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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
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FORM 10-SB12G/A
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GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS
Under Section 12(g) of
The Securities Exchange Act of 1934
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EAGLETECH COMMUNICATIONS, INC.
(Name of Small Business Issuer in its charter)
Nevada 13-4020694
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
305 South Andrews Avenue, Fort Lauderdale, Florida 33301
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(Address of principal executive offices) (Zip code)
Issuer's telephone number: (954) 462-1494
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Securities to be registered pursuant to Section 12(b) of the Act:
None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock ($.0001 Par Value)
(Title of Class)
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TABLE OF CONTENTS
Page
PART I
Item 1. Description of Business. 3
Item 2. Plan of Operation. 7
Item 3. Description of Property. 12
Item 4. Security Ownership of Certain Beneficial Owners and Management 12
Item 5. Directors, Executive Officers, Promoters and Control Persons 14
Item 6. Executive Compensation 16
Item 7. Certain Relationships and Related Transactions 17
Item 8. Description of Securities 17
PART II
Item 1. Market for Common Equities and Related Stockholder Matters 17
Item 2. Legal Proceedings 19
Item 3. Changes in and Disagreements with Accountants 19
Item 4. Recent Sales of Unregistered Securities. 20
Item 5. Indemnification of Directors and Officers. 22
PART F/S
Financial Statements 23
Table of Contents 24
PART III
Item 1. Index to Exhibits. 36
Signatures 36
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PART I
Item 1. Description of Business
Eagletech Communications, Inc. (the "Company") has developed
proprietary unified communications products and services to complement existing
telecommunications technologies for voice-mail, messaging and connectivity
solutions. As a communications service provider ("CSP"), Eagletech makes it
possible for mobile professionals to maintain real-time contact with one
telephone number while also providing telephone access to messages and Web
control over the unified system.
Eagletech's proprietary solution to this telecommunications challenge
is the "EagleOne" (TM) flat rate service that includes:
o "One Number-Follow Me"- Provides for call transfers of up to
four telephone numbers.
o "EagleAttendant" (TM)- Autoattendant greeting with a custom
recorded business greeting.
o "EagleAnnounce" (TM) - Screens calls, when the caller
announces his or her name, you can take the important calls
and send others to voice mail.
o "EagleMail" (TM) - Voice mail, callers have the option to
leave a detailed message of up to five minutes in length.
Calls are automatically deleted after 30 days.
o "EagleMessage" (TM) - EagleMail (TM) messages are delivered
within minutes. Messages are re-delivered until you are found.
You specify how often and how many times deliveries are
attempted.
o "EagleWeb" (TM) - Set up and make changes to your transfer
numbers, message delivery parameters, etc. using your web
browser, or when on the road, from a cellphone. Messages can
be delivered to your email address and heard on a multimedia
computer.
o "EagleFax" (TM) - Store and forward your faxes to any fax
machine. EagleFax (TM) will notify you when you have received
a fax.
There are two distinct markets for Eagletech's products. The first is
integration of these services into a company's existing PBX system. Here the
solution is customized to the needs of the company which has multiple employees
covered by the system. The first implementation of these customized solutions
will be in the real estate market where it is critical for a broker to be
reached by a client. The customized solution will provide for not only "One
Number-Follow Me" service but also other features appropriate for this class of
customers such as fax on demand sending a party information about a listed
property. The first two real estate systems in South Florida are operational.
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The second market is a service bureau designed for mobile professionals
who are not part of a larger organization which provides these critical
communications services. Using local points of access, Eagletech will provide
individuals with the full range of its services in given geographic areas. In
the first calendar quarter of 2000, Eagletech began the national rollout of its
service bureaus in Dade and Broward Counties of Florida.
Eagletech intends to use strategic relationships to market and sell its
products to these two markets. It will manufacture the basic products necessary
to provide these services and provide the technical support associated with any
customized system or question raised by a service bureau customer. For the
service bureau market, Eagletech intends to build a national network for access
to unified communications services with local points of access, similar to the
way national Internet Service Providers offer Web access with local access
numbers and Points of Presence (POPs).
The Board of Directors of the Company has begun to implement this
principal business purpose described below under "Item 2 - Plan of Operation."
Eagletech was incorporated as Goldplate Holdings Enterprises, Inc. in
Nevada in August, 1997. In June 1999, the Company changed its name to Eagletech
Communications, Inc. The Company's corporate offices are located at 305 South
Andrews Avenue, Fort Lauderdale, Florida 33301. The Company's telephone number
at that location is (954) 462-1494.
The Company is filing this registration statement to enhance investor
protection and to provide information to the trading market. On December 11,
1997, the National Association of Securities Dealers, Inc. (the "NASD")
announced that its Board of Governors had approved a series of proposed changes
for the Over the Counter ("OTC") Bulletin Board and the OTC market. The
principal change, which was approved by the Securities and Exchange Commission
on January 4, 1999, allows only those companies that report their current
financial information to the Securities and Exchange Commission, banking, or
insurance regulators to be quoted on the OTC Bulletin Board. The rule provides
for a phase-in period for those securities already quoted on the OTC Bulletin
Board. The Company is filing this Registration Statement to comply with that
rule. Quotations for the Company's common stock (par value $0.0001 per share)
(the "Common Stock") are posted on the OTC Bulletin Board under the symbol
"EATC."
The Company's business is subject to numerous risk factors, including,
but not limited to, the following:
RISKS RELATED TO THE COMPANY'S BUSINESS
Development Stage Company; Limited Operating History. Eagletech is an
early-stage company and Eagletech expects to encounter risks and difficulties
frequently faced by early-stage companies in new and rapidly evolving markets.
Eagletech's predecessor was incorporated in 1996. Eagletech installed its first
system in September, 1999. The
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Company's limited operating history makes an evaluation of the Company's future
prospects very difficult. Eagletech will encounter the risks and difficulties
frequently encountered by early stage companies in new and rapidly evolving
markets. Eagletech cannot be certain that the Company's business strategy will
be successful or that Eagletech will successfully address these risks.
Eagletech Anticipates Future Losses and Negative Cash Flow. Eagletech expects
operating losses and negative cash flow to continue for the foreseeable future.
Eagletech anticipates the Company's losses will increase significantly from
current levels because Eagletech expects to incur additional costs and expenses
related to:
- - brand development, marketing and other promotional activities;
- - expansion of the Company's operations;
- - continued development of the Company's technology, its website, the
systems that Eagletech uses to process customers' orders and payments,
and the Company's computer network;
- - geographic expansion of the Company's service area; and
- - development of relationships with strategic business partners.
As of December 31, 1999, Eagletech had an accumulated deficit during
the development stage of $(9,310,735). Eagletech incurred net losses of
$(9,018,952) and no sales in the nine months ended December 31, 1999. The
Company's ability to become profitable depends on the Company's ability to
generate and sustain sales while maintaining reasonable expense levels. If
Eagletech does achieve profitability, Eagletech cannot be certain that the
Company would be able to sustain or increase profitability on a quarterly or
annual basis in the future. See Item 2-"Plan of Operations."
The Company's Limited Operating History Makes Future Forecasting Difficult.
Because of the Company's limited operating history, Eagletech finds it difficult
to forecast the Company's net sales accurately. Eagletech has limited meaningful
historical financial data upon which to base planned operating expenses, since
it has been in the development stage without sales since 1996. Eagletech bases
the Company's current and future expense levels on the Company's operating plans
and estimates of future net sales, and the Company's expenses are to a large
extent fixed. Sales and operating results are difficult to forecast because they
generally depend on the volume and timing of the orders Eagletech receives.
Consequently, Eagletech may be unable to adjust the Company's spending in a
timely manner to compensate for any unexpected revenue shortfall. This inability
could cause the Company's net losses in a given quarter to be greater than
expected.
The Company's Operating Results are Volatile and Difficult to Predict. If
Eagletech Fails to Meet the Expectations of Public Market Analysts and
Investors, the Market Price of the Company's Common Stock May Decrease
Significantly. The Company's annual and quarterly operating results may
fluctuate significantly in the future due to a variety of factors, many of which
are outside of the Company's control, including, among other
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things, the demand for the Company's products, unpredictability of consumer
trends and technology changes. Because the Company's operating results are
volatile and difficult to predict, Eagletech believes that quarter-to-quarter
comparisons of the Company's operating results are not a good indication of the
Company's future performance. It is likely that in some future quarter the
Company's operating results may fall below the expectations of securities
analysts and investors. In this event, the trading price of the Company's Common
Stock may fall significantly. Factors that may harm the Company's business or
cause the Company's operating results to fluctuate include the following:
- - the Company's inability to obtain new customers at reasonable cost and
retain existing customers;
- - decreases in the funds available for marketing and promoting the
Company's services;
- - the Company's inability to manage rapid expansion of its services;
- - the Company's inability to adequately maintain, upgrade and develop the
Company's technical systems;
- - the ability of the Company's competitors to offer new or enhanced
services or products;
- - price competition;
- - an unanticipated high level of service cancellations;
- - the termination of existing, or failure to develop new, strategic
marketing and manufacturing relationships;
- - increases in the cost of advertising;
- - the amount and timing of operating costs and capital expenditures
relating to expansion of the Company's operations;
- - technical difficulties, system downtime or telephone service
interruptions.
A number of factors will cause the Company's gross margins to fluctuate
in future periods, including timing of service area expansion, the mix of
services provided by the Company, and the level of discount or introductory
pricing. Any change in one or more of these factors could harm the Company's
gross margins and operating results in future periods.
The Company's Net Sales are Dependent Upon the Company's Ability To Offer the
Company's Customers Dependable Quality Services at Competitive Prices. If
Eagletech is not able to offer the Company's customers dependable services at
competitive prices, the Company's net sales and results of operations will be
harmed. The Company's success depends on the Company's ability to provide
dependable service to its customers at competitive prices.
If Eagletech Is Unable To Obtain Sufficient Quantities of Products From the
Company's Key Vendors, the Company's Net Sales Would Be Adversely Affected. If
Eagletech was unable to obtain sufficient quantities of electronic components
from the Company's key vendors, the Company's net sales and results of
operations would be harmed. The Company buys its electronic components from one
vendor at this time, but the Company
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believes that multiple other sources of such components exist and finding
replacement vendors would not have a material adverse effect upon the Company.
To Manage the Company's Growth and Expansion, Eagletech Needs To Improve and
Implement the Company's Systems, Procedures and Controls. If Eagletech Is Unable
To Do So Successfully, the Company's Business Would Be Seriously Harmed. The
Company's rapid growth in operations will place a significant strain on the
Company's management, information systems and resources. In order to manage this
growth effectively, Eagletech needs to continue to improve the Company's
financial and managerial controls and reporting systems and procedures. The
Company's failure to successfully implement, improve and integrate these systems
and procedures would harm the Company's results of operations.
Eagletech May Not Be Able To Compete Successfully Against Current and Future
Competitors. The Company faces competition from some of the largest
telecommunications companies in the United States. The telecommunications market
is rapidly evolving and intensely competitive. Increased competition is likely
to result in price reductions, reduced gross margins and loss of market share,
any of which could seriously harm the Company's net sales and results of
operations. Eagletech expects competition to intensify in the future as
telecommunications deregulation continues, regional Bell companies expand
nationwide and cellular services become more common.
Many of the Company's competitors have longer operating histories,
larger customer or user bases, greater brand recognition and significantly
greater financial, marketing and other resources than does Eagletech. Many of
these competitors can devote substantially more resources to marketing and
promotion than can Eagletech. In addition, larger, well-established and
well-financed telecommunications companies, cable suppliers and cellular
telephone companies may try to offer competing services. The Company's
competitors may be able to secure products from vendors on terms that are more
favorable and adopt more aggressive pricing policies than can Eagletech.
If Eagletech Does Not Successfully Expand the Company's Service Area, the
Company's Business Could be Seriously Harmed. If Eagletech does not successfully
expand the Company's service area and number of lines its service bureau can
accommodate, Eagletech will not be able to increase the Company's net sales in
accordance with the expectations of securities analysts and investors. In such
an event, the Company's business will be harmed. The Company's success depends
on the Company's ability to expand the Company's service area and switching
capacity rapidly in order to accommodate a significant increase in customer
orders. The Company's planned expansion may cause disruptions that could harm
the Company's business, results of operations and financial condition.
The Company's Facilities and Systems are Vulnerable to Natural Disasters and
Other Unexpected Problems. The occurrence of a hurricane, tornado, large scale
electrical storm or other natural disaster or unanticipated problems at the
Company's leased facility
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in Ft. Lauderdale, Florida that houses substantially all of the Company's
computer and communications hardware systems, could cause interruptions or
delays in the Company's business, loss of data or render the Company unable to
provide its services. Any such interruptions or delays at its facility would
harm the Company's net sales and results of operations. In addition, the
Company's systems and operations are vulnerable to damage or interruption from
fire, flood, power loss, telecommunications failure, break-ins, and similar
events. Eagletech has no formal disaster recovery plan and the Company's
business interruption insurance may not adequately compensate Eagletech for
losses that may occur. The occurrence of any or all of the events could harm the
Company's reputation, brand and business.
If Eagletech Does Not Respond To Rapid Technological Changes, the Company's
Services Could Become Obsolete and the Company's Business Would Be Seriously
Harmed. If Eagletech faces material delays in introducing new services, products
and enhancements, the Company's customers may forego the use of the Company's
services and use those of the Company's competitors. To remain competitive,
Eagletech must continue to enhance and improve the functionality and features of
the Company's telecommunications services. The telecommunications industry is
rapidly changing as a result of deregulation, technology improvements and new
customer demands. If competitors introduce new products and services embodying
new technologies, or if new industry standards and practices emerge, the
Company's existing proprietary technology and systems may become obsolete.
Developing, enhancing and upgrading the Company's proprietary technology entails
significant technical and business risks. Eagletech may use new technologies
ineffectively or Eagletech may fail to adapt the Company's proprietary
technology and the Company's computer network to customer requirements or
emerging industry standards.
Intellectual Property Claims Against the Company Could Be Costly and Could
Result In the Loss Of Significant Rights. Other parties may assert infringement
or unfair competition claims against Eagletech. The Company cannot predict
whether third parties will assert claims of infringement against Eagletech, or
whether any future assertions or prosecutions will harm the Company's business.
If Eagletech is forced to defend against any such claims, whether they are with
or without merit or are determined in the Company's favor, then Eagletech may
face costly litigation, diversion of technical and management personnel, or
product shipment delays. Because of such a dispute, Eagletech may have to
develop non-infringing technology or enter into royalty or licensing agreements.
Such royalty or licensing agreements, if required, may be unavailable on terms
acceptable to the Company, or at all. If there is a successful claim of product
infringement against the Company and Eagletech is unable to develop
non-infringing technology or license the infringed or similar technology on a
timely basis, it could harm the Company's business.
If the Protection of the Company's Technology, Trademarks and Proprietary Rights
Is Inadequate, the Company's Business Will Be Seriously Harmed. The steps
Eagletech takes to protect the Company's proprietary rights may be inadequate.
Eagletech regards
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the Company's copyrights, service marks, trademarks, trade dress, trade secrets
and similar intellectual property as critical to the Company's success. In
addition, Eagletech has filed for patent protection for its proprietary
technology and has received a Notice of Allowance regarding its patent
application. The Company will pay the Issue Fee and the patent will issue in the
near future. Eagletech relies on trademark and copyright law, trade secret
protection and confidentiality or license agreements with the Company's
employees, customers, partners and others to protect the Company's proprietary
rights. The Company is in the process of filing for trademark protection for
"Eagletech" for telecommunications services. Effective patent, trademark,
service mark, copyright and trade secret protection may not be available in
every country in which Eagletech will sell the Company's products and services.
The Loss of the Services of One Or More of the Company's Key Personnel, or the
Company's Failure To Attract, Assimilate and Retain Other Highly Qualified
Personnel in the Future Would Seriously Harm the Company's Business. The loss of
the services of one or more of the Company's key personnel could seriously harm
the Company's business. Eagletech depends on the continued services and
performance of the Company's senior management and other key personnel,
particularly Robert Dobbs, the Company's President and Chief Executive Officer,
and Rodney Young, the Company's Vice-President for Technology and the inventor
of the Company's proprietary technology. The Company's future success also
depends upon the continued service of Robert Bergman, the Company's Vice
President for Marketing and Sales, and the services of other essential
technical, sales, marketing and support personnel. All of the Company's officers
and key employees are bound by employment agreements. Eagletech does not have
"key person" life insurance policies covering any of the Company's employees.
Eagletech May Be Adversely Impacted if the Software, Computer Technology and
Other Systems Eagletech Uses are not Year 2000 Compliant. Any failure of the
Company's material systems, the Company's vendors' material systems or the
Internet to be Year 2000 compliant would have material adverse consequences for
the Company. Such consequences would include difficulties in providing switching
or conducting other fundamental parts of the Company's business. Eagletech has
determined that all of its material systems are Year 2000 compliant and has
received assurances that its vendors' systems are Year 2000 compliant also.
Eagletech also depends on the Year 2000 compliance of the computer systems and
financial services used by consumers and by telecommunications companies with
which its systems operate. A significant disruption in the ability of consumers
to reliably access their telecommunications system or portions of it would have
an adverse effect on demand for the Company's services and would have a material
adverse effect on the Company. See Item 2-"Plan of Operations."
Risks Associated With Potential Acquisitions. If Eagletech is presented with
appropriate opportunities, Eagletech intends to make investments in
complementary companies, products or technologies. Eagletech may not realize the
anticipated benefits of any acquisition or investment. If Eagletech buys a
company, Eagletech could have difficulty in assimilating that company's
personnel and operations. In addition, the essential
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personnel of the acquired company may decide not to work for the Company. If
Eagletech makes other types of acquisitions, Eagletech could have difficulty in
assimilating the acquired technology or products into the Company's operations.
These difficulties could disrupt the Company's ongoing business, distract the
Company's management and employees and increase the Company's expenses.
Furthermore, Eagletech may have to incur debt or issue equity securities to pay
for any future acquisitions or investments, the issuance of which could be
dilutive to the Company or the Company's existing stockholders.
Existing Stockholders Will Be Able to Exercise Significant Control Over
Eagletech. Executive officers, directors and entities affiliated with them, if
acting together, would be able to significantly influence all matters requiring
approval by the Company's stockholders, including the election of directors and
the approval of mergers or other business combination transactions. These
stockholders, taken together, beneficially own approximately 59% of the
Company's outstanding common stock and can elect all directors and pass any
action requiring stockholder approval. See Item 4. "Security Ownership of
Certain Beneficial Owners and Management" and Item 5 "Directors, Executive
Officers, Promoters and Control Persons."
It May Be Difficult For A Third Party To Acquire The Company. Provisions of the
Company's Certificate of Incorporation, the Company's Bylaws and Nevada law
could make it more difficult for a third party to acquire the Company, even if
doing so would be beneficial to the Company's stockholders. See Item 8.
"Description of Securities."
RISKS RELATED TO THE COMPANY'S INDUSTRY
Eagletech May Need To Change the Manner In Which Eagletech Conducts the
Company's Business If Government Regulation Increases. The adoption or
modification of laws or regulations relating to the telecommunications industry
could adversely affect the manner in which Eagletech currently conducts the
Company's business. In addition, the growth and development of the market for
enhanced telecommunications systems may lead to more stringent consumer
protection laws, both in the United States and abroad, that may impose
additional burdens on the Company. Laws and regulations directly applicable to
telecommunications are in a constant state of flux.
RISKS RELATED TO SECURITIES MARKETS
Eagletech May Be Unable to Meet the Company's Future Capital Requirements.
Eagletech cannot be certain that additional financing will be available to the
Company on favorable terms when required, or at all. If Eagletech raises
additional funds through the issuance of equity, equity-related or debt
securities, such securities may have rights, preferences or privileges senior to
those of the rights of the Company's Common Stock and the Company's stockholders
may experience additional dilution. Eagletech requires substantial working
capital to fund the Company's business. Since the Company's inception, Eagletech
has experienced negative cash flow from operations and expects to
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experience significant negative cash flow from operations for the foreseeable
future. Eagletech currently anticipates that the Company's available funds will
be sufficient to meet the Company's anticipated needs for working capital and
capital expenditures through at least the next 6 months. Eagletech may need to
raise additional funds before the expiration of such period.
The Company's Common Stock Price May Be Volatile, Which Could Result in
Substantial Losses For Individual Stockholders. The market price for the
Company's common stock is likely to be highly volatile and subject to wide
fluctuations in response to factors including the following, some of which are
beyond the Company's control:
- - actual or anticipated variations in the Company's quarterly operating
results;
- - announcements of technological innovations or new products or services
by the Company or the Company's competitors;
- - changes in financial estimates by securities analysts;
- - conditions or trends in the telecommunications industry;
- - changes in the economic performance and/or market valuations of other
independent telecommunications companies;
- - announcements by the Company or the Company's competitors of
significant acquisitions, strategic partnerships, joint ventures or
capital commitments;
- - additions or departures of key personnel;
- - release of lock-up or other transfer restrictions on the Company's
outstanding shares of common stock or sales of additional shares of
common stock; and
- - potential litigation.
If the Company's Stock Price Is Volatile, Eagletech Could Face a Securities
Class Action Lawsuit. In the past, following periods of volatility in the market
price of their stock, many companies have been the subjects of securities class
action litigation. If disgruntled stockholders sued Eagletech in a securities
class action, it could result in substantial costs and a diversion of
management's attention and resources and would harm the Company's stock price.
Substantial Sales of the Company's Common Stock Could Cause the Company's Stock
Price To Fall. If the Company's stockholders sell substantial amounts of the
Company's Common Stock in the public market, the market price of the Company's
Common Stock could fall. Such sales also might make it more difficult for the
Company to sell equity or equity-related securities in the future at a time and
price that Eagletech deems appropriate.
Conflicts of Interest. Officers and directors of the Company may in the future
participate in business ventures that could be deemed to compete directly with
the Company. Additional conflicts of interest and non-arms length transactions
may also arise in the future in the event the Company's officers or directors
are involved in the management of any firm with which the Company transacts
business. The Company has adopted a policy that the Company will not seek a
merger with, or acquisition of, any entity in which
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members of the Company's management serve as officers, directors or partners, or
in which they or their family members own or hold any material ownership
interest.
Reporting Requirements May Delay or Preclude Acquisition. Sections 13 and 5(d)
of the Securities Exchange Act of 1934 (the "1934 Act"), require companies
subject thereto to provide certain information about significant acquisitions,
including certified financial statements for the company acquired, covering one,
two, or three years, depending on the relative size of the acquisition. The time
and additional costs that may be incurred by some target entities to prepare
such statements may significantly delay or essentially preclude consummation of
an otherwise desirable acquisition by the Company. Acquisition prospects that do
not have or are unable to obtain the required audited statements may not be
appropriate for acquisition so long as the reporting requirements of the 1934
Act are applicable.
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Item 2. Plan of Operation
Eagletech was founded to manufacture, market and distribute unique
communications products and services. We recognized a major marketing
opportunity to develop a unified messaging service and a low cost unified
communications call management solution. Currently, most mobile and remote
professionals have cellphones, pagers, laptops, email and corporate voice mail
in order to stay in contact with co-workers and customers. Still, with all these
available business tools, three out of four calls fail to reach their intended
party. Eagletech provides solutions that increase productivity and efficiency.
Eagletech delivers a full suite of communications services that
integrate seamlessly with a company's existing communications infrastructure or
work as a stand alone solution. Because of the proprietary manner in which
Eagletech delivers these services, Eagletech believes it is the low cost
communications service provider compared with its competitors.
Eagletech's proprietary solution to this telecommunications challenge
is the "EagleOne" (TM) flat rate service, which includes:
o "One Number-Follow Me"- Provides for call transfers of up to
four telephone numbers.
o "EagleAttendant" (TM) - Autoattendant greeting with a custom
recorded business greeting.
o "EagleAnnounce" (TM) - Screens incoming calls, when the caller
announces his or her name, the customer can take important
calls and send others to Voice Mail.
o "EagleMail" (TM) - Voice mail, callers have the option to
leave a detailed message of up to five minutes in length.
Calls are automatically deleted after 30 days.
o "EagleMessage" (TM) - EagleMail messages are delivered within
minutes. Messages are re-delivered until the customer is
found. The customer specifies how often and how many times
deliveries are attempted.
o "EagleWeb" (TM) - The customer can set up and make changes to
transfer numbers, message delivery parameters, and the like
using the Internet, or from a cellphone. Audio messages can be
delivered to the customer's email address and heard on a
multimedia computer.
o "EagleFax" (TM) - Stores and forwards faxes to any fax
machine. EagleFax notifies the customer when a fax is
received.
This suite of products and services provide a universal local number
that connects the business professional, wherever he or she is working, to
important calls and messages through telephone interfaces for a per line flat
fee per month. The customer receives:
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o Local access using one telephone number
o Call forwarding of up to four numbers
o Integrated voice mail system
o Call announcement
o Efficient call management
o Internet management and message delivery
In addition, customer accounts may include customized solutions such as
fax on demand or the "EagleDirectory" (TM). After the autoattendant answers with
the customized company greeting, EagleDirectory gives a directory of extensions
formatted in the method that works best for the customer.
Eagletech has developed a proprietary switching capability that
provides an ongoing cost advantage to the provision of its services. The
Company's enhanced switching device increases significantly the capacity of that
switching device. This proprietary technology is the basis for the Company's
patent application, for which the United States Patent and Trademark Office has
issued a Notice of Allowance.
All other communications service providers utilize switches which have
at minimum two lines bound together, the incoming and the outgoing, for the
duration of a typical seven minute business call. For a standard T-1 switch, 24
simultaneous conversations are possible. During peak use, this limits all other
communications providers to 300 subscribers per T-1 switch. The Eagletech
proprietary solution increases the density for the same T-1 switch from 300 to
1500 to 2000 subscribers during peak use. Eagletech has filed a patent
application with the United States Patent and Trademark Office for this
proprietary solution and will pursue foreign patent protection for critical
markets.
MARKET STRATEGY
There are two distinct markets for Eagletech's products. The first is
integration of the Company's services into a customer's existing PBX system.
Here the solution is customized to the needs of the customer with multiple
employees. The Company has targeted the real estate brokerage market for the
first implementation of these customized solutions, where it is absolutely
critical for a broker to be reached by a client. The customized solution will
provide for not only "One Number-Follow Me" service but also other features
appropriate for this class of customers such as "Talking Signs", "Talking Ads",
fax-back information and the ability to capture Caller ID information from home
buyers who respond to a Talking Sign or Talking Ad. The first two real estate
systems are operational.
These two demonstration sites will allow the Company to roll out this
product to other real estate brokerage firms as well as other corporate markets
such as healthcare, financial services and the building industry, which
typically deploy personnel off-premises.
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Further, these two demonstration sites will be helpful in marketing and selling
the EagleOne (TM) Enhanced Service Bureau (TM) product.
The second market is a service bureau designed for business
professionals who are not part of a larger organization which provides these
critical communications services. Using local points of access, Eagletech will
provide individuals with the full range of its services in given geographic
areas. In the April 2000, Eagletech expects to begin the national roll-out of
its service bureaus in Dade and Broward Counties of Florida.
The EagleOne (TM) service bureau products provide a universal local
number which connects the business professional, wherever he or she is working,
to important calls and messages through telephone interfaces. There no longer is
a need for a pager since the business professional will have the call forwarded
to wherever that professional is, have the call announced and then the
professional will decide whether to take it or have it forwarded to voice mail.
Eagletech has built one local switch to provide this service in Dade
and Broward Counties in Florida and is currently testing this installation. The
service bureau will be offered through independent cellular telephone dealers in
each of these two counties. For each customer who decides to use the service,
the dealer will receive a commission together with a residual income from the
monthly revenue stream generated by the customer.
The experience in Dade and Broward Counties together with the
experience at corporate accounts will be instrumental in obtaining a strategic
partner for the EagleOne (TM) Enhanced Service Bureau (TM) product. This
strategic partner could be a retail chain that sells a significant amount of
telecommunications equipment or a partner capable of bundling this product with
their own telecommunications products. Alternatively, Eagletech can contract
with independent sales representatives on a commission only basis to market and
sell the EagleOne (TM) Enhanced Service Bureau (TM) product to independent
cellular telephone dealers. In either event, Eagletech together with its
strategic partner or independent sales force will roll-out EagleOne (TM) to the
major metropolitan regions of the country, starting from its south Florida base.
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COMPETITION
Eagletech competes with a variety of companies that provide some type
of unifying message services. There are a number of turnkey voice mail systems
available on the market, the majority featuring expensive, high density
equipment focused on larger businesses. There are also several excellent
software products on the market but require programming experience and are aimed
at developers and not end user solutions.
The Company's competitors include voice mail service bureaus, which are
typically paging companies that offers basic voice mail/pager notification
mailboxes at bargain prices but without advanced features. AT&T, MCI and
MCI-WorldCom offer "One Number- Follow Me" service bureaus, but they require the
caller to enter a PIN number and are sold as measured rate service -- $0.27
peak, to $0.15 off peak per minute. Inexpensive local flat rate service is not
available.
Two communication provider companies offer competing products in this
unifying message category. The first is Wildfire Communications, which develops
and markets the Wildfire Electronic Assistant, which uses speech recognition to
manage telephone, fax and email communications. Wildfire mimics a personal
assistant, taking messages and telephone numbers if users are unable to
personally answer. Wildfire can follow spoken instructions and also make and
take calls. As the service is used increasingly, Wildfire develops and adapts to
a user's personal requirements, building up a personal list of names and
numbers. Wildfire can store up to 150 personal contacts. Wildfire will
automatically call one of the stored numbers when instructed by the user.
Wildfire requires a great deal of computing power and therefore is very
expensive. Monthly charges normally exceed $300. Further, a headset is necessary
for clarity in speech recognition. This product has been marketed for over two
years but has received minimal market acceptance.
Linx Communications is a national communications service provider
offering businesses and consumers local and toll-free access to a suite of
communications products and services through the telephone or Internet. Linx
offers customizable unified communication services that allow individuals to
connect to important callers and gives them access to messages with one local or
toll free phone number or Internet connection. Linx provides a single point of
access, through the telephone or the Internet, for all voice messages, faxes and
email. When a caller dials a user's LinxConnect number the system rings up to
three user-specified numbers simultaneously and announces the caller. The user
can choose to take the call, send it to voice mail, or transfer the call to a
colleague. For faxes, users can send an incoming fax to specified machines or
hold it in queue for printing later.
Linx, through a partnership with Focal Communications of Chicago, is
co-locating its switching equipment in Focal facilities across the United
States. LinxConnect is currently available in Boston, New York, San Francisco,
Los Angeles and Washington, D.C. Linx expects to expand service to 14 additional
cities in 1999 including Atlanta, Chicago and Dallas. The basic charge for
LinxConnect, the equivalent "One Number
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Follow-Me " service of EagleOne, is $ 24.95 a month plus a set-up fee of $
24.95. In addition there is a measured meter rate charge of $ .15 per minute for
long distance calls. Through the first year of marketing, the average bill was $
50 to $ 75 per month. In 1998, Linx had 2500 subscribers, $1 million in revenues
and lost $1 million. In 1999, Linx grew its subscriber base to 5,000
subscribers.
There are important differences between the EagleOne (TM) and
LinxConnect. LinxConnect rings three numbers simultaneously while EagleOne rings
them in sequence. The LinxConnect configuration requires the use of multiple
lines at once, thereby limiting the number of subscribers possible per switch to
less than the 300 possible if only two lines are being used. EagleOne's (TM)
proprietary switching configuration permits at least 1500 subscribers per
switch, thereby insuring a substantial cost advantage to Eagletech in providing
these unifying message services. Further, the LinxConnect service includes a
measured meter rate component for long distance calls, which may result in the
user paying more per minute than under his or her current long distance
provider. The Company anticipates that EagleOne (TM) will be profitable without
the need for additional margin from the measured meter rate service.
The Company has 4 full time and 1 part time employees and operates one
facility at 305 South Andrews Avenue, Fort Lauderdale, Florida used as the
principal corporate office and the site of its initial service bureau.
CORPORATE INFORMATION
The Company has significant capital needs, which to date the Company
has met through private sales of its equity and loans. The Company will continue
to need substantial infusions of capital, which it expects to continue to fund
primarily from private sales of its equity and loans, or by a public offering of
its equity or debt securities. The Company has no definitive plans for any
transaction at this time.
Item 3. Description of Property
The Company leases one facility located at 305 South Andrews Avenue,
Fort Lauderdale, Florida as an office and service bureau facility. The facility
contains approximately 1,000 square feet total, of which 900 square feet are
used for office space and 100 square feet are used to house equipment. The lease
on this facility expires June 30, 2004 and the annual lease payments are $30,000
for the entire facility.
Item 4. Security Ownership of Certain Beneficial Owners and Management
(a) Security Ownership of Certain Beneficial Owners.
The following table sets forth the beneficial ownership for the
Company's sole class of Common Stock of the Company beneficially owned by all
directors, officers and 5% or more holders.
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<PAGE> 18
Name and
Address of Nature of
Beneficial Beneficial Number of
Owner Ownership Shares Percent
- ------------------------- --------------------- --------- -------
Robert J. Dobbs (1) Record 100,000 1.0%
Rodney E. Young (1) (2) Record and Beneficial 2,775,001 29.0%
Robert A. Bergman (1) Record 25,000 0.3%
James Payne (1) (3) Record and Beneficial 2,575,001 26.5%
Thomas Kessler (1) (4) Record and Beneficial 666,668 6.9%
Kenneth L. Payne (1) (4) Record and Beneficial 200,000 2.1%
Christopher P. Flannery (1) Record and Beneficial 0 0.0%
(1) Address c/o the Company at 305 South Andrews Avenue, Fort Lauderdale,
Florida.
(2) Mr. Young's total includes 853,330 shares owned by members of his
immediate family as to which he disclaims beneficial ownership.
(3) Mr. James Payne's total includes 536,300 shares owned by members of his
immediate family as to which he disclaims beneficial ownership.
(4) Mr. Kessler is Managing Director of Lloyds Bahamas Securities, Inc.,
which holds 666,668 shares as to which he disclaims beneficial
ownership.
(5) Mr. Kenneth Payne's holdings include 100,000 shares owned by members of
his immediate family as to which he disclaims beneficial ownership.
Item 5. Directors, Executive Officers, Promoters and Control Persons.
The directors and officers of the Company are as follows:
Name Age Position
- ---- --- --------
Robert J. Dobbs 40 President, Chairman of the
Board and Director
Rodney E. Young 48 Vice President of Technology and Director
Robert A. Bergman 49 Vice President- Sales and Marketing
Thomas Kessler 57 Director
Kenneth L. Payne 40 Director
Christopher P. Flannery 43 Director
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ROBERT J. DOBBS. Mr. Dobbs became President and Chairman of the Board of
Eagletech in April, 1999. Mr. Dobbs has been owner and President of ATNEX
Business Solutions, Inc., Fort Lauderdale, Florida since 1997. In this capacity,
Mr. Dobbs has been responsible for all operations of a regional management
consulting firm specializing in providing corporate re-engineering and business
solutions to small and middle market size companies (Sales-$5MM-$50MM)
headquartered in the Gold Coast Region of Florida. In this role, Mr. Dobbs
served as interim chief operating officer for several small and medium size
companies providing day to day management of all corporate operations and
financial/reporting accountability to the company's shareholders. Mr. Dobbs was
responsible for increased corporate profits, reduction of overhead and
improvement in company's Dun & Bradstreet credit rating.
From 1995 to 1997, he served as Vice President , First Union National
Bank, Fort Lauderdale, Florida where he was responsible for corporate revenue
generation through the distribution of commercial credit, capital markets
solutions and comprehensive cash management platforms to senior-level executives
and managers of small and middle market size companies located in the South
Florida Region.
From 1986 to 1995, Mr. Dobbs served as Senior Vice President, SunTrust
Bank, Washington, DC. He is a graduate of The American University Kogod School
of Business. During his military career, while in the United States Army, Mr.
Dobbs served on the Presidential Honor Guard.
RODNEY E. YOUNG. Mr. Young is a founder of the Company and has been engaged in
developing the Company's technology since 1996. Mr. Young has had a successful
career in computers, systems integration, local area networking, computer
telephony, construction and real estate development and management. His varied
experience includes a full range of general business disciplines: marketing,
promotion, sales, planning, product design, production, personnel, finance, and
accounting. He has special expertise in developing product concepts, marketing
research, Pro-forma analysis, written and oral communications.
From 1989-1996, Mr. Young was owner and president of Eagle/Century
Development Corp., Fort Lauderdale, Florida. There he developed the EagleOne
(TM) Enhanced Service Bureau (TM) turnkey Interactive Voice Response System (TM)
featuring: One Number-Follow Me, Voice Mail, Fax Mail, Fax-on-Demand, Audiotext
system for small business. From 1991-1996, Mr. Young was a real estate
development consultant and certified expert witness. From 1988-1991, he served
as Executive Vice President of Adult Management Corporation, Deerfield Beach,
Florida, where he developed a 250 unit adult congregate living facility.
THOMAS R. KESSLER. Thomas Kessler has served since 1994 as a Director of the
Montaque Securities International Limited, Nassau, The Bahamas. Previously he
was General Manager of the Euro Canadian Bank, Nassau, The Bahamas. From 1975 to
1982, he served as Vice President/Manager: European Division of the Continental
Bank International in New York.
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<PAGE> 20
Mr. Kessler is a graduate of Kent State University (B.S. and M.A.) and
the Cleveland Marshall College of Law ( J.D. ).
KENNETH L. PAYNE. Kenneth L. Payne is a member of the board of directors of
Different Strokes Golf Centers, Inc. which owns and manages a number of
brand-name, public, family oriented golf centers in the Southeast. In addition
Mr. Payne also serves as Vice President and General Manager for Main Street
Realty Inc., a real estate development company. He has been with the firm since
1989 and been responsible for various residential and commercial real estate
developments. Prior to that, Mr. Payne was Director of Tax for Humana, Inc., a
fortune 500 health care company, where he was responsible for tax research and
planning. From 1981 to 1988, Mr. Payne was a tax manager with the international
accounting firm of Coopers & Lybrand. Before joining Coopers & Lybrand, Mr.
Payne served as controller for a local real estate development company.
Mr. Payne is a licensed Certified Public Accountant (CPA) and is a
member of the American Institute of Certified Public Accountants, the Kentucky
Society of CPAs, where he has also served as a member of the Federal Taxation
Committee, and the Tax division of the AICPA. Mr. Payne is a graduate of the
University of Louisville and is a native of Louisville.
CHRISTOPHER P. FLANNERY Christopher P. Flannery has practiced corporate and
business law, with an emphasis on securities, since 1984, first in New York and
now in Philadelphia. Mr. Flannery is an attorney with Astor, Weiss, Kaplan &
Rosenblum, LLP in Center City Philadelphia. He deals mainly with start-up and
development stage companies, assisting clients in corporate formation,
financings, mergers and acquisitions, private and public offerings, reverse
mergers, exchange listings and continuing compliance with securities laws and
regulations. Mr. Flannery's clients include companies in the financial,
insurance, manufacturing, computer software and hardware, electronics, building
materials, pharmaceutical, internet retailing, entertainment and sports
equipment industries, among others.
Mr. Flannery graduated from the Cornell Law School in 1981. In 1978,
Mr. Flannery received his B.A., magna cum laude, from LeMoyne College in
Syracuse, New York majoring in History and French, with minors in Political
Science and Philosophy.
Mr. Flannery has written for Philadelphia Enterpriser Magazine and
Mergers & Acquisitions. Mr. Flannery has been a principal speaker in numerous
programs for the profession and for entrepreneurs on corporate finance and
securities issues.
ROBERT A. BERGMAN. Mr. Bergman became the Company's Vice President of Sales and
Marketing in June, 1999. Mr. Bergman has been actively involved with sales and
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<PAGE> 21
marketing for major investment banking firms, as well as marketing benefit
enhancement products in the managed care and insurance marketplace. His
background includes experience in employee benefits, estate planning and
insurance sales. Since 1994, he has been a self-employed sales and marketing
consultant in the insurance, energy and technology fields.
Mr. Bergman has a B.A. in Business Administration from Temple
University and pursued graduate studies at the Wharton School of Business. He is
actively involved within his community and serves as a Board Member of
Associated Day Care Services.
The above listed directors will serve until the next annual meeting of
the stockholders or until their death, resignation, retirement, removal, or
disqualification, and until their successors have been duly elected and
qualified. Our executive officers serve at the discretion of the Board of
Directors. Vacancies in the existing Board of Directors are filled by majority
vote of the remaining Directors. Officers of the Company serve at the will of
the Board of Directors. There are no agreements or understandings for any
officer or director to resign at the request of another person and no officer or
director is acting on behalf of or will act at the direction of any other
person. There is no family relationship between any executive officer or
director of the Company.
Board Committees. The Board of Directors has not yet established any committees.
The Board intends to establish a Compensation Committee and an Audit Committee
at the next meeting of the Board of Directors.
Compensation Committee Interlocks And Insider Participation. The Board has not
yet established a Compensation Committee. The Board of Directors as a whole
performs this function.
Director Compensation. Eagletech's directors do not receive any cash or other
compensation for their service as members of the Board of Directors, although
they are reimbursed for travel and lodging expenses in connection with
attendance at Board meetings.
Item 6. Executive Compensation.
Executive Compensation. The following table sets forth the compensation received
for services rendered to the Company during the fiscal year ended March 31, 1999
by our former Chief Executive Officer. The Company had no officers who earned
more than $100,000 during the fiscal year ended March 31, 1999.
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SUMMARY COMPENSATION TABLE
Annual Compensation
Name And Principal Salary($) Bonus($) Other Annual Long-Term All Other
Position Compensation Compensation Compensation Awards
- ------------------ ------------------- ------------ ------------ ---------
Rodney E. Young $45,000 $ 0 None None None
On June 15, 1999, Robert J. Dobbs, Jr. became Chairman of the Board,
President and Chief Executive Officer of the Company. Mr. Dobbs was issued
100,000 shares of common stock as part of his employment agreement. On an annual
basis, Mr. Dobbs' initial salary would have been $75,000. On September 25, 1999,
the Board approved an employment agreement with Mr. Dobbs whereby Mr. Dobbs will
receive an annual salary of $110,000, with a bonus only if granted by the Board
of Directors.
The Company did not pay to our Chief Executive Officer or any executive
officer any compensation intended to serve as incentive for performance to occur
over a period longer than one year pursuant to a long-term incentive plan in the
fiscal year ended March 31, 1999. The Company does not have any defined benefit
or actuarial plan with respect to our Chief Executive Officer or any executive
officer under which benefits are determined primarily by final compensation and
years of service.
Option Grants
The Company did not issue any stock options to its Chief Executive
Officer or any executive officer in the fiscal year ended March 31, 1999.
Members of the Company's management are associated with other firms
involved in a range of business activities. Consequently, there are potential
inherent conflicts of interest in their acting as officers and directors of the
Company. Insofar as the officers and directors are engaged in other business
activities, management anticipates it will devote only a minor amount of time to
the Company's affairs.
The officers and directors of the Company are now, and may in the
future become, stockholders, officers or directors of other companies that may
be engaged in business activities similar to those conducted by the Company.
Accordingly, additional direct conflicts of interest may arise in the future
with respect to such individuals acting on behalf of the Company or other
entities. Moreover, additional conflicts of interest may arise with respect to
opportunities which come to the attention of such individuals in the performance
of their duties or otherwise. The Company does not currently have a right of
first refusal pertaining to opportunities that come to management's attention
insofar as such opportunities may relate to the Company's proposed business
operations.
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None of the Company's directors receives any compensation for their
respective services rendered to the Company as directors, nor have they received
such compensation in the past. They all have agreed to act without compensation
until authorized by the Board of Directors. Further, none of the directors is
accruing any compensation under any agreement with the Company.
Item 7. Certain Relationships and Related Transactions.
There have been no related party transactions or any other transactions
or relationships required to be disclosed pursuant to Item 404 of Regulation
S-B.
Item 8. Description of Securities.
The Company's authorized capital stock consists of 100,000,000 shares,
par value $.0001 per share. There are 9,950,240 shares of Common Stock issued
and outstanding as of the date of this filing. All shares of Common Stock have
equal voting rights and, when validly issued and outstanding, are entitled to
one vote per share in all matters to be voted upon by stockholders. The shares
of Common Stock have no preemptive, subscription, conversion or redemption
rights and may be issued only as fully-paid and non-assessable shares.
Cumulative voting in the election of directors is not permitted, which means
that the holders of a majority of the issued and outstanding shares of Common
Stock represented at any meeting at which a quorum is present will be able to
elect the entire Board of Directors if they so choose and, in such event, the
holders of the remaining shares of Common Stock will not be able to elect any
directors. In the event of liquidation of the Company, each stockholder is
entitled to receive a proportionate share of the Company's assets available for
distribution to stockholders after the payment of liabilities and after
distribution in full of preferential amounts, if any. All shares of the
Company's Common Stock issued and outstanding are fully paid and nonassessable.
Holders of the Common Stock are entitled to share pro rata in dividends and
distributions with respect to the Common Stock, as may be declared by the Board
of Directors out of funds legally available therefor.
PART II
Item 1. Market Price for Common Equity and Related Stockholder Matters.
Price quotations for the Company's Common Stock are posted presently on
the OTC Bulletin Board and have been since February, 1999. As soon as the
Company becomes eligible, the Company intends to request a listing for the
Common Stock on the NASDAQ SmallCap Market (TM). This listing requires certain
asset, earnings and per share price standards that the Company does not now
meet. The Company can give no assurance that it will meet these standards in the
foreseeable future, it at all.
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(a) Market Price.
Since February 23, 1999, market makers have been able to post price
quotations for the Company's Common Stock on the Over the Counter Bulletin
Board. The historical prices for the Company's Common Stock on the OTC Bulletin
Board are as follows (calendar quarters):
High Low
---- ---
First Quarter 1999 (Beginning 2/23/1999) $ 4.50 $2.25
Second Quarter 1999 $12.75 $1.50
Third Quarter 1999 $ 8.81 $5.50
Fourth Quarter 1999 $ 8.00 $5.00
First Quarter 2000 (Until 2/14/2000) $10.75 $4.8125
The Securities and Exchange Commission adopted Rule 15g-9, which
established the definition of a "penny stock," for purposes relevant to the
Company, as any equity security that has a market price of less than $5.00 per
share or with an exercise price of less than $5.00 per share, subject to certain
exceptions. For any transaction involving a penny stock, unless exempt, the
rules require: (i) that a broker or dealer approve a person's account for
transactions in penny stocks; and (ii) the broker or dealer receive from the
investor a written agreement to the transaction, setting forth the identity and
quantity of the penny stock to be purchased. In order to approve a person's
account for transactions in penny stocks, the broker or dealer must (i) obtain
financial information and investment experience and objectives of the person;
and (ii) make a reasonable determination that the transactions in penny stocks
are suitable for that person and that person has sufficient knowledge and
experience in financial matters to be capable of evaluating the risks of
transactions in penny stocks. The broker or dealer must also deliver, prior to
any transaction in a penny stock, a disclosure schedule prepared by the
Commission relating to the penny stock market, which, in highlight form, (i)
sets forth the basis on which the broker or dealer made the suitability
determination; and (ii) that the broker or dealer received a signed, written
agreement from the investor prior to the transaction. Disclosure also has to be
made about the risks of investing in penny stock in both public offering and in
secondary trading, and about commissions payable to both the broker-dealer and
the registered representative, current quotations for the securities and the
rights and remedies available to an investor in cases of fraud in penny stock
transactions. Finally, monthly statements have to be sent disclosing recent
price information for the penny stock held in the account and information on the
limited market in penny stocks.
For the initial listing in the NASDAQ SmallCap Market(TM), a company
must have net tangible assets of $4 million or market capitalization of $50
million or a net income (in the latest fiscal year or two of the last fiscal
years) of $750,000, a public float of 1,000,000 shares with a market value of $5
million. The minimum bid price must be $4.00 and there must be three market
makers. In addition, there must be 300 stockholders
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holding 100 shares or more, and the company must have an operating history of at
least one year or a market capitalization of $50 million. For continued listing
in the NASDAQ SmallCap Market(TM), a company must have net tangible assets of $2
million or market capitalization of $35 million or a net income (in the latest
fiscal year or two of the last fiscal years) of $500,000, a public float of
500,000 shares with a market value of $1 million. The minimum bid price must be
$1.00 and there must be two market makers. In addition, there must be 300
stockholders holding 100 shares or more. The Company can give no assurances that
it will qualify its securities for listing on NASDAQ or some other national
exchange, or be able to maintain the maintenance criteria necessary to insure
continued listing. The failure of the Company to qualify its securities or to
meet the relevant maintenance criteria after such qualification in the future
may result in the discontinuance of the inclusion of the Company's securities on
a national exchange. In such events, trading, if any, in the Company's
securities may then continue in the non-NASDAQ over-the-counter market. As a
result, a stockholder may find it more difficult to dispose of, or to obtain
accurate quotations as to the market value of, the Company's securities.
(b) Holders. There are approximately 200 holders of the Company's Common Stock.
All share numbers are adjusted for a 1 for 10 reverse stock split effective
April 1, 1999 and a 1 for 3 reverse stock split effective June 9, 1999. During
1998, the Company did not issue any Common Stock. In 1999, the Company issued
9,209,059 shares to investors for cash, in exchange for services or assets or to
retire debt. In January 2000, the Company issued a total of 204,999 shares as
compensation to consultants in private transactions. All of the issued and
outstanding shares of the Company's Common Stock were issued in accordance with
exemptions from registration afforded by Sections 3(b) or 4(2) of the Securities
Act of 1933, as amended (the "Securities Act"). As of the date of this
registration statement, 3,853,342 shares of the Company's Common Stock held by
non-affiliates are eligible for sale, including 520,018 shares eligible under
Rule 144 promulgated under the Securities Act of 1933, as amended, subject to
certain limitations included in such Rule. In general, under Rule 144, a person
(or persons whose shares are aggregated), who has satisfied a one year holding
period, under certain circumstances, may sell within any three-month period a
number of shares which does not exceed the greater of one percent of the then
outstanding Common Stock or the average weekly trading volume during the four
calendar weeks prior to such sale. Rule 144 also permits, under certain
circumstances, the sale of shares without any quantity limitation by a person
who has satisfied a two-year holding period and who is not, and has not been for
the preceding three months, an affiliate of the Company.
Dividends. The Company has not paid any dividends to date, and has no plans to
do so in the immediate future.
Item 2. Legal Proceedings.
There is no litigation pending or threatened by or against the Company.
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Item 3. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure. The Company has changed accountants since its formation;
but there were no disagreements with the findings of the Company's former
accountants.
Item 4. Recent Sales of Unregistered Securities.
(a) Securities sold. The Company sold and issued its securities during the three
year period preceding the date of this registration statement in a series of
private transactions or exempt offerings of securities; as follows:
All share numbers are adjusted for a 1 for 10 reverse stock split
effective April 1, 1999 and a 1 for 3 reverse stock split effective June 9,
1999. In March, 1999, prior to the acquisition by the Company of Eagletech
Communications, Inc., a Florida corporation ("Eagletech-Florida"), the Company
issued 520,018 shares to the stockholders of 21ST Century Frontier Group, Inc.
("21st Century") in exchange for their shares of 21st Century in a transaction
designed to change the Company's state of incorporation to Nevada from Florida.
On April 1, 1999, the Company acquired Eagletech-Florida in exchange for
5,000,000 shares of common stock in a private transaction, of which 4,882,401
were issued to the principals of Eagletech-Florida and 117,599 were issued to
debtholders of Eagletech-Florida. On April 5, 1999, in order to raise additional
capital, the Company issued 3,333,333 shares to investors in an offering exempt
under Rule 504 of Regulation D. On May 5, 1999, the Company issued 675,002 to
officers of the Company as compensation in a private transaction, and an
additional 150,000 shares were issued as compensation to consultants. On May 26,
1999, Eagletech approved a 1-for-3 reverse stock split, effective June 9, 1999.
On June 1, 1999, the Company issued 667 shares to certain vendors in settlement
of certain debts in private transactions. In January 2000, the Company issued a
total of 204,999 shares as compensation to consultants in private transactions.
Certain of the shares of Common Stock of the Company were sold and
issued on various dates, described above, for investment purposes in "private
transactions" and are "restricted" shares as defined in Rule 144 under the
Securities Act of 1933, as amended. These shares may not be offered for public
sale except under Rule 144, or otherwise, pursuant to said Act. In summary, Rule
144 applies to affiliates (that is, control persons) and nonaffiliates when they
resell restricted securities (those purchased from the issuer or an affiliate of
the issuer in nonpublic transactions). Nonaffiliates reselling restricted
securities, as well as affiliates selling restricted or nonrestricted
securities, are not considered to be engaged in a distribution and, therefore,
are not deemed to be underwriters as defined in Section 2(11) of the Securities
Act of 1933, as amended, if six conditions are met:
(1) Current public information must be available about the issuer unless
sales are limited to those made by non-affiliates after two years.
(2) When restricted securities are sold, generally there must be a one-year
holding period.
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(3) When either restricted or nonrestricted securities are sold by an
affiliate after one year, there are limitations on the amount of
securities that may be sold; when restricted securities are sold by
non-affiliates between the first and second years, there are identical
limitations; after two years, there are no volume limitations for
resales by non-affiliates.
(4) Except for sales of restricted securities made by non-affiliates after
two years, all sales must be made in brokers' transactions as defined
in Section 4(4) of the Securities Act of 1933, as amended, or a
transaction directly with a "market maker" as that term is defined in
Section 3(a)(38) of the 1934 Act.
(5) Except for sales of restricted securities made by non-affiliates after
two years, a notice of proposed sale must be filed for all sales in
excess of 500 shares or with an aggregate sales price in excess of
$10,000.
(6) There must be a bona fide intention to sell within a reasonable time
after the filing of the notice referred to in (5) above.
(b) Underwriters and other purchasers. There were no underwriters in the sale
and issuance of any of the Company's securities. All of the purchasers of Common
Stock from the Company have had a pre-existing personal or business relationship
with the Company or its officers and directors.
Consideration.
The Company sold certain shares of stock for cash and others were issued either
for services rendered to the Company, for the assets of Eagletech-Florida or to
settle outstanding debts of the Company or its predecessor. The Company sold
shares in 1999 at various prices, ranging from $0.10 to $4.00. Other shares were
issued for services rendered or to settle debt of the Company.
(d) Exemptions from Registration Relied Upon.
The sale and issuance of the shares of stock were exempt from registration under
the Securities Act of 1933, as amended, by virtue of either section 3(b) or 4(2)
and, in certain cases, Regulation D promulgated thereunder. Purchasers in
transactions exempt under Section 4(2) and Rule 506 purchased shares from the
Company for investment and not with a view to distribution to the public. The
Company sold 3,333,334 shares under Rule 504 of Regulation D that are not
subject to restrictions on resale.
Item 5. Indemnification of Directors and Officers.
Except for acts or omissions which involve intentional misconduct, fraud or
known violation of law or for the payment of dividends in violation of the
Nevada Revised Statutes, there shall be no personal liability of a director or
officer to the Company, or its stockholders for damages for breach of fiduciary
duty as a director or officer. The Company may indemnify any person for expenses
incurred, including attorneys fees, in connection with their good faith acts if
they reasonably believe such acts are in and not
25
<PAGE> 28
opposed to the best interests of the Company and for acts for which the person
had no reason to believe his or her conduct was unlawful. The Company may
indemnify the officers and directors for expenses incurred in defending a civil
or criminal action, suit or proceeding as they are incurred in advance of the
final disposition of the action, suit or proceeding, upon receipt of an
undertaking by or on behalf of the director or officer to repay the amount of
such expenses if it is ultimately determined by a court of competent
jurisdiction in which the action or suit is brought determined that such person
is fairly and reasonably entitled to indemnification for such expenses which the
court deems proper. Insofar as indemnification for liabilities arising under the
1933 Act may be permitted to officers, directors or persons controlling the
Company pursuant to the foregoing, the Company has been informed that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act of 1933, as amended,
and is therefore unenforceable.
PART F/S
Financial Statements. The following financial statements are attached to this
report and filed as a part thereof.
26
<PAGE> 29
EAGLETECH COMMUNICATIONS, INC.,
FORMERLY
GOLDPLATE HOLDINGS ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
AND
REPORT OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
<PAGE> 30
EAGLETECH COMMUNICATIONS, INC.,
FORMERLY GOLDPLATE HOLDINGS ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
TABLE OF CONTENTS
Page
----
Report of Independent Certified Public Accountants 1
Balance Sheets 2
Statements of Operations 3
Statements of Stockholders' Equity (Deficit) 4
Statements of Cash Flows 5
Notes to the Financial Statements 7
<PAGE> 31
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors
Eagletech Communications, Inc.,
formerly Goldplate Holdings Enterprises, Inc.
We have audited the accompanying balance sheet of Eagletech Communications,
Inc., formerly Goldplate Holdings Enterprises, Inc., (a development stage
company), as of March 31, 1999, and the related statements of operations and
stockholders' equity (deficit) and cash flows for the years ended March 31, 1999
and 1998, and for the period December 20, 1996 (inception) to March 31, 1999.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Eagletech Communications, Inc.,
formerly Goldplate Holdings Enterprises, Inc., (a development stage company) as
of March 31, 1999, and the results of its operations and its cash flows for the
years ended March 31, 1999 and 1998, and for the period December 20, 1996
(inception) to March 31, 1999, in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that the
company will continue as a going concern. As discussed in Note 3 to the
financial statements, the company has suffered losses from operations and has a
net capital deficiency that raise substantial doubt about its ability to
continue as a going concern. Management's plans in regard to these matters are
also described in Note 3. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
SWEENEY GATES & CO.
Fort Lauderdale, Florida
September 28, 1999
<PAGE> 32
EAGLETECH COMMUNICATIONS, INC.
FORMERLY GOLDPLATE HOLDINGS ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
December 31, March 31,
1999 1999
----------- ---------
(unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 145,638 $ -
----------- ---------
Total current assets 145,638 -
----------- ---------
Property and equipment, net 182,812 -
Other assets 7,682 -
----------- ---------
$ 336,132 $ -
=========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable and accrued expenses $ 199,936 $ 47,258
Related party notes 33,902 88,127
Judgments payable 24,638 68,196
Convertible debt - 88,200
----------- ---------
Total current liabilities 258,476 291,781
----------- ---------
Stockholders' equity (deficit)
Common stock, $.0001 par value, 100,000,000 shares
authorized; 9,745,241 and 4,882,401 shares issued and outstanding 975 488
Additional paid-in capital 9,387,416 (486)
Deficit accumulated during the development stage (9,310,735) (291,783)
----------- ---------
Stockholders' equity (deficit) 77,656 (291,781)
----------- ---------
$ 336,132 $ -
=========== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 2
<PAGE> 33
EAGLETECH COMMUNICATIONS, INC.
FORMERLY GOLDPLATE HOLDINGS ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
December 20, 1996
Nine months ended December 31, (inception)
1999 1998 to December 31, 1999
----------- -------- --------------------
(unaudited) (unaudited)
<S> <C> <C> <C>
Sales $ - $ - $ -
Operating expenses:
Public relations 575,000 - 575,000
Investment banking fees 1,150,000 - 1,150,000
Compensation 6,281,893 - 6,281,893
Start up 204,000 - 204,000
Consulting fees 248,531 - 248,531
Research and development - 5,374 65,868
Selling, general, and administrative 594,608 7,717 770,061
----------- -------- -----------
Total operating expenses 9,054,032 13,091 9,295,353
----------- -------- -----------
Loss from operations (9,054,032) (13,091) (9,295,353)
----------- -------- -----------
Other income (expense):
Interest expense (6,281) (12,852) (33,781)
Interest income 8,885 8,885
Gain on settlement of judgments 32,476 32,476
Loss on disposal of property and equipment - (22,962) (22,962)
----------- -------- -----------
Total other income (expense) 35,080 (35,814) (15,382)
----------- -------- -----------
Net loss $(9,018,952) $(48,905) $(9,310,735)
=========== ======== ===========
Loss per share, basic and diluted $ (1.41) $ (0.01)
=========== ========
Weighted average shares outstanding 6,411,928 4,882,401
=========== =========
</TABLE>
<TABLE>
<CAPTION>
December 20, 1996
Year ended Year ended (inception)
March 31, 1999 March 31, 1998 to March 31, 1999
-------------- -------------- -----------------
<S> <C> <C> <C>
Sales $ - $ - $ -
Operating expenses:
Public relations - - -
Investment banking fees - - -
Compensation - - -
Start up - - -
Consulting fees - - -
Research and development 7,165 58,703 65,868
Selling, general, and administrative 10,218 67,225 175,453
-------- --------- ---------
Total operating expenses 17,383 125,928 241,321
-------- --------- ---------
Loss from operations (17,383) (125,928) (241,321)
-------- --------- ---------
Other income (expense):
Interest expense (17,136) (10,364) (27,500)
Interest income
Gain on settlement of judgments
Loss on disposal of property and equipment (22,962) - (22,962)
-------- --------- ---------
Total other income (expense) (40,098) (10,364) (50,462)
-------- --------- ---------
Net loss $(57,481) $(136,292) $(291,783)
======== ========= =========
Loss per share, basic and diluted $ (0.01) $ (0.03)
======== =========
Weighted average shares outstanding 4,882,401 4,882,401
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 3
<PAGE> 34
EAGLETECH COMMUNICATIONS, INC.
FORMERLY GOLDPLATE HOLDINGS ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CHANGES TO STOCKHOLDERS' DEFICIT
<TABLE>
<CAPTION>
Deficit
accumulated
Additional during the
Common stock paid-in development
Shares Amount capital stage Total
------ ------ ------- ----- -----
<S> <C> <C> <C> <C> <C>
Issuance of stock,
December 20, 1996 4,882,401 $488 $ (486) $ $ 2
--------- ---- ---------- ----------- -----------
Balance, December 31, 1996 4,882,401 488 (486) - 2
Net loss for year ended
March 31, 1997 - - - (98,010) (98,010)
--------- ---- ---------- ----------- -----------
Balance, March 31, 1997 4,882,401 488 (486) (98,010) (98,008)
Net loss for year ended
March 31, 1998 (136,292) (136,292)
--------- ---- ---------- ----------- -----------
Balance, March 31, 1998 4,882,401 488 (486) (234,302) (234,300)
Net loss for year ended
March 31, 1999 (57,481) (57,481)
--------- ---- ---------- ----------- -----------
Balance, March 31, 1999 4,882,401 488 (486) (291,783) (291,781)
Recapitalization 520,018 52 106 158
Offering of stock to investors 3,333,333 333 1,260,667 1,261,000
Issuance of stock for compensation 735,002 74 6,281,819 6,281,893
Issuance of stock for services 150,000 15 1,724,985 1,725,000
Bonds converted to common stock 117,599 12 100,326 100,338
Issuance of stock for settlement
of GHE liabilities 6,888 1 19,999 20,000
Net loss for the nine months ended
December 31, 1999 (unaudited) (9,018,952) (9,018,952)
--------- ---- ---------- ----------- -----------
Balance, December 31, 1999 (unaudited) 9,745,241 $975 $9,387,416 $(9,310,735) $ 77,656
========= ==== ========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 4
<PAGE> 35
EAGLETECH COMMUNICATIONS, INC.,
FORMERLY GOLDPLATE HOLDINGS ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
December 20, 1996
(inception)
Nine months ended December 31, to December 31,
1999 1998 1999
----------- -------- ------------------
(unaudited) (unaudited)
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $(9,018,952) $(48,905) $(9,310,735)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation 11,780 - 18,430
Issuance of stock for services and compensation 8,006,893 - 8,006,893
Start up expense 204,000 - 204,000
Loss on disposal of property and
equipment - 22,962 22,962
Gain on settlement of judgments (32,476) (32,476)
Changes in operating assets and liabilities:
(Increase) decrease in deposits - - -
Increase (decrease) in accounts payable
and accrued expenses (13,608) 20,624 33,650
Increase in other assets (7,682) - (7,682)
Increase (decrease) in judgments payable (16,500) - 51,696
----------- -------- -----------
Net cash used in operating activities (866,545) (5,319) (1,013,262)
----------- -------- -----------
Cash flows from investing activities:
Purchases of property and equipment (194,592) - (224,205)
----------- -------- -----------
Net cash used in investing activities (194,592) - (224,205)
----------- -------- -----------
</TABLE>
<TABLE>
<CAPTION>
December 20, 1996
Year ended Year ended (inception)
March 31, 1999 March 31, 1998 to March 31, 1999
-------------- -------------- -----------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $(57,481) $(136,292) $(291,783)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation - 4,434 6,650
Issuance of stock for services and compensation - - -
Start up expense - - -
Loss on disposal of property and
equipment 22,962 - 22,962
Gain on settlement of judgments
Changes in operating assets and liabilities:
(Increase) decrease in deposits 2,030 (2,030) -
Increase (decrease) in accounts payable
and accrued expenses 27,136 18,873 47,258
Increase in other assets - -
Increase (decrease) in judgments payable - 68,196 68,196
-------- --------- ---------
Net cash used in operating activities (5,353) (46,819) (146,717)
-------- --------- ---------
Cash flows from investing activities:
Purchases of property and equipment - - (29,613)
-------- --------- ---------
Net cash used in investing activities - - (29,613)
-------- --------- ---------
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 5
<PAGE> 36
EAGLETECH COMMUNICATIONS, INC.,
FORMERLY GOLDPLATE HOLDINGS ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
December 20,
1996
Nine months ended December 31, (inception) to
1999 1998 December 31, 1999
---------- -------- ------------------
(unaudited) (unaudited)
<S> <C> <C> <C>
Proceeds from debt - 5,336 176,330
Proceeds from sale of stock 1,261,000 - 1,261,000
Payments on related party notes (54,225) - (54,225)
---------- -------- ----------
Net cash provided by financing activities 1,206,775 5,336 1,383,105
---------- -------- ----------
Net increase (decrease) in cash and cash
equivalents: 145,638 17 145,638
---------- -------- ----------
Cash and cash equivalents, beginning or period - 17 -
---------- -------- ----------
Cash and cash equivalents, end of period $ 145,638 $145,638 $ 145,638
========== ======== ==========
Supplemental information:
Cash paid for interest during the period $ - $ - $ -
========== ======== ==========
Cash paid for income taxes during the period $ - $ - $ -
========== ======== ==========
Schedule of noncash investing and financing activities:
Interest on convertible bonds contribution to
additional paid-in capital $ 12,138 $ 12,138
========== ==========
Assumption of liabilities due to merger $ 204,000 $ 204,000
========== ==========
Issuance of common stock to settle merger liabilities $ 20,000 $ 20,000
========== ==========
</TABLE>
<TABLE>
<CAPTION>
December 20,
1996
Year ended (inception) to
March 31, 1999 March 31, 1998 March 31, 1999
-------------- -------------- ---------------
<S> <C> <C> <C>
Proceeds from debt 5,336 45,866 176,330
Proceeds from sale of stock - - -
Payments on related party notes - - -
------ ------- --------
Net cash provided by financing activities 5,336 45,866 176,330
------ ------- --------
Net increase (decrease) in cash and cash
equivalents: (17) (953) -
------ ------- --------
Cash and cash equivalents, beginning or period 17 970 -
------ ------- --------
Cash and cash equivalents, end of period $ - $ 17 $ -
====== ======= ========
Supplemental information:
Cash paid for interest during the period $ - $ - $ -
====== ======= ========
Cash paid for income taxes during the period $ - $ - $ -
====== ======= ========
Schedule of noncash investing and financing activities:
Interest on convertible bonds contribution to
additional paid-in capital
Assumption of liabilities due to merger
Issuance of common stock to settle merger liabilities
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 6
<PAGE> 37
EAGLETECH COMMUNICATIONS, INC.,
FORMERLY GOLDPLATE HOLDINGS ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
1. BUSINESS AND BASIS OF PRESENTATION
Goldplate Holdings Enterprises, Inc. ("GHE"), subsequently Eagletech
Communications, Inc. ("the Company"), was incorporated in the state of Nevada on
August 8, 1997. GHE was a development stage company and inactive.
On April 1, 1999, GHE's stockholders approved a merger with Eagletech
Communications, Inc. ("Eagletech Florida"), a Florida corporation, incorporated
on December 20, 1996, and located in Fort Lauderdale, Florida. Eagletech Florida
was engaged in the development of a proprietary unified communications products
and services to complement existing telecommunications technologies for
voice-mail, messaging and connectivity solutions. The merger agreement provided
that the Eagletech Florida stockholders would receive 4,882,401 shares and
convertible bondholders were to receive 117,599 shares for a total of 5,000,000
shares of GHE common stock. At the date of the transaction, GHE had no assets or
operations and had liabilities of approximately $204,000, which were recorded as
accounts payable and expensed as startup costs. For accounting purposes, the
transaction was treated as a "reverse merger". As such, the financial statements
of the Company reflect the assets, liabilities and operations of Eagletech
Florida as if it had been the reporting entity since inception. On June 8, 1999,
subsequent to the merger, GHE changed its name to Eagletech Communications, Inc.
The Company was in the development stage and its efforts through December 31,
1999 were principally devoted to organizational activities, raising capital and
development of its products. Management anticipates incurring substantial
additional losses as it pursues its development efforts.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
UNAUDITED INTERIM FINANCIAL STATEMENTS - The accompanying financial statements
of the Company for the nine months ended December 31, 1999 and 1998, and for the
period from December 20, 1996 (inception) to December 31, 1999, are unaudited,
but, in the opinion of management, reflect the adjustments, all of which are of
a normal recurring nature, necessary for a fair presentation of such financial
statements in accordance with generally accepted accounting principles. The
results of operations for an interim period are not necessarily indicative of
the results for a full year.
PROPERTY AND EQUIPMENT - Property, and equipment are stated at cost. Major
renewals and improvements are capitalized, while maintenance and repairs are
expensed when incurred. The cost and accumulated depreciation for property, and
equipment sold, retired, or otherwise disposed of are relieved from the
accounts, and resulting gains or losses are reflected in income. Depreciation is
computed over the estimated useful lives of depreciable assets using the
straight-line method.
Page 7
<PAGE> 38
EAGLETECH COMMUNICATIONS, INC.,
FORMERLY GOLDPLATE HOLDINGS ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INCOME TAX - Income tax assets and liabilities are computed annually for
temporary differences between the financial statement and tax bases of assets
and liabilities that will result in taxable or deductible amounts in the future,
based upon 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 is the tax payable or refundable for the
period, plus or minus the change during the period in deferred tax assets and
liabilities.
USE OF ESTIMATES - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosures 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.
FAIR VALUE OF FINANCIAL INSTRUMENTS - The fair value of the Company's financial
instruments such as accounts payable and notes payable approximate their
carrying value.
ADVERTISING COSTS - Advertising costs were $633 in 1999 and $4,701 in 1998 and
are charged to operations as incurred.
DEVELOPMENT COSTS - All costs relating to start up and development of its
telecommunications systems are expensed as incurred.
IMPAIRMENT OF LONG-LIVED ASSETS - The Company evaluates the recoverability of
its property and equipment, and other assets in accordance with Statement of
Financial Accounting Standards Board ("FASB") No.121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Live Assets to Be Disposed Of"
("SFAS 121"). SFAS 121 requires recognition of impairment of long-lived assets
in the event the net book value of such assets exceeds the estimated future
undiscounted cash flows attributable to such assets or the business to which
such intangible assets relate. No impairments were recognized during the year
ended December 31, 1999.
LOSS PER SHARE - The Company accounts for earnings per share according to
Financial Accounting Standards No. 128, "Earnings per Share" ("FAS 128"). FAS
128 requires presentation of basic and diluted earnings or loss per share.
Shares related to the convertible bonds were excluded from the computation of
net loss per share because the effect of inclusion would be anti-dilutive due to
the Company's net loss. Earnings or loss per share is computed by dividing net
income or loss by the weighted average number of shares outstanding during the
period.
Page 8
<PAGE> 39
EAGLETECH COMMUNICATIONS, INC.,
FORMERLY GOLDPLATE HOLDINGS ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. GOING CONCERN
As shown in the accompanying financial statements, the Company incurred net
losses of $57,481 and $136,292 for the years ended March 31, 1999 and 1998,
respectively, and as of March 31, 1999, the Company's current liabilities
exceeded its current assets by $291,781. During the nine months ended December
31, 1999, the Company incurred additional net losses of $9,024,701. The
Company's continued existence is dependent upon its ability to resolve its
liquidity problems, principally by obtaining capital, commencing sales of its
products and generating sufficient revenues to become profitable. The ability of
the Company to continue as a going concern is dependent upon obtaining
additional capital subsequent to the merger with GHE (see Note 9). The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
4. PROPERTY AND EQUIPMENT
Estimated
December 31, 1999 Useful lives
----------------- ------------
(unaudited)
Equipment $192,731 5 years
Furniture and fixtures 1,861 7 years
--------
194,592
Less: accumulated depreciation (11,780)
--------
$182,812
========
5. RELATED PARTY NOTES
Related party notes are unsecured demand notes due to stockholders, including
accrued interest at 7%.
6. CONVERTIBLE DEBT
In 1998, the Company issued unsecured convertible notes in the amount of
$88,200, due on demand, with interest accruing at seven percent. Subsequent to
March 31, 1999, the notes were converted at $.75 per share to 117,599 shares of
common stock. At this time, the accrued interest of $12,138 was contributed to
capital.
Page 9
<PAGE> 40
EAGLETECH COMMUNICATIONS, INC.,
FORMERLY GOLDPLATE HOLDINGS ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
7. JUDGMENTS PAYABLE
As of March 31, 1999 the Company had judgments relating to three outstanding
irrevocable financing agreements from various banks in the amount of $68,196,
issued in connection with the lease of certain equipment. During the year ended
March 31, 1999, the equipment was abandoned. However, the judgments continue to
accrue interest at the rate of 10% which is included in accounts payable and
accrued expenses. Subsequent to March 31, 1999, the Company settled a portion of
the judgments totaling $49,000, including interest, which resulted in a gain of
$32,476.
8. OPERATING LEASES
The Company leases its office space on a month-to-month basis. Subsequent to
year end, the Company leased additional facilities containing approximately
1,000 square feet, for ten years, expiring on September 30, 2009. Rental expense
was $15,433 for the nine months ended December 31, 1999.
9. MERGER AND STARTUP COSTS
Prior to merging with Eagletech Florida, on March 17, 1999, the Company
completed an exchange of stock whereby 21st Century Frontier Group, Inc.("21st
Century"), a publicly trading Company, became a wholly owned subsidiary. The
Company became the surviving entity. This share agreement resulted in the
Company assuming $204,000 in liabilities. Since there were no assets or
operations in 21st Century, the $204,000 was written off as startup costs on
April 1, 1999, the date of the GHE and Eagletech Florida merger. The Company may
have additional contingent liabilities in connection with this transaction. No
accruals have been made for any contingencies.
The financial statements are not consolidated as 21st Century had no operations
and was dissolved subsequent to March 31, 1999.
Page 10
<PAGE> 41
EAGLETECH COMMUNICATIONS, INC.,
FORMERLY GOLDPLATE HOLDINGS ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
10. SALE OF SECURITIES AND MERGER
In May 1999, the Company approved a one for three reverse stock split effective
June 9, 1999. All share and per share information has been restated to
retroactively reflect this split. In March 1999, GHE issued 520,018 shares to
individuals pursuant to a private placement. No cash was raised in the offering.
On April 1, 1999, the Company, pursuant to a private placement offering, sold
3,333,333 shares of common stock for $1,261,000.
In June 1999, the Company issued a total of 675,002 shares of stock to officers
and a founding stockholder and recorded a $5,818,768 charge for compensation.
During August and September of 1999, 60,000 shares of common stock were issued
for services performed, totaling $463,125. Additionally, 150,000 shares of
common stock were issued to the Company's investment banking and public
relations firms for services performed, totaling $1,725,000. These stock
transactions were expensed at fair market value on the date the transactions
were approved by the board of directors. In June 1999, the convertible
bondholders converted their bonds to 117,599 shares of common stock (see Note
6). In September 1999, 6,888 shares of common stock were issued as payment for
$25,000 of accounts payable, which were assumed in the GHE and Eagletech Florida
merger.
11. INCOME TAXES
The Company did not have any net operating loss carryforwards as of March 31,
1999, due to the change of business and ownership provisions of the Internal
Revenue Code.
The Company had available at December 31, 1999, operating loss carryforwards for
federal and state tax purposes generated since its merger with Eagletech Florida
approximately $9,075,000, which could be applied against taxable income in
subsequent years through 2020. The tax effect of the net operating loss is
approximately $3,385,000, and a full valuation allowance has been recorded,
since realization is uncertain.
12. COMMITMENTS
EMPLOYMENT AGREEMENTS - On September 30, 1999, the Company entered into an
employment agreement with the Chief Operating Officer for three years commencing
October 1, 1999. The agreement included a signing bonus of $10,000 and an
initial annual compensation of $110,000. Also, the Company shall pay incentive
compensation equal to three percent of Company pre-tax earnings in excess of
$750,000. Previously, the employee was given, at no cost, 100,000 shares of
restricted common stock.
Page 11
<PAGE> 42
EAGLETECH COMMUNICATIONS, INC.,
FORMERLY GOLDPLATE HOLDINGS ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
12. COMMITMENTS (CONTINUED)
EMPLOYMENT AGREEMENTS (CONTINUED) - On September 30, 1999, the Company entered
into an employment agreement with the Director of Marketing for three years
commencing October 1, 1999. The agreement included a signing bonus of $7,500 and
an initial annual compensation of $100,000. Also, the Company shall pay
incentive compensation equal to two percent of Company pre-tax earnings in
excess of $750,000. Previously, the employee was given, at no cost, 50,000
shares of restricted common stock.
On September 30, 1999, the Company entered into an employment agreement with the
Director of Technology for three years commencing October 1, 1999. The agreement
included a signing bonus of $7,500 and an initial annual compensation of
$90,000. Also, the Company shall pay incentive compensation equal to one percent
of Company pre-tax earnings in excess of $750,000.
Page 12
<PAGE> 43
EXHIBITS
<PAGE> 44
Item 1. Exhibit Index
Exhibit
No
(3) Articles of Incorporation and Bylaws
3.1 Articles of Incorporation +
3.2 Bylaws +
(10) Material Contracts
10.1 Consulting Agreement with LBC Capital, Inc. +
10.2 Services Agreement with BellSouth Telecommunications, Inc. +
10.3 Employment Agreement with Robert J. Dobbs +
10.4 Employment Agreement with Rodney Young +
10.5 Employment Agreement with Robert Bergman +
(21) Subsidiaries of the Registrant
21.1 Subsidiaries of the Registrant +
(23) Consents - Experts
23.1 Consent of Sweeney, Gates & Co.++
(27) Financial Data Schedule
27.1 Financial Data Schedule++
- --------
+ Filed with the Company's initial filing on Form 10-SB filed February 1, 2000.
++Filed herewith
Page 1 of 4
<PAGE> 45
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the Registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
Date: February 15, 2000 EAGLETECH COMMUNICATIONS, INC.
By: /s/ ROBERT J. DOBBS, JR.
-------------------------------
Robert J. Dobbs, Jr., President
Page 2 of 4
<PAGE> 1
EXHIBIT 23.1
Consent of Sweeney, Gates & Co.
{Letterhead of Sweeney, Gates & Co.]
To Whom It May Concern: December 6, 1999
The firm of Sweeney, Gates & Co., Certified Public Accountants, consents to the
inclusion of their report of September 28, 1999, on the Financial Statements of
Eagletech Communications, Inc., as of March 31, 1999, 1999, in any filings that
are necessary now or in the near future with the U.S. Securities and Exchange
Commission.
Very truly yours,
SWEENEY, GATES & CO.
Page 3 of 4
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
unaudited financial statements for the nine months ended December 31, 1999
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-END> DEC-31-1999
<CASH> 145,638
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 145,638
<PP&E> 182,812
<DEPRECIATION> 0
<TOTAL-ASSETS> 336,132
<CURRENT-LIABILITIES> 258,476
<BONDS> 0
0
0
<COMMON> 9,745,241
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 336,132
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 9,054,032
<OTHER-EXPENSES> (35,080)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,281
<INCOME-PRETAX> (9,018,952)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (9,018,952)
<EPS-BASIC> (1.41)
<EPS-DILUTED> (1.41)
</TABLE>
