SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 10-SB
GENERAL INFORMATION FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS UNDER SECTION 12(b)
OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
FIRST CAPITAL INTERNATIONAL, INC.
(Name of Small Business Issuer in Its Charter)
Delaware 76-0375627
-------- ----------
(State of Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
5120 Woodway, Suite 9004, Houston, Texas 77056
- --------------------------------------------- -----
(Address of Principal Executive Offices) (Zip Code)
tel. (713) 629-4866 fax (713) 629-4913
------------------------------------------------------------------
(Registrant's Telephone Number, including Area Code)
With copies to: Robert D. Axelrod, Attorney At Law
Axelrod, Smith & Kirshbaum
5300 Memorial Drive, Suite 700
Houston, Texas 77007
tel. (713) 861-1996 ext. 116 fax (713) 552-0202
Securities to be registered pursuant to Section 12(b) of the Act:
None.
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.001
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PART I
------
<S> <C>
Item 1. Description of Business. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Item 2. Management's Discussion and Analysis.. . . . . . . . . . . . . . . . . . . . 5
Item 3. Description of Property. . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Item 4. Security Ownership of Certain Beneficial Owners and Management . . . . . . . 11
Item 5. Directors, Executive Officers, Promoters and Control Persons . . . . . . . . 12
Item 6. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Item 7. Certain Relationships and Related Transactions . . . . . . . . . . . . . . . 14
Item 8. Description of Securities. . . . . . . . . . . . . . . . . . . . . . . . . . 15
PART II
-------
Item 1. Market Price of and Dividends
on the Registrant's Common Equity and
Other Shareholder Matters. . . . . . . . . . . . . . . . . . . . . . . . . . 17
Item 2. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Item 3. Changes in and Disagreements With Accountants. . . . . . . . . . . . . . . . 18
Item 4. Recent Sales of Unregistered Securities. . . . . . . . . . . . . . . . . . . 19
Item 5. Indemnification of Directors and Officers. . . . . . . . . . . . . . . . . . 21
PART F/S
--------
Financial Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
PART III
--------
Item 1. Index to Exhibits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Item 2. Description of Exhibits. . . . . . . . . . . . . . . . . . . . . . . . . . . 22
</TABLE>
The Exhibits required by this item
are included as set forth in the Exhibit Index.
<PAGE>
PART I
------
Item 1. Description of Business
INTRODUCTION
First Capital International, Inc., a Delaware company, (the "Company") was
incorporated in January, 1977. The principal executive offices of the Company
are located at 5120 Woodway, Suite 9004, Houston, Texas 77056; tel. (713)
629-4866, fax (713) 629-4913.
The Company's common stock is currently traded on the over-the-counter
bulletin board ("OTC BB") under the symbol "FCAI."
The Company presently operates in two business segments:
- - A leasing company in the Republic of Estonia named EIP Liisingu AS ("EIP")
an Estonian corporation, which leases business and consumer items. The
Company acquired 100% of EIP in 1998.
- - An internet retail shopping site called PlazaRoyal.com, located at
www.plazaroyal.com. The Company started this website in March 1999. The
Company's main focus for this business segment is to market U.S. retailers
on this website to European consumers. The Company is presently seeking
cyber retail tenants to sublease space on this website. To date, the
Company has not had any revenues from this website.
References to the Company in this Form 10-SB include First Capital
International, Inc. and EIP Liisingu AS.
HISTORY
The Company was originally incorporated in the State of Utah in 1977 under
the name Galt-Atlantis Corporation. The Company had insignificant operations
until December, 1981 at which time the Company changed its name to Kan-Tx Energy
Company and commenced activities in the natural resources industry. Being
unsuccessful with its oil an gas business, Kan-Tx Energy Company suspended
operations from 1986 until May, 1994, at which time the Company effectuated a
one-for-ten reverse stock split and re-incorporated itself by merger into Kan-Tx
Energy Company, a Delaware company, formed for the purpose of permitting the
Company to conduct its affairs pursuant to Delaware corporate law rather than
Utah corporate law by changing the domicile of the Company to Delaware. Also in
May, 1994, the Company acquired all of the outstanding capital stock of Ranger
Car Care Corporation, an automotive service company, which until that time had
been a privately owned Texas corporation, in exchange for 10,000,000 shares of
the Company's common stock. In June, 1994, the Company changed its name to
Ranger/USA, Inc. and commenced activities in the automotive service business
through its wholly owned subsidiary Ranger Car Care Corporation. In December,
1997, the Company suspended its automotive service business and was dormant from
December, 1997 until August, 1998.
1
<PAGE>
In August, 1998, in anticipation of a business combination, the Company
changed its name to First Capital International, Inc. , increased the number of
authorized shares to 100,000,000 shares of capital stock, and the present
directors and officers were appointed. In September, 1998, the Company entered
into a Stock Exchange Agreement with the two stockholders of EIP, who were
Eurocapital Group, Ltd. and United Capital Group Limited. Pursuant to the
Stock Exchange Agreement, the Company issued a total of 34,000,000 shares of its
common stock to the EIP stockholders in exchange for all of the outstanding
shares of EIP. The terms and conditions of the Stock Exchange Agreement were
determined by the parties through arms length negotiations and approved by the
Board of Directors. However, no appraisal was performed.
BUSINESS ACTIVITIES
Leasing Activities. The Company, through its wholly owned subsidiary EIP,
operates a leasing business in Estonia, a nation which gained its independence
during the fall of the Soviet Union. At one time, EIP was owned by the Estonian
Innovation Bank, a bank in Estonia. EIP owns a portfolio of leases of
apartments, appliances, equipment and automobiles. These leases are made to
consumers and businesses in Estonia. The main types of services offered by EIP
are finance (lease-to-own, or option to purchase) leases and operating (rental)
leases. A lease is considered to be a finance lease if ownership of the leased
asset is transferred by EIP to the lessee at the end of lease term. A lease is
considered to be an operating lease when EIP continues ownership and takes
possession of the leased asset at the end of lease term, or meets certain other
criteria. EIP then re-leases or sells the asset. The typical lease term is for
two to three years. EIP markets its services using newspaper advertisements and
other printed media in Estonia.
EIP funds its leasing operations through its cash flow from operation and
from existing debt financing which it presently has from third parties. EIP
utilizes these funds to acquire the assets which it leases. The current
principal balance on this loan, which bears interest at 10% per annum, is
$333,641, which is payable interest only on a monthly basis with a final balloon
payment of principal and interest due in May, 2002. The Company does not
believe that this funding source will provide any additional financing.
The lender, Estonian Innovation Bank, owned EIP at one time. The Company
Believes that Estonian Innovation Bank is insolvent. Therefore the Company
believes that the Estonian Innovation Bank will not provide any additional
financing to the Company.
Customers. EIP's current customer base is 60% consumer and 40% business.
---------
The customer base can be further characterized as 52% real estate related, such
as apartments, 20% automobile, 20% furniture and household goods such as major
appliances and 8% miscellaneous categories. The business base can be further
characterized as 65% automobile, 18% industrial equipment, 12% computers and
office equipment and 5% real estate. In 1997, EIP entered into 111 leases. In
1998, EIP entered into 37 leases.
2
<PAGE>
Disposition at the end of the lease. At the end of a finance lease, EIP
--------------------------------------
disposes of the leased asset by transferring ownership of the leased asset to
the lessee. At the end of an operating lease, EIP continues ownership of the
leased asset and takes possession of the leased asset. EIP then either
re-leases the asset to a different customer or sells the asset.
Disposition upon customer default. If a customer defaults
-----------------------------------
on a lease payment, the Company repossesses the property and either leases the
asset to a different customer or sells the asset. In 1997 and 1998
approximately 10% of EIP's leases went into default.
The leasing industry is relatively new in Estonia. The Company believes
that there are more than 10 other leasing companies in Estonia. Many of the
Company's competitors are well established and have substantially greater
capital resources and greater marketing capabilities than the Company. There
can be no assurance that the Company will be competitive.
E-commerce Related Activities. The Company recently began development of an
internet cyber shopping mall called Plaza Royal.com at www.plazaroyal.com. Plaza
Royal.com provides U.S. retailers an opportunity to be part of a cyber shopping
mall. The Company's main focus for Plaza Royal.com is to market U.S. retailers
to European consumers. Plaza Royal.com is a 3-D, virtual reality, fully
interactive cyber shopping experience with the capability to market to
non-English speaking customers. The 3-D cyber shopping experience at Plaza
Royal.com is designed to be entertaining to the consumer and to provide the
feeling of being in a shopping mall. The Company is presently seeking cyber
retail tenants to sublease space on this website. To date, the Company has not
had any revenues from this website. The Company believes it can create revenue
from three sources:
- - Revenues from rent fees paid by retail organizations who sell from the
site.
- - Revenues from advertisers on the site.
- - Revenues from retailers for transaction and credit card processing fees.
The Company has entered into affiliated e-commerce merchant programs with
the following companies: Dell Computers, CBS Sports Store, Sharper Image,
Amazon.com, Discover Nature, CarPrice.com, Reel.com, Nextcard and Swiss Army
Depot. The affiliated merchant program enables the Company to earn a percentage
of the sales generated when a visitor to the Company's website links to the
websites of affiliated merchants and makes a purchase. The Company will receive
between 1% and 20% as a sales commission on these types of transactions.
3
<PAGE>
The Company has plans to develop a legal directory portal website under the
name Legal Claims.com. The Company has already reserved the website name
www.legalclaims.com. The target markets for Legal Claims.com are providers and
users of legal services.
RISKS ASSOCIATED WITH THE FOREIGN OPERATIONS
EIP operates in a part of the world which could be viewed as having a high
potential for political, economic and military instability. For example,
Estonia is near Russia. If the political situation in Russia worsened, a spill
over effect into Estonia could have adverse consequences for EIP. Some other
nations which gained independence after the fall of the Soviet Union have
experienced instability. If such instability were to occur in Estonia, the
Company's business could be adversely affected.
Presently, the Company's operations in Estonia are conducted in
transactions denominated in the local currency of Estonia, the EEK. Therefore,
the Company has exposure to foreign currency fluctuations and foreign government
intervention such as a devaluation of the local currency.
Risk of Non-Availability of Long Term Financing for EIP
EIP funds its leasing operations through its cash flow from operation and
from long term debt financing which it presently has from third parties. EIP
utilizes these funds to acquire the assets which it leases. EIP presently owes
long term debt in the remaining principal balance of $333,641, payable monthly
at 10% per annum. The final payment is due in May, 2002. The Company does not
believe that this funding source will provide any additional financing. The
lender, Estonian Innovation Bank, owned EIP at one time.
GOING CONCERN RISK
In Note 3 to the audited financial statements, the Company's independent
auditors have reported that the Company has suffered recurring losses from
operations that raise substantial doubt about its ability to continue as a going
concern. The Company has developed plans to address this situation. The Company
believes that by becoming a reporting company by filing this Form 10-SB, its
common stock can be used as an exchange vehicle for acquisitions. The Company
believes that its businesses will ultimately provide positive cash flow. See,
Part F/S.
EMPLOYEES
As of May 6, 1999, the Company had five employees in the USA and EIP had
four employees in Europe.
4
<PAGE>
SUBSIDIARIES
The Company has two wholly-owned subsidiaries, EIP Liisingu AS ("EIP"), an
Estonian corporation, which is a leasing company in Europe, and Ranger Car Care
Corporation, a Texas corporation, which is presently dormant.
PENDING ACQUISITIONS
The Company has entered into a letter of intent to acquire all of stock of
a company in the Republic of Estonia named TGK-LINK AS which is a
telecommunications company specializing in internet telephony and other internet
applications. Internet telephony is the use of the Internet for real-time voice
communications, which is a lower cost substitute for using a regular telephone.
If this acquisition is consummated, selling equity holders of TGK-LINK AS would
receive 400,000 restricted shares of common stock of the Company immediately,
and later could receive an option to acquire up to 200,000 shares of common
stock of the Company at an exercise price of $.05 per share of common stock,
expiring March 1, 2000, if the net profit for TGK-LINK AS for the year ended
December 31, 1999 is not less than $75,000. If the closing bid on the Company's
stock is less than $0.05 per share for 60 consecutive trading days through the
period ending 14 months after the acquisition date, the former shareholders of
TGK-LINK AS may repurchase their shares for $0.01 per share. There is no
assurance that this acquisition will occur.
Item 2. Management Discussion and Analysis
FORWARD-LOOKING STATEMENT AND INFORMATION
The Company is including the following cautionary statement in this Form
10-SB to make applicable and take advantage of the safe harbor provision of the
Private Securities Litigation Reform Act of 1995 for any forward-looking
statements made by, or on behalf of, the Company. Forward-looking statements
include statements concerning plans, objectives, goals, strategies,
expectations, future events or performance and underlying assumptions and other
statements which are other than statements of historical facts. Certain
statements contained herein are forward-looking statements and, accordingly,
involve risks and uncertainties which could cause actual results or outcomes to
differ materially from those expressed in the forward-looking statements. The
Company's expectations, beliefs and projections are expressed in good faith and
are believed by the Company to have a reasonable basis, including without
limitations, management's examination of historical operating trends, data
contained in the Company's records and other data available from third parties,
but there can be no assurance that management's expectations, beliefs or
projections will result or be achieved or accomplished. In addition to other
factors and matters discussed elsewhere herein, the following are important
factors that, in the view of the Company, could cause actual results to differ
materially from those discussed in the forward-looking statements: the ability
of the Company's management to operate on a global basis; the ability of the
Company to effectuate and successfully operate acquisitions, and new operations;
the ability of the Company to obtain acceptable forms and amounts of financing
to fund planned acquisitions; the political, economic and military climate in
nations where the Company may have interests and operations; and the ability to
engage the services of suitable consultants or employees in foreign countries.
The Company has no obligation to update or revise these forward-looking
statements to reflect the occurrence of future events or circumstances.
5
<PAGE>
The following description of the Company's financial position and results
of operations should be read in conjunction with the Financial Statements and
the Notes to Financial Statements, contained in this report as set forth
beginning on page F-1.
INTRODUCTION
In August, 1998, as part of the Company's transition from dormancy into an
operating entity, the present directors and officers were appointed. It is the
present intent of management to grow the Company's asset and revenue base
through the acquisition of operating businesses in the United States and Europe
in the financial services, e-commerce and internet industries.
The Company intends to make all of the acquisitions by issuing common stock
in exchange for the acquired businesses. However, the Company may need
additional capital to enter into acquisitions. In the event that capital is
needed to effectuate certain acquisitions, the Company will be required to raise
substantially all of the funds for such acquisitions. The Company anticipates
that most, if not all, of any acquisitions it may make during the next 12 months
will be of operating entities that have current management in place.
The Company's first acquisition occurred in September, 1998 when the
Company completed the acquisition of 100% of the stock of EIP from the
stockholders of EIP in exchange for a total of 34,000,000 shares of the
Company's common stock.
EIP operates in a part of the world which could be viewed as having a high
potential for political, economic and military instability. For example,
Estonia is near Russia. If the political situation in Russia worsened, a spill
over effect into Estonia could have adverse consequences for EIP. Some other
nations which gained independence after the fall of the Soviet Union have
experienced instability. If such instability were to occur in Estonia, the
Company's business could be adversely affected.
The operations of EIP are conducted in Estonia with transactions
denominated in the local currency of Estonia, the EEK. Therefore, the Company
has exposure to foreign currency fluctuations and foreign government
intervention such as a devaluation of the local currency.
The Company believes that EIP's existing cash flow is adequate to fund its
existing lease portfolio and to fund a limited number of new leases. However,
one of the Company's objectives for the next 12 months is to increase its
capital resources, so that EIP can increase the size of its lease portfolio.
6
<PAGE>
The Company presently believes that the development and expansion of its
e-commerce business website, Plaza Royal.com, will require additional capital.
The Company will seek financing for Plaza Royal.com through the sale of debt or
equity. In order to achieve these objectives, the Company will be required to
raise additional funds from the sale of equity or debt. The sale of equity
securities could dilute the Company's existing stockholders' interest, and
borrowings from third parties could result in restrictive loan terms which would
increase the Company's debt service requirements and could restrict the
Company's operations. It is unknown at this time whether the Company will be
successful in raising capital on reasonable terms for the purpose of increasing
the capital base of EIP or for financing the further development of Plaza
Royal.com.
During late 1998 through March 31, 1999, the Company, in private
transactions, raised approximately $65,000 in cash through the sale of its
common stock and options.
PLAN OF OPERATION
The current plan of operation involves the further development of our main
E-commerce Portal: PlazaRoyal.com. The Company originally developed this portal
in March and April of 1999. At the present time the Company is actively in the
process of signing on new merchants for the PlazaRoyal.com Mall. Among those
already signed are Dell Computers, CBS Sport Stores, Discover Nature Stores,
the Sharper Image, Omaha Steaks, the Swiss Army Depot, Office Max, Hickory Farms
and Amazon.com.
Additionally, the Company is working on the development of the new
cyberstore concept, which will allow merchants to operate their respective
stores on the Internet as a joint venture with our Company. Also, we are in the
process of developing a detailed marketing program, which will enable our
shopping mall to function in several languages in several different countries.
Various local Internet providers in several countries have expressed an active
interest in supporting these developments in Europe.
ANALYSIS OF FINANCIAL CONDITION
At the present time, the Company still has a balance of $60,161.93 left
from the original $300,000.00 credit line with United Capital Group. It is our
belief that an additional $200,000.00 line of credit can be negotiated with this
same investor.
7
<PAGE>
Also, the Company is actively seeking new acquisitions in the United States
and throughout Europe and currently negotiations are underway for the
acquisition of several E-commerce companies in the United States, as well as
travel related service companies with E-commerce features. The Company is
pursuing several new acquisition opportunities in Eastern Europe and is
presently negotiating for the acquisition of several Internet providers in the
Baltic Region. The Company is seeking to accomplish any further acquisition on
a stock exchange basis only. This would enable the Company to acquire additional
assets and maintain its cash flow as well.
Further, the Company is in the process of actively developing a new
international legal directory portal under the name of "LegalClaims.com." This
portal will enable us to expand our E-commerce services into this new market
segment, as well as, generate new revenue(s) for the Company from the sale of
memberships to legal professionals, as well as, revenue from advertising and
other types of services to the global legal community.
The Company currently has plans to increase the number of its employees by
hiring a marketing manager and an operations manager. Also, the Company is
actively considering a contract with the E-commerce Solution Company in order to
provide full E-commerce services to the PlazaRoyal.com portal and to
LegalClaims.com. The Company intends to finance these respective expenditures
from the sale of its securities.
COMPETITION
Currently, only a few sites on the Internet offer the same type of a full,
interactive 3-D shopping experience that PlazaRoyal.com will offer. However, in
the future, the Company expects substantial competition. As technology
progresses, technology could make 3-D shopping malls and/or full 3-D stores a
rather "ordinary" feature offered by e-commerce web sites. At the present time,
however, this is still quite a novelty and will provide our Company with an
additional "edge" against any current competition.
YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997
RESULTS OF OPERATIONS
During the year ended December 31, 1998, the Company had revenues of
$43,822 compared to revenues of $109,628 for the year ended December 31, 1997.
This decrease in revenue of $65,806 is a result of EIP's limited availability of
capital to enter into new leases.
During the year ended December 31, 1998, the Company had operating, general
and administrative expenses of $257,745 compared to operating, general and
administrative expenses of $82,146 for the year ended December 31, 1997. This
increase of $175,599 resulted from the commencement of business operations after
a dormant period. The commencement of management activities, the start-up of the
Plaza Royal.com internet website, and expenses related to business development
combined to create the significant increase.
8
<PAGE>
During the year ended December 31, 1998, the Company had depreciation and
amortization expense of $8,563 compared to $12,109 for the year ended December
31, 1997. The decrease in depreciation and amortization expense of $3,546 was
the result of the expiration of certain operating leases and the disposition of
certain related assets.
During the year ended December 31, 1998, the Company incurred interest
expense of $31,611 as compared to $65,570 for the year ended December 31, 1997.
The decrease in interest expense of $33,959 resulted from EIP's partial
repayment of its credit line.
During the year ended December 31, 1998, the Company had a net loss of
$(787,870) compared to $(26,953) for the year ended December 31, 1997. This
increase in net loss of $760,917 is attributable to the Company's sale of stock
and options at below market value, the Company's acquisition activities and the
development costs of the Company's e-commerce website www.plazaroyal.com.
During the year ended December 31, 1998, the Company had a net loss
available to common stockholders of $(895,859) compared to a net loss of
$(26,953) for the year ended December 31, 1997, or an increase in net loss of
$760,917. A significant portion of the net loss amount is attributable to the
accounting treatment of the Company's sale of stock and options at below market
value, the Company's acquisition activities and the ramp up of the Company's
e-commerce website www.plazaroyal.com.
THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO THE THREE MONTHS ENDED MARCH 31,
1999.
RESULTS OF OPERATIONS
During the three months ended March 31, 1999, the Company had revenues of
$12,946 compared to revenues of $12,805 for the three months ended March 31,
1998.
During the three months ended March 31, 1999, the Company had operating,
general and administrative expenses of $65,656 compared to $4,152 for the three
months ended March 31, 1998. This increase in operating, general and
administrative expenses resulted from commencement of business operations in the
U.S.A. after a dormant period, which involved the commencement of management
activities, the start-up of the Plaza Royal.com internet website, and expenses
related to business development.
9
<PAGE>
During the three months ended March 31, 1999, depreciation, interest
expense and amortization expense were consistent with levels for the three
months ended March 31, 1998.
During the three months ended March 31, 1999, the Company had a net loss of
$(155,115) compared to a net loss of $(3,061)for the three months ended March
31, 1998. A significant portion of the net loss amount is attributable to the
the Company's sale of stock and options to employees at prices below market
value, the Company's acquisition activities and the development costs of the
Company's e-commerce website www.plazaroyal.com.
During the three months ended March 31, 1999, the Company had a net loss
available to common stock holders of $(1,515,970) compared to a net loss
available to common stock holders of $(3,061)for the three months ended March
31, 1998. The significant increase in the net loss available to common stock
holders is attributable to the Company's sale of stock and options at below
market value, the Company's acquisition activities and the development costs of
the Company's e-commerce website www.plazaroyal.com.
LIQUIDITY AND CAPITAL RESOURCES
The financial statements of the Company include a going concern
qualification by the Company's independent auditors. The Company's operating
losses and the Company's need for financing raise substantial doubts about the
Company's ability to continue as a going concern.
The Company believes that EIP's cash requirements for EIP's current
operations during 1999 can be met through EIP's internal cash flow from
operations. During the year ended December 31, 1998, the Company had revenues
of $43,822 compared to revenue of $109,628 for the year ended December 31, 1997.
The decrease in revenue of $65,806, was a direct result of EIP's limited
availability of capital to enter into new leases.
During late 1998 through March 31, 1999, the Company raised approximately
$65,000 in cash through the sale of its common stock and options.
YEAR 2000 ISSUES AND Y2K
The Company presently believes that its computers are Y2K compliant and the
Company presently anticipates no Y2K impact in connection with its suppliers or
customers. However, the Company is presently assessing its Year 2000 compliance
status and the status of its suppliers and customers. There can be no assurance
that the Company will escape the consequences of a Year 2000 compliance
deficiency.
Item 3. Description of Property.
10
<PAGE>
The Company's principal executive offices are located at 5120 Woodway,
Suite 9004, Houston, Texas 77056, in approximately 2,000 square feet of office
space which is subleased from a firm owned by Alex Genin, the President of the
Company, on a month to month sublease for $2,343 per month. EIP leases
approximately 3,000 square feet of office space in Estonia on a month to month
lease for approximately $2,100 per month from an independent third party. The
Company believes that its offices are adequate for its present and future needs.
Item 4. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth certain information as of May 1, 1999 with
respect to the beneficial ownership of shares of common stock by (i) each person
who is known to the Company to beneficially own more than 5% of the outstanding
shares of common stock, (ii) each director of the Company, (iii) each executive
officer of the Company and (iv) all executive officers and directors of the
Company as a group. Unless otherwise indicated, each stockholder has sole voting
and investment power with respect to the shares shown.
<TABLE>
<CAPTION>
Name and Address Shares of Common Percent
of Beneficial Holder Stock Beneficially Owned of Class
- -------------------------------- ------------------------- --------
<S> <C> <C>
Eurocapital Group, Ltd.. . . . . 25,500,000 (1)(2) 39.2%
19 Peel Road
Douglas, Isle of Man
British Isles 1M1 4LS
United Capital Group Limited . . 17,016,761 (1)(2)(3) 25.7%
50 Town Range, Suite 7B
Gibraltar
Alex Genin . . . . . . . . . . . 6,700,000 (1)(2) 9.9%
5120 Woodway, Suite 9004
Houston, Texas 77056
Michael Dashkovsky . . . . . . . 4,500,000 (4) 6.8%
5120 Woodway, Suite 9004
Houston, Texas 77056
Abrador, SA. . . . . . . . . . . 3,618,100 5.6%
48 East Street
Bella Vista, Sucre Building
Panama
Joseph A. Bond . . . . . . . . . 400,000 .6%
5120 Woodway, Suite 9004
Houston, Texas 77056
Walter C. Wilson . . . . . . . . 200,000 (5) .3%
1900 West Loop South, Suite 2050
Houston, Texas 77027
Joselito H. Sangel. . . . . . . 500,000 (5) 0.8%
5120 Woodway, Suite 9004
Houston, Texas 77056
All officers and directors as
a Group--Five Persons. . . . . . 12,300,000 17.7%
<FN>
_____________________________
11
<PAGE>
(1) Includes options to purchase up to 2,700,000 shares of common stock of the
Company which are presently exercisable at excise prices of from $.05 to
$.25 per share.
(2) Alex Genin currently holds powers of attorney from Eurocapital Group, Ltd.
and United Capital Group Limited by which Mr. Genin is granted the power to
make limited management and investment decisions. Mr. Genin advises and
consults with Eurocapital Group, Ltd. and United Capital Group Limited to
formulate management decisions on behalf of Eurocapital Group, Ltd. and
United Capital Group Limited, including management decisions related to the
Company. Mr. Genin does not own any stock of Eurocapital Group, Ltd. or
United Capital Group Limited.
(3) Includes 1,076,761 shares issueable in exchange for debt owed by the
Company to United Capital Group, Ltd. The exchange price is $0.05 per
share.
(4) Includes an option to purchase up to 1,500,000 shares of common stock of
the Company which is presently exercisable at an exercise price of $0.05
per share.
(5) Includes an option to purchase up to 100,000 shares of common stock of the
Company which is presently exercisable at an exercise price of $0.05 per
share.
</TABLE>
Item 5. Directors, Executive Officers, Promoters and Control Persons.
The directors and executive officers of the Company are as follows.
<TABLE>
<CAPTION>
Name and Address Age Position
- ------------------------------- --- ----------------
<S> <C> <C>
Alex Genin . . . . . . . . . . . 47 Director, CEO, and
5120 Woodway, Suite 9004 . . . . President
Houston, Texas 77056
Joseph A. Bond . . . . . . . . . 65 Director and
5120 Woodway, Suite 9004 . . . . Secretary
Houston, Texas 77056
Michael Dashkovsky . . . . . . . 37 Director
5120 Woodway, Suite 9004
Houston, Texas 77056
Walter C. Wilson . . . . . . . . 51 Director
1900 West Loop South, Suite 2050
Houston, Texas 77027
Joselito H. Sangel . . . . . . . 45 Vice President of
5120 Woodway, Suite 9004 . . . . Finance
Houston, Texas 77056
</TABLE>
Directors are elected annually and hold office until the next annual
meeting of the stockholders of the Company or until their successors are elected
and qualified. Officers serve at the discretion of the Board of Directors. There
is no family relationship between or among any of the directors and executive
officers of the Company.
BIOGRAPHIES
Alex Genin has been a Director, President and a major shareholder of the
Company since August, 1998. Since 1992, Mr. Genin has been the President of ECL
Trading Company, which trades goods and commodities in Europe and countries of
the former Soviet Union. Since 1985, Mr. Genin has been the President of Eastern
Credit Ltd. Inc. which provides mortgage and financial consulting services in
Europe, Asia and the United States. Mr. Genin has extensive experience in
business activities in Europe, Asia and countries of the former Soviet Union.
12
<PAGE>
Joseph A. Bond has been a Director and the Secretary of the Company since
August, 1998. For more than five years, Mr. Bond has been an attorney in the
private practice of law in Texas. Mr. Bond has extensive experience in
international tax law.
Michael Dashkovsky has been a Director of the Company since August, 1998
and since March, 1999 he has been the Company's manager of European operations.
Since 1990, Mr. Dashkovsky has been employed by Eastern Credit Ltd., Inc. as a
manager, and as the President of the Estonian Innovation Bank until February,
1999. This bank owned EIP at one time.
Walter C. Wilson has been a Director of the Company since January, 1999.
Since 1974, Mr. Wilson has been an attorney in private practice in Texas. Mr.
Wilson is licensed to practice law in Texas and Florida. He has a J.D. degree,
1969, from the University of Florida Law School. Mr. Wilson practices in
international law and international taxation.
Joselito H. Sangel has been the Company's Vice-President of Finance since
September, 1998. Since 1996, Mr. Sangel has been an accountant with EC Group
Companies, a firm controlled by Alex Genin. From 1988 through 1995 Mr. Sangel
was a portfolio accountant with First Interstate Bank.
Item 6. Executive Compensation.
The following table reflects all forms of compensation for services to the
Company for years ended December 31 , 1998 , 1997 and 1996 of the chief
executive officer. No executive officer of the Company received compensation
which exceeded $100,000 during these periods.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
--------------------------
ANNUAL COMPENSATION LONG TERM COMPENSATION
-------------------- ------------------------
AWARDS PAYOUTS
------ -------
OTHER ALL
NAME AND ANNUA RESTRICTED SECURITIES OTHER
PRINCIPAL COMPEN- STOCK UNDERLYING LTIP COMPEN-
POSITION YEAR SALARY BONUS SATION AWARDS OPTIONS/SARS PAYOUTS SATION
- --------- ---- ------------- ----- ------ ---------- ------------ ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Alex. . . 1998 $37,000- (1) -0- -0- -0- -0- (2) -0- -0-
Genin . . 1997 $ -0- -0- -0- -0- -0- -0- -0-
CEO and . 1996 $ -0- -0- -0- -0- -0- -0- -0-
President
<FN>
________________________
(1) See, Certain Relationships and Related Transactions.
(2) On April 7, 1999, the Company awarded Mr. Genin with an immediately exercisable
option to purchase up to 200,000 shares of common stock of the Company at an
exercise price of $0.25 per share expiring on March 31, 2002. This was
compensation for services rendered from August, 1998 through March 31, 1999.
</TABLE>
In 1998, Mr. Genin purchased an option to purchase up to 2,500,000 shares
of common stock of the Company at an exercise price of $0.05 per share which is
presently exercisable. He has not exercised this option. At December 31,
1998, the value of Mr. Genin's unexercised in the money option is $500,000.
13
<PAGE>
EMPLOYMENT AGREEMENTS
The Company does not have an employment contract with any of its employees.
The Company presently intends to negotiate an employment contract with Alex
Genin.
DIRECTOR COMPENSATION
The Company does not currently pay any cash directors' fees.
EMPLOYEE STOCK OPTION PLAN
The Company believes that equity ownership is an important factor in its
ability to attract and retain skilled personnel, and the Board of Directors of
the Company may adopt an employee stock option plan in the future. The purpose
of the stock option program will be to further the interest of the Company, its
subsidiaries and its stockholders by providing incentives in the form of stock
options to key employees and directors who contribute materially to the success
and profitability of the Company. The grants will recognize and reward
outstanding individual performances and contributions and will give such persons
a proprietary interest in the Company, thus enhancing their personal interest in
the Company's continued success and progress. This program will also assist the
Company and its subsidiaries in attracting and retaining key employees and
directors.
Item 7. Certain Relationships and Related Transactions.
Alex Genin currently holds powers of attorney from Eurocapital Group, Ltd.
and United Capital Group Limited by which Mr. Genin is granted the power to make
limited management and investment decisions. Mr. Genin advises and consults
with Eurocapital Group, Ltd. and United Capital Group Limited to formulate
management decisions on behalf of Eurocapital Group, Ltd. and United Capital
Group Limited, including management decisions related to the Company. Mr. Genin
does not own any stock of Eurocapital Group, Ltd. or United Capital Group
Limited.
Effective September, 1998, United Capital Group Limited and the Company
entered into a loan agreement, pursuant to which the Company may borrow up to
$300,000. As part of the loan agreement, during 1998, United Capital Group
Limited, on behalf of the Company, paid entities owned by Alex Genin for
Services which they provided the Company including office space and business
services, managerial and consultant staffing and (including payments to Mr.
Gennin of $37,000 in 1998) travel expenses. Mr. Genin's entities provided these
Services on terms no less favorable to the Company than terms obtainable from
unaffiliated third parties. In 1998, Mr. Genin's entities' received $168,553
under this arrangement and the cumulative total was $186,000 as of January 31,
1999. United Capital Group and the Company agreed to exchange this debt for
7,440,000 shares of common stock. The Company continues to use this method of
financing to provide itself with resources and capabilities, and will do so
until it is able to secure alternative sources of capital on better terms.
United Capital Group Limited may exchange additional debt for shares of common
stock of the Company pursuant to the loan agreement at an exchange price of
$0.05 per share. At the present time the Company owes $60,161 to United Capital
Group Limited pursuant to this agreement. United Capital Group Limited owns
approximately 25.7% of the common stock of the Company.
14
<PAGE>
During 1998, Mr. Genin's entities compensated Mr. Genin in the amount of
$37,000 for services he rendered related to the Company. During 1999 to date,
Mr. Genin's entities compensated Mr. Genin in the amount of $6,200 per month for
services he rendered related to the Company. Mr. Genin owns approximately
9.9% of the common stock of Company
In September, 1998, the Company entered into a Stock Exchange Agreement
with the two stockholders of EIP, who were Eurocapital Group, Ltd. and United
Capital Group Limited. The Company issued a total of 34,000,000 shares of
common stock of the Company to the EIP stockholders in exchange for all of the
outstanding shares of EIP. The terms and conditions of the Stock Agreement
Exchange were determined by the parties through arms length negotiations.
However, no appraisal was performed. As a result of these transactions,
Eurocapital Group, Ltd. now owns 39.2% of the common stock of the Company, and
United Capital Group Limited now owns 25.7% of the common stock of the Company.
At one time EIP was owned by the Estonian Innovation Bank, which made a
loan to EIP. The current principal balance on this loan, which bears interest at
10% per annum, is $333,641, which is payable interest only on a monthly basis
with a final balloon payment of principal and interest due in May, 2002.
The Company does not believe that this funding source will provide any
additional financing. Eurocapital Group, Ltd. owns approximately 54% of Estonian
Innovation Bank and approximately 39.2% of the Company.
In October, 1998, the Company sold to Alex Genin 4,000,000 shares of common
stock at one-tenth cent per share and granted Mr. Genin an option to purchase
2,500,000 shares of common stock of the Company exercisable at $0.05 per share
expiring in August, 2001, for the total cash sum of $4,140. This option is
presently exercisable. These issuances were approve by the Board of Directors.
This was an incentive approved by the Board of Directors to persuade Mr. Genin
to become an officer and director and to devote virtually all of his time to the
management of the Company at a time when there was no meaningful market for the
shares and when the Company had limited financial resources. In April, 1999 the
Company granted Mr. Genin an option to purchase up to 200,000 of common stock to
the Company exercisable at $0.25 per share expiring in March, 2002.
In October, 1998, Company sold to Michael Dashkovsky 3,000,000 shares of
common stock at one-tenth cent per share and granted Mr. Dashkovsky an option
to purchase 1,500,000 shares of common stock of the Company exercisable at $0.05
per share expiring in August, 2001, for the total cash sums of $3,080. This
option is presently exercisable. These issuances were approve by the Board of
Directors. This was an incentive approved by the Board of Directors to persuade
Mr. Dashkovsky to become an officer and director and to devote substantially all
of his time to the management of the Company at a time when there was no
meaningful market for the shares and when the Company had limited financial
resources.
15
<PAGE>
Item 8. Description of Securities.
The authorized capital stock of the Company consists of 100,000,000 shares
of common stock, par value $0.001, and 10,000,000 shares of preferred stock, par
value $0.001. The Board of Directors may establish series or classes of shares
out of the authorized shares. As of May 3, 1999, the Company had outstanding
65,123,142 shares of common stock, and no outstanding preferred stock. However,
the Company may designate Series A Convertible Preferred Stock in the near
future in connection with a proposed sale of securities.
The following summary description of the securities of the Company is
qualified in its entirety by reference to the Certificates of Incorporation, as
amended, and the Bylaws of the Company, as amended, copies of which are filed
as exhibits to this Form 10-SB.
COMMON STOCK
The holders of common stock are entitled to one vote per share with respect
to all matters required by law to be submitted to stockholders of the Company,
including the election of directors. The common stock does not have any
cumulative voting, preemptive, subscription or conversion rights. The election
of directors and other general stockholder action requires the affirmative vote
of a majority of shares represented at a meeting in which a quorum is
represented, except that pursuant to the Bylaws a consent to corporate action by
a majority of shareholders entitled to vote on a matter is permitted. The
outstanding shares of common stock are validly issued, fully paid and
non-assessable.
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 affairs of the
Company, the holders of common stock are entitled to share ratably in all assets
remaining available for distribution to them.
PREFERRED STOCK
There are no shares of preferred stock outstanding. However, the Company
may designate Series A Convertible Preferred Stock in the near future in
connection with a proposed sale of securities. The Company's Articles of
Incorporation authorize 10,000,000 shares of preferred stock and provide that
the Board of Directors may designate the voting power, preferences, relative,
participating optional or other special rights, and qualifications, limitations
or restrictions of preferred stock. The Company's Articles of Incorporation
also provide that the Board of Directors may create one or more classes of
preferred stock and one or more series of preferred stock.
Series A Convertible Preferred Stock. If designated, the description of
---------------------------------------
Series A Convertible Preferred Stock would be qualified in its entirety by
reference to the Company's Articles of Incorporation, Bylaws and the Certificate
of the Designation, Preferences, Rights and Limitations of Series A Convertible
Preferred Stock
16
<PAGE>
Series A Convertible Preferred Stock would be convertible into common stock
beginning 24 months after purchase as follows: (i) at a conversion ratio of 20
shares of common stock per share of Series A Convertible Preferred Stock, or,
(ii) at a conversion price calculated as 70% of the average of the daily high
and low bid per share of common stock during the 20 trading days preceding
conversion, whichever method results in a greater of shares of common being
issued on the conversion date. However, the conversion price shall not be less
than $.10 per share of common stock. The Series A Convertible Preferred Stock
dividend would be the payment-in-kind of common stock for the equivalent of a
15% annual dividend rate on the stated value of the Series A Convertible
Preferred Stock. The value of common stock in connection with a dividend is
calculated as the average of the daily high and low bid per share of common
stock during the 20 trading days preceding the record date of the annual
dividend payment. Series A Convertible Preferred Stock would be non-voting.
PART II
Item 1. Market Price of and Dividends on the Registrant's Common Stock and
Other Shareholder Matters.
The Company's common stock is currently traded on the over-the-counter
bulletin board ("OTC BB") under the symbol "FCAI." The following table sets
forth, for the periods indicated, the reported high and low closing bid
quotations for the common stock of the Company as reported on the OTC BB. The
bid prices reflect inter-dealer quotations, do not include retail markups,
markdowns or commissions and do not necessarily reflect actual transactions.
<TABLE>
<CAPTION>
HIGH LOW
QUARTER ENDED BID BID
- --------------------- ------- -----
<S> <C> <C>
March 31, 1997. . . . $ (*) $ (*)
June 30, 1997 . . . . $ (*) $ (*)
September 30, 1997. . $ (*) $ (*)
December 31, 1997 . . $ (*) $ (*)
March 31, 1998. . . . $ (*) $ (*)
June 30, 1998 . . . . $ (*) $ (*)
September 30, 1998. . $ (*) $ (*)
December 31, 1998 . . $ (**) $(**)
March 31, 1999. . . . $ 1/2 $ 1/4
April 1, 1999 through
June 1, 1999. . . . . $ 1 7/16 $ 1/4
<FN>
____________________
(*) To the best of the Company's knowledge, from January 1, 1996 through
October, 1998, no broker-dealer made an active market or regularly
submitted quotations for the Company's stock. During this period there
were only an infrequent number of trades and virtually no trading volume.
(**) To the best of the Company's knowledge, from November, 1998 through
January, 1999, there were only an infrequent number of trades and little
trading volume.
</TABLE>
17
<PAGE>
The closing bid price on the Company's common stock was $0.875 per share on
June 1, 1999. As of June 1, 1999, there were approximately 1,008 holders of
record of the Company's common stock.
The Company's transfer agent is OTC Stock Transfer, Inc., 321 East 2100
South, Salt Lake City, UT 84115; PO Box 65665, Salt Lake City, UT 84165; tel.
(801) 485-555, fax (801) 486-0562.
DIVIDEND POLICY
The Company has not paid, and the Company does not currently intend to pay
cash dividends on its common stock in the foreseeable future. The current policy
of the Company's Board of Directors is for the Company to retain all earnings,
if any, to provide funds for operation and expansion of the Company's business.
The declaration of dividends, if any, will be subject to the discretion of the
Board of Directors, which may consider such factors as the Company's results of
operations, financial condition, capital needs and acquisition strategy, among
others.
Item 2. Legal Proceedings.
None.
Item 3. Changes in and Disagreements With Accountants.
(a) On July 2, 1998 the Company engaged Ham, Langston & Brezina, L.L.P.
("Ham, Langston & Brezina") as its independent accountant. The decision to
engage Ham, Langston & Brezina as the Company's independent accountant was
recommended and approved by the chairman of the Company's Board of Directors.
(b) In a report dated May 2, 1994, Darrell T. Schvaneveldt, Certified Public
Accountant, reported on the Company's financial statements as of April 30, 1994,
December 31, 1993, 1992 and 1991, and the related statements of operations,
stockholders' equity and cash flows for the accumulated period January 3, 1977
to April 30, 1994, the period January 1, 1994 to April 30, 1994, and for the
years ended December 31, 1993, 1992 and 1991. Such report did not contain an
adverse opinion or disclaimer of opinion, nor was such report qualified or
modified as to uncertainty, audit scope, or accounting principles. Darrell T.
Schvaneveldt, Certified Public Accountant, understands that he was terminated as
the Company's independent accountant effective May 2, 1994. Thereafter, the
Company engaged Ham, Langston & Brezina as its independent accountant on July 2,
1998.
18
<PAGE>
(c) During the Company's two fiscal years ended December 31, 1998 and 1997,
and the subsequent interim period preceding the decision to engage independent
accountants, there were no "reportable events" (hereinafter defined) requiring
disclosure pursuant to Item 304 of Regulation S-B.
(d) Effective July 2, 1998, the Company engaged Ham, Langston & Brezina as its
independent accountant. During the two years ended December 31, 1998 and 1997,
and the subsequent interim period preceding the decision to engage independent
accountants, neither the Company nor anyone on its behalf consulted Ham,
Langston & Brezina regarding either the application of accounting principles to
a specified transaction, either completed or proposed, or the type of audit
opinion that might be rendered on the Company's financial statements, nor has
Ham, Langston & Brezina provided to the Company a written report or oral advice
regarding such principles or audit opinion.
Darrell T. Schvaneveldt, Certified Public Accountant, has provided the
Company with a letter pursuant to Rule 304 of Regulation S-B.
Item 4. Recent Sales of Unregistered Securities.
During the past three years, the following transactions were effected by
the Company in reliance upon exemptions from registration under the Securities
Act of 1933 as amended (the "Act") as provided in Section 4(2) thereof. Each
certificate issued for unregistered securities contained a legend stating that
the securities have not been registered under the Act and setting forth the
restrictions on the transferability and the sale of the securities. No
underwriter participated in, nor did the Company pay any commissions or fees to
any underwriter in connection with any of these transactions. None of the
transactions involved a public offering.
In September, 1998, the Company entered into a Stock Exchange Agreement
with the two stockholders of EIP, whereby the Company issued a total of
34,000,000 shares of common stock of the Company to the EIP stockholders in
exchange for all of the outstanding shares of EIP. The Stock Exchange Agreement
was the result of negotiations between the Company and the EIP stockholders.
In October, 1998 the Company sold a total of 7,650,000 shares of common
stock to six employees of the Company for prices ranging from $.001 to $.01 per
share in cash. In November, 1998 the Company sold 80,000 shares to another
employee at a purchase price of $.005 per share. In October, 1998, the Company
sold a total of 4,250,000 options to purchase common stock of the Company to
eight persons who were employees of the Company. The Company believes that each
of the persons had knowledge and experience in financial and business matters
which allowed them to evaluate the merits and risk of the purchase of these
securities of the Company. All of these persons were employees or vendors of
the Company and in such capacity they were knowledgeable about the Company's
operations and financial condition.
19
<PAGE>
In October, November and December, 1998, the Company sold a total of
1,420,000 shares of common stock to eight persons at prices ranging from $.005
to $.04 per share. The Company believes that these persons had knowledge and
experience in financial and business matters which allowed them to evaluate the
merits and risk of the purchase of these securities of the Company. The Company
believes that each of them was knowledgeable about the Company's operations and
financial condition.
In January, February and March, 1999, the Company sold a total of 1,780,000
shares of common stock to 14 persons at prices ranging from $.005 to $.05 per
share in cash. The Company believes that these persons had knowledge and
experience in financial and business matters which allowed them to evaluate the
merits and risk of the purchase of these securities of the Company. The Company
believes that each of them was knowledgeable about the Company's operations and
financial condition.
In February, 1999, pursuant to a loan agreement effective September, 1998,
United Capital Group Limited and the Company agreed to exchange the existing
indebtedness on this loan ($186,000) for 7,440,000 shares of common stock, or
$0.025 per share. The Company believes that each of the EIP stockholders had
knowledge and experience in financial and business matters which allowed them to
evaluate the merits and risk of the exchange or purchase of these securities of
the Company. The Company believes that the EIP stockholders had knowledge and
experience in financial and business matters which allowed them to evaluate the
merits and risk of the purchase of these securities of the Company, and that
they were knowledgeable about the Company's operations and financial condition.
In April, 1999, the Company awarded Mr. Genin with an immediately
exercisable option to purchase up to 200,000 shares of common stock of the
Company at an exercise price of $0.25 per share expiring on March 31, 2002.
This was compensation for services rendered from August, 1998 through March 31,
1999. Mr. Genin is an officer and director of the Company. The Company
believes that Mr. Genin had knowledge and experience in financial and business
matters which allowed him to evaluate the merits and risk of the receipt of this
option The Company believes that each of he was knowledgeable about the
Company's operations and financial condition.
20
<PAGE>
Item 5. Indemnification of Directors and Officers.
The following summary description of certain provisions of the Company's
Certificate of Incorporation and Bylaws is qualified in its entirety by
reference to the Certificate of Incorporation and the Bylaws of the Company,
copies of which are included as exhibits to this Form 10-SB.
The Company's Certificate of Incorporation, Section Seven, provide that a
Director of the Company is not liable to either the Company or its shareholders
for breach of fiduciary duties unless the breach involves a breach of loyalty to
the Company or its shareholders, acts or omissions not in good faith which
involve intentional misconduct or knowing violation of law, liability for
unlawful payments of dividends or unlawful stock purchase or redemption by the
Company, or a transaction from which the director derived an improper personal
benefit.
The Company's Bylaws, Article V, Section 14, provide for the
indemnification of present and future officers and directors for all liabilities
against the officer or director in connection with any claim by reason of his
being or having been an officer or director of the Company.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers or persons controlling the Company pursuant to
the Company's Certificate of Incorporation or Bylaws, the Company has been
informed that, in the opinion of the SEC, such indemnification is against public
policy as expressed in the Act and is therefore unenforceable.
PART F/S
The financial information required by this item is included as set forth on
Pages F-1 through F-29.
<TABLE>
<CAPTION>
PART III
Item 1. Index to Exhibits.
<S> <C>
3.1 Certificate of Incorporation and Amendments thereto.
3.2 By-Laws and Amendments thereto.
4.1 Form of Common Stock Certificate.
10.1 Stock Exchange Agreement by and among First Capital International, Inc.
and certain registered holders of capital stock of EIP Liisingu AS, an
Estonian corporation.
10.2 Loan agreement between the Company and United Capital Group, Ltd
21
<PAGE>
16.1 Letter on change of certifying accountant.
21.1 Subsidiaries of the registrant.
27.1 Financial Data Schedule for the year ended December 31, 1997.
27.2 Financial Data Schedule for the year ended December 31, 1998.
27.3 Financial Data Schedule for the three months ended March 31, 1999.
</TABLE>
Item 2. Description of Exhibits.
The Exhibits required by this item
are included as set forth in the Exhibit Index.
22
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
First Capital International, Inc.
June 2, 1999 By /s/ Alex Genin
------------------------------------------
Alex Genin
Director, CEO and President
June 2, 1999 By /s/ Joselito H. Sangel
------------------------------------------
Joselito H. Sangel
Vice-President of Finance
23
<PAGE>
FIRST CAPITAL INTERNATIONAL, INC.
__________
CONSOLIDATED FINANCIAL STATEMENTS
WITH REPORT OF INDEPENDENT AUDITORS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
F-1
<PAGE>
<TABLE>
<CAPTION>
FIRST CAPITAL INTERNATIONAL, INC.
TABLE OF CONTENTS
__________
PAGE(S)
-------
<S> <C>
Report of Independent Auditors . . . . . . . . . . . F-3
Audited Financial Statements
Consolidated Balance Sheet as of December 31, 1998 F-4
Consolidated Statement of Operations for the
years ended December 31, 1998 and 1997 . . . . . F-5
Consolidated Statement of Stockholders' Deficit
for the years ended December 31, 1998 and 1997 . F-6
Consolidated Statement of Cash Flows for the
years ended December 31, 1998 and 1997 . . . . . F-7
Notes to Consolidated Financial Statements . . . . . F-8
</TABLE>
F-2
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Stockholders
First Capital International, Inc.
We have audited the accompanying consolidated balance sheet of First Capital
International, Inc. as of December 31, 1998, and the related statements of
operations, stockholders' deficit and cash flows for each of the two years in
the period 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 audits. We did not audit the financial
statements of EIP Liisingu AS, a company with which the Company merged in
1998. The financial statements of EIP Liisingu AS reflect total assets
constituting 99% of the consolidated total as of December 31, 1998, total
revenues constituting 100% of the consolidated totals for the years ended
December 31, 1998 and 1997 and total costs and expenses constituting 11% and
100% of the consolidated totals for the years ended December 31, 1998 and 1997,
respectively. Those statements were audited by other auditors whose report has
been furnished to us, and our opinion, insofar as it relates to amounts included
for EIP Liisingu A.S., is based solely on the report of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits and the report of the other auditors provide a
reasonable basis for our opinion.
In our opinion, based on our audit and the report of the other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the financial position of First Capital International, Inc.
as of December 31, 1998, and the results of its operations and its cash flows
for each of the two years in the period then ended in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 3 to the financial
statements, the Company has suffered recurring losses from operations that raise
substantial doubt about its ability to continue as a going concern. Management's
plans in regard to these matters are also described in Note 3. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
/s/ Ham, Langston & Brezina, L.L.P.
Houston, Texas
April 21, 1999
F-3
<PAGE>
<TABLE>
<CAPTION>
FIRST CAPITAL INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1998
__________
ASSETS
- ---------------------------------------------
<S> <C>
Current assets:
Cash and cash equivalents . . . . . . . . . $ 61,467
Lease receivables, net. . . . . . . . . . . 107,200
Accounts and notes receivable, net. . . . . 8,862
Prepaid expenses. . . . . . . . . . . . . . 6,974
Assets held for sale. . . . . . . . . . . . 18,958
----------
Total current assets. . . . . . . . . . . 203,461
Lease receivables . . . . . . . . . . . . . . 119,339
Accounts and notes receivable, net. . . . . . 3,082
Property and equipment, net . . . . . . . . . 9,519
----------
Total assets. . . . . . . . . . . . . . $ 335,401
==========
LIABILITIES AND STOCKHOLDERS' DEFICIT
- ---------------------------------------------
Current liabilities:
Note payable-related party. . . . . . . . . $ 166,810
Accounts payable. . . . . . . . . . . . . . 21,276
Accrued liabilities . . . . . . . . . . . . 5,225
----------
Total current liabilities . . . . . . . . 193,311
Long-term debt-related party. . . . . . . . . 333,641
----------
Total liabilities . . . . . . . . . . . 526,952
----------
Commitments and contingencies
Stockholders' deficit:
Common stock, $0.001 par value; 100,000,000
shares authorized; 55,751,142 shares
issued and outstanding. . . . . . . . . . 55,751
Additional paid-in capital. . . . . . . . . 581,660
Accumulated deficit . . . . . . . . . . . . (826,106)
Accumulated foreign currency translation
adjustments . . . . . . . . . . . . . . . (2,856)
----------
Total stockholders' deficit . . . . . . (191,551)
----------
Total liabilities and stockholders'
deficit . . . . . . . . . . . . . . $ 335,401
==========
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
FIRST CAPITAL INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
__________
YEAR ENDED DECEMBER 31,
--------------------------
1998 1997
------------ ------------
<S> <C> <C>
Revenue:
Interest income . . . . . . . . . . . $ 43,822 $ 109,628
Other operating revenue . . . . . . . 13,352 23,244
------------ ------------
Total revenue . . . . . . . . . . . 57,174 132,872
------------ ------------
Costs and expenses:
Operating, general and administrative
expenses. . . . . . . . . . . . . . 257,745 82,146
Stock and option based compensation . 546,822 -
Depreciation and amortization . . . . 8,563 12,109
Interest expense. . . . . . . . . . . 31,611 65,570
Other expense, net. . . . . . . . . . 303 -
------------ ------------
Total costs and expenses. . . . . . 845,044 159,825
------------ ------------
Net loss. . . . . . . . . . . . . . . . $ (787,870) $ (26,953)
============ ============
Net loss applicable to common
stockholders. . . . . . . . . . . . . $ (895,859) $ (26,953)
============ ============
Basic and dilutive net loss per
common share. . . . . . . . . . . . . $ (0.04) $ (0.00)
============ ============
Weighted average shares outstanding . . 24,477,471 12,651,142
============ ============
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE>
<TABLE>
<CAPTION>
FIRST CAPITAL INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
__________
FOREIGN COMPRE-
ADDITIONAL CURRENCY HENSIVE
COMMON PAID-IN ACCUMULATED TRANSLATION INCOME
STOCK CAPITAL DEFICIT ADJUSTMENT (LOSS)
--------- ------------ ------------- ------------- ----------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1996 . $ 40,241 $ - $ (11,283) $ - $ 28,958
----------
Net loss . . . . . . . . . . . - - (26,953) - (26,953)
Other comprehensive income-
foreign currency transla-
tion adjustment. . . . . . . - - - (3,125) (3,125)
----------
Comprehensive income (30,078)
----------
Cancellation of shares (48
shares). . . . . . . . . . . (38,631) 38,631 - - -
Common stock issued for cash
(8 shares) . . . . . . . . . 5,780 - - - -
--------- ------------ ------------- ------------- ----------
Balance at December 31, 1997 . 7,390 38,631 (38,236) (3,125) (1,120)
----------
Net loss . . . . . . . . . . . - - (787,870) - (787,870)
Other comprehensive income-
foreign currency transla-
tion adjustment. . . . . . . - - - 269 269
----------
Comprehensive income (787,601)
----------
Common stock issued for cash
before recapitalization
(30 shares). . . . . . . . . 21,314 376 - - -
Recapitalization effective
September 17, 1998 . . . . . 26,137 (26,137) - - -
Common stock issued for cash
and services after capital-
ization (9,100,000 shares) . 910 518,790 - - -
Stock options issued to
officers below fair market
value. . . . . . . . . . . . - 50,000 - - -
--------- ------------ ------------- ------------- ----------
Balance at December 31, 1998 . $ 55,751 $ 581,660 $ (826,106) $ (2,856) $(788,721)
========= ============ ============= ============= ==========
</TABLE>
See notes to consolidated financial statements.
F-6
<PAGE>
<TABLE>
<CAPTION>
FIRST CAPITAL INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
__________
YEAR ENDED DECEMBER 31,
----------------------
1998 1997
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net loss . . . . . . . . . . . . . . . . . . . . $(787,870) $ (26,953)
Adjustment to reconcile net loss to net
cash used in operating activities:
Loss from sale of property and equipment . . . - 304
Depreciation expense . . . . . . . . . . . . . 8,563 12,109
Provision for bad debts. . . . . . . . . . . . 53,148 -
Common stock and stock options issued for
services . . . . . . . . . . . . . . . . . . 546,822 -
Change in operating assets and liabilities:
Lease receivables. . . . . . . . . . . . . . 28,187 257,925
Accounts receivable. . . . . . . . . . . . . 14,612 242,649
Prepaid expenses . . . . . . . . . . . . . . 67 -
Assets held for sale . . . . . . . . . . . . (18,958) -
Accounts payable . . . . . . . . . . . . . . 18,157 (60,988)
Accrued liabilities. . . . . . . . . . . . . (53,295) (21,782)
---------- ----------
Net cash provided by (used in)
operating activities . . . . . . . . . . (190,567) 403,264
---------- ----------
Cash flows from investing activities:
Proceeds from sale of property and equipment . . 138 9,721
Capital expenditures . . . . . . . . . . . . . . - (9,041)
---------- ----------
Net cash provided by investing
activities . . . . . . . . . . . . . . . 138 680
---------- ----------
Cash flows from financing activities:
Proceeds from notes payable. . . . . . . . . . . 166,810 -
Proceeds from sale of common stock . . . . . . . 44,568 (5,780)
Payments on notes payable. . . . . . . . . . . . - (355,872)
---------- ----------
Net cash provided by (used in) financing
activities . . . . . . . . . . . . . . . 211,378 (361,652)
---------- ----------
Effects of exchange rate changes on cash . . . . . (1,774) -
Net increase in cash and cash equivalents. . . . . 19,175 42,292
Cash and cash equivalents, beginning
of year. . . . . . . . . . . . . . . . . . . . . 42,292 -
---------- ----------
Cash and cash equivalents, end of year . . . . . . $ 61,467 $ 42,292
========== ==========
Supplemental disclosure of cash flow information:
Cash paid for interest . . . . . . . . . . . . . $ 31,611 $ 65,570
========== ==========
</TABLE>
See notes to consolidated financial statements.
F-7
<PAGE>
FIRST CAPITAL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
__________
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
----------------------------------------------------
First Capital International, Inc. (the "Company"), formerly Ranger/USA, Inc.,
assumed its current name in August 1998 when new management took over the
Company which, at the time, had no existing operations, and began implementation
of a new business plan. The Company is now involved primarily in the
identification, acquisition and operation of businesses serving or focussed on
Central and Eastern European markets. To date, the Company's initial business
has been EIP Liisingu AS, an Estonian company that provides lease financing of
real estate, motor vehicles and equipment. The Company is currently identifying
additional acquisition targets that are involved in the financial services or
high technology sectors (See Note 2 and 16) and is devoting substantial
resources to the development of a virtual shopping mall, PlazaRoyal.com, for
deployment on the Internet.
PRINCIPLES OF CONSOLIDATION
-----------------------------
The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiaries after elimination of all significant intercompany
accounts and transactions.
MANAGEMENT ESTIMATES
---------------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of 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. These
estimates mainly involve the useful lives of property and equipment, the
valuation of deferred tax assets and the realizability of accounts receivable.
REVENUE RECOGNITION
--------------------
Interest income is recognized using the interest method over the terms of
underlying leases. Other operating revenue is recognized at the time services
are provided.
CONCENTRATIONS OF CREDIT RISK
--------------------------------
Cash and accounts and lease receivables are the primary financial instruments
that subject the Company to concentrations of credit risk. The Company
maintains its cash in banks selected based upon management's assessment of the
bank's financial stability. Cash balances are currently maintained in banks in
Estonia and the United States. Cash balances in U.S. banks may periodically
exceed the $100,000 federal depository insurance limit.
Continued
F-8
<PAGE>
FIRST CAPITAL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
__________
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
----------------------------------------------------------------
CONCENTRATIONS OF CREDIT RISK, CONTINUED
--------------------------------------------
Accounts and leases receivable arise primarily from transactions with customers
in Estonia. The Company performs credit reviews of its customers and provides a
reserve for accounts where collectibility is uncertain. Collateral is required
for credit granted in connection with certain lease transactions.
CASH EQUIVALENTS
-----------------
For purposes of reporting cash flows, the Company considers all short-term
investments with an original maturity of three months or less to be cash
equivalents.
PROPERTY AND EQUIPMENT
------------------------
Equipment is stated at cost. Depreciation is computed principally by the
straight-line method over the estimated useful lives of 2 to 5 years for office
furniture and equipment and 2 to 3 years for machinery and equipment.
IMPAIRMENT OF LONG-LIVED ASSETS
----------------------------------
In the event that facts and circumstances indicate that the carrying value of a
long-lived asset, including associated intangibles, may be impaired, an
evaluation of recoverability is performed by comparing the estimated future
undiscounted cash flows associated with the asset to the asset's carrying amount
to determine if a write-down to market value or discounted cash flow is
required.
INCOME TAXES
-------------
The Company uses the liability method in accounting for income taxes. Under
this method, deferred tax assets and liabilities are determined based on
differences between financial reporting and income tax carrying amounts of
assets and liabilities and are measured using the enacted tax rates and laws
that will be in effect when the differences are expected to reverse.
FAIR VALUE OF FINANCIAL INSTRUMENTS
---------------------------------------
The Company includes fair value information in the notes to financial statements
when the fair value of its financial instruments is different from the book
value. When the book value approximates fair value, no additional disclosure is
made.
Continued
F-9
<PAGE>
FIRST CAPITAL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
__________
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
----------------------------------------------------------------
FOREIGN CURRENCY TRANSLATION
------------------------------
The Company has determined that the local currency is the functional currency
for its Estonian subsidiary under Financial Accounting Standards Board Statement
No. 52, "Foreign Currency Translation" (FAS 52). Under FAS 52, assets and
liabilities denominated in foreign functional currencies are translated at the
exchange rate as of the balance sheet date. Translation adjustments are
recorded as a separate component of stockholders' deficit. Revenues, costs and
expenses denominated in foreign functional currencies are translated at the
weighted average exchange rate for the period.
The Estonian kroon ("EEK") is the functional currency of the Company's foreign
subsidiary and the EEK is pegged to the German mark ("DEM") in the ratio of 8
EEK = 1 DEM.
COMPREHENSIVE INCOME
---------------------
Effective January 1, 1998 the Company adopted FAS 130, "Reporting Comprehensive
Income". FAS 130 establishes standards for reporting and display of
comprehensive income and its components (revenues, expenses, gains and losses)
in a full set of general-purpose financial statements. It requires (a)
classification of the components of other comprehensive income by their nature
in a financial statement and (b) the display of the accumulated balance of the
other comprehensive income separate from retained earnings and additional
paid-in capital in the equity section of a statement of financial position.
Prior years financial statements have been reclassified to conform to these
requirements.
2. REVERSE MERGER WITH EIP LIISINGU AS
----------------------------------------
On September 28, 1998, the Company recapitalized EIP Liisingu AS ("EIP"), an
Estonian corporation, by exchanging 34,000,000 shares of the Company's common
stock for all outstanding shares of EIP. For financial reporting purposes EIP
has been treated as an acquiring company in a reverse merger transaction.
Accordingly, the accompanying financial statements reflect the financial
position and results of operations of EIP, although First Capital International,
Inc. remains as the legal reporting entity. This acquisition has been accounted
for as a recapitalization because the Company was a shell company with no
operations prior to the merger.
Continued
F-10
<PAGE>
FIRST CAPITAL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
__________
3. GOING CONCERN CONSIDERATIONS
------------------------------
During the years ended December 31, 1998 and 1997, the Company has been
dependent on debt and equity raised from individual investors and related
parties to sustain its operations. During the years ended December 31, 1998 and
1997, the Company incurred net losses of $787,870 and $26,953, respectively.
Also, during the year ended December 31, 1998, the Company had negative cash
flows from operations of $190,567. These factors along with a stockholders'
deficit of $191,551 at December 31, 1998 raise substantial doubt about the
Company's ability to continue as a going concern.
Management has specific plans to address the financial situation as follows:
- - In the near term the Company plans a private placement of its common stock
to qualified investors to fund its current operations.
- - In the intermediate term, the Company plans to file a Form 10SB and become
a full reporting company under the Securities and Exchange Act of 1934.
Management believes this step will provide a market for its common stock and
provide a means of obtaining future funds necessary to implement its business
plan.
- - In the long-term, the Company believes that cash flows from acquired
businesses and businesses that it is currently developing will provide the
resources for its continued operations. The Company is currently developing a
virtual mall for launch on the Internet. Management believes that revenues from
this virtual mall, if successfully launched, will more than cover overhead at
the corporate level. Acquisition activities and development of the Company's
internet project resulted in corporate headquarters accounting for 95% of the
Company's total net loss in 1998.
- - The Company has identified businesses operating in the telecommunications
and Internet sector that the Company believes will provide good near term
results and believes that its planned operations in Eastern European markets
will provide positive returns (See Note 16).
There can be no assurance that the Company's planned private placement of equity
securities or its planned full public reporting status will be successful or
that the Company will have the ability to implement its business plan and
ultimately attain profitability. The Company's long-term viability as a going
concern is dependent upon three key factors, as follows:
Continued
F-11
<PAGE>
FIRST CAPITAL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
__________
3. GOING CONCERN CONSIDERATIONS, CONTINUED
------------------------------------------
The Company's ability to obtain adequate sources of debt or equity funding
to meet current commitments and fund the continuation of its business
operations.
The ability of the Company to acquire or internally develop viable
businesses.
The ability of the Company to ultimately achieve adequate profitability and
cash flows from operations to sustain its operations.
4. ACCOUNTS AND NOTES RECEIVABLE
--------------------------------
Accounts and notes receivable at December 31, 1998 were as follows:
<TABLE>
<CAPTION>
<S> <C>
Trade accounts receivable. . . . . . . . . $ 6,618
Notes receivable . . . . . . . . . . . . . 4,042
Accrued interest receivable. . . . . . . . 3,537
Other. . . . . . . . . . . . . . . . . . . 409
-------
14,606
Less allowance for doubtful accounts . . . 2,662
-------
11,944
Less current portion of accounts and notes
receivable . . . . . . . . . . . . . . . 8,862
-------
$ 3,082
=======
</TABLE>
5. INVESTMENT IN DIRECT FINANCING LEASES
-----------------------------------------
The Company owns and leases various buildings, transportation and other
equipment under leases that meet the criteria to be classified as direct
financing leases. Assets owned and leased under direct financing leases are
carried at the Company's gross investment in the lease less unearned income.
Unearned income is recognized in such a manner as to produce a constant periodic
rate of return on the net investment in the direct financing lease.
The components of the Company's investment in direct financing leases at
December 31, 1998 were as follows:
<TABLE>
<CAPTION>
<S> <C>
Lease contracts receivable (net of
accounts reserved of $5,439) . . . . $280,986
Less unearned income . . . . . . . . . 54,447
--------
Investment in direct financing leases. $226,539
========
</TABLE>
Continued
F-12
<PAGE>
FIRST CAPITAL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
__________
5. INVESTMENT IN DIRECT FINANCING LEASES, CONTINUED
-----------------------------------------------------
The minimum lease payment receivables under noncancellable leasing arrangements
at December 31, 1998 were as follows:
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31,
- ----------------------------------------
<S> <C>
1999. . . . . . . . . . . . . . . . $133,092
2000. . . . . . . . . . . . . . . . 91,716
2001. . . . . . . . . . . . . . . . 50,700
2002. . . . . . . . . . . . . . . . 5,478
--------
Net minimum lease receipts. . . . . 280,986
Less unearned income. . . . . . . . 54,447
--------
Net investment in direct financing
leases. . . . . . . . . . . . . . 226,539
Less current portion. . . . . . . . 107,200
--------
119,339
========
</TABLE>
6. PROPERTY AND EQUIPMENT
------------------------
Property and equipment at December 31, 1998 was as follows:
<TABLE>
<CAPTION>
<S> <C>
Transportation equipment . . . $24,111
Office equipment . . . . . . . 4,934
-------
29,045
-------
Less accumulated depreciation. 19,526
-------
9,519
=======
</TABLE>
7. NOTE PAYABLE AND LONG-TERM DEBT-RELATED PARTY
--------------------------------------------------
Notes payable and long-term debt at December 31, 1998 were as follows:
<TABLE>
<CAPTION>
<S> <C>
Note payable to a related foreign corpora-
tion under a $300,000 line of credit,
bearing interest at 8.0% per year and
currently due February 1, 1999. This
note includes provisions under which it
may, at the option of the Company, be
converted to restricted shares of the
Company's common stock based on a con-
version price of $0.25 per share. In
February 1999, upon maturity, this note
was converted. . . . . . . . . . . . . . . $166,810
Note payable to EIP's former parent company,
bearing interest at 10% per year and due
in monthly payments of interest only
through May 2002, at which date the en-
tire principal balance is payable. This
note is collateralized by substantially
all of EIP's property and equipment and
leased assets excluding buildings and
transportation equipment.. . . . . . . . . 333,641
--------
500,451
Less current portion . . . . . . . . . . . . 166,810
--------
$333,641
========
</TABLE>
Future maturities of notes payable and long-term debt at December 31, 1999 were
as follows:
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31,
- -------------
<S> <C>
1999 . . . $166,810
2000 . . . -
2001 . . . -
2002 . . . 333,641
--------
500,451
========
</TABLE>
Continued
F-14
<PAGE>
FIRST CAPITAL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
__________
8. INCOME TAXES
-------------
The Company has incurred losses since its inception and, therefore, has not been
subject to federal income taxes. As of December 31, 1998, the Company had net
operating loss ("NOL") carryforwards for income tax purposes of approximately
$480,000 which expire in 2008 through 2018. Under the provisions of Section 382
of the Internal Revenue Code the greater than 50% ownership change in the
Company in connection with the reverse merger with EIP (See Note 2) severely
limits the Company's ability to utilize the NOL carryforward to reduce future
taxable income and related tax liabilities. Additionally, because United States
tax laws limit the time during which NOL carryforwards may be applied against
future taxable income, the Company will not be able to take full advantage of
its NOL for federal income tax purposes should the Company generate taxable
income.
The composition of deferred tax assets and the related tax effects at December
31, 1998 are as follows:
<TABLE>
<CAPTION>
<S> <C>
Deferred tax assets:
Net operating losses. . . . . . . . $ 163,200
Allowance for doubtful accounts and
notes receivable. . . . . . . . . 2,754
Valuation allowance . . . . . . . . (165,954)
----------
Net deferred tax assets . . . . . $ -
==========
</TABLE>
The difference between the income tax benefit in the accompanying statement of
operations and the amount that would result if the U.S. Federal statutory rate
of 34% were applied to pre-tax loss is as follows (amounts in thousands):
<TABLE>
<CAPTION>
1998 1997
------------------ ----------------
AMOUNT % AMOUNT %
---------- ------ -------- ------
<S> <C> <C> <C> <C>
Benefit for income tax at
federal statutory rate. . $ 267,875 34.0 $ 9,164 34.0
Non-deductible compensation (185,919) (23.6) - -
Increase in valuation
allowance . . . . . . . . (81,956) (10.4) (9,164) (34.0)
---------- ------ -------- ------
$ - - $ - -
========== ====== ======== ======
</TABLE>
Continued
F-15
<PAGE>
FIRST CAPITAL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
__________
9. STOCKHOLDER'S EQUITY
---------------------
During the year ended December 31, 1998, the Company sold and issued, above
existing shares, a total of 43,100,000 shares of common stock. In order to
remain within the constraints of authorized shares on August 28, 1998, the
Company adopted amendments to its certificate of incorporation to (i) increase
the authorized capital stock of the corporation from 50,000,000 shares to
100,000,000 shares and (ii) decrease the par value of common stock from $0.01 to
$0.001 per share. On April 1, 1999 the Company also authorized 10,000,000
shares of serial preferred stock for which the Company's Board of Directors may
designate voting power, preferences, limitations and restrictions.
10. STOCK OPTIONS
--------------
During the year ended December 31, 1998, the Company issued non-qualified
options to employees, officers and directors of the Company that will allow them
to acquire a total of 4,250,000 shares of the Company's common stock at prices
ranging from $0.05 to $0.10 per share. The table below summarizes the annual
activity of the Company's stock option plan:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
EXERCISE
OPTIONS PRICE
--------- ---------
<S> <C> <C>
Balance at December 31, 1996
and 1997 . . . . . . . . . - $ -
Granted. . . . . . . . . . 4,250,000 0.05
Canceled . . . . . . . . . - -
Exercised. . . . . . . . . - -
--------- ---------
Balance at December 31, 1998 4,250,000 $ 0.05
========= =========
</TABLE>
The Company utilizes the disclosure-only provisions of SFAS No. 123 "Accounting
for Stock-Based Compensation" and applies Accounting Principles Board ("APB")
Opinion No. 25 and related interpretations in accounting for its stock option
plans. Under APB No. 25, because the exercise prices of the Company's employee
stock options were less than the market prices of the underlying Company stock
on the date of grant, compensation expense totaling $50,000 has been recognized
in these financial statements to reflect the value of the employee stock options
granted.
Continued
F-16
<PAGE>
FIRST CAPITAL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
__________
10. STOCK OPTIONS, CONTINUED
--------------------------
Had the Company elected to recognize compensation cost for its stock option
plans based on the calculated fair value at the grant dates for awards under
such plans, consistent with the method prescribed by SFAS No. 123, net income
(loss) per share would have reflected the proforma amounts indicated below:
<TABLE>
<CAPTION>
1998 1997
---------- ---------
<S> <C> <C>
Net loss
as reported. . . . . . . . . . . . . . . $(787,870) $(26,953)
proforma . . . . . . . . . . . . . . . . (873,187) (26,953)
Net loss applicable to common stockholders (981,170) (26,953)
Basic and diluted net loss per share . (0.04) (0.00)
</TABLE>
The fair values of the stock options are estimated on the dates of grant using
the Black-Scholes option-pricing model with the following weighted average
assumptions for options granted in 1998:
<TABLE>
<CAPTION>
<S> <C>
Dividend yield. . . . . 0.0%
Expected volatility . . 70.0%
Risk-free interest rate 4.9%
Expected holding period 2 years
</TABLE>
The table below summarizes information regarding Company stock options
outstanding and exercisable as of December 31, 1998:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE WEIGHTED
REMAINING AVERAGE
CONTRACTUAL EXERCISE
EXERCISE PRICE SHARES LIFE PRICE
- --------------- --------- ----------- ---------
<S> <C> <C> <C>
0.05 . . . . . 4,000,000 2.66 $ 0.05
0.10. . . . . . 250,000 2.66 0.10
</TABLE>
11. EARNINGS PER SHARE
--------------------
Following is the reconciliation of net loss to the net loss available to common
stockholders.
Continued
F-17
<PAGE>
FIRST CAPITAL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
__________
11. EARNINGS PER SHARE, CONTINUED
--------------------------------
<TABLE>
<CAPTION>
1998 1997
---------- ---------
<S> <C> <C>
Net loss. . . . . . . . . . . . $(787,870) $(26,953)
Less: Accretion of discount on
issuance of common stock. . . (107,989) -
---------- ---------
Net loss available to common
stockholders. . . . . . . . . $(895,859) $(26,953)
========== =========
</TABLE>
In October through December 1998, common stock was sold to various individuals
at prices below the quoted market price. The discount upon issuance of such
shares is analogous to a dividend to the holders of newly issued shares and is
deducted from the net loss available to common stockholders in the calculation
of earnings per share.
12. RELATED PARTY TRANSACTIONS
----------------------------
During the years ended December 31, 1998 and 1997, the Company engaged in
certain related party transactions as follows:
<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
Direct financing leases with
officers and directors of EIP
Total lease contract amount . . . . $ 3,792 $ 1,066
Balance of lease receivable at
year end. . . . . . . . . . . . . $ 1,050 $ 169
Interest rate . . . . . . . . . . . 15% 10%
Interest incurred on long-term debt
to former parent of EIP . . . . . $31,611 $69,613
</TABLE>
During 1998 the Company began subleasing office space from a company 100% owned
by the Company's president. The sublease is on a month-to-month basis and
provides for monthly payments of $2,343. Total rent expense recognized with
respect to this lease during 1998 was $9,372.
Continued
F-18
<PAGE>
FIRST CAPITAL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
__________
13. LITIGATION
----------
The Company is a party to certain litigation arising in the normal course of
business. Management believes that such litigation will not have a material
impact on the Company.
14. IMPACT OF THE YEAR 2000 ISSUE
----------------------------------
The Year 2000 issue is the result of computer programs and hardware with
embedded date technology using two digits to define the applicable year rather
than four. Any programs or hardware that are time sensitive and have not been
determined to be Year 2000 compliant may recognize a date using "00" as the year
1900 rather than the year 2000. Such improper date recognition could, in turn,
result in erroneous processing of data, or, in extreme situations, system
failure.
The Company is currently implementing a Year 2000 program which encompasses
performing an inventory of information technology and non-information technology
systems, assessing the potential problem areas, testing the systems for Year
2000 readiness, and modifying systems that are not Year 2000 compliant.
To date, inventory and assessment are in progress for all core systems that are
essential for business operations. The Company believes all of its core systems
are Year 2000 compliant. Because many of the Company's systems are new and
designed to be year 2000 compliant, the Company's management estimates that the
work they have completed represents more than seventy-five percent of the work
involved in preparing the Company's systems for the Year 2000.
Although the Company expects to be ready to continue business activities without
interruption by a Year 2000 problem, Company management recognizes the general
uncertainty inherent in the Year 2000 issue, in part because of the uncertainty
about the Year 2000 readiness of third parties, particularly in Estonia and
other Eastern European countries. Under a "worst case Year 2000 scenario", it
may be necessary for the Company to temporarily interrupt normal business
activities or operations and to seek outside financing for cash flow problems
brought on by customer payment problems. The Company believes that such
circumstances could result in a material adverse impact to its operations and in
its current financial position, threaten its continued existence. The Company
has begun, but not yet completed, development of a contingency plan to deal with
the "most likely worst case Year 2000 scenario". The contingency plan is
expected to be completed during the fourth quarter of 1999.
Continued
F-19
<PAGE>
FIRST CAPITAL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
__________
14. IMPACT OF THE YEAR 2000 ISSUE, CONTINUED
----------------------------------------------
Based on a current assessment, the Company's total cost of becoming Year 2000
compliant is not expected to be significant to its financial position, results
of operations or cash flows and is estimated to be less than $10,000.
15. SEGMENT AND GEOGRAPHIC INFORMATION
-------------------------------------
The Company currently operates in the equipment and real estate direct financing
lease business but is actively seeking qualified businesses to acquire. The
Company's two reportable segments are based upon geographic area and type of
business. All of the Company's foreign operations are currently conducted by
EIP in Estonia. EIP operates with the Estonian kroon as its functional
currency.
The corporate component of operating income (loss) represents corporate general
and administrative expenses. Corporate assets include cash and cash
equivalents.
Following is a summary of segment information:
<TABLE>
<CAPTION>
1998 1997
---------- ---------
<S> <C> <C>
Net Revenue:
United States - Corporate. . $ - $ -
Estonia - Leasing. . . . . . 57,174 132,872
---------- ---------
Total net revenue. . . . . $ 57,174 $ 132,872
========== =========
Depreciation and Amortization:
United States - Corporate. . $ - $ -
Estonia - Leasing. . . . . . 8,563 12,109
---------- ---------
Total depreciation and
amortization . . . . . . $ 8,563 $ 12,109
========== =========
Loss from Operations:
United States - Corporate. . $(749,179) $ -
Estonia - Leasing. . . . . . (38,691) (26,953)
---------- ---------
Total loss from operations $(787,870) $(26,953)
========== =========
</TABLE>
Continued
F-20
<PAGE>
FIRST CAPITAL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
__________
15. SEGMENT AND GEOGRAPHIC INFORMATION, CONTINUED
-------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
Assets:
United States - Corporate. . $ 906 $ -
Estonia - Leasing. . . . . . 334,495 324,293
-------- --------
Total assets . . . . . . . $335,401 $324,293
======== ========
Capital Expenditures:
United States - Corporate. . $ - $ -
Estonia - Leasing. . . . . . 138 9,721
-------- --------
Total capital expenditures $ 138 $ 9,721
======== ========
</TABLE>
16. SUBSEQUENT EVENTS - LETTERS OF INTENT
------------------------------------------
Subsequent to year-end the Company entered into a letter of intent to acquire
TGK-LINK, an Estonian Corporation that provides global data connections and
links to local banks in Estonia. The purchase price for TGK-LINK will be
400,000 shares of First Capital International, Inc. common stock. In connection
with this acquisition, the Company has agreed to invest up to $300,000 in
ventures involving TGK-LINK and to issue to TGK-LINK options to acquire an
additional 200,000 restricted shares of the Company's common stock at $0.05 per
share if TGK-LINK produces net income of at least $75,000 in 1999. Such
options, if granted, will expire February 29, 2000. The TGK-LINK letter of
intent also includes a provision that if the quoted market price of the
Company's common stock falls below $0.05 per share for 60 consecutive trading
days, TGK-LINK will have the right to purchase its shares for $0.01 per share.
F-21
<PAGE>
FIRST CAPITAL INTERNATIONAL, INC.
__________
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(UNAUDITED)
F-22
<PAGE>
<TABLE>
<CAPTION>
FIRST CAPITAL INTERNATIONAL, INC.
TABLE OF CONTENTS
__________
PAGE(S)
-------
<S> <C>
Unaudited Financial Statements
Consolidated Balance Sheet as of March 31,
1999 and December 31, 1998 . . . . . . . . . . . . F-24
Consolidated Statement of Operations for the
three months ended March 31, 1999 and 1998. . . . F-25
Consolidated Statement of Stockholders' Deficit
for the three months ended March 31, 1999 and 1998 F-26
Consolidated Condensed Statement of Cash Flows
for the three months ended March 31, 1999 and 1998 F-27
Selected Notes to Consolidated Financial Statements. . F-28
</TABLE>
F-23
<PAGE>
<TABLE>
<CAPTION>
FIRST CAPITAL INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEET
MARCH 31, 1999 AND DECEMBER 31, 1998
__________
MARCH 31, DECEMBER 31,
1999 1998
ASSETS (UNAUDITED) (NOTE)
- ------------------------------------------------ ------------ --------------
<S> <C> <C>
Current assets:
Cash and cash equivalents. . . . . . . . . . . $ 91,539 $ 61,467
Lease receivables, net . . . . . . . . . . . . 91,269 107,200
Accounts and notes receivable, net . . . . . . 13,893 8,862
Prepaid expenses . . . . . . . . . . . . . . . 8,015 6,974
Assets held for sale . . . . . . . . . . . . . - 18,958
------------ --------------
Total current assets . . . . . . . . . . . . 204,716 203,461
Lease receivables. . . . . . . . . . . . . . . . 101,102 119,339
Accounts and notes receivable, net . . . . . . . 2,595 3,082
Property and equipment, net. . . . . . . . . . . 6,774 9,519
------------ --------------
Total assets . . . . . . . . . . . . . . . $ 315,187 $ 335,401
============ ==============
LIABILITIES AND STOCKHOLDERS' DEFICIT
- ------------------------------------------------
Current liabilities:
Note payable-related party . . . . . . . . . . $ 32,013 $ 166,810
Accounts payable . . . . . . . . . . . . . . . 279 21,276
Accrued liabilities. . . . . . . . . . . . . . 3,370 5,225
------------ --------------
Total current liabilities. . . . . . . . . . 35,662 193,311
Long-term debt-related party . . . . . . . . . . 306,646 333,641
------------ --------------
Total liabilities. . . . . . . . . . . . . 342,308 526,952
------------ --------------
Commitments and contingencies
Stockholders' deficit:
Common stock, $0.001 par value; 100,000,000
shares authorized; 65,023,142 and 55,751,142
shares issued and outstanding at March 31,
1999 and December 31, 1998, respectively . . 65,023 55,751
Additional paid-in capital . . . . . . . . . . 887,028 581,660
Accumulated deficit. . . . . . . . . . . . . . (978,432) (826,106)
Accumulated foreign currency translation
adjustments. . . . . . . . . . . . . . . . . (740) (2,856)
------------ --------------
Total stockholders' deficit. . . . . . . . (27,121) (191,551)
------------ --------------
Total liabilities and stockholders'
deficit. . . . . . . . . . . . . . . . $ 315,187 $ 335,401
============ ==============
</TABLE>
Note: The consolidated balance sheet at December 31, 1998 has been derived from
the audited financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. See accompanying notes.
F-24
<PAGE>
<TABLE>
<CAPTION>
FIRST CAPITAL INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
__________
(UNAUDITED)
THREE MONTHS ENDED MARCH 31,
----------------------------
1999 1998
------------ ------------
<S> <C> <C>
Revenue:
Interest income . . . . . . . . . . . $ 10,470 $ 10,700
Other operating revenue . . . . . . . 2,476 2,105
------------ ------------
Total revenue . . . . . . . . . . . 12,946 12,805
------------ ------------
Costs and expenses:
Operating, general and administrative
expenses. . . . . . . . . . . . . . 65,656 4,152
Stock and option based compensation . 89,325 -
Depreciation and amortization . . . . 2,057 2,085
Interest expense. . . . . . . . . . . 8,160 7,597
Other expense, net. . . . . . . . . . 2,863 2,032
------------ ------------
Total costs and expenses. . . . . . 168,061 15,866
------------ ------------
Net loss. . . . . . . . . . . . . . . . $ (155,115) $ (3,061)
============ ============
Net loss applicable to common
stockholders. . . . . . . . . . . . . $(1,515,970) $ (3,061)
============ ============
Basic and dilutive net loss per
common share. . . . . . . . . . . . . $ (0.02) $ (0.00)
============ ============
Weighted average shares outstanding . . 61,107,031 46,651,142
============ ============
</TABLE>
See accompanying notes.
F-25
<PAGE>
<TABLE>
<CAPTION>
FIRST CAPITAL INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
FOR THE THREE MONTHS ENDED MARCH 31, 1999
__________
(UNAUDITED)
FOREIGN COMPRE-
ADDITIONAL CURRENCY HENSIVE
COMMON PAID-IN ACCUMULATED TRANSLATION INCOME
STOCK CAPITAL DEFICIT ADJUSTMENT (LOSS)
------- ----------- ------------- ------------- ----------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1998. $55,751 $ 581,660 $ (826,106) $ (2,856) $(788,721)
Net loss. . . . . . . . . . . - - (155,115) - (155,115)
Other comprehensive income-
foreign currency transla-
tion adjustment . . . . . . - - - 2,116 2,116
----------
Comprehensive income (152,999)
----------
Common stock issued for cash
(9,272,000 shares). . . . . 9,272 305,368 - - -
------- ----------- ------------- ------------- ----------
Balance at March 31, 1999 . . $65,023 $ 887,028 $ (981,221) $ (740) $(941,720)
======= =========== ============= ============= ==========
</TABLE>
See accompanying notes.
F-26
<PAGE>
<TABLE>
<CAPTION>
FIRST CAPITAL INTERNATIONAL, INC.
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
__________
(UNAUDITED)
THREE MONTHS ENDED MARCH 31,
----------------------------
1999 1998
---------- --------
<S> <C> <C>
Cash flows from operating activities:
Net loss . . . . . . . . . . . . . . . . . $(155,115) $(3,061)
Adjustment to reconcile net loss to net
cash provided by operating activities: . 165,636 32,321
---------- --------
Net cash provided by operating
activities . . . . . . . . . . . . 10,521 29,260
---------- --------
Cash flows from financing activities:
Proceeds from sale of common stock . . . . 42,950 18,520
Payments on notes payable. . . . . . . . . (24,207) (9,598)
---------- --------
Net cash provided by financing
activities . . . . . . . . . . . . 18,743 8,922
---------- --------
Effects of exchange rate changes on cash . . 808 -
---------- --------
Net increase in cash and cash equivalents. . 30,072 38,182
Cash and cash equivalents, beginning
of period. . . . . . . . . . . . . . . . . 61,467 42,242
---------- --------
Cash and cash equivalents, end of period . . $ 91,539 $80,424
========== ========
Non-cash investing and financing activities:
Conversion of note payable to a related
party to common stock. . . . . . . . . . $ 186,000 $ -
</TABLE>
See accompanying notes.
F-27
<PAGE>
FIRST CAPITAL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
__________
1. INTERIM FINANCIAL STATEMENTS
------------------------------
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Article 10 of
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 (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three-month periods ended March 31,
1999 and 1998 are not necessarily indicative of the results that may be expected
for the respective full years.
A summary of the Company's significant accounting policies and other information
necessary to understand these consolidated interim financial statements is
presented in the Company's audited financial statements for the years ended
December 31, 1998 and 1997. Accordingly, the Company's audited financial
statements should be read in connection with these financial statements.
2. INCOME TAXES
-------------
The difference between the 34% federal statutory income tax rate shown in the
accompanying interim financial statements if primarily attributable to an
increase in the valuation allowance applied against the tax benefit from
utilization of net operating loss carryforwards.
3. EARNINGS PER SHARE
--------------------
Following is the reconciliation of net loss to the net loss available to common
stockholders.
<TABLE>
<CAPTION>
1998 1997
------------ --------
<S> <C> <C>
Net loss. . . . . . . . . . . . $ (155,115) $(3,061)
Less: Accretion of discount on
issuance of common stock. . . (1,360,855) -
------------ --------
Net loss available to common
stockholders. . . . . . . . . $(1,515,970) $(3,061)
============ ========
</TABLE>
F-28
<PAGE>
FIRST CAPITAL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
__________
3. EARNINGS PER SHARE, CONTINUED
--------------------------------
During the three months ended March 31, 1999, common stock was sold to various
individuals at prices below the quoted market price. The discount upon issuance
of such shares is analogous to a dividend to the holders of newly issued shares
and is deducted from the net loss available to common stockholders in the
calculation of earnings per share.
F-29
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 04/21/1994
944069348 - 2396340
CERTIFICATE OF INCORPORATION
OF
KAN-TX ENERGY COMPANY
FIRST: The name of this corporation is Kan-Tx Energy Company
SECOND: Its registered office in the state of Delaware is to be located at Three
Christina Centre, 201 N. Walnut Street, Wilmington DE 19801, New Castle County.
The registered agent in charge thereof is The Company Corporation, address "same
as above".
THIRD: The nature of the business and, the objects and purposes proposed to be
transacted, promoted and carried on, are to do any or all the things herein
mentioned as fully and to the same extent as natural persons might or could do,
and in any part of the world, viz:
The purpose of the corporation is to engage in any lawful act or activity for
which corporations may be organized under the General Corporation Law of
Delaware.
FOURTH: The amount of the total authorized capital stock of this corporation is
divided into 50,000,000 shares of stock at $.001 par value.
FIFTH: The name and mailing address of the incorporator is as follows:
Vanessa Foster Three Christina Centre, 201 N. Walnut Street; Wilmington
DE 19801
SIXTH: The Directors shall have power to make and to alter or amend the By-Laws;
to fix the amount to be reserved as working capital, and to authorize and cause
to be executed, mortgages and liens without limit as to the amount, upon the
property and franchise of the Corporation.
With the consent in writing, and pursuant to a vote of the holders of a majority
of the capital stock issued and outstanding, the Directors shall have the
authority to dispose, in any manner, of the whole property of this corporation.
The By-Laws shall determine whether and to what extent the accounts and books of
this corporation, or any of them shall be open to the inspection of the
stockholders; and no stockholder shall have any right of inspecting any account,
or book or document of this Corporation, except as conferred by the law or the
By-Laws, or by resolution of the stockholders.
The stockholders and directors shall have power to hold their meetings and keep
the books, documents, and papers of the Corporation outsideof the State of
Delaware, at such places as may be from time to lime designated by the By-Laws
or by resolution of the stockholders or directors, except as otherwise required
by the laws of Delaware.
It is the intention that the objects, purposes and powers specified in the Third
paragraph hereof shall, except where otherwise specified in said paragraph, be
nowise limited or restricted by reference to or inference from the terms of any
other clause or paragraph in this certificate of incorporation, that the
objects, purposes and powers specified in the Third paragraph and in each of the
clauses or paragraphs of this charter shall be regarded as independent objects,
purposes and powers.
SEVENTH: Directors of the corporation shall not be liable to either the
corporation or its stockholders for monetary damages for a breach of fiduciary
duties unless the breach involves: (1) a director's duty of loyalty to the
corporation or its stockholders; (2) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law; (3)
liability for unlawful payments of dividends or unlawful stock purchase or
redemption by the corporation; or (4) a transaction from which the director
derived an improper personal benefit.
I, THE UNDERSIGNED, for the purpose of forming a Corporation under the laws of
the State of Delaware, do make, file and record this Certificate and do certify
that the facts herein are true; and I have accordingly hereunto set my hand.
DATED: April 21, 1994 /s/ Vanessa Foster
--------------------
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 06/21/1994
944097708 - 2396340
CERTIFICATE OF AMMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
KAN-TX ENERGY COMPANY
Kan-Tx Energy Company, a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of said corporation by the unanimous
written consent of its members, filed with the minutes of the Board, adopted a
resolution proposing and declaring advisable the following amendment to the
Certificate of Incorporation of said corporation:
RESOLVED, that the Certificate of Incorporation of Kan-Tx Energy
Company be amended by changing the First Article thereof so that, as
amended, said Article shall be and read as follows: The name of this
corporation is Ranger/USA, lnc.
SECOND: That in lieu of a meeting and vote of stockholders, the
stockholders have given written consent to said amendment in accordance with the
provisions of Section 228 of the General Law of the State of Delaware, and
written notice of the adoption of the amendment has been given as provided in
Section 228 of the General Corporation Law of the State of Delaware to every
stockholder entitled to such notice.
THIRD: That the aforesaid amendment was duly adopted in accordance with the
applicable provisions of Section 242 and 228 of the General Corporation Law of
the State of Delaware.
IN WITNESS WHEREOF, said Kan-Tx Energy Company has caused this certificate
to be signed by Joe E. Russo, its President and attested by Becky H. Russo, its
Assistant Secretary this 14th day of May 1994.
Kan-Tx Energy Company
By /s/ Joe E. Russo
--------------------------
Joe E. Russo, President
ATTEST:
/s/Becky H. Russo
- ------------------------------------------
Becky H. Russo, Assistant Secretary
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 08/31/1998
981339487 -- 2396340
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION OF
RANGER/USA, INC.
Ranger/USA, Inc., a corporation organized and existing under and by virtue
of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of said corporation by the unanimous
written consent of its members, filed with the minutes of the Board, adopted
resolutions proposing and declaring advisable the following amendments to the
Certificate of Incorporation of said corporation:
RESOLVED, that the Certificate of Incorporation of Ranger/USA, Inc. be
amended by changing the First Article thereof so that, as amended,
said Article shall be and read as follows:
"The name of this corporation is First Capital International,
Inc."
RESOLVED, that the Certificate of Incorporation of Ranger/USA, Inc. be
amended by changing the Fourth Article thereof so that, as amended,
said Article shall be and read as follows:
"The amount of the total authorized capital stock of this
corporation is divided into 100,000,000 shares of stock at $.001
par value."
SECOND: That in lieu of a meeting and vote of stockholders, the
stockholders have given written consent to said amendments in accordance with
the provisions of Section 228 of the General Law of the State of Delaware.
THIRD: That the aforesaid amendments were duly adopted in accordance with
the applicable provisions of Section 242 and 228 of the General Corporation Law
of the State of Delaware.
<PAGE>
IN WITNESS WHEREOF, said Ranger/USA, Inc. has mused this certificate to be
signed by Alex Genin, its President and attested by Joe Bond, its Secretary,
this 21st day of August 1998.
Ranger/USA, Inc.
By /s/ Alex Genin
----------------------------
Alex Genin, President
ATTEST:
/s/ Joe Bond
- -------------------------------------
Joe Bond, Assistant Secretary
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
FIRST CAPITAL INTERNATIONAL, INC.
First Capital International, Inc., a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of said corporation by the unanimous
written consent of its members, filed with the minutes of the Board, adopted
resolutions proposing and declaring advisable the following amendments to the
Certificate of Incorporation of said corporation:
RESOLVED, that the Certificate of Incorporation of First Capital International,
Inc. be amended by changing the Fourth Article thereof in its entirety so that,
as amended, said Article shall be and read as follows:
A. The amount of the total authorized common stock of this corporation
shall be 100,000,000 shares of common at $.001 par value.
B. The amount of the total authorized preferred stock of this corporation
shall be 10,000,000 shares of preferred stock at $.001 par value. The Board of
Directors is authorized to: (i) designate the voting power, preferences,
relative, participating, optional or other special rights, and qualifications,
limitations or restrictions of preferred stock, and, (ii) create one or more
classes of preferred stock and one or more series of preferred stock."
SECOND: That in lieu of a meeting and vote of stockholders, the
stockholders have given written consent to said amendments in accordance with
the provisions of Section 228 of the General Law of the State of Delaware.
THIRD: That the aforesaid amendments were duly adopted in accordance with
the applicable provisions of Section 242 and 228 of the General Corporation Law
of the State of Delaware.
<PAGE>
IN WITNESS WHEREOF, said First Capital International, Inc. has caused this
certificate to be signed by Alex Genin, its President this 10th day of May 1999.
First Capital International, Inc.
By: /s/ Alex Genin
----------------
Alex Genin, President
THE STATE OF TEXAS }
}
COUNTY OF HARRIS }
BEFORE ME, the undersigned authority, on this day personally appeared Alex
Genin, known to me to be the person whose name is subscribed to the foregoing
instrument and acknowledged to me that he executed the same for the purposes and
consideration therein expressed.
GIVEN UNDER MY HAND AND SEAL of office this 10th day of May 1999.
/s/ N. Kotliartchouk
----------------------
NOTARY PUBLIC IN AND FOR
THE STATE OF TEXAS
[Notary Seal]
<PAGE>
BYLAWS OF
KAN-TX ENERGY COMPANY (A Delaware Corporation)
ARTICLE I
OFFICES
Section 1. The principal office in the State of Delaware shall be at the
address of the registered agent for the corporation in the State of Delaware.
Section 2. The corporation may also have offices at such other places both
within and without the State of Delaware as the board of directors may from time
to time determine as the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders for the election of directors
shall be held at such place as may be fixed from time to time by the board of
directors, either within or without the State of Delaware. Meetings of
stockholders for any other purpose may be held at such time and place, within or
without the State of Delaware, as shall be stated in the notice of the meeting
or in a duly executed waiver of notice thereof.
Section 2. Annual meetings of stockholders shall be held at times
designated by the board of directors, and at such meetings the stockholders
shall elect by a plurality vote a board of directors, and transact such other
business as may properly be brought before the meeting.
Section 3. Written notice of the annual meeting shall be given to each
stockholder entitled to vote thereat at least ten days and not more than sixty
days before the date of the meeting.
Section 4. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every election of
directors, a complete list of the stockholders entitled to vote at said
election, arranged in alphabetical order, showing the address of and the number
of shares registered in the name of each stockholder. Such list shall he open to
the examination of any stockholder, during ordinary business hours, for a period
of at least ten days prior to the election, either at a place within the city,
town or village where the election is to be held and which place shall be
specified in the
-1-
<PAGE>
notice of the meeting, or if not specified, at the place where said meeting is
to be held, and the list shall be produced and kept at the time and place of
election during the whole time thereof, and subject to the inspection of any
stockholder who may be present.
Section 5. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the certificate of
incorporation, may be called by the president and shall be called by the
president or secretary at the request in writing of the board of directors, or
at the request in writing of stockholders owning a majority in amount of the
entire capital stock of the corporation issued and outstanding and entitled to
vote. Such request shall state the purpose or purposes of the proposed meeting.
Section 6. Written notice of a special meeting of stockholders, stating the
time, place and object thereof, shall be given to each stockholder entitled to
vote thereat, at least ten days before the date fixed for the meeting.
Section 7. Business transacted at any special meeting of stockholders shall
be limited to the purposes stated in the notice.
Section 8. The holders of a majority of the stock issued and outstanding
and entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute or by the certificate of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the stockholders, the stockholders entitled to vote thereat,
present in person or represented by proxy, shall have power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified.
Section 9. When a quorum is present at any meeting, the vote of the holders
of a majority of the stock having voting power present in person or represented
by proxy shall decide any question brought before such meeting, unless the
question is one upon which by express provision of the statutes or of the
certificate of incorporation, a different vote is required in which case such
express provision shall govern and control the decision of such question.
Section 10. Each stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of the capital stock
having voting power held by such stockholder, but no proxy shall be voted on
after six months from its date, and, except where the transfer books of the
corporation have been closed or a date has been fixed as a record date for the
determination of its stockholders entitled to vote, no share of stock shall be
voted on at any election for directors which has been transferred on the books
of the corporation within twenty days next preceding such election of directors.
Section 11. Whenever the vote of stockholders at a meeting thereof is
required or permitted to be taken in connection with any corporate action by any
provisions of the statutes or of the certificates of incorporation, the meeting
and vote of stockholders may be dispensed with, if all the stockholders who
would have been entitled to vote upon the action if such meeting were held,
shall consent in writing to such corporate action being taken.
-2-
<PAGE>
ARTICLE III
DIRECTORS
Section 1. The number of directors which shall constitute the whole board
shall be not less than three and not more than seven, unless approved by all of
the directors. The directors shall he elected at the annual meeting of the
stockholders, except as provided in Section 2 of this article, and each director
elected shall hold office until his successor is elected and qualified.
Directors need not be stockholders.
Section 2. Vacancies and newly created directorships resulting from any
increase in the authorized number of directors may be filled by a majority of
the directors then in office, and the directors so chosen shall hold office
until the next annual election and until their successors are duly elected and
shall qualify, unless sooner displaced.
Section 3. The business of the corporation shall be managed by its board of
directors which may exercise all such powers of the corporation and do all such
lawful acts and things as are not by statute or by the certificate of
incorporation or by these by-laws directed or required to be exercised or done
by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
Section 4. The board of directors of the corporation may hold meetings,
both regular and special, either within or without the State of Delaware.
Section 5. The first meeting of each newly elected board of directors shall
be held immediately following the final adjournment of the annual meeting of the
stockholders. No notice of such a meeting shall be necessary to the newly
elected directors in order legally to constitute the meeting, provided a quorum
shall be present.
Section 6. Regular meetings of the board of directors may be held without
notice at such time and such place as shall from time to time be determined by
the board.
Section 7. Special meetings of the board may be called by the president on
forty-eight hours notice to each director, either personally or by mail or by
telegram setting forth the time and place thereat; special meetings shall be
called by the president or secretary in like manner and on like notice on the
written request of two directors.
Section 8. At all meetings of the board a majority of the directors then in
office shall constitute a quorum for the transaction of business and the act of
a majority of the directors, except as may be otherwise specifically provided by
statute or by the certificate of incorporation. If a quorum shall not be present
at any meeting of the board of directors the directors present thereat may
adjourn the meeting from time to time, without notice other than an announcement
at the meeting, until a quorum shall be present.
Section 9. Unless otherwise restricted by the certificate of incorporation
or these by-laws, any action required or permitted to be taken at any meeting of
the board of directors or of any committee thereof may be taken without a
meeting, if prior to such action a written consent thereto is signed by all
-3-
<PAGE>
members of the board or of such committee as the case may be, and such written
consent is filed with the minutes of proceedings of the board or committee.
Section 10. Unless otherwise restricted by the certificate of incorporation
of these by-laws, members of the board of directors or any committee designed by
the board may participate in a meeting of such board or committee by means of a
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other and participation in a
meeting in this manner shall constitute presence in person at such meeting.
COMMITTEES OF DIRECTORS
Section 11. The directors may appoint an executive committee from their
number. The executive committee may make its own rules of procedure and shall
meet where and as provided by such rules, or by a resolution of the directors. A
majority shall constitute a quorum, and in every case the affirmative vote of a
majority of all the members of the committee shall be required for the adoption
of any resolution.
Section 12. During the intervals between the meetings of the directors, the
executive committee may exercise all the powers of the directors in the
management and direction of the business of the corporation, in such manner as
such committee shall deem best for the interest of the corporation, and in all
cases in which specific directions shall not have been given by the directors.
Section 13. The board of directors may, by resolution passed by a majority
of the whole board, designate one or more other committees, each committee to
consist of two or more of the directors of the corporation, which, to the extent
provided in the resolution, shall have and may exercise the powers of the board
of directors in the management of the business and affairs of the corporation
and may authorize the seal of the corporation to be affixed to all papers which
may require it. Such committee or committees shall have such name or names as
may be determined from time to time by resolution adopted by the board of
directors.
COMPENSATION OF DIRECTORS
Section 14. Directors shall not receive any stated salary for their
services as directors, but by resolution of the board, a fixed fee and expenses
of attendance may be allowed for attendance at each meeting. Nothing herein
contained shall be construed to preclude any director from serving the
corporation in any capacity as an officer or otherwise and receiving
compensation therefor.
ARTICLE IV
NOTICES
Section 1. Notices to directors and stockholders shall be in writing and
delivered personally or mailed to the directors or stockholders at their
addresses appearing in the books of the corporation. Notice by mail shall be
deemed to be given at the time when the same shall be mailed. Notice to
directors may also be given by telegram.
-4-
<PAGE>
Section 2. Whenever any notice is required to be given under the provisions
of the statutes or of the certificate of incorporation or of these by-laws, a
waiver thereof in writing, signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the board of
directors and shall be a president, a vice-president, a secretary and treasurer.
The board of directors may also choose additional vice-presidents, and one or
more assistant secretaries and assistant treasurers. Two or more offices may be
held by the same person, except where the offices of president and secretary are
held by the same person, such person shall not hold any other office.
Section 2. The board of directors at its first meeting after each annual
meeting of stockholders shall choose a president, one or more vice-presidents, a
secretary and a treasurer.
Section 3. The board of directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the board.
Section 4. The salaries of all officers of the corporation shall be fixed
by the board of directors.
Section 5. The officers of the corporation shall hold office until their
successors are chosen and qualify. Any officer elected or appointed by the board
of directors may be removed at any time by the affirmative vote of a majority of
the board of directors. Any vacancy occurring in any office of the corporation
shall be filled by the board of directors.
THE PRESIDENT
Section 6. The president shall be the chief executive officer of the
corporation, shall preside at all meetings of the stockholders and the board of
directors, shall have general and active management of the business of the
corporation and shall have power to call meetings of the directors and
stockholders in accordance with these by-laws, appoint and remove, subject to
the approval of the directors, servants, agents and employees of the corporation
and fix their compensation, make and sign contracts and agreements in the name
and on behalf of the corporation; he shall see that the books, reports,
statements and certificates required by the statute under which the corporation
is organized or any other laws applicable thereto are properly kept, made and
filed according to law; and he shall generally do and perform all acts incident
to the office of president, or which are authorized or required by law.
THE VICE-PRESIDENTS
Section 7. The vice-president, or if there shall be more than one, the
vice-presidents in the order determined by the board of directors, shall, in the
absence or disability of the president, perform the
-5-
<PAGE>
duties and exercise the power of the president and shall perform such other
duties and have such other powers as the board of directors may from time to
time prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 8. The secretary shall attend all meetings of the board of
directors and all meetings of the stockholders and record all the proceedings of
the meetings of the corporation and the board of directors in a book to be kept
for that purpose and shall perform like duties for the standing committees when
required. He shall give, or cause to be given, notice of all meetings of the
stockholders and special meetings of the board of directors, and shall perform
such other duties as may be prescribed by the board of directors or president,
under whose supervision he shall be. He shall have custody of the corporate seal
of the corporation and he, or an assistant secretary, shall have authority to
affix the same to any instrument requiring it and when so affixed, it may be
attested by his signature or by the signature of such assistant secretary. The
board of directors may give general authority to any other officer to affix the
seal of the corporation and to attest the affixing by his signature.
Section 9. The assistant secretary, or if there be more than one, the
assistant secretaries in the order determined by the board of directors, shall,
in the absence or disability of the secretary, perform such other duties and
exercise the powers of the secretary and shall perform such other duties and
have such other powers as the board of directors may from time to time
prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 10. The treasurer shall have the custody of the corporate funds and
securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all monies
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the board of directors.
Section 11. He shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meeting, or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 12. If required by the board of directors, he shall give the
corporation a bond (which shall be renewed every six years) in such sum and with
such surety or sureties as shall be satisfactory to the board of directors for
the faithful performance of the duties of his office and for the restoration to
the corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the corporation.
Section 13. The assistant treasurer, or if there shall be more than one,
the assistant treasurers in the order determined by the board of directors,
shall, in the absence or disability of the treasurer, perform the duties and
exercise the powers of the treasurer and shall perform such other duties and
have such other powers as the board of directors may from time to time
prescribe.
-6-
<PAGE>
INDEMNIFICATION
Section 14. The corporation shall indemnify and reimburse each present and
future director and officer of the corporation for and against all or part of
the liabilities and expenses imposed upon or reasonably incurred by him in
connection with any claim, action, suit or proceeding in which he may be
involved or with which he may be threatened by reason of his being or having
been a director or officer of the corporation or of any other corporation of
which he shall at the request of this corporation then be serving or theretofore
have served as a director or officer, whether or not he continues to be a
director or officer, at the time such liabilities or expenses are imposed upon
or incurred by him, including but without being limited to attorney's fees,
court costs, judgments and reasonable compromise settlements; provided, however,
that such indemnification and reimbursement shall not cover: (a) liabilities or
expenses imposed or incurred in connection with any matter as to which such
director or officer shall be finally adjudged in such action, suit or proceeding
to be liable by reason of his having been derelict in the performance of his
duty as such director or officer, or (b) liabilities or expenses (including
amounts paid in compromise settlements) imposed or incurred in connection with
any matter which shall be settled by compromise (including settlement by consent
decree or judgment) unless the board of directors of the corporation by
resolution adopted by it (i) approves such settlement and (ii) finds that such
settlement is in the best interest of the corporation and that such director or
officer has not been derelict in the performance of his duty as such director or
officer with respect to such matter. These indemnity provisions shall be
separable, and if any portion thereof shall be finally adjudged to be invalid,
or shall for any other reason be inapplicable or ineffective, such invalidity,
inapplicability or ineffectiveness shall not affect any other portion or any
other application of such portion or any other portion which can be given effect
without the invalid, inapplicable or ineffective portion. The rights of
indemnification and reimbursement hereby provided shall not be exclusive of
other rights to which any director or officer may be entitled as a matter of law
or by votes of stockholders or otherwise. As used in this paragraph, the terms
"director" and "officer" shall include their respective heirs, executors and
administrators.
ARTICLE VI
CERTIFICATES OF STOCK
Section 1. Every holder of stock in the corporation shall be entitled to
have a certificate, signed by, or in the name of the corporation by, the
president or a vice-president or a vice-president and the treasurer or an
assistant treasurer, or the secretary or an assistant secretary of the
corporation, certifying the number of shares owned by him in the corporation.
Section 2. Where a certificate is signed (1) by a transfer agent or an
assistant transfer agent (other than the corporation or a transfer clerk who is
an employee of the corporation) or (2) by a registrar (other than the
corporation or its employee), all other signatures may be a facsimile. In case
any officer or officers, transfer agent, or registrar, who has signed or whose
facsimile signature or signatures have been used on a certificate shall cease to
be such officer, transfer agent or registrar, whether because of death,
resignation, or otherwise, before such certificate or certificates have been
delivered by the corporation, such certificate or certificates may nevertheless
be adopted by the corporation and be issued and delivered as though the person
or persons who signed such certificate or certificates or whose facsimile
signature or signatures have been used thereon had not ceased to be such
officer, transfer agent or registrar.
-7-
<PAGE>
TRANSFER AGENT AND REGISTRAR
Section 3. The corporation may have such transfer agents and registrars as
the board of directors may designate and appoint.
LOST CERTIFICATES
Section 4. The board of directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost or destroyed,
upon the making of an affidavit of the fact by the person claiming the
certificate of stock to be lost or destroyed. When authorizing such issue of a
new certificate or certificates, the board of directors may, in its discretion
and as a condition precedent to the issuance thereof, require the owner of such
lost or destroyed certificate or certificates, or his legal representative, to
advertise the same in such manner as it shall require and/or to give the
corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the corporation with respect to the certificate alleged
to have been lost or destroyed.
TRANSFERS OF STOCK
Section 5. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
CLOSING OF TRANSFER BOOKS
Section 6. The board of directors may close the stock transfer books of the
corporation for a period not exceeding forty-five days preceding the date of any
meeting of stockholders or the date for payment of any dividend or the date for
the allotment of rights or the date when any change or conversion or exchange of
capital stock shall go into effect or for a period of not exceeding forty-five
days in connection with obtaining the consent of stockholders for any purpose.
In lieu of closing the stock transfer books as aforesaid, the board of directors
may fix in advance a date, not exceeding forty-five days preceding the date of
any meeting of stockholders, or the date for payment of any dividend, or the
date for the allotment of rights, or the date when any change or conversion or
exchange of capital stock shall go into effect, or a date in connection with
obtaining such consent, as a record date for the determination of the
stockholders entitled to notice of, and to vote at, any such meeting, and any
adjournment thereof, or entitled to receive payment of any such dividend, or to
any such allotment of rights, or to exercise the rights in respect of any such
change, conversion or exchange of capital stock, or to give such consent and in
such case such stockholders and only such stockholders as shall be stockholders
of record on the date so fixed shall be entitled to such notice of, and to vote
at, such meeting and any adjournment thereof, or to receive payment of such
dividend, or to receive such allotment of rights, or to exercise such rights, or
to give such consent, as the case may be notwithstanding any transfer of any
stock on the books of the corporation after any such record date fixed as
aforesaid.
-8-
<PAGE>
REGISTERED STOCKHOLDERS
Section 7. The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the corporation, subject to
the provisions of the certificate of incorporation, if any, may be declared by
the board of directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of. capital stock,
subject to the provisions of the certificate of incorporation.
Section 2. Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purposes as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
RESIGNATIONS
Section 3. Any director, member of any committee or other officer may
resign at any time. Such resignation shall be made in writing, and shall take
effect at the time specified therein, and if no time be specified therein at the
time of its receipt by the president or secretary, the acceptance of a
resignation shall not be necessary to make it effective.
CHECKS
Section 4. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as
the board of directors may from time to time designate.
Section 5. Fiscal Year. The fiscal year of the corporation shall be as
determined by the Board of Directors.
-9-
<PAGE>
ARTICLE VIII
AMENDMENTS
Section 1. These by-laws may be altered or repealed at any regular meeting
of the stockholders or of the board of directors or at any special meeting of
the stockholders or of the board of directors if notice of such alteration or
repeal be contained in the notice of such special meeting.
CERTIFICATE OF SECRETARY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned does hereby certify that the undersigned is the
secretary of Kan-Tx Energy Company, a corporation duly organized and existing
under and by virtue of the laws of the State of Delaware; that the above and
foregoing Bylaws of said corporation were duly and regularly adopted as such by
the Board of Directors of said corporation by unanimous consent on the 2nd day
of May 1994; and that the above and foregoing Bylaws are now in full force and
effect.
Dated this 2nd day of May 1994.
/s/ Ivan Harry
----------------------------
Ivan Harry, Secretary
-10-
<PAGE>
Amendments to Bylaws August 7, 1998
Article II, Section 11. of the Bylaws of the Corporation is amended in its
entirety to read:
Any action which is required to, or may, be taken at any annual or special
meeting of the stockholders of the Corporation, may be taken without a meeting,
without prior notice and without a vote, if a consent, or consents, in writing,
setting forth the action so taken, are signed by holders of the outstanding
stock having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted, and are delivered to the Corporation by
delivery to its registered office in Delaware, its principal place of business
or an officer or agent of the Corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Delivery made to the
Corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested.
INCORPOTATED UNDER THE LAWS OF THE STATE OF DELAWARE
FIRST CAPITAL INTERNATIONAL, INC.
100,000,000 AUTHORIZED SHARES $.001 PAR VALUE NON-ASSESSABLE
THIS CERTIFIES THAT
IS THE RECORD HOLDER OF
SHARES OF FIRST CAPTIAL INTERNATIONAL, INC. COMMON STOCK
TRANSFERABLE ON THE BOOKS OF THE CORPORTATION BY THE HOLDER HEREOF IN PERSON OR
BY DULY AUTHORIZED ATTORNEY UPON SURRENDER OF THE CERTIFICATE PROPERLY ENDORSED.
THIS CERTIFICATE IS NOT VALID UNTIL COUNTERSIGNED BY THE TRANSFER AGENT AND
REGISTERED BY THE REGISTRAR. WITNESS THE FACSIMILE SEAL OF THE CORPORTATION AND
THE FACSIMILE SIGNATURES OF ITS DULY AUTHORIZED OFFICERS.
DATED:
Joseph A. Bond Alex Genin
SECRETARY PRESIDENT
STOCK EXCHANGE AGREEMENT
------------------------
THIS STOCK EXCHANGE AGREEMENT (the "Agreement"), dated as of September 28,
1998, is by and among FIRST CAPITAL INTERNATIONAL, INC., a Delaware corporation
("FCII"), and each of the persons or entities whose names appear and who are
identified as stockholders on the signature page hereof (individually, a
"STOCKHOLDER" and collectively the "STOCKHOLDERS"), such persons or entities
being registered holders of capital stock of EIP Liisingu AS, an Estonian
corporation ("EIP").
R E C I T A L S
---------------
WHEREAS, each Stockholder is the record and beneficial owner of the number
of shares of common stock, face value 10,000 EEK per share, of EIP indicated in
the table set forth as Exhibit A to this Agreement (which shares are hereinafter
collectively referred to as the "EIP Stock");
WHEREAS, FCII desires to acquire from the Stockholders, and the
Stockholders desire to convey to FCII, all of the issued and outstanding EIP
Stock owned by the Stockholders in exchange for shares of voting common stock,
$0.001 par value of FCII (the "FCII Stock"), all on the terms and conditions set
forth below;
NOW, THEREFORE, in consideration of the premises, the mutual covenants and
agreements and the respective representations and warranties herein contained in
this Agreement, and on the terms and subject to the conditions set forth in this
Agreement, the parties hereto, intending to be legally bound, hereby agree as
follows:
ARTICLE I
EXCHANGE OF SHARES
Section 1.1 EIP Stock. At the Closing (as defined below), each
----------
Stockholder shall transfer, convey and deliver to FCII the number of shares of
EIP Stock set forth opposite their name on Exhibit A hereto, and shall deliver
to FCII stock certificates representing the EIP Stock, duly endorsed to FCII or
accompanied by duly executed stock powers in form and substance satisfactory to
FCII.
Section 1.2 FCII Stock. At the Closing, in exchange for each share of
----------
EIP Stock transferred to FCII, FCII shall issue and deliver to each Stockholder
the number of shares of FCII Stock set forth opposite their name on Exhibit A
hereto. The transaction by which the transfer shall take place is referred to
in this Agreement as the "Exchange".
ARTICLE II
THE CLOSING
The Closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at 4:00 p.m. on September 28, 1998 (the "Closing
Date"), at the offices of FCII, 5120 Woodway, Suite 9004, Houston, Texas 77056.
or at such other time and place as agreed upon among the parties hereto.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
Each of the Stockholders hereby severally represents and warrants to FCII
as follows:
Section 3.1 Ownership of the EIP Stock. The Stockholder owns,
------------------------------
beneficially and of record, that number of shares of EIP Stock set forth
opposite the Stockholder's name on Exhibit A hereto; except for restrictions
imposed by national, federal and state securities laws, (i) such shares are
owned by such Stockholder free and clear of any liens, claims, equities,
charges, options, rights of first refusal, or encumbrances; (ii) the Stockholder
has the unrestricted right and power to transfer, convey and deliver full
ownership of such shares without the consent or agreement of any other person
and without any designation, declaration or filing with any governmental
authority; and, (iii) upon the transfer of such shares to FCII as contemplated
herein, FCII will receive good and valid title thereto, free and clear of any
liens, claims, equities, charges, options, rights of first refusal, encumbrances
or other restrictions.
Section 3.2 Organization. If the Stockholder is either a corporation,
------------
limited liability company or partnership, it represents and warrants that it is
duly organized, validly existing and in good standing under the laws of the
state or nation of its incorporation or formation, with full power and authority
and all necessary governmental and regulatory licenses, permits and
authorizations to carry on the businesses in which it is engaged, to own the
properties that it owns currently and will own at the Closing, and to perform
its obligations under this Agreement. If the Stockholder is a corporation,
limited liability company or partnership it is qualified as a foreign
corporation, foreign limited liability company or foreign partnership (which
ever the case may be) and is in good standing in each jurisdiction in which the
failure to qualify would have material adverse effect on the business,
properties or condition (financial or otherwise) of the corporate, limited
liability company or partnership Stockholder.
Section 3.3 Authorization. If the Stockholder is a person, then he or
-------------
she is of the full age of majority, with full power, capacity and authority to
enter into this Agreement and perform the obligations contemplated hereby by and
for himself or herself and his or her spouse, if any. If the Stockholder is a
corporation, limited liability company or partnership, then all corporate,
limited liability company or partnership action on the part of the corporate,
limited liability company or partnership Shareholder necessary for the
authorization, execution, delivery and performance of this Agreement and the
transactions contemplated hereby has been taken or will be taken prior to the
Closing. All action on the part of the Stockholder necessary for the
authorization, execution, delivery and performance of this Agreement by the
Stockholder has been taken or will be taken prior to the Closing. This
Agreement constitutes a valid and binding obligation of the Stockholder,
enforceable against the Stockholder in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, and other laws of general application
relating to or affecting creditors' rights and to general equitable principles.
Section 3.4 Pending Claims. There is no claim, suit, action or
---------------
proceeding, whether judicial, administrative or otherwise, pending or, to the
best of the Stockholder's knowledge, threatened that would preclude or restrict
the transfer to FCII of the EIP Stock owned by the Stockholder or the
performance of this Agreement by the Stockholder.
Section 3.5 No Default. The execution, delivery and performance of
-----------
this Agreement by the Stockholder does not and will not constitute a violation
or default under or conflict with any contract, agreement, understanding or
commitment to which such Stockholder is a party or by which such Stockholder is
bound.
Section 3.6 Acquisition of Stock for Investment. The Stockholder
---------------------------------------
understands that the issuance of FCII Stock will not have been registered under
the Securities Act of 1933, as amended (the "Act"), or any national or state
securities acts, and, accordingly, are restricted securities, and that he/she
represents and warrants to FCII that his/her present intention is to receive and
hold the FCII Stock for investment only and not with a view to the distribution
or resale thereof.
Additionally, the Stockholder understands that any sale by the Stockholder
of any of the FCII Stock received under this Agreement will, under current law,
require either (a) the registration of the FCII Stock under the Act and
applicable national or state securities acts; (b) compliance with Rule 144 of
the Act; or (c) the availability of an exemption from the registration
requirements of the Act and applicable national or state securities acts. The
Stockholder understands that FCII has not undertaken and does not presently
intend to file a Registration Statement to register the FCII Stock to be issued
to the Stockholder. The Stockholder hereby agrees to execute, deliver, furnish
or otherwise provide to FCII an opinion of counsel reasonably acceptable to FCII
prior to any subsequent transfer of the FCII Stock, that such transfer will not
violate the registration requirements of the federal or national or state
securities acts. The Stockholder further agrees to execute, deliver, furnish or
otherwise provide to FCII any documents or instruments as may be reasonably
necessary or desirable in order to evidence and record the FCII Stock acquired
hereby.
To assist in implementing the above provisions, the Stockholder hereby
consents to the placement of the legend, or a substantially similar legend, set
forth below, on all certificates representing ownership of the FCII Stock
acquired hereby until the FCII Stock has been sold, transferred, or otherwise
disposed of, pursuant to the requirements hereof. The legend shall read
substantially as follows:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY APPLICABLE STATE SECURITIES ACTS. THESE SECURITIES MUST BE
ACQUIRED FOR INVESTMENT, ARE RESTRICTED AS TO TRANSFERABILITY, AND MAY NOT BE
SOLD, HYPOTHECATED, OR OTHERWISE TRANSFERRED WITHOUT COMPLIANCE WITH THE
REGISTRATION AND QUALIFICATION PROVISIONS OF APPLICABLE FEDERAL AND STATE
SECURITIES LAWS OR APPLICABLE EXEMPTIONS THEREFROM."
In addition, each Stockholder consents to FCII placing a "stop transfer
notation" in its corporate records concerning the transfer of the FCII Stock
acquired by each Stockholder.
Section 3.7 Subscription Agreement. The Stockholder hereby
-----------------------
acknowledges, as a condition to the consummation of the transactions
contemplated hereby, that he/she will, simultaneously with the execution of this
Agreement execute a Subscription Agreement containing additional representations
and warranties relating to the issuance of the FCII Stock to the Stockholder.
Section 3.8 Stockholder Access to Information. The Stockholder hereby
---------------------------------
confirms and represents that he/she: (a) has been afforded the opportunity to
ask questions of and receive answers from representatives of FCII concerning the
business and financial condition, properties, operations and prospects of FCII
and has asked such questions as he/she desires to ask and all such questions
have been answered to the full satisfaction of the Stockholder; (b) has such
knowledge and experience in financial and business matters so as to be capable
of evaluating the relative merits and risks of the transactions contemplated
hereby; (c) has had an opportunity to engage and is represented by an attorney
of his/her choice; (d) has had an opportunity to negotiate the terms and
conditions of this Agreement; (e) has been given adequate time to evaluate the
merits and risks of the transactions contemplated hereby; and (f) has been
provided with and given an opportunity to review all current information about
FCII.
Section 3.9 Disclosure. To the best of the Stockholder's knowledge, no
----------
representation or warranty of the Stockholder contained in this Agreement
(including the exhibits and schedules hereto) contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained herein or therein, in light of the circumstances under
which they were made, not misleading.
Section 3.10 Indemnification by Stockholder The Stockholder recognizes
------------------------------
that the Exchange being conducted with FCII is based, to a material degree, upon
the representations and warranties of Stockholder as set forth and contained
herein and the Stockholder hereby agrees to indemnify and hold harmless FCII
against all damages, costs, or expenses (including reasonable attorney's fees)
arising as a result of any breach of representation or warranty or omission made
herein by the Stockholder.
If any action is brought against FCII in respect of which indemnity may be
sought against the Stockholder pursuant to the foregoing paragraph, FCII shall
promptly notify the Stockholder in writing of the institution of such action
(but the omission to so notify the Stockholder shall not relieve it from any
liability that it may have to FCII except to the extent the Stockholder is
materially prejudiced or otherwise forfeit substantive rights or defenses by
reason of such failure), and the Stockholder shall assume the defense of such
action, including the employment of counsel to be chosen by the Stockholder to
be reasonably satisfactory to FCII, and payment of expenses. FCII shall have
the right to employ the Stockholder's or their own counsel in any such case, but
the fees and expenses of such counsel shall be at FCII expense, unless the
employment of such counsel shall have been authorized in writing by the
Stockholder in connection with the defense of such action, or the Stockholder
shall not have employed counsel to take charge of the defense of such action, or
counsel employed by the Stockholder shall not be diligently defending such
action, or FCII shall have reasonably concluded that there may be defenses
available to it which are different from or additional to those available to the
Stockholder, or that representation of FCII by the same counsel would be
inappropriate under applicable standards of professional conduct due to actual
or potential differing interests between them (in which case the Stockholder
shall not have the right to direct the defense of such action on behalf of
FCII), in any of which event such fees and expenses shall be borne by the
Stockholder. Anything in this paragraph to the contrary notwithstanding, the
Stockholder shall not be liable for any settlement of, or any expenses incurred
with respect to, any such claim or action effected without the Stockholder's
written consent, which consent shall not be unreasonably withheld. The
Stockholder shall not, without the prior written consent of FCII effect any
settlement of any proceeding in respect of which FCII is a party and indemnity
has been sought hereunder unless such settlement includes an unconditional
release of FCII from all liability on claims that are the subject matter of such
proceeding.
Section 3.11 Organization and Capitalization. EIP is a corporation
---------------------------------
duly organized, validly existing and in good standing under the laws of the
nation of Estonia, with full power and authority and all necessary governmental
and regulatory licenses, permits and authorizations to carry on the businesses
in which it is engaged, to own the properties that it owns currently and will
own at the Closing. EIP is qualified as a foreign corporation and is in good
standing in each jurisdiction in which the failure to qualify would have a
material adverse effect on the business, properties or condition (financial or
otherwise) of EIP. EIP does not have any subsidiaries or any other investments
or ownership interest in any corporation, partnership, joint venture or other
business enterprise, except as set forth in Schedule 3.11. The authorized
capital stock of EIP consists of 40 shares of common stock, 10,000 EEK par
value, of which 40 shares are validly issued and outstanding. All of such
issued and outstanding shares of EIP Stock have been duly authorized and validly
issued and are fully paid and non-assessable. None of the shares were issued in
violation of any preemptive rights. Except as set forth in Schedule 3.11, there
are no existing warrants, options, rights of first refusal, conversion rights,
calls, commitments or other agreements of any character pursuant to which EIP is
or may become obligated to issue any of its stock or securities. EIP has no
obligation to repurchase, reacquire or redeem any of its outstanding capital
stock.
Section 3.12 Subsidiaries. Schedule 3.12 sets forth a complete and
------------
accurate list of all Subsidiaries of EIP, showing (as to each such Subsidiary)
the date of its incorporation and the jurisdiction of its incorporation. All of
the outstanding capital stock of, or other ownership interests in, each
Subsidiary is owned by EIP, directly or indirectly, free and clear of any lien
or any other limitation or limitation or restriction (including restrictions on
the right to vote). All outstanding shares of the capital stock of each
Subsidiary have been duly authorized and validly issued and are fully paid and
non-assessable and are free of any preemptive rights. There are no outstanding
securities of any Subsidiary convertible into or evidencing the right to
purchase or subscribe for any shares of capital stock of any Subsidiary, there
are no outstanding or authorized options, warrants, calls, subscriptions,
rights, commitments or any other agreements of any character obligating any
Subsidiary to issue any shares of its capital stock or any securities
convertible into or evidencing the right to purchase or subscribe for any shares
of such stock, and there are no agreements or understandings with respect to the
voting, sale, transfer or registration of any shares of capital stock of any
Subsidiary.
Section 3.13 Financial Information. EIP has delivered to FCII the
----------------------
audited balance sheet of EIP as of December 31, 1997, together with the related
statements of income, changes in shareholder's equity and cash flow for the
years then ended, including the related notes, all certified by Price
Waterhouse, certified public accountants. In addition, EIP has delivered to
FCII its interim unaudited financial statements as for the three month periods
ending March 31, 1998. Such Financial Statements, including the related notes,
are in accordance with the books and records of EIP and fairly present the
financial position of EIP and the results of operations and changes in financial
position of EIP as of the dates and for the periods indicated, in each case in
conformity with generally accepted accounting principles applied on a consistent
basis. Except as, and to the extent reflected or reserved against in the
Financial Statements, EIP, as of the date of the Financial Statements, has no
material liability or obligation of any nature, whether absolute, accrued,
continued or otherwise, not fully reflected or reserved against in the Financial
Statements. As of the Closing Date, there will not have been any adverse change
in the financial condition or other operations, business, properties or assets
of EIP other than liabilities incurred in the ordinary course of business in
which, in the aggregate, are not in excess of $50,000 from that reflected in the
latest Financial Statements of EIP furnished to FCII pursuant hereto.
Section 3.14 Litigation. Except as disclosed in Schedule 3.14, there
----------
are no actions, suits or proceedings, formal or informal, pending or, to the
best knowledge of the Stockholder's, threatened against EIP, nor is EIP subject
to any order, judgment or decree, except in all cases, whether known or unknown,
for matters which, in the aggregate, would not result in a loss to EIP in excess
of $50,000.
Section 3.15 Taxes. Except as disclosed in Schedule 3.15, EIP has
-----
filed all federal tax returns and reports due or required to be filed, and has
paid all taxes, interest payments and penalties, if any, required to be paid
with respect thereto. EIP has made adequate provision for the payment of all
taxes accruable for all periods ending on or before the Closing Date to any
taxing authority and is not delinquent in the payment of any material tax or
governmental charge of any nature.
Section 3.16 Compliance with Laws. Except as set forth in Schedule
----------------------
3.16, EIP is, and at all times prior to the date hereof has been, to the best of
the Stockholder's knowledge, in compliance with all statutes, orders, rules, and
regulations applicable to it or to the ownership of its assets or the operation
of its business, except for failures to be in compliance that would not have a
material adverse effect on the business, properties, condition (financial or
otherwise) or prospects of EIP, and EIP has no basis to expect to receive, and
has not received, any order or notice of any such violation or claim of
violation of any such statute, order, rule, ordinance or regulation.
Section 3.17 Books and Records. The books of account, minute books,
-------------------
stock record books and other records of EIP, all of which have been made
available to FCII, are accurate and complete in all material respects and have
been maintained in accordance with sound business practices.
Section 3.18 Title to Properties; Encumbrances. EIP has good title to
---------------------------------
all of its properties and assets, real and personal, tangible and intangible,
that are material to the condition (financial or otherwise), business,
operations or prospects of EIP, free and clear of all mortgages, claims, liens,
security interests, charges, leases, encumbrances and other restrictions of any
kind and nature, except (i) as specifically disclosed in Schedule 3.18, (ii) as
disclosed in the financial statements of EIP, (iii) statutory liens not yet
delinquent, and (iv) such liens consisting of zoning or planning restrictions,
imperfections of title, easements, pledges, charges and encumbrances, if any, as
do not materially detract from the value or materially interfere with the
present use of the property or assets subject thereto or affected thereby.
Section 3.19 Disclosure. To the best of the Stockholder's knowledge,
----------
no representation or warranty of the Stockholder contained in this Agreement
(including the exhibits and schedules hereto) contains any untrue statement or
omits to state a material fact necessary in order to make the statements
contained herein or therein, in light of the circumstances under which they were
made, not misleading.
Section 3.20 Insurance . EIP and its Subsidiaries maintain adequate
---------
insurance with respect to their respective businesses and are in compliance with
all material requirements and provisions thereof.
Section 3.21 Material Agreements; Action . Except as set forth in
-----------------------------
Schedule 3.21, there are no material contracts, agreements, commitments,
understandings or proposed transactions, whether written or oral, to which EIP
or any of its Subsidiaries is a party or by which it is bound that involve or
relate to: (i) any of their respective officers, directors, stockholders or
partners or any Affiliate thereof; (ii) the sale of any of the assets of EIP or
any of its Subsidiaries other than in the ordinary course of business; (iii)
covenants of EIP or any of its Subsidiaries not to compete in any line of
business or with any person in any geographical area or covenants of any other
person not to compete with EIP or any of its Subsidiaries in any line of
business or in any geographical area; (iv) the acquisition by EIP or any of its
Subsidiaries of any operating business or the capital stock of any other Person;
(v) the borrowing of money or (vi) the expenditure of more than $50,000 in the
aggregate or the performance by EIP or any Subsidiary extending for a period
more than one year from the date hereof, other than in the ordinary course of
business. There have been made available to FCII and its representatives true
and complete copies of all such agreements. All such agreements are in full
force and effect. Neither the Company nor any of its Subsidiaries is in default
under any such agreements nor is any other party to any such agreements in
default thereunder in any respect.
Section 3.22 Employee Benefit Plans . EIP is not a party to any
------------------------
employee benefit plan.
Section 3.23 No Pending Transactions . Except for the transactions
-------------------------
contemplated by this Agreement, neither EIP nor any Subsidiary is a party to or
bound by or the subject of any agreement, undertaking, commitment or discussions
or negotiations with any person that could result in (i) the sale, merger,
consolidation or recapitalization of EIP or any Subsidiary, (ii) the sale of
all or substantially all of the assets of EIP or any Subsidiary, or (iii) a
change of control of more than five percent of the outstanding capital stock of
EIP or any Subsidiary.
Section 3.24 No Undisclosed Liabilities . To the best of the
----------------------------
Stockholder's knowledge, neither EIP nor or any Subsidiary has any obligation or
liability (contingent or otherwise) that would be required to be reflected in
the financial statements of the Company in accordance with Estonian Accounting
Law except as reflected in EIP's Balance Sheet.
ARTICLE IV
LIMITATION OF LIABILITY OF CERTAIN PERSONS
Section 33N of the Texas Securities Act, which applies to this Offering,
limits the liability of certain persons in connection with actions or series of
actions under Section 33 of the Texas Securities Act. Specifically, Section 33N
limits the liability of an attorney, an accountant, a consultant, or the firm of
the attorney, accountant, or consultant (collectively, the "Person") to an
amount equal to three times the fee paid by the Company or other seller to the
Person for the services related to the offer of securities, unless a court finds
the Person engaged in intentional wrong doing in providing the services.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF FCII
FCII hereby represents and warrant to the Stockholders as follows:
Section 5.1 Organization and Capitalization. FCII is a corporation
---------------------------------
duly organized, validly existing and in good standing under the laws of the
State of Delaware, with full power and authority and all necessary governmental
and regulatory licenses, permits and authorizations to carry on the businesses
in which it is engaged, to own the properties that it owns currently and will
own at the Closing, and to perform its obligations under this Agreement. FCII
is qualified as a foreign corporation and is in good standing in each
jurisdiction in which the failure to qualify would have a material adverse
effect on the business, properties or condition (financial or otherwise) of
FCII. FCII does not have any subsidiaries or any other investments or ownership
interest in any corporation, partnership, joint venture or other business
enterprise, except as set forth in Schedule 5.1. Immediately prior to the
Closing Date the authorized capital stock of FCII consists of (i) 100,000,000
shares of common stock, $.001 par value of which 12,651,142 shares are validly
issued and outstanding, and of which FCII contemplates issuing 9,600,000 shares
in unrelated private transactions. All of such issued and outstanding shares of
FCII Stock have been and all of the shares of FCII Stock to be issued hereby
will be, at the Closing, duly authorized and validly issued and are and will be
at the Closing fully paid and non-assessable. None of the shares that were
issued and none of the shares to be issued hereby will be in violation of any
preemptive rights. FCII has no obligation to repurchase, reacquire or redeem
any of its outstanding capital stock. FCII also contemplates issuing options to
purchase up to 4,630,000 shares in unrelated transactions. These options expire
August 24, 2001 and are exercisable at prices ranging from $.005 to $.01 per
share.
Section 5.2 Subsidiaries. Schedule 5.2 sets forth a complete and
------------
accurate list of all Subsidiaries of FCII, showing (as to each such Subsidiary)
the date of its incorporation and the jurisdiction of its incorporation. All of
the outstanding capital stock of, or other ownership interests in, each
Subsidiary is owned by FCII, directly or indirectly, free and clear of any lien
or any other limitation or limitation or restriction (including restrictions on
the right to vote). All outstanding shares of the capital stock of any
Subsidiary have been duly authorized and validly issued and are fully paid and
non-assessable and are free of any preemptive rights. There are no outstanding
securities of any Subsidiary convertible into or evidencing the right to
purchase or subscribe for any shares of capital stock of any Subsidiary, there
are no outstanding or authorized options, warrants, calls, subscriptions,
rights, commitments or any other agreements of any character obligating any
Subsidiary to issue any shares of its capital stock or any securities
convertible into or evidencing the right to purchase or subscribe for any shares
of such stock, and there are no agreements or understandings with respect to the
voting, sale, transfer or registration of any shares of capital stock of any
Subsidiary.
Section 5.3 Authorization. All corporate action on the part of FCII
-------------
necessary for the authorization, execution, delivery and performance of this
Agreement by FCII has been taken or will be taken prior to the Closing. FCII
has the requisite corporate power and authority to execute, deliver and perform
this Agreement. This Agreement has been duly executed and delivered by FCII,
and constitutes a valid and binding obligation of FCII, enforceable against FCII
in accordance with its terms, subject to bankruptcy, insolvency, reorganization,
and other laws of general application relating to or affecting creditors' rights
and to general equitable principles.
Section 5.4 Litigation. Except as set forth in Schedule 5.4, there are
----------
no claims, actions, suits or proceedings, formal or informal, pending or, to the
best knowledge of FCII, threatened against FCII, nor is FCII subject to any
order, judgment or decree, except in either case for matters which, in the
aggregate, would not result in a loss to FCII in excess of $100,000.
Section 5.5 Taxes. FCII has filed all federal, state or local tax
-----
returns and reports due or required to be filed and has paid all taxes, interest
payments and penalties, if any, required to be paid with respect thereto, and
has made adequate provision for the payment of all taxes accruable for all
periods ending on or before the Closing Date to any taxing authority and is not
delinquent in the payment of any material tax or governmental charge of any
nature.
Section 5.6 Financial Information. FCII has delivered to the
----------------------
Stockholders the audited balance sheet of FCII as of December 31, 1997, together
with the related statements of income, changes in shareholders' equity and cash
flow for the years then ended, including the related notes, all certified by
Ham, Langston & Brezina L.L.P., certified public accountants (the "Financial
Statements"). Such Financial Statements, including the related notes, are in
accordance with the books and records of FCII and fairly present the financial
position of FCII and the results of operations and changes in financial position
of FCII as of the dates and for the periods indicated, in each case in
conformity with generally accepted accounting principles applied on a consistent
basis. Except as, and to the extent reflected or reserved against in the
Financial Statements, FCII as of the date of the financial statements has no
material liability or obligation of any nature, whether absolute, accrued,
continued or otherwise, not fully reflected or reserved against in the Financial
Statements. As of the Closing Date, there will not have been any adverse change
in the financial condition or other operations, business, properties or assets
of FCII in excess of $100,000 from that reflected in the latest financial
statements of FCII furnished to the Stockholders pursuant hereto.
Section 5.7 Compliance with Laws. Except as set forth in Schedule 5.7,
--------------------
FCII is, and at all times prior to the date hereof has been, to the best of its
knowledge, in compliance with all statutes, orders, rules, ordinances and
regulations applicable to it or to the ownership of its assets or the operation
of its businesses, except for failures to be in compliance that would not have a
material adverse effect on the business, properties, condition (financial or
otherwise) or prospects of FCII and FCII has no basis to expect, nor has
received, any order or notice of any such violation or claim of violation of any
such statute, order, rule, ordinance or regulation.
Section 5.8 Title to Properties; Encumbrances. FCII has good and
------------------------------------
marketable title to all of its properties and assets, real and personal,
tangible and intangible, that are material to the condition (financial or
otherwise), business, operations or prospects of FCII, free and clear of all
mortgages, claims, liens, security interests, charges, leases, encumbrances and
other restrictions of any kind and nature, except (i) as specifically disclosed
in Schedule 5.8, (ii) as disclosed in the Financial Statements of FCII, (iii)
statutory liens not yet delinquent, and (iv) such liens consisting of zoning or
planning restrictions, imperfections of title, easements, pledges, charges and
encumbrances, if any, as do not materially detract from the value or materially
interfere with the present use of the property or assets subject thereto or
affected thereby.
Section 5.9 Disclosure. Except as set forth in Schedule 5.9, to the
----------
best of FCII knowledge, no representation or warranty of FCII contained in this
Agreement (including the exhibits and schedules hereto) contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein or therein, in light of the
circumstances under which they were made, not misleading.
Section 5.10 No Default. The execution, delivery and performance of
-----------
this Agreement by FCII does not and will not constitute a violation or default
under or conflict with any contract, agreement, understanding or commitment to
which it is a party or by which it is bound or the Certificate of Incorporation
or By-Laws of FCII or any statute, regulation, law, ordinance, judgment, decree,
writ, injunction, order or ruling of any government entity.
Section 5.11 Pending Claims. There is no claim, suit, action or
---------------
proceeding, whether judicial, administrative or otherwise, pending or, to the
best of FCII's knowledge, threatened that would preclude or restrict the
transfer to the Stockholders of the FCII Stock or the performance of this
Agreement by FCII.
Section 5.12 Insurance . FCII and its Subsidiaries maintain adequate
---------
insurance with respect to their respective businesses and are in compliance with
all material requirements and provisions thereof.
Section 5.13 Employee Benefit Plans . FCII is not a party to any
------------------------
employee benefit plan.
Section 5.14 No Pending Transactions . Except for the transactions
-------------------------
contemplated by this Agreement, neither FCII nor any Subsidiary is a party to or
bound by or the subject of any agreement, undertaking, commitment or discussions
or negotiations with any person that could result in (i) the sale, merger,
consolidation or recapitalization of FCII or any Subsidiary, (ii) the sale of
all or substantially all of the assets of FCII or any Subsidiary, or (iii) a
change of control of more than five percent of the outstanding capital stock of
FCII or any Subsidiary.
Section 5.15 No Undisclosed Liabilities. To the best of its
----------------------------
knowledge, neither FCII nor or any Subsidiary has any obligation or liability
(contingent or otherwise) that would be required to be reflected in the
financial statements of the Company in accordance with GAAP except as reflected
in FCII Balance Sheet.
Section 5.16 Indemnification by FCII. FCII recognizes that the Exchange
-----------------------
being conducted with the Stockholders is based, to a material degree, upon the
representations and warranties of FCII as set forth and contained herein and
FCII hereby agrees to indemnify and hold harmless the Stockholders against all
damages, costs, or expenses (including reasonable attorney's fees) arising as a
result of any breach of representation or warranty or omission made herein by
FCII.
If any action is brought against FCII, the Stockholders (collectively the
"Indemnified Parties") in respect of which indemnity may be sought against FCII
pursuant to the foregoing paragraph, the Indemnified Parties shall promptly
notify FCII in writing of the institution of such action (but the omission to so
notify FCII shall not relieve it from any liability that it may have to such
Indemnified Parties except to the extent FCII is materially prejudiced or
otherwise forfeits substantive rights or defenses by reason of such failure),
and FCII shall assume the defense of such action, including the employment of
counsel to be chosen by FCII to be reasonably satisfactory to the Indemnified
Parties, and payment of expenses. The Indemnified Parties shall have the right
to employ FCII or their own counsel in any such case, but the fees and expenses
of such counsel shall be at the Indemnified Party's expense, unless the
employment of such counsel shall have been authorized in writing by FCII in
connection with the defense of such action, or FCII shall not have employed
counsel to take charge of the defense of such action, or counsel employed by
FCII shall not be diligently defending such action, or the Indemnified Parties
shall have reasonably concluded that there may be defenses available to it which
are different from or additional to those available to FCII, or that
representation of such Indemnified Party and FCII by the same counsel would be
inappropriate under applicable standards of professional conduct due to actual
or potential differing interests between them (in which case FCII shall not have
the right to direct the defense of such action on behalf of the Indemnified
Parties), in any of which event such fees and expenses shall been borne by FCII.
Anything in this paragraph to the contrary notwithstanding, FCII shall not be
liable for any settlement of, or any expenses incurred with respect to, any such
claim or action effected without FCII written consent, which consent shall not
be unreasonably withheld. FCII shall not, without the prior written consent of
the Indemnified Parties effect any settlement of any proceeding in respect of
which any Indemnified Parties is a party and indemnity has been sought hereunder
unless such settlement includes an unconditional release of such Indemnified
Parties from all liability on claims that are the subject matter of such
proceeding.
ARTICLE VI
CLOSING; DELIVERY
Section 6.1(a) Closing Documents of the Stockholders. The obligations
-------------------------------------
of FCII to effect the transactions contemplated hereby are subject to the
delivery by the Stockholders at Closing of each of the following documents:
(i) The Stockholders shall have delivered certificates evidencing their
EIP Common Stock duly endorsed for transfer by the Stockholders to FCII as
contemplated by this Agreement, in form and substance satisfactory to counsel
for FCII.
(ii) The Stockholders shall have executed and delivered to FCII the
Subscription Agreement as contemplated by Section 3.7 hereof.
Section 6.1(b) Closing Documents of FCII. The obligations of the
----------------------------
Stockholders to effect the transactions contemplated hereby are subject to each
of the following conditions:
(i) FCII shall have delivered either (i) certificates evidencing FCII
Common Stock, duly executed for issuance by FCII to the Stockholders as
contemplated by this Agreement or (ii) letter of instructions from a duly
authorized officer of FCII to OTC Stock Transfer, Inc. (FCII's transfer agent),
instructing the transfer agent to duly issue stock certificates evidencing the
shares of Common Stock of FCII to the Stockholders, all as contemplated by this
Agreement, in form and substance satisfactory to counsel for the Stockholders.
Section 6.1 (c) Conditions to the Obligations of FCII and the
----------------------------------------------------
Stockholders. The obligations of FCII and the Stockholders to effect the
- -------------
transactions contemplated hereby are further subject to the following condition:
(i) The Board of Directors of FCII shall have approved and authorized
the transactions contemplated herein.
(ii) No action, suit or proceeding by or before any court or any
governmental or regulatory authority shall have been commenced or threatened,
and no investigation by any governmental or regulatory authority shall have been
commenced or threatened, seeking to restrain, prevent or challenge the
transactions contemplated hereby or seeking judgments against FCII or the
Stockholders.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Notices. All notices and other communications provided
-------
for herein shall be in writing and shall be deemed to have been duly given if
delivered personally or sent by registered or certified mail, return receipt
requested, postage prepaid, or overnight air courier guaranteeing next day
delivery:
(a) If to FCII:
Mr. Alex Genin, President
First Capital International, Inc.
5120 Woodway, Suite 9004
Houston, Texas 77056
fax (713) 629-4913
With a copy to:
Robert D. Axelrod
Axelrod, Smith & Kirshbaum
5300 Memorial Drive, Suite 700
Houston, Texas 77007
Fax: (713) 552-0202
(b) If to the Stockholders, to:
The addresses listed on Exhibit A, attached hereto.
All notices and communications shall be deemed to have been duly given: at
the time delivered by hand, if personally delivered; three days after being
deposited in the mail, postage prepaid, sent certified mail, return receipt
requested, if mailed; and the next day after timely delivery to the courier, if
sent by overnight air courier guaranteeing next day delivery.
If a notice or communication is mailed in the manner provided above within
the time prescribed, it is duly given, whether or not the addressee receives it.
Section 7.2 Assignment. Neither this Agreement nor any of the rights,
----------
interests or obligations hereunder shall be assigned by any of the parties
without the prior written consent of the other parties, which consent will not
be unreasonably withheld. This Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective heirs,
personal representatives, successors and assigns.
Section 7.3 Counterparts. This Agreement may be executed in any number
------------
of counterparts, which taken together shall constitute one and the same
instrument and each of which shall be considered an original for all purposes.
Section 7.4 Section Headings. The section headings contained in this
-----------------
Agreement are for convenient reference only and shall not in any way affect the
meaning or interpretation of this Agreement.
Section 7.5 Entire Agreement. This Agreement, the documents to be
-----------------
executed hereunder and the exhibits and schedules attached hereto constitute the
entire agreement among the parties hereto pertaining to the subject matter
hereof and supersede all prior agreements, understandings, negotiations and
discussions, whether oral or written, of the parties pertaining to the subject
matter hereof, and there are no warranties, representations or other agreements
among the parties in connection with the subject matter hereof except as
specifically set forth herein or in documents delivered pursuant hereto. No
supplement, amendment, alteration, modification, waiver or termination of this
Agreement shall be binding unless executed in writing by the parties hereto.
All of the exhibits and schedules referred to in this Agreement are hereby
incorporated into this Agreement by reference and constitute a part of this
Agreement.
Section 7.6 Validity. The invalidity or unenforceability of any
--------
provision of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in full force and
effect.
Section 7.7 Survival. The respective representations, warranties,
--------
covenants and agreements set forth in this Agreement shall survive the Closing
for a period of one year from the execution hereof.
Section 7.8 Public Announcements. The parties hereto agree that prior
--------------------
to making any public announcement or statement with respect to the transactions
contemplated by this Agreement, the party desiring to make such public
announcement or statement shall consult with the other parties hereto and
exercise their best efforts to (i) agree upon the text of a joint public
announcement or statement to be made by all of such parties or (ii) obtain
approval of the other parties hereto to the text of a public announcement or
statement to be made solely by the party desiring to make such public
announcement; provided, however, that if any party hereto is required by law to
make such public announcement or statement, then such announcement or statement
may be made without the approval of the other parties.
Section 7.9 Gender. All personal pronouns used in this Agreement shall
------
include the other genders, whether used in the masculine, feminine or neuter
gender, and the singular shall include the plural, and vice versa, whenever
appropriate.
Section 7.10 Choice of Law. This Agreement shall be governed by, and
--------------
construed in accordance with, the laws of the State of Texas, U.S.A. without
regard to principles of conflict of laws.
Section 7.11 Costs and Expenses. FCII and the Stockholders shall each
------------------
pay their own respective fees and disbursements incurred in connection with this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed or caused this
Agreement to be executed effective as of the day and year first above written.
FIRST CAPITAL INTERNATIONAL, INC.
By: /s/ Alex Genin
-----------------------
Alex Genin, President
STOCKHOLDER:
Eurocapital Group Ltd.
By: /s/ Gillian Caine
--------------
Gillian Caine
STOCKHOLDER:
United Capital Group Limited
By: /s/ James C. Sutherland
---------------------------------------------
James C. Sutherland, Authorized Signatory
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT A
----------
Shares of EIP to be Shares of FCII to be
Delivered to FCII Received from FCII
Stockholder at Closing at Closing
- --------------------------------- ------------------- ----------------------
<S> <C> <C>
1. Eurocapital Group Ltd. 30 25,500,000
19 Peel Road
Douglas, Isle of Man U.K.
2. United Capital Group Ltd. 10 8,500,000
Suites 7B & 8B
50 Town Range
Gibraltar
</TABLE>
<PAGE>
LETTER AGREEMENT
BETWEEN
UNITED CAPITAL GROUP, LTD.,
AND
FIRST CAPITAL INTERNATIONAL, INC.
This Letter Agreement, hereinafter referred to as tile "Agreement", is made by
and between UNITED CAPITAL GROUP, LTD., a Corporation duly chartered under the
laws of Gibraltar, hereinafter referred to as "UCG", and FIRST CAPITAL
INTERNATIONAL, INC., a Corporation duly chartered under the laws of the State of
Delaware, USA, hereinafter referred to as "FCI". UCG and FCI are collectively
referred to in this Agreement as the "Parties".
The Parties to this Agreement through discussions and negotiations have agreed
to the following terms and conditions:
I. The Parties do hereby expressly agree that FCI will receive a Credit Line,
from UCG, of an amount up to and not to exceed Three Hundred Thousand
($300,000.OOUSD) Dollars, hereinafter referred to as the "Credit Line".
II. Both Parties do hereby expressly agree that the above referenced Credit
Line will be extended for the payment of any and all debts owed by the
predecessor company of FCI, known as Ranger, USA, hereinafter referred to
as "Ranger".
III. Both Parties do hereby expressly agree that the above referenced Credit
Line will further be utilized for the payment of the following, as well:
all Consulting work performed by outside Consultants, all expenses related
to the business developments in the Countries/Republics of Moldova,
Lithuania, Estonia and Russia, to pay for all required personnel salaries
and certain expenses/charges and to pay for all telephone, Internet related
charges, travel, entertainment and professional fees. The Parties agree
that the above referenced listing of charges and expenses are not to be
considered all inclusive; certain other expenses and charges could arise
which would be paid from this Credit Line, as well.
IV. Both Parties do hereby expressly agree the UCG has paid some of the
following expenses, during the time frame of 01 June 1998 through 01
September 1998, related to the evaluation of Ranger, as well as, some of
the legal expenses related to the FCI acquisition and new business
development related to future business for FCI. The Parties do expressly
agree that any of these amounts expended during this time frame should be
made an integral part and covered by the Credit Line Letter Agreement.
<PAGE>
LETTER AGREEMENT
BETWEEN
UNITED CAPITAL GROUP, LTD.,
AND
FIRST CAPITAL INTERNATIONAL, INC.
Page 2
V. Both Parties do hereby expressly agree that the Expense calculations as
incorporated and attached herein for all purposes as Exhibit "A", are true,
accurate and correctly calculated and further should be made an integral
part of this Agreement.
VI. Both Parties do hereby expressly agree that the Credit Line could be
extended through any Credit facilities and/or by direct payments to be made
for the above-referenced services, charges and/or expenses by EuroCapital
Group (IOM) or ECL Trading Co., Inc., (Houston, Texas).
VII. Both Parties do hereby expressly agree that FCI will reimburse UCG by 01
February 1999, all amount of the extended credit by that time with a lump
sum payment including 8% interest, per annum; however, interest will be
calculated only from the date that the respective amounts of credit are
billed.
VIII.Both Parties do hereby expressly agree that in the event that repayment is
not made to UCG by FCI, then FCI will cause to be issued shares of it's
Restricted Common Stock in an amount adequate to cover any and all amounts
extended to FCI by UCG under the Credit Line; such shares of FCI stock will
be issued at a per share price of $0.025 cents. Additionally, both Parties
expressly agree that FCI will cause these requisite shares certificates to
be issued on a timely basis to allow this debt under the Credit Line to be
fully converted into the Restricted Common shares of stock, as
above-referenced.
IX. Both Parties do hereby expressly agree that in the event FCI will continue
to utilize the remaining Credit Line available balance and/or credit
facilities, those respective funds drawn on after 01 February 1999 shall be
paid back to UCG no later than 01 May 1999 or be converted into Restricted
shares of Common stock of FCI based upon the per share price of $0.05
cents. In the event of the utilization of this new agreed to shares
conversion, FCI does hereby agree to immediately cause the requisite amount
of shares, to equal the new outstanding balance borrowed by FCI, of its
Restricted Common stock to be issued to UCG without any unreasonable
delays.
X. Both Parties do hereby expressly agree that this Agreement is Final and
will come into full force and effect upon the signing of same and as
evidenced by the Parties signatures below.
<PAGE>
LETTER AGREEMENT
BETWEEN
UNITED CAPITAL GROUP, LTD.,
AND
FIRST CAPITAL INTERNATIONAL, INC.
Page 3
XI. Both Parties do hereby expressly agree that this Agreement was negotiated
in good faith and that both Parties do expressly understand the full extent
and nature of this Agreement and that this Agreement evidences the true
agreed to terms and conditions set forth between UCG and FCI, as evidenced
by the Parties signatures below.
XII. This Agreement may be executed and signed by facsimile and if indeed signed
by the Parties through facsimile then the facsimile copy will for all
intent and purposes be treated as an original with full force and effect.
XIII.This Agreement may be only changed, modified or amended by a written
instrument signed by both Parties to this Agreement.
XIV. This Agreement is subject to the laws of the United Kingdom.
EXECUTED this ___ day of February 1999 and to be effective as of the 01
September 1998.
AGREED TO AND ACCEPTED BY:
UNITED CAPITAL GROUP, LTD. FIRST CAPITAL INTERNATIONAL, INC.
______________________________ ____________________________
Alex Genin - President
<PAGE>
SCHVANEVELDT AND COMPANY
Certified Public Accountant
275 E. South Temple, Suite 300
Salt Lake City, Utah 84111
(801) 521-2392
Darrell T. Schvaneveldt, CPA
May 11, 1999
Securities and Exchange Commission
Washington, D.C. 20549
Ladies & Gentlemen,
We were previously principal accountants for Kan-Tx Energy Company and, under
the date of May 2, 1994, we reported on the financial statements of Kan-Tx
Energy Company as of April 30, 1994, December 31, 1993, 1992 and 1991, and the
related statements of operations, stockholders' equity and cash flows for the
accumulated period January 3, 1977 to April. 30, 1994, the period January 1,
1994 to April 30, 1994, and for the years ended December 31, 1993, 1992 and
1991. We have read the disclosure under Item 3 of Form 10-SB. We agree with
such statements in so far as they relate to our firm. We understand that we
were terminated as independent accountants effective May 2, 1994.
Very Truly Yours,
/S/ Darrell T. Schvaneveldt
- ------------------------------
Darrell T. Schvaneveldt
<PAGE>
Exhibit 21.1 Subsidiaries of the registrant
Ranger Car Care Corporation, a Texas corporation
100% owned by the registrant.
EIP Liisingu AS, an Estonian corporation.
100% owned by the registrants
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 42292
<SECURITIES> 0
<RECEIVABLES> 113406
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 182839
<PP&E> 27526
<DEPRECIATION> 9956
<TOTAL-ASSETS> 324393
<CURRENT-LIABILITIES> 7624
<BONDS> 312109
<COMMON> 7390
0
0
<OTHER-SE> (2730)
<TOTAL-LIABILITY-AND-EQUITY> 324393
<SALES> 0
<TOTAL-REVENUES> 132872
<CGS> 0
<TOTAL-COSTS> 94255
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 65570
<INCOME-PRETAX> (26953)
<INCOME-TAX> 0
<INCOME-CONTINUING> (26953)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (26953)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 61467
<SECURITIES> 0
<RECEIVABLES> 107200
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 203461
<PP&E> 29045
<DEPRECIATION> 19526
<TOTAL-ASSETS> 335401
<CURRENT-LIABILITIES> 193311
<BONDS> 333641
<COMMON> 55751
0
0
<OTHER-SE> (247302)
<TOTAL-LIABILITY-AND-EQUITY> 335401
<SALES> 0
<TOTAL-REVENUES> 57174
<CGS> 0
<TOTAL-COSTS> 813130
<OTHER-EXPENSES> 303
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 31611
<INCOME-PRETAX> (787870)
<INCOME-TAX> 0
<INCOME-CONTINUING> (787870)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (787870)
<EPS-BASIC> (.04)
<EPS-DILUTED> (.04)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 91539
<SECURITIES> 0
<RECEIVABLES> 91269
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 204716
<PP&E> 29045
<DEPRECIATION> 22271
<TOTAL-ASSETS> 315187
<CURRENT-LIABILITIES> 35662
<BONDS> 306646
<COMMON> 65023
0
0
<OTHER-SE> (92144)
<TOTAL-LIABILITY-AND-EQUITY> 315187
<SALES> 0
<TOTAL-REVENUES> 12946
<CGS> 0
<TOTAL-COSTS> 159901
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 8160
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (155115)
<INCOME-TAX> 0
<INCOME-CONTINUING> (155115)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (155115)
<EPS-BASIC> (.02)
<EPS-DILUTED> (.02)
</TABLE>
