as
amended), and if not paid or otherwise becomes delinquent,
accrues interest from July 31, 2000 forward. The Company has
agreed to pay Lone Wolf $12,000 per month for the months of
May, June and July 2000 for extending the due date to July 31,
2000.
Other short-term loans used for working capital totaled
$725,000 as of June 30, 2000.
NOTE 5 - 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 June 30, 2000 totaling
$862,990.
The Company's Director, Robert Kornahrens, made a short term
loan to the Company during the period ending June 30, 2000,
totaling $500,000.
F-9
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 June 30, 2000, the Company had total assets of $12,198,283, as
compared to total assets of $9,799,074 at December 31, 1999; current liabilities
and total liabilities of $3,584,023 at June 30, 2000, as compared to current
liabilities and total liabilities of $724,533 at December 31, 1999; and
stockholders' equity at June 30, 2000 of $8,614,260, as compared to $9,074,541
at December 31, 1999. The decrease in stockholders' equity was due to the
recording during the six months ended June 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.
Liquidity and Capital Resources
As of June 30, 2000, the Company's cash totaled $755,036 as compared to
$20,326 at December 31, 1999. Net cash used in operations was $14,867 compared
to $298,571 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 India, China and Mexico subsidiaries. Management believes
based upon current results that the company will be able to fund its operations
entirely from revenue by the third quarter of 2000. The Company may require
additional financing to fund existing operations until sufficient revenues are
generated. The Company anticipates raising capital from the sale of its
securities during the third quarter of 2000; however, in the interim for the
months of July, August and September, 2000, 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 third
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, 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.
F-11
Results of Operations
Sales for the period ended June 30, 2000 were $750,00 compared with
sales of $0 in the same quarter of 1999. Based upon current contracts, the
Company expects sales of $23 million for fiscal 2000. In June 2000, Eagle
received a non-refundable commission of $750,000 on a project in Bombay, India
that will ultimately use over 3,000,000 of the patented IMSI System(R) blocks.
It is anticipated that production will commence on this project in September
2000. The Company experienced net income of $99,748 for the quarter ended June
30, 2000, and a net loss of $1,077,199 for the six months ended June 30, 2000
compared to a net loss of $641,452 and $1,282,900 for the same periods of 1999.
Net loss recorded for the six months ended June 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.
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.
F-12
EAGLE CAPITAL INTERNATIONAL, LTD.
FINANCIAL STATEMENTS
as of
December 31, 1999 and 1998
and for the Years Then Ended
Prepared by
Christensen & Duncan CPA's LC
Certified Public Accountants
F-13
Christensen & Duncan CPAs, LC
Certified Public Accountants
(801) 944-4020 Fax (801) 944-4866 slcpas@ioL3.com
7086 South Highland Dr. #200 / Salt Lake City, Utah 84121
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors of
Eagle Capital International, Ltd.
(A Development Stage Company)
1900 Northwest Corporate Blvd.
Suite 400 East
Boca Raton, Florida 33431
We have audited the accompanying balance sheet of Eagle Capital International,
Ltd. (a development stage company) as of December 31, 1999, and the related
statements of operations, stockholders' equity and cash flows for the year then
ended. 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 audit. The financial statements of the Company for the
year ended December 31, 1998, were audited by other auditors whose report, dated
July 26, 1999, expressed an unqualified opinion on those statements and included
an explanatory paragraph concerning the Company's ability to continue as a going
concern.
We conducted our audit 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
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Eagle Capital International,
Ltd. (a development stage company) as of December 31, 1999 and the results of
its operations and its cash flows for the year then ended in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company is a development stage company with no
significant operating results, which raises substantial doubt about its ability
to continue as a going concern. Management's plans in regard to these matters
are also described in Note 2. The financial statements do not include any
adjustments that might result from the outcome of the uncertainty.
May 22, 2000
F-14
EAGLE CAPITAL INTERNATIONAL, LTD
(A Development Stage Company)
BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
ASSETS
1999 1998
---------- ----------
CURRENT ASSETS:
Cash $ 20,326 $ 48
OTHER ASSETS:
License rights 90,000 --
Deposits on equipment 300,000 117,100
Equipment (Surface bonding
machine not placed in service) 185,100 --
INVESTMENT IN UNCONSOLIDATED
SUBSIDIARIES:
IMSI 5,600,000 --
CT Great Wall of China 1,771,018 --
CT India 1,150,800 --
CT Mexico 681,830 --
---------- ----------
TOTAL ASSETS $9,799,074 $ 117,148
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 94,173 $ 55,264
Commitments payable to
unconsolidated subsidiaries 149,500 --
Advances from shareholder 5,860 --
Notes payable 475,000 --
---------- ----------
TOTAL LIABILITIES 724,533 55,264
COMMITMENTS (Note 7)
STOCKHOLDERS' EQUITY:
Preferred stock, Class A;
10,000,000 shares authorized
of $.001 par value, 1,080,600
and 1,586,400 shares
outstanding at December 31, 1999
and 1998, respectively 1,081 1,586
Preferred stock, Class B;
10,000,000 shares authorized
of $.001 par value, 856,021
shares outstanding at
December 31, 1999 856 --
Common stock; 70,000,000 shares
authorized of $.001 par value;
7,103,228 and 1,997,918 shares
outstanding at December 31, 1999
and 1998, respectively 7,103 1,998
F-15
EAGLE CAPITAL INTERNATIONAL, LTD
(A Development Stage Company)
BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
LIABILITIES AND STOCKHOLDERS' EQUITY
1999 1998
------------ ------------
STOCKHOLDERS' EQUITY: (Cont'd)
Additional paid-in capital $ 13,202,755 $ 820,768
Deficit accumulated prior
to January 1, 1998 (708,682) (708,682)
Deficit accumulated during
the development stage (3,428,572) (53,786)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 9,074,541 61,884
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 9,799,074 $ 117,148
============ ============
See notes to financial statements.
F-16
EAGLE CAPITAL INTERNATIONAL, LTD
(A Development Stage Company)
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
AND FROM INCEPTION OF THE DEVELOPMENT STAGE ON
JANUARY 1, 1998 THROUGH DECEMBER 31, 1999
January 1, 1998
Through
1999 1998 December 31, 1999
----------- ----------- -----------
EXPENSES:
Issuance of common stock
for services $ 2,557,270 $ -- $ 2,557,270
Loss in unconsolidated
subsidiaries 140,102 -- 140,102
Legal 133,589 -- 133,589
Management fees 130,000 -- 130,000
Consulting fees 115,640 -- 115,640
Lease expense 96,000 -- 96,000
Other general and
administrative expenses 77,086 53,786 130,872
Travel 48,434 -- 48,434
Accounting 33,805 -- 33,805
Advertising 28,020 -- 28,020
Rent 14,840 -- 14,840
----------- ----------- -----------
NET LOSS 3,374,786 53,786 3,428,572
Deficit accumulated during
the development stage
at the beginning of year 53,786 -- --
Deficit accumulated during
the development stage
at the end of year $ 3,428,572 $ 53,786 $ 3,428,572
=========== =========== ===========
Net loss per common share $ 0.27 $ 0.01 $ 0.41
=========== =========== ===========
Weighted average number
of shares outstanding 12,775,755 4,086,967 8,431,836
=========== =========== ===========
See notes to financial statements
F-17
EAGLE CAPITAL INTERNATIONAL, LTD.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
AND FROM INCEPTION OF THE DEVELOPMENT STAGE ON
JANUARY 1, 1998 THROUGH DECEMBER 31, 1999
January 1, 1998
Through
1999 1998 December 31, 1999
----------- ----------- -----------
OPERATING ACTIVITIES:
Net loss $(3,374,786) $ (53,786) $(3,428,572)
Add compensation
expense due to issuance
of common stock for
services 2,557,270 -- 2,557,270
Add loss in unconsolidated
subsidiaries 140,102 -- 140,102
Adjustments to reconcile
net loss to net cash
used in operating
activities:
Increase in accounts
payable 38,909 52,405 91,314
Amortization 1,429 -- 1,429
----------- ----------- -----------
CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES (638,505) 48 (638,457)
----------- ----------- -----------
INVESTING ACTIVITIES:
Deposits on equipment (300,000) -- (300,000)
Cash payments on equipment (68,000) -- (68,000)
Cash payments on license
rights (90,000) -- (90,000)
----------- ----------- -----------
CASH USED IN INVESTING
ACTIVITIES (458,000) -- (458,000)
----------- ----------- -----------
FINANCING ACTIVITIES:
Proceeds from sale
of common stock 936,423 -- 936,423
Net proceeds from
notes payable 480,860 -- 480,860
Cash payments on
commitments payable
to unconsolidated
subsidiaries (300,500) -- (300,500)
----------- ----------- -----------
CASH PROVIDED BY
FINANCING ACTIVITIES 1,116,783 -- 1,116,783
----------- ----------- -----------
NET INCREASE IN CASH 20,278 48 20,326
CASH AT BEGINNING OF YEAR 48 -- --
----------- ----------- -----------
CASH AT END OF YEAR $ 20,326 $ 48 $ 20,326
=========== =========== ===========
See notes to financial statements.
F-18
EAGLE CAPITAL INTERNATIONAL, LTD.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
AND FROM INCEPTION OF THE DEVELOPMENT STAGE ON
JANUARY 1, 1998 THROUGH DECEMBER 31, 1999
January 1, 1998
Through
1999 1998 December 31, 1999
---------- ---------- -----------------
Supplemental Cash Flow
Information:
Cash paid for:
Interest $3,379 $ -- $3,379
Income taxes -- -- --
Year ended December 31, 1999
During the year ended December 31, 1999, the Company acquired interests in four
unconsolidated subsidiaries for the following consideration:
Par Value Additional
Percentage Preferred B Paid-In
Ownership Stock Capital Payable Total
---------- ----------- ---------- ------- -----------
CT Great Wall of China 49% $ 168 $1,685,082 $150,000 $1,835,250
CT India 40% 103 1,035,897 150,000 1,186,000
CT Mexico 49% 57 572,443 150,000 722,500
IMSI 38% 560 5,599,440 5,600,000
See notes to financial statements.
F-19
EAGLE CAPITAL INTERNATIONAL, LTD
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
Preferred Preferred Additional
Class A Stock Class B Stock Common Stock Paid-In Accumulated
Shares Amount Shares Amount Shares Amount Capital Deficit
---------- -------- ---------- -------- ---------- -------- ---------- -----------
Balance
December 31, 1997
(inception of
development stage) 630,000 $ 630 - $ - 1,172,918 $ 1,173 $ 704,126 $ (708,682)
Issuance of preferred
class A shares in
exchange for the
net assets of IMSI
Capital Fund, Inc. 1,286,400 1,286 - - - - 117,137 -
Conversion of class A
shares into common
stock (330,000) (330) - - 825,000 825 (495) -
Net loss for the year
ended December 31,1998 - - - - - - - (53,786)
---------- -------- ------- ------- ---------- -------- -------- ----------
Balance -
December 31,1998 1,586,400 1,586 - - 1,997,918 1,998 820,768 (762,468)
Issuance of preferred
class B for
investments in:
CT Great Wall of China - - 168,525 168 - - 1,685,082 -
CT India - - 103,600 103 - - 1,035,897 -
CT Mexico - - 57,250 57 - - 572,443 -
IMSI - - 560,000 560 - - 5,599,440 -
F-20
EAGLE CAPITAL INTERNATIONAL, LTD
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
(Continued)
Preferred Preferred Additional
Class A Stock Class B Stock Common Stock Paid-In Accumulated
Shares Amount Shares Amount Shares Amount Capital Deficit
---------- -------- ---------- -------- ---------- -------- ---------- -----------
Issuance of preferred
class B for cash (net
of stock offering costs
of $97,500) -- $ -- -- $ -- 950,000 $ 950 $ 851,550 $ --
Issuance of common stock
for services -- -- -- -- 1,831,700 1,831 1,829,869 --
Issuance of preferred
class B for services -- -- 72,557 73 -- -- 725,497 --
Conversion of preferred
class B to common
stock -- -- (105,911) (105) 1,059,110 1,059 (954) --
Conversion of preferred
class A to common
stock (505,800) (505) -- -- 1,264,500 1,265 (760) --
Shareholders' cash
contributions -- -- -- -- -- -- 83,923 --
Net loss for the
year ended
December 31, 1999 -- -- -- -- -- -- -- (3,374,786)
--------- --------- --------- -------- ---------- -------- ------------ ------------
Balance -
December 31, 1999 1,080,600 $ 1,081 856,021 $ 856 7,103,228 $ 7,103 $ 13,202,755 $ (4,137,254)
========= ========= ========= ======== ========== ======== ============ ============
See notes to financial statements
F-21
EAGLE CAPITAL INTERNATIONAL, LTD
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS FOR THE
YEARS ENDED DECEMBER 31, 1999 AND 1998
NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Organization - Eagle Capital International, Ltd. (the Company)
(formerly, IAC, Inc.) is a Nevada corporation which through
December 31, 1997 was in the business of managing malpractice
insurance contracts. The Company's management contract was
terminated effective December 31, 1997 and as a result, the
Company was reclassified as a development stage Company
effective January 1, 1998.
IMSI Capital Fund, Inc. (Cap Fund) was incorporated in the
state of Nevada on May 7, 1998. The founders of Cap Fund were
all either officers, directors, employees or shareholders of
Integrated Masonry Systems International, Inc. (IMSI). The
principal purpose of Cap Fund was to support the rapid
development and expansion of IMSI block building system
products by providing the necessary equipment funding. On July
23, 1998, the Company acquired the net assets of Cap Fund
valued at $118,423 in exchange for 1,286,400 shares of Class A
convertible preferred stock of the Company . In addition, the
following also transpired on the date of combination or
shortly thereafter:
o 4,687,868 shares of outstanding Company common stock
were exchanged for approximately 1,172,918 shares of
Company common stock under the terms of a 1 for 4
reverse stock split.
o Holders of 330,000 shares of existing Company
preferred stock converted such shares into 825,000
shares of Company common stock.
o The Company changed its name from IAC, Inc. to Eagle
Capital International, Ltd.
o The former officers and directors of the Company were
replaced by former Cap Fund officers and directors. In
May 1999, the majority of the former Cap Fund officers
and directors were replaced by the current officers
and directors of the Company.
The Company is currently examining the above
transaction with Cap Fund to determine if certain
representations made by Cap Fund to the Company were
factual.
F-22
EAGLE CAPITAL INTERNATIONAL, LTD
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS FOR THE
YEARS ENDED DECEMBER 31, 1999 AND 1998
NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
Use Of Estimates In The Preparation of Financial Statements -
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amount of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those
estimates.
Equipment - As of December 31, 1999, the equipment recorded on
the accompanying balance sheet represented a surface bonding
machine which, as of December 31, 1999, had not been placed
into service. Depreciation will be recorded on the
straight-line method over the estimated useful life of the
machine commencing in year 2000.
License Rights - Amounts expended to secure licenses for the
IMSI building block system are capitalized and amortized over
the straight-line method commencing upon production beginning
in such territories.
Organizational Costs - The Company has adopted Statement
of Position (SOP) No. 98-5, Reporting on the Costs of
Start-up Activities. In accordance with SOP No. 98-5,
the Company has expensed all organizational costs.
Net Loss Per Common Share - The Company computes net loss per
common share under the provisions of Statement of Financial
Accounting Standards (SFAS) No. 128, Earnings Per Share.
Accordingly, net loss per common share is computed under the
basic method which uses the weighted average number of Company
common shares outstanding (assuming conversion of preferred
into common).
Statement of Cash Flows - For purposes of the statements of
cash flows, the Company considers investments with an original
maturity of less than three months to be cash equivalents.
NOTE 2 - GOING CONCERN
The Company's financial statements are prepared using
generally accepted accounting principles applicable to a going
concern which contemplates the realization of
F-23
EAGLE CAPITAL INTERNATIONAL, LTD
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS FOR THE
YEARS ENDED DECEMBER 31, 1999 AND 1998
NOTE 2 - GOING CONCERN (Cont'd)
assets and liquidation of liabilities in the normal course of
business. As of December 31, 1999, the Company did not have
significant cash or an established source of revenues
sufficient to cover its operating costs and to allow it to
continue as a going concern.
Management of the Company believes that operations in 2000
will improve and enable the Company to continue as a going
concern. Beginning April 2000, the Company generated its frist
revenues in the amount of $150,000 from its current operations
in India. As of May 22, 2000, the Company has signed contracts
in its licensed territories which management believes will
generate $125,000,000 in gross revenues over the next four
years. Management believes that the cash generated from these
contracts will eliminate the need for continued funding from
the sale of Company equities or short-term advances from
corporate officers, beginning in the third quarter of 2000.
NOTE 3 - NOTES PAYABLE AND ADVANCES FROM SHAREHOLDER
Notes payable consisted of the following at December 31, 1999:
o Note payable to Board Member and shareholder dated
December 10, 1999 with all unpaid interest at 15% and
principal due on March 10, 2000. As of May 22, 2000,
the note was converted into 50,000 shares of the
Company's common stock. $ 50,000
o Note payable to Chairman, CEO, President and
shareholder dated November 20, 1999 with all unpaid
interest at 15% and principal due on February 20,
2000. As of May 22, 2000, the note holder has agreed
to convert the not into 250,000 shares of the
Company's common stock. 250,000
F-24
EAGLE CAPITAL INTERNATIONAL, LTD
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS FOR THE
YEARS ENDED DECEMBER 31, 1999 AND 1998
NOTE 3 - NOTES PAYABLE AND ADVANCES FROM SHAREHOLDER (Cont'd)
o Note payable dated December 30, 1999 with all unpaid
interest at 12% and principal due on February 29,
2000. The note has been paid in full as of May 22,
2000. 50,000
o Note payable dated September 28, 1999 with all unpaid
interest at 12% plus principal due in January 2000 As
of May 22, 2000, the note holder has agreed to convert
the note into 25,000 shares of the Company's common
stock. 125,000
--------
TOTAL $475,000
--------
In addition to the above notes, the Company's President/CEO
has made periodic non-interest bearing advances to the Company
during 1999. As of December 31, 1999, the balance owing the
President/CEO was $5,860.
NOTE 4 - ACQUISITIONS AND LICENSE RIGHTS
On March 3, 2000, the Company agreed to settle pending
litigation with IMSI in connection with license rights for the
IMSI block building system (IMSI System) which the Company had
previously obtained from IMSI. The formal settlement and
license agreements are currently being drafted based upon the
settlement entered into on March 3, 2000. Final settlement is
subject to court approval and such settlement will be void if
the court does not approve the settlement agreement. IMSI and
the Company are awaiting court approval of the settlement,
which management of the Company believes will be granted.
Under the terms of the settlement, IMSI has agreed to ratify
the licenses previously granted to the Company for China,
India and Mexico in exchange for a one time license fee of
$25,000 to be paid for each of these three licenses. In
addition, IMSI agreed to issue the Company a license for
Southeastern Europe for a license fee of $50,000, and to
recognize a previous license for Romania granted to a Company
investee. In addition to the above
F-25
EAGLE CAPITAL INTERNATIONAL, LTD
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS FOR THE
YEARS ENDED DECEMBER 31, 1999 AND 1998
NOTE 4 - ACQUISITIONS AND LICENSE RIGHTS (Cont'd)
mentioned license fees, the Company made payments totalling
$90,000 towards obtaining licenses for the IMSI System which
are reflected in the accompanying 1999 balance sheet under the
caption, License Rights.
The settlement agreement requires the Company to pay IMSI a royalty of 4.5% of
gross revenues from the sale of the IMSI system, with minimum royalties required
as follows:
China: January 2000 through June 2000, $2,000 per
month;
July 2000 through December 2000, $2,500 per
month;
January 2001 through June 2001, $5,000 per
month; and
$7,500 per month from and including July
2001 onward.
India: January 2000 through June 2000, $2,000 per
month;
July 2000 through December 2000, $2,500 per
month;
January 2001 through June 2001, $5,000 per
month; and
$7,500 per month from and including July
2001 onward.
Mexico: July 2000 through December 2000, $2,000 per
month;
January 2001 through June 2001, $2,500 per
month;
July 2001 through December 2001, $5,000 per
month;
$7,500 per month from and including January
2002 onward.
Romania: April 2000 through September 2000, $2,000
per month;
October 2000 through March 2001, $2,500 per
month;
April 2001 through September 2001, $5,000
per month;
$7,500 per month from and including October
2001 onward.
F-26
EAGLE CAPITAL INTERNATIONAL, LTD
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS FOR THE
YEARS ENDED DECEMBER 31, 1999 AND 1998
NOTE 4 - ACQUISITIONS AND LICENSE RIGHTS (Cont'd)
Southeastern
Europe: April 2000 through September 2000, $2,000
per month;
October 2000 through March 2001, $2,500 per
month;
April 2001 through September 2001, $5,000
per month;
$7,500 per month from and including October
2001 onward.
During 1999 the Company acquired the following interests in
three companies which are actively pursuing contracts for the
IMSI System in China, India and Mexico. In addition, the
Company acquired on interest in IMSI in 1999. The ownership
interest in each Company and the consideration paid is as
follows:
Par Value Additional
Percentage Preferred B Paid-In
Ownership Stock Capital Payable Total
--------- ----- -------------------------- -----------
CT Great Wall of China 49% $168 $1,685,082 $150,000 $1,835,250
CT India 40% 103 1,035,897 $150,000 1,186,000
CT Mexico 49% 57 572,443 $150,000 722,500
IMSI 38% 560 5,599,440 5,600,000
The Preferred B stock issued in connection with the
acquisitions has been recorded at a value of $10 per share
($1.00 value common at a conversion rate of 10 shares of
common for one share of preferred B). As the Company's
ownership percentage is less than 50% for each subsidiary, the
Company uses the equity method of accounting for such
acquisitions and has recorded its percentage share of the
subsidiaries' losses for 1999 in the accompanying statement of
operations under the caption, "Loss in Unconsolidated
Subsidiaries".
On September 30, 1999, the Company renegotiated its purchases
of CT Great Wall of China, CT India and CT Mexico. Under the
terms of the renegotiations, the Company's ownership in CT
Great Wall of China will increase to 100%, effective upon the
Company receiving all previously issued shares of CT Great
Wall of China, ownership in CT India will increase to 70%
effective January 5, 2000 and ownership in CT Mexico will
increase to 90% in exchange for an additional 7,750 shares of
the Company's preferred B Stock.
F-27
EAGLE CAPITAL INTERNATIONAL, LTD
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS FOR THE
YEARS ENDED DECEMBER 31, 1999 AND 1998
NOTE 5 - STOCKHOLDERS' EQUITY
On January 5, 1999 the Company amended its articles of
incorporation with such amendment being approved by the
shareholders of the Company as of December 31, 1998. Under the
amendment, the number of shares of authorized common stock was
increased to 70,000,000 and the number of shares of authorized
preferred stock (all present and future classes) being
increased to 20,000,000.
Class A Preferred - The Company has authorized 10,000,000
shares of Class A preferred stock (Class A). Class A may be
converted at any time at the option of the holder into 2.5
shares of common stock for every one share of Class A held.
Class A also has cumulative dividend and liquidation
preferential rights over all other classes of stock with
dividend rights equal to 20% of net income commencing with the
year ending December 31, 1999 payable only as declared by the
board of directors.
Class B Preferred - The Company has authorized 10,000,000
shares of Class B preferred stock (Class B). Class B may be
converted at any time at the option of the holder into 10
shares of common stock for every one share of Class B held.
Class B does not have preferential cumulative dividend or
liquidation rights.
NOTE 6 - INCOME TAXES
Through December 31, 1999, the Company had a net operating
loss (NOL) carryforward of approximately $4,000,000. This NOL
may be carried forward through the year 2019 to offset taxable
income. Other cumulative differences between the losses
reported for income tax purposes and financial statement
purposes are insignificant. Due to the Company being in a
large NOL carryforward position, the deferred tax asset of
approximately $1,500,000 has been 100% reserved for as of
December 31, 1999.
NOTE 7 - COMMITMENTS
During 1999, the Company entered into four employment/service
agreements with officers and directors of the Company. Under
such agreements, the Company is committed to pay its
President/CEO and annual salary of $198,000 per year through
May 15, 2001 and a board member
F-28
EAGLE CAPITAL INTERNATIONAL, LTD
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS FOR THE
YEARS ENDED DECEMBER 31, 1999 AND 1998
NOTE 7 - COMMITMENTS (Cont'd)
consultant fee of $3,000 per month through May 15, 2001. In
addition, the contracts require for the following issuances of
common stock in 1999 and future issuances in year 2000.
Common shares issued in 1999: 1,437,500 shares
Common shares to be issued in 2000: 562,500 shares
In addition to the 1,437,500 common shares issued for services
as reflected above, the Company issued an additional 394,200
shares of common stock and 72,557 shares of Preferred B stock
in 1999 for services. These shares have been recorded in the
accompanying 1999 statement of operations under the caption
"Issuance of Common Stock for Services" at the value of $1.00
- common and $10 - preferred B.
NOTE 8 - SUBSEQUENT EVENTS
On February 18, 2000, the Company purchased a Mobile Block
Plant from Lone Wolf Energy (Lone Wolf) for $625,000 which
amount has been paid in full as of May 22, 2000. The cash used
to pay for the Block Plant was raised by the Company through
the sale of its common stock and/or loans from Company
officers. Prior to purchasing the Block Plant, the Company,
during 1999 leased the Mobile Block Plant from Lone Wolf for
$12,000 per month.
In addition, on February 18, 2000, the Company entered into an
"Agreement for Termination of Master Equipment Sales
Agreement" with Lone Wolf. Under this termination agreement,
Lone Wolf agreed to cancel a "Master Equipment Sales
Agreement" dated February 26, 1999 entered into between Lone
Wolf and the Company wherein the Company was obligated to
purchase a minimum of ten Mobile Block Plants from Lone Wolf
and pay Lone Wolf $.035 per block produced. As consideration
to Lone Wolf for their agreement to cancel the Company's
purchase obligations under the "Master Equipment Sales
Agreement", the Company entered into a $1,000,000 non-interest
bearing note payable to Lone Wolf. The note is due on July 31,
2000 (as amended) and if not paid or otherwise becomes
delinquent, accrues interest from July 31, 2000 forward. The
Company has agreed to pay Lone Wolf $12,000 per month for the
months of May, June and July 2000, for extending the due date
to July 31, 2000.
F-29
EAGLE CAPITAL INTERNATIONAL, LTD
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS FOR THE
YEARS ENDED DECEMBER 31, 1999 AND 1998
NOTE 8 - SUBSEQUENT EVENTS (Cont'd)
In March 2000, the Company acquired approximately 44% of
Bullhide Liner Corporation (Bullhide) in exchange for
approximately $200,000. Bullhide has patented technologies and
methods which management believes will compliment the
Company's international plans.
On April 25, 2000, proxies were submitted by a majority of the
shareholders of the Company, approving a change of the
Company's name to Eagle Building Technologies, Ltd.
F-30
PART II
Information Not Required in Prospectus
Item 24. Indemnification of Directors and Officers
Article VII of the Company's Certificate of Incorporation and Article
XI of the By-Laws of the Company, contain the following provisions with respect
to indemnifying officers and directors of the Company:
Certificate of Incorporation
Article VII. In accordance with Section 78.037 of the Nevada Business
Corporation Code, the Directors and Officers of this corporation shall not be
personally liable to the corporation or its stockholders for damages for breach
of fiduciary duty as a Director or Officer, so long as the Acts did not involve
intentional misconduct, fraud, or a knowing violation of the law.
By-Laws
Article XI. Every person who was or is a party or is threatened to be made a
party to or is involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he or a
person of whom he is the legal representative is or was a director or officer of
the corporation or is or was serving at the request for the corporation or for
its benefit as a director or officer of another corporation, or as its
representative in a partnership, joint venture, trust or other enterprise,
extent legally permissible under the General Corporation Law of the State of
Nevada from time to time against all expenses, liability and loss (including
attorney's fees, judgments, fines and amounts paid or to be paid in settlement)
reasonably incurred or suffered by him in connection therewith. The expenses of
officers and directors incurred in defending a civil or criminal action, suit or
proceeding must be paid by the corporation as they are incurred and in advance
of the final disposition of the action, suit or proceeding upon receipt of an
undertaking by or on behalf of the director or officer to repay the amount if it
is ultimately determined by a court of competent jurisdiction that he is not
entitled to be indemnified by the corporation. Such right of indemnification
shall be a contract right which may be enforced in any manner desired by such
person. Such right of indemnification shall not be exclusive of any other right
which such directors, officers or representative may have or hereafter acquire
and, without limiting the generality of such statement, they shall be entitled
to their respective rights of indemnification under any by-law, agreement, vote
of stockholders, provision of law or otherwise, as well as their rights under
the Article.
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Item 25. Other Expenses of Issuance and Distribution
The following table sets forth various expenses which will be incurred
in connection with the registration of the Company's securities. Other than the
SEC Registration Fee, the amounts set forth below are estimates:
SEC Registration Fee...............................$ 1,248.85
Printing & Engraving Expenses............................10,000.00
Legal Fees and Expenses..................................50,000.00
Accounting Fees and Expenses.............................15,000.00
Total...............................................$ 76,248.85
=============
Item 26. Recent Sales of Unregistered Securities
The Company was incorporated in the State of Nevada in October, 1994,
with 25,000,000 authorized common shares. Currently, the Company has authorized
capital of 70,000,000 shares of common stock, $.001 par value and 20,000,000
shares of preferred stock, $.001 par value. The Company has 10,226,752 shares of
common stock, 967,400 shares of Series A Preferred Stock and 600,536 shares of
Series B Preferred Stock issued and outstanding prior to this registration. See
"Principal Securityholders" and "Description of Securities".
In January, 1999, the Company amended its Certificate of Incorporation
to increase the number of authorized common shares from 25,000,000 shares to
70,000,000 and authorized 20,000,000 shares of preferred stock.
In April, 1999, the Company issued 100,000 shares of common stock to
Taylor Stuart Financial pursuant to a Consulting Agreement.
In June, 1999, the Company issued 825,000 shares of common stock
pursuant to a private offering.
On July 23, 1999, the Company issued 1,286,400 of its Series A
Preferred Stock in exchange for the assets of IMSI Cap Fund, Inc.
On March 10, 2000, the Company issued 850,000 common stock warrants in
conjunction with the sale of convertible promissory notes. The common stock
underlying the warrants is exercisable at two dollars ($2.00) per share anytime
prior to the expiration of three (3) years from the date of issuance of the
warrants.
In May, 2000, the Company issued 50,000 shares of common stock to a
director in consideration for the Director's conversion of a Note dated December
10, 1999.
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In May, 2000, the Company issued 250,000 shares of common stock to the
Chairman and CEO in consideration for the Chairman and CEO's conversion of a
Note dated November 20, 1999.
In May, 2000, the Company issued 25,000 shares of common stock to a
noteholder as consideration for the Noteholder's conversion of a Note dated
September 28, 1999.
In May, 2000, the Company issued 150,000 shares of common stock to The
Investors Relations Group in consideration for an agreement to provide investor
relation services.
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Item 27. Exhibits
Exhibit No. Description of Exhibit
- ----------- ----------------------
3.1 Certificate of Incorporation & Certificates of Amendment Thereto
of Registrant
3.2 By-Laws of Registrant
4.1 Form of Certificate Evidencing Shares of Common Stock
5.1 Opinion re: Legality of the Securities Being Registered
10.1(a) Anthony D'Amato Employment Agreement (May 15, 1999 - May 14, 2001)
10.1(b) Anthony D'Amato Employment Agreement (May 15, 1999 - May 14, 2001)
10.2 Wilfred C. Mango, Jr. Employment Agreement (August 1, 2000 -
July 31, 2002)
10.3 Wilfred C. Mango, Jr. Consulting Agreement (August 1, 2000 -
July 31, 2002)
10.4 Ralph Thompson Employment Agreement (May 15, 1999 - May 14, 2001)
10.5 Binding Letter Agreement Concerning Settlement of IMSI Litigation
23.1 Consent of Counsel - David A. Carter, P.A.
23.2 Consent of Accountant - Christensen & Duncan, CPA's LLC
23.3 Consent of Accountant - Jones, Jensen & Company, CPA's
23.4 Independent Auditor's Report - Christensen & Duncan, CPA's LLC
23.5 Independent Auditor's Report - Jones, Jensen & Company, CPA's
24.1 Power of Attorney
- ---------------
Item 28. Undertakings
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement to include any
material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, as amended, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial BONA FIDE offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, as amended, each
filing of the Registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934, as amended (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934, as amended) that is incorporated
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by reference in the Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial BONA
FIDE offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended, may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933, as amended, and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933, as amended, and will be governed by the final
adjudication of such issue.
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SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL
OF THE REQUIREMENTS FOR FILING ON FORM SB-2 AND HAS DULY CAUSED THIS
REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO
DULY AUTHORIZED, IN THE CITY OF COCONUT CREEK, COUNTY OF BROWARD, STATE OF
FLORIDA, ON AUGUST 30, 2000.
EAGLE CAPITAL INTERNATIONAL LTD.
Dated: August 30, 2000 By: /s/ Anthony D'Amato
----------------------------------
Anthony D'Amato, President and CEO
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
Signature Title
- --------- -----
/s/ Anthony D'Amato Chairman of the Board of Directors and
- --------------------------- Chief Executive Officer
Anthony D'Amato
/s/ Donald Pollock Treasurer and Director
- ---------------------------
Donald Pollock
/s/ Andros Savvides Director
- ---------------------------
Andros Savvides
/s/ Ralph Thompson Director
- ---------------------------
Ralph Thompson
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INDEX TO EXHIBITS
3.1 Certificate of Incorporation & Certificates of Amendment Thereto of
Registrant
3.2 By-Laws of Registrant
4.1 Form of Certificate Evidencing Shares of Common Stock
5.1 Opinion re: Legality of the Securities Being Registered
10.1(a) Anthony D'Amato Employment Agreement (May 15, 1999 - May 14, 2001)
10.1(b) Anthony D'Amato Employment Agreement (May 15, 1999 - May 14, 2001)
10.2 Wilfred C. Mango, Jr. Employment Agreement (August 1, 2000 - July
31, 2002)
10.3 Wilfred C. Mango, Jr. Consulting Agreement (August 1, 2000 - July
31, 2002)
10.4 Ralph Thompson Employment Agreement (May 15, 1999 - May 14, 2001)
10.5 Binding Letter Agreement Concerning Settlement of IMSI Litigation
23.1 Consent of Counsel - David A. Carter, P.A.
23.2 Consent of Accountant - Christensen & Duncan, CPA's LLC
23.3 Consent of Accountant - Jones, Jensen & Company, CPA's
23.4 Independent Auditor's Report - Christensen & Duncan, CPA's LLC
23.5 Independent Auditor's Report - Jones, Jensen & Company, CPA's
24.1 Power of Attorney