FIRST CAPITAL INTERNATIONAL INC, 10SB12G/A, 1999-12-08

FIRST CAPITAL INTERNATIONAL INC
10SB12G/A, 1999-12-08
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.

FORM 10-SB
AMENDMENT NO. 4

GENERAL INFORMATION FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS UNDER SECTION 12(b)
OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File No. 0-26271

FIRST CAPITAL INTERNATIONAL, INC.
(Name of Small Business Issuer in Its Charter)

Delaware 76-0582435
(State or 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

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TABLE OF CONTENTS

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PART I

Item 1. Description of Business . . . . . . . . . . . . . . . . . . . . 1
Item 2. Management's Discussion and Analysis. . . . . . . . . . . . . . 14
Item 3. Description of Property . . . . . . . . . . . . . . . . . . . . 25
Item 4. Security Ownership of Certain Beneficial Owners and Management. 25
Item 5. Directors, Executive Officers, Promoters and Control Persons. . 27
Item 6. Executive Compensation. . . . . . . . . . . . . . . . . . . . . 28
Item 7. Certain Relationships and Related Transactions. . . . . . . . . 30
Item 8. Description of Securities . . . . . . . . . . . . . . . . . . . 32

PART II

Item 1. Market Price of and Dividends on the Registrant's Common Equity
and Other Shareholder Matters . . . . . . . . . . . . . . . . . . 34
Item 2. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . 35
Item 3. Changes in and Disagreements With Accountants . . . . . . . . . 35
Item 4. Recent Sales of Unregistered Securities . . . . . . . . . . . . 36
Item 5. Indemnification of Directors and Officers . . . . . . . . . . . 39

PART F/S

Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . 40

PART III

Item 1. Index to Exhibits . . . . . . . . . . . . . . . . . . . . . . . 40
Item 2. Description of Exhibits
The Exhibits required by this item are included
as set forth in the Exhibit Index

Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
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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, in a recapitalization transaction
accounted for in a manner similar to a reverse merger.

- --- An Internet retail shopping site called PlazaRoyal.com, located at
www.plazaroyal.com. The Company began offering this website on the Internet in
March 1999. The main focus of this business segment is marketing U.S.
retailers to European consumers via this website. The Company is presently in
the phase of seeking cyber retail tenants to lease space at this website and to
date has not generated any revenues from its operation.

References to the Company in this Form 10-SB include First Capital
International, Inc. and EIP Liisingu AS.

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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.

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 former 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. The
Company treated the acquisition of EIP as a recapitalization whereby EIP was the
accounting acquiror. At the time of the acquisition, the Company estimated the
market value of the Company's common stock at approximately $.005 per share,
resulting in a valuation of the acquisition of approximately $170,000. The
Former EIP stockholders are presently the beneficial owners of 63.1% of the
common stock of the Company. See, Security Ownership of Certain Beneficial
Owners and Management.

In August, 1998, upon appointment of its present officers and directors and
initiation of the recapitalization involving EIP, the Company began current
operations. Management has evaluated the operations of EIP and has determined
that it does not currently make economic sense to commit additional resources to
expand EIP's leasing operations in Estonia. It is management's current intent
to grow the Company through the continued development and commercialization of
its Internet based business, PlazaRoyal.com in both the United States and
Eastern Europe. The Company will also consider the acquisition of financial
services or Internet related businesses in the same markets.

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. EIP was founded in 1994 by the Estonian
Innovation Bank, a bank in Estonia, and EIP was owned by the Estonian Innovation
Bank until 1998 at which time the Estonian Innovation Bank sold EIP to
Eurocapital Group, Ltd. and United Capital Group Limited.

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EIP owns a portfolio of leases of apartments, appliances, equipment and
automobiles. These leases are made to consumers and businesses in Estonia. The
main service offered by EIP is direct financing (lease-to-own, or option to
purchase) leases. EIP presently has no operating leases. A lease is considered
to be a direct financing lease if ownership of the leased asset is transferred
to the lessee at the end of lease term or if the amount of the lease payments or
the duration of the lease meet certain criteria. EIP's investment in direct
financing leases totaled $226,539 at December 31, 1998, and at that date, the
typical lease term of its direct financing leases was two to three years (see
Consolidated Financial Statements). EIP markets its services using newspaper
advertisements and other printed media in Estonia.

The Company currently funds leasing operations using cash flows from
operations and debt financing from the Estonian Innovation Bank, the former
owner of EIP. EIP, the Company's leasing subsidiary, uses such funds to acquire
the assets which it leases. The principal balance on the Estonian Innovation
Bank loan, which bears interest at 10% per annum was is $333,641 at December 31,
1998. This note is due in payments of interest only with a final balloon
payment of principal and interest due in May, 2002.

The Company believes that the Estonian Innovation Bank, the sole lender to
EIP, is insolvent and does not represent a source of further financing. The
Company has not analyzed other financing sources in Estonia but believes that
additional Estonia-based financing is not available or would be extremely costly
to obtain. Management has evaluated the operations of EIP and has determined
that it does not currently make economic sense to commit additional resources to
expand leasing operations in Estonia.

Lease Portfolio. The Company owns 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 lease.

During the years ended December 31, 1998 and 1997, the Company entered into
37 and 111 leases, respectively. The average value of a new lease was
approximately $2,548 in 1997, approximately $14,000 in 1998 and approximately
$10,167 in the quarter ended March 31, 1999. The Company's operations in
Estonia are conducted in transactions denominated in the local currency of
Estonia, the kroon or EEK, which is pegged at 8 EEK = 1 German Mark (DM), and
the calculation of these average lease values was based on the US$/DM exchange
rate at the end of each period calculated.

The average duration of the lease contracts was 1.1 years for 1997, 2.5
years for 1998, and 2.8 years for the quarter ended March 31, 1999. The average
interest rate of the leases has been approximately 17% per annum since 1997.

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The components of the Company's investment in direct financing leases at
December 31, 1998 were as follows:

Lease contracts receivable (net of
accounts reserved of $5,439) $280,986
Less unearned income 54,447
--------
Investment in direct financing leases $226,539
========

The value of the Company's lease portfolio was $192,641 at March 31, 1999,
$226,539 at December 31, 1998, and $233,158 at December 31, 1997. In each of
these periods, there was only one operating lease. EIP presently has no
operating leases.

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.

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. EIP presently
has no operating leases.

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 approximately 12 of EIP's leases
went into default. In 1998 approximately 3 of EIP's leases went into default.
All of these leases were direct finance leases.

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.

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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, as well 2-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 e-commerce affiliated merchant programs with
the following companies: Dell Computers, CBS Sports Store, Sharper Image,
Amazon.com, Discover Nature, CarPrice.com, Reel.com, and Swiss Army Depot and
approximately 70 other companies. The merchant programs enable the Company to
earn a percentage of the sales generated when a visitor to the Company's website
links to the website of an affiliated merchant and makes a purchase. The
Company will receive between 1% and 20% as a sales commission on these types of
transactions. These types of merchant programs are quickly and easily
established by the Company by applying for the an affiliation with a merchant
program over the Internet, and then programming the link (such as a banner or
3-D display stand) into the PlazaRoyal.com website. There has been no direct
cost to set up these merchant programs. There have been no revenues from these
merchant programs to date. The sales commission rates are established by the
seller and no negotiation with the Company takes place. For example, Dell
Computers gives a 1% sales commission and Sharper Image gives a 20% commission.
No single merchant program is material to the Company.

The Company has plans to develop a legal directory portal website under the
name LegalClaims.com to provide consumers with listings of providers of legal
services, and to market legal services of subscribers to consumers, all in
jurisdictions where this type of activity is permitted, such as in Canada,
Australia, New Zealand, and nations in Central America, South America, the
Caribbean, Europe, Africa and Asia. The Company has already reserved the web
site name www.legalclaims.com. Revenues will come from advertising,
subscribers, and sharing in legal fees in jurisdictions where this type of
activity is permitted. The Company is in the process of designing the web site.

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. The Company has no insurance to
cover political risks.

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Estonia does not have a highly inflationary economy now, although in the
recent past it did. Estonia has experienced a great amount of political and
economic instability and inflation increased, but then stabilized in 1999.
Accordingly, the government's monetary policy could come under pressure. If
inflation increases, both the outlook for leasing operations and the effect of
translation adjustments will negatively impact the Company's financial position
and results of operations. The Estonian inflation
rate has been negative since December, 1998, and the Estonian Consumer Price
Index growth rate has fallen to 3.1% in June, 1999 from 10.2% in June, 1998.
The tight credit environment has led to a reduction in imports and an increase
in unemployment, both of which act to reduce inflationary tendencies and to
lower consumer prices. If Estonia experiences growing inflation, then Estonia's
economy could be classified as a highly inflationary economy under generally
accepted accounting principles. Under such circumstances, declines in the value
of the EEK would be reflected in operations and would negatively impact the
Company's financial position and results of operations.

Estonia is a free market democracy with established commercial laws. In
Estonia, lease agreements are governed by the Estonian Law of Rent and the Law
of Property. Under these laws, if the lessee does not make a payment within
three months of a due date, or within such shorter period specified in the lease
agreement, the lessor is entitled to repossess the leased property (under a
legal theory of unilateral anticipatory termination). A repossession causes no
tax consequences to the lessor or investors). At this time, Estonian law is
unsettled as to whether a lessor must first make a claim of anticipatory
termination by the lessee in court.

The local currency of Estonia is the Estonian kroon or EEK. Because the
EEK is the functional currency for its Estonian subsidiary under Financial
Accounting Standards Board Statement No. 52, "Foreign Currency Translation" (FAS
52), assets and liabilities denominated in foreign functional currencies are
generally 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.
Therefore, the Company has exposure to foreign currency fluctuations and foreign
government intervention such as a devaluation of the local currency, or a freeze
of international transfer of funds. The Estonian Central Bank does not have the
power to devalue the EEK, and technical fluctuations are restricted to 3%.
However, a devaluation of the German Mark (DM) or the Euro could occur, with a
resulting effect on the exchange rate of the EEK. The Estonian Central Bank has
officially pegged the EEK at 8 EEK = 1 DM. Therefore, the Company is also
subject to foreign currency risks related to the DM. Relative to the U.S.
dollar, a declining EEK or DM would negatively impact the value, in U.S.
dollars, of the Company's transactions in Estonia. The Estonian Central Bank
has also officially pegged to the Euro at 15.64 EEK = 1 Euro, which is
considered the equivalent of the DM peg. Therefore, the Company is also subject
to the same types of foreign currency risks related to the Euro. Relative to
the U.S. dollar, a declining Euro would negatively impact the value, in U.S.
dollars, of the Company's transactions in Estonia.

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EMPLOYEES

As of November 9, 1999, the Company had nine employees in the USA and EIP
had four employees in Europe. No employees are represented by a union. The
Company believes that its employee relations are good.

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.

In July, 1999, the Company terminated negotiations to acquire 100% of the
outstanding equity of TGK-LINK AS, an Estonian company.

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 preparing the Company's systems for the Year 2000.

In assessing the readiness of third parties, the Company has received
correspondence from Hagen & Associates ("Hagen"), the Company's Internet web
site host and service provider, dated September 28, 1999, stating that Hagen has
found its systems to be Year 2000 compliant. The three major internet
backbone providers in Estonia, who are EestiTelecom, MCI and Sprint announced
their systems are Y2K compliant.

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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.

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.

RISK FACTORS

Going Concern Risk

During 1998 and 1997, the Company has been dependent on debt and equity
raised from individual investors and related parties to sustain its operations
and has incurred net losses of $1,640,760 and $30,078, 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 $90,131 at December 31, 1998 raise substantial doubt about the Company's
ability to continue as a going concern. (See Note 4 of the Consolidated
Financial Statements on Page F-13) The Company's long-term viability as a going
concern is dependent upon three key factors as follows:

- --- 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.

As a result of potential liquidity problems that the Company faces, its
auditors, Ham, Langston & Brezina, L.L.P. have added an explanatory paragraph
in their opinion on the Company's financial statements indicating that
substantial doubt exists about the Company's ability to continue as a going
concern.

Recent Losses and Accumulated Losses and Deficit, and Potential Deficiencies in
Liquidity

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The Company's ability to achieve profitability will depend, in part, on its
ability to successfully develop and market its Internet site on a wide scale.
There is no assurance that the Company will be able to successfully make the
transition from development to commercial success for its Internet site on a
broad basis. While attempting to make this transition, the Company will be
subject to all risks inherent in a growing venture, including the need to
develop marketing expertise and produce significant revenue. The Company may
incur losses for the foreseeable future due to the significant costs associated
with Internet site development and commercialization activities. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

The Company incurred a net loss of $1,640,760 for the year ending December
31, 1998, and a net loss of $30,078 for the year ended December 31, 1997. At
December 31, 1998 the Company had an accumulative deficit of $1,678,996.
Revenues decreased during the year ending December 1998 to $57,174 from
$132,872 during the year ended December 31, 1997. Losses have been largely
attributable to the Company becoming active in August, 1998 after a dormant
period, and the Resulting commencement of business operations. Management
believes that revenues will increase, and ultimately that the Company will
be profitable, although there can no assurance that this will occur.

Lack of Financing for Future Acquisitions and Expenditures

Financing for the Company. Until such time as the operating results of the
Company improve sufficiently, the Company must obtain outside financing to fund
the expansion of the business and to meet the obligations of the Company as they
become due. Any additional debt or equity financing may be dilutive to the
interests of the shareholders of the Company. Such financing must be provided
from the Company's operations, or from the sale of equity securities, borrowing,
or other sources of third party financing in order for the Company to expand its
operations. Further, the sale of equity securities could dilute the Company's
existing stockholders' interest, and borrowings from third parties could result
in assets of the Company being pledged as collateral and loan terms which would
increase its debt service requirements and could restrict the Company's
operations. There is no assurance that capital will be available from any of
these sources, or, if available, upon terms and conditions acceptable to the
Company.

Financing for EIP. The Company funds its leasing operations through its
cash flow from operation and from long term debt financing which it presently
has from third parties. EIP, the Company's leasing subsidiary, utilizes these
funds to acquire the assets which it leases. EIP presently owes long term debt
in the remaining principal balance of $333,641, which is payable interest only
on a monthly basis at 10% interest per annum with a final balloon payment of
principal and interest due in May, 2002.

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The Company believes that the Estonian Innovation Bank, the sole lender to
EIP, is insolvent and does not represent a source of further financing.
Estonian Innovation Bank owned EIP at one time. The Company has not analyzed
other financing sources in Estonia but believes that additional Estonia-based
financing is not available or would be extremely costly to obtain. Management
has evaluated the operations of EIP and has determined that it does not make
economic sense to commit additional resources to expand leasing operations in
Estonia. If EIP does not raise new funds to finance new leases, EIP will
ultimately be in a self- liquidating situation, whereby EIP would find itself
with de minimis cash and no leases. EIP presently has

no operating leases and does not possess any assets that were the subject of
previous operating leases.

Foreign Political Risk

Uninsured Political Risks

The Company does not have any political risk insurance to cover its foreign
assets or bassness. There can be no assurance that the Company may not be
exposed to a complete loss of its foreign assets and business due to foreign
political events.

Foreign Currency Risk

Presently, the Company's operations in Estonia are conducted in
transactions denominated in the local currency of Estonia, the kroon or EEK.
The Company has determined that the EEK 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. Therefore, the Company has exposure to
foreign currency fluctuations and foreign government intervention such as a
devaluation of the local currency, or a freeze of international transfer of
funds. The EEK is pegged at 8 EEK = 1 German Mark (DM). Therefore, the Company
is also subject to the same types of foreign currency risks related to the DM.
Relative to the U.S. dollar, a declining EEK or DM would negatively impact the
value, in U.S. dollars, of the Company's transactions in Estonia. The EEK is
also pegged to the Euro at 15.64 EEK = 1 Euro, which is considered the
equivalent of the DM peg. Therefore, the Company is also subject to the same
types of foreign currency risks related to the Euro. Relative to the U.S.
dollar, a declining Euro would negatively impact the value, in U.S. dollars, of
the Company's transactions in Estonia.

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Risk of Dilution Upon Conversion of Options and Shares Eligible for Future Sale

Risk of Dilution Upon Conversion of Options. The Company presently has
-----------------------------------------------
outstanding a total of 4,550,000 options to purchase common stock of the Company
at exercise prices of $.05 to $.25 per share, which are below market exercise
prices. If exercises or conversion occur, other shareholders will be subject to
an immediate dilution in per share net tangible book value.

Risk of Dilution Related to Shares Eligible for Future Sale. At November
-------------------------------------------------------------
9, 1999, the Company had outstanding 68,561,142 shares of common of which
approximately 12,401,842 shares are free trading shares, and approximately
56,159,300 shares are restricted securities as that term is defined in Rule 144
adopted under the Act ("Restricted Securities"). Rule 144 governs resales of
Restricted Securities for the account of any person, other than an issuer, and
restricted and unrestricted securities for the account of an "affiliate" of the
issuer. Restricted securities generally include any securities acquired
directly or indirectly from an issuer or its affiliates which were not issued or
sold in connection with a public offering registered under the Securities Act.
An affiliate of the issuer is any person who directly or indirectly controls, is
controlled by, or is under common control with, the issuer. Affiliates of the
Company may include its directors, executive officers, and persons directly or
indirectly owning 10% or more of the outstanding common stock. Under Rule 144,
unregistered resales of restricted common stock cannot be made until it has been
held for one year from the later of its acquisition from the Company or an
affiliate of the Company. Thereafter, shares of common stock may be resold
without registration subject to Rule 144's volume limitation, aggregation,
broker transaction, notice filing requirements, and requirements concerning
publicly available information about the Company ("Applicable Requirements").
Resales by the Company's affiliates of restricted and unrestricted common stock
are subject to the Applicable Requirements. The volume limitations provide that
a person, or persons who must aggregate their sales, cannot, within any
three-month period, sell more than the greater of (i) one percent of the then
outstanding shares, or (ii) the average weekly reported trading volume during
the four calendar weeks preceding each such sale. A person who is not deemed an
"affiliate" of the Company and who has beneficially owned shares for at least
two years would be entitled to sell such shares under Rule 144 without regard to
the Applicable Requirements. The Company believes that approximately 11,717,530
shares of its restricted common stock have been held for more than two years,
and therefore may be sold by non-affiliates without limitation. Further, the
Company believes that 45,717,530 shares of its restricted common stock have been
held for more than one year, and therefore may be sold pursuant to the
Applicable Requirements.

No prediction can be made as to the effect, if any, that sales of shares of
common stock or the availability of such shares for sale will have on the market
prices prevailing from time to time. Nevertheless, the possibility that
substantial amounts of common stock may be sold in the public market would
likely have a material adverse effect on prevailing market prices for the common
stock and could impair the Company's ability to raise capital through the sale
of its equity securities.

11
<PAGE>
Limited Operating History; No Assurance of Successful Implementation of Business
Strategy

The Company became active in August, 1998 after a dormant period. In
addition to those risks specifically inherent in the establishment and growth of
a developing businesses, including, among other things, limited access to
capital, delays in the completion of its business plan in certain markets and
intense competition, profits from e-commerce and eastern-Europe related business
endeavors have been elusive. There can be no assurance that the Company's
business ultimately will be successful. Therefore, ownership of securities of
the Company must be regarded as the placing of funds at a high risk in a new or
developing venture with all of the unforeseen costs, expenses, problems, and
difficulties to which such ventures are subject.

Ability to Locate Suitable Combination Partners

The Company periodically enters into preliminary, non-binding discussions
with other firms in Internet related or Internet exploitable industries in the
U.S. and eastern Europe and the Baltic region. Such discussions could result
in business combinations. While the Company desires that such business
combinations occur, no assurance can be given that any future business
combination can be structured on terms acceptable to the Company. 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. However, it may result in substantial dilution in per share net
tangible book value to existing shareholders.

Control by Management

Alex Genin, the Chief Executive Officer and Chairman of the Board of the
Company is the beneficial owner approximately 72.9% of the common stock of the
Company. As a result, management, as a practical matter, will be able to elect
all directors and otherwise control the affairs of the Company for the
foreseeable future.

Market Liquidity of the Company's Securities and Penny Stock Securities Law
Considerations

The Company's stock is considered penny stock and subject to the penny
stock rules promulgated under the Securities Exchange Act of 1934, Rules 15g-1
to 15g-9. The penny stock rules require broker-dealers to take steps under
certain circumstances prior to executing any penny stock transactions in
customer accounts. Among other things, Rule 15g-3 requires a broker or dealer
to advise potential purchasers of a penny stock of the lowest offer and highest
bid quotations for such stock, and Rule 15g-4 requires a broker or dealer to
disclose to the potential purchaser its compensation in connection with such
transaction. Under Rule 15g-9, a broker or dealer who recommends such
securities to persons other than established customers must make a special
written suitability determination for the purchaser and receive the purchaser's
prior agreement to such a transaction. The effect of these regulations may be
to delay transactions in stocks that are deemed to be penny stocks, and
therefore the market liquidity of the Company's securites and sales of the
Company's common stock by brokers or dealer and resales by investors could be
adversely affected.

12
<PAGE>
Possible Volatility of Common Stock Price

The market price of the Common Stock may be highly volatile, as has been
the case with the securities of many other small capitalization companies.
Additionally, in recent years, the securities markets have experienced a high
level of price and volume volatility and the market prices of securities for
many companies, particularly small capitalization companies, have experienced
wide fluctuations which have not necessarily been related to the operating
performances or underlying asset values of such companies.

Issuance of Preferred Stock

The Company presently has authorized 10,000,000 shares of preferred stock,
par value $.001 per share, non of which are outstanding. The shares of
Preferred Stock, if issued, would be entitled to preferences over the Common
Stock. The Company's Board of Directors will have authority, without action or
consent by the stockholders, to issue the authorized but unissued shares of
Preferred Stock in one or more series, to fix the number of shares in each
series, and to determine the voting rights, preferences as to dividends and
liquidation rights, conversion rights, and other rights of any such series. The
shares of Preferred Stock, when and if issued, could adversely affect the rights
of the holders of Common Stock, and could prevent holders of common stock from
receiving a premium for their common stock. For example, such issuance could
result in a class of securities outstanding that would have preferences with
respect to voting rights and dividends and in liquidation over the Common Stock,
and could (upon conversion or otherwise) enjoy all of the rights of holders of
Common Stock. The Board's authority to issue Preferred Stock could discourage
potential takeover attempts and could delay or prevent a change in control of
the Company through merger, tender offer, proxy contest or otherwise by making
such attempts more difficult to achieve or more costly. The Company may
designate Series A Convertible Preferred Stock in the near future in connection
with a proposed sale of securities. See, Preferred Stock--Description of
Securities

No Cash Dividends

The Company has never paid cash dividends on its Common Stock and the Board
of Directors does not anticipate paying cash dividends in the foreseeable
future. It currently intends to retain future earnings to finance the growth of
its business.

Limitation on Director Liability

The Company's Articles of Incorporation provide, as permitted by governing
Delaware law, that a director of the Company shall not be personally liable to
the Company or its stockholders for monetary damages for breach of fiduciary
duty as a director, with certain exceptions. These provisions may discourage
stockholders from bringing suit against a director for breach of fiduciary duty
and may reduce the likelihood of derivative litigation brought by stockholders
on behalf of the Company against a director.

13
<PAGE>
Competition

There are many companies which are currently engaged in e-commerce and
leasing. Some of the Company's competitors are more established companies with
substantially greater capital resources and have substantially greater marketing
capabilities than the Company. No assurances can be given that the Company will
be able to successfully compete with such companies. The cost of entry into the
e-commerce marketplace is low. The Company anticipates that the number of
competitors will increase in the future.

Dependence On, and Availability of Management; Management of Growth

The success of the Company is substantially dependent upon the time,
talent, and experience of Alex Genin, its President and Chief Executive Officer.
The Company has no employment agreement with Mr. Genin. The loss of the
services of Mr. Genin would have a material adverse impact on the Company and
its business. No assurance can be given that a replacement for Mr. Genin could
be located in the event of his unavailability. Further, in order for the
Company to expand its business operations, it must continue to improve and
expand the level of expertise of its personnel and must attract, train and
manage qualified managers and employees to oversee and manage the expanded
operations. Demand for Internet and computer industry personnel is high. There
is no assurance that the Company will be in a position to offer competitive
compensation to attract or retain such personnel.

Ability to Manage Growth

It is the intention of the Company to expand its existing business
operations by acquiring companies and starting new businesses. Such expansion
will subject the Company to a variety of risks associated with rapidly growing
companies. In particular, the Company's growth may place a significant strain
on its day-to-day operations. There can be no assurance that its systems,
controls or personnel will be sufficient to meet these demands. Inadequacies in
these areas could have a material adverse effect on the Company's business,
financial condition and results of operations.

Item 2. Management Discussion and Analysis

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.

14
<PAGE>
INTRODUCTION

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.

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 (see below for
discussion of foreign currency issues). The Company believes that EIP's
existing cash flow is adequate to fund its existing lease portfolio. The
Company's future ability to enter into new leases is dependent upon the
availability of financing. The Company's main objective for the next 12 months
is to maintain the existing portfolio of leases.

The Company presently believes that the development and expansion of its
e-commerce business web site, 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.

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<PAGE>
During late 1998 through October 1, 1999, the Company, in private
transactions, raised approximately $300,000 in cash through the sale of its
common stock and options.

PLAN OF OPERATION

The Company's 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

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 has
contracted with the E-commerce Solution Company in order to provide full
E-commerce services to the clients of the PlazaRoyal.com portal. The Company
intends to finance these respective expenditures from the sale of its securities
and the Company's existing stockholders could suffer significant dilution in per
share net tangible book value from such sales of securities by the Company.

16
<PAGE>
Since the Company emerged from dormancy it has been dependent on outside
financing from individuals and related parties to fund its Internet site
development and general corporate overhead. The Company is now in the phase of
building markets for PlazaRoyal.com and will continue to be dependent on outside
financing for the foreseeable future. If the Company is unable to successfully
transition from site development to commercial success for PlazaRoyal.com in a
reasonable time frame and/or is unable to acquire other commercially viable
businesses, the Company may be unable to obtain adequate sources of long-term
financing to continue operations.

GOING CONCERN ISSUE

During the six months ended June 30, 1999 and the year ended December 31,
1998 the Company has been dependent on debt and equity raised from individual
investors and related parties to sustain its operations. During those periods
the Company has incurred net losses of ($742,298) and ($1,640,760),
respectively. Additionally, the Company had negative cash flows from operations
during those periods of $97,019 and $190,567, respectively. These factors
along with a stockholders' deficit of $74,432 at June 30, 1999 raise substantial
doubt about the Company's ability to continue as a going concern.

The Company's long-term viability as a going concern is dependent upon
three key factors as follows:

- --- 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.

As a result of potential liquidity problems that the Company faces, its
auditors, Ham, Langston & Brezina, L.L.P. have added an explanatory paragraph
in their opinion on the Company's financial statements for the year ended
December 31, 1998 indicating that substantial doubt exists about the Company's
ability to continue as a going concern.

17
<PAGE>
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 near term, the Company recently became a 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 has developed
PlazaRoyal.com, a virtual mall, for launch on the Internet. Management believes
that revenues from this virtual mall, if successfully marketed, 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 and substantially all of the
Company's total net loss for the six months ended June 30, 1999.

COMPETITION

The Company believes that only a very limited number of sites on the
Internet offer the same type of 3-D shopping experience that PlazaRoyal.com
intends to offer. The Company also believes that as technology and related
Internet access speeds improve, that PlazaRoyal.com will attract both a greater
number of customers and more intense competition from other 3-D Internet
shopping sites. Such competition could ultimately make 3-D an ordinary feature
of Internet shopping malls. The Company has developed a normal 2-D version of
its site that requires less graphic data transfer and is better suited for
current technology. This 2-D Internet site is already subject to extreme
competition and an inability by the Company to properly target its customers and
differentiate its Internet site from the sites of its competitors could have a
significant adverse impact on the Company. The Company plans to target markets
in Eastern Europe that management believes are either undeveloped or are not
adequately served.

Company believes that EIP, the Company's leasing operation in Estonia, is
not subject to severe competition in the markets it serves because the leasing
industry is relatively new to Estonia. However, the financial systems in
Estonia are not as well developed as those in the United States and the Company
intends to continue leasing operations in Estonia only to the extent that they
are supported by EIP's current cash flows from operations.

18
<PAGE>
FOREIGN CURRENCY TRANSLATION AND INFLATION ISSUES

Foreign Currency Issues. EIP's functional currency is the Estonian kroon
-------------------------
("EEK") and substantially all business conducted by EIP is conducted within
Estonia. Small changes in the U.S. dollar/EEK exchange rate do not have a
significant impact on EIP's financial position or results of operations.
However, declines in the value of the EEK generally reduce the value of certain
of EIP's assets and cause deterioration in the Company's overall financial
position. To stabilize its currency, the government of Estonia has enacted
monetary policy that "pegs" the exchange rate of the EEK to the German mark
("DEM") in the ratio of 8 EEK = 1 DEM. Because the exchange rate of the DEM is
relatively stable against the U.S. dollar, the exchange rate of the EEK should
also be expected to be relatively stable against the U.S. dollar.

The local currency of Estonia is the Estonian kroon or EEK. Because the
EEK is the functional currency for its Estonian subsidiary under Financial
Accounting Standards Board Statement No. 52, "Foreign Currency Translation" (FAS
52), assets and liabilities denominated in foreign functional currencies are
generally 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.
Therefore, the Company has exposure to foreign currency fluctuations and foreign
government intervention such as a devaluation of the local currency, or a freeze
of international transfer of funds. The Estonian Central Bank does not have the
power to devalue the EEK, and technical fluctuations are restricted to 3%.
However, a devaluation of the German Mark (DM) or the Euro could occur, with a
resulting effect on the exchange rate of the EEK. The Estonian Central Bank has
officially pegged the EEK at 8 EEK = 1 DM. Therefore, the Company is also
subject to foreign currency risks related to the DM. Relative to the U.S.
dollar, a declining EEK or DM would negatively impact the value, in U.S.
dollars, of the Company's transactions in Estonia. The Estonian Central Bank
has also officially pegged to the Euro at 15.64 EEK = 1 Euro, which is
considered the equivalent of the DM peg. Therefore, the Company is also subject
to the same types of foreign currency risks related to the Euro Relative to the
U.S. dollar, a declining Euro would negatively impact the value, in U.S.
dollars, of the Company's transactions in Estonia.

The Company's results of operations were improved when the Company's
functional currency changed from the U.S. dollar to the Estonian Kroon.
Estonia's economy has a historically higher inflation rate than the United
States economy and all currency losses associated with the translation of
financial statements where the U.S. dollar is considered the functional currency
are reflected as losses in operations rather than as charges against
stockholders' equity as is the case when the Estonian kroon is considered EIP's
functional currency.

19
<PAGE>

Estonian Inflation Issues. Estonia does not have a highly inflationary
---------------------------
economy now, although in the recent past it did. Estonia has experienced a
great amount of political and economic instability and inflation increased, but
then stabilized in 1999. Accordingly, the government's monetary policy could
come under pressure. If inflation increases, both the outlook for leasing
operations and the effect of translation adjustments will negatively impact the
Company's financial position and results of operations. The
Estonian inflation rate has been negative since December, 1998, and the Estonian
Consumer Price Index growth rate has fallen to 3.1% in June, 1999 from 10.2% in
June, 1998. The tight credit environment has led to a reduction in imports and
an increase in unemployment, both of which act to reduce inflationary tendencies
and to lower consumer prices. If Estonia experiences growing inflation, then
Estonia's economy could be classified as a highly inflationary economy under
generally accepted accounting principles. Under such circumstances, declines in
the value of the EEK would be reflected in operations and would negatively
impact the Company's financial position and results of operations.

SIGNIFICANT TRENDS

During 1998 EIP entered into 37 new finance leases as compared to 111 in
1997. Substantially all leases entered into by EIP are finance leases and the
average dollar amount of each lease was approximately $14,730 in 1998 and $2,548
in 1997. This trend highlights the fact that the Company's leasing operations
have been and are expected to continue to be adversely impacted by
underdeveloped Estonian financial markets and by managements decision to employ
substantially all new capital resources in funding the Company's Internet site
development and in building markets for its Internet sites. The Company intends
to continue servicing its existing lease portfolio but intends to enter into new
leases only to the extent that such new leases are supported by EIP's cash flows
from operations. Because EIP experienced negative cash flows from operations of
approximately $7,000 during 1998, the Company will fund few, if any, new leases
in 1999. The Company expects that negative cash flows from operations at EIP
during 1999 will meet or exceed those experienced in 1998 not only due to a
decline in leasing activity but also because the Company intends to use the EIP
employees to help in the development of markets for the Company's Internet sites
and in fund raising efforts in Eastern Europe.

RESULTS OF OPERATIONS

Year Ended December 31, 1998 Compared to the Year Ended December 31, 1997

During 1998 the Company experienced a decline in revenues of $75,698 or 57%
as compared to 1997. This decline in revenue was the direct result of a decline
in leasing activity in EIP that was caused by a deterioration of the financial
markets in Estonia and related limitations on the availability of capital to
enter into new leases. (See Significant Trends above.)

During 1998 the Company's operating, general and administrative costs of
approximately $258,000 increased 313% as compared to 1997. The increase of
approximately $176,000 was made up of an increase of approximately $95,000 in
personnel costs, an increase of approximately $61,000 in legal and other
professional fees.

20
<PAGE>
During 1998 depreciation and amortization decreased by $3,435 or 29% as
compared to 1997. This increase was the direct result of the expiration of
certain leases and disposition of the related leased assets. The Company
believes that such decreases will continue in future years as the Company
downsizes its leasing operations through EIP in Estonia and concentrates on
development of PlazaRoyal.com and other related Internet businesses.

During 1998 stock and option based compensation was $1,334,327 due to the
sale of common stock to officers and employees at below market prices and due to
the issuance of options for purchase of common stock with exercise prices below
the current price of the Company's common stock at the date of issue. Such
sales resulted in charges to compensation expense for the difference between the
market price and the exercise/sales price at the date of issue/sale. In 1997
there were no similar sales or issuances of stock and options.

During 1998 the Company had a net loss of ($1,640,460) compared to a net
loss of ($30,078) in 1997. The increased net loss was largely attributable to
the Company's Internet related activities in the United States as the net loss
from operations in Estonia, through EIP, increased by only $11,738. As
described in more detail above, the primary reasons for the increased losses
were stock and option based compensation charges and increases in personnel,
legal and professional fees in 1998.

Three Months Ended June 30, 1999 Compared to the Three Months Ended June 30,
1998

During the three months ended June 30, 1999 the Company's revenues
increased approximately $50,000 or 161% as compared to the three months ended
June 30, 1998. Leasing revenues in EIP were consistent as a result of
consistently weak leasing activity in EIP caused by a deterioration of the
financial markets in Estonia and related limitations on the availability of
capital to enter into new leases. (See Significant Trends) However, during the
three months ended June 30, 1999, EIP earned approximately $50,000 in revenue
for market research services provided to a related entity. These revenues
account for the overall increase.

During the three months ended June 30, 1999 the Company's operating,
general and administrative costs increased by approximately $94,000 as compared
to the three months ended June 30, 1998. This increase was made up of an
increase in personnel costs and in legal and other professional fees. The
$94,000 increase was primarily attributable to the development of the Company's
PlazaRoyal.com Internet site and to general business development.

During the three months ended June 30, 1999 depreciation and amortization
remained constant as compared to the three months ended June 30, 1998 due to
similar levels of activity in EIP.

During the three months ended June 30, 1999 stock and option based
compensation was $77,860 due to the sale of common stock to officers and
employees at below market prices, and due to the issuance of options for
purchase of common stock with exercise prices below the current price of the
Company's common stock at the date of issue. Such sales resulted in charges to
compensation expense for the difference between the market price and the sales
price at the date of sale. In the three months ended June 30, 1998 there were
no similar sales of stock and options.

21
<PAGE>
Interest expense increased from $7,716 during the three months ended June
30, 1998 to $111,678 during the three months ended June 30, 1999. The increase
was the result of the Company issuing convertible debt with a below market
conversion rate during late 1998. The resulting discount on the debt has been
amortized to interest expense over the term of the debt and resulted in
substantially all of the increase in interest during the three months ended June
30, 1999.

During the three months ended June 30, 1999 the Company had a net loss of
($232,915) compared to a net loss of ($808) in the three months ended June 30,
1998. The increased net loss was attributable to the operations in the United
States, as the Company's operations in Estonia produced net income of $38,104
during the three months ended June 30, 1999 due not to leasing operations, but
to fees for market research provided to a related company. As described in more
detail above, the primary reasons for the increased losses were stock and option
based compensation charges, increases in interest expense and increases in
personnel, legal and professional fees in 1998.

Six Months Ended June 30, 1999 Compared to the Six Months Ended June 30, 1998

During the six months ended June 30, 1999 the Company's revenues increased
approximately $50,000 or 161% as compared to the six months ended June 30, 1998.
Leasing revenues in EIP were consistent as a result of consistently weak leasing
activity in EIP caused by a deterioration of the financial markets in Estonia
and related limitations on the availability of capital to enter into new leases.
(See Significant Trends) However, during the six months ended June 30, 1999, EIP
earned approximately $50,000 in revenue for marketing research services provided
to a related entity. These revenues account for the overall increase.

During the six months ended June 30, 1999 the Company's operating, general
and administrative costs increased by approximately $156,000 as compared to the
six months ended June 30, 1998. This increase was made up of an increase in
personnel costs and in legal and other professional fees. The $156,000 increase
was primarily attributable to the development of the Company's PlazaRoyal.com
Internet site and to general business development.

During the six months ended June 30, 1999 depreciation and amortization
remained constant as compared to the six months ended June 30, 1998 due to
similar levels of activity in EIP.

During the six months ended June 30, 1999 stock and option based
compensation was $400,850 due to the sale of common stock to officers and
employees at below market prices and due to the issuance of options for purchase
of common stock with exercise prices below the current price of the Company's
common stock at the date of issue. Such sales resulted in charges to
compensation expense for the difference between the market price and the
exercise/sales price at the date of issue/sale. In the six months ended June
30, 1998 there were no similar sales of stock and options.

22
<PAGE>
Interest expense increased from $15,313 during the six months ended June
30, 1998 to $240,448 during the six months ended June 30, 1999. The increase
was the result of the Company issuing convertible debt with a below market
conversion rate during late 1998. The resulting discount on the debt has been
amortized to interest expense over the term of the debt and resulted in
substantially all of the increase in interest during the six months ended June
30, 1999.

During the six months ended June 30, 1999 the Company had a net loss of
($242,298) compared to a net loss of ($3,869) in the six months ended June 30,
1998. The increased net loss was attributable to the operations in the United
States as the from the Company's operations in Estonia produced net income of
$38,104 during the six months ended June 30, 1999 due not to leasing operations,
but to fees for market research provided to a related company. As described in
more detail l above, the primary reasons for the increased losses were stock and
option based compensation charges, increases in interest expense and increases
in personnel, legal and professional fees in 1998.

LIQUIDITY AND CAPITAL RESOURCES

At June 30, 1999, the Company had cash resources of approximately $93,000,
and at October 1, 1999, the Company had on hand cash resources of approximately
$120,000.

The Company's cash requirements for operations for the last quarter of 1999
will be approximately $60,000. The Company estimates that during the year 2000,
its cash requirements will be approximately $150,000 per quarter. Accordingly,
the Company will require approximately $150,000 from outside sources to fund its
operations for each quarter of the year 2000. At October 1, 1999, the Company
had on hand cash resources of approximately $120,000. To the extent that the
Company's cash on hand is otherwise fully allocated or disbursed before the end
of the last quarter of 1999, the Company plans to obtain additional financing
through the sale of its securities and by obtaining debt financing. Further,
the Company plans to sell its securities to obtain financing in the year 2000,
until cash flow from operations is adequate to fund the Company's ongoing cash
requirements. There is no assurance that capital will be available from any of
these sources, or, if available, upon terms and conditions acceptable to the
Company.

The Company has no material commitments for capital expenditures for its
U.S.A. operations, and anticipates future material capital commitments for its
1999 U.S.A. operations as follows, but only if funds become available: $20,000
for advertising the Plaza Royal web site, $30,000 for merchandise for resale by
Plaza Royal and $10,000 for Internet e-commerce operating expenses.

23
<PAGE>
The Company does not currently have any commitments for capital
expenditures in EIP. The Company intends to continue servicing its existing
lease portfolio but intends to enter into new leases only to the extent that
such leases are supported by EIP's cash flows from operations. Those cash flows
are not expected to allow additional leases in 1999 (See Significant Trends
above). The Company has no anticipated capital commitments for EIP.

The Company expects to be able to raise sufficient capital for 1999
operations but raising the capital may cause dilution in per share net tangible
book value to existing shareholders. The Company will ultimately need to
produce positive cash flows from operations to meet its long-term capital needs.
(See Going Concern Issue above.)

IMPACT OF THE YEAR 2000 ISSUE

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.

24
<PAGE>
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.

Item 3. Description of Property

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 October 4, 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. At November 9, 1999, the Company had outstanding 68,561,142 shares of
common stock, and no outstanding preferred stock.

<TABLE>
<CAPTION>
Name and Address Shares of Common Percent of
of Beneficial Holder Stock Beneficially Owned Class
- -------------------------------- ------------------------- -----------
<S> <C> <C>
Alex Genin . . . . . . . . . . . 50,420,000 (1)(2)(5) 70.8%
5120 Woodway, Suite 9004
Houston, Texas 77056

Eurocapital Group, Ltd.. . . . . 25,500,000 (2) 37.2%
19 Peel Road
Douglas, Isle of Man
British Isles 1M1 4LS

United Capital Group Limited . . 18,220,000 (2) 26.6%
50 Town Range, Suite 7B
Gibraltar

Michael Dashkovsky . . . . . . . 4,500,000 (3) 6.4%
5120 Woodway, Suite 9004
Houston, Texas 77056

25
<PAGE>
Name and Address Shares of Common Percent of
of Beneficial Holder Stock Beneficially Owned Class
- -------------------------------- ------------------------- -----------

Abrador, SA. . . . . . . . . . . 3,618,100 5.3%
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 (4) .3%
1900 West Loop South, Suite 2050
Houston, Texas 77027

Joselito H. Sangel . . . . . . . 500,000 (4) .7%
5120 Woodway, Suite 9004
Houston, Texas 77056

All officers and directors as
a Group--Five Persons. . . . . . 56,020,000 76.8%
<FN>
(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 pursuant to which Mr. Genin is granted
voting and investment power with respect to shares of the Company. Accordingly,
Mr. Genin is deemed to be the beneficial owner of these shares. Mr. Genin does
not own any stock of Eurocapital Group, Ltd. or United Capital Group Limited.

(3) 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.

(4) 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 $0.10 per
share.

(5) Includes shares owned by Eurocapital Group, Ltd. and United Capital
Group Limited.
</TABLE>

26
<PAGE>
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 and
5120 Woodway, Suite 9004 Manager of European Operations
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.

27
<PAGE>
Joseph A. Bond has been a Director and the Secretary of the Company since
August, 1998. For more than 25 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 Mr. Genin and
Michael Dashkovsky, a Director of the Company. No other executive officer of the
Company received compensation which exceeded $100,000 during these periods.

<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE

ANNUAL LONG TERM COMPENSATION
COMPENSATION
AWARDS PAYOUTS
OTHER
NAME AND ANNUAL RESTRICTED SECURITIES ALL
PRINCIPAL COMPEN- STOCK UNDERLYING LTIP OTHER
POSITION YEAR SALARY BONUS SATION AWARDS OPTIONS/SARS PAYOUTS COMPENSATION
- --------------------- ---- ----------- ----- ------- ---------- ------------ ------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Alex Genin 1998 $ 37,000(1) -0- -0- $62,500(2) -0-(2) -0- $684,420(3)(4)
CEO 1997 $ -0- -0- -0- -0- -0- -0- -0-
Director, CEO 1996 $ -0- -0- -0- -0- -0- -0- -0-
and President

Michael 1998 $ -0- -0- -0- -0- -0- -0- $483,360(5)(6)
Dashkovsky 1997 $ -0- -0- -0- -0- -0- -0- -0-
Director and 1996 $ -0- -0- -0- -0- -0- -0- -0-
Manager of
European Operations
<FN>
_______________

28
<PAGE>
(1) This $37,000 was indirect compensation to Mr. Genin. In addition,
businesses owned by Mr. Genin received $131,553 as reimbursement for providing
the Company with office space and business services (such as: secretarial
services, telecommunications services, and photostating services), managerial
and consultant staffing and travel expenses. For the current year 1999 to date,
Mr. Genin indirectly received an additional $43,400 as compensation. 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 through March 31, 1999. At the date
of the grant, the fair value of the Company's common stock was approximately
$0.5625 per share and the option was valued at $62,500.

(3) In 1998, Mr. Genin purchased an immediately exercisable option to
purchase up to 2,500,000 shares of common stock of the Company at an exercise
price of $0.05 per share. The exercise price was below the fair value of the
Company's common stock on the date the option was purchased and the option was
valued at $187,500. Mr. Genin has not exercised this option and at December 31,
1998, the value of his unexercised in the money option was $500,000. Mr. Genin
paid $140 for this option.

(4) In 1998, Mr. Genin purchased 4,000,000 shares of the Company's common
stock for $0.0008 per share when the fair value of the stock was approximately
$0.1250 per share. This transaction resulted in compensation to Mr. Genin of
$496,920.

(5) In 1998, Mr. Michael Dashkovsky, Manager of Eastern Operations and a
Director of the Company, purchased an immediately exercisable option to purchase
up to 1,500,000 shares of common stock of the Company at an exercise price of
$0.05 per share. The exercise price was below the fair value of the Company's
common stock on the date the option was purchased and the option was valued at
$112,500. Mr. Dashkovsky has not exercised this option and at December 31, 1998,
the value of his unexercised option was approximately $300,000. Mr. Dashkovsky
paid $80 for this option.

(6) In 1998, Mr. Dashkovsky also purchased 3,000,000 shares of the Company's
common stock for $0.0014 per share when the fair value of the stock was
approximately $0.1250 per share. This transaction resulted in compensation to
Mr. Dashkovsky of $370,860.
</TABLE>

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 which would be approved by the Board of Directors, however, no terms have
been discussed at this time.

29
<PAGE>
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 pursuant to which Mr. Genin is granted voting
and investment power with respect to shares of the Company. Accordingly, Mr.
Genin is deemed to be the beneficial owner of these shares. Mr. Genin does not
own any stock of Eurocapital Group, Ltd. or United Capital Group Limited.

The Company believes that the terms and conditions of all of the following
transactions were no less as favorable to the Company than terms attainable from
unaffiliated third parties. The terms of these transactions were determined by
the parties through arms length negotiations. These transactions were made at a
time when the Company's common stock had a very low market value and there was
only de minimis and infrequent trading activity.

30
<PAGE>
Effective September, 1998, United Capital Group Limited and the Company
entered into a loan agreement (since repaid). As part of the loan agreement,
during 1998, United Capital Group Limited, on behalf of the Company, reimbursed
businesses owned by Mr. Genin for services which Mr. Genin's businesses provided
to the Company, including office space and business services (such as:
secretarial services, telecommunications services, and photostating services),
managerial and consultant staffing (including payments to Mr. Genin of $37,000
in 1998) and travel expenses. Mr. Genin's businesses provided these services on
terms no less favorable to the Company than terms obtainable from unaffiliated
third parties. At the time these transactions occurred, the Company had limited
resources, and was unable to find any alternative source of financing. In 1998,
Mr. Genin's businesses received $168,553 under this arrangement and the
cumulative total was $186,000 as of January 31, 1999. In February, 1999, United
Capital Group and the Company agreed to exchange the $186,000 indebtedness for
7,440,000 shares of common stock. Pursuant to the loan agreement, this debt was
converted at a conversion price of $0.025 per share, which, at the time of
conversion, was below market value. In August, 1999, United Capital Group
Limited converted additional debt for shares of common stock of the Company
pursuant to the loan agreement at an exchange price of $0.05 per share for
2,280,000 shares of common stock of the Company. United Capital Group Limited
presently owns approximately 63.1% of the common stock of the Company. At that
time, Mr. Genin will begin receiving $6,200 per month in compensation directly
from the Company.

During 1998, Mr. Genin's businesses compensated Mr. Genin in the amount of
$37,000 for services he rendered related to the Company. During 1999 to date,
Mr. Genin's businesses compensated Mr. Genin in the amount of $43,400 for
services he rendered related to the Company. Mr. Genin beneficially owns
approximately 72.9% 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 and was
approved by the Board of Directors. However, no appraisal was performed. As a
result of these transactions, Eurocapital Group, Ltd. now beneficially owns
37.2% of the common stock of the Company, and United Capital Group Limited now
beneficially owns 25.9% of the common stock of the Company. The Company treated
the acquisition of EIP as a recapitalization whereby EIP was the accounting
acquiror. At the time of the acquisition, the Company estimated the market
value of the Company's common stock at approximately $.005 per share, resulting
in a valuation of the acquisition of approximately $170,000.

Estonian Innovation Bank, which previously owned EIP, made a loan to EIP in
1997. 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
beneficially owns 37.2% of the common stock of the Company.

31
<PAGE>
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 approved 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.

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. At November 9, 1999, the Company had outstanding
68,561,142 shares of common stock, and no outstanding preferred stock. The
Company may, however, designate Series a Convertible Preferred Stock in the near
future in connection with a possible sale of securities. The Company has no
present plans or agreements to increase the number of authorized shares of its
capital stock. In the event that a corporate opportunity presents itself, the
Board may seek shareholder approval to increase the number of authorized shares.
Further, the Company may effectuate a reverse split of its common stock in the
future.

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 Company's Articles of Incorporation authorize 100,000,000 shares of
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.

32
<PAGE>
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
only after accrued dividends are paid to holders of preferred stock and other
senior securities. 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 subject to
the rights of holders of preferred stock and other senior securities.

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.

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.

33
<PAGE>
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>
QUARTER ENDED HIGH BID LOW 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 . . $ .50 $ .25
June 30, 1999. . . $ 1.4375 $ .25
September 30, 1999 $ 1.00 $ .50
<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>

The closing bid price on the Company's common stock was $.625 per share on
November 4, 1999. As of November 8, 1999, there were approximately 1,013
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.

34
<PAGE>
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.

(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.

35
<PAGE>
(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, Eurocapital Group, Ltd. and United Capital
Group Limited, 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. 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 receipt of
these securities of the Company. The Company believes that the EIP stockholders
were knowledgeable about the Company's operations and financial condition.

In October and November 1998 the Company sold a total of 7,680,000 shares
of common stock and 4,250,000 options to purchase common stock to six employees
of the Company for prices ranging from $.001 to $.01 per share in cash,
including the options purchased. These options are exercisable at exercise
prices ranging from $.01 per share to $.10 per share. The Company received a
total of $14,678 in cash from the sale of these securities. 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 of the Company and in such capacity they were knowledgeable about the
Company's operations and financial condition.

36
<PAGE>
In October, 1998 the Company sold a total of 400,000 shares of common stock
to two investors for $.01 per share . The Company received a total of $4,000
in cash from the sale of these securities. 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 of the Company and in such
capacity they were knowledgeable about the Company's operations and financial
condition.

In October, 1998 the Company issued a total of 440,000 shares of common
stock to two vendors as payment in kind for legal services rendered. 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 receipt of these securities of the Company. All of these persons
were vendors of the Company and in such capacity they were knowledgeable about
the Company's operations and financial condition.

In November and December, 1998, the Company sold a total of 580,000 shares
of common stock to four investors at prices ranging from $.005 to $.04 per
share. The Company received a total of $8,600 in cash from the sale of these
securities. 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 1,830,000
shares of common stock to six employees of the Company, four family members of
employees, , two vendors and five investors at prices ranging from $.005 to $.05
per share in cash. The Company received a total of $42,950 in cash from the
sale of these securities. 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, 1999 the Company granted options to purchase 100,00 shares of
common stock of the Company to Walter Wilson, a director of the Company, at an
exercise price of $.10 per share. The Company believes Mr. Wilson had knowledge
and experience in financial and business matters which allowed him to evaluate
the merits and risk of the receipt of these securities of the Company. Mr.
Wilson is a director of the Company and in such capacity he was knowledgeable
about the Company's operations and financial condition.

37
<PAGE>
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 (which was $186,000) for 7,440,000 shares of common
stock, or $0.025 per share. In August, 1999, United Capital Group Limited
converted additional debt (which was $114,000) for shares of common stock of the
Company pursuant to the loan agreement at an exchange price of $0.05 per share
for 2,280,000 shares of common stock of the Company. The Company believes that
United Capital Group Limited had knowledge and experience in financial and
business matters which allowed it to evaluate the merits and risk of the
exchange or 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.

From April through July 22, 1999, six investors and one family member of an
employee purchased a total of 215,000 shares of common stock of the Company at
purchase prices ranging from $0.05 per share to $0.15 per share. The Company
received a total of $36,000 in cash from the sale of these securities. 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. The Company believes
that each of these persons were knowledgeable about the Company's operations and
financial condition.

In August, 1999, the Company sold a total of 1,000,000 shares of commons
stock to Bailey Pacific Enterprises ("Bailey") for cash consideration of
$200,000. The Company believes that Bailey had knowledge and experience in
financial and business matters which allowed it to evaluate the merits and risk
of the purchase of these securities of the Company. The Company believes that
the Bailey was were knowledgeable about the Company's operations and financial
condition.

In September, 1999 the Company issued a total of 10,000 shares of common
stock to two employees as compensation for services rendered. 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
receipt of these securities of the Company. All of these persons were vendors
of the Company and in such capacity they were knowledgeable about the Company's
operations and financial condition.

In September, 1999 the Company issued a total of 10,000 shares of common
stock to Coffin Communications Group as compensation for services rendered. The
Company believes that Coffin Communications Group had knowledge and experience
in financial and business matters which allowed it to evaluate the merits and
risk of the receipt of these securities of the Company. Coffin Communications
Group was a vendor of the Company and in such capacity it was knowledgeable
about the Company's operations and financial condition.

38
<PAGE>
In October, 1999 the Company issued a total of 23,000 shares of common
stock to one employee and one vendor as compensation for services rendered. 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 receipt 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.

In October, 1999 the Company issued options to purchase a total of 40,000
shares of common stock to two vendors as compensation for services rendered.
The options are immediately exercisable. Of these options, 30,000 options have
an exercise price of $.68 per share and expire in October, 2001, and 10,000
options have an exercise price of $.75 per share and expire on October. 2000.
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 receipt of these securities of the Company. All of these persons
were vendors of the Company and in such capacity they were knowledgeable about
the Company's operations and financial condition.

Item 5. Indemnification of Directors and Officers

The following summary description of material 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, provides 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, provides 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.

39
<PAGE>
PART F/S

The financial information required by this item is included as set forth
beginning on Page F-1.

PART III

Item 1. Index to Exhibits.

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
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 six months ended June 30, 1999.

(*) Previously provided in the Form 10-SB original submission and
amendments thereto.

(**) Provided here with.

Item 2. Description of Exhibits.

The Exhibits required by this item are provided as set forth in the Index
to Exhibits.

40
<PAGE>
SIGNATURES

In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this Amendment No. 3 of Form 10-SB registration statement to
be signed on its behalf by the undersigned, thereunto duly authorized.

First Capital International, Inc.

November 30, 1999 By /s/ Alex Genin
-----------------------------
Alex Genin
Director, CEO and President

November 30, 1999 By /s/ Joselito H. Sangel
-----------------------------
Joselito H. Sangel
Vice President of Finance

41
<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>

FIRST CAPITAL INTERNATIONAL, INC.
TABLE OF CONTENTS
__________

PAGE(S)
-------
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-8

Notes to Consolidated Financial Statements F-9

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 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 provide a reasonable basis for our opinion.

In our opinion, based on our audit, 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 4 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 4. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.

As discussed further in Note 2, the accompanying financial statements for the
years ended December 31, 1998 and 1997 have been restated.

/s/ Ham, Langston & Brezina, L.L.P.

Houston, Texas
November 8, 1999

F-3
<PAGE>
<TABLE>
<CAPTION>
FIRST CAPITAL INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEET
__________
DECEMBER 31,
1998
AS RESTATED
(SEE NOTE 2)
------------
<S> <C>
ASSETS
-------

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 $ 65,390
Accounts payable 21,276
Accrued liabilities 5,225
------------

Total current liabilities 91,891

Long-term debt-related party 333,641
------------

Total liabilities 425,532
------------

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 1,535,970
Accumulated deficit (1,678,996)
Accumulated foreign currency translation
adjustments (2,856)
------------

Total stockholders' deficit (90,131)
------------

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
AS RESTATED AS RESTATED
(SEE NOTE 2) (SEE NOTE 2)
------------- ------------
<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 1,334,322 -
Depreciation and amortization 8,563 12,109
Interest expense 97,001 65,570
Foreign currency translation losses - 3,125
Other expense, net 303 -
------------- ------------

Total costs and expenses 1,697,934 162,950
------------- ------------

Net loss $ (1,640,760) $ (30,078)
============= ============

Basic and dilutive net loss per
common share $ (0.07) $ (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 STOCK PAID-IN ACCUMULATED TRANSLATION INCOME
SHARES AMOUNT CAPITAL DEFICIT ADJUSTMENT (LOSS)
----------- ------------- ------------- --------- ------------ --------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1996 50 $ 40,241 $ - $(11,283) $ - $28,958
--------

Net loss and comprehensive income
(loss) as restated (See Note 2) - - (30,078) - (30,078)

Reverse 1 for 25 stock split
and subsequent cancellation
of shares (48) (38,631) 38,631 - - -

Common stock issued for cash 8 5,780 - - - -
----------- ------------- ------------- --------- ------------ --------

Balance at December 31, 1997, as
restated (See Note 2) 10 7,390 38,631 (41,361) - (1,120)
--------

Cumulative foreign currency trans-
lation adjustment at January 1,
1998, the date of change in
status of Estonia to non-highly
inflationary economy - - 3,125 (3,125) -

Net loss, as restated (See Note 2) - - (1,640,760) - (1,640,760)

Other comprehensive income-
foreign currency transla-
tion adjustment - - - 269 269
-----------

Comprehensive income (loss), as
restated (See Note 2) (1,640,491)
-----------
Common stock issued for cash
before recapitalization 30 21,314 376 - - -
</TABLE>

See notes to consolidated financial statements.

F-6
<PAGE>
<TABLE>
<CAPTION>

FIRST CAPITAL INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT, CONTINUED
__________

FOREIGN COMPRE-
ADDITIONAL CURRENCY HENSIVE
COMMON STOCK PAID-IN ACCUMULATED TRANSLATION INCOME
SHARES AMOUNT CAPITAL DEFICIT ADJUSTMENT (LOSS)
- --------------------------------- ------------ --------- ------------- ------------- ----------- -------
<S> <C> <C> <C> <C> <C> <C>
Recapitalization effective
September 17, 1998 46,651,102 17,947 (17,947) - - -

Common stock issued for cash
and services after recapital-
ization 9,100,000 9,100 1,018,100 - - -

Stock options issued to
officers below fair market
value, as restated (See Note 2) - 330,000 - - -

Value of conversion feature on
convertible debt, as restated
(See Note 2) - - 166,810 - - -
------------ --------- ------------- ------------- -------- ------------

Balance at December 31, 1998, as
restated (See Note 2) 55,751,142 $ 55,751 $ 1,535,970 $ (1,678,996) $(2,856) $(1,639,371)
============ ========= ============= ============= ======== ============
</TABLE>

See notes to consolidated financial statements.

F-7
<PAGE>
<TABLE>
<CAPTION>

FIRST CAPITAL INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
__________

YEAR ENDED DECEMBER 31,
--------------------------
1998 1997
AS RESTATED AS RESTATED
(SEE NOTE 2) (SEE NOTE 2)
------------ ------------
<S> <C> <C>

Cash flows from operating activities:
Net loss $ (1,640,760) $ (30,078)
-------------
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 -
Foreign currency translation losses - 3,125
Common stock and stock options issued for
services 1,334,322 -
Amortization of discount on note payable-
related party 65,390 -

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 and related
conversion feature 166,810 -
Proceeds from sale of common stock 44,568 5,780
Payments on notes payable - (365,914)
------------- ----------

Net cash provided by (used in) financing
activities 211,378 (360,134)
------------- ----------

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-8
<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 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-9
<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.

<PAGE>
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-10
<PAGE>
FIRST CAPITAL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
__________

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
----------------------------------------------------------------

FOREIGN CURRENCY TRANSLATION
------------------------------

During 1998, the Company determined that the local currency was 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.

Prior to 1998, Estonia was considered a "highly inflationary economy" under FAS
52 and the U.S. dollar was treated as the functional currency for the Company's
Estonian subsidiary. Accordingly, all translation adjustments were reflected in
the consolidated statement of operations in 1997. As reflected in the
consolidated statement of stockholders' deficit, at January 1, 1998 the Company
recorded an adjustment to accumulated deficit of $3,125 to reflect cummulative
translation adjustments in stockholders' deficit at the date the Company's
Estonian subsidiary changed its functional currency to the Estonian kroon.

During 1997, prior to the change in the functional currency for its Estonian
operations, the Company did not recognize deferred tax liabilities or assets for
differences related to assets and liabilities that were remeasured from the
local currency (Estonian kroons) into the functional currency (U.S. dollars)
using historical exchange rates when such differences resulted from changes in
exchange rates or indexing for tax purposes. Due to the fact that all of the
Company's deferred tax assets are subject to valuation allowances, the change in
functional currency did not impact deferred taxes.

During 1997, the Company was subject to foreign currency translation losses
resulting from the Company holding a net asset position in Estonian kroons at
the time the kroon was declining against the U.S. dollar. Such losses were
reflected in operations. The change in the Company's functional currency to the
Estonian kroon changed the method such losses are reported, resulting in
improved operating results.

Continued
F-11
<PAGE>
FIRST CAPITAL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
__________

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
----------------------------------------------------------------

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. RESTATEMENT OF FINANCIAL STATEMENTS
--------------------------------------

During the year ended December 31, 1997, the financial statements of the
Company's Estonian subsidiary were improperly translated to U.S. dollars
treating Estonia as a stable (non-highly inflationary) economy and the Estonian
kroon as the functional currency. However, based on the fact that Estonia's
three year cumulative compounded inflation rate exceeded 100% during the three
years prior to 1997, the U.S. dollar should have been used as the functional
currency for the Company's Estonian operations in 1997.

During the year ended December 31, 1998, the Company issued certain short-term
debt with an associated beneficial conversion feature. The beneficial
conversion feature was assigned a value of zero, but should have been assigned a
value of approximately $167,000 and amortized as additional interest expense
over the term of the debt.

During the year ended December 31, 1998, the Company issued 9,100,000 shares of
its common stock for services at prices representing a discount from the quoted
market price of the Company's common stock at the dates of issue. The Company
also issued 4,250,000 non-qualified compensatory stock options for shares of its
common stock and convertible debt with a beneficial conversion feature. The
stock options bear exercise prices that represent a discount from the quoted
market price of the Company's common stock at the date of issue. The fair value
of the Company's common stock, for purposes of determining compensation expense
associated with stock and stock options and the value of the beneficial
conversion feature associated with convertible debt, was determined based upon
quoted market prices in an inactive market with discounts for trading
restrictions on such shares and a thin market for the Company's common stock.
Generally accepted accounting principles do not allow for such discounts from
the quoted market price.

Continued
F-12
<PAGE>
FIRST CAPITAL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
__________

2. RESTATEMENT OF FINANCIAL STATEMENTS, CONTINUED
--------------------------------------------------

The effect of correcting these errors in application of generally accepted
accounting principles on the Company's financial statements at December 31, 1998
and for the years ended, is as follows:

<TABLE>
<CAPTION>
1998 1997
---------- -------
<S> <C> <C>
Decrease in total assets $ - $ -
========== =======

Decrease in total liabilities $(101,420) $ -
========== =======

Increase in common and preferred stock
and additional paid-in capital $ 101,420 $ -
========== =======

Increase in accumulated deficit $ 852,890 $3,125
========== =======

Increase in net loss $ 852,890 $3,125
========== =======

Increase in basic and dilutive net
loss per common share $ (0.04) $(0.00)
========== =======
</TABLE>

3. RECAPITALIZATION
----------------

On September 28, 1998 First Capital International, Inc. was acquired by EIP
Liisingu AS ("EIP"), an Estonian corporation, in a recapitalization transaction
accounted for similar to a reverse acquisition, except that no goodwill was
recorded. First Capital International, Inc. was the "acquired" company in the
transaction, but remains the surviving legal entity. Prior to the acquisition
First Capital International, Inc. was a non-operating public shell corporation
with no significant assets. Accordingly, the transaction was treated as an
issuance of stock by First Capital International, Inc. for EIP's net monetary
assets, accompanied by a recapitalization. In connection with this transaction,
First Capital International, Inc. issued 34,000,000 shares of common stock in
exchange for all outstanding shares of EIP. Since this transaction is in
substance, a recapitalization of EIP and not a business combination, proforma
information is not presented and a valuation of the company was not performed.

In connection with the recapitalization transaction described in the previous
paragraph, the outstanding common stock of First Capital International, Inc. was
essentially substituted for the common stock of EIP and the difference was
included in additional paid-in capital.

Continued
F-13
<PAGE>
FIRST CAPITAL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
__________

4. 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 $1,640,760 and $30,078, 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 $1,678,996 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.

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:

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.

Continued
F-14
<PAGE>
FIRST CAPITAL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
__________

4. GOING CONCERN CONSIDERATIONS, CONTINUED
------------------------------------------

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.

5. 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>

6. 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-15
<PAGE>
FIRST CAPITAL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
__________

6. 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>

7. 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>

Continued
F-16
<PAGE>
FIRST CAPITAL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
__________

8. 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 a stated rate of 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 at a conver-
sion price of $0.025 per share. The con-
version price at the date the note was
negotiated was significantly lower than
the quoted market price of the Company's
common stock. Accordingly, the note was
issued at a discount equal to 100% of its
face value. Such discount is being amor-
tized to interest expense from the date
of individual draws under the line of
credit to the date of maturity, resulting
in an effective interest rate that is un-
defined but exceptionally high. In February
1999 this note was converted to common stock. $ 65,390

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
--------

439,599
Less current portion 105,958
--------

$333,641
========
</TABLE>

The value of the beneficial conversion feature associated with the $300,000 line
of credit was determined in accordance with Emerging Issues Task Force ("EITF")
Topic D-60. In determining the value of the beneficial conversion feature, the
measurement date for share price valuation was September 1, 1998, which was the
date of inception of the agreement and the date initial draws were obtained
under its terms. The value of the beneficial conversion feature is being
amortized to interest expense from the date of funding to the date the debt
becomes convertible, which is February 1, 1999.

Continued
F-17
<PAGE>
FIRST CAPITAL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
__________

8. NOTE PAYABLE AND LONG-TERM DEBT-RELATED PARTY, CONTINUED
--------------------------------------------------------------

Future maturities of notes payable and long-term debt at December 31, 1999 were
as follows:

YEAR ENDING
DECEMBER 31,
- -------------
<S> <C>
1999 $105,958
2000 -
2001 -
2002 333,641
--------

439,599
=======
</TABLE>

9. 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 3) 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>

Continued
F-18
<PAGE>
FIRST CAPITAL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
__________

9. INCOME TAXES, CONTINUED
-------------------------

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):

1998 1997
------------------ ----------------
AMOUNT % AMOUNT %
---------- ------ -------- ------
<S> <C> <C> <C> <C>
Benefit for income tax at
federal statutory rate $ 557,858 34.0 $10,226 34.0
Non-deductible foreign
currency translation
adjustments - - (1,062) (3.5)
Non-deductible compensation (476,002) (29.0) - -
Increase in valuation
allowance (81,956) (5.0) (9,164) (30.5)
---------- ------ -------- ------

$ - - $ - -
========== ====== ======== ======
</TABLE>

10. STOCKHOLDER'S EQUITY
---------------------

On April 1, 1999 the Company 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.

During the year ended December 31, 1998, the Company sold and issued, above the
number of existing shares outstanding, a total of 43,100,000 shares of common
stock. Of the 43,100,000 total shares, 9,100,000 shares were issued as
compensation for employee and non-employee services at prices representing a
discount from the fair value of the Company's common stock at the date of issue
or measurement date. Such discount has been recognized as compensation expense
totaling $1,004,322 in the accompanying statement of operations for the year
ended December 31, 1998. In connection with the issuance of shares for service,
the fair value of the Company's common stock was determined based upon the
quoted market prices for the Company's common stock. The Company has accounted
for common stock issued to non-employees for services in accordance with EITF
Issue 96-18. In all cases the measurement date for measurement of the fair
value of the Company's common stock was the date at which the service provider's
performance was complete because such date was before the commitment by the
service provider to earn the common stock.

Continued
F-19
<PAGE>
FIRST CAPITAL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
__________

10. STOCKHOLDER'S EQUITY, CONTINUED
---------------------------------

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.

During the year ended December 31, 1997, the Company, prior to the
recapitalization transaction described in Note 3, initiated a 1 for 25 reverse
stock split.

11. 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 immediately 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 in the Company's stock options:

<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 fair value of the Company's stock on the date
of grant, compensation expense totaling $330,000 has been recognized in these
financial statements to reflect the value of stock options granted as
compensation. The fair value of the Company's common stock, for purposes of
determining compensation expense associated with stock options, was determined
based upon the quoted market price of the Company's common stock.

Continued
F-20
<PAGE>
FIRST CAPITAL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
__________

11. STOCK OPTIONS, CONTINUED
--------------------------

Had the Company elected to recognize compensation cost for stock options based
on the calculated fair value at the grant dates, consistent with the method
prescribed by SFAS No. 123, net income (loss) per share would have reflected the
proforma amounts indicated below:

1998 1997
------------ ---------
<S> <C> <C>
Net loss
as reported $(1,640,760) $(30,078)
proforma (1,726,077) (30,078)
Basic and diluted net loss per share (0.07) (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>

Continued
F-21
<PAGE>
FIRST CAPITAL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
__________

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 $2,323. Total rent expense recognized with
respect to this lease during 1998 was $9,372.

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 A00" 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.

Continued
F-22
<PAGE>
FIRST CAPITAL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
__________

14. IMPACT OF THE YEAR 2000 ISSUE, CONTINUED
----------------------------------------------

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.

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 currently operates with the Estonian kroon as its
functional currency; however, in 1997, Estonia was considered a highly
inflationary economy and the U.S. dollar was EIP's functional currency.

The corporate component of operating income (loss) represents corporate general
and administrative expenses. Corporate assets include cash and cash
equivalents.

Continued
F-23
<PAGE>
FIRST CAPITAL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
__________

15. SEGMENT AND GEOGRAPHIC INFORMATION, CONTINUED
-------------------------------------------------

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 $(1,602,069) $ -
Estonia - Leasing (38,691) (30,078)
------------ ---------

Total loss from operations $(1,640,760) $(30,078)
============ =========

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>

F-24
<PAGE>

FIRST CAPITAL INTERNATIONAL, INC.
__________

CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1999 AND 1998
(UNAUDITED)

F-25
<PAGE>
<TABLE>
<CAPTION>
FIRST CAPITAL INTERNATIONAL, INC.
TABLE OF CONTENTS
__________

<S> <C>
PAGE(S)
-------

Unaudited Consolidated Condensed Financial
Statements:

Consolidated Condensed Balance Sheet as of
June 30, 1999 and December 31, 1998 F-27

Consolidated Condensed Statement of
Operations for the three and six months
ended June 30, 1999 and 1998 F-28

Consolidated Condensed Statement of
Stockholders' Deficit for the six months
ended June 30, 1999 and 1998 F-29

Consolidated Condensed Statement of Cash Flows
for the six months ended June 30, 1999 and
1998 F-30

Selected Notes to Consolidated Condensed
Financial Statements F-31
</TABLE>

F-26
<PAGE>
<TABLE>
<CAPTION>
FIRST CAPITAL INTERNATIONAL, INC.
CONSOLIDATED CONDENSED BALANCE SHEET
JUNE 30, 1999 AND DECEMBER 31, 1998
__________

JUNE 30, DECEMBER 31,
1999 1998
ASSETS (UNAUDITED) (NOTE)
------ ----------- -------------
(RESTATED) (RESTATED)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 137,643 $ 61,467
Lease receivables, net 92,787 107,200
Other 25,365 34,794
------------ ------------

Total current assets 255,795 203,461

Lease receivables 77,348 119,339

Accounts and notes receivable, net 2,262 3,082

Property and equipment, net 6,043 9,519
------------ ------------

Total assets $ 341,448 $ 335,401
============ ============

LIABILITIES AND STOCKHOLDERS' DEFICIT
- --------------------------------------

Current liabilities:
Note payable to a related party $ 114,000 $ 65,390
Accounts payable and accrued liabilities 6,701 26,501
------------ ------------

Total current liabilities 120,701 91,891

Long-term debt to a related party 295,179 333,641
------------ ------------

Total liabilities 415,880 425,532
------------ ------------

Commitments and contingencies

Stockholders' deficit:
Common stock, $0.001 par value; 100,000,000
shares authorized; 65,196,142 and 55,751,142
shares issued and outstanding at June 30,
1999 and December 31, 1998, respectively 65,196 55,751
Additional paid-in capital 2,281,510 1,535,970
Accumulated deficit (2,419,154) (1,678,996)
Accumulated foreign currency translation
adjustments (1,984) (2,856)
------------ ------------

Total stockholders' deficit (74,432) (90,131)
------------ ------------

Total liabilities and stockholders'
deficit $ 341,448 $ 335,401
============ ============
<FN>
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.
</TABLE>

F-27
<PAGE>
<TABLE>
<CAPTION>
FIRST CAPITAL INTERNATIONAL, INC.
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
___________
(UNAUDITED)

THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
--------------------------- --------------------------
1999 1998 1999 1998
------------- ------------ ------------ ------------
(RESTATED) (RESTATED)
<S> <C> <C> <C> <C>
Revenue:
Interest income $ 8,948 $ 11,201 $ 19,418 $ 21,901
Other operating revenue 59,446 7,120 61,929 9,225
------------- ------------ ------------ ------------

Total revenue 68,394 18,321 81,347 31,126
------------- ------------ ------------ ------------

Costs and expenses:
Operating, general and admin-
istrative expenses 98,120 4,044 163,776 8,196
Stock and option based com-
pensation 77,860 - 400,850 -
Depreciation and amortization 1,937 2,085 3,994 4,170
Interest expense 111,678 7,716 240,448 15,313
Other expense, net 11,714 5,284 14,577 7,316
------------- ------------ ------------ ------------

Total costs and expenses 301,309 19,129 823,645 34,995
------------- ------------ ------------ ------------

Net loss $ (232,915) $ (808) $ (742,298) $ (3,869)
============= ============ ============ ============

Basic and dilutive net loss
per common share $ (0.00) $ (0.00) $ (0.01) $ (0.00)
============= ============ ============ ============

Weighted average shares
outstanding 65,137,977 46,651,142 63,133,639 46,651,142
============= ============ ============ ============
</TABLE>

See accompanying notes.

F-28
<PAGE>
<TABLE>
<CAPTION>
FIRST CAPITAL INTERNATIONAL, INC.
CONSOLIDATED CONDENSED STATEMENT OF STOCKHOLDERS' DEFICIT
FOR THE SIX MONTHS ENDED JUNE 30, 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, as restated $ 55,751 $ 1,535,970 $ (1,678,996) $ (2,856) $(1,639,371)

Net loss, as restated - - (740,158) - (740,158)

Other comprehensive income-
foreign currency transla-
tion adjustment - - - 872 872
------------

Comprehensive income, as
restated (739,286)
------------

Common stock issued, as re-
stated (9,445,000 shares) 9,445 534,850 - - -

Compensatory stock options,
as restated - 77,500 - - -

Value of conversion feature
on convertible debt, as
restated - 133,190 - - -
-------- ------------ ------------- ------------ ------------

Balance at June 30, 1999,
as restated $ 65,196 $ 2,281,510 $ (2,419,154) $ (1,984) $(2,378,657)
======== ============ ============= ============ ============
</TABLE>

See accompanying notes.

F-29
<PAGE>
<TABLE>
<CAPTION>
FIRST CAPITAL INTERNATIONAL, INC.
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
___________
(UNAUDITED)

SIX MONTHS ENDED JUNE 30,
-------------------------
1999 1998
---------- ---------
(RESTATED)

<S> <C> <C>
Cash flows from operating activities: $ (97,019) $ (3,869)
---------- ---------
Cash flows from financing activities:
Proceeds from sale of common stock 68,139 -
Proceeds from notes payable to a
related party and conversion feature 133,190 -
Payments on long-term debt to a
related party (38,462) -
---------- ---------
Net cash provided by financing
activities 162,867 -
---------- ---------
Effects of exchange rate changes on cash 10,328 -
---------- ---------

Net increase in cash and cash equivalents 76,176 -

Cash and cash equivalents, beginning
of period 61,467 -
---------- ---------
Cash and cash equivalents, end of period $ 137,643 $ -
========== =========

Non-cash investing and financing activities:

Conversion of note payable to a related
party to common stock $186,000 $ -

Short-term investment received in payment
of accounts receivable $ 25,000 $ -
</TABLE>

See accompanying notes.

F-30
<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 and six-month periods
ended June 30, 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. RESTATEMENT OF FINANCIAL STATEMENTS
--------------------------------------

During the six months ended June 30, 1999, the Company issued 22,000 shares of
its common stock for services at prices representing a discount from the quoted
market price of the Company's common stock at the dates of issue. The Company
also issued 300,000 non-qualified compensatory stock options for shares of its
common stock and convertible debt with a beneficial conversion feature. The
stock options bear exercise prices that represent a discount from the quoted
market price of the Company's common stock at the date of issue. The fair value
of the Company's common stock, for purposes of determining compensation expense
associated with stock and stock options and the value of the beneficial
conversion feature associated with convertible debt, was determined based upon
quoted market prices in an inactive market with discounts for trading
restrictions on such shares and a thin market for the Company's common stock.
Generally accepted accounting principles do not allow for such discounts from
the quoted market price.

The effect of correcting this error in application of generally accepted
accounting principles on the Company's financial statements at June 30, 1999 and
for the six months then ended, is as follows:

F-31
<PAGE>
<TABLE>
<CAPTION>
FIRST CAPITAL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
__________

2. RESTATEMENT OF FINANCIAL STATEMENTS, CONTINUED
----------------------------------------------
<S> <C>
Decrease in total assets $ -
==============

Decrease in total liabilities $ -
==============

Increase in common and preferred stock
and additional paid-in capital $ 1,179,249
==============

Increase in accumulated deficit $ 1,179,249
==============

Increase in net loss $ 387,406
==============

Increase in basic and dilutive net
loss per common share $ (0.01)
==============
</TABLE>

3. SHORT-TERM INVESTMENTS
-----------------------

Short-term investments at June 30, 1999 consist of marketable equity securities
that are considered trading securities. Accordingly, unrealized gains and
losses are included in net earnings. Short-term investments are reported at
market value based upon quoted market prices. The Company utilizes the specific
identification method in accounting for its short-term investments.

4. INCOME TAXES
-------------

The difference between the 34% federal statutory income tax rate shown in the
accompanying interim financial statements is primarily attributable to an
increase in the valuation allowance applied against the tax benefit from
utilization of net operating loss carryforwards.

5. STOCKHOLDERS' EQUITY
---------------------

During the six months ended June 30, 1999, the Company issued shares of common
stock and had other increases to stockholders' equity as follows:

F-32
<PAGE>
<TABLE>
<CAPTION>
FIRST CAPITAL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
__________

5. STOCKHOLDERS' EQUITY, CONTINUED
--------------------------------

ADDITIONAL
COMMON PAID-IN
STOCK CAPITAL TOTAL
------ ---------- --------
<S> <C> <C> <C>
Common stock issued for cash $2,005 $ 66,134 $ 68,139

Compensation recognized on
common stock issued to of-
ficers and employees at
below market value - 290,156 290,156

Common stock issued in payment
of note payable to a related
party 7,440 178,560 186,000
------ ---------- --------
$9,445 534,850 $544,295
====== ========== ========

During the six months ended June 30, 1999, the Company also issued compensatory
stock options to a consultant and to the Company's chief executive officer to
acquire a total of 300,000 shares of the Company's common stock. Such options
included exercise prices less than the fair value of the Company's common stock
at the date of grant and, accordingly, compensation expense totaling $77,500 was
recognized in connection with such options.
</TABLE>

6. 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 loss represents corporate general and
administrative expenses and expenses incurred in developing the Company's
internet site. Corporate assets include cash and cash equivalents.

Following is a summary of segment information:

<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------- ------------------
1999 1998 1999 1998
-------- ------- -------- --------
<S> <C> <C> <C> <C>
Net Revenue:
United States - Corporate $ - $ - $ - $ -
Estonia - Leasing 68,394 18,321 81,347 31,126
-------- ------- ------- -------

Total net revenue $ 68,394 $18,321 $81,347 $31,126
======== ======= ======= =======
</TABLE>

F-33
<PAGE>
FIRST CAPITAL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
__________

6. SEGMENT AND GEOGRAPHIC INFORMATION, CONTINUED
-------------------------------------------------

<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------- -----------------------
1999 1998 1999 1998
----------- ------ ---------- ---------
<S> <C> <C> <C> <C>
Income (loss) from Operations:
United States - Corporate $ (275,567) $ - $(778,262) $ -
Estonia - Leasing 42,652 (808) 38,104 (3,869)
----------- ------ ---------- ---------

Total loss from operations $ (232,915) $(808) $(740,158) $ (3,869)
=========== ====== ========== =========

JUNE 30, DECEMBER 31,
1999 1998
---------- ---------
Assets:
United States - Corporate $ 15,075 $ -
Estonia - Leasing 326,373 335,401
---------- ---------

Total assets $ 341,448 $335,401
========== =========
</TABLE>

F-34
<PAGE>

<ARTICLE> 5
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<S> <C>
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<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
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<TOTAL-ASSETS> 324393
<CURRENT-LIABILITIES> 7624
<BONDS> 312109
0
0
<COMMON> 7390
<OTHER-SE> (2730)
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<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (30078)
<EPS-BASIC> 0
<EPS-DILUTED> 0

</TABLE>

<ARTICLE> 5
<MULTIPLIER> 1

<S> <C>
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<CASH> 61467
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<BONDS> 333641
0
0
<COMMON> 55751
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<TOTAL-LIABILITY-AND-EQUITY> 335401
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<INCOME-PRETAX> (1640760)
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1640760)
<EPS-BASIC> (.07)
<EPS-DILUTED> (.07)

</TABLE>

<ARTICLE> 5
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<S> <C>
<PERIOD-TYPE> 6-MOS
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<PERIOD-START> JAN-01-1999
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0
0
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</TABLE>