<PAGE>
As filed with the Securities and Exchange Commission on January __, 2001
Registration No. 333-52558
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
AMENDMENT NO. 1. TO
FORM SB-2/A
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
---------------
CCM MANUFACTURING TECHNOLOGIES, INC.
(Name of small business issuer in its charter)
---------------
Delaware 52-2201514
(State or other jurisdiction (I.R.S. Employer (Primary Standard
of incorporation or Identification Number) Industrial Classification
organization) Code Number)
---------------
CCM Manufacturing Technologies, Inc.
15635 Vision Drive
Pflugerville, Texas 78660-3203
512/ 251-3484
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices and principal place of business)
Jose G. Chavez, Chief Executive Officer
CCM Manufacturing Technologies, Inc.
15635 Vision Drive
Pflugerville, Texas 78660-3203
512/251-3484
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
Cassidy & Associates
1504 R Street N.W.
Washington, D.C. 20009
---------------
Approximate Date of Commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration
Statement.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier registration statement for the same
offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<PAGE>
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until the registration statement
shall become effective on such date as the Commission, acting pursuant to
Section 8(a), may determine.
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Amount Maximum Maximum Amount of
Title of Each To be Offering Price Aggregate Registration
Class of to Registered Per Share Offering Price Fee
Securities (1)
to be registered
<S> <C> <C> <C> <C>
Shares of Class A common
stock held by selling
security holders 4,472,434 $.000637 $2,849 $1.00
Shares of Class A common
stock underlying
Class B common stock 166,500 $.000637 $106 $1.00
Shares of Class A common
stock underlying warrants
and option 1,600,000 $.000637 $1,019 $2.00
Total 6,238,934 $.000637 $3,974.20 $4.00(2)
--------------------
</TABLE>
(1) There is no current market for the securities and the price at which the
shares held by the selling security holders will be sold is unknown.
Pursuant to Rule 457(f)(2), the registration fee is based upon the
estimated book value per share of Class A common stock of $.0006375 as of
September 30, 2000.
(2) Paid by electronic transfer.
<PAGE>
PROSPECTUS Subject to Completion, Dated _______________, 2001
The information contained in this prospectus is subject to completion or
amendment. A registration statement relating to these securities has been filed
with the Securities and Exchange Commission. These securities may not be sold
nor may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any state in which an offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of that state.
CCM MANUFACTURING TECHNOLOGIES, INC.
4,472,434 shares of Class A common stock to be sold by certain selling
security holders,
600,000 shares of Class A common stock issuable upon exercise of
an option therefor,
1,000,000 shares of Class A common stock issuable upon exercise of
warrants, and
and 166,500 shares of Series A common stock underlying Class B
common stock conversion
This prospectus relates to the offer and sale of 6,238,934 shares of Class
A common stock of CCM Manufacturing Technologies, Inc. ("CCM"), par value $.0001
per share, by 98 holders, which includes (i) 4,472,434 shares earlier issued to
the security holders (ii) 600,000 shares issuable upon the exercise of an option
held by a consultant to CCM at an exercise price of $1.50 per share, (iii)
1,000,000 shares issuable upon the exercise of warrants held by a consultant to
CCM at exercise prices ranging from $2.50 to $5.00 per share (See "Description
of Securities") and (iv)166,500 shares underlying the conversion of the Class B
common stock.
166,500 shares of Series A preferred stock may be converted at the election
of the holders thereof on a one-for-one basis to Class B common stock. At the
time of effectiveness of this registration statement all Class B common stock
outstanding or issuable upon conversion of Series A preferred stock will be
automatically converted into an equal number of shares of Class A common stock
and the Class B common stock will no longer exist. Class B common stock is
identical to Class A common stock except that the Class B common stock has no
voting rights.
There has been no market for CCM's common or preferred stock and a public
market may not develop, or, if any market does develop, it may not be
sustained.
The shares will become tradeable on the effective date of this prospectus.
The selling security holders will receive the proceeds from the sale of their
shares and CCM will not receive any of the proceeds from such sales. The
selling security holders, directly or through agents, dealers or representatives
to be designated from time to time, may sell their shares on terms to be
determined at the time of sale. See "Plan of Distribution." The selling
security holders reserve the sole right to accept or reject, in whole or in
part, any proposed purchase of the shares being offered for sale.
These securities involve a high degree of risk. See "Risk Factors" contained in
this prospectus beginning on page 5.
These securities have not been approved or disapproved by the Securities and
Exchange Commission or any state securities commission nor has the Securities
and Exchange Commission or any state securities commission passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is
a criminal offense.
--------------------------------------------------------------------------------
Proceeds to Company or
Underwriting Discounts Other Persons
Price to Public (1) and Commissions(2)
--------------------------------------------------------------------------------
Per Share Unknown $ 0 (3)
--------------------------------------------------------------------------------
Total Unknown $ 0 (3)
================================================================================
(1) All the shares are being sold by the selling securityholders in separate
transactions at prices to be negotiated at that time.
(2) The shares are being sold by the selling securityholders and CCM has no
agreements or understandings with any broker or dealer for the sales of the
shares. A selling securityholder may determine to use a broker-dealer in the
sale of its securities and the commission paid to that broker-dealer, if any,
will be determined at that time. Prior to the involvement of any broker-
dealer, that broker-dealer must seek and obtain clearance of the compensation
arrangements from the National Association of Securities Dealers, Inc. In that
event, CCM will file a post-effective amendment identifying the broker-
dealer(s).
(3) CCM will not receive any proceeds from the sale of the shares.
One or more broker-dealers may be the principal market makers for the
shares being offered . Under these circumstances, the market bid and asked
prices for the securities may be significantly influenced by decisions of the
market makers to buy or sell the securities for their own account. The market
making activities of any market makers, if commenced, may subsequently be
discontinued.
The date of this Prospectus is January ____, 2001
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
<S> <C>
Prospectus Summary...................................................... 1
Risk Factors............................................................
Additional Information..................................................
Disclosure Regarding Forward Looking Statements.........................
Business................................................................
Use of Proceeds.........................................................
Management's Discussion and Analysis of Financial Condition.............
and Results of Operations...............................................
Management..............................................................
Security Ownership of Certain Beneficial Owners and Management..........
Selling Security Holders................................................
Certain Relationships and Related Transactions..........................
Description of Securities...............................................
Plan of Distribution....................................................
Legal Matters...........................................................
Experts.................................................................
Index to Financial Statements........................................... F-1
</TABLE>
___________________
<PAGE>
PROSPECTUS SUMMARY
The following is a summary of certain information found elsewhere in this
prospectus. Reference is made to, and this summary is qualified by, the more
detailed information set forth in this prospectus, which should be read in its
entirety.
Risk Factors
There are substantial risk factors involved in investment in CCM. An
investment in CCM is speculative and investors may not receive any return from
their investment. See "Risk Factors".
CCM Manufacturing Technologies and Subsidiaries
CCM Manufacturing Technologies, Inc. is a recently-created company with two
wholly-owned subsidiaries, Syntec Holding Group, Inc. and Syntec Corporation.
Through its subsidiaries, CCM is an independent provider of customized
integrated electronics manufacturing services ("EMS") to original equipment
manufacturers.
CCM's executive offices are located at 15635 Vision Drive, Pflugerville,
Texas 78660-3203, and its telephone number is 512/251-3484. CCM's web site is
located at www.synteccorp.com. Information contained in CCM's web site is not
part of this prospectus.
Selling Security Holders
This prospectus relates to the registration for sale of the securities held
by 98 security holders of CCM. These security holders will be able to sell their
shares on terms to be determined at the time of sale, directly or through
agents, dealers or representatives to be designated from time to time. CCM
will not receive any proceeds from the sale of the securities by the selling
security holders.
Trading Market
There is currently no trading market for the securities of CCM. CCM
intends to apply initially for its securities to be traded in the over-the-
counter market on the NASD OTC Bulletin Board or, if and when qualified, on the
Nasdaq SmallCap Market. CCM may not now or ever qualify for listing of its
securities on the NASD OTC Bulletin Board and may not now or at any time in the
future qualify for quotation on the Nasdaq SmallCap Market. See "Risk Factors-
There is no current trading market for CCM's securities and if a market does not
develop, purchasers of its securities may have difficulty selling their shares."
Selected Financial Data
The following table sets forth the selected consolidated financial data for
CCM for the period indicated below. The financial information set forth below is
derived from, and should be read in conjunction with, the more detailed
financial statements (including the notes thereto) appearing elsewhere in this
prospectus.
<TABLE>
<CAPTION>
Syntec Acquisition
Corp. and Syntec Holding Group, Inc. Syntec
Subsidiaries and Subsidiary Corporation
------------------ ----------------------------- -----------
Six Months Six Months Seven Months Five Months
Ended Ended Ended Ended
December 31, 1999 June 30, 1999 December 31, 1998 May 31, 1998
------------------ --------------- ------------------ ------------
<S> <C> <C> <C> <C>
Income Statement Items:
-----------------------
Revenues $ 2,078,249 $1,776,086 $1,736,270 $1,208,898
Selling, general and
administrative expenses 882,469 554,389 565,957 224,132
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Net income $(1,307,585) $ (200,684) $ (296,518) 2,009
Balance Sheet Items
-------------------
Cash $ 11,649 $ 3,457 $ 20,068 $ 6,731
Total current assets 1,195,674 805,506 391,770 407,244
Total assets 3,310,349 1,585,626 1,222,101 739,515
Current liabilities 3,077,856 1,928,649 1,402,925 455,405
Total shareholders' equity (255,219) (434,452) (295,768) 152,026
</TABLE>
The selected financial data above is a summary only and has been derived
from and is qualified in its entirety by reference to CCM's financial statements
and the report related thereto from King, Griffin & Adamson, P.C.
RISK FACTORS
The securities offered hereby are speculative in nature and involve a high
degree of risk and should be purchased only by persons who can afford to lose
their entire investment. Therefore, each prospective investor should, prior to
purchase, consider very carefully the following risk factors, as well as all of
the other information set forth elsewhere in this prospectus and the information
contained in the financial statements, including all notes thereto.
Special note regarding forward-looking statements
This prospectus may contain certain forward-looking statements and
information relating to CCM that are based on its beliefs and its principals as
well as assumptions made by and information currently available to them. These
statements include, among other things, the discussions of its business strategy
and expectations concerning its market position, future operations, expansion
opportunities, and profitability. When used in these documents, the words
"anticipate," "feel," "believe," "estimate," "expect," "plan," and "intend" and
similar expressions, as they relate to CCM or its principals, are intended to
identify forward-looking statements. Such statements reflect the current view
of respecting future events and are subject to certain risks, uncertainties, and
assumptions, including the meaningful and important risks and uncertainties
noted, particularly those related to its operations, results of operations, and
growth strategy, liquidity, competitive factors and pricing pressures, changes
in legal and regulatory requirements, general economic conditions, and other
factors described in this prospectus.
CCM may not continue as a going concern
As described in the CCM consolidated financial statements, CCM and
subsidiaries and its predecessors have experienced recurring losses during 1999
and 1998. Additionally, at December 31, 1999, CCM (formerly known as Syntec
Acquisition Corp.) and subsidiaries' current liabilities exceeded its current
assets by $1,882,182. These conditions raise substantial doubt about CCM and
its subsidiaries' ability to continue as a going concern. Unless CCM obtains
additional financing through operations, investment capital or otherwise, it
will not be able to meet its obligations as they come due and it will be unable
to execute its long-term business plan.
Current Cash Shortage
CCM is currently experiencing a cash flow problem which is effecting its
ability to timely fill production orders. CCM may need to raise additional
capital through the placement of its securities or from debt or equity
financing. If CCM is not able to raise such financing or obtain alternative
sources of funding, management may be required to curtail operations.
CCM may need to raise additional funds in the future for its operations and if
it is unable to raise additional financing, CCM may not be able to support its
operations.
<PAGE>
CCM is operating at a loss and may need additional funds to support its
operations. CCM may seek additional capital through an offering of its equity
securities, an offering of debt securities or obtaining financing through a bank
or other entity. CCM has not established a limit as to the amount of debt it may
incur nor has it adopted a ratio of its equity to a debt allowance. If CCM needs
to obtain additional financing, financing may not be available from any source,
or not available on terms acceptable to CCM, and any future offering of
securities may not be successful. If additional funds are raised through the
issuance of equity securities, there may be a significant dilution in the value
of CCM's outstanding Class A common stock. CCM could suffer adverse consequences
if it is unable to obtain additional capital when needed.
CCM may obtain additional capital primarily through the issuance of preferred
stock which may have an adverse effect on the rights of holders of its Class A
common stock
CCM may, without further action or vote by its shareholders, designate and
issue additional shares of CCM preferred stock. The terms of any series of
preferred stock, which may include priority claims to assets and dividends and
special voting rights, could adversely affect the rights of holders of the Class
A common stock and thereby reduce the value of the Class A common stock. The
designation and issuance of preferred stock favorable to current management or
shareholders could make the possible takeover of CCM or the removal of its
management more difficult and defeat hostile bids for control of CCM which bids
might have provided shareholders with premiums for their shares.
There is no current trading market for CCM's securities and, if a trading market
does not develop, purchasers of its securities may have difficulty selling their
shares.
There is currently no established public trading market for CCM's
securities. A trading market in CCM's securities may never develop or, if
developed, it may not be able to be sustained. CCM intends to apply for
admission to quotation of its securities on the NASD OTC Bulletin Board and, if
and when qualified, it intends to apply for admission to quotation on the Nasdaq
SmallCap Market. If for any reason CCM's Class A common stock is not listed on
the NASD OTC Bulletin Board or a public trading market does not otherwise
develop, purchasers of the shares may have difficulty selling their Class A
common stock should they desire to do so. Various factors, such as CCM's
operating results, changes in laws, rules or regulations, general market
fluctuations, changes in financial estimates by securities analysts and other
factors may have a significant impact on the market price of CCM's securities.
CCM may issue additional shares of its Class A common stock which would reduce
investors percent of ownership and may dilute CCM's share value.
CCM's Certificate of Incorporation authorizes the issuance of 70,000,000
shares of common stock (60,000,000 shares of Class A and 10,000,000 shares of
Class B). The future issuance of all or part of CCM's remaining authorized
common stock may result in substantial dilution in the percentage of its common
stock held by CCM's then existing shareholders. The issuance of common stock for
future services or acquisitions or other corporate actions may have the effect
of diluting the value of the shares held by CCM's investors, and might have an
adverse effect on any trading market for its common stock should a trading
market develop for CCM's securities.
The possibility of CCM issuing preferred stock with certain preferences may
depress market price of the common stock
CCM's Certificate of Incorporation authorizes 30,000,000 shares of non-
designated preferred stock which it may issue from time to time by action of the
board of directors. As of the date of this prospectus, CCM has designated
3,000,000 shares as Series A Preferred Stock of which 2,972,504 shares have been
issued and 1,500,000 shares as Series B Preferred Stock none of which have been
issued. However, the board of directors may designate voting and other
preferences without shareholder consent which designations may give the holders
of the preferred stock voting control and other preferred rights such as to
liquidation and dividends. The authority of the board of directors to issue
stock without shareholder consent may have a depressive effect on the market
price of CCM's Class A common stock even prior to any designation or issuance of
the preferred stock.
The possibility of issuing preferred stock for anti-takeover effect could
prevent takeovers favored by shareholders
<PAGE>
The board of directors has the authority, without further approval of CCM's
stockholders, to issue preferred stock, having the rights, preferences and
privileges as the board of directors may determine. Preventing a change in
control of the company could have the effect of preventing shareholders from
receiving a premium price for their shares or may prevent a takeover which some
of the shareholders favor because they might perceive it would result in better
management of the company.
The shares available for sale immediately by the selling security holders could
significantly reduce the market price of CCM's Class A common stock, if a market
should develop.
The market price of CCM's Class A common stock could drop if substantial
amounts of shares are sold in the public market, if a public market should
develop, or if the market perceives that such sales could occur. A drop in the
market price could adversely affect holders of CCM's Class A common stock and
could also harm CCM's ability to raise additional capital by selling equity
securities. CCM has 6,540,538 warrants and options outstanding exercisable at
prices ranging from $1.50 per share to $5.00 per share. The exercise of these
warrants and options at a price less than the market price could dilute the
value of outstanding shares and depress the market price. The perception that
these instruments may be exercised for or converted into Class A common stock
that could be sold into the public market could adversely affect the market
price of the Class A common stock.
Additional shares entering market pursuant to Rule 144 without additional
capital contribution
An increase in the number of shares of CCM available for public sale
without any increase to CCM's capitalization could decrease the market price of
the company's shares. After a one-year holding period restricted shares of CCM
will become eligible for trading pursuant to Rule 144 of the General Rules and
Regulations of the Securities and Exchange Commission without any additional
payment to the company or any increase to CCM's capitalization.
Of the 17,699,517 shares of Class A common stock currently outstanding,
4,472,434 shares of the Class A common stock are registered in this prospectus
for sale (which figure does not include shares registered herein to be issued
upon exercise of warrants or an option or conversion of stock). Of the
13,227,083 shares outstanding and not registered for sale herein 806,250 shares
(6%) are restricted shares held by non-affiliates of CCM which shares are
subject to limitations on their transferability. The one-year holding expired in
July, 2001 for these shares.
Affiliates of CCM will be subject to the limitations of Rule 144, including
its volume limitations in the sale of their shares. An aggregate of 16,371,085
(79.6%) of the outstanding shares of the company (including currently
exercisable options and warrants) are held by officers, directors, affiliates
and entities controlled by them and are subject to the limitations of Rule 144
including the shares held by affiliates which are registered in this prospectus.
See "Plan of Distribution-Sales by Affiliates".
Selling securityholders may sell securities at any price or time
After effectiveness of this registration statement, the non-affiliated
selling securityholders may offer and sell their shares at a price and time
determined by them without subject to Rule 144. The timing of sales and the
price at which the shares are sold by the selling securityholders could have an
adverse effect upon the public market for the Class A common stock, should one
develop. See "Plan of Distribution-Sales by Selling Securityholders".
Penny stock regulation may impair shareholders' ability to sell CCM's stock
If trading in CCM's stock begins, its Class A common stock may be deemed a
penny stock. Penny stocks generally are equity securities with a price of less
than $5.00 per share other than securities registered on certain national
securities exchanges. Penny stocks are subject to "penny stock rules" that
impose additional sales practice requirements on broker-dealers who sell the
securities to persons other than established customers and accredited investors
and these additional requirements may restrict the ability of broker-dealers to
sell a penny stock. See "Description of Securities-Penny Stock Regulation".
Management and affiliates own enough shares to control shareholder vote
<PAGE>
CCM's executive officers, directors, affiliates and entities controlled by
them, own approximately 84% of the outstanding Class A common stock. As a
result, these executive officers and directors will control matters that require
stockholder approval such as election of directors, approval of a corporate
merger, increasing or decreasing the number of authorized shares, adopting
corporate benefit plans, effecting a stock split, amending CCM's Certificate of
incorporation or other material corporate actions.
CCM has never paid dividends
Investors can not expect to receive a return on their stock investment in
the form of a dividend. CCM has never paid cash dividends on its Class A common
stock and no cash dividends are expected to be paid on the Class A common stock
in the foreseeable future. CCM anticipates that for the foreseeable future all
of its cash resources and earnings, if any, will be retained for the operation
and expansion of its business.
Officers and directors have limited liability and have indemnity rights
The Certificate of Incorporation and By-Laws of CCM provide that CCM
indemnify its officers and directors against losses sustained or liabilities
incurred which arise from any transaction in that officer's or director's
respective managerial capacity unless that officer or director violates a duty
of loyalty, did not act in good faith, engaged in intentional misconduct or
knowingly violated the law, approved an improper dividend, or derived an
improper benefit from the transaction. CCM's Certificate of Incorporation and
By-Laws also provide for the indemnification by it of its officers and directors
against any losses or liabilities incurred as a result of the manner in which
the officers and directors operate CCM's business or conduct its internal
affairs, provided that in connection with these activities they act in good
faith and in a manner which they reasonably believe to be in, or not opposed to,
the best interests of CCM and their conduct does not constitute gross
negligence, misconduct or breach of fiduciary obligations.
The variability of customer requirements in the electronics industry could
adversely affect CCM's results of operations
Electronic manufacturing service providers must provide increasingly rapid
product turnaround time for their original equipment manufacturer customers. CCM
generally does not obtain firm, long-term purchase commitments from its
customers, and has experienced a demand for reduced lead-times in customer
orders. CCM's customers may cancel their orders, change production quantities or
delay design and production for several factors. Cancellations, reductions or
delays by a significant customer or group of customers could adversely affect
CCM's results of operations. Additional factors that affect the electronics
industry and that could have a material adverse effect on CCM include the
inability of its customers to adapt to rapidly changing technology and evolving
industry standards and the inability of its customers to develop and market
their products. If CCM's customers' products become obsolete or fail to gain
commercial acceptance, CCM's results of operations may be materially and
adversely affected.
The limited availability of electronic components could adversely affect CCM's
ability to provide assembled products to its customers
A substantial portion of CCM's net sales are derived from turnkey
manufacturing in which it is responsible for procuring materials, which
typically result in CCM bearing the risk of component price increases. At
various times, there have been shortages of certain electronic components.
Component shortages could result in manufacturing and shipping delays or higher
prices, which could have a material adverse effect on CCM's business and results
of operations.
CCM's failure to comply with environmental regulations could prohibit CCM from
conducting its business operations
Proper waste disposal is a major consideration for printed circuit board
manufacturers because metals and chemicals are used in the manufacturing
process. CCM is subject to a variety of environmental regulations relating to
the use, storage, discharge and disposal of hazardous chemicals. For example,
water used in the printed circuit board manufacturing process must be treated to
remove metal particles and other contaminants before it can be discharged into
the municipal sanitary sewer system. Although CCM's management believes that its
facility is currently in material compliance with applicable environmental laws,
there can be no assurance that violations will
<PAGE>
not occur. Furthermore, environmental laws could become more stringent over
time. The costs and penalties that could result from a violation of
environmental laws could materially and adversely affect CCM's business
operations.
Effect of loss of Minority Business Status
CCM is certified by the National Minority Suppliers Development Council as
a "minority owned business". A minority owned business is a for-profit
enterprise, physically located in the United States or its trust territories,
which, in the case of a publicly-owned business, has at least 51% of the stock
owned by one or more minority group members which include United States citizens
who are Black, Hispanic, Native American or Asian and the management and daily
operation of the minority owned business are conducted by these minority group
members. CCM is also certified by the General Services Commission of the State
of Texas as compliant with the Historically Underutilized Business ("HUB")
program, and is recognized as a HUB. If at any time CCM no longer meets these
criteria (as, for example, if future stock offerings reduce the stock ownership
of minority group members below their required percentages), it may lose its
Minority Business Enterprise status, which could have a material adverse effect
upon its business operations.
The loss of CCM's key employees may adversely affect its growth objectives
CCM's success in achieving its growth objectives depends upon the efforts
of its top management team including the efforts of Jaime J. Munoz, CCM's
President, Jose Chavez, CCM's Chief Executive Officer and Chairman of the Board
of Directors, and Gustavo Cardenas, CCM's Chief Financial Officer, as well as
other of CCM's management members. The loss of the services of any of these
individuals may have a material adverse effect on CCM's business, financial
condition and results of operations. CCM can give no assurance that it will be
able to maintain and achieve its growth objectives should it lose any or all of
these individuals' services.
CCM's success depends on its ability to attract and/or retain qualified
personnel
A change in labor market conditions that either further reduces the
availability of employees or increases significantly the cost of labor could
have a material adverse effect on CCM's business, its financial condition and
results of its operations. CCM's business is dependent upon its ability to
attract and retain highly sophisticated research and development personnel,
sales personnel, business administrators and corporate management. CCM can give
no assurance that it will be able to employ a sufficient number of such
personnel in order to accomplish its growth objectives.
Many of CCM's competitors are larger and have greater financial and other
resources than CCM does and those advantages could make it difficult for CCM to
compete with them
The electronics manufacturing services industry is extremely competitive
and includes several companies which have achieved substantially greater market
shares than CCM has, and have substantially greater manufacturing, financial,
research and development and marketing resources than CCM. If overall demand for
electronics manufacturing services should decrease, this increased capacity
could result in significant pricing competition, which could adversely affect
CCM's operating results.
AVAILABLE INFORMATION
CCM is subject to the informational reporting requirements of the
Securities Exchange Act of 1934 and files periodic and episodic reports with the
SEC. Reports, proxy statements and other information filed by CCM, including its
registration statement, can be inspected and copied on the SEC's home page on
the world wide web at http://www.sec.gov or at the public reference facilities
of the SEC, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, as
well as the following Regional Offices: 7 World Trade Center, Suite 1300, New
York, N.Y. 10048; and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. Copies can be obtained from the SEC by mail at
prescribed rates. Requests should be directed to the SEC's Public Reference
Section, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549.
CCM will provide without charge to each person who receives a copy of the
prospectus which is a part of this registration statement, upon written or oral
request, a copy of any of the information incorporated herein by reference, not
including exhibits. Such requests should be made in writing to Jose Chavez,
Chief Executive Officer,
<PAGE>
CCM Manufacturing Technologies, Inc., 15635 Vision Drive, Pflugerville, Texas
78660-3203 or by telephone at 512/251-3484.
CCM MANUFACTURING TECHNOLOGIES, INC.
CCM, through its subsidiaries, Syntec Holding Group, Inc. and Syntec
Corporation, which are Texas corporations, is a provider of customized
integrated electronics manufacturing services ("EMS") to original equipment
manufacturers ("OEMs") in the electronics industry. CCM's integrated services
consist of the manufacturing of complex printed circuit board assemblies ("PCB")
using surface mount and pin-through hole interconnection technologies and the
manufacture of custom design assemblies.
Syntec Acquisition Corporation, a Texas corporation, was formed in June,
1999 to acquire the electronics manufacturing services of Syntec Holding Group,
Inc. and its wholly-owned subsidiary, Syntec Corporation, operating since
February 20, 1970. On June 30, 1999 Syntec Acquisition Corporation acquired 100%
of the outstanding stock of Syntec Holding Group. The purchase consideration
totaled $1,000,000 which included $500,000 in cash and the issuance of a
$500,000 promissory note, in addition to assuming liabilities of $2,020,078.
On July 13, 2000, Mayford Acquisition Corporation ("Mayford"). Mayford
acquired 99.9% of the outstanding shares of Syntec Acquisition Corporation from
the shareholders thereof in an exchange of stock. Syntec Acquisition Corporation
was the parent company of Syntec Holding Group, Inc. and Syntec Corporation. On
July 14, 2000, Syntec Acquisition Corporation was merged with and into Mayford
and Mayford changed its name to "CCM Manufacturing Technologies, Inc."
BUSINESS
Operations
CCM, through its wholly-owned subsidiaries, manufactures printed circuit
boards on which various electronic components such as integrated circuits,
microprocessors and resistors are mounted. These assemblies are key functional
elements of numerous types of electronic products. In addition to CCM's
manufacturing services, it provides its customers assistance with new product
designs, testing developments, engineering services, the procurement of raw
materials, end-of-life servicing, packaging and distribution.
Customers
CCM's past and current customers include OEMs such as International
Business Machines (IBM), Texas Instruments, Inc., Compaq Computers, Inc., Xerox
Corporation, Dell Computer Corporation, Motorola, Inc., High End Systems, Horton
Automatics, XEL Communications, Elo Touch Systems, American Dental, Kasper
Wireworks, and Allied Signal, Inc., all of which utilize CCM to build products
or utilize CCM's related services.
As of December 10, 2000, CCM had approximately seven active customers
including small to large-size companies which represent a cross-section of the
electronics equipment industry.
Percentage Sales Distribution Per Customer
High End Systems 25.9%
Horton Automatics 22.2%
IBM 16.6%
XEL Communications 13.0%
Elo Touch Systems 9.3%
Kasper Wireworks 9.3%
American Dental 3.7%
An important element of CCM's marketing strategy is to establish
partnerships with major and emerging OEM leaders in diverse segments across the
electronics industry. CCM's current customer base includes industry segments
such as personal computers, semiconductor equipment, telecommunications, and
computer peripherals. CCM can assist its customers in prototype services which
include design and layout, concurrent engineering, test
<PAGE>
development and engineering. CCM also provides solutions in manufacturing and
distribution including just-in-time delivery on low- to medium-volume turnkey,
price-sensitive and high-volume production, logistics and parts management and
projects that require more value-added services. Additionally, CCM serves OEMs
that need end-of-life services such as product repair and warranty services.
Manufacturing Strategy
CCM offers its customers a broad range of integrated electronics services
including, but not limited to, purchasing materials, initial design, product
manufacturing, circuit testing, inventory management, product servicing,
packaging, distribution and technical support. CCM's objective is to offer high-
quality electronics manufacturing and related services so as to assist its
customers in all aspects of the production cycle. In order to meet this
objective, CCM emphasizes the following significant factors:
Quality. CCM believes that product quality is a critical success factor in
the electronics manufacturing market. As such, CCM has adopted a number of
quality measurement techniques to monitor and continuously improve its services
and technical performance. CCM's manufacturing facilities are certified by the
International Standards Organization ("ISO") to meet ISO 9002 standards which
are international quality standards for design, manufacturing and distribution
management systems. There are a total of twenty requirements, including
management responsibility, quality systems and process control. The ISO
certification process involves periodically subjecting production processes and
quality management systems to stringent third-party review and verification. To
ensure certification requirements, CCM has developed a quality systems manual
and an internal system of quality controls. CCM's customers often look to an ISO
certification as a threshold indication of quality control standards.
In addition to ISO 9002 certification, CCM is Underwriter's Laboratories
("UL") compliant. These qualifications establish standards for quality,
manufacturing process control and manufacturing documentation. Several OEMs in
the electronics manufacturing industry require their service providers to comply
with UL standards. On November 1, 1999, CCM was presented a commitment award
from the Greater Austin Quality Council, a division of the Austin Chamber of
Commerce, recognizing CCM's commitment to promoting quality and service.
Turnkey Capabilities. CCM strives to provide a complete range of
manufacturing management and value-added services. CCM believes that as
manufacturing technologies become more complex and as product life-cycles
shorten, OEMs will increasingly contract for manufacturing on a turnkey basis as
they seek to reduce their products' time-to-market, capital assets and inventory
costs. CCM believes that its ability to manage and service large turnkey
projects of leading OEMs is a critical success factor.
Minority Owned Business. CCM is certified by the National Minority
Suppliers Development Council as a "minority owned business". A minority owned
business is a for-profit enterprise, physically located in the United States or
its trust territories, which, in the case of a publicly-owned business, has at
least 51% of the stock owned by one or more minority group members which include
United States citizens who are Black, Hispanic, Native American or Asian and the
management and daily operation of the minority owned business are conducted by
these minority group members. CCM is also certified by the General Services
Commission of the State of Texas as compliant with the Historically
Underutilized Business ("HUB") program, and is recognized as a HUB.
Advanced Manufacturing Process Technology. CCM intends to continue to offer
its customers advanced manufacturing process technologies, including surface
mount technology and through-hole (axial and radial) assembly, as well as
testing and refurbishing of interconnect technologies. CCM's PCBs consist
primarily of metallic interconnecting paths on nonconductive material, typically
laminated epoxy glass. Holes drilled in the laminate and plated-through with
conductive material from one surface to another, called plated-through holes,
are used to receive component leads and to interconnect the circuit in layers.
PCBs are used in large quantities in the electronics industry to mount and
interconnect integrated circuits, microprocessors and other electronic
components. CCM intends to focus its operations so as to further take advantage
of the increasing need for electronic components with higher speed, higher
performance and increased density and complexity.
CCM combines advanced manufacturing technology, such as computer-aided
manufacturing and testing, with manufacturing techniques including just-in-time
manufacturing, total quality management, statistical process control and
continuous flow manufacturing. Just-in-time manufacturing is a production
technique which minimizes
<PAGE>
work-in-process inventory and manufacturing cycle time while enabling CCM to
deliver its products to customers in the quantities and time frame required.
Electronics Assembly and Other Services. CCM's electronics assembly
activities consist primarily of the placement and attachment of electronic and
mechanical components on PCBs. CCM assembles higher-level sub-systems and
systems incorporating printed circuit boards and complex electro mechanical
components. Other services include the following:
--computer-aided testing of PCBs, sub-systems and systems in conjunction
with CCM's assembly activities, which contributes significantly to CCM's
ability to deliver high quality products. CCM has developed specific
strategies and routines to test board and system level assemblies. In
addition, CCM offers environmental stress tests of the board or system
assembly.
--procurement and materials management consisting of planning, purchasing,
expediting, warehousing, preparing and financing of components and
materials required to assemble a PCB or electronic system. CCM believes
that its inventory management expertise and procurement capabilities
contribute to cost reductions and reduce product turnaround time.
--evaluation of board designs for manufacturability. CCM evaluates the
board design for ease and quality of manufacture and, when appropriate,
recommends design changes to reduce manufacturing costs or lead times or to
increase the quality of finished assemblies. Board design services consist
of the engineering and design associated with the arrangement and
interconnection of specified components on PCBs to achieve an OEM's
specified level of functionality.
Sales and Marketing
CCM intends to use its status as a minority-owned and operated company
together with its ISO9002 standard of quality and certification to gain
visibility and to secure business opportunities with those companies which are
OEMs. CCM will also target companies whose primary success has been in
engineering and research and development and have decided to exit the
manufacturing business and outsource production.
CCM intends to focus on the following factors:
Visibility - Strong marketing and sales programs directed at both OEM
vendors and carrier sides of the electronic manufacturing market
Work Force - Maintain continuity and stability in the production work force
Customer Satisfaction - Offer customer service programs, high quality
manufacturing services, and quick response to customer requirements
Value Added Services - Offer continual growth in value-added engineering
and distribution services to maximize company value and long-term success
Minority Diversification - Through participation in National Minority
Supplier Development Council, CCM hopes to gain access to companies with
proactive minority supplier development programs
There are hundreds of electronic contract manufacturers, both domestic and
foreign that compete in the U.S. telecommunications industry. CCM intends to
distinguish its marketing efforts by focusing on the regulated segment of the
industry and intends to target the smaller sized OEMs that do not receive their
desired level of service.
Competition
The electronic manufacturing service industry is comprised of a large
number of companies, several of which have achieved significant market share.
Certain of CCM's competitors may have greater manufacturing,
<PAGE>
financial, research and development and marketing resources than CCM. Major in-
house printed circuit board producers are also considered CCM's competitors.
There is a risk that CCM's customers will make greater use of their own
facilities rather than utilize CCM's manufacturing services. CCM believes that
the principal competitive factors in the electronics manufacturing services
industry in which it operates are technological capabilities, responsiveness,
cost, product and service quality and value added services.
Industry Overview
As a result of intense competition in the electronics and
telecommunications industries, many OEMs are increasingly utilizing electronics
manufacturing service providers to outsource a broad range of manufacturing,
engineering and distribution services. By outsourcing, OEMs take advantage of an
electronics manufacturing service provider's specific skills, thereby enabling
each OEM to focus its efforts on its core competencies such as product
development, marketing and sales. OEMs utilize electronic manufacturing service
providers for several reasons including the following:
- Reduce Time to Market. Due to the ever changing technology in the
electronics industry, OEMs are faced with increasingly shorter product life
cycles and therefore have a growing need to reduce the time required to
bring a product to market. OEMs can reduce their time to market by
utilizing a manufacturing service provider's specialty skills and
infrastructure.
- Access to Sophisticated Manufacturing Technology. As manufacturing
technology becomes increasingly more complex and sophisticated, it is
difficult and costly for OEMs to maintain the necessary technological
expertise and skills to competitively manufacture and manage the production
of intricate electronic products. OEMs can outsource their requirements so
as to gain access to the service provider's advanced manufacturing
capabilities and sophisticated design technology.
- Capital Cost Reduction. As electronic products have become more
technologically advanced, the manufacturing process to create such products
requires a significant capital investment for complex manufacturing
equipment, product and inventory management. OEMs can turn to manufacturing
service providers to utilize the service provider's infrastructure, raw
material procurement and production management, thereby reducing the OEMs
overall capital requirements.
- Improve Inventory Management. Due to frequent design changes, short
product lifestyles and component price fluctuations of electronics
products, OEMs are faced with increasing difficulties in planning,
procuring and managing their inventory. As such, OEMs can utilize
electronics service providers to access better control over inventory
levels, reduce inventory costs and increase the OEMs' return on assets.
- Worldwide Manufacturing Capabilities. OEMs are increasing their
international activities in an effort to access foreign markets.
Electronics manufacturing service providers offer OEMs a variety of
manufacturing location options to better address their international
objectives regarding costs, shipment location, compliance with foreign
regulations and other business issues related to international trade.
Compliance with Environment Requirements
Waste treatment and disposal is a major consideration for printed circuit
board manufacturers since the manufacturing processes utilize significant
quantities of metals, acids, other toxic substances and water. For example,
water used in the printed circuit board manufacturing process must be treated to
remove metal particles and other contaminants before it can be discharged into
the municipal sanitary sewer system. Although CCM believes that its facility are
currently in material compliance with applicable environmental laws, there can
be no assurance that violations will not occur. Furthermore, environmental laws
could become more stringent over time. The costs and penalties that could result
from a violation of environmental laws could materially and adversely affect
CCM's business operations.
Employees
As of December 10, 2000, CCM had approximately fifty employees. CCM has
never experienced a work stoppage and CCM believes that its employee relations
are good. CCM's success depends to a large extent upon the
<PAGE>
continued services of CCM's key managerial and technical employees. The loss of
such personnel could have a material adverse effect on CCM's business and its
results of operations. See "Risk Factors".
Physical Facilities and Offices
CCM's administrative offices, executive offices and manufacturing facility
are located at 15635 Vision Drive, Pflugerville, Texas 78660-3203 consisting of
approximately 38,604 square feet of manufacturing space. CCM leases its
manufacturing facility at a rate of $16,700 per month. CCM's lease term is for
15 years with an option to renew such terms for an additional term of two years.
The lease term commenced on May 22, 1998. CCM believes that its leased
properties are adequate for its current and immediately foreseeable operating
needs. CCM does not have any policies regarding investments in real estate,
securities or other forms of property.
CCM's mailing address is 15635 Vision Drive, Pflugerville, Texas 78660-
3203. CCM's telephone number is 512/ 251-3484 and its facsimile number is
512/251-8238. CCM's e-mail address is [email protected]. CCM maintains an
---------------------
Internet Web site at http://www.synteccorp.com/about.html.
-------------------------------------
Legal Proceedings
There is no current outstanding litigation in which CCM is involved other
than routine litigation incidental to ongoing business.
Transfer agent
CCM's transfer agent is Pacific Stock Transfer Company, 5844 South Pecos
Road, Suite D, Las Vegas Nevada, 89120.
DIVIDEND POLICY
CCM has not paid any cash dividends on its Class A common stock since
inception and CCM does not anticipate paying any cash dividends on its Class A
common stock in the foreseeable future. CCM intends to retain future earnings,
if any, to finance the expansion and development and of its business. CCM's
board of directors will determine, in its sole discretion, whether to declare
any dividends on CCM's Class A common stock in the future, based on its
earnings, capital requirements, financial position, general economic conditions,
and other relevant factors then existing.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion is intended to provide an analysis of CCM's
financial condition and should be read in conjunction with CCM's financial
statements and the notes thereto. The matters discussed in this section that are
not historical or current facts deal with potential future circumstances and
developments. Such forward-looking statements include, but are not limited to,
the development plans for the growth of CCM, trends in the results of CCM's
development, anticipated development plans, operating expenses and CCM's
anticipated capital requirements and capital resources. CCM's actual results
could differ materially from the results discussed in the forward-looking
statements.
This report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act of
1934. Although CCM believes that the expectations reflected in the forward-
looking statements and the assumptions upon which the forward-looking statements
are based are reasonable, it can give no assurance that such expectations and
assumptions will prove to be correct.
General
CCM is a contract service provider of design, manufacturing and testing
services to the electronics industry, headquartered in Austin, Texas. Through
its wholly owned subsidiary, Syntec Corporation, CCM provides product
realization services to original equipment manufacturers in the industrial,
computer and telecommunications
<PAGE>
industries. CCM offers a full range of services including product development
and design, material procurement and management, prototyping, assembly, testing,
manufacturing, final system box build, distribution and after market support.
CCM is a certified MBE by the National Minority Supplier Development Council
(NMSDC) and a certified Historically Underutilized Business (HUB) by the State
of Texas.
CCM's contract manufacturing services are provided on a turnkey basis,
where CCM procures certain or all of the materials required for product
assembly. Turnkey services include material procurement and warehousing, in
addition to manufacturing, and involve greater resource investment and inventory
risk management than consignment services. Turnkey manufacturing currently
represents almost all of CCM's sales. Turnkey sales typically generate higher
net sales and higher gross profit dollars with lower gross margin percentages
than consignment sales due to the inclusion of component costs, and related
markup, in CCM's net sales. However, CCM takes on the risk of inventory
management, and a change in component costs can directly impact the average
selling price, gross margins and CCM's net sales. Due to the nature of turnkey
manufacturing, CCM's quarterly and annual results are affected by the level and
timing of customer orders, fluctuations in materials costs, and the degree of
automation used in the assembly process.
Since a substantial portion of CCM's sales are derived from turnkey
manufacturing, net sales can be negatively impacted by component shortages and
their lead-times. Shortages of key electronic components which are provided
directly from customers or suppliers and their lead-times can cause
manufacturing interruptions, customer rescheduling issues, production downtime
and production set-up and restart inefficiencies. From time to time, allocations
of components can be an integral part of the electronics industry and component
shortages and extended lead-time issues can occur with respect to specific
industries or particular components (such as memory and logic devices). In such
cases, supply shortages could substantially curtail production of some or all
assemblies utilizing a particular component. In addition, at various times
industry wide shortages of electronic components have occurred, particularly for
memory and logic devices.
Over the past twelve plus months the marketplace for certain electronic
components, primarily in the telecommunications and wireless markets (in
particular flash memory, tantalum capacitors, and SAW filters), has tightened
from recent periods. In addition, recent tightening has occurred with complex,
high layer count (12 layers and above) raw printed circuit boards (PCBs). This
has resulted in the extension of certain component lead-times, increased pricing
and in certain instances has resulted in the allocation of such components by
the suppliers. In response to this environment, CCM has initiated a plan whose
primary purpose is to create strong supplier alliances to assure a steady flow
of components at competitive prices, and mitigate shortages. CCM has established
relationships with key component suppliers to improve shortage and pricing
issues. However, because of the limited number of suppliers for certain
electronic components and whether further tightening in the marketplace for
components could result in missed deliveries or cancellations from CCM's
suppliers, along with other supply and demand concerns, CCM can neither
eliminate component shortages nor determine the timing or impact of such
shortages on CCM's results.
Because CCM provides its customers component procurement services, CCM may
bear the risk of price increases for these components if CCM is unable to
purchase them at the same price that CCM agrees with its customer on the pricing
for the components. As a result, CCM's sales and profitability can be affected
from period to period. In order to attempt to mitigate CCM's financial risk of
component price increases, CCM regularly reviews and adjusts for price
fluctuations with customers.
Many of the industries for which CCM currently provides electronic products
are subject to rapid technological changes, product obsolescence, increased
competition, and pricing pressures. These and other factors which affect the
industries or the markets that CCM serves, and which affect any of CCM's major
customers in particular, could have a material adverse effect on CCM's results
of operations. CCM depends on a relatively small number of customers for the
majority of its revenues.
CCM began transitioning its customer base during the past year,
implementing the new strategy, ensuring customer focus, and balancing current
production capabilities with the growth objectives. This transition involved
moving towards developing long-term relationships with select OEMs with whom CCM
could develop significant synergies. CCM's status as a certified minority
business enterprise is a key differentiator, especially in the communications
industry. XEL Communications, Inc., one of CCM's customers, is the first OEM to
select CCM
<PAGE>
as one of its electronic manufacturers service providers with the anticipation
of leveraging the minority manufactured content provided by CCM as a competitive
differentiator.
CCM has no long-term volume commitments from its customers, and lead-times
for customer orders and product-life cycles continue to decrease. Although CCM
obtains firm purchase orders and/or schedules from its customers, they typically
do not make firm orders for delivery of products more than 30 to 90 days in
advance. CCM does not believe that the backlog of expected product sales covered
by firm purchase orders is a meaningful measure of future sales since orders may
be canceled and volume levels can be changed or delayed at any time. The timely
replacement of delayed, canceled or reduced programs with new business cannot be
assured. In recent periods, an increasing percentage of CCM's sales have been
sales to its largest customers, which may increase CCM's dependence upon them.
Because of these and other factors, there can be no assurance that CCM's
historical sales growth rate will continue.
CCM participates within the EMS segment of the electronics industry. The
EMS segment is comprised of a large number of companies, with only a few
attaining significant market share. CCM's growth plan calls for a mix of both
internal growth - fueled by increased business from current key customers
combined with an expansion in the overall customer base through focused
prospecting - and external growth gained through the acquisition of businesses
that complement CCM's model and strategy by delivering incremental capabilities,
vertical integration, or geographic coverage.
Start-up costs and the management of new programs and new customers have an
effect on CCM's gross profit margins. Due to these and other factors, gross
margins can be negatively impacted early on in the life cycle of new programs.
In addition, labor efficiency and equipment utilization rates ultimately
achieved and maintained by CCM for new and current programs impact CCM's gross
margins.
CCM will look for opportunities for geographical expansion that will
improve CCM's ability to provide services to its customers. The successful
integration and operation of an acquired business, requires communication and
cooperation among key managers, along with the transition of customer
relationships. Acquisitions also involve risks including the retention of key
personnel and customers, the integration of information systems and purchasing
operations, the management of an increasingly larger and more geographically
dispersed business, and the diversion of management's attention from other
ongoing business concerns.
CCM anticipates cost savings, operating efficiencies and other benefits as
a result of acquisitions, if any, and the consolidation of functions and the
integration of departments, systems and procedures present significant
management challenges. CCM cannot assure that it will successfully accomplish
those actions as rapidly as expected. Also, CCM cannot assure the extent to
which it will achieve cost savings and efficiencies in any transaction or
expansion. There can be no assurance that CCM will successfully manage the
integration of new locations or acquired operations, and CCM may experience
certain inefficiencies that could negatively impact the results of operations or
CCM's financial condition. Additionally, no assurance can be given that any past
or future acquisition by CCM will enhance CCM's business.
Results of Operations
Comparison of the nine months ended September 30, 2000 and the nine months ended
September 30, 1999
NET SALES
Net sales for the nine months ended September 30, 2000, decreased $343,958
(12.20%) to $2,474,011 from $2,817,969 for the same fiscal period in the prior
fiscal year. The decrease in net sales was largely attributable to a severe
industry wide material/components shortage, which in turn negatively effected
the Company's cash flow and subsequent ability to procure additional parts
inventory. The Company believes that it has made significant progress in
alleviating the materials/components shortage issues by establishing strategic
alliances with some of the industries largest materials/components
suppliers.
GROSS PROFIT (LOSS)
<PAGE>
The Company incurred a gross loss of $235,533 for the nine months ended
September 30, 2000 compared to a gross profit of $359,281 for the same period in
the prior fiscal year. The decrease in the gross profit was due primarily to an
increase in materials/components costs due to the industry wide
material/components shortage and a 15% increase in personnel in the
direct/indirect labor module, and manufacturing burden. The Company's gross
margin also reflects a number of factors which can vary from period to period,
including product mix, the level of start-up costs and efficiencies of new
programs, product life cycles, sales volumes, price erosion within the
electronics industry, capacity utilization for surface mount and other
equipment, labor costs and efficiencies, the management of inventories,
component pricing and shortages, average sales prices, the mix of turnkey and
consignment business, fluctuations and timing of customer orders, changing
demand for customer products and competition within the electronics
business.
OPERATING EXPENSES
Selling, general and administrativ increased $635,951 (81.18%) to $1,419,370 for
the nine months ended September 30, 2000 from $783,419 for the same period in
the prior fiscal year. The increase in 2000 is largely due to additional costs
associated with the Company intensifying its sales and marketing efforts,
coupled with increases in personnel in the purchasing and engineering
departments, which was done in anticipation of increased sales, and legal fees
and acquisition costs associated with the reverse acquisition of Mayford
Acquisition Corporation.
INTEREST EXPENSE
Interest expense increased $72,536 (109.49%) to $138,782 for the nine
months ended September 30, 2000 from $66,246 for the same period in the prior
fiscal year. These increases are due to increased debt obtained from
shareholders and financial institutions to fund operations during late 1999 and
throughout 2000.
LIQUIDITY AND CAPITAL RESOURCES
Cash flows used in operating activities were $1,300,116 for the nine month
period ending September 30, 2000 compared to $70,155 for the same period in the
prior fiscal year. Cash flows used in operations for the nine months ended
September 30, 2000 resulted primarily from the Company's net loss of $1,802,682,
less the increase in deferred compensation of $308,365 and depreciation and
amortization expense for the period of $211,756. Cash flows used in operations
for the nine months ended September 30, 1999 resulted primarily from the
Company's net loss of $505,646 and the increase in accounts receivable of
$585,584, less depreciation and amortization expense for the period of $135,695
and the increase in accounts payable, deferred compensation and accrued
liabilities of $878,895.
Cash flows provided by financing activities were $1,292,584 for the nine month
period ended September 30, 2000 and resulted primarily from the proceeds from
the sale of preferred stock of $928,250, factoring advances of $242,231,
proceeds from the sale of common stock and common stock warrants of $262,500,
less net reductions of the Company's line of credit and long-term debt of
$146,880.
Cash flows provided by financial activities were $119,877 for the nine month
period ended September 30, 1999 and resulted primarily from the proceeds from
the sale of preferred and common stock of $657,374, plus advances from
shareholders of $197,363, less net payments on the Company's line of credit of
$777,938.
Comparison of the year ended December 31, 1998 and the year ended December 31,
1999
Net sales for the twelve months ended December 31, 1999, increased $909,167
(30.9%) to $3,854,335 from $2,945,168 for the same period in the prior fiscal
year. Management's decision to increase investment in internal support base
such as adding marketing staff, additional purchasing agents and manufacturing
engineers set the stage to increase and support new customers and increase
revenue from existing customers.
CCM had gross profits of $122,838 for the twelve months ended December 31,
1999 compared to a gross profit of $517,724 for the same period in the prior
fiscal year. The decrease in the gross profit was due primarily to an increase
in materials/components costs due to the industry wide material/components
shortage and an increase in personnel in the direct/indirect labor module, and
manufacturing burden. CCM's gross margin also reflects a number of factors
which can vary from period to period, including product mix, the level of start-
up costs and efficiencies of new programs, product life cycles, sales volumes,
price erosion within the electronics industry, capacity utilization for surface
mount and other equipment, labor costs and efficiencies, the management of
inventories, component pricing and shortages, average sales prices, the mix of
turnkey and consignment business, fluctuations and timing of customer orders,
changing demand for customer's products and competition within the electronics
business.
Selling, general and administrative expenses increased $717,097 to
$1,507,186 for the twelve months ended December 31, 1999 from $790,089 for the
same period in the prior fiscal year. The increase in 1999 is largely due to
additional costs associated with CCM intensifying its sales and marketing
efforts, coupled with increases in personnel in the purchasing and engineering
departments and legal fees.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity and Capital Resources
<PAGE>
Cash flows used in operating activities were $837,157 for the six month
period ending June 30, 2000 compared to $244,855 for the same period in the
prior fiscal year. Cash from operations was used primarily by increases in cost
of goods sold, and selling, general, and administrative expenses.
Cash flows used in operating activities were $933,718 for the twelve month
period ending December 31, 1999 compared to $22,055 for the same period in the
prior fiscal year. Cash used in operations was primarily due to increases in
cost of goods sold, and selling, general, and administrative expenses adjusted
for changes in operating assets and liabilities. Additional cash to finance
operations came from the proceeds of sale of preferred stock.
CCM utilizes available cash, debt and operating leases to fund its
operational needs. CCM utilizes operating leases primarily in situations where
technical obsolescence concerns are determined to outweigh the benefits of
financing the equipment purchase.
Because CCM's cash needs have increased significantly, CCM expects to
renegotiate and increase the size of its credit agreements with its banks in the
near term so as to provide sufficient funding levels for anticipated working
capital needs to support growth, significant expansion of its current facilities
and for potential additional acquisitions. CCM's credit facilities, its leasing
capabilities, cash and short-term investments and projected cash from operations
should be sufficient to meet its working capital and capital requirements
through fiscal 2000 and the foreseeable future. As CCM reviews its capital
needs, CCM may seek to raise additional capital through the issuance of either
public or private equity securities to finance anticipated future growth.
While there can be no assurance that future financing will be available on
terms acceptable to CCM, CCM may seek to raise additional capital through the
issuance of either public or private debt or equity securities to finance future
acquisitions. Debt financing may require CCM to pledge assets as collateral.
Equity financing may result in dilution to stockholders. Failure to arrange
additional financing could affect CCM's ability to continue to expand its
operations.
CCM has not paid dividends on its Class A common stock, but has reinvested
its earnings to support its working capital and expansion requirements. CCM
intends to continue to utilize its earnings in the development and expansion of
the business and does not expect to pay cash dividends in the foreseeable
future.
MANAGEMENT
The following table sets forth certain information regarding the members of
CCM's board of directors and its executive officers:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Jose G. Chavez 49 Chief Executive Officer and Chairman of the Board
Jaime J. Munoz 40 President and Director
Gustavo A. Cardenas 47 Chief Financial Officer, Treasurer, Secretary and Director
Lynn K Bishop 61 Vice President of Business Development
</TABLE>
CCM's directors hold office until the next annual meeting of its
shareholders or until their successors are duly elected and qualified. CCM's
executive officers serve at the pleasure of the Board of Directors. Set forth
below is a summary description of the principal occupation and business
experience of each of CCM's directors and executive officers for at least the
last five years.
Jose G. Chavez serves as CCM's Chief Executive Officer and Chairman of the
Board of Directors. Since June 1999, Mr. Chavez has served as the Chief
Executive officer and Chairman of the Board of CCM's wholly-owned subsidiary,
Syntec Corporation. Mr. Chavez co-founded, in 1993, Micro-Media Solutions,
Inc. ("MSI"), a computer service and consulting company located in Austin,
Texas. From 1993 to 1999, Mr. Chavez served as Chief Executive Officer and
Chairman of the Board of Directors of MSI. Prior to 1993, Mr. Chavez served as a
Plant Manager for Hart Graphic Distribution, Inc., served as Plant Manufacturing
Manager for CompuAdd Corporation, a personal computer manufacturer and was
section head at Hughes Aircraft. In 1981, Mr. Chavez obtained a Master of
Administrative Management from the University of Redlands Business School and in
1975 received a Bachelor of Science in Electrical Engineering from the
University of Texas at El Paso.
<PAGE>
Jaime Munoz serves as CCM's President and a director. From 1997 to 1999,
Mr. Munoz served as Vice President of Operations for Micro-Media Solutions, Inc.
("MSI"), a computer service company. Mr Munoz's responsibilities for MSI
included managing finances, investor relations, public company compliance, human
resources, purchasing, inventory control, liaison for related legal matters, and
company administration. From 1987 to 1997, Mr. Munoz served as Vice President
and Chief Marketing Officer for Infrastructure Services, Inc., a company
located in Houston, Texas. Mr. Munoz received a Bachelor of Science Degree from
the University of Texas at El Paso.
Gustavo A. Cardenas serves as CCM's Chief Financial Officer, Secretary,
Treasurer and a director. Since June 1999, Mr. Cardenas has served as the Chief
Financial Officer, Secretary, Treasurer and as a board member of CCM's wholly-
owned subsidiary, Syntec Corporation. From March 1997 to June 1999, Mr.
Cardenas served as the Vice President of Exceptional Resource Services, a
company located in Texas. Prior to 1997, Mr. Cardenas has held various banking
positions with First State Bank and Del Rio National Bank such as Vice President
of Mortgage Lending Division, Vice President of Commercial Lending; and Vice
President, International Banking. From 1992 to 1995, Mr. Cardenas founded and
served as the Chief Executive Officer of SFI Group, which provided financial
consulting to small and medium size companies. Mr. Cardenas holds several
degrees including an Associate's of Arts degree from Southwest Texas Jr. College
(1974), a Bachelor's in Business Management from University of Texas (1976) and
two Banking Management certifications, one from Texas Technical University
(1980), and another from Southern Methodist University (1982).
Lynn K. Bishop serves as CCM's Vice President of Business Development.
Since 1998, Mr. Bishop served as the Chairman of the Board and Vice President
of Business Development of CCM's wholly-owned subsidiary, Syntec Corporation.
Over the past thirty years, Mr. Bishop has worked in computer industry at
companies such as Texas Instruments (Director, Authorized Distribution Program
for Computer and Peripheral Products) and Hall-Mark Electronics (Vice
President and General Manager of Computer Systems Business Segment). From 1996
to 1998 Mr. Bishop served as a Director of Marketing for XEL Communications,
Inc., a telecommunications equipment manufacturer. Prior to 1996 Mr. Bishop
served as the Director of Marketing and as Vice President Memotec
Communications, Inc. and Racal Datacom, Inc., both telecommunications companies.
In 1961, Mr. Bishop received a Bachelors Degree in Psychology from Baylor
University, in 1963 he received a Masters Degree in Theology from Southwest
Baptist Theological Seminary and in 1968 completed all residence requirements
for a PHD in Ethics.
Involvement in Certain Legal Proceedings
CCM is not aware of any material legal proceedings that have occurred
within the past five years concerning any director, director nominee, promoter
or control person which involved a criminal conviction, a pending criminal
proceeding, a pending or concluded administrative or civil proceeding limiting
one's participation in the securities or banking industries, or a finding of
securities or commodities law violations.
Executive Compensation
The following table sets forth information concerning the total
compensation that CCM has paid or accrued on behalf of its officers during the
fiscal period ending December 31, 1999. None of CCM's officers received a salary
and bonus in excess of $100,000 for services rendered during such fiscal year.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Name and
Principal Stock
Position Year Salary($) Bonus($) Other($) Awards(# shares) Compensation
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Jose G. Chavez, CEO 1999 $90,000 0
Jaime J. Munoz, Pres. 1999 $75,000 0
Gus A. Cardenas, CFO 1999 $ 67,500 0
Lynn K. Bishop, VP 1999 $21,601 $22,989
</TABLE>
<PAGE>
Employment Agreements
On July 1, 1999, CCM entered into an employment agreement, which was later
amended on December 21, 1999 to retroactively take effect on July 1, 1999, with
Jose G. Chavez to serve as its chief executive officer at an annual salary of
$180,000 and a monthly automobile allowance of $600. Pursuant to the agreement,
CCM issued Mr. Chavez, an eight year option to purchase 1,250,000 shares of
CCM's Class A common stock at an exercise price of $1.50 per share. The option
to purchase 1,250,000 shares vests over a period of three years with 500,000
shares vesting on July 1, 2000, 375,000 shares vesting on July 1, 2001 and the
remaining 375,000 shares vesting on July 1, 2002. The agreement is for a three
year term with an option to extend such employment period for two successive
one year terms. Mr. Chavez has entered into comprehensive confidentiality and
non-compete agreements.
On July 1, 1999, CCM entered into an employment agreement, which was
later amended on December 21, 1999 to retroactively take effect on July 1, 1999,
with Jaime J. Munoz to serve as its president at an annual base salary of
$150,000 and a monthly automobile allowance of $450. Pursuant to the agreement,
CCM issued Mr. Munoz an eight year option to purchase 750,000 shares of CCM's
Class A common stock at an exercise price of $1.50 per share. The option to
purchase 750,000 shares shall vest annually in equal amounts over a period of
three years with 250,000 shares vesting on July 1, 2000. The agreement is for a
three year term with an option to extend such employment period for two
successive one year terms. Mr. Munoz has entered into comprehensive
confidentiality and non-compete agreements.
On July 1, 1999, CCM entered into an employment agreement, which was later
amended on December 21, 1999 to retroactively take effect on July 1, 1999, with
Gustavo A. Cardenas to serve as its chief financial officer and treasurer at an
annual salary of $135,000 and a monthly automobile allowance of $450. Pursuant
to the agreement, CCM issued Mr. Cardenas, an eight year option to purchase
750,000 shares of CCM's Class A common stock at an exercise price of $1.50 per
share. The option to purchase 750,000 shares shall vest annually in equal
amounts over a period of three years with 250,000 shares vesting on July 1,
2000. The agreement is for a three year term with an option to extend such
employment period for two successive one year terms. Mr. Cardenas has also
entered into comprehensive confidentiality and non-compete agreements.
On July 1, 1999, CCM entered into an employment agreement, which was later
amended on December 21, 1999 to retroactively take effect on July 1, 1999, with
Lynn K. Bishop to serve as its Vice President of Business Development at an
annual salary of $12,000. Pursuant to the agreement, CCM issued Mr. Bishop a
ten year option to purchase 750,000 shares of the Class B common stock at an
exercise price of $1.50 per share. The option to purchase 750,000 shares shall
vest annually in equal amounts over a period of three years with 250,000 shares
vesting on July 1, 2000. The agreement is for a three year term with an option
to extend such employment period for two successive one year terms. Mr. Bishop
has also entered into comprehensive confidentiality and non-compete agreements.
Indemnification of Officers, Directors, Employees and Agents
CCM's Certificate of Incorporation and By-Laws provide that CCM shall, to
the fullest extent permitted by applicable law, as amended from time to time,
indemnify its directors, as well as any of CCM's officers or employees to whom
CCM has agreed to grant indemnification.
Section 145 of the Delaware General Corporation Law ("DGCL") empowers a
corporation to indemnify its directors and officers and to purchase insurance
with respect to liability arising out of their capacity or status a s directors
and officers provided that this provision shall not eliminate or limit the
liability of a director
-for breach of the director's duty of loyalty to the corporation or its
stockholders;
-for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
-under Section 174 (relating to the liability for unauthorized acquisitions
or redemptions of, or dividends on, capital stock) of the Delaware
General Corporation Law; or
-for any transaction from which the director derived an improper personal
benefit.
<PAGE>
The Delaware General Corporation Law provides further that the
indemnification permitted thereunder shall not be deemed exclusive of any other
rights to which the directors and officers may be entitled under the
corporation's by laws, any agreement, vote of shareholder or otherwise.
The effect of the foregoing is to require CCM to indemnify its officers and
directors for any claim arising against such person in their official capacities
if such person acted in good faith and in a manner that he reasonably believed
to be in or not opposed to CCM's best interests, and, with respect to any
criminal actions or proceedings, had no reasonable cause to believe his conduct
was unlawful.
CCM has adopted a charter provision that requires it to indemnify all of
the present and former directors, officers, agents and employees of CCM to the
fullest extent permitted by Delaware law. In connection with CCM's
indemnification obligations to such persons, CCM may make advances to cover a
person's expenses provided that CCM receives an undertaking from such person to
repay the advances unless the person is ultimately determined to be entitled to
indemnification.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to CCM's directors, officers and controlling persons
pursuant to the foregoing provisions, or otherwise, CCM has been advised that in
the opinion of the Securities and Exchange Commission indemnification for such
liabilities is against public policy as expressed in the Securities Act and is
therefore unenforceable.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of the date of this
prospectus regarding the beneficial ownership of CCM's Class A common stock by
each of its executive officers and directors, individually and as a group and by
each person who beneficially owns in excess of five percent of the Class A
common stock after giving effect to the exercise of warrants or options held by
the named security holder.
Number of Shares of Percent of
Common Stock Common Stock
Beneficially Beneficially
Name of Owned or Right Owned or Right
Beneficial Owner to Direct Vote(1) to Direct Vote (2)
---------------- ----------------- -----------------
Jose G. Chavez 7,708,333(3) 42.3%
Chairman and Chief
Executive Officer
Jaime J. Munoz 1,553,125(4) 8.6%
President and Director
Gustavo A. Cardenas 1,534,375(5) 8.5%
Chief Financial Officer,
Treasurer, Secretary and
Director
Lynn Bishop 2,875,000(6) 16%
Vice President of
Business Development
Consulting Strategy 1,800,000 9.3%
International LLC(7)
Franklin C. Fisher, Jr. (8) 300,084 1.7%
International Fluid
<PAGE>
Dynamics, Inc. (8) 300,084 1.7%
TCA Investments, Inc. (8) 300,083 1.7%
Travin Partners LLLP (9) 337,563 1.9%
Executive Officers and 13,670,833 77.3%
Directors as a Group
(1) Includes any shares as to which the person or entity has sole or
shared voting power or investment power and shares which such person or entity
has the right to acquire or which will convert within sixty days after the date
of this prospectus .
(2) Based upon 17,699,517 shares of Class A common stock outstanding as of
December1. Such figure does not shares to be issued upon exercise of warrants or
conversion of Class A preferred stock.
(3) Includes 500,000 shares of Class A common stock underlying options
immediately exercisable at an exercise price of $1.50 per share for a term
expiring December 31, 2004.
(4) Includes 250,000 shares of common stock underlying options immediately
exercisable at an exercise price of $1.50 per share for a term expiring December
31, 2004.
(5) Includes 250,000 shares of common stock underlying options immediately
exercisable at an exercise price of $1.50 per share for a term expiring December
31, 2004.
(6) Includes 250,000 shares of common stock underlying options immediately
exercisable at an exercise price of $1.50 per share for a term expiring December
31, 2004.
(7) Consists of 200,000 shares of CCM's Class A common stock, an option to
purchase 600,000 shares of CCM's Class A common stock exercisable at $1.50 per
share and warrants to purchase 1,000,000 shares of CCM's Class A common stock at
prices ranging from $2.50 per share to $5.00 per share. See "Description of
Securities". Consulting & Strategy International LLC serves as corporate
consultant to CCM and consists of two principals, Franklin C. Fisher, Jr. and
Steve L. Tebo. Steve L. Tebo also serves as a principal of Travin Partners LLLP
which owns 337,563 shares of CCM Class A common stock. Franklin C. Fisher, Jr.
individually owns 300,084 shares of CCM Class A common stock and Mr. Fisher also
serves as a principal of International Fluid Dynamics, Inc. which owns 300,084
shares of Class A common stock.
(8) Franklin C. Fisher, Jr. individually owns 300,084 shares of CCM Class
A common stock. Mr. Fisher also serves as a principal of International Fluid
Dynamics, Inc. which owns 300,084 shares of Class A common stock and of
Consulting & Strategy International LLC which owns 200,000 shares of Class A
common stock, an option to purchase 600,000 shares of Class A common stock and a
warrant to purchase 1,000,000 shares of Class A common stock. Mr. Fisher is also
a principal of TCA Investments, Inc. which owns 300,083 shares of CCM Class A
common stock.
(9) Steve L. Tebo is a principal of the named shareholder. Mr. Tebo is also
a principal of Consulting & Strategy International LLC, a selling
securityholder.
CCM's executive officers, directors, and affiliates, together with entities
controlled by them, beneficially own 84.5% of CCM's outstanding Class A common
stock and they are able to exercise a controlling influence over the election of
directors and other matters requiring stockholder approval, including change of
control transactions. See "Risk Factors".
SELLING SECURITY HOLDERS
CCM is registering for offer and sale by the holders thereof 6,238,935
shares of Class A common stock held by certain security holders which includes
(i) Class A common stock issuable upon the exercise of an option to purchase
600,000 shares of Class A common stock, (ii) shares of Class A common stock
issuable upon the exercise of warrants to purchase 1,000,000 shares of Class A
common stock, and (iii) 166,500 shares of Class A common stock issuable upon
conversion of 166,500 shares of outstanding Series A Preferred Stock. The
selling security holders may offer their shares for sale on a continuous basis
pursuant to Rule 415 under the 1933 Act. See "Risk
<PAGE>
Factors"
All of the selling security holders' shares registered hereby will become
tradeable on the effective date of the registration statement of which this
prospectus is a part.
The following table sets forth the beneficial ownership of the securities
of CCM held by each person who is a selling securityholder.
<TABLE>
<CAPTION>
Number of Shares
Number of Of Class A Common Stock
Shares of Series Underlying conversion Percent of Stock
Owned
A Preferred of Series A Preferred Prior to After
Name and Address Owned Offered herein Offering(1) Offering (2)
------------- -------------- ------------ ------------
<S> <C> <C> <C> <C>
Series A Preferred Shares
---------------------------
Aguire LLC 70,000 5,000 (*) (*)
12700 Park Central Dr.
Dallas, TX 75251
Gene Aguillar 236,668 5,000 1.3% 1.3%
10803 Hard Rock Road
Austin, TX 78750
Pedro Aguirre 120,000 5,000 (*) (*)
12700 Park Central Dr.
15/th/ Floor
Dallas, TX 75251
Jett Bartlett 80,000 5,000 (*) (*)
2603 Escondido Cove
Austin, TX 78703
Bing & Sybill Bingham 385,000 15,000 2.2% 2.1%
1000 Edgemont Court
Allen, TX 75013
Fred R. & Kelly J.Bost 11,668 5,000 (*) (*)
4111 Day Drive
San Marcos, TX 78666
Joseph E. Brown and 95,000 5,000 (*) (*)
B.J. Brown
1819 Pebbie Brook Dr.
New Braunfels, TX 78763
Katherin G. Butler 36,668 5,000 (*) (*)
1724 17/th/ Street #2 NW
Washington, DC 20009
Jack Carmody 240,000 10,000 1.35% 1.3%
522 Thundercreek B-1
Austin, Texas 78759
Benny Daneshjou(3) 49,998 5,000 (*) (*)
67 St. Stephens
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Austin, TX 78746
Nancy Fisher 7,668 4,000 (*) (*)
1122 Colorado
Suite 301
Austin, Texas 78701
James Gaidry 42,500 7,500 (*) (*)
8905 Balcones Club Dr.
Austin, TX 78750
George R. and Charla 36,668 5,000 (*) (*)
W. Hisler
1100 Hunters Creek Dr.
Cedar Park, TX 78613
Michael Joseph(4) 262,500 10,000 1.5% 1.42%
2202 Parkland Cove
Round Rock, TX 78860
John G. Lione, Jr. 45,000 5,000 (*) (*)
8113 Bottlebrush Dr.
Austin, TX 78750
Lorenz Family Trust 240,000 10,000 1.35% 1.3%
Rick Triplett, Trustee
2300 NCNA Tower
515 Congress Avenue
Austin, TX
Gordon Mckinley 36,668 5,000 (*) (*)
11218 Windmere
Meadows
Austin TX 78757
Eddie Mena 30,000 5,000 (*) (*)
1334 Austin Thomas Dr.
Keller, TX 76248
Pieratt No. 1, LLC 75,000 5,000 (*) (*)
PO Box 50390
Austin, TX 78763
Ann M. Pieratt 80,000 5,000 (*) (*)
PO Box 50390
Austin, TX 78763
John D. Pieratt 20,000 5,000 (*) (*)
PO Box 50390
Austin, TX 78763
Fraye B. Stokes 78,333 5,000 (*) (*)
710 Loop Drive
San Marcos, TX 78666
John Stockton 62,500 5,000 (*) (*)
9442 Spring Hollow
</TABLE>
<PAGE>
Austin, TX 78750
Gisela D. Triana 28,335 5,000 (*) (*)
401 East 35/th/ Street
Austin, Texas 78750
Alex Vandewalle 30,000 5,000 (*) (*)
6602 Three Oaks Circle
Austin, TX 78750
Mike Vandewalle 30,000 5,000 (*) (*)
6602 Thousand Oaks Circle
Austin, TX 78763
George Villalva 295,000 5,000 1.66% 1.63%
1703 S 3/rd/ Street
Austin, TX 78704
Kevin Wood 80,830 5,000 (*) (*)
6521 Twin Creek Hollow
Austin, TX
<TABLE>
<CAPTION>
Common Shares
-------------
Number of
Shares of Series Number of Shares Percent of Stock Owned
A Common of Common Stock Prior to After
Name and Address Owned Offered herein Offering(1) Offering
------- -------------- ----------- --------
<S> <C> <C> <C> <C>
Aberdeen Investment 1,000 1,000 (*) (*)
Corp.
(c/o Bob Sonfield)
770 S. Post Oak Lane
Houston, TX 77056
Urooj Abdulla 5,000 5,000 (*) (*)
10300 Wilcrest Dr. #711
Houston, TX 77099
Zaheer Babar 5,000 5,000 (*) (*)
5433 Westheimer
Houston, TX 77056
George Ball 500 500 (*) (*)
600 Travis, Suite 3100
Houston, TX 77002
Lan Bentsen 2,000 2,000 (*) (*)
3040 Post Oak Blvd
Suite 730
Houston, TX 77056
Lan Bentsen, Trustee
WPO Forum 4,000 4,000 (*) (*)
3040 Post Oak Blvd
Suite 730
Houston, TX 77056
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Eloise Brooks 30,000 30,000 (*) (*)
111 Puccini Lane
Uvalde, TX 78801
Glen Burton 30,000 30,000 (*) (*)
8805 Granada Hills
Austin, TX 78737
Patricia Camareno 5,000 5,000 (*) (*)
PO Box 920952
PMB 142
Houston, TX 77292-0952
Robert Cannon (5) 150,000 150,000 (*) (*)
1410 Phillip Street
New Orleans, LA 70130
Hunter M.A. Carr 500 500 (*) (*)
23 Bayou Shadows
Houston, TX 77077
Castle Developments Ltd. 337,562 337,562 1.9% (*)
Sir Williams Newton St.
Port Louis, Mauritius
Consulting and Strategy 1,800,000(7) 1,800,000 10.16% (*)
International LLC (6)
5433 Westheimer
Houston, TX 77056
Anthony Deeden 2,000 2,000 (*) (*)
6611 Westchester
Houston, TX 77005
Mark Destefano 10,000 10,000 (*) (*)
500 N Rainbow Blvd
Suite 300
Las Vegas, NV 89107
Danica Gail Decosto 1,000 1,000 (*) (*)
1271 Turnbury Oak
Houston, TX 77055
Benny & Sally 20,000 20,000 (*) (*)
Danaeshjou(3)
67 S. Stephens
Austin, TX 78764
Paul Emmanuel 10,000 10,000 (*) (*)
1511 Gulf Stream Circle
#104
Brandon, FL 33511
Peter Emmanuel 10,000 10,000 (*) (*)
1511 Gulf Stream Circle
#104
Brandon, FL 33511
</TABLE>
<PAGE>
James Etheridge 25,000 25,000 (*) (*)
11908 Volente Road
#1025
Austin, TX 78750
Franklin C. Fisher III 10,000 10,000 (*) (*)
120 S Fenway Avenue
Bartlesville, OK 74006
Franklin C. Fisher, Jr(8). 300,084 300,084 1.7% (*)
5433 Westheimer,
Suite 500
Houston, TX 77056
Franklin C. Fisher III, 10,000 10,000 (*) (*)
Trustee of Mathew
Reed Fisher, Trust # 1
120 S Fenway Avenue
Bartlesville, OK 74006
Edna Flores 2,500 2,500 (*) (*)
9321 Lightwood Loop
Austin, TX 78748
Garnier Holdings Ltd. 337,562 337,562 1.9% (*)
PO Box 146
Road Town, Tortola
British Virgin Islands
John P. Gorst 500 500 (*) (*)
1101 Broadway Plaza
Tacoma, WA 98402
Anthony Heller 5,000 5,000 (*) (*)
3895 Bathurst St, #202
Toronto
M3H 3N2, Canada
Yolanda Hernandez 20,000 20,000 (*) (*)
10737 Janway
El Paso, TX 79935
Jeffrey L. Henken 5,000 5,000 (*) (*)
400 Evergreen Street
Emmet, ID 83617
International Fluid 300,084 300,084 1.7% (*)
Dynamics(9)
6199 Portal
Houston, TX 77096
Robert Inzano & 20,000 20,000 (*) (*)
Martha O. Chavez
PO Box 7004
Capisprano Beach, CA
92624
<PAGE>
David Jackson 20,000 20,000 (*) (*)
4504 Aqua Verde
Austin, TX 78746
Michael Joseph(4) 40,000 40,000 (*) (*)
2202 Parkland Cove
Round Rock, TX 78660
Jim Kelly 20,000 20,000 (*) (*)
PO Box 5189
Douglasville, GA 30135
Craig Longhurst 2,000 2,000 (*) (*)
12625 Memorial Dr #18
Houston, TX 77024
Rick Martinez 10,000 10,000 (*) (*)
5613 King Acres Dr.
Corpus Christi, TX
78414
Angelina Martinez 15,000 15,000 (*) (*)
5910 Raza
Pearland, TX 77584
Vicki Mechling 20,000 20,000 (*) (*)
4500 Court of St. James
Austin, TX 78730
Pete Montoya 40,000 40,000 (*) (*)
2905 Prado Street
Austin, TX 78702
Jason Nassour 5,000 5,000 (*) (*)
1004 Walsh Lane
Round Rock, TX 78681
Lisa Nieri 22,500 22,500 (*) (*)
3501 E Camelback RD
# 214
Phoenix, AZ 85018
Oxford Financial Group 300,000 300,000 1.69% (*)
5085 Westheimer #4520
Houston, TX 77056
Joe Pacheco 32,500 32,500 (*) (*)
7308 Danwood Drive
Austin, TX 78759
Sandra B. Peterson 1,000 1,000 (*) (*)
6615 Cypress Point Dr.
Houston, TX 77069
Thomas R. Peterson 1,000 1,000 (*) (*)
6615 Cypress Point Dr.
<PAGE>
Houston, TX 77069
Evan Peterson 1,000 1,000 (*) (*)
16826 Kettlecreek
Spring, TX 77379
Julie Peterson 1,000 1,000 (*) (*)
3601 Allen Parkway
Apt. 352
Houston, TX 77019
Joe Quintero 15,000 15,000 (*) (*)
115 Waller #A
Austin, TX 78702
Carlos Romero 1,000 1,000 (*) (*)
Camarones 503-8
Electricistas
Mexico D.F. 02060
Mexico
Sacrston Trading LTD 10,000 10,000 (*) (*)
14601 Bellaire Blvd.
Houston TX 77083
Sage Capital Management 450,000 450,000 2.54% (*)
One Riverway
Suite 2550
Houston, TX 77056
Gerald Sherman 10,000 10,000 (*) (*)
5433 Westheimer
Suite 500
Houston, TX 77056
Ted Skiffington 5,000 5,000 (*) (*)
5470 Briar Drive
Houston, TX 77056
Paul Stork 20,000 20,000 (*) (*)
3101 Hopkins Road
Beasley, TX 77417
Sunstate Equity
Trading, Inc.(10) 200,000 200,000 1.12% (*)
1008 N DaleMabry Hwy
Tampa, FL 33618
Franklin and Lordes Smith 5,000 5,000 (*) (*)
15021 Haily Hollow
Austin, TX 78728
John Stockton 6,334 6,334 (*) (*)
9442 Spring Hollow
Austin, TX 78750
<PAGE>
Roy Sosa 25,600 25,600 (*) (*)
2617 Carlow Drive
Austin, TX 78745
Lily Sosa 24,500 24,500 (*) (*)
3704 Ebony Hollow Pass
Austin, TX 78739
TCA Investments (11) 300,083 300,083 1.7% (*)
5014 Glenmont
Houston, TX 77081
TPG Capital Corporation(12) 300,000 300,000 1.7% (*)
1504 R. Street NW
Washington, D.C. 20009
Travin Partners LLLP(13) 337,562 337,562 1.9% (*)
c/o Briskin & Associates
1001 Cambridge Square
Alpharetta, GA 30004
James Watson 2,500 2,500 (*) (*)
McCabe, Jr.
PO Box 2289
Naples, FL 34106
Valverde Financial 337,563 337,563 1.9% (*)
Corporation
General-Willie Strasse 10
Zurich 8027
Switzerland
George Weiss 10,000 10,000 (*) (*)
1 Rockefeller Plaza
New York, NY 10020
Martin Weiner 5,000 5,000 (*) (*)
10 Lana Lane
Houston, TX 77027
Connie J. Wheeler 10,000 10,000 (*) (*)
1271 Turnbury Oak
Houston, TX, 77055
Marcus Melton Wheeler 1,000 1,000 (*) (*)
1271 Turnbury Oak
Houston, TX 77055
Dayton Freels Wheeler 1,000 1,000 (*) (*)
1271 Turnbury Oak
Houston, TX 77055
Gary K. Wohrle 5,000 5,000 (*) (*)
3370 NE 190/th/ Street
#1703
Aventura, FL 33180
<PAGE>
_____________
* Represents less than 1% of CCM's outstanding shares of Class A common stock
(1) Based upon 17,699,517 shares of Class A common stock outstanding. Such
figure does not include 1,600,000 shares of CCM's Class A common stock
issuable upon the exercise of an option to purchase 600,000 shares of CCM's
Class A common stock and the exercise of warrants to purchase 1,000,000
shares of CCM's Class A common stock.
(2) Assumes the sale of all of the shares offered by the selling security
holders.
(3) The named shareholder owns 49,998 shares of CCM Series A preferred stock
and owns 20,000 shares of Class A common stock.
(4) The named shareholder owns 262,500 shares of CCM Series A preferred stock
and owns 40,000 shares of Class A common stock.
(5) 90,000 shares of the shares listed are being held in escrow to be issued to
Mr. Cannon in the event that CCM defaults on a $150,000 promissory note
payable to Mr. Cannon due on January 19, 2001.
(6) The named shareholder serves as CCM's business consultant with its
principals consisting of Steve L. Tebo and Franklin C. Fisher, Jr. Mr. Tebo
also serves as a principal of Travin Partners LLLP which owns 337,562
shares of Class A common stock. Mr. Fisher also serves as a principal of
International Fluid Dynamics, Inc. and TCA Investments, Inc., which are
selling shareholders.
(7) Such figure consists of 200,000 shares of CCM common stock, an option to
purchase 600,000 shares of common stock at $1.50, and a warrant to
purchase 1,000,000 shares of CCM common stock at exercise prices ranging
from $2.50 per share to $5.00 per share.
(8) The named shareholder is a principal of Consulting & Strategy International
LLC which serves as CCM's business consultant and is also a principal of
International Fluid Dynamics, Inc. and TCA Investments, Inc. which are
selling shareholders.
(9) The named shareholder's principal, Franklin C. Fisher, Jr., also serves as
a principal of Consulting & Strategy International LLC. Mr. Fisher is also
a principal of International Fluid Dynamics, Inc. which owns 300,084
shares of Class A common stock and TCA Investments, Inc. which owns
300,083 shares of Class A common stock, both of which entities are selling
shareholders.
(10) The named shareholder, an NASD member firm, has entered into an investment
banking agreement with CCM to provide financial advisory services.
(11) The named shareholder's principal, Franklin C. Fisher, Jr., also serves as
a principal of Consulting & Strategy International LLC, a selling
shareholder. Mr. Fisher also serves as a principal of International Fluid
Dynamics, Inc. which owns 300,084 shares of Class A common stock and is a
selling shareholder.
(12) TPG Capital Corporation is an affiliate of Cassidy & Associates, the law
firm which prepared this registration statement.
(13) The named shareholder's principal, Steve L. Tebo, also serves as a
principal of Consulting & Strategy International LLC, a selling
shareholder.
CCM will not receive any proceeds from the sale of any shares by the
selling security holders. CCM is bearing all expenses in connection with the
registration of the selling security holder's shares offered by the registration
statement of which this prospectus is a part.
The shares owned by the selling security holders are being registered
pursuant to Rule 415 of the General Rules and Regulations of the Securities and
Exchange Commission which Rules pertain to delayed and continuous offerings and
sales of securities. In regard to the selling security holder's shares offered
under Rule 415, CCM has made certain undertakings in Part II of the registration
statement of which this prospectus is a part pursuant to which, in general, CCM
has committed to keep this prospectus current during any period in which offers
or sales are made pursuant to Rule 415.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
At December 31, 1999, CCM had an unsecured note payable due to Jose G.
Chavez , a majority shareholder, CCM's Chief Executive Officer and a director,
totaling $500,000. Such note has been repaid in full in exchange for shares of
Class A common stock.
CCM has an unsecured note payable due to several of its shareholders, Jose
G. Chavez, Jaime J. Munoz,
<PAGE>
Lynn K. Bishop and Gus A. Cardenas totaling $511,090. The note bears interest at
the rate of 11% per annum and payments are made as CCM's cash flow permits. The
balance of $511,090 was due on September 21, 2000 and as of the date of this
filing has not yet been paid. The promissory note does not make reference to
demand rights or default clauses.
As of June 30, 1999, CCM has two additional unsecured notes payable to two
shareholders. Lynn K. Bishop and Jose G. Chavez totaling $92,955 and $97,283,
respectively. The notes bear interest at the rate of 18% per annum and do not
have a specific maturity date but are repaid as CCM's cash flow permits.
On June 30, 1999, Syntec Acquisition acquired all of the outstanding
capital stock (1,875 shares) of Syntec Holding Group, Inc. ("Holding") from
eight selling shareholders (the "Selling Shareholders"). One of the Selling
Shareholders was Lynn K. Bishop who was the Executive Vice President and Chief
Marketing Officer of Syntec Corporation and who is currently a beneficial owner
of more than 5% of the CCM Class A common stock. Syntec Acquisition purchased
all of the outstanding shares of Holding for the purchase price of $1,000,000
consisting of a $500,000 promissory note and a cash payment of $500,000 subject
to reductions as set forth in the purchase agreement. The promissory note has
been repaid in full.
On June 30, 1999, Syntec Acquisition entered into a shareholder agreement
("Shareholder Agreement") with its then current shareholders (the
"Shareholders") whereby if at any time the a Shareholder proposes to transfer
its shares of CCM's Class A or Class B common stock, the offeror would, before
such transfer, provide Mr. Jose G. Chavez the right to purchase some or all of
such offered shares. If there are any offered shares that are not purchased by
Mr. Chavez, such shares shall then be offered to CCM. Such Shareholder Agreement
also grants to Lynn Bishop, so long as Mr. Bishop is a 5% owner of the fully
diluted stock, the right of first refusal to purchase those securities which
Syntec Acquisition may propose to issue which would have a sales, exercise or
conversion price per share of less than $0.14.
On September 30, 1999, Syntec Acquisition entered into an agreement with
the holders of its Series A Preferred Stock (the "Holders"). The Holders agreed
that prior to September 30, 2003, if, in the judgement of CCM's management,
having the Series A Preferred Stock outstanding would jeopardize CCM's status as
a Historically Underutilized Business, the Holders would tender their shares of
the Series A Preferred Stock to CCM in exchange for CCM's Class A common stock
on the same basis that the Series A Preferred Stock is then convertible into
CCM's Class B common stock.
DESCRIPTION OF SECURITIES
CCM is currently authorized to issue 60,000,000 shares of Class A common
stock, par value $.0001 per share (the "Class A Common Stock"), 10,000,000
shares of Class B common stock, par value $.0001 (the "Class B Common Stock")
and 30,000,000 shares of preferred stock, par value $.0001 per share (the
"Preferred Stock"). Of the 30,000,000 authorized shares of Preferred Stock,
3,000,000 shares have been designated as "Series A Preferred Stock" and
1,500,000 shares have been designated as "Series B Preferred Stock". CCM has
25,500,000 shares of undesignated Preferred Stock of which CCM has not issued
any shares.
Class A Common Stock
As of December 10, 2000, 17,699,517 shares of Class A Common Stock were
issued and outstanding. The holders of the Class A Common Stock are entitled to
one vote per share for the election of directors and with respect to all other
matters on which shareholders are entitled to vote. The holders of more than 50%
of the shares voting for the election of the directors can elect all of CCM's
directors if they choose to do so and, in such event, the holders of the
remaining shares will not be able to elect any person to the board of directors.
In the event that CCM is liquidated, dissolved or wound up, the holders of
the Class A Common Stock are entitled to share ratable in all of CCM's assets
remaining available for distribution to them after payment of its liabilities
and after provision has been made for each class of CCM's stock having
preference over the Class A Common Stock. Holders of the Class A Common Stock do
not have preemptive rights to purchase additional shares of the common stock or
other subscription rights.
Class B Common Stock
<PAGE>
As of December 10, 2000 there were no shares of Class B Common Stock
issued. Holders of the Class B Common Stock shall have identical rights to those
holders of the Class A Common Stock, except that holders of the Class B Common
Stock shall have no voting rights except as otherwise required by law.
Shares of the Class B Common Stock shall automatically be converted into
shares of CCM's Class A Common Stock on a share for share basis upon the
occurrence of the closing of a sale of the Class A Common Stock, by CCM,
pursuant to an effective registration under the Securities Act of 1933, as
amended.
All of CCM's outstanding shares of Class A Common Stock and Class B Common
Stock are validly authorized and issued, fully paid and non-assessable. CCM's
board of directors is authorized to issue additional shares of common stock, not
to exceed the amount authorized by its Certificate of Incorporation, and to
issue options for the purchase of such shares, on such terms and conditions and
for such consideration as the Board may deem appropriate without further
shareholder action.
Preferred Stock
CCM is currently authorized to issue 30,000,000 shares of Preferred Stock,
of which 2,972,504 shares of Series A Preferred Stock were issued and
outstanding as of December 10, 2000.
CCM's Board of Directors is authorized to provide for the issuance of
additional shares of Preferred Stock in series and, by filing a certificate
pursuant to the applicable laws of Delaware, to establish from time to time the
number of shares to be included in each such series, and to fix the designation,
powers, preferences and rights of the shares of each such series and the
qualifications, limitations or restrictions thereof without any further vote or
action by the shareholders. Any shares of the Preferred Stock so issued would
have priority over the Common Stock with respect to dividend or liquidation
rights. Any future issuance of Preferred Stock may have the effect of delaying,
deferring or preventing a change in control of CCM without further action by CCM
shareholders and may adversely affect the voting and other rights of the holders
of Common Stock.
Series A Preferred Stock
As of December 10, 2000, there were 2,972,504 shares of CCM's Series A
Preferred Stock issued and outstanding.
Rank. The Series A Preferred Stock, with respect to the payment of
dividends, redemption payments and liquidation rights, shall rank senior to the
Class A common stock. CCM's board may designate other series of Preferred Stock
ranking senior, pari passu or junior to the Series A Preferred Stock.
Voting. The holders of CCM's Series A Preferred Stock are not entitled to
vote on matters submitted for approval by the holders of its Class A common
stock.
Conversion. At the holder's election, each share of the Class A Preferred
Stock is convertible, at any time after the date of issuance of such share,
into one fully paid and non-assessable shares of the Class B Common Stock.
Liquidation Preference. In the event of CCM's liquidation or dissolution as
a result of which its assets are to be distributed to its shareholders, the
holders of the Series A Preferred Stock shall be entitled to receive, prior and
in preference to the holders of the Common Stock or any other capital stock of
which the Series A Preferred Stock ranks higher, an amount equal to $1.50 per
share (the "Liquidation Preference"), plus an amount equal to all unpaid
dividends for each share of Series A Preferred Stock held by them.
Dividends. Each share of the Series A Preferred Stock earns quarterly
dividends for each share of the Series A Preferred Stock that is outstanding at
a rate of eight percent (8%) per annum of the Liquidation Preference of such
share.
Series B Preferred Stock
As of December 10, 2000, there were no shares of CCM's Series B Preferred
Stock outstanding.
<PAGE>
Rank. CCM's Series B Preferred Stock, with respect to the payment of
dividends, redemption payments and liquidation rights, shall rank senior and
prior to its Common Stock and pari passu with the Series A Preferred Stock.
CCM's board may designate any other series of preferred stock ranking senior,
pari passu or junior to the Series B Preferred Stock.
Voting. The holders of the Series B Preferred Stock are not entitled to
vote on matters submitted for approval by the holders of CCM's Common Stock.
Conversion. At the holder's election, each share of the Series B Preferred
Stock is convertible, beginning six month after the date of issuance of such
share, into two fully paid and non-assessable share of the Class A Common
Stock.
Liquidation Preference. In the event of CCM's liquidation or dissolution as
a result of which its assets are to be distributed to its shareholders, the
holders of the Series B Preferred Stock shall be entitled to receive, prior and
in preference to the holders of the Class A common stock or any other capital
stock of which the Series B Preferred Stock ranks higher, an amount equal to
$4.00 per share (the "Liquidation Preference"), plus an amount equal to all
accrued and unpaid dividends for each share of Series B Preferred Stock held by
them.
Dividends. Each share of the Series B Preferred Stock earns quarterly
dividends for each share of the Series B Preferred Stock that is outstanding at
a rate of five percent (5%) per annum of the Liquidation Preference of such
share. Any payment of dividends in the form of Series B Preferred Stock shall be
deemed to have a value equal to four dollars ($4.00) per share.
Warrants
As of December 10, 2000, CCM had granted warrants for the purchase of
1,928,038 shares of Class A common stock.
878,039 warrants were issued in October 1999 to seven individuals for legal
services rendered to CCM and such warrants are exercisable at $1.50, expire on
December 31, 2004 and, pursuant to their terms, are exercisable as of the date
of this prospectus. 50,000 warrants were issued in March 2000 to one
individual for legal services rendered to CCM and such warrant is exercisable at
$1.50, expires on December 31, 2004 and, pursuant to its terms, is exercisable
as of the date of this prospectus. Such warrants may not be transferred or
assigned without compliance with applicable federal and state securities laws by
the transferor and the transferee.
An additional 1,000,000 warrants for a five year term were issued in
December 2000 to Consulting & Strategy International LLC, pursuant to a business
services contract, as payment for corporate consulting services rendered to CCM.
Such warrants are currently exercisable as follows:
-250,000 shares are exercisable at $2.50and must be exercised within one
year of the average of the Class A common stock's bid and ask price remaining at
$5.50 per share for a continuous 30 day period; and
-250,000 shares are exercisable at $3.50 per share and must be exercised
within one year of the average of the Class A common stock's bid and ask price
remaining at $7.00 per share for a continuous 30 day period; and
250,000 shares are exercisable at $4.00 per share and must be exercised
within one year of the average of the Class A common stock's bid and ask price
remaining at $8.00 per share for a continuous 30 day period; and
-250,000 shares are exercisable at $5.00 per share and must be exercised
within one year of the average of the Class A common stock's bid and ask price
remaining at $10.00 per share for a continuous 30 day period.
Options
CCM's board of directors has authorized CCM to adopt a Long-Term Stock
Incentive Plan (the "Stock Plan") the terms of which have not yet been
finalized. CCM's Stock Plan is to be administered by Jose G. Chavez, Jaime J.
Munoz and Gustavo A. Cardenas (collectively the "Committee") who will determine
the persons to whom awards will be granted, the number of awards granted and the
specific terms of each grant, subject to the provisions
<PAGE>
of the Stock Plan. The maximum number of shares of stock that will be issuable
under the Stock Plan is 2,500,000 shares, of which no shares have been issued.
CCM has granted 4,612,500 options outside the Stock Plan. In December
2000, CCM granted an option to purchase 600,000 shares of CCM Class A common
stock to Consulting & Strategy International LLC pursuant to a business services
contract as payment for corporate consulting services rendered to CCM. Such
options to purchase 600,000 shares of CCM Class A common stock are non-
transferable, are exercisable at $1.50 per share upon the occurrence of CCM's
Class A common stock trading on the OTC Bulletin Board at $1.50 per share and
the options expire 18 months from the date that CCM is traded, if at all, on the
OTC Bulletin Board. The remaining 4,012,500 options, granted to our officers and
directors, vest over three years, are exercisable at $1.50 per share and expire
on July 1, 2007 and July 1, 2009.
Additional Information Describing Securities
Reference is made to applicable statutes of the State of Delaware for a
description concerning statutory rights and liabilities of shareholders.
Trading of Shares
There are no outstanding options, options to purchase, or securities
convertible into shares of CCM's Class A common stock other than the securities
described herein. CCM has not agreed with any shareholders, to register their
shares for sale, other than for this registration. CCM does not have any other
public offerings in process or proposed.
Admission to Quotation on the NASD OTC Bulletin Board
Prior to the date of this prospectus, no public trading market existed for
CCM's Class A common stock. A public trading market for CCM's Class A common
stock may not develop or if developed, may not be sustained. If CCM meets the
qualifications, it intends to apply for quotation of its Class A common stock on
the NASD OTC Bulletin Board. Until CCM meets such qualifications, its securities
may be quoted in the daily quotation sheets of the National Quotation Bureau,
Inc., commonly known as the pink sheets. If CCM's Class A common stock is not
quoted on the NASD OTC Bulletin Board, a holder may have difficulty selling, or
obtaining accurate quotations as to the market value of, such stock. In order to
have its securities quoted on the OTC Bulletin Board, a company must:
(1) be a company that reports its current financial information to the
Securities and Exchange Commission, banking regulators or insurance regulators;
and
(2) have at least one market maker who completes and files a Form 211 with the
National Association of Securities Dealers, Inc.
Penny Stock Regulation
Penny stocks generally are equity securities with a price of less than
$5.00 per share other than securities registered on certain national securities
exchanges or listed on the Nasdaq Stock Market, provided that current price and
volume information with respect to transactions in such securities are provided
by the exchange or system. The penny stock rules impose additional sales
practice requirements on broker-dealers who sell such securities to persons
other than established customers and accredited investors (generally those with
assets in excess of $1,000,000 or annual income exceeding $200,000, or $300,000
together with their spouse). For transactions covered by these rules, the
broker-dealer must make a special suitability determination for the purchase of
such securities and have received the purchaser's written consent to the
transaction prior to the purchase. Additionally, for any transaction involving a
penny stock, unless exempt, the rules require the delivery, prior to the
transaction, of a disclosure schedule prescribed by the SEC relating to the
penny stock market. The broker-dealer also must disclose the commissions payable
to both the broker-dealer and the registered representative and current
quotations for the securities. Finally, monthly statements must be sent
disclosing recent price information on the limited market in penny stocks.
Because of these penny stock rules, broker-dealers may be restricted in their
ability to sell CCM's Class A common stock. The foregoing required penny stock
restrictions will not apply to CCM's Class A common stock if such stock reaches
and maintains a market price of $5.00 or greater.
<PAGE>
Reports to Shareholders
CCM will furnish to holders of its Class A common stock annual reports
containing audited financial statements examined and reported upon, and with an
opinion expressed by, an independent certified public accountant. CCM may issue
other unaudited interim reports to its shareholders as it deem appropriate.
PLAN OF DISTRIBUTION
Sales by Security Holders
After effectiveness of this registration statement, the non-affiliated
selling securityholders may offer and sell their shares at a price and time
determined by them without subject to Rule 144. In addition, the National
Securities Market Improvement Act of 1996 limits the authority of states to
impose restrictions upon sales of securities made pursuant to Sections 4(1) and
4(3) of the Securities Act of companies which file reports under Sections 13 or
15(d) of the Exchange Act. Section 4(1) provides that sales by any person that
is not the issuer or an underwriter or a dealer are exempt from the registration
statement provisions of the Securities Act of 1933. Sales by selling
securityholders will be made pursuant to Section 4(1) and as a result of the
National Securities Market Improvement Act no state registration of the sales
will be required.
Section 4(3) of the Securities Act provides an exemption from the
registration provisions of the Securities Act for transactions by a dealer for
transactions occurring within 40 days of the effective date of a registration
statement for the securities or prior to the expiration of 40 days after the
first date upon which the security was offered to the public.
Sales by the selling security holders in the secondary market may be made
pursuant to Section 4(1) (sales other than by an issuer, underwriter or
broker). It is anticipated that following the effective date of this
registration statement the selling securityholders' shares will be eligible for
resale in the secondary market in each state.
CCM will not receive any proceeds from the sale of shares by the selling
security holders. The selling security holders may sell their shares directly to
purchasers from time to time or they may offer their securities for sale through
underwriters, dealers or agents, who may receive compensation in the form of
underwriting discounts, concessions or commissions from the selling security
holders and/or the purchasers of the securities for whom they may act as agents.
Any underwriters, dealers or agents who participate in the distribution of the
securities may be deemed to be "underwriters" under the Securities Act and any
discounts, commissions or concessions received by any such underwriters, dealers
or agents may be deemed to be underwriting discounts and commissions under the
Securities Act.
At the time a particular offer is made by or on the behalf of the selling
security holders, a prospectus, including any necessary supplement thereto, will
be distributed which will set forth the number of shares of common stock and
other securities being offered and the terms of the offering, including the
names of any underwriters, dealers or agents, the purchase price paid by any
underwriter for the shares purchased from the selling security holders, any
discounts, commissions and other items constituting compensation from the
selling security holders, any discounts, commissions or concessions allowed,
reallowed or paid to dealers, and the proposed selling price to the public.
Pursuant to Regulation M of the of the General Rules and Regulations of the
Securities and Exchange Commission, any person engaged in a distribution of
securities, including on behalf of a selling security holder, may not
simultaneously bid for, purchase or attempt to induce any person to bid for or
purchase securities of the same class for a period of five business days prior
to the commencement of such distribution and continuing until the selling
security holder (or other person engaged in the distribution) is no longer a
participant in the distribution. In addition and without limiting the foregoing,
the selling security holders will be subject to applicable provisions of the
Exchange Act and the rules and regulations under such Act in connection with
transactions in the securities during the effectiveness of the registration
statement of which this prospectus is a part.
If, at some time in the future, CCM meets the listing requirements of the
Nasdaq SmallCap Market, CCM may apply to have its shares listed on such market.
If CCM qualifies and is accepted for listing, then certain underwriters may
engage in passive market making transactions in CCM's Class A common stock in
accordance with
<PAGE>
Rule 103 of Regulation M.
The shares sold by the selling security holders may be sold from time to
time in one or more transactions: (1) at an offering price that is fixed or that
may vary from transaction to transaction depending upon the time of sale or (2)
at prices otherwise negotiated at the time of sale. Such prices will be
determined by the selling security holders or by agreement between the selling
security holders and any underwriters.
Sales by Affiliates
Sales of the securities by affiliates of CCM are subject to the volume
limitations imposed by Rule 144 even after registration of such securities. An
affiliate who holds unrestricted securities may sell, within any three month
period, a number of the shares of CCM that does not exceed the greater of one
percent of the then outstanding shares of the class of securities being sold or,
if CCM's securities are trading on the Nasdaq Stock Market or an exchange at
some time in the future, the average weekly trading volume during the four
calendar weeks prior to such sale.
Resales of the Securities under State Securities Laws
The National Securities Market Improvement Act of 1996 ("NSMIA") limits the
authority of states to impose restrictions upon sales of securities made
pursuant to Sections 4(1) and 4(3) of the Securities Act of companies which file
reports under Sections 13 or 15(d) of the Securities Exchange Act. Sales of the
securities in the secondary market will be made pursuant to Section 4(1) of the
Securities Act (sales other than by an issuer, underwriter or broker). It is
anticipated that following the effective date the selling securityholders'
securities will be eligible for resale in the secondary market in each state.
If CCM meets the requirements of the NASD OTC Bulletin Board it will apply
for listing thereon. When and if it should qualify, if ever, it intends to
apply for quotation of its securities on the Nasdaq SmallCap Market. CCM may
not qualify for listing of its securities on the NASD OTC Bulletin Board or may
never satisfy the qualifications to be quoted on the Nasdaq SmallCap Market. If
it should be accepted for listing thereon, then the underwriters may engage in
passive market making transactions in CCM's Class A common stock in accordance
with Rule 103 of Regulation M.
Following the completion of this offering, one or more broker-dealers may
act as the principal market makers for the securities offered hereby. Under
these circumstances, the market bid and asked prices for the securities may be
significantly influenced by decisions of the market makers to buy or sell the
securities for their own account. The market making activities of any market
makers, if commenced, may subsequently be discontinued.
LEGAL MATTERS
Legal Proceedings
CCM is not a party to any litigation and management has no knowledge of any
threatened or pending litigation against it.
Legal Opinion
Cassidy & Associates, Washington, D.C., has given its opinion as attorneys-
at-law that the shares of Class A common stock offered by the selling security
holders will be fully paid, validly issued and non-assessable. Cassidy &
Associates has passed on the validity of the Class A common stock offered by the
selling security holders but purchasers of such Class A common stock should not
rely on Cassidy & Associates with respect to any other matters.
James M. Cassidy, a principal of Cassidy & Associates, is an officer and
director and controlling shareholder of TPG Capital Corporation, which owns
300,000 shares of CCM's Class A common stock and is a selling security holder.
EXPERTS
The audited financial statements for the periods ended December 31, 1999
and 1998 included in this
<PAGE>
prospectus have been so included in reliance on the report of King, Griffin &
Adamson, P.C., independent accountants, given on the authority of such firm as
experts in auditing and accounting.
<PAGE>
CONSOLIDATED FINANCIAL STATEMENTS AND
REPORT OF INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS
SYNTEC ACQUISITION CORP. AND SUBSIDIARIES
AND PREDECESSOR COMPANIES
December 31, 1999, June 30, 1999, December 31, 1998, and May 31, 1998
<PAGE>
SYNTEC ACQUISITION CORP. AND SUBSIDIARIES
AND PREDECCESSOR COMPANIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Certified Public Accountants.............................................. 3
Financial Statements
Consolidated Balance Sheets as of December 31, 1999, June 30, 1999, December 31, 1998
and May 31, 1998............................................................................... 4
Consolidated Statements of Operations for the periods ended December 31, 1999,
June 30, 1999, December 31, 1998 and May 31, 1998............................................. 6
Consolidated Statements of Changes in Shareholders' Equity (Deficit) for the periods ended
December 31, 1999, June 30, 1999, December 31, 1998 and May 31, 1998.......................... 7
Consolidated Statements of Cash Flows for the periods ended December 31, 1999, June 30, 1999,
December 31, 1998 and May 31, 1998............................................................ 8
Notes to Consolidated Financial Statements..................................................... 10
</TABLE>
2
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
--------------------------------------------------
Board of Directors
Syntec Acquisition Corp.
We have audited the accompanying consolidated balance sheets of Syntec
Acquisition Corp. and subsidiaries and predecessor companies as of December 31,
1999, June 30, 1999, December 31, 1998 and May 31, 1998, and the related
consolidated statements of operations, changes in shareholders' deficit, and
cash flows for the periods then ended. These consolidated financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated 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 audits 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, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Syntec
Acquisition Corp. and subsidiaries and predecessor companies as of December 31,
1999, June 30, 1999, December 31, 1998 and May 31, 1998, and the results of
their operations and their cash flows for the periods then ended in conformity
with generally accepted accounting principles.
As described in Note C, the accompanying consolidated financial statements have
been prepared assuming that the company will continue as a going concern. The
Company and its predecessors have experienced recurring losses during 1999 and
1998. Additionally, at December 31, 1999, the Company's current liabilities
exceeded its current assets by $1,882,182. These conditions raise substantial
doubt about the Company's ability to continue as a going concern. Unless the
Company obtains additional financing, it will not be able to meet its
obligations as they come due and it will be unable to execute its long-term
business plan. Management's plans as they relate to these issues are also
explained in Note C. The consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
KING GRIFFIN & ADAMSON P.C.
Dallas, Texas
April 14, 2000, except for Note P to which the date is June 19, 2000
<PAGE>
SYNTEC ACQUISITION CORP. AND SUBSIDIARIES
AND PREDECESSOR COMPANIES
CONSOLIDATED BALANCE SHEETS
ASSETS
------
<TABLE>
<CAPTION>
Syntec
Acquisition
Corp. and Syntec Holding Group, Inc. Syntec
Subsidiaries and Subsidiary Corporation
------------- ---------------------------- ------------
December 31, June 30, December 31, May 31,
1999 1999 1998 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 11,649 $ 3,547 $ 20,068 $ 6,731
Accounts receivable, net of
allowance for doubtful accounts 545,433 321,072 124,463 196,415
Inventories 603,485 465,425 232,747 204,098
Prepaid expenses 35,107 16,462 14,492 -
---------- ---------- ---------- ----------
Total current assets 1,195,674 806,506 391,770 407,244
PROPERTY AND EQUIPMENT
Machinery and equipment 1,072,867 1,029,391 1,028,739 995,770
Furniture and fixtures 47,617 46,065 46,065 46,065
Automobiles 1,500 1,500 1,500 9,400
Leasehold improvements 896 896 896 896
---------- ---------- ---------- ----------
1,122,880 1,077,852 1,077,200 1,052,131
Accumulated depreciation and
amortization (884,763) (836,393) (802,291) (748,842)
---------- ---------- ---------- ----------
Net property and equipment 238,117 241,459 274,909 303,289
OTHER ASSETS 33,219 31,754 30,099 28,982
EXCESS OF COST OVER FAIR
VALUE OF NET ASSETS OF
COMPANIES ACQUIRED, net 1,843,339 505,907 525,323 -
---------- ---------- ---------- ----------
TOTAL ASSETS $3,310,349 $1,585,626 $1,222,101 $ 739,515
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
4
<PAGE>
SYNTEC ACQUISITION CORP. AND SUBSIDIARIES
AND PREDECESSOR COMPANIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
----------------------------------------------
<TABLE>
<CAPTION>
Syntec
Acquisition
Corp. and Syntec Holding Group, Inc. Syntec
Subsidiaries and Subsidiary Corporation
------------- ---------------------------- -----------
December 31, June 30, December 31, May 31,
1999 1999 1998 1998
----------- ---------- ---------- --------
<S> <C> <C> <C> <C>
CURRENT LIABILITIES
Line of credit $ 252,257 $1,005,003 $ 987,896 $205,335
Current portion of long-term debt 200,000 - - -
Notes payable to shareholders 1,142,698 166,815 - -
Current portion of capital lease 42,792 35,839 28,901 27,579
Accounts payable 1,035,706 699,125 332,033 181,499
Accrued liabilities 172,403 21,867 54,095 40,992
Deferred compensation 232,000 - - -
----------- ---------- ---------- --------
Total current liabilities 3,077,856 1,928,649 1,402,925 455,405
LONG-TERM DEBT, less current portion 391,667 - - -
CAPITAL LEASE OBLIGATIONS, less
current portion 96,045 91,429 114,944 132,084
----------- ---------- ---------- --------
Total liabilities 3,565,568 2,020,078 1,517,869 587,489
COMMITMENTS AND CONTINGENCIES
(Note J)
SHAREHOLDERS' EQUITY (DEFICIT)
Preferred stock, $0.0001 par value,
30,000,000 shares authorized, 550,165
shares issued and outstanding at
December 31, 1999; liquidation preference
of 825,248 at December 31, 1999 55 - - -
Class A Common stock, $0.0001 par value,
60,000,000 shares authorized, 4,725,000
shares issued and outstanding at
December 31, 1999; $1.00 par value,
200,000 shares authorized, 750 shares
issued and outstanding at May 31, 1998 473 750 750 1,000
Class B Common stock, $0.0001 par value,
10,000,000 shares authorized, none issued
and outstanding at December 31, 1999 - - - -
Additional paid-in-capital 1,051,838 62,000 - -
Retained earnings (accumulated deficit) (1,307,585) (497,202) (296,518) 151,026
----------- ---------- ---------- --------
Total shareholders' equity (deficit) (255,219) (434,452) (295,768) 152,026
----------- ---------- ---------- --------
TOTAL LIABILITIES AND
SHAREHOLDERS; EQUITY (DEFICIT) $ 3,310,349 $1,585,626 $1,222,101 $739,515
=========== ========== ========== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE>
SYNTEC ACQUISITION CORP. AND SUBSIDIARIES
AND PREDECESSOR COMPANIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Syntec
Acquisition
Corp. and Syntec Holding Group, Inc. Syntec
Subsidiaries and Subsidiary Corporation
------------- ---------------------------- ------------
Six Month Six Month Seven Month Five Month
Period Period Period Period
Ended Ended Ended Ended
December 31, June 30, December 31, May 31,
1999 1999 1998 1998
----------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Net Sales $ 2,078,249 $1,776,086 $1,736,270 $1,208,898
Cost of Sales 2,361,770 1,369,727 1,456,500 970,944
----------- ---------- ---------- ----------
Gross profit (loss) (283,521) 406,359 (279,770) 237,954
Selling, general and administrative 952,797 554,389 565,957 224,132
----------- ---------- ---------- ----------
Income (loss) from operations (1,236,318) (148,030) (286,187) 13,822
Other income (expense)
Interest expense (88,102) (51,062) (50,437) (12,038)
Other, net 16,835 (1,592) 40,106 225
----------- ---------- ---------- ----------
Total other income (expenses) (71,267) (52,654) (10,331) (11,813)
----------- ---------- ---------- ----------
Income (loss) before provision
For income taxes (1,307,585) (200,684) (296,518) 2,009
Provision for income taxes - - - -
----------- ---------- ---------- ----------
Net income (loss) $(1,307,585) $ (200,684) $ (296,518) $ 2,009
=========== ========== ========== ==========
Net income (loss) attributable to
common stockholders' $(1,307,585) $ (200,684) $ (296,518) $ 2,009
=========== ========== ========== ==========
Basic and diluted net income (loss)
per share attributable to
common stockholders $ (.28) $ (267.58) $ (395.36) $ .04
=========== ========== ========== ==========
Number of weighted average shares
of common stock outstanding
(basic and diluted) 4,725,000 750 750 46,000
=========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
6
<PAGE>
SYNTEC ACQUISITION CORP. AND SUBSIDIARIES
AND PREDECESSOR COMPANIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
Retained
Class A Additional Earnings
Preferred stock Common Stock Paid-in (Accumulated
--------------- ---------------
Shares Amount Shares Amount Capital Deficit) Total
------ ------ ------ ------ ------- -------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Syntec Corporations:
----------------------------
Balance at January 1, 1998 - $ - 46,000 $ 1,000 $ - $ 149,017 $ 150,017
Net income - - - - - 2,009 2,009
------- ------ --------- ------- ---------- ----------- -----------
Balance at May 31, 1998 - $ - 46,0000 $ 1,000 $ - $ 151,026 $ 152,026
======= ====== ========= ======= ========== =========== ===========
Syntec Holding Group, Inc. and Subsidiary:
------------------------------------------
Common stock issued for cash - $ - 750 $ 750 $ - $ - $ 750
Net loss - - - - - (296,518) $ (296,518)
------- ------ --------- ------- ---------- ----------- -----------
Balance at December 31, 1998 - - 750 750 - (296,518) (295,768)
Additional capital contributed - - - - 62,000 - 62,000
Net loss - - - - - (200,684) (200,684)
------- ------ --------- ------- ---------- ----------- -----------
Balance at June 30, 1999 - $ - 750 $ 750 $ 62,000 $ (497,202) $ (434,452)
======= ====== ========= ======= ========== =========== ===========
Syntec Acquisition Corp. and Subsidiaries
-----------------------------------------
Preferred stock issued for cash 510,165 $ 51 - $ - $ 765,195 $ - $ 765,246
Preferred stock issued for services 40,000 4 - - 59,996 - 60,000
Class A common stock issued for cash - - 4,725,000 473 149,901 - 150,374
Class A common stock warrants issued for services - - - - 76,746 - 76,746
Net loss - - - - - (1,307,585) (1,307,585)
------- ------ --------- ------- ---------- ----------- -----------
Balance at December 31, 1999 550,165 $ 55 4,725,000 $ 473 $1,051,838 $(1,307,585) $ (255,219)
======= ====== ========= ======= ========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
7
<PAGE>
SYNTEC ACQUISITION CORP. AND SUBSIDIARIES
AND PREDECESSOR COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Syntec
Acquisition
Corp. and Syntec Holding Group, Inc. Syntec
Subsidiaries and Subsidiary Corporation
------------- ---------------------------- ------------
Six Month Six Month Seven Month Five Month
Period Period Period Period
Ended Ended Ended Ended
December 31, June 30, December 31, May 31,
1999 1999 1998 1998
------------ ---------- ----------- ------------
<S> <C> <C> <C> <C>
Cash flows from operating activities
Net income (loss) $(1,307,585) $ (200,684) $ (296,518) $ 2,009
Adjustments to reconcile net income
(loss) to net cash provided (used)
by operating activities:
Depreciation and amortization 48,370 34,102 53,449 37,816
Amortization of excess of cost over fair
value of net assets of companies acquired 97,018 19,416 22,651 -
Warrants issued for services 76,746 - - -
Preferred stock issued for services 60,000 - - -
(Increase) decrease in (net of assets and
liabilities acquired)
Accounts receivable (224,359) (196,609) 71,952 (57,348)
Inventories (138,060) (232,678) (28,649) (19,296)
Prepaid expenses (18,645) (1,970) (14,492) 16,053
Other assets (1,465) (1,655) (1,117) (16,699)
Accounts payable 336,581 367,451 150,534 48,045
Accrued expenses 150,536 (32,228) 13,103 (3,548)
Deferred compensation 232,000 - - -
------------ ---------- ----------- ------------
Cash flows provided (used)
by operating activities (688,863) (244,855) (29,087) 7,032
Cash flows from investing activities
Purchases of property and equipment (10,528) (652) (25,069) (76,436)
Cash paid for companies acquired (1,000,000) - (700,000) -
------------ ---------- ----------- ------------
Cash flows used in
Investing activities (1,010,528) (652) (725,069) (76,436)
Cash flows from financing activities
Proceeds from sale of preferred stock 765,246 - - -
Proceeds from sale of common stock 150,374 - 750 -
Net activity on line of credit (752,746) 17,107 782,561 185,335
Additional capital contributed - 62,000 - -
Proceeds from long-term debt 600,000 - - -
Repayment of long-term debt (8,333) - - (14,683)
Payments on capital leases (22,931) (16,577) (15,818) (2,200)
Net proceeds (payments) on notes
Payable to shareholders 975,883 166,456 - (102,000)
------------ ---------- ----------- ------------
Cash flows provided by financing
Activities 1,707,493 228,986 767,493 66,452
------------ ---------- ----------- ------------
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
8
<PAGE>
SYNTEC ACQUISITION CORP. AND SUBSIDIARIES
AND PREDECESSOR COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - Continued
<TABLE>
<CAPTION>
Syntec
Acquisition
Corp. and Syntec Holding Group, Inc. Syntec
Subsidiaries and Subsidiary Corporation
------------ --------------------------- ------------
Six Month Six Month Seven Month Five Month
Period Period Period Period
Ended Ended Ended Ended
December 31, June 30, December 31, May 31,
1999 1999 1998 1998
------------ ----------- ------------- -----------
<S> <C> <C> <C> <C>
Net increase (decrease) in cash and
cash equivalents 8,102 (16,521) 13,337 (2,952)
Cash and cash equivalents, beginning
of period 3,547 20,068 6,731 9,683
------------ ----------- ------------- -----------
Cash and cash equivalents, end of period $ 11,649 $ 3,547 $ 20,068 $ 6,731
============ =========== ============= ===========
NON-CASH FINANCING AND INVESTING
--------------------------------
ACTIVITIES:
-----------
Equipment acquired under capital leases $ 34,500 $ - $ - $ 161,863
============ =========== ============= ===========
SUPPLEMENTAL DISCLOSURES:
-------------------------
Cash paid during the period for interest $ 75,000 $ 51,000 $ 50,000 $ 19,000
============ =========== ============= ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
9
<PAGE>
SYNTEC ACQUISITION CORP. AND SUBSIDIARIES
AND PREDECESSOR COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, June 30, 1999, December 31, 1998 and May 31, 1998
NOTE A - ORGANIZATION
Syntec Corporation ("Corp") was formed on February 20, 1970, as a Texas
corporation. On April 21, 1998, Syntec Holding Group, Inc. ("Holding") was
formed as a Texas corporation for the purpose of acquiring 100% of the
outstanding stock of Corp. The acquisition was accounted for as a purchase. On
June 3, 1999, Syntec Acquisition Corp. ("Acquisition") was formed as a Texas
corporation for the purpose of acquiring 100% of the outstanding stock of
Holding. The acquisition was accounted for as a purchase.
Corp is a premier contract electronic manufacturer providing worldwide
electronic manufacturing services that include complete printed surface mount
and through-hole component placement, custom hand assembly, in circuit and
functional testing, chassis mounting and box builds, as well as complete supply
chain management from component sourcing to finished goods inventory. In
addition, Corp qualifies as a Minority Business Enterprise and an Historically
Underutilized Business.
These financial statements include the balance sheet at May 31, 1998 and the
related statements of operations and cash flows of Corp for the period January
1, 1998 to May 31, 1998 (the effective date of the purchase by Holding); the
consolidated balance sheets at December 31, 1998 and June 30, 1999 and the
related consolidated statements of operations and cash flows of Holding and
Subsidiary for the period June 1, 1998 to December 31, 1998 and January 1, 1999
to June 30, 1999 (the effective date of the purchase by Acquisition); and the
consolidated balance sheet at December 31, 1999 and the related consolidated
statements of operations and cash flows of Acquisition and Subsidiaries for the
period July 1, 1999 to December 31, 1999.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
---------------------------
The accompanying consolidated financial statements include the accounts of
Acquisition, Holding and Corp. All significant intercompany transactions and
balances are eliminated in consolidation. The consolidated group is referred to
as the "Company".
Cash Equivalents
----------------
For purposes of the statement of cash flows the Company considers all highly
liquid investments purchased with an original maturity of three months or less
to be cash equivalents.
Inventories
-----------
Inventories are valued at the lower of cost, using the first-in, first-out
method, or market.
Property and Equipment
----------------------
Property and equipment are carried at cost. Depreciation and amortization of
equipment is provided using the straight-line method over the estimated useful
lives of the assets ranging from 5 to 7 years. Assets held under capital leases
and leasehold improvements are amortized on a straight-line basis over the
shorter of the lease term or the estimated useful life of the related asset,
ranging from 3 to 5 years. Depreciation and amortization expense of property and
equipment recognized during the six month period ended December 31, 1999, the
six month period ended June 30, 1999, the seven month period ended December 31,
1998 and the five month period ended May 31, 1998 was $48,370, $34,102, $53,449
and $37,816, respectively.
10
<PAGE>
SYNTEC ACQUISITION CORP. AND SUBSIDIARIES
AND PREDECESSOR COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, June 30, 1999, December 31, 1998 and May 31, 1998
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
---------------------------------------------------------------
Expenditures for major renewals and betterments that extend the useful lives of
property and equipment are capitalized. Expenditures for maintenance and
repairs are charged to expense as incurred.
Long-Lived Assets
-----------------
The Company accounts for the impairment and disposition of long-lived assets in
accordance with Statement of Financial Accounting Standards (SFAS) No. 121,
Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to Be
Disposed Of. In accordance with SFAS No. 121, long-lived assets are reviewed
for events or changes in circumstances which indicate that their carrying value
may not be recoverable. There was no impairment of the value of such assets for
the six month period ended December 31, 1999, the six month period ended June
30, 1999, the seven month period ended December 31, 1998 or the five month
period ended May 31, 1998.
Excess of Cost Over Fair Value of Net Assets of Companies Acquired
-------------------------------------------------------------------
This asset results from the excess of the purchase price paid by Holding in 1999
and Corp in 1998, over the estimated fair value of the net assets acquired and
totaled $1,940,357 and $547,974 for the Holding and Corp acquisitions,
respectively. The asset is being amortized using the straight-line method over
10 years, it's estimated useful life. Accumulated amortization totaled $97,018.
$42,067, and $22,651 at December 31, 1999, June 30, 1999 and December 31, 1998,
respectively.
Revenue Recognition
-------------------
Revenues from product sales are recognized upon shipment. Revenues from services
are recognized when the services are delivered.
Use of Estimates and Assumptions
--------------------------------
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 and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Income Taxes
------------
The Company utilizes the asset and liability approach to financial accounting
and reporting for income taxes. Deferred income tax assets and liabilities are
computed annually for differences between the financial statements and tax basis
of assets and liabilities that will result in taxable or deductible amounts in
the future based on enacted tax laws and rates applicable to the periods in
which the differences are expected to affect taxable income. Valuation
allowances are established when necessary to reduce deferred tax assets to the
amount expected to be realized. Income tax expense or benefit is the tax payable
or refundable for the period plus or minus the change during the period in
deferred tax assets and liabilities.
11
<PAGE>
SYNTEC ACQUISITION CORP. AND SUBSIDIARIES
AND PREDECESSOR COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, June 30, 1999, December 31, 1998 and May 31, 1998
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Stock-Based Compensation
------------------------
The Company accounts for stock-based employee compensation arrangements in
accordance with provisions of Accounting Principles Board ("APB") Opinion No.
25, "Accounting for Stock Issued to Employees", and complies with the
disclosure provisions of SFAS No. 123, "Accounting for Stock-Based
Compensation". Under APB Opinion No. 25, compensation expense for employees is
based on the excess, if any, on the date of grant, of fair value of the
Company's stock over the exercise price.
The Company accounts for equity instruments issued to non-employees in
accordance with the provisions of SFAS 123 and Emerging Issues Task Force
("EITF") Issue No. 96-18, "Accounting for Equity Instruments That Are Issued to
Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or
Services". All transactions in which goods or services are the consideration
received for the issuance of equity instruments are accounted for based on the
fair value of the consideration received or the fair value of the equity
instrument issued, whichever is more reliably measurable. The measurement date
of the fair value of the equity instrument issued is the earlier of the date on
which the counterparty's performance is complete or the date on which it is
probable that performance will occur.
Net Income (Loss) Per Share
---------------------------
Basic income (loss) per share is computed by dividing consolidated net income
(loss) by the weighted average number of shares of common stock outstanding
during each respective period. Common stock equivalents are not included in the
diluted (loss) per share for the six month period ended December 31, 1999 as
they are antidilutive.
Recent Accounting Pronouncements
--------------------------------
The Company adopted SFAS No. 131, "Disclosures about Segments of an Enterprise
and Related Information" during 1998. SFAS 131 establishes standards for
reporting information regarding operating segments in annual financial
statements and requires selected information for those segments to be presented
in interim financial reports. SFAS 131 also establishes standards for related
disclosures about products and services and geographic areas. Operating
segments are identified as components of an enterprise about which separate
discrete financial information is available for evaluation by the chief
operating decision maker, or decision making group, in making decisions about
how to allocate resources and assess performance. As the Company has only one
operating segment, this standard currently does not impact the Company's
disclosures.
In June 1999, the FASB issued SFAS No. 137, "Accounting for Derivative
Instruments and Hedging Activities - Deferral of the Effective Date of FASB
Statement No. 133", which establishes accounting and reporting standards for
derivative instruments. SFAS 137 is effective for all fiscal years beginning
after June 15, 2000. The adoption of SFAS 137 is not expected to have a
significant impact on the Company's results of operations or disclosures.
NOTE C - GOING CONCERN UNCERTAINTY
The consolidated financial statements have been prepared on the assumption that
the Company will continue as a going concern. The Company incurred a net loss
of $1,307,585 during the six-month period ended December 31, 1999. Cash used by
operating activities for the same period aggregated $688,863. Current
liabilities at December 31, 1999 of $3,077,856 exceed current assets of
$1,195,674 by $1,882,182. Total liabilities at December 31, 1999 of $3,565,568
exceed total assets of $3,310,349 by $255,219. The Company's continued
existence depends upon the success of management's efforts to raise the
additional capital necessary to meet the Company's obligations as they come due
and to
12
<PAGE>
SYNTEC ACQUISITION CORP. AND SUBSIDIARIES
AND PREDECESSOR COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, June 30, 1999, December 31, 1998 and May 31, 1998
NOTE C - GOING CONCERN UNCERTAINTY (Continued)
obtain sufficient capital to execute its business plan. The Company intends to
obtain additional capital primarily through the issuance of preferred stock.
There can be no degree of assurance given that the Company will be successful in
completing additional financing transactions. The consolidated financial
statements do not include any adjustments to reflect the possible effects on the
recoverability and classification of assets or classification of liabilities
which may result from the inability of the Company to continue as a going
concern.
NOTE D - ACQUISITIONS
On May 14, 1998, Holding acquired 100% of the outstanding stock of Corp. The
purchase consideration was $700,000, plus the assumption of liabilities of
$587,489. The acquisition has been accounted for as a purchase. The excess of
the purchase price over the fair value of net assets acquired was $547,974.
A summary of the fair value of assets acquired and liabilities assumed is as
follows:
Current assets $ 407,244
Fixed assets 303,289
Other assets 28,982
Excess of cost over fair value of
net assets acquired 547,974
Current liabilities (455,405)
Long-term liabilities (132,084)
---------
$ 700,000
=========
On June 30, 1999, Acquisition acquired 100% of the outstanding stock of Holding.
The purchase consideration totaled $1,000,000, which included $500,000 in cash
and the issuance of a $500,000 promissory note, in addition to assuming
liabilities of $2,020,078. The acquisition has been accounted for as a
purchase. The excess of the purchase price over the fair value of net assets
acquired was $1,940,357
A summary of the fair value of assets acquired and liabilities assumed is as
follows:
Current assets $ 806,506
Fixed assets 241,459
Other assets 31,756
Excess of cost over fair value of net
assets of companies acquired 1,940,357
Current liabilities (1,928,649)
Long-term liabilities (91,429)
-----------
$ 1,000,000
===========
13
<PAGE>
SYNTEC ACQUISITION CORP. AND SUBSIDIARIES
AND PREDECESSOR COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, June 30, 1999, December 31, 1998 and May 31, 1998
NOTE E - INVENTORIES
Inventories at the respective balance sheet dates are as follows:
December 31, June 30, December 31, May 31,
1999 1999 1998 1998
----------- --------- ------------ ---------
Raw materials $ 530,959 $ 421,368 $ 188,388 $ 151,259
Work-in-process - 44,057 44,359 52,839
Finished goods 72,526 - - -
----------- --------- ------------ ---------
$ 603,485 $ 465,425 $ 232,747 $ 204,098
=========== ========= ============ =========
NOTE F - DEFERRED COMPENSATION
Deferred compensation is comprised of salaries accrued for certain officers of
the Company that have not been paid at December 31, 1999. These amounts were
converted into 154,667 shares of Class A common stock of the Company subsequent
to December 31, 1999.
NOTE G - LINE OF CREDIT
The Company had a revolving credit agreement with a financial institution that
matured and was paid in full in July 1999. At June 30, 1999, December 31, 1998
and May 31, 1998, $1,005,003, $987,896 and $205,335, respectively, was
outstanding under this agreement.
During December 1999, the Company obtained a $500,000 revolving credit agreement
with a financial institution with monthly interest payments at prime rate plus
5.5% (14% at December 31, 1999) and all outstanding principal and interest due
at maturity, December 30, 2000. At December 31, 1999, $252,257 was outstanding
under this agreement. The line of credit is collateralized by accounts
receivable, inventory and equipment, and personally guaranteed by certain
shareholders. At December 31, 1999, the Company was not in compliance with
certain covenants associated with the line of credit.
NOTE H - NOTES PAYABLE TO SHAREHOLDERS
The Company has an unsecured note payable due to the majority shareholder
totaling $500,000 at December 31, 1999. The note payable bears interest at 12%
per annum and payments are made as cash flow permits with the total outstanding
balance of principal and accrued interest due November 30, 2000. Subsequent to
December 31, 1999, this note payable was converted into 333,333 shares of Class
A common stock
The Company has an unsecured note payable due to several shareholders totaling
$500,000 at December 31, 1999. The note payable bears interest at 9.5% per
annum and payments are made as cash flow permits with the total outstanding
balance of principal and accrued interest due April 30, 2000.
The Company has two additional unsecured notes payable due to two shareholders
totaling $142,698 and $166,815 at December 31, 1999 and June 30, 1999,
respectively. The notes bear interest at 18% per annum and do not have a
specific maturity date but are repaid as cash flow permits.
14
<PAGE>
SYNTEC ACQUISITION CORP. AND SUBSIDIARIES
AND PREDECESSOR COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, June 30, 1999, December 31, 1998 and May 31, 1998
NOTE I - LONG TERM DEBT
Long-term debt at December 31, 1999 consists of the following:
<TABLE>
<S> <C>
Installment note payable to financial institution, due in monthly
installments of $8,333, including interest at the 30 day rate
of commercial paper plus 3.25% percent (14% as of December,
31, 1999), matures August 2004, secured by all assets of the
Company excluding accounts receivable and inventory $ 491,667
Installment note payable to financial institution, due in weekly
principal installments of $2,000, interest is payable monthly
at the prime rate plus 5.5% percent (14% as of December 31,
1999), matures December 2000, secured by accounts receivable,
inventory, and equipment and personally guaranteed by certain
shareholders (cross-collateralized with the line of credit) 100,000
-----------
591,667
Less current portion 200,000
-----------
Long-term debt, less current portion $ 391,667
===========
</TABLE>
Principal payments on long-term debt for each of the next five years are as
follows:
<TABLE>
<CAPTION>
Year ending December 31:
------------------------
<S> <C>
2000 $ 200,000
2001 100,000
2002 100,000
2003 100,000
2004 91,667
-----------
$ 591,667
===========
</TABLE>
NOTE J - LEASES
The Company is obligated under certain capital leases that expire on April 1,
2003. The Company also leases its office facility under an operating lease with
a 15 year term expiring in 2013. Rental expense for operating leases was
approximately $86,000, $86,000, $59,000 and $42,000 for the six month period
ended December 31, 1999, the six month period ended June 30, 1999, the seven
month period ended December 31, 1998 and the five month period ended May 31,
1998, respectively.
15
<PAGE>
SYNTEC ACQUISITION CORP. AND SUBSIDIARIES
AND PREDECESSOR COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, June 30, 1999, December 31, 1998, and May 31, 1998
NOTE J - LEASES (Continued)
Future minimum lease payments under non-cancelable operating leases (with
initial or remaining lease terms in excess of one year) and future minimum
capital lease payments as of December 31, 1999 are:
Capital Operating
Leases Leases
-------- ----------
Year ending December 31,
2000 $ 52,387 $ 211,784
2001 52,387 210,984
2002 39,433 204,125
2003 13,145 177,387
2004 - 172,800
Thereafter - 1,469,200
-------- ----------
Total minimum lease payments 157,352 $2,446,280
==========
Less amounts representing interest (18,515)
--------
Present value of net minimum
capital lease payments 138,837
Less current portion of capital lease payments (42,792)
--------
Capital lease obligation less current
portion $ 96,045
========
NOTE K - INCOME TAXES
Deferred tax assets and liabilities at December 31, 1999, June 30, 1999,
December 31, 1998 and May 31, 1998 are as follows:
<TABLE>
<CAPTION>
December 31, June 30, December 31, May 31,
1999 1999 1998 1998
------------ --------- ------------ --------
<S> <C> <C> <C> <C>
Current deferred tax asset $ 27,039 $ - $ - $ -
Non-current deferred tax asset 609,841 192,301 124,068 23,252
Less: valuation allowance (636,880) (192,301) (124,068) (23,252)
------------ --------- ------------ --------
Net deferred tax asset $ - $ - $ - $ -
============ ========= ============ ========
</TABLE>
The current deferred tax asset results from the allowance for doubtful accounts.
The non-current deferred tax asset results from the net operating loss
carryforward and the difference in the amortization period of the excess of cost
over fair value of net assets of companies acquired. The net operating loss
available at December 31, 1999 amounts to approximately $1,800,000 and begins to
expire in 2013. At December 31, 1999, June 30, 1999, December 31, 1998, and May
31, 1998, the net deferred tax asset has a 100% allowance due to the uncertainty
of the Company generating future taxable income.
16
<PAGE>
SYNTEC ACQUISITION CORP. AND SUBSIDIARIES
AND PREDECESSOR COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, June 30, 1999, December 31, 1998, and May 31, 1998
NOTE K - INCOME TAXES (Continued)
A reconciliation of income tax expense using the statutory federal income tax
rate of 34% to the actual income tax expense for the six months ended December
31, 1999, the six months ended June 30, 1999, the seven months ended December
31, 1998 and the five months ended May 31, 1998 is as follows:
<TABLE>
<CAPTION>
December 31, June 30, December 31, May 31,
1999 1999 1998 1998
------------- --------- ------------- --------
<S> <C> <C> <C> <C>
Federal tax expense at statutory rate $ (444,579) $ (68,233) $ (100,816) $ 683
Change in valuation allowance 444,579 68,233 100,816 (683)
------------- --------- ------------- --------
$ - $ - $ - $ -
============= ========= ============= ========
</TABLE>
NOTE L - STOCKHOLDERS' EQUITY
The Preferred Stock of Acquisition is non-voting and convertible, at the option
of the holder, to Class B common stock on a share for share basis. The
Preferred Stock bears non-cumulative dividends of 8% per annum which are payable
at the discretion of the Board of Directors. This stock has a liquidation
preference of $1.50 per share.
The Class B Common Stock is identical to Class A Common Stock, except that the
Class B stock has no voting rights. The Class B stock automatically converts to
Class A stock, on a share for share basis, upon the Class A stock being
registered with the Securities and Exchange Commission.
NOTE M - STOCK OPTIONS AND WARRANTS
The Company applies APB Opinion No. 25, "Accounting for Stock Issued to
Employees" in accounting for its compensatory options. Accordingly, no
compensation cost has been recognized for its employee stock options in the
financial statements for those options where the fair market value approximates
the exercise price. Had the Company determined compensation cost based on the
fair value at the grant date for its stock options under SFAS 123, the Company's
pro forma net loss for the six-month period ended December 31, 1999 would have
been increased to the pro forma amounts indicated below (the six month period
June 30, 1999, the seven month period December 31, 1998 and the five month
period May 31, 1998 have no pro forma differences):
Net loss As reported (1,307,585)
Pro forma (1,361,978)
The fair value of each option grant is estimated on the date of grant using the
Black Scholes option-pricing model with the following assumptions used for
grants during the six-month period ended December 31, 1999: dividend yield of 0
percent; expected volatility of 0%; risk free interest rate of 5%; and an
expected life of 3 years.
17
<PAGE>
SYNTEC ACQUISITION CORP. AND SUBSIDIARIES
AND PREDECESSOR COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, June 30, 1999, December 31, 1998, and May 31, 1998
NOTE M - STOCK OPTIONS AND WARRANTS (Continued)
A summary of changes in the Company's compensatory options and warrants follows:
<TABLE>
<CAPTION>
Employee Stock Option Plan Other Compensatory Combined Total
-------------------------- ------------------ --------------
Weighted Weighted
Average Average
Exercise Exercise Options/
Options Price Warrants Price Warrants
------- ----- -------- ----- ---------
<S> <C> <C> <C> <C> <C>
Outstanding at June 30, 1999 - $ - - $ - -
Granted 1,580,000 1.50 371,215 1.50 1,951,215
Exercised - - - - -
Forfeited - - - - -
--------- ------ ------- ------ ---------
Outstanding at December 31, 1999 1,580,000 $ 1.50 371,215 $ 1.50 1,951,215
========= ====== ======= ====== =========
</TABLE>
The following table summarizes information about employee stock options
outstanding at December 31, 1999 under the Stock Option Plan:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
---------------------------------------------------------------- -----------------------------
Weighted
average Weighted
Range of Number remaining average Number Weighted average
exercise prices outstanding contractual life exercise price Exercisable exercise price
----------------- ----------- ---------------- -------------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
$1.50 1,580,000 7.50 years $1.50 263,333 $1.50
</TABLE>
The following table summarizes information about warrants outstanding at
December 31, 1999.
<TABLE>
<CAPTION>
Warrants Outstanding Warrants Exercisable
----------------------------------------------------------------- -----------------------------
Weighted
average Weighted
Range of Number remaining average Number Weighted average
exercise prices outstanding contractual life exercise price Exercisable exercise price
--------------- ----------- ---------------- -------------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
$ 1.50 371,215 5.0 years $1.50 371,215 $1.50
</TABLE>
18
<PAGE>
SYNTEC ACQUISITION CORP. AND SUBSIDIARIES
AND PREDECESSOR COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, June 30, 1999, December 31, 1998, and May 31, 1998
NOTE N - CREDIT CONCENTRATIONS AND SIGNIFICANT CUSTOMERS
Financial instruments that potentially subject the Company to concentrations of
credit risk consist primarily of cash and accounts receivable.
Cash and cash equivalents are at risk to the extent that they exceed the Federal
Deposit Insurance Corporation insured amount. To minimize this risk, the
Company places its cash and cash equivalents with high credit quality financial
institutions.
The Company recognizes revenue upon shipment of goods or delivery of services
and does not maintain any set policy regarding the customer's right of return.
Customer requests to return products for refund or credit are handled on an
individual basis at the discretion of management. The refunds or credits in
1999 and 1998 were not significant to the results of operations of the Company.
In the normal course of business, the Company extends unsecured credit to
virtually all of its customers. The Company has a broad base of customers
located throughout the United States, which reduces its credit risk. Because of
the credit risk involved, management has provided an allowance for doubtful
accounts which reflects its opinion of amounts which will eventually become
uncollectible ($9,197 at December 31, 1999; $0 at June 30, 1999, December 31,
1998 and May 31, 1998). In the event of complete non-performance by the
Company's customers, the maximum exposure to the Company is the outstanding
accounts receivable balance at the date of non-performance.
NOTE O - FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107 "Disclosure About Fair Value
of Financial Instruments", requires disclosure about the fair value of all
financial assets and liabilities for which it is practical to estimate. At
December 31, 1999, June 30, 1999, December 31, 1998 and May 31 1998 the carrying
value all of the Company's accounts receivable, accounts payable and accrued
liabilities approximate fair value because of their short-term nature.
Line of credit, long-term debt, capital lease obligations, and notes payable to
shareholders carrying values approximate fair values based on the borrowing
rates currently available to the Company for arrangements with similar terms.
NOTE P - SUBSEQUENT EVENTS
Pursuant to an Agreement and Plan of Reorganization date June 19, 2000,
Acquisition entered into a reverse merger acquisition agreement with Mayford
Acquisition Corporation ("Mayford"), a publicly held "shell" Delaware
Corporation. Mayford purchased 100% of Acquisition's outstanding stock in a tax
free reorganization. Mayford issued 13,527,083 shares of its $.0001 par value
Class A common stock and 2,972,504 shares of its $.0001 par value Series A
convertible preferred stock in exchange for all of the outstanding common and
preferred shares of Acquisition. Also effective June 19, 2000, Mayford changed
its name to CCM Manufacturing Technologies, Inc. For accounting purposes, the
merger will be treated as a recapitalization of Acquisition with Acquisition as
the acquirer (a reverse merger).
19
<PAGE>
CCM MANUFACTURING TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(Unaudited)
ASSETS September 30, December 31,
2000 1999
------------- ------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents............................. $ 606 $ 11,649
Accounts receivable, net of allowance for doubtful
accounts of $0 and $9,197 at September 30, 2000 and
December 31, 1999, respectively...................... 632,994 545,433
Inventories........................................... 582,352 603,485
Prepaid expenses...................................... 5,069 35,107
------------- ------------
Total current assets............................ 1,221,021 1,195,674
PROPERTY AND EQUIPMENT
Machinery and equipment............................... 1,076,342 1,072,867
Furniture and fixtures................................ 47,617 47,617
Automobiles........................................... 1,500 1,500
Leasehold improvements................................ 896 896
------------- ------------
1,126,355 1,122,880
Accumulated depreciation and
amortization....................................... (950,992) (884,763)
------------- ------------
Net property and equipment.................... 175,363 238,117
EXCESS OF COST OVER FAIR VALUE OF NET
ASSETS OF COMPANIES ACQUIRED, net..................... 1,697,812 1,843,339
OTHER ASSETS.............................................. 33,887 33,219
------------- ------------
TOTAL ASSETS.............................................. $ 3,128,083 $ 3,310,349
============= ============
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
3
<PAGE>
CCM MANUFACTURING TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - Continued
<TABLE>
<CAPTION>
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) September 30, December 31,
2000 1999
------------- ------------
<S> <C> <C>
CURRENT LIABILITIES
Line of credit................................. $ - $ 252,257
Current portion of long-term debt.............. 380,377 200,000
Notes payable to shareholders.................. 684,567 1,142,698
Current portion of capital lease obligations... 45,737 42,792
Factoring advances............................. 242,231 -
Accounts payable............................... 958,776 1,035,706
Accrued liabilities............................ 238,836 172,403
Deferred compensation.......................... 192,115 232,000
------------- ------------
Total current liabilities................ 2,742,639 3,077,856
LONG-TERM LIABILITIES
Long-term debt, less current portion............... 316,667 391,667
Capital lease obligations, less current portion.... 57,678 96,045
------------- ------------
Total long-term liabilities.............. 374,345 487,712
------------- ------------
Total liabilities........................ 3,116,984 3,565,568
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, $0.0001 par value, 25,500,000 shares
authorized, none issued and outstanding at September 30,
2000 and December 31, 1999.................................. - -
Series A Preferred stock, $0.0001 par value, 3,000,000 shares
authorized, 2,972,504 and 1,375,413 shares issued and
outstanding at September 30, 2000 and December 31, 1999,
respectively (liquidation preference of $4,458,756 and
$2,063,120 at September 30, 2000 and December 31, 1999,
respectively)............................................... 297 138
Series B Preferred stock, $0.0001 par value,1,500,000 shares
authorized, none issued and outstanding at September 30,
2000 and December 31, 1999.................................. - -
Class A Common stock, $0.0001 par value, 60,000,000 shares
authorized, 17,409,517 and 11,812,500 shares issued and
outstanding at September 30, 2000 and December 31, 1999,
respectively................................................ 1,741 1,181
Class B Common stock, $0.0001 par value, 10,000,000 shares
authorized, none issued and outstanding at September 30,
2000 and December 31, 1999.................................. - -
Common stock subscriptions receivable.......................... (75,470) -
Additional paid-in capital..................................... 3,194,798 1,051,047
Accumulated deficit............................................ (3,110,267) (1,307,585)
------------- ------------
Total stockholders' equity (deficit)..................... 11,099 (255,219)
------------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT)...................................................... $ 3,128,083 $ 3,310,349
============= ============
</TABLE>
<PAGE>
CCM MANUFACTURING TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
(Unaudited)
Nine Months Ended
September 30,
--------------------------
2000 1999
----------- -----------
<S> <C> <C>
Net sales............................................. $ 2,474,011 $ 2,817,969
Cost of sales......................................... 2,709,544 2,458,688
----------- -----------
Gross profit (loss)................................... (235,533) 359,281
Selling, general and administrative expenses.......... 1,419,370 783,419
----------- -----------
Loss from operations.................................. (1,654,903) (424,138)
Other income (expenses)
Interest expense.................................. (138,782) (66,246)
Other, net........................................ (8,997) (15,262)
----------- -----------
Total other income (expenses)......................... (147,779) (81,508)
----------- -----------
Loss before provision for income taxes................ (1,802,682) (505,646)
Provision for income taxes............................ - -
----------- -----------
Net loss.............................................. $(1,802,682) $ (505,646)
=========== ===========
Net loss attributable
to common stockholders............................ $(1,802,682) $ (505,646)
=========== ===========
Basic and diluted net loss per share
attributable to common stockholders............... $ (0.14) $ (0.04)
=========== ===========
Number of weighted average shares
of common stock outstanding....................... 13,140,698 11,812,500
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
5
<PAGE>
CMM MANUFACTURING TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(Unaudited)
Nine Months Ended
September 30,
-----------------------------------
2000 1999
------------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss....................................................... $ (1,802,682) $ (505,646)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation and amortization.............................. 66,229 67,770
Amortization of excess of cost over fair value of net
assets of companies acquired............................ 145,527 67,925
Preferred stock issued as compensation..................... 30,000 -
Change in operating assets and liabilities
Accounts receivable..................................... (87,561) (328,406)
Inventories............................................. 21,133 (257,178)
Prepaid expenses........................................ 30,038 (4,143)
Other assets............................................ (668) 10,628
Accounts payable........................................ (76,930) 361,450
Accrued liabilities..................................... 66,433 401,445
Deferred compensation................................... 308,365 116,000
------------- -----------
Cash flows used in operating activities................ (1,300,116) (70,155)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment........................ (3,475) (41,335)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock warrants............ 115,000 -
Proceeds from sale of preferred stock...................... 928,250 507,000
Proceeds from sale of common stock......................... 147,500 150,374
Net activity on line of credit............................. (252,257) (777,938)
Additional capital contributed............................. - 62,000
Factoring advances......................................... 242,231 -
Proceeds from long-term debt............................... 289,869 -
Repayment of long-term debt................................ (184,492) -
Payments on capital leases................................. (35,422) (18,922)
Net proceeds on notes payable to shareholders.............. 41,869 197,363
------------- -----------
Cash flows provided by financing activities............ 1,292,548 119,877
------------- -----------
Net increase (decrease) in cash and cash equivalents........... (11,043) 8,387
Cash and cash equivalents, beginning of period................. 11,649 20,068
------------- -----------
Cash and cash equivalents, end of period....................... $ 606 $ 28,455
============= ===========
</TABLE>
<PAGE>
CMM MANUFACTURING TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - Continued
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
<TABLE>
<CAPTION>
(Unaudited)
Nine Months Ended
September 30,
--------------------------------
2000 1999
--------------------------------
<S> <C> <C>
NON-CASH FINANCIAL AND INVESTING ACTIVITIES:
-------------------------------------------
Issuance of Class A common stock as payment of
compensation................................... $348,250 $ -
======== ==========
Issuance of Class A common stock in exchange for
note payable to shareholders................... $500,000 $ -
======== ==========
Issuance of Class A common stock for subscription
receivable..................................... $ 75,470 $ -
======== ==========
SUPPLEMENTAL DISCLOSURE:
------------------------
Cash paid for interest during period................ $138,000 $ 66,000
======== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
7
<PAGE>
CMM MANUFACTURING TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited financial statements of CCM Manufacturing
Technologies, Inc. (formerly Syntec Acquisitions Corp.) and subsidiaries ("CCM"
or "Company") have been prepared from the records of the Company in accordance
with generally accepted accounting principles "GAAP" for interim financial
information and in accordance with the instructions pursuant to item 310(b) of
Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by GAAP for complete financial statements. These financial
statements reflect all adjustments which are, in the opinion of management,
necessary to provide a fair statement of the results of operations and financial
position for the interim periods. The current interim period reported herein
should be read in conjunction with the Company's Form 8-K/A and the related
financial statements included therein.
The results of operations for the three and nine months ended September 30, 2000
are not necessarily indicative of the results that may be expected for the year
ending December 31, 2000.
The preparation of the financial statements in accordance with GAAP requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
NOTE B - GOING CONCERN
The consolidated financial statements have been prepared on the assumption that
the Company will continue as a going concern. The Company incurred a net loss of
$1,802,682 during the nine-month period ended September 30, 2000. Cash used in
operating activities for the same period aggregated $1,300,116. Current
liabilities at September 30, 2000 of $2,742,639 exceed current assets of
$1,221,021 by $1,521,618. The Company's continued existence depends upon the
success of management's efforts to raise the additional capital necessary to
meet the Company's obligations as they come due and to obtain sufficient capital
to execute its business plan. The Company intends to obtain additional capital
primarily through the issuance of non-voting preferred stock. There can be no
degree of assurance given that the Company will be successful in completing
additional financing transactions. The consolidated financial statements do not
include any adjustments to reflect the possible effects on the recoverability
and classification of assets or classification of liabilities which may result
from the inability of the Company to continue as a going concern.
NOTE C - LOSS PER SHARE
Basic net loss per share is computed by dividing net loss by the weighted
average number of common shares outstanding for the period. CCM's common stock
equivalents are not included in the diluted loss per share for September 30,
2000 and 1999 as they are antidilutive. Therefore, diluted and basic loss per
share are the same.
NOTE D - REVERSE MERGER
Pursuant to an agreement and Plan of Reorganization dated June 19, 2000, Syntec
Acquisition Corp. ("Acquisition") entered into a reverse merger acquisition
agreement with Mayford Acquisition Corporation ("Mayford"), a publicly held
"shell" Delaware Corporation. Mayford purchased 100% of Acquisition's
outstanding stock in a tax free reorganization. Mayford issued 13,527,083 shares
of its $.0001 par value Class A common stock and 2,972,504 shares of its $.0001
par value Series A convertible preferred stock in exchange for all of the
outstanding common and preferred shares of Acquisition. Also effective June 19,
2000, Mayford changed its name to CCM Manufacturing Technologies, Inc. For
accounting purposes, the merger was treated as a recapitalization of Acquisition
with Acquisition as the acquirer (a reverse merger).
<PAGE>
CMM MANUFACTURING TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE E - NOTES PAYABLE TO SHAREHOLDERS
The Company has unsecured note payables due to several shareholders totaling
$684,567 at September 30, 2000.
The first note bears interest at 9.5% per annum and payments are made as cash
flow permits with the total outstanding balance of principal and accrued
interest due December 31, 2000. The remaining $184,567 is due on demand and
bears interest at 18% per annum.
NOTE F - LONG TERM DEBT
Long-term debt at September 30, 2000 consists of the following:
Installment note payable to financial institution, due in
monthly installments of $8,333, including interest at the 30
day rate of commercial paper plus 3.25%, matures August 2004,
secured by all assets of the Company excluding accounts
receivable and inventory $ 416,667
Installment note payable to financial institution, due in
weekly principal installments of $2,000, interest is payable
monthly at the prime rate plus 5.5% matures December 2000,
secured by accounts receivable, inventory, and equipment and
personally guaranteed by certain shareholders 24,000
Installment note payable to vendor due in monthly
installments of $20,092 including 10% interest, matures
November 2000, secured by certain inventories 121,377
Unsecured note payable, accrues interest at the prime rate
plus 2%, principal and accrued interest due at maturity on
February 11, 2001 (net of discount of $46,000) 54,000
Unsecured note payable, accrues interest at the prime rate
plus 2%, principal and accrued interest due at maturity on
January 18, 2001 (net of discount of $69,000) 81,000
--------
697,044
Less current portion 380,377
--------
Long-term debt, less current portion $316,667
========
NOTE G - FACTORING ADVANCES
The Company has entered into a factoring agreement with a financial institution.
Under this agreement, the Company sells certain accounts receivable with
recourse at a discount to the financial institution. The factoring advance
liability included on the balance sheet represents advances received for
accounts receivable that have not yet been collected by the financial
institution.
NOTE H - STOCKHOLDERS' EQUITY
Effective September 20, 2000, the Company sold 3,372,500 shares of Class A
common stock in exchange for a subscription receivable of $125,000 or $.037 per
share. $62,500 of the subscribed amount was collected prior to September 30,
2000 and the remaining amount is shown as a subscription receivable at September
30, 2000. Also effective September 20, 2000, the Company sold 349,934 shares of
Class A common stock in exchange for a subscription receivable of $12,970 or
$.037 per share to "friends and family" of the Company. This entire amount is
shown as a subscription receivable in the financial statements at September 30,
2000.
During the quarter ended September 30, 2000, the Company issued warrants to
purchase 100,000 shares of Class A common stock with an exercise price of $.10
per share associated with $250,000 in debt obtained from two individuals. The
fair value of the warrants, using the Black-Scholes model, has been determined
to be $115,000 and has been recorded as additional paid-in capital and a
discount to the related debt in the financial statements. These warrants were
exercised during the third quarter of 2000. During this quarter, the Company
also sold 60,000 shares of Class A common stock to three individuals for an
aggregate of $75,000 or $1.25 per share. This amount was collected in full prior
to September 30, 2000.
<PAGE>
CCM MANUFACTURING TECHNOLOGIES, INC.
6,072,435 shares of Class A common stock to be sold by certain selling security
holders
and 166,500 shares of Series A common stock underlying Class B common stock
conversion
----------------
PROSPECTUS
----------------
December _____, 2000
CCM has not authorized any dealer, salesperson or other person to provide
any information or make any representations other than the information or
representations contained in this prospectus. You should not rely on any
additional information or representations if made.
This prospectus does not constitute an offer to sell, or a solicitation of an
offer to buy any securities:
. except the common stock offered by this prospectus;
. in any jurisdiction in which the offer or solicitation is not authorized;
. in any jurisdiction where the dealer or other salesperson is not qualified
to make the offer or solicitation;
. to any person to whom it is unlawful to make the offer or solicitation; or
. to any person who is not a United States resident or who is outside the
jurisdiction of the United States.
The delivery of this prospectus or any accompanying sale does not imply that:
. there have been no changes in CCM's affairs after the date of this
prospectus; or
. the information contained in this prospectus is correct after the date of
this prospectus.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 24. Indemnification of Directors and Officers
CCM Manufacturing Technologies, Inc. is incorporated in Delaware. Under
Section 145 of the General Corporation Law of the State of Delaware, a Delaware
corporation has the power, under specified circumstances, to indemnify its
directors, officers, employees and agents in connection with actions, suits or
proceedings brought against them by a third party or in the right of the
corporation, by reason of the fact that they were or are such directors,
officers, employees or agents, against expenses incurred in any action, suit or
proceeding. The Company's Certificate of Incorporation and by-laws provide for
indemnification of its directors and officers to the fullest extent permitted by
the General Corporation Law of the State of Delaware.
The General Corporation Law of the State of Delaware provides that a
Certificate of Incorporation may contain a provision eliminating the personal
liability of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director provided that such provision
shall not eliminate or limit the liability of a director
(1) for any breach of the director's duty of loyalty to the corporation or
its stockholders,
(2) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law,
(3) under Section 174 (relating to liability for unauthorized
acquisitions or redemptions of, or dividends on, capital stock) of the General
Corporation Law of the State of Delaware, or
(4) for any transaction from which the director derived an improper
personal benefit.
CCM's Certificate of Incorporation contains such a provision.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to directors, officers or control persons
pursuant to the foregoing provisions, it is the opinion of the Securities and
Exchange Commission that such indemnification is against public policy as
expressed in the Act and is therefore unenforceable.
Item 25. Other Expenses of Issuance and Distribution
The following table sets forth CCM's expenses in connection with this
registration statement. All of such expenses are estimates, other than the
filing fees payable to the Securities and Exchange Commission.
Filing Fee--Securities and Exchange Commission........ $
Fees and Expenses of Accountants and legal counsel.... $
Blue Sky Fees and Expenses............................ $2,000
Printing and Engraving Expenses....................... $3,500
Miscellaneous Expenses................................ $3,000
------
Total................................................. $
Item 26. Recent Sales of Unregistered Securities
Within the past three years, the Company has issued the following shares of
its Class A common stock, par value $.0001 (the "Shares"), for cash or services
rendered to the Company and has granted the following options and warrants to
purchase its Class A common stock for services rendered to the Company, absent
registration under the Securities Act of 1933, as amended (the "Securities Act")
pursuant to the exemption provided in Section 4(2) of the Securities Act for
transactions by an issuer not involving a public offering except shares of Class
A common stock issued by Mayford prior to the stock exchange transaction and
name change, which shares were issued in reliance
<PAGE>
on Rule 506 of the Securities Act. The following information is provided as
calculated on a post-merger basis.
Some of the holders of the shares issued below may have subsequently
transferred or disposed of their shares and the list does not purport to be a
current listing of CCM's shareholders. The post merger column is the number of
shares issued on the exchange of shares resulting from the merger of Syntec
Acquisition Corporation with and into CCM Manufacturing Technologies, Inc.
<TABLE>
<CAPTION>
Number of Number of
Holders of Class A Pre-Merger Post-Merger
Date Common Stock Shares Shares Consideration
---- ------------ ------ ------ --------------
<S> <C> <C> <C> <C>
____ TPG Capital Corporation 120,000 300,000 $__________________
6/99 Jose G. Chavez* 2,883,333 7,208,333 $246 / services rendered
6/99 Jaime J. Munoz * 521,250 1,303,125 $44.63 / services rendered
6/99 Gustavo A. Cardenas* 513,750 1,284,375 $44.63 / services rendered
6/99 Lynn K. Bishop* 1,050,000 2,625,000 $150,000
6/99 Michael J. Wales* 157,000 393,750 $15.75
6/99 Michael A. Chavez* 157,500 393,750 $15.75
6/99 Cheryl Arnold-Forte* 7,500 18,750 $0.75
</TABLE>
(*) The named stockholder is an employee of the Company.
From July 1999 through May, 2000, the Company sold 1,189,000 shares
(2,972,504 post-merger shares) of its Class A Preferred Stock, at a purchase
price of $1.50 per share, to twenty-eight individuals. In October 1999, the
Company also issued 20,000 shares (50,000 post-merger shares) of its Class A
preferred stock to one employee as compensation for services rendered to the
Company. The Company believes that such issuances were exempt from registration
pursuant to Section 4(2) of the Securities Act of 1933, as amended.
In July 1999 the Company granted options to eight employees and officers of
the Company, pursuant to their employment agreements, to purchase an aggregate
of 1,605,000 shares (4,012,500 post-merger shares) of the Company's Class A
common stock exercisable at $1.50 per share.
From July 2000 through September, 2000 the Company sold 3,782,436 of its
Class A common stock to sixty-six investors for an aggregate purchase price of
$209,594.65. The Company believes that such issuances were exempt from
registration pursuant to Section 4(2) of the Securities Act of 1933, as amended.
In August, 2000, in connection with a loan for an aggregate of $250,000,
the Company granted two individuals warrants to purchase an aggregate of 100,000
shares of Class A common stock exercisable at $.10 per share. As of the date of
this filing all of such warrants were exercised and paid in full.
In October 1999, the Company granted warrants to purchase an aggregate of
321,215 shares (803,038 post-merger shares) of its Class A Common Stock to seven
individuals as payment for legal services rendered to the Company and, in June
2000, the Company granted a warrant to purchase 50,000 shares (125,000 post-
merger shares) of its Class A Common Stock to one individual as payment for
legal services rendered to the Company.
In December 2000, the Company granted to Consulting and Strategy
International LLC, as payment for services rendered to the Company, a warrant to
purchase 1,000,000 shares of Class A Common Stock exercisable as follows:
250,000 shares at $2.50 per share; 250,000 shares at $3.50 per share; 250,000
shares at $4.00 per share; and 250,000 shares at $5.00.
In December 2000, the Company granted to Consulting & Strategy
International LLC, as payment for services rendered to the Company, an option to
purchase 600,000 shares of its Class A common stock exercisable at $1.50 per
share upon the occurrence of the Company's Class A common stock trading on the
NASD OTC Bulletin Board. The option expires 18 months from the date that the
Company's securities are traded, if at all, on the NASD OTC Bulletin Board.
In December 2000, the Company issued 200,000 shares of its common stock to
Sunstate Equity Trading,
<PAGE>
Inc. ("Sunstate"), an NASD member firm, with whom the Company entered into a
financial advisory agreement. The Shares were issued to Sunstate for services
rendered to the Company pursuant to Section 4(2) of the Securities Act of 1933,
as amended.
Item 27. Exhibits and Financial Statement Schedules
(a) Exhibits
3.1** Certificate of Incorporation, filed with the registration statement of
Mayford Acquisition Corporation on Form 10-SB (file No. 000-28681 filed
with the Commission on December 29, 1999 and incorporated herein by
reference
3.2** By-Laws of the Company, filed with the registration statement of
Mayford Acquisition Corporation on Form 10-SB (file No. 000-28681)
filed with the Commission on December 29, 1999 and incorporated herein
by reference
3.3** Certificate of Amendment of the Certificate of Incorporation of Mayford
Acquisition Corporation filed on Form 8-K with the Commission on July
17, 2000 and incorporated herein by reference
3.4** Designation of Preference for Series A Convertible Preferred Stock
3.5** Designation of Preference for Series B Convertible Preferred Stock
4.1** Agreement and Plan of reorganization among Mayford Acquisition
Corporation, Syntec Acquisition Corporation, and the shareholders of
Syntec filed on Form 8-K of Mayford and incorporated herein by
reference
4.2** Agreement and Plan of Merger between Mayford Acquisition Corporation
and Syntec Acquisition Corporation filed with the Commission on Form 8K
filed on July 17, 2000 and incorporated herein by reference (*)
4.3* Form of Warrant Agreement granted to Consulting & Strategy
International LLC dated November 1, 2000.
4.4* Form of Option Agreement granted Consulting & Strategy International
LLC dated November 1, 2000.
4.5* Form of Business Services Contract between the Company and Consulting &
Strategy International LLC dated December 1, 1999.
4.6* Form of Financial Advisory Agreement between Sunstate Equity Trading,
Inc. and the Company.
5.1* Opinion of Cassidy & Associates
10.6** Form of Employment Agreement with Mr. Jose G. Chavez
10.7** Form of Employment Agreement with Mr. Jaime J. Munoz
10.8** Form of Employment Agreement with Mr. Gustavo A. Cardenas
10.9** Form of Employment Agreement with Mr. Lynn K. Bishop
23.1 Consent of Accountants
23.2* Consent of Cassidy & Associates (included in Exhibit 5.1)
-------
* To be filed by amendment.
** Previously filed.
Item 28. Undertakings.
The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(1) To include any prospectus required by Section 10(a)(3) of the Securities
Act of 1933;
(2) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement;
(3) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding)
<PAGE>
is asserted by such director, officer or controlling person in connection with
the securities being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
(c) The undersigned registrant hereby undertakes that for the purpose of
determining any liability under the Securities Act of 1933, each post-effective
amendment that contains a form of prospectus shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, CCM
Manufacturing Technologies, Inc. certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form SB-2 and
authorized this registration statement to be signed on its behalf by the
undersigned in Pflugerville, Texas, on January 17, 2001.
CCM MANUFACTURING TECHNOLOGIES, INC.
By: /s/ Jose Chavez
------------------------------------
Jose Chavez, Chief Executive Officer
By: /s/ Gustavo A. Cardenas
------------------------------------
Gustavo A. Cardenas, Chief Financial
Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed below by the following persons in
the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Jaime J. Munoz
-------------------------- President and Director January 17, 2001
Jaime J. Munoz
/s/ Jose Chavez
-------------------------- Chief Executive Officer January 17, 2001
Jose Chavez and Director
/s/ Gustavo Cardenas
-------------------------- Chief Financial Officer January 17, 2001
Gustavo Cardenas and Director
