AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION September 22, 2000
REGISTRATION NO. 333-94307
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM S-11
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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EURO CAP CORPORATION
(Exact Name of Registrant as specified in its Governing Instruments)
Stony Hill Plaza
71 Stony Hill Road, 2nd Flr.
Bethel, Connecticut 06801
(203) 798-1889
(Address of Principal Executive Offices)
Baik Suk Kim COPIES TO:
PRESIDENT Corporate Services Group
EURO CAP CORPORATION Bernabe Diaz, ESQ.
Stony Hill Plaza Stony Hill Plaza
71 Stony Hill Road, 2nd Flr. 71 Stony Hill Road, 2nd Flr.
Bethel, Connecticut 06801 Bethel, Connecticut 06801
(Name and Address of Agent for Service) (203) 798-1889
APPROXIMATE DATE OF COMMENCEMENT OF THE PROPOSED SALE OF THE SECURITIES TO
THE PUBLIC: As soon as practicable after the Registration Statement becomes
effective.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registrations statement number of the earlier effective registration statement
for the same offering. [ ]
<PAGE> 1
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE (1)
<TABLE>
<CAPTION>
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Proposed Maximum
Title of Each Class Amount Offering Aggregate Amount of
of Securities to be to be Price Offering Registration
to Registered Registered Per Unit Price Fee.
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<S> <C> <C> <C>
Common Stock, with par
value of $0.000025(1) 2,000,000 $1.00 $2,000,000 $ 556.00
Floating Rate
Subordinated Notes
due 2009(2) $2,000,000 100% $2,000,000 $ 556.00
Guarantees(3) $2,000,000 (3) (3) None
Totals $4,000,000 $1,112.00
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</TABLE>
(1) Represents 2,000,000 shares of common stock to be issued to the public
by the Corporation. Presently there is no market for these shares.
(2) Estimated solely for purposes of calculating the registration fee.
(3) Pursuant to Rule 457(n), no separate filing fee is required to be
paid.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY SUCH STATE.
PROSPECTUS
SUBJECT TO COMPLETION, DATED: JANUARY 5, 2000
Euro Cap Corporation
(a New York Corporation)
2,000,000 Shares of Common Stock, with a Par Value of $0.000025
$2,000,000 Subordinated Notes with Interest at a
floating rate of Libor + 1/2 percent per anum, maturing in 2009,
and secured by a fixed and floating debenture over the assets
of Bon Hyang, Inc., the subsidiary of the Offeror.
This offering involves the sale of 2,000,000 Shares in the Common
Stock of Euro Cap Corporation, and the sale of $2,000,000 of a total of
$500,000,000 of Subordinated Notes with a floating interest rate of LIBOR +
1/2 maturing on December 31, 2009.The notes are secured by a fixed and floating
debenture over the assets of Bon Hyang, Inc., the sole subsidiary of Euro
Cap Corporation. Euro Cap Corporation (the"Company") is a holding corporation
with one wholly owned subsidiary, Bon Hyang, Inc.(BHI), organized pursuant
to the laws of New York in February, 1999, and involved, worldwide, in the
purchase, and Management of office buildings and resort properties. There is
at present no market for these securities. SEE RISK FACTORS ON PAGE_____.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
==============================================================================
TOTAL NUMBER PRICE PER AGGRAGATE PRICE EXPENSES & PROCEEDS TO
OF SHARES SHARE TO PUBLIC COMMISSIONS COMPANY
==============================================================================
2,000,000 (1) Unknown (1) Unknown (2) Unknown (3) Unknown
==============================================================================
(1) The price per Share to the public of the Shares will be based on the
bid price for the Company's common stock on the dates of specific sales,
unless shares are sold in private transactions. Consequently, no
determination can be made as to actual pricing matters.
(2) The Company has no brokerage agreements or other agreements for the
sale of its shares, and will be selling treasury stock via private placement.
The costs of selling the stock, by the most conservative estimate, should not
exceed ten percent of the gross value of the stock. The Company estimates
that it will pay approximately $50,000 in fixed expenses pertaining to the
offering, including accounting fees, fees to Securities and Exchange
Commission, National Association of Securities Dealers, Inc., printing
expenses, transfer agent fees and expenses and miscellaneous costs.
(3) No determination can be made as to the proceeds to the Company as the
selling price per share has not been determined.
It is anticipated by management that the Notes will be sold at face value
with a cost associated with the said sale not to exceed 10% of the face value.
This means that the Company anticipates the sale of the Notes at $500,000,000
with $450,000,000 being the net proceeds to the Company. Of this amount,
$2,000,000 are being sold to the public via this offering, and the remainder
will be sold through private placement to institutions and not being offered
to the public as part of this offering.
<PAGE> 03
TABLE OF CONTENTS PAGE
<TABLE>
<S> <C>
THE OFFERING 1,10
TABLE OF CONTENTS 2
ADDITIONAL INFORMATION 3
GLOSSARY OF TERMS 4
PROSPECTUS SUMMARY 5
RISK FACTORS 6
Possible Loss of Entire Investment 6
Potential Future Sales Pursuant To Rule 144 6
Absence of a Trading Market 6
Adverse effects of Penny Stock Regulations 6
Absence of Underwriter 7
Concentration of Share Ownership 7
Financial Risks 7
BUSINESS RISKS 7
No Dividends 7
Material Reliance Upon Officers 7
No Operating History 7
INTEREST RATE, CURRENCY, AND ALLIED RISKS 7
Interest Rate Changes 7
Foreign Exposure 8
Issuer-Specific Changes 8
PRINCIPAL INVESTMENT RISKS 8
Interest Rate Changes 8
Foreign Exposure 9
INVESTMENT IN KOREA 9
Investment and Repatriation Restrictions 9
Transfer of funds from Korea to Foreign Countries 9
Currency Fluctuations 9
LACK OF PUBLIC MARKET 9
FORWARD-LOOKING STATEMENTS 9
THE NOTES-Detailed Description 10
THE SHARE OFFERING (Determination of Offering Price) 12
RATIO OF EARNINGS TO FIXED CHARGES 13
SECURITIES OUTSTANDING 14
CURRENT STOCKHOLDERS 14
DEFINITION OF TERMS 14
PLAN OF DISTRIBUTION 14
USE OF PROCEEDS 14
SELLING SHAREHOLDERS 15
MARKET FOR COMMON EQUITY 15
DIVIDENDS 15
SELECTED FINANCIAL INFORMATION 15
THE COMPANY 17
POLICY WITH RESPECT TO CERTAIN ACTIVITIES 18
INVESTMENT POLICIES OF THE COMPANY 19
Investment or Interest in Real Estate 19
Investment in Real Estate Mortgages 19
Securities of or interests in persons primarily engaged
in real estate activities 19
Investment in other securities 19
DESCRIPTION OF REAL ESTATE 20
TAX TREATMENT OF SECURITY HOLDERS 24
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION,
CHANGES IN FINANCIAL CONDITION
AND RESULTS OF OPERATIONS 25
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION,
CHANGES IN FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Discussion of Financial Information 25
Material Events 26
Liquidity 27
Current Plans 27
Selection ,Management and Custody of
Company's investmentsAccounting Policies and Procedures 27
CONFLICTS OF INTEREST 27
MANAGEMENT 28
Directors and Executive Officers 28
Involvement in Certain Legal Proceedings 29
COMPENSATION 29
CERTAIN TRANSACTIONS 30
PRINCIPAL STOCKHOLDERS 31
SECURITY OWNERSHIP OF MANAGEMENT 32
COMMON STOCK 32
OTHER SECURITIES 32
TRANSFER AGENT 32
SHARES ELIGIBLE FOR FUTURE SALE 33
ADDITIONAL INFORMATION 33
INDEMNIFICATION ARRANGEMENTS 34
LITIGATION 34
LEGAL OPINIONS 34
EXPERTS 34
FINANCIAL STATEMENTS 35
<PAGE> 4
EURO CAP CORPORATION
71 Stony Hill Road, 2nd Floor
Bethel, CT 06801
(203) 798-1889
SUBJECT TO COMPLETION
The date of this Prospectus is December 2, 1999.
ADDITIONAL INFORMATION
The Company has filed a Registration Statement on Form S-11 (adopted
under authority of the Securities Act of 1933, as amended) with respect to
the securities offered hereby, with the United States Securities and Exchange
Commission (S. E. C.). This Prospectus does not contain all the information
set forth in the Registration Statement and the exhibits and schedules
attached thereto. For further information, reference is hereby made to the
Registration Statement. Statements contained in this Prospectus as to the
contents of any contract or other document are not necessarily complete, and
in each instance reference is made to the copy of such contract filed as an
exhibit to the Registration Statement, each such statement may be inspected
without charge at the Public Reference Section of the Commission in its
Washington, D.C. office and copies of all or any part thereof may be obtained
from the Commission at prescribed rates, and may be perused at the S. E. C.'s
Web Site, whose address is http://www.sec.gov. Copies of the Registration
Statement and the Exhibits appended thereto will be provided without charge
upon written or oral request addressed to Mr. Baik Suk Kim; Euro Cap Corp.,
71 Stony Hill Road, 2nd Floor, Bethel CT 06801, or by calling (203) 798-1889.
The Company currently does not furnish its stockholders with annual
reports containing financial statements certified by its independent public
accountants and quarterly reports containing unaudited financial information
for the first three quarters of each fiscal year. Prior to the sale of the
Registered Securities, the Company was not subject to the informational
requirements of the Securities Exchange Act of 1934 since its securities
were not registered with the Commission pursuant to the requirements of
Sections 13 or 15(d) of the Securities Exchange Act of 1934, as amended.
No dealer, salesman or any other person has been authorized to give
any information or to make any representations other than those contained in
this Prospectus. Any information or representation not contained herein, if
given or made, must not be relied upon as having been authorized by
Euro Cap Corporation (the "Company"). Neither the delivery of this
Prospectus nor any sale made hereunder shall under any circumstances create
any implication that there has been no change in the affairs of the Company
since the date hereof. This Prospectus does not constitute an offer or a
solicitation of any offer to buy any securities offered hereby in any
jurisdiction to any person to whom it is unlawful to make such an offer
or solicitation in such jurisdiction.
Until December 31, 2001, all dealers effecting transactions in the
registered securities, whether or not participating in this distribution,
may be required to deliver a Prospectus. This is in addition to the
obligation of dealers to deliver a Prospectus when acting as underwriters
and with respect to their unsold allotments or subscriptions.
<PAGE> 5
GLOSSARY OF TERMS
AS USED HEREIN, THE FOLLOWING HAVE THE MEANINGS SET FORTH BELOW:
Bon Hyang or BHI Bon Hyang, Inc, the sole subsidiary of Euro Cap
Corporation.
Bond or Note(s) The generic term for the $500,000,000 in Subordinated
Notes being offered by the Company, $2,000,000 of which is being offered to
the public in this Prospectus.
Capital Stock. The generic term for the Company's Common Stock.
Common Stock. The shares of the Company's common stock, with a par
value of $0.000025, of which 40,000,000 shares are authorized and 10,000,500
are issued and outstanding prior to this offering(see "DESCRIPTION OF
SECURITIES").
Commission or SEC. Securities and Exchange Commission of the United States.
Korea The Republic of Korea, also known as South Korea.
LIBOR The annual LIBOR rate is defined as the arithmetic mean
rate of the 12 preceding monthly LIBOR rates, calculated from the date on which
the annual interest payment is due, as published on the LIBO page on the
Reuters Monitor Money Rates Services.
NASD. National Association of Securities Dealers, Inc. The
self-regulatory body registered under the Securities Exchange Act of 1934,
as amended, responsible for regulation of securities brokers and dealers, and
the operator of the NASDAQ inter-dealer automated quotation system's bulletin
board over which Company securities are traded.
Registered Securities. The generic and collective term for the 2,000,000
shares offered herein, and the $2,000,000 in Subordinated Notes offered in
this Prospectus.
The Company or Euro Cap Corporation, a New York Corporation and the
The Corporation. issuer of the securities offered hereby.
<PAGE> 6
PROSPECTUS SUMMARY
The following is a summary of certain information contained in this
Prospectus and is qualified in its entirety by the more detailed information
and financial statements (including notes thereto) appearing elsewhere herein.
THE COMPANY AND THE OFFERING
The Company was incorporated in the State of New York on February 5,
1999. It was organized as a purchaser of Bon Hyang, Inc. (BHI), and
purchased 100% of the outstanding common shares of BHI on July 1, 1999,
in exchange for 10,000,000 million shares in the common stock of the Company.
Currently the Company is a holding company with one subsidiary, BHI. BHI was
Organized pursuant to the laws of the Republic of Korea. Neither company has
ever been a party to any material reclassification, merger, consolidation, or
purchase or sale of a significant amount of assets not in the ordinary course
of business, other than with respect to BHI's acquisition by the Company.
For purposes of this prospectus, the Company's subsidiary is sometimes
referred to as "BHI".
BHI, a Korean corporation was formed on July 29, 1998, to purchase and
operate, worldwide, downtown office complexes and resort properties. The
company currently has 2 resort properties and a downtown office complex, all
in Korea, under contract to purchase for the total sum of $500,000,000.
The Company plans to use the proceeds from the sale of the Notes to
purchase the building and resorts mentioned above. (See 'Use of Proceeds",
"The Company", and "Description of Real Estate", below).
The offering consists of (1) 2,000,000 common shares in the Company. There
are currently 10,000,500 common shares issued to 6 shareholders, said shares
subject to Rule 144 of the SEC.; and, (2) the issuance of Notes maturing in
2009 bearing interest at LIBOR (See Glossary for definition of LIBOR)+1\2% per
anum.The Notes bear interest from the issuing date of the Notes. Interest shall
continue to accrue after as before maturity and both before and after default.
Interest shall be payable in arrears on December 31 in each year with a final
interest payment, together with the outstanding principal, to be made on Decem-
ber 31, 2009. Whenever it is necessary to complete the amount of interest in
respect of any Note for a period of less than a full year, such interest will
be calculated on the basis of a 360 day year consisting of 12 months of 30
days each, in the case of an incomplete month, the number of days elapsed. The
Notes are secured by a fixed and floating debenture issued by BHI to secure the
said Notes. The proceeds from the sale of the Notes will be held in escrow by
Continental Stock Transfer and Trust Company, 2 Broadway, New York NY, until
sufficient funds are collected to close on the abovementioned properties (See
"Description of Property","Use of Proceeds"). In the event that the property
closings cannot be concluded on or before June 30, 2000, all funds will be
returned to the Noteholders. In the event that, as management believes, the
property closings occur as anticipated, the Noteholders will be paid as
mentioned above. For more complete information regarding the Notes,
including definitions of certain capitalized terms used above, see "Description
of Notes."
<PAGE> 7
RISK FACTORS
THE SECURITIES OFFERED HEREBY ARE SPECULATIVE IN NATURE AND INVOLVE A
DEGREE OF RISK. THEY SHOULD BE PURCHASED ONLY BY PERSONS WHO CAN AFFORD TO
LOSE THEIR INVESTMENT IN THE COMPANY WITHOUT A MATERIALLY ADVERSE IMPACT ON
THEIR STANDARD OF LIVING OR FINANCIAL SECURITY. THEREFORE, PRIOR TO PURCHASE
EACH PROSPECTIVE INVESTOR SHOULD CONSIDER THE FOLLOWING RISK FACTORS, AS WELL
AS ALL OTHER INFORMATION SET FORTH ELSEWHERE IN THIS PROSPECTUS.
RISKS OF THE OFFERING
Possible Loss of Entire Investment
Prospective investors should be aware that if the Company is not
successful in its endeavors, their entire investment in the Company could
become worthless. Even if the Company is successful in its programs there
can be no assurances that investors will derive a profit from their investment.
The Company has only one operating subsidiary, and as of yet has no
significant operating history. It is possible that there will never be any
Purchases or Operations, in which case the total investment of investors may
be lost.
Potential Future Sales Pursuant To Rule 144
Generally, under Rule 144, a person (or persons whose shares are
aggregated) who has satisfied a one year holding period may, under certain
circumstances, sell within any three month period a number of shares which
does not exceed the greater of one percent (1%) 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 not
been an affiliate of the Company for at least 90 days and who has satisfied a
one year holding period.
The one year holding period for all the Company's currently
outstanding restricted shares required by Rule 144 will expire during January
of 2001 and thereafter, the holders may periodically sell their Company
securities, subject to applicable volume limitations, restrictions on the
manner of sale and applicable reporting.
Absence of a Trading Market
At present, there is no market for the securities of the Company,
and there can be no assurance that an established trading market or any
public market will develop in the future, or that if developed, it could be
sustained, or the securities of the Company resold at any price. Any market
the Company may develop will, in all likelihood, be a substantially limited
one.
Adverse effects of Penny Stock Regulations
Securities, generally, with a price $5.00 per share or less are
referred to as penny stock. These securities are unsuitable for investors
with low fixed incomes and limited net worth, or for accounts held in a
fiduciary or custodial capacity. As well, they are not suitable for investors
who are risk aversive or have income as their sole investment objective.
Investment broker/dealers must satisfy special sales practice requirements,
including making written suitability determinations regarding any persons
wishing to invest in penny stock; written consent of the purchaser prior to
purchasing penny stock; delivery of a disclosure statement outlining the
risks associated with penny stock prior to any transaction; a written current
bid and ask quotation and commissions to be earned by the broker/dealer in the
transaction; and monthly statements stating the market value of any penny
stock held in a portfolio. These requirements, if applicable to the Company,
may adversely effect any market for the Registrant's shares.
<PAGE> 8
Absence of Underwriter
The Shares and Notes will be sold directly by the Company,
consequently, no underwriter is expected to be involved therewith. The
absence of an underwriter means that there will be less due diligence in
conjunction with this offering than would be performed in an underwritten
offering, and furthermore, that there are no brokers committed to stabilizing
the market for the Company's securities.
Concentration of Share Ownership
Where approximately 86% of the shares in the Company are currently
held by 6 persons, who are also the Officers and Directors of the Company
and of its sole Subsidiary, BHI, the effective control of the Registrant
rests with these parties.
Financial Risks
No assurance can be given that the Company's future performance will
meet the Company's expectations or that the Company will be able to operate
profitably. The Company has a history of operating losses, and lacking future
profitable operations, will need additional capital, which the Company has no
assurance whatsoever of being able to obtain. The inability to obtain such
financing would have a material adverse effect on the Company's results of
operations. (See "Financial Statements", "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION, CHANGES IN FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.")
BUSINESS RISKS
No Dividends
The Company has never paid dividends on its Common Stock. The
Company does not anticipate paying dividends for the foreseeable future and
intends to devote earnings, if any, to the development of the Company's
business. The payment of dividends in the future rests within the discretion
of the Company's Board of Directors and will depend on the existence of
substantial earnings, the Company's financial requirements and other factors.
The Company has paid no substantial dividends in the past; and earnings for the
foreseeable future are expected to be retained to finance corporate business
expansion.
Material Reliance Upon Officers
The Company is wholly dependent upon the personal efforts and
abilities of its officers and directors. The loss of or unavailability to
the Company of the services of any of its officers or directors would have a
materially adverse effect on the Company's business prospects and potential
earning capacity. The Company does not carry any insurance to compensate
for any such loss, nor does it intend to obtain "key man" life insurance
covering its officers or directors.
Lack of Operating History
Neither the Company nor BHI have any operating history, and there is no
assurance that either company will be successful. If the companies fail to
raise the capital needed to support their activities, either or both companies
may fail, the result of which would be the loss of all or substantially all of
investment.
INTEREST RATE, CURRENCY, AND ALLIED RISKS
Interest Rate Changes
Interest rate increases can cause the price of a debt security to
decrease. This is offset, somewhat, by the floating nature of the Notes,
but the overall rate may be lower at any given time than that of like
securities offered to the public.
<PAGE> 9
Foreign Exposure
Entities located in foreign countries can be affected by adverse
political, regulatory, market or economic developments in those countries.
Where the property to be owned by the Company's subsidiary is in Korea,
Any political or economic instability will adversely effect the Company,
and therefor directly impact on the value of the securities being offered.
Issuer-Specific Changes
The value of an individual security or particular type of security can be
more volatile than the market as a whole and can perform differently than the
value of the market as a whole. An investment in the Notes is not a deposit
of a bank and is not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency. When you sell your Notes, they
could be worth more or less than what you paid for them.
PRINCIPAL INVESTMENT RISKS
The Notes are subject to the following principal investment risks:
Interest Rate Changes
Interest rate increases can cause the price of a debt security to
decrease.
Interest Rate Changes
Debt securities have varying levels of sensitivity to changes in interest
rates. In general, the price of a debt security can fall when interest rates
rise and can rise when interest rates fall. Securities with longer maturities
and mortgage securities can be more sensitive to interest rate changes. In
other words, the longer the maturity of a security, the greater the impact
a change in interest rates could have on the security's price. In addition,
short-term and long-term interest rates do not necessarily move in the same
amount or the same direction. Short-term securities tend to react to changes
in short-term interest rates, and long-term securities tend to react to
changes in long-term interest rates.
Foreign Exposure
Foreign securities and securities issued by U.S. entities with substantial
foreign operations can involve additional risks relating to political,
economic or regulatory conditions in foreign countries. All of these factors
can make foreign investments more volatile than U.S. investments.
INVESTMENT IN KOREA
Investing in securities of Korean companies involves certain risks not
typically associated with investing in securities of United States companies
or the United States government, in addition to those discussed in the
sections above.
Investment and Repatriation Restrictions
Until recently, Korean security regulations limited the percentage of any
class of equity shares of an issuer that may be held by a particular foreign
investor to 3% and to 12% by all foreign investors as a group. Currently, the
limit on direct foreign investment has been removed by the Korean Government.
Upon due notification to the Government both direct investment and long term
Loans may be made to Korean companies, and profits expatriated up to the level
of the original investment plus a suitable return on investment. The specific
definition of suitable return creates a risk in that the government may at any
time define the return at a level which will negatively impact on the share
value of the Company's shares. Further, Foreign companies require government
approval prior to investing in Korea. Bon Hyang, Inc. has approval for up to
$500,000,000 in foreign investment. It does not currently have specific
approval for issuing long term debt. Management believes that the approval
will be forthcoming before the effective date of this Prospectus.
<PAGE> 10
Transfer of funds from Korea to Foreign Countries
Funds invested in Korea are subject to certain regulatory approvals
pursuant to foreign exchange control laws and regulations.
Generally, as long as the original investment was approved or allowed
under the applicable laws and regulations of Korea, the conversion and
remittance of cash or cash equivalents into U.S. dollars in relation to such
investment will be freely allowed upon receipt of the appropriate payment
approvals from the Bank of Korea or a designated Class A foreign exchange bank.
Currency Fluctuations
The Note proceeds will be invested primarily in property in Korea (See
"Use of Proceeds"), the market value of which is determined in Won, and
substantially all of its income will be received or realized in the Korean Won.
The Company will be required, however, to compute its net asset value and
income, and to distribute its income, in U.S. dollars. As a result, the net
asset value and its distribution amounts will be subject to foreign exchange
rate fluctuations.
The Korean Won was devalued against the US dollar in 1999 to 1200 Won
to the dollar as compared to 1100 won in late 1998, and between 800 and 900 won
over two previous years.
The Company expects to incur certain transaction costs in connection with
its conversions between currencies and, in light of the history of fluctuating
currency values of the Korean Won relative to the dollar, it is impossible to
predict what effect currency conversion costs may have on the operations of the
Company.
LACK OF PUBLIC MARKET
There will not be a public market for the shares and Notes and their
liquidity is therefore limited.
FOR ALL OF THE AFORESAID REASONS, AND OTHERS SET FORTH HEREIN, THESE
SECURITIES INVOLVE A HIGH DEGREE OF RISK. ANY PERSON CONSIDERING AN
INVESTMENT IN THE SECURITIES OFFERED HEREBY SHOULD BE AWARE OF THESE AND
OTHER FACTORS SET FORTH IN THIS PROSPECTUS. THESE SECURITIES SHOULD ONLY BE
PURCHASED BY PERSONS WHO CAN AFFORD A TOTAL LOSS OF THEIR INVESTMENT IN THE
COMPANY AND HAVE NO IMMEDIATE NEED FOR A RETURN ON THEIR INVESTMENT.
FORWARD LOOKING STATEMENTS
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS: THIS PROSPECTUS INCLUDES
"FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995(SECTION 27A OF THE SECURITIES ACT AND SECTION 21E
OF THE EXCHANGE ACT). THE COMPANY WISHES TO ENSURE THAT ALL SUCH
FORWARD-LOOKING STATEMENTS ARE ACCOMPANIED BY MEANINGFUL CAUTIONARY STATEMENTS
PURSUANT TO THE SAFE HARBOR ESTABLISHED IN SUCH ACT. ALL STATEMENTS OTHER THAN
STATEMENTS OF HISTORICAL FACTS INCLUDED IN THIS PROSPECTUS, INCLUDING WITHOUT
LIMITATION, CERTAIN STATEMENTS UNDER "SUMMARY," "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" AND "THE BUSINESS,"
MAY CONSTITUTE FORWARD-LOOKING STATEMENTS. FORWARD-LOOKING STATEMENTS INCLUDE
THE INTENT, BELIEF OR CURRENT EXPECTATIONS OF THE COMPANY AND MEMBERS OF
ITS SENIOR MANAGEMENT TEAM. ALL FORWARD-LOOKING STATEMENTS ARE INHERENTLY
UNCERTAIN AS THEY ARE BASED ON VARIOUS EXPECTATIONS AND ASSUMPTIONS CONCERNING
FUTURE EVENTS AND THEY ARE SUBJECT TO NUMEROUS KNOWN AND UNKNOWN RISKS AND
UNCERTAINTIES WHICH COULD CAUSE ACTUAL EVENTS OR RESULTS TO DIFFER MATERIALLY
FROM THOSE PROJECTED. DUE TO THOSE UNCERTAINTIES AND RISKS, PROSPECTIVE
PARTICIPANTS IN THE OFFER ARE URGED NOT TO PLACE UNDUE RELIANCE ON SUCH
FORWARD-LOOKING STATEMENTS CONTAINED IN THIS PROSPECTUS. ALTHOUGH THE COMPANY
BELIEVES THAT THE EXPECTATIONS REFLECTED IN SUCH FORWARD-LOOKING
STATEMENTS ARE REASONABLE, IT CAN GIVE NO ASSURANCE THAT SUCH EXPECTATIONS WILL
PROVE TO HAVE BEEN CORRECT. IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS
TO DIFFER MATERIALLY FROM THE COMPANY'S EXPECTATIONS ("CAUTIONARY STATEMENTS")
ARE DISCLOSED IN THIS PROSPECTUS, INCLUDING, WITHOUT LIMITATION, IN CONJUNCTION
WITH THE FORWARD-LOOKING STATEMENTS INCLUDED IN THIS PROSPECTUS AND UNDER "RISK
FACTORS." ALL SUBSEQUENT WRITTEN AND ORAL FORWARD-LOOKING STATEMENTS
ATTRIBUTABLE TO THE COMPANY OR PERSONS ACTING ON ITS BEHALF ARE EXPRESSLY
QUALIFIED IN THEIR ENTIRETY BY THE CAUTIONARY STATEMENTS. THE COMPANY
UNDERTAKES NO OBLIGATION TO UPDATE OR REVISE THIS "SAFE-HARBOR COMPLIANCE
STATEMENT FOR FORWARD-LOOKING STATEMENTS" TO REFLECT FUTURE DEVELOPMENTS.
<PAGE> 11
THE NOTES
The Company is tendering for sale $500,000,000 in Subordinated Debt,
secured by a fixed and floating debenture over the assets of its subsidiary,
BHI. $2,000,000 of the said debt is being sold to the public, the remainder
is being placed institutionally, with rights of registration being granted
to the institutional holders. The proceeds of the offer are being used in
conjunstion with the purchase in Korea of a downtown office building, and
two resort properties (See: "Use of Proceeds", and "Description of Property").
Currently, the assets of BHI consist primarily of $4.5 million in cash, and
$211,000 in deposits and automobile. However, the closing on the property
will, in management's opinion, increase the asset position of BHI to at least
equal to the total principal of the debt owed pursuant to the issue of the
Notes. All funds collected will be held in escrow by Continental Stock Transfer
and Trust Company in New York, pending the closing, on or before June 30,
2000, of the purchases abovementioned.
The terms of the offer are as follows:
THE OFFER............... Up to $500,000,000 aggregate principal amount of
Notes are being offered bearing interest both
before as well as after maturity at the rate of
LIBOR plus 1\2 of one per centum per anum, with
interest payable on December 31 of each year to
maturity, maturity being defined as December 31,
2009.
The Notes are being offered in denominations of
$10,000, and are not redeemable before maturity.
The Notes are secured by a debenture (see below)
issued by Bon Hyang, Inc. The proceeds will be
held in escrow (see "Escrow", below) pending the
closing on properties to be purchased with the
proceeds in Korea (see "Use of Proceeds").
EXPIRATION DATE............ 5:00 P.M., New York City time, on
June 30, 2000, unless the Offer is extended
by the Company (in which case the
Expiration Date will be the latest date and time
to which the Offer is extended).
CONDITIONS TO THE
OFFER.................... The Offer is subject to raising sufficient capital
to close on one or more of the properties in Korea
(see "Use of Proceeds) and is not conditioned upon
any minimum principal amount of Notes being
sold, except as stated above.
MATURITY DATE.............. December 31, 2009.
INTEREST RATE; PAYMENT
DATES...................... The New Notes will bear interest at the rate of
LIBOR plus 1/2% per annum from the date of
issuance, payable annually on December 31 of each
year, commencing December 31, 2000.
GUARANTEES................. The New Notes will be guaranteed by BHI through
the issue of a fixed and floating debenture over
its assets. The terms of the debenture do not
allow, the sale of any assets worth over $250,000
without replacement by like assets or cash or
cash equivelent, such that the minimum value of
the assets of BHI shall always exceed the amount
due and owing on the Notes plus one year's
interest thereon.
<PAGE> 12
RANKING.................... The Notes will be subordinated in right of
payment to future Senior Debt issued by the
Company. The guarantees of BHI, the
Subsidiary Guarantor (the "Guarantees") will be
subordinated to the prior payment in full of all
Senior Debt of the Company and BHI.
As of June 30, 1999 the company and BHI
have had outstanding an aggregate
principal amount of approximately $1 million of
Senior Debt which would rank senior in right of
payment to the Notes and guarantees, respectively
OPTIONAL REDEMPTION........ Except as described below, the Notes will not
be redeemable by the Company prior to December 31,
2009. On or after that date, the Notes are
subject to retirement.
CHANGE OF CONTROL.......... Upon an occurrence of a Change of Control, the
Company will be required to make an offer to
repurchase the Notes at a price equal to 101% of
the aggregate principal amount thereof plus
accrued and unpaid interest thereon, if any, to
the date of purchase.
CERTAIN COVENANTS.......... The Indenture contains certain covenants that
impose limitations on, among other things:
(i) the incurrence of additional indebtedness;
(ii) the issuance of Disqualified Capital Stock
by the Company and its subsidiaries;
(iii) the making of certain Restricted Payments.
the Indenture permits Investments
in (i) non-guarantor subsidiaries that are
Wholly Owned Foreign Subsidiaries engaged
in a Related Business and (ii) other
non-guarantor subsidiaries; provided that,
after giving effect to the Investment in
such other non-guarantor subsidiary, (1)
no event of default shall have occurred
under the Indenture, (2) the aggregate of
all Restricted Investments made under the
Indenture to the date of the proposed
Investment, with certain exceptions, does
not exceed the sum of (x) $50.0 million,
and (y) BHI have such assets available to
meet its debenture obligations.
(iv) the imposition of restrictions on the
payments of dividends and other payment
restrictions affecting subsidiaries,
except as to minimum asset levels to
be maintained by BHI.
(v) the incurrence of liens;
(vi) transactions with affiliates.
EVENTS OF DEFAULT AND
REMEDIES................... The Indenture provides that upon the occurrence of
an event of default thereunder (including, without
limitation, upon the failure to retire the
Notes when required upon the occurrence of a
Change of Control or an Asset Sale), either the
trustee under the Indenture or holders of at least
25% in aggregate principal amount of the out-
standing Notes may, subject to certain limitations
related to Senior Debt, declare all principal and
interest on the Notes immediately due and payable.
<PAGE> 13
Likewise, certain defaults under the Indenture
(primarily those defaults related to the
failure to pay indebtedness under the Indenture or
defaults resulting in the acceleration of the
maturity of indebtedness under the Indenture) will
result in an Event of Default.
USE OF PROCEEDS............ See "Use of Proceeds."
NO PERSONAL LIABILITY OF
DIRECTORS, OFFICERS,
EMPLOYEES AND
STOCKHOLDERS............... The Indenture provides that no direct or indirect
stockholder, employee, officer or director, as
such, past, present or future of the Company, BHI
or any successor entity shall have any
personal liability in respect of the obligations of
the Conpany and BHI under the Indenture or the
Notes solely by reason of his or its status as such
stockholder, employee, officer or director.
The Company has been advised that it is the
opinion of the Commission that the indemnification
described in the preceding sentence may be
unenforceable in that it is against public policy.
ESCROW AGENT............. The ESCROW AGENT with respect to the
Offer is Continental Stock Transfer and Trust
Company, 2 Broadway, New York NY.
CERTAIN FEDERAL INCOME TAX
CONSIDERATIONS........... See"Certain Federal Income Tax
Consequences" prior to purchasing Notes in the
Offer.
THE SHARE OFFERING AND DETERMINATION OF OFFERING PRICE
Euro Cap Corporation has authorized Capital of 40,000,000 shares with a
par value of $0.0000025, of which 10,000,500 shares are currently outstanding
and held by 6 shareholders. The offering is for 2,000,000 shares to be sold to
the public at a price to be determined by the bid price for the shares. As the
company is relatively new with no operating history, no determination of the
offering price can be made until a bid price has been established. There is at
present no market for the shares, nor can it be assumed that there will ever be
a market for the shares. The Company does, however, plan to register the shares
as a NASDAQ Small Cap issue within 90 days of the effective date of this
Prospectus.
The Company plans to use no broker dealers in the initial sale of the
shares, but shall act as its own selling agent.
As a result of the foregoing, until a quantity of shares have been sold,
The Company cannot determine the offering price of the shares.
The proceeds from the sale of the shares shall be used as additional
capital for the purchase of as of yet not determined property and as working
capital. (See, "Use of Proceeds")
<PAGE> 14
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the fixed charges of the Company and its
sole subsidiary, BHI. The fixed charges are broken down by property. The
figures presented for Seoul Finance Center are solely pro-forma as the building
has never been occupied. The pro-forma data for interest payments with respect
to the NOTES is calculated based on an increase in LIBOR of 2% from the rate
on December 31, 1999 of ____%. The increase is arbitrary and set merely to
utilize a conservative approach in the calculations.
TABLE
<PAGE> 15
SECURITIES OUTSTANDING
As of the date of this Prospectus, 10,000,500 shares of Common stock
were issued and outstanding. (see "CAPITALIZATION", "PLAN OF DISTRIBUTION"
and "PRINCIPAL STOCKHOLDERS")
CURRENT STOCKHOLDERS
Approximately 6 individuals own shares of the Company's Common Stock
(see "CERTAIN TRANSACTIONS" and "PRINCIPAL STOCKHOLDERS").
DEFINITION OF TERMS
Certain terms used in this Prospectus, usually identified by initial
capital letters, are defined in the section of this Prospectus captioned
"GLOSSARY OF TERMS."
PLAN OF DISTRIBUTION
The Company plans to sell the stock and Notes being issued privately,
to accredited investors (As the term is defined in the Securities Act of
1933, and the Exchange Act of 1934). The Company has no underwriting
Agreement with any Broker, nor does it plan to enter into any.
The Company undertakes to file a post effective amendment to the
Registration Statement identifying any underwriter who may agree to sell
any shares of any Selling Stockholder or Company, and to set forth the terms
of any underwriting agreement or arrangement. The said underwriter shall
also deliver a market making prospectus. As far as the Company is aware,
there exists no past, present, or future plans, proposals, or undertakings
with respect to any underwriter and any selling stockholder.
Although there is no current market for the shares, and they are
not currently traded in the public market, it is anticipated that the shares
will be registered and sold on the NASDAQ Small Cap System within 3
months of the effective date of the Registration Statement of which this
Prospectus forms a part.
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 2,000,000 shares of
Common Stock by the Company as follows: (i) the first $400,000 will be
utilized for working capital and other general corporate purposes (ii) the
remainder will be used for acquisition of property in the United States
in the New York City metropolitan area.
From time to time, in the ordinary course of business, the Company evaluates
possible acquisitions of, or investments in, businesses, products and
technologies that are complementary to those of the Company. A portion of the
net proceeds are therefore to fund acquisitions or investments.
With respect to the proceeds from the sale of the notes, the following
Table shows the planned utilization of Funds:
Year 2000
Fund Usage Total
Cheju JoongMoon Complex
(include Golf Course) 20,000,000
Song Hyun-Dong Project 25,000,000
Seoul Finance Center 350,000,000
Kyungju Chosun Hotel 100,000,000
Purchase, Legal,
and filing expenses 5,000,000
<PAGE> 16
In the event that less than the total amount is raised, the Company
reserves the right to choose among the abovementioned projects for most
appropriate use of the funds. In the event that a minimum of $25,000,000
is not raised, the escrow agent will return the funds to the investors.
Subject to Completion as Specific information is received about
each project, including cash flows, detailed descriptions, and
specific Agreements of Purchase and Sale. The only actual executed
purchase and sale agreement presently available is that of Seoul
Financial Center.
SELLING SHAREHOLDERS
The Company is registering 2,000,000 shares of Treasury Stock
for sale to the general public. There are no other Selling Stockholders.
MARKET FOR COMMON EQUITY
At present, there is no market, public or private, for the trading of
the Company's common stock. The Company anticipates registering its shares
on the NASDAQ Small Cap System within 180 days of the effective date of
the Registration Statement on Form S-11, of which this Prospectus forms a
part.
DIVIDENDS
There have been no cash dividends declared or paid since the
inception the Company and no dividends are contemplated to be paid in the
foreseeable future. No dividends were paid by the Company's subsidiaries,
prior to their acquisition by the Company; however, it is anticipated that
for the foreseeable future, the Company's profits (if any) will be reinvested
in the Company rather than distributed as dividends.
SELECTED FINANCIAL INFORMATION
Set forth below is selected consolidated financial information of
the Company. The provided information is derived from the more detailed
audited consolidated financial statements as of September 30, 1999, and
should be read in conjunction with the audited consolidated financial
statements included elsewhere in this Prospectus and are qualified in their
entirety by reference thereto (see "FINANCIAL STATEMENTS").
Cumulative 6 Months Annual
Since Ended Ended
Inception June December
30, 1999 31, 1998
($) ($) ($)
Operating Results:
Revenues 0 0 0
General and
Administration 194,860 173,138 21,721
<PAGE> 17
INCOME FROM
OPERATIONS
BEFORE INCOME
TAXES (194,850) (173,139) (21,821)
Interest Income 254,881 251,818 3,063
Other Expenses (16,503) (11,126) (5,407)
NET INCOME 42,518 66,653 (24,135)
Earnings (Loss) per
share-Common Stock 0.0067 (0.0033)
ASSETS:
Current Assets:
Cash 4,561,379 1,111,875
Total Current Assets 5,023,107 4,890,583
Total Fixed Assets 211,174 111,292
TOTAL ASSETS 5,234,281 5,001,875
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current Liabilities 21,757 26,010
Long-term Liabilities 198,533 42,953
TOTAL LIABILITIES 863,930 833,343
Common Stock, $0.000025 par value-
authorized 40,000,000 shares;
issued and outstanding 10,000,500 250 250
Additional Paid-In-Capital 4,319,905 4,186,417
Gain Accumulated during
the development stage 28,439 (24,135)
TOTAL STOCKHOLDERS'
EQUITY 4,348,594 4,142,532
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY 5,234,281 5,001,875
CAPITALIZATION
The following table sets forth the capitalization of the Company as
of June 30, 1999.
June
Title of Class 30, 1999
Stockholders' Equity $4,348,594
Debt
Total Liabilities $885,687
<PAGE> 18
THE COMPANY
The Company was incorporated in the State of New York on February 5,
1999. It was organized as a purchaser of Bon Hyang, Inc. (BHI), and
purchased 100% of the outstanding common shares of BHI on July 1, 1999,
in exchange for 10,000,000 million shares in the common stock of the Company.
Currently the Company is a holding company with one subsidiary, BHI. BHI was
Organized pursuant to the laws of the Republic of Korea. Neither company has
ever been a party to any material reclassification, merger, consolidation, or
purchase or sale of a significant amount of assets not in the ordinary course
of business, other than with respect to BHI's acquisition by the Company.
For purposes of this prospectus, the Company's subsidiary is sometimes
referred to as "BHI".
BHI, a Korean corporation was formed on July 29, 1998,
to purchase and operate, worldwide downtown office complexes and resort
properties. The company currently has 2 resort properties and a downtown
office complex, all in Korea, under contract to purchase for the total sum
of $500,000,000, including the costs of the purchase (See "Description of
Property").
The Company plans to incorporate a second wholly owned subsidiary that
will operate the properties owned by BHI. The Company also plans to incorporate
subsidiaries in Europe, China, and the United States to purchase other
properties. The strategy of the Company is to utilize local subsidiaries to
purchase properties which will be operated by the Company, or other local
wholly owned subsidiaries. The key to the Company's strategy is that it intends
to allow its holdings to gain value through capital appreciation, and to derive
its income from the judicious management of the property, and from property
rental income.
Initially, the company will be highly leveraged (See "Management's
Discussion and Analysis of Financial Conditions and Results of Operations").
However, the Company plans its long term growth on equity investment and
the reinvestment of profits. It is the Company's goal to have a debt to asset
ratio of no more than 60% by the end of its tenth year of operation.
Management feels that this is a reasonable goal, given that the Seoul
Financial Center will likely carry the Notes and build up a reserve to
retire them at maturity, leaving the remainder of the properties to generate
working capital and profits for investment.
Management feels that the abovementioned strategy will provide a solid
basis for growth, and at the same time minimize the effect of any global or
local recession. Management has assembled what it believes to be a successful,
responsible, and cost conscious management team (See "Biographies of Key
Executives")
Currently, the Company to utilize its full efforts in procuring the Seoul
Financial Center in Seoul, Korea, along with the other properties it has
Options to purchase in Korea, and to develop them into profit centers.
(See Description of Properties)
<PAGE> 19
POLICY WITH RESPECT TO CERTAIN ACTIVITIES
Except as specifically identified below, the statements in sections
(a)-(i) are forward looking policy statements as the Company was formed on
February, 1999, and its only sole business activities to date have been the
purchase of BHI. The policies of the Company outlined below are also the
policies of its sole subsidiary, BHI. These policies may be changed by
by a unanimous vote of the Board of Directors without any voting rights
by the security holders.
The policy of the Registrant with respect to the specific activities
outlined below are as follows:
(a) To issue Senior Security. The Company requires the unanimous consent
of its Board of directors to issue Senior Securities. Other than the issue of
the debenture by BHI to secure the Notes, the Company has decided that it will
not issue Senior Securities in the future, except to property owners for the
purchase of their real property (see (g) below).
(b) To Borrow Money. The Company, except for lines of credit utilized in
the day to day running of its business for an aggregate sum of less than
$5,000,000, does not plan to borrow money in the future. The exception is the
Notes which were deemed necessary to purchase the Korean properties (See
Description of Property). The Company requires the unanimous consent of its
Board of Directors to borrow any sum of money greater than $100,000.
(c) To make loans to other persons. It is the strict policy of the Company
that it will make no loans to third parties except for intercompany loans, with
and without interest, to its subsidiary or, in the future, subsidiaries.
(d) To invest in the securities of other issuers for the purpose of
exercising control. The Company requires the unanimous consent of its Board
of Directors to invest in any other company. The does not intend to purchase
any debt instruments, but may, if it is deemed by the Board of Directors
to be in the best interest of the Company, invest in other companies for the
purpose of gaining control of the said company.
(e) To underwrite securities of other issuers. Except for its subsidiaries
it is the firm policy of the company not to underwrite the securities of other
issuers.
(f) To engage in the purchase (or turnover) of investments. The policy
of the Company is to look to long term growth through the development and
operation of its real estate interests. Except as is consistent with the
foregoing, the Company's policy is not to engage in the purchase of general
investments, and not to turn over its assets. Any investment over $100,000
requires the unimous consent of the Board of Directors.
(g) To offer securities in exchange for properties. It is the policy of
the Company to, where possible, offer securities in the form of common shares
in exchange for properties it wishes to purchase. Unanimous consent of the Board
of Directors is required to effect any such transaction. The Company may also,
with the unanimous consent of its Board of Directors, offer debt instruments
in exchange for properties it wishes to acquire.
(h) To repurchase or otherwise reacquire its shares or securities. It is
the Company's general policy not to reacquire its shares or securities. It
would require the unanimous consent of the Board of Directors and a Special
meeting of Security Holders to change this policy.
(i) Subsequent to the effective date of the Report on Form S-11 of which
this Prospectus forms a part, the Company will be a fully reporting Public
Company and will file all Reports required to be filed by the Securities Act of
1933, as amended, and the Exchange Act of 1934, as amended, including the
filing of quarterly Reports on Form 10-Q, with accompanying unaudited financial
statements, and of annual Reports on Form 10-K, with accompanying audited
statements, certified by independent public accountants, with the SEC.
<PAGE> 20
INVESTMENT POLICIES OF THE COMPANY
(a) Investment or Interest in Real Estate. The Company plans investment
activity in real estate solely for income and not for capital gain. Until the
Notes are retired, the Company must replace any real estate sold by BHI with
Assets of at least equal value. Neither shareholder nor securityholder approval
is required for either the purchase or sale of property. However, unanimous
shareholder approval is required for either the purchase or sale of property.
The Company plans to concentrate its efforts in both Korea and the
New York metropolitan area for the initial acquisition of property. The Company
plans to purchase only resort property, including golfing facilities where
Possible, and large office buildings in urban areas. The key factor in
deciding on a building or resort is its operating profitibility, not its
Capital Gains potential. As well, the Company views each property as an
independent profit center, and operates it as such.
The Company plans to manage its own properties. It plans, where
possible to keep as many of the local property staff as is possible to
run each facility under the supervision of the head office and regional
senior management personnel.
The Company has no specific policy regarding the amount of assets to
be invested in any particular property.
Financing of properties will, generally, be through standard mortgage
financing coupled with property specific securities issued to the property
owner. Where possible, it is the policy of the Company to reduce the overall
leverage on its total portfolio to a ratio of 60% financing to equity.
Initially, the Notes are being used to purchase the first properties in Korea.
Subsequently, the company will endeaver to reduce its leveraged position over
a 10 year period to the ratio previously mentioned.
(b) Investment in Real Estate Mortgages. The Company does not plan any
activity in this area. Having said this, the Company will purchase property
that is subject to mortgages, provided that the properties can be profitably
operated after debt service.
(c) Securities of or interests in persons primarily engaged in real
estate activities. The Company's basic policy is to invest in its or its
subsidiaries' properties only, and not purchase securities of other companies
involved in real estate and real estate associated businesses.
(d) Investment in other securities. The Company does not plan to invest
in other securities, except in the event that it may wish control of a company
owning a particular property the Company wishes to purchase. In this case the
investment in the company would be anciliary to the purchase of the said
property.
<PAGE> 21
DESCRIPTION OF REAL ESTATE
Currently the Company and its sole subsidiary own no property, but have
the option of purchasing two resort properties and a development site in
downtown Seoul Korea, and a purchase and sale agreement executed for the
purchase of the Seoul Financial Center, a 30 story office complex in downtown
Seoul.
Below are the detailed descriptions and operating data for each property:
(A) SEOUL FINANCIAL CENTER.
1) BUILDING LOCATION
#63, Mukyo-Dong, Choong-Ku, Seoul, Korea
2) OVERVIEW OF LOCATION
Optimal location for office building, as neighbored by a main
crossroad of Kanghwamoon in Seoul, it is at the center of Korean politics,
administration, economics, culture, finance, and shopping.
Main street in front of the building, maintains largest traffic
capacity in Seoul and is 2.2km long with 20 street lanes, making access to the
building readily available. The building is adjascent bus and subway stops,
and is in the heart of the Seoul business core and government centers.
Located next to the subway stations of Line 1, Line 2, and Line 5.
It takes 30 minutes to Kimpo Int'l Airport, and 70% of Seoul bus
routes passes through Kwanghwamoon Street.
(3) The Building
The building has 30 floors above ground, and eight floors of below
grade parking. The structure is of steel reinforced concrete, and covers
8,600 square meters.
The building has 119,765 sq. meters in rentable floor space, with
71,972 sqm above ground, and 47,793 sqm of parking below ground. There is
an additional 14,858 sqm in common space and for building operations. The
building has 21 elevators.
The building is currently under foreclosure due to cost overruns,
and the current owners have entered into a purchase and sales agreement with
BHI for the purchase of the building for the sum of $350,000,000 as a
turnkey operation.
Buildings in the area are over 95% occupied (source- Seoul Real Estate
Data Agency)
(4) Pro-Forma Financial Information
Rental income by year
( unit :1,000 won )
Classification 1st year 2nd year 3rd year
Key money 78,969,500 90,303,944 95,320,830
Interest earned 7,896,950 9,030,394 9,532,083
by Key Money
Rental 26,218,950 29,982,138 31,647,812
Increase rate 8% 8%
__________
NOTES:
Calculation basis of Rents:
projected lease area by year x rental x 12 months x increase rate
Interest income : 10% of Key money
1) 1st yea'sr projected lease area : (85% of total area
available for lease)
2) 2nd year's projected lease area : (90% of total area
available for lease)
3) 3rd year's projected lease area : (95% of total area
available for lease)
Maintenance Costs
(unit: 1,000 won)
Classification 1st year 2nd year 3rd year
Maintenance costs 11,825,280 13,522,360 14,273,832
Increase rate 8% 8%
Parking Charge
(unit :1,000 won)
Classification 1st year 2nd year 3rd year
Parking charge 2,056,320 2,351,462 2,482,099
Increase rate 8% 8%
* Calculation basis of Parking charge
No. of fixed parking cars x occupancy rate by year x parking charge x
l2 months x increase rate
* Parking lot for 600 cars is used by tenants free of charge. (1,200
cars parking lot)
* Fixed parking charge : 210,000 won / a car
* Fixed parking charge : 600 vehicles x 85%(Occupancy rate) x 210,000 x
12 months -1,285,200,000 won
* Parking charge per hour :771,120,000 won( 60% of fixed parking charge)
* Annual parking charge : 2,056,320,000 won(Fixed parking + parking by
the hour)
<PAGE> 22
Projected General Administrative Expenses (1st Year)
(unit 1,000 won)
Description Amount
Personnel
Expenses 302,770
Administrative
Services 2,400,000
Water, light and
heating 3,622,913
Taxes and Dues 991,082
Supplies 217,374
Commissions 181,145
Insurance 54,343
Travel 18,114
Total 7,787,741
Taxes and Dues by Year (unit: 1,000 won)
Description 1st Year 2nd Year 3rd Year
Property Tax (Building) 397,996 417,896 438,791
Land Tax 249,004 261,454 274,527
VAT on key money
interest 344,082 421,156 508,360
Total 991,082 1,100,506 1,221,678
Calculation Basis
Property Tax (Building)
- Annual 5% increase applied
92,650,730 won x 29,329.1 pyong (SFC) /7,169 pyong (Kwanghwamoon) x 1.05
= 397,996,000 won
(2nd year's Property Tax)
397,996,000 won x 1.05 = 417,896,000 won
(3rd year's Property Tax)
417,896,000 won x 1.05 = 438,791,000 won
Land Tax
5,547.5m2 (Land) x 13,700,000 won
76,000,750,000 won (assessed Land Price)
76,000,750,000 won (assessed Land Price) x 35%
26,600,262,500 won(Tax basis)
(1st year's Land Tax)
82,400,000 won + (16,600,262,500 won x 15/1000) = 249,003,938 won
(2nd Land Tax)
249,003,938 won x 1.05 = 261,454, 135 won
(3rd Land Tax)
261,454,135 won x 1.05 = 274,526, 842 won
VAT on Key Money Interest (annual 10% increase from 2 nd year)
Total Key Money x 9/100 x 10% =
1st year: 38,231,367,000won x 9/100 x 10% = 344,082,303 won
2nd year: 46,795,193,000won x 9/100 x 10% = 421,156,737 won
3rd year: 56,484,551,000won x 9/100 x 10% = 508,360,959 won
Projected Income Statement (1999. 10.1 - 2002.9.30)
(unit :1,000 won)
Year
Description 1st year 2nd year 3rd year
(1999 10.1- (2000 10.1- (2001 10.1-
2000.930) 2001.9.30) 2002.10.1)
Sales 47,997,500 54,886,354 57,935,826
Rent 26,218,950 29,982,138 31,647,812
Maintainance costs 11,825,280 13,522,360 14,273,832
Parking charge 2,056,320 2,351,462 2,482,099
Interest on Key money 7,896,950 9,030,394 9,532,083
General Administrative
expenses 7,787,741 8,236,999 8,714,995
Personnel expenses 302,770 317,909 333,804
Administrative
Services 2,400,000 2,520,000 2,646,000
Water, light and
heating 3,622,913 3,804,059 3,994,262
Taxes & Dues 991,082 1,100,506 1,221,678
(VAT on
Key money interest) (344,082) (421,156) (508,360)
(Property Tax) (647,000) (679,350) (713,318)
Insurance 54,343 57,060 59,913
Supplies 217,374 228,243 239,655
Commissions 181,145 190,202 199,712
Travel 18,114 19,020 19,971
Operating income 40,209,759 46,649,355 49,220,831
Income Taxes 11,258,733 13,061,819 13,781,833
Net Income 28,951,028 33,587,536 35,438,998
Key Money 78,969,500 90,803,944 95,320,830
<PAGE> 23
V. Rentals of Buildings in Neighborhood
(as of 1999/rent per pyong)
Building
S.F.C Koram Bank Kyobo Youngpoon Dong-A Samsung Naewee
Description O Fire
Insurance
Location Mukyodong Kongpyongd Chongrol Chonggak Front of Yulgiro Yulgiro
ong ga SEC
Scale
(above/under) 30/8 12/4 22/3 23/5 19/6 20/6 15/3
Total Floor
Area 36,207 12,000 22,300 22,300 11,200 16,690 10,120
Lease Area
per floor 960 380 993 650 378 544 500
Key Money 8,300,000 9,000,000 9,000,000 8,500,000 9,500,000 10,000,000 9,500,000
Key Money for
Monthly
rent 850,000 800,000 710,000 830,000 900,000 915,000 820,000
Rental 90,000 85,000 91,600 89,000 90,000 91,500 93,000
Maintenance
costs 32,000 30,000 31,800 30,000 30,000 37,000 31,000
Parking
charge 210,000 200,000 200,000 200,000 180,000 200,000 200,000
Occupancy
rate 95% 96% 96% 90% 99% 92%
<PAGE> 24
(B) Kyungju Chosun Hotel
Location
1) Address- #410-2 Sinpyung-Dong City Kyungsang Bokdo Province
2) Land ; 2,220,678 Square Meters
3) Hotel area ; 43,854 Square Meter
4) Benefits of location
The whole area around Hotel is a year round tourist area whose main
attractions are the hot springs. The area is under constant development
with a race track complex to be completed in the near future. Construction
has begun on a high speed train, bringing the property within 1 1\2 hours
commuter distance from Seoul and other major urban centers.
BHI has an option to purchase the property for $100,000,000.
Cheju Joon Moon Complex
BHI has an option to purchase this property for $20,000,000.
.Location ; #2100 Saekdal- Dong, Seoguipo Cit, Cheju Province, Korea
.Total Area ; 954,767m2
.Construction Area ; 4,400m2
.General Inf. ; 18 holes, 1 unit of club house, 86 bunkers, 2 resting area,
Total length 6,820m
This is an international resort complex, and is located on Cheju
Island, a one hour flight fron Seoul. The island has a temperate climate
year round, and is very heavily visited by foreign nationals as well as
Koreans year round. President Clinton, on his visit to Korea stayed at this
resort.
BHI has an option to purchase the resort for $20,000,000.
(C) Song Hyun-Dong Property
BHI has an option to purchase this property for $25,000,000.
Location - ;#49-1 Songhyun-dong, Chongro-ku, Seoul, Korea
Total Land Area ; 35,876,6 m2
Construction Area ; 221,266 m2will be developed later)
This property is in the heart of Seoul Korea, within walking distance
of the Presidential Palace, and the Company intends to inventory the
property and construct an international convention center on the
property at a later date.
The operating history of each of the properties is presented below:
TABLE
<PAGE> 25
TAX TREATMENT OF SECURITY HOLDERS
SECURITY HOLDERS
The following discussion summarizes certain United States Federal income
tax considerations associated with the the ownership and disposition of Notes.
This summary applies only to beneficial owners of Notes who acquire such Notes
at the initial offering from the Company for the original offering price
therefor. This summary is based upon existing United States Federal income tax
law, which is subject to change,possibly with retroactive effect. This summary
does not discuss all aspects of United States Federal income taxation that
may be relevant to particular holders in the context of their specific
investment circumstances or certain types of holders subject to special
treatment under such laws (including, for example, financial institutions,
insurance companies, broker-dealers, persons having a functional currency
other than the United States dollar, United States expatriates, tax-exempt
organizations, controlled foreign corporations related to Corporate Express
through stock ownership and holders (whether actual or constructive) of 10%
or more of the total combined voting power of all classes of stock of the
Company). In addition, this summary does not discuss any foreign, state or
local tax considerations and assumes that holders of the Notes will hold the
Notes as "capital assets" (generally, property held for investment).
Prospective holders of Notes should consult their tax advisors
regarding the United States Federal, State, Local, and Foreign Income and
other tax considerations of the ownership and disposition of the Notes.
For purposes of this summary, a "United States holder" is an individual who
is a citizen or resident of the United States, a corporation or partnership
created or organized under the laws of the United States or any state or
political subdivision thereof, or a person or other entity who is otherwise
subject to United States Federal income taxation on a net income basis in
respect of income derived from the Notes.
United States Holders
Interest payable on the Notes will be included in the income of a
United States holders at the time accrued or received in accordance with such
holder's regular method of accounting for United States Federal income tax
purposes.
A United States holder will recognize a capital gain or loss upon the sale
or other disposition of a Note in an amount equal to the difference between
the amount realized from such disposition (exclusive of any amount paid for
accrued interest not previously included in income, which amount will be
taxable as ordinary income) and the holder's adjusted tax basis in the Note.
Such capital gain or loss will be long-term capital gain or loss if the holder
has held the Note for more than one year at the time of disposition. Holders of
Notes that are individuals are generally entitled to preferential treatment
for net long-term capital gains.
Non-United States Holders
An investment in the Notes by a non-United States holder generally will
not give rise to any United States Federal income tax consequences, unless the
interest received or any gain recognized on the sale or other disposition of
the Notes by such holder is treated as effectively connected with the conduct
by such holder of trade or business in the United States, or, in the case of
gains derived by an individual, such individual is present in the United
States for 183 days or more and certain other requirements are met.
In order to avoid back-up withholding of 31% on payments of interest and
principal made by United States payors, a non-United States holder of the Notes
must generally complete, and provide the payor with, an Internal Revenue
Service Form W-8 ("Certificate of Foreign Status"), or other documentary
evidence, certifying that such holder is an exempt foreign person.
<PAGE> 26
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION,
CHANGES IN FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis relate to factors which have
affected the financial condition and results of operations of the Company for
the six months ended June 30, 1999 and the fiscal year ending
December 31, 1999.
On July 1, 1999 the Company purchased 100% of all the outstanding
shares of BHI, as fully described in Material Events, below. As a result of
the aforementioned transaction, the Company gained BHI, whose activities are
fully described herein.
Discussion of Financial Information
BHI is the active operating entity, producing, marketing,
manufacturing, and supporting the products of the Company. The Company has no
active income save for the activities of BHI. Therefore, the financial
information regarding the parent company and its subsidiary are presented on
a consolidated basis. The data (pro-forma) for the period ending
December 31, 1998 is solely that of the Subsidiary, as the Company was formed
in February of 1999.
<PAGE> 27
BHI is a development stage company, anticipating becoming an active
Operating company in the current fiscal year upon the purchase of the
properties in Korea with the proceeds of the sale of the Notes. In the event
that the Notes are not sold in sufficient numbers to permit the purchase of the
properties in Korea (See "Description of Properties"), the Company will attempt
to find suitable property in Korea and purchase the same with its cash reserves
(See "Liquidity"). This discussion is based on the Financial Statements found
elsewhere in this Prospectus, and the reader is directed to these (See,
"Financial Statements").
For the fiscal year ended December 31, 1998, and the six month period
ended June 30, 1999, there were no revenues.
The overall profit during the development period to the end of
June 30, 1999 was $28,439, with profits during the 6 month period ending
June 30, 1998 being $53,461 as compared to a loss of $24,135 for the
fiscal year ended December 31, 1998. As there was no operating income for
either period, the Company's income is a reflection solely of interest income.
Expenses since inception were $194,860 for the period ending June 30, 1999.
Expenses for the fiscal year ended December 31, 1998 were $173,139 as compared
to $21,721 for the six months ended June 30,1999. The increase is reflective
of the efforts of the Company to become an operating Company, and is mainly
due to the increase of salary and benefits related expenses.from $11,812
for the fiscal year ended December 31, 1998 to $148,225 for the six months
ending June 30, 1999.
The cash and investment certificate position of the company was
$5,023,107 on June 30, 1999 as compared to $4,890,583 on December 31, 1998.
Material Events
Acquisition of BHI
On July 1, 1999, in exchange for 10,000,500 shares in the common
stock of Company, 100% of the stock in BHI was sold by the owners of the stock
to the Company. The transaction resulted in the 6 shareholders of BHI owning
99.9 percent of the Company.
<PAGE> 28
Liquidity
Management believes that the Company has the cash funds and necessary
liquidity to meet the needs of the Company over the next year.
Primarily, liquidity needs will be met through the utilization of the cash
reserves.
However, to fully maximize the potential presented by the purchase and sale
contract for Seoul Financial Center, and the options to purchase the remaining
properties, the Company will need a cash infusion of $500,000,000. The funds
will be primarily used to purchase the properties and for the costs of closing.
In the event insufficient funds are raised for all or any of the closings
the Company will use its cash reserves to purchase property in Korea for
generating operating capital.
Current Plans
The key events that are anticipated by management to occur over the
next year are the closings on one or more properties and the transition
from a development stage company to an active operating one.
Selection, Management and Custody of Company's investments
The Company will manage all of its properties and finances, and not
rely on any outside managers and consultants.
It is the strict policy of the Company that no officer, director, or
employee have any ownership interest in any property purchased or operated by
the Company. The Company will not purchase any property in which a Director
or senior management personnel have an interest.
Accounting Policies and Procedures
The Company follows generally accepted accounting principles in
preparing its financial statements, and has audited statements produced
annually, with its quarterly statements produced by its management and
accountants.
Revenue Recognition
Revenue is recognized using the accrual method of accounting.
Statements of Cash Flows
Statements of Cash Flow are prepared quarterly, on a consolidated
basis, using generally accepted accounting principles and guidelines.
Inventory
The Company keeps no inventory except office supplies and sundry.
<PAGE> 29
Fixed Assets
Fixed assets are valued based on their depreciated value. Depreciation
is calculated using the straight line method.
Principles of Consolidation
All Financial Statements are produced on a consolidated basis, as the
subsidiary, BHI, accounts for all operating revenue of the Company.
Income/Loss Per Share
The Computation of loss per share of common stock is based on the
weighted average number of shares outstanding during the periods presented.
Statement Re Computation of Earnings Per Share
The Company has a simple capital structure as defined by APB Opinion
Number 15. Accordingly, earnings per share is calculated by dividing net
income by the weighted average shares outstanding.
Provision for Income Taxes
Provisions for income tax are computed quarterly using the guidelines
as defined in the Federal and State Statutes.
The Company's Immediate Capital Requirements
The Company requires about $500,000,000 to close on the properties
in Korea presently under contract or on which the Company has options
to purchase. (See "Description of Properties").
CONFLICTS OF INTEREST
Baik Suk Kim is an Executive Officer and director of the Company,
and as such exerts great influence on all matters on which the Board will
vote at the next annual meeting of the Company's Stockholders. He
also holds or controls a definitive major interest in the
Company's outstanding common stock. Because the Company's officers and
directors will be voting upon matters of personal interest to him (e.g.,
salaries, bonuses and other benefits), the outcome of such votes will not be
based on arm's length negotiations. While the Company's current officers
intend to exercise fairness in determining their compensation and all other
matters, there can be no assurance that the Company would not have negotiated
more favorable arrangements had persons other than its current officers been
responsible for ultimate determinations.
<PAGE> 29
MANAGEMENT
Directors and Executive Officers
The following sets forth the names and ages of all the Directors and
Executive Officers of the Company, positions held by such person, length of
service, when first elected or appointed and term of office.
First Elected
Name Age or Appointed/Term Position
Baik Suk Kim 59 February 5, 1999 CEO, Chairman
of the Board
Jin Ho Kim 32 July 1, 1999 President
Jeong Ja Yoon 59 July 1, 1999 Chief Financial Officer
Yong Ho Kim 34 July 1, 1999 Director
Biographies of Directors, Officers and Director Nominees
Baik Suk Kim, Chairman/CEO
Mr. Kim's responsibilities include long term vision and business
development. He was the founder of both the Company and BHI.
He directly manages the acquisition of properties and investment strategy
of the Company and BHI.
For the 5 years prior to becoming full time CEO of the Corporation and
BHI, Mr. Kim was president of Korea RAIS Chemical Ltd.
Mr. Kim is a graduate of Chung Nam University.
Jin Ho Kim, President
Mr. Kim's duties include the overseeing of all day to day
operations, and the implementation of Corporate Strategy into the Company.
For the five years prior to coming to the Company, Mr. Kim was a senior
manager with Mang Hyang, Ltd.
Mr. Kim is a graduate of Kyeong Ki University.
Jeong Ja Yoon, Chief Financial Officer
Mr.Yoon's duties include the supervision of the accounting department
and the analysis of prospective properties for purchasing. He oversees all
financial aspects of the Company's operations.For the five years prior to
coming to the Company he was a senior manager with Mang Hyang, Ltd.
Mr. Yoon is a graduate of Kyong Ki University.
Yong Ho Kim, Director
Mr. Kim works full time with the Company as a managing director.
He works with the Chairman in the areas of Property procurement and
operations of purchased properties. Prior to coming to the Company,
Mr. Kim was a senior manager with Mang Hyang, Ltd. for the preceeding five
years.
Mr. Kim is a graduate of Methodist University.
<PAGE> 30
Involvement in Certain Legal Proceedings
During the past five years no current director, person nominated to
become a director, executive officer, promoter or control person of the
Company has been a party to or the subject of:
(1) Any bankruptcy petition filed by or against any business of which
such person was a general partner or executive officer either at the time of
the bankruptcy or within two years prior to that time;
(2) Any conviction in a criminal proceeding or has been subject to a
pending criminal proceeding (excluding traffic violations and other minor
offenses);
(3) Any order, judgment, or decree, not subsequently reversed, suspended
or vacated, of any court of competent jurisdiction, permanently or
temporarily enjoying, barring suspending or otherwise limiting his
involvement in any type of business, securities or banking activities; and
(4) Been found by a court of competent jurisdiction (in a civil action),
the Commission or the Commodity Futures Trading Commission to have violated a
federal or state securities or commodities law, and the judgement has not
been reversed, suspended, or vacated.
Compensation
Compensation of Directors
Standard Arrangements
All members of the Company's board of directors are paid a per diem
fee of for attendance at meetings of the board of directors and committees
thereof. In addition, if required, they are reimbursed for travel expenses
and lodging is arranged for them, at the Company's expense. At such time as
adequate funds are available, all director (and officers) of the Company will
be covered by liability insurance. Directors are reimbursed for all out of
pocket expenses incurred in the performance of their roles, subject to
provision of receipts in form and substance adequate to satisfy Internal
Revenue Service audit requirements (e.g., long distance telephone, postage,
etc.).
Other Arrangements
Neither the Company nor any of its subsidiaries have any other
arrangements to compensate its directors.
Employment contracts, termination of employment & change-in-control
arrangements
The Company does not have any compensatory plan or arrangement,
including payments to be received from the Company, with respect to a named
executive officer that results or will result from the resignation,
retirement or any other termination of such executive officer's employment
with the Company and its subsidiaries or from a change-in-control of the
Company or a change in the name executive officer's responsibilities
following a chance-in-control, which, including all periodic payments or
installments, exceeds $100,000.
<PAGE> 31
It is anticipated that the CEO, Mr. Kim will draw a salary of $50,000
during the fiscal year ending December 31, 2000, although no salary was drawn
in the past.
Each of the other directors and executives receive a salary of $36,000
per year.
SUMMARY, COMPENSATION TABLE
Annual Compensation Awards Payouts
Other Rest-
Annual ricted
Compen Stock Aw- SU SA
Name and sation ards OP RS LTIP Other
Position Year Salary ($) Bonus ($) (#) ($) __ ($) __($)
Baik Kim 1999 0++ 0 0 0 0 0 0 0 0
Jin Ho Kim 1999 0++ 0 0 0 0 0 0 0 0
Jeong Yoon 1999 0++ 0 0 0 0 0 0 0 0
Yong Ho Kim 1999 0++ 0 0 0 0 0 0 0 0
++ Baik Suk Kim, CEO of the Company drew no salaries prior to January 1, 2000.
It is anticipated that he will draw a salary of $50,000 in
2000.
Jin Ho Kim, President of the Company drew no salary prior to January 1
2000. It is anticipated he will draw a salary of $36,000 in
2000.
Jeong Ja Yoon, CFO of the Company drew no salary prior to January 1
2000. It is anticipated he will draw a salary of $36,000 in
2000.
Yong Ho Kim, Director of the Company drew no salary prior to January 1
2000. It is anticipated he will draw a salary of $36,000 in
2000.
CERTAIN TRANSACTIONS
The following information pertains to all transaction during the
last two year, or proposed transactions, to which the Company was or is to be
a party, in which any of the following persons had or is to have a direct or
indirect material interest: any director or executive officer of the
Company: any nominee for election as a director; any principal security
holder listed below; and, any member of the immediate family (including
spouse, parents, children, siblings, and in-laws) of any of the foregoing
persons.
Relationship Nature of Interest Amount of Fiscal
Name to Company in the Transaction Interest Year Ending
Baik Suk Kim CEO, Chairman
of the Board Purchase of BHI 25% (1) December 31, 1999
Jin Ho Kim President Purchase of BHI 12.5% (1) December 31, 1999
Jeong Ja Yoon Chief Financial Purchase of BHI 25% (1) December 31, 1999
Officer
Yong Ho Kim Director Purchase of BHI 12.5% (1) December 31, 1999
_____________
(1) as a result of the purchase of BHI by the Company, Baik Suk Kim received
2,500,000 shares, as did Jeong Ja Ho. Jin Ho Kim and Yong Ho Kim each received
1,250,000 shares. Baik Suk Kim held 500 shares in the Company prior to the
purchase.
<PAGE> 32
Parents of the Company
The following table discloses all persons who are parent of the
Company (as such term is defined in Securities and Exchange Commission
Regulation C), showing the basis of control and as to each parent, the
percentage of voting securities owned or other basis of control by its
immediate parent if any.
Percentage Other
of Voting Basis
Basis for Securities For
Name Control Owned Control
Baik Suk Kim Share Ownership 25.00 none
Jin Ho Kim Share Ownership 12.5 none
Jeong Ja Share Ownership 25.00 none
Yong Ho Kim Share Ownership 12.5 none
Mi Kyung Kim Share Ownership 12.5 none
Jang Ho Kim Share Ownership 12.5 none
Transaction with Promoters, if Organized Within the Past Five Years
There have been no transactions with Promoters over the past five
years.
PRINCIPAL STOCKHOLDERS
The following sets forth the security ownership of Management of the
Company and any holders of the Company's common stock known to own 5% or more
of the Company's issued and outstanding common stock, as of September 30,
1997.
PRINCIPAL STOCKHOLDERS
As of the date of this Prospectus, the following persons (including
any "group" are, based on information available to the Company, beneficial
owners of more than five percent of the Company's common stock (its only
class of voting securities):
Name and Amount and
Title Address of Nature of Percent
of Beneficial Beneficial of
Class Owner Owner Class
Common Baik Suk Kim 2,500,500 Shares 25.0
Stock 237 Narsu Dong
Jongro-Ku, Seoul, Korea
Common Jeong Ja Yoon 2,500,000 Shares 25.0
Stock 237 Narsu Dong
Jongro-Ku, Seoul, Korea
Common Yong Ho Kim 1,250,000 Shares 12.5
Stock 237 Narsu Dong
Jongro-Ku, Seoul, Korea
Common Jin Ho Kim 1,250,000 Shares 12.5
Stock 240 Narsu Dong
Jongro-Ku, Seoul, Korea
Common Mi Kyung Kim 1,250,000 Shares 12.5
Stock 109 Tong Ui-Dong
Jongro-Ku, Seoul, Korea
Common Jang Ho Kim 1,250,000 Shares 12.5
Stock 684 Yungkwon-Ri, MU Jeong
Jeon Nam, IN Korea
_______________
NOTE: The principal shareholders held the same percentage of Bon Hyang Common
Shares as they now do of the Corporation. They received 20 shares in the
Company for every share they had held in BHI. There was a total of 500,000
shares in BHI sold by the shareholders to the Company.
<PAGE> 33
SECURITY OWNERSHIP OF MANAGEMENT
As of the date of this Prospectus, the following table discloses, as
to each class of equity securities of the registrant or any of its parents
or subsidiaries other than directors' qualifying shares, beneficially owned
by all directors and nominees, the names of each executive officer (as
defined in Item 402[a][2] of Securities and Exchange Commission regulation
S-B), and directors and executive officers of the registrant as a group, the
total number of shares beneficially owned and the percent of class so owned.
Of the number of shares shown, the associated footnotes indicate the amount
of shares with respect to which such persons have the right to acquire
beneficial ownership as specified in Securities and Exchange Commission Rule
13(d)(1).
Name and Amount and
Title Address of Nature of Percent
of Beneficial Beneficial of
Class Owner Owner Class
Common Baik Suk Kim 2,500,500 Shares 25.0
Stock 237 Narsu Dong
Jongro-Ku, Seoul, Korea
Common Jeong Ja Yoon 2,500,000 Shares 25.0
Stock 237 Narsu Dong
Jongro-Ku, Seoul, Korea
Common Yong Ho Kim 1,250,000 Shares 12.5
Stock 237 Narsu Dong
Jongro-Ku, Seoul, Korea
Common Jin Ho Kim 1,250,000 Shares 12.5
Stock 240 Narsu Dong
Jongro-Ku, Seoul, Korea
COMMON STOCK
The Company is authorized to issue 40,000,000 shares of Common Stock,
with a par value of $.000025. Immediately prior to this offering 10,000,500
shares of Common Stock were outstanding and held of record by 6
persons as of December 31, 1999. The holders of Common Stock have one vote
per share on all matters (including election of directors) without provision
for cumulative voting. Thus, holders of more than fifty percent (50%) of the
shares voting for the election of directors can elect all of the directors,
if they choose to do so. The Common Stock currently is not redeemable and
has no conversion or pre-emptive rights. The Common Stock currently
outstanding is (and the Shares being issued pursuant to this prospectus will
be) validly issued, fully paid and non-assessable.
In the event of liquidation of the Company's assets available for
Common Stock will share equally in any balance of the Company's assets
available for distribution to them after satisfaction of creditors and the
holders of the Company's senior securities. The Company may pay dividends,
in cash or in securities or other property when and as declared by the board
of directors from funds legally available therefor, but has paid no cash
dividends on its Common Stock.
OTHER SECURITIES
The Company issued, on December 1, 1999, $500,000,000 of Subordinated
Notes with a floating interest rate of LIBOR +1/2 percentum per anum, maturing
on December 31, 2009. The notes are secured by a fixed and floating
debenture over the assets of Bon Hyang, Inc., the sole subsidiary of Euro
Cap Corporation. Of the total Notes to be issued, $2,000,000 worth are being
registered in the Registration Statement of which this Prospectus forms a part
for sale to the public (See "The Offering")
TRANSFER AGENT
The transfer agent for the Company's Capital Stock is Continental
Stock Transfer and Trust Company of New York.
<PAGE> 34
SHARES ELIGIBLE FOR FUTURE SALE
Generally, under Rule 144, a person (or persons whose shares are
aggregated) who has satisfied a one year holding period may, under certain
circumstances, sell within any three month period a number of shares which
does not exceed the greater of one percent (1%) 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 not
been an affiliate of the Company for at least 90 days and who has satisfied a
one year holding period.
There are 6 shareholders holding 10,000,500 shares which will be
eligible for sale in January of 2001, pursuant to fulfilling the terms as set
down in Rule 144.
ADDITIONAL INFORMATION
The foregoing statement is a summary of the rights and privileges of
the holders of the Company's Stock. It does not purport to be complete and
is subject to the provisions of the New York Corporation Act, the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, and, the rules, regulations and bylaws of the National Association
of Securities Dealers, Inc.. The foregoing statements are qualified in
their entirely by such references.
<PAGE> 35
INDEMNIFICATION ARRANGEMENTS
The Company's articles of incorporation and bylaws provide for
indemnification of the Company's officers, directors and agents to the fullest
extent permitted by law. The Company's articles of incorporation also
limit the right of stockholders to sue Company officers, directors and agents.
In addition, the Company's employment agreements with its officers
all require the Company to defend the contracting parties against all
liabilities resulting from their association with the Company, to the
greatest extent legally permitted.
Insofar as indemnification for liabilities arising under the
Securities Act Of 1933, as amended, may be permitted to directors, officers
or persons controlling the Company pursuant to the foregoing provisions, the
Company has been informed that in the opinion of the United States Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is therefore unenforceable.
LITIGATION
The Company is not a party to any material pending legal proceedings.
LEGAL OPINIONS
Bernabe Diaz, Esquire, Attorney at Law, has rendered his opinion
that the shares of Common Stock reserved as described herein when issued
will be validly issued, fully paid and non-assessable, and that future
purchasers thereof will not be subject to personal liability as a result of
their ownership thereof.
EXPERTS
The audited financial statements of the Company appearing in this
Prospectus and in the Registration Statement have been examined by independent
public accountants, as set forth in their report appearing elsewhere herein,
and are included in reliance upon such report the authority of such firm as
expert in auditing and accounting.
FINANCIAL STATEMENTS
(See following pages)
<PAGE> 36
Bon Hyang Inc.
Financial Statements and
Accountant's Audit Report
For the period beginning July 29 and ended December 31, 1998
And for the two quarters ended June 30, 1999
Euro Cap Corporation
Financial Statements and
Accountant's Audit Report
For the two quarters ended June 30, 1999
Euro Cap Corporation
Consolidated Pro Forma
Financial Statements and
Accountant's Audit Report
For the period beginning July 29 and ended December 31, 1998
And for the two quarters ended June 30, 1999
<PAGE> 37
Bon Hyang Inc.
FINANCIAL STATEMENTS
For the period beginning July 29 and ended December 31, 1998
And for the two quarters ended June 30, 1999
TABLE OF CONTENTS
______________________________________________________________________________
Page
Accountant's Audit Report 3
Financial Statements:
Balance Sheets F4
Statements of Operations and Deficit F5
Statements of Stockholders' Equity F6
Statements of Cash Flows F7
Notes to Financial Statements F16
______________________________________________________________________________
<PAGE> 38
Euro Cap Corporation
FINANCIAL STATEMENTS
For the two quarters ended June 30, 1999
TABLE OF CONTENTS
______________________________________________________________________________
Page
Financial Statements:
Balance Sheets F8
Statements of Operations and Deficit F9
Statements of Stockholders' Equity F10
Statements of Cash Flows F11
Notes to Financial Statements F16
______________________________________________________________________________
<PAGE> 39
Euro Cap Corporation
Consolidated Pro- Forma
FINANCIAL STATEMENTS
For the period beginning July 29 and ended December 31, 1998
And for the two quarters ended June 30, 1999
TABLE OF CONTENTS
______________________________________________________________________________
Page
Financial Statements:
Balance Sheets F12
Statements of Operations and Deficit F13
Statements of Stockholders' Equity F14
Statements of Cash Flows F15
Notes to Financial Statements F16
______________________________________________________________________________
<PAGE> 40
DMHD Hamilton Clark & Co.
www.dmhd-cpa.com
Stan J.H. Lee, CPA, CMA
Tel) 201-944-7246
440 West St. Suite 300
Fax) 201-944-7759
Fort Lee, NJ 07024-5058
e-mail) [email protected]
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and
Shareholders of
Bon Hyang Incorporation
Naesu-Dong Jongro-Ku
Seoul, Korea
We have audited the accompanying balance sheets of Bon Hyang Inc. as
of December 31, 1998, and for the two quarters ended June 30, 1999, the
related statement of operations, statements of stockholders'
equity and statements of cash flows for the periods then ended. These
financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
based on our audits.
We have also audited the accompanying balance sheet of Euro Cap Corporation
as of June 30, 1999, the related statement of operations,
statement of stockholders' equity and statement of cash flows for the
periods then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
Utilizing the audited data we prepared the consolidated pro-forma balance sheet
and accompanying Statements of Operations, shareholders' equity, and cash flow.
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.
<PAGE> 41
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 Bon Hyang Inc.
at December 31, 1998, and for the two quarters ended June 30, 1999 and the
results of its operations and its cash flows for the periods then ended
in conformity with generally accepted accounting principles.
In our opinion, the financial statements referred to above also present fairly,
in all material respects, the financial position of Euro Cap Corporation
at June 30, 1999 and the results of its operations and its cash flows for the
two quarters then ended in conformity with generally accepted accounting
principles. In our opinion, the financial statements referred to above also
present fairly, in all material respects, the consolidated pro forma financial
position of Euro Cap Corporation on December 31,1998, and at June 30, 1999 and
the results of its operations and its cash flows for the periods then ended in
conformity with generally accepted accounting principles.
/s/Stan J.H. Lee, CPA/s/
December 29, 1999
Fort Lee, N.J.
<PAGE> 42
BON HYANG INC.
BALANCE SHEETS
AS OF JUNE 30, 1999 AND DECEMBER 31, 1998
6/30/99 12/31/98
ASSETS
Current Assets:
Cash $4,561,379 1,111,875
Prepaid expenses 461,728 3,778,708
5,023,107 4,890,583
Fixed Assets:
Automobile 72,112 60,388
Furniture and fixtures 16,699 10,446
Security deposits 103,671 27,500
Organizational costs 18,692 12,958
211,174 111,292
TOTAL ASSETS $5,234,281 $5,001,875
LIABILITIES
Current Liabilities:
Notes payables 21,757 26,010
21,757 26,010
Long-Term Debt:
Notes payable 863,930 833,333
863,930
TOTAL LIABILITIES 885,687 859,343
SHAREHOLDERS' EQUITY
Capital Stock 4,319,655 4,166,667
authorized capital of
2,000,000 shares of
common stock with a
par value of 10,000
WON per share; 500,000
Shares issued and
outstanding
Retained earnings 28,939 (24,135)
4,348,594 4,142,532
$5,234,281 $5,001,875
See Accompanying Notes Which are an Integral Part of Financial Statements.
<PAGE> 43
BON HYANG INC.
STATEMENTS OF EARNINGS AND RETAINED EARNINGS
FOR THE TWO QUARTERS ENDED JUNE 30, 1999
AND
FOR THE PERIOD OF JULY 29, 1998-DECEMBER 31, 1998
CUMULATIVE
SINCE
INCEPTION 12/31/97 12/31/98
REVENUE $- $- $-
GENERAL AND
ADMINISTRATIVE
EXPENSES
Salaries 140,510 129,823 10,687
Employee benefits 19,527 18,402 1,125
Communications 3,166 2,376 790
Office 1,664 1,227 437
Advertising 12,746 8,639 4,107
Travel 10,831 7,826 3,005
Automotive 4,555 3,422 1,133
Professional fees 1,361 924 437
TOTAL GENERAL AND
ADMINISTRATIVE EXPENSES 194,360 172,639 21,721
INCOME (LOSS) FROM
OPERATIONS (194,360) (172,639) (21,721)
Other revenues and gains
Interest Income 254,881 251,818 3,063
Other Expenses and
losses Amortization on
deferred assets (15,639) (10,368) (5,271)
Miscellaneous loss (1,864) (1,658) (206)
INCOME (LOSS) BEFORE
INCOME TAX 43,018 67,153 (24,135)
Income taxes (13,192) (13,192) -
INCOME (LOSS) BEFORE
EXTRAORDINARY ITEM 29,826 53,961 (24,135)
Extraordinary items
Gain (Loss) currency
conversion (887) (887) -
NET INCOME (LOSS) 28,939 53,074 (24,135)
RETAINED EARNINGS,
beginning - (24,135) -
RETAINED EARNINGS,
end 28,939 28,939 (24,135)
See Accompanying Notes Which are an Integral Part of Financial Statements.
<PAGE> 44
BON HYANG INC,
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE TWO QUARTERS ENDED JUNE 30, 1999
AND
FOR THE PERIOD OF JULY 29-DECEMBER 31, 1998
Common Stock Total
Numbers of Shares Amount Retained earnings Stockholders'
(Deficits) Equity
07/29/98 500,000 $4,166,667 $- $4,166,667
Shares Issued
in years 1998 - - - -
Net Income-
7/29-12/31/98 - - (24,135) (24,135)
BALANCE AS OF
12/31/98 500,000 $4,166,667 (24,135) 4,142,532
BALANCE AS OF
01/01/99 500,000 4,166,667 (24,135) 4,142,532
Net gain (Loss) -
currency conversion - 152,988 - 152,988
Net Income- 6/30/99 - - 53,074 53,074
BALANCE AS OF
6/30/99 500,000 $4,319,655 $28,939 $4,348,594
See Accompanying Notes Which are an Integral Part of Financial Statements.
<PAGE> 45
BON HYANG INC.
STATEMENT OF CASH FLOWS
FOR THE TWO QUARTERS ENDED JUNE 30, 1998
AND
FOR THE PERIOD OF JULY 29-DECEMBER 31, 1998
CUMULATIVE
SINCE
INCEPTION 6/30/99* 12/31/98
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net Income $29,826 $53,961 $(24,135)
$29,826 $53,961 $(24,135)
CASH FLOWS FROM
INVESTING ACTIVITIES:
Collection of prepayments 3,455,723 3,455,723 -
Prepaid expenses (3,778,708) - (3,778,708)
Lease deposits (102,662) (75,162) (27,500)
Acquisition of automobile (69,896) (9,508) (60,388)
Acquisition of furniture
and equipment (16,314) (5,868) (10,446)
Deferred assets (18,216) (5,258) (12,958)
(530,073) 3,359,927 (3,890,000)
CASH FLOWS FROM
FINANCING ACTIVITIES:
Proceeds of short-term
debt 833,333 833,333
Proceeds of long-term
debt 26,010 26,010
Proceeds from issuance
of common stock 4,166,667 4,166,667
Notes payables (5,208) (5,208) -
5,020,802 (5,208) 5,026,010
Net Increase(Decrease)
in Balance of Cash 4,520,555 3,408,680 1,111,875
Cash at Beginning
of Period 1,152,699 1,152,699 -
Cash at End
of Period $5,673,254 $4,561,379 $1,111,875
* Adjusted for currency appreciation
See Accompanying Notes Which are an Integral Part of Financial Statements.
<PAGE> 46
EURO CAP CORPORATION
BALANCE SHEETS
AS OF JUNE 30, 1999
6/30/99
ASSETS
Current Assets:
Cash $-
-
TOTAL ASSETS $-
LIABILITIES
Current Liabilities: $-
Accounts payables -
-
Long-Term Debt:
Notes payable -
TOTAL LIABILITIES -
SHAREHOLDERS' EQUITY
Capital Stock $ 500
40,000,000 shares of Common Stock
authorized at a par value of
$0.000025 each, 500 issued
Retained earnings (500)
-
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $-
See Accompanying Notes Which are an Integral Part of Financial Statements.
<PAGE> 47
EURO CAP CORPORATION
STATEMENTS OF EARNINGS
FOR THE QUARTERS ENDED JUNE 30, 1999
6/30/99
REVENUE $-
GENERAL AND ADMINISTRATIVE EXPENSES
Registration fees 500
TOTAL GENERAL AND ADMINISTRATIVE EXPENSES 500
OPERATING INCOME (LOSS) (500)
NET INCOME (LOSS) (500)
See Accompanying Notes Which are an Integral Part of Financial Statements.
<PAGE> 48
EURO CAP CORPORATION
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE TWO QUARTERS ENDED JUNE 30, 1999
Common Stock Total
Numbers of Shares Amount Retained earnings Stockholders'
(Deficits) Equity
BALANCE AS OF
01/01/99 500 $500 $- $500
Shares Issued
in years 1999 - - - -
Net Income-
01/01/99-06/30/99 - - (500) (500)
BALANCE AS OF
06/30/99 500 $500 (500) -
See Accompanying Notes Which are an Integral Part of Financial Statements.
<PAGE> 49
EURO CAP CORPORATION
STATEMENT OF CASH FLOWS
FOR THE TWO QUARTERS ENDED JUNE 30, 1999
6/30/99
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $(500)
(500)
CASH FLOWS FROM INVESTING ACTIVITIES:
-
-
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock 500
500
Net Increase(Decrease) in Balance of Cash -
Cash at Beginning of Period -
Cash at End of Period $-
See Accompanying Notes Which are an Integral Part of Financial Statements.
<PAGE> 50
EURO CAP CORPORATION
CONSOLIDATED PRO-FORMA BALANCE SHEETS
AS OF JUNE 30, 1999 AND DECEMBER 31, 1998
6/30/99 12/31/98
ASSETS
Current Assets:
Cash $4,561,379 1,111,875
Prepaid expenses 461,728 3,778,708
5,023,107 4,890,583
Fixed Assets:
Automobile 72,112 60,388
Furniture and fixtures 16,699 10,446
Security deposits 103,671 27,500
Organizational costs 18,692 12,958
211,174 111,292
TOTAL ASSETS $5,234,281 $5,001,875
LIABILITIES
Current Liabilities:
Notes payables 21,757 26,010
21,757 26,010
Long-Term Debt:
Notes payable 863,930 833,333
863,930
TOTAL LIABILITIES 885,687 859,343
SHAREHOLDERS' EQUITY
Capital Stock 4,320,155 4,166,667
Retained earnings 28,439 (24,135)
4,348,594 4,142,532
$5,234,281 $5,001,875
See Accompanying Notes Which are an Integral Part of Financial Statements.
<PAGE> 51
EURO CAP CORPORATION
CONSOLIDATED PRO-FORMA STATEMENTS OF EARNINGS AND RETAINED EARNINGS
FOR THE TWO QUARTERS ENDED JUNE 30, 1999
AND
FOR THE PERIOD OF JULY 29, 1998-DECEMBER 31, 1999
CUMULATIVE
SINCE
INCEPTION 06/30/99 12/31/98
REVENUE $- $- $-
GENERAL AND
ADMINISTRATIVE EXPENSES
Salaries 140,510 129,823 10,687
Employee benefits 19,527 18,402 1,125
Communications 3,166 2,376 790
Office 1,664 1,227 437
Advertising 12,746 8,639 4,107
Travel 10,831 7,826 3,005
Registration fees 500 500 -
Automotive 4,555 3,422 1,133
Professional fees 1,361 924 437
TOTAL GENERAL AND
ADMINISTRATIVE EXPENSES 194,860 173,139 21,721
INCOME (LOSS) FROM
OPERATIONS (194,860) (173,139) (21,721)
Other revenues and gains
Interest Income 254,881 251,818 3,063
Other Expenses and losses
Amortization on deferred
assets (15,639) (10,368) (5,271)
Miscellaneous loss (1,864) (1,658) (206)
INCOME (LOSS) BEFORE
INCOME TAX 42,518 66,653 (24,135)
Income taxes (13,192) (13,192) -
INCOME (LOSS) BEFORE
EXTRAORDINARY ITEM 29,326 53,461 (24,135)
Extraordinary items
Gain (Loss) currency
conversion (887) (887) -
NET INCOME (LOSS) 28,439 52,574 (24,135)
RETAINED EARNINGS,
beginning - (24,135) -
RETAINED EARNINGS,
end 28,439 28,439 (24,135)
EARNINGS PER SHARE $0.0028 ($0.0024)
See Accompanying Notes Which are an Integral Part of Financial Statements.
<PAGE> 52
EURO CAP CORPORATION
CONSOLIDATED PRO-FORMA STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE TWO QUARTERS ENDED JUNE 30, 1999
AND
FOR THE PERIOD OF JULY 29-DECEMBER 31, 1999
Common Stock Total
Numbers of Shares Amount Retained earnings Stockholders'
(Deficits) Equity
BALANCE AS OF
07/29/98 10,000,000 $4,166,667 $- $4,166,667
Shares Issued
in years 1998 - - - -
Net Income-
7/29-12/31/98 - - (24,135) (24,135)
BALANCE AS OF
12/31/98 10,000,000 $4,166,667 (24,135) 4,142,532
BALANCE AS OF
01/01/99 10,000,000 4,166,667 (24,135) 4,142,532
Shares Issued
in years 1999 500 500 500
Net gain (Loss) -
currency conversion 152,988 152,988
Net Income- 6/30/99 - - 52,574 52,574
BALANCE AS OF
6/30/99 10,000,500 $4,320,155 $28,439 $4,348,594
See Accompanying Notes Which are an Integral Part of Financial Statements.
<PAGE> 53
EURO CAP CORPORATION
CONSOLIDATED PRO-FORMA STATEMENT OF CASH FLOW
FOR THE QUARTERS ENDED JUNE 30, 1999
FOR THE PERIOD OF JULY 29,-DECEMBER 31, 1998
CUMULATIVE
SINCE
INCEPTION 6/30/99* 12/31/98
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net Income $29,326 $53,461 $(24,135)
$29,326
$53,461 $(24,135)
CASH FLOWS FROM
INVESTING ACTIVITIES:
Collection of prepayments 3,455,723 3,455,723 -
Prepaid expenses (3,778,708) - (3,778,708)
Lease deposits (102,662) (75,162) (27,500)
Acquisition of automobile (69,896) (9,508) (60,388)
Acquisition of furniture
and equipment (16,314) (5,868) (10,446)
Deferred assets (18,216) (5,258) (12,958)
(530,073) 3,359,927 (3,890,000)
CASH FLOWS FROM
FINANCING ACTIVITIES:
Proceeds of short-term debt 833,333 833,333
Proceeds of long-term debt 26,010 26,010
Proceeds from issuance of
common stock 4,167,167 500 4,166,667
Notes payables (5,208) (5,208) -
5,021,302 (4,708) 5,026,010
Net Increase(Decrease)
in Balance of Cash 4,520,555 3,408,680 1,111,875
Cash at
Beginning of Period 1,152,699 1,152,699 -
Cash at
End of Period $5,673,254 $4,561,379 $1,111,875
* Adjusted for currency appreciation
See Accompanying Notes Which are an Integral Part of Financial Statements
<PAGE> 54
EURO CAP CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Period Ended JUNE 30, 1999
and December 31, 1998
1. Incorporation and Business Activity
Euro Cap Corporation was incorporated pursuant to the laws of New York
on February 5, 1999. Euro Cap Corporation (Euro Cap), On July 1, 1999,
purchased Bon Hyang Inc.(BHI), in exchange for 10,000,000 shares.
As a result of the foregoing transaction, Euro Cap, a holding Company
with no assets, obtained a wholly owned subsidiary, which will become the
operating entity, with Euro Cap being solely a holding company with the
one operating subsidiary.
Bon Hyang Inc. was incorporated under the laws of The Republic of Korea
on July 29, 1998.
Bon Hyang Inc. is in the business of purchasing and operating real estate
properties. Currently all operations are run from the head office
facilities in Seoul, Korea.
2. Summary of Significant Accounting Policies
a) Principles of Consolidations
Euro Cap is a Holding Company with no asset except for its single
operating subsidiary (see financial statements for Euro Cap).
Bon Hyang Inc., the only subsidiary of Euro Cap and has been included in
the consolidated pro-forma financial statements, as it is the operating
entity, with Bon Hyang, a non-operating holding company.
In accordance with the reverse takeover method of accounting, the
consolidated financial statements of the Company include the accounts of
Euro Cap together with the results BHI for the six-month period ended June
30, 1999 (See Consolidated Pro-Forma Statements). The Individual
statements for BHI and Euro Cap have been prepared for comparative
purposes.
b) Revenue and Expense Recognition
The Company prepares its financial statements on the accrual
accounting basis. Consequently, certain revenue and related assets are
recognized when earned rather than when received, and certain expenses
are recognized when the obligation is incurred or the asset consumed,
rather than when paid.
c) Accounting Method
The Company recognizes income and expenses on accrual basis.
d) Depreciation
Depreciation is computed by using the straight-line method for
financial reporting purposes and the modified accelerated cost
recovery method for federal income tax purposes.
See Accompanying Accountant's Audit Report, which is an Integral Part of
Financial Statements.
<PAGE> 55
EURO CAP CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Period Ended JUNE 30, 1999
and December 31, 1998
e) Income Taxes
Income taxes are provided for the tax effects of transactions reported in
the financial statements and consist of taxes currently due plus deferred
taxes related primarily to differences between the bases of certain assets
and liabilities for financial and tax reporting. The deferred taxes
represent the future tax return consequences of those differences, which
will either be taxable when the assets and liabilities are recovered or
settled.
2. Summary of Significant Accounting Policies - Continued
f) Net Operating Loss Carry-forward
Income taxes are provided for the tax effects of transactions reported
in the financial statements and consist of taxes currently due plus
deferred taxes for operating losses that are available to offset
future taxable income.
g) Intangible Assets
Intangible assets subject to amortization include organization costs,
loan closing costs, and in-force leasehold costs. Organization costs
and in-force leasehold costs are being amortized using the interest
method over the life of the related loan.
h) Reclassifications
Certain accounts in the prior-year financial statements have been
reclassified for comparative purposes to conform with the presentation
in the current-year financial statements.
i) Property and Equipment
Property and equipment are carried at cost. Depreciation of property
and equipment is provided using the straight-line method for financial
reporting purposes at rates based on the following estimated useful
lives:
Machinery and equipment 3-10
Furniture and fixtures 3-10
Engineering equipment 3-10
For federal income tax purposes, depreciation is computed using the
modified accelerated cost recovery system. Expenditures for major
renewals and betterment that extend the useful lives of property and
equipment are capitalized. Expenditures for maintenance and repairs
are charged to expense as incurred.
j) Inventories
Inventories are stated at the lower of cost (determined on the first-
in, first-out basis) or market.
See Accompanying Accountant's Audit Report, which is an Integral Part of
Financial Statements
<PAGE> 56
EURO CAP CORPORATOION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Period Ended JUNE 30, 1999
and December 31, 1998
3. Business Combination
Pursuant to an Agreement dated July 1, 1999, and effective on that date,
Euro Cap issued 10,000,000 common shares in exchange for 500,000
outstanding shares in the capital of Bon Hyang Inc. As a result of this
transaction, control of the combined companies passed to the former
shareholders of Bon Hyang, Inc.
This business combination situation is referred to as a "Reverse
Takeover". Legally, Euro Cap is the parent or continuing corporation;
however, Generally Accepted Accounting Principles require that the former
shareholders of BHI be identified as the acquirer and that BHI be treated
as the acquired company. Accordingly, control of the assets and business
of Bon Hyang, Inc. has been acquired by Euro Cap in consideration for the
issuance of common shares.
4. Loans
The Notes Payable are unsecured, non-interest bearing with non-set terms
of repayment. They will be retired as the company has surplus funds to
repay these loans. The Note Holder is Baik Suk Kim, CEO of both Euro Cap
and BHI.
5. Common Stocks
The Company is authorized to issue 40,000,000 at $ 0.000025 par value
share, and, as of June 30, 1999, 500 voting common shares are issued and
outstanding. However, to show the effect of the transaction which took
place the next day, the capital of the Company has been retroactively
restated in the Consolidated pro-forma statements to show the effect of
the transaction.
6. Related Party Transaction
There were significant non arm's-length basis transactions between the
Company and any related party during the Period Ended June 30, 1999.
13. Earnings Per Shares
Earnings (Loss) per share are calculated using the weighted-average
number of common shares outstanding and common shares equivalents. The
average number of shares outstanding under these assumptions would be 500
as of December 31, 1998 and 500 as of June 30, 1999. However, to show the
effect of the reverse takeover, the weighted average was adjusted to
10,000,500 for both periods in the consolidated pro forma statements.
See Accompanying Accountant's Audit Report, which is an Integral Part of
Financial Statements.
<PAGE> 57
BLANK PAGE
<PAGE> 59
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 34: INDEMNIFICATION OF OFFICERS AND DIRECTORS
In accordance with the General Corporation Laws of the State of
New York which were in effect at the time the Registrant was incorporated,
the Registrant's Board of Directors adopted by resolution, as further set
forth in the Registrant's by laws, provisions relative to indemnification
of its Officers and Directors against expenses, judgments, fines,
settlements, and other amounts actually and reasonably incurred in connection
with the defense of any proceeding or threatened proceeding to which such
person was or is a party, or is threatened to be made a party by reason of
the fact that such person was or is an officer or director, provided that,
(i) such director or officers acted in good faith or in a manner reasonably
believed by him to be in the best interests of the corporation to procure a
judgment in its favor. In the latter case, the power to indemnify extends
to expenses actually or reasonably incurred in connection with the defense
or settlement of any proceeding if such person (i) acted
in good faith, and (ii) the manner such officer and director believed to
be in the best interest of the corporation and with such care, including
reasonable inquiry, as an ordinary prudent person would use under similar
circumstances. No indemnification will be made in respect of any claim,
issue or matter, as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his duty to the
corporation unless, and only to the extent that the court in which such
action or suit was brought shall determine upon an application of that,
despite the adjudication of liability, but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for
such expenses which the court shall deem proper. Otherwise, indemnification
for an officer and director meeting the applicable standards of conduct is
determined by a majority of the disinterested directors or shareholders or
upon application by the corporation, such officer or director or his
attorney, to the court in which such proceeding was pending.
The Securities & Exchange Commission is of the opinion that
Indemnification of Company officers or directors for matters involving
violation of securities laws is against public policy and that agreements
therefor are consequently unenforceable.
ITEM 31: OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses in connection with distribution of the securities of
the Company being Registered hereby, other than commissions and
non-accountable expense allowances, will be borne directly by the
Company rather than by the selling stockholder. Such expenses are
estimated to be $50,000.
Item Amount
United States Securities and Exchange Commission filing fee $ 700
Printing Expenses 4,000
Fees and expenses of counsel for the Company 22,000
Accounting fees and expenses 20,000
Transfer agent fees and expenses 3,000
Miscellaneous 300
TOTAL $50,000
<PAGE> 60
Part II, Page 2
ITEM 33 RECENT SALES OF UNREGISTERED SECURITIES
Acquisition of Bon Hyang Inc.
On July 1, 1999, in exchange for 10,000,000 shares in the common
stock of Company, 100% of the stock in BHI was sold by the owners
thereof, to the Company. They received 20 shares in the Company
for every share they had held in BHI. There was a total of 500,000 shares
in BHI sold by the shareholders of BHI to the Company. (See-"PRINCIPAL
SHAREHOLDERS","Security Ownership of Management", for the names and addresses
of the shareholders of BHI who received shares in the Company). These shares
were restricted, subject to Rule 144, and exempt from registration through
reliance on Section 4 (2) of the Securities Act of 1933 as the purchasers
are deemed sophisticated purchasers.
<PAGE> 61
Part II, Page 3
ITEM 27: EXHIBITS
Exhibit
Number Description
Page
1. Constituent Document:
.1 Original Article of Incorporation 68
.2 Bylaws 72
5.1 Opinion of Counsel 84
10. Material Contracts:
.1 Purchase and Sale Agreement,
Seoul Finance Center 85
.2 Indenture, Euro Cap Corporation 90
.3 Debenture, Bon Hyang, Inc. 99
<PAGE> 62
Part II, Page 4
.4 Stock Purchase Agreement 109
22. Subsidiaries of the Registrant 134
24.6 Consent of Auditors 135
ITEM 28: UNDERTAKINGS
A. Certificates
The Company hereby undertakes to provide its transfer agent with
certificates in such denominations and registered in such names as
required to permit delivery thereof to each purchaser of the Selling
Stockholders' stock offered hereby, from time to time, as required,
starting as of the close of business on the day immediately following
the date of this Registration Statement.
B. Liabilities
Insofar as indemnification of liabilities arising under the
securities Act of 1933, as amended, may be permitted to directors,
officers and controlling persons of the Company pursuant to the
foregoing provisions or otherwise, the Company has been advised that
in the opinion of the Securities and Exchange Commission such
otherwise, the Company has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is therefore unenforceable.
In the event that a claim for indemnification against such
liabilities (other than payment by the Company of expenses incurred
or paid by a director, officer or controlling person of the Company
in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the Company will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction
the question of whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue.
C. Further Undertakings
The Company undertakes to file a post effective amendment to the
Registration Statement identifying any underwriter who may agree to sell any
shares of any Selling Stockholder, and to set forth the terms of any
underwriting agreement or arrangement. The said underwriter shall also
deliver a market making prospectus. As far as the Company is aware, there
exists no past, present or future plans, proposals, or undertakings with
respect to any underwriter and any selling stockholder.
<PAGE> 63
Part II, Page 5
The Company further undertakes to:
1. File during any period in which it offers or sells securities, a post
effective amendment to this Registration Statement to:
a) Include any prospectus required by Section 10 (a)(3) of the
Securities Act;
b) Reflect in the prospectus any facts or events which,
individually or together represent a fundamental change
in the information in the Registration Statement; and,
c) Include any additional or changed material information
on the Plan of Distribution.
2. For determining liability under the Securities Act of 1933, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial
bona fide offering.
3. File a post effective amendment to remove from registration any
securities that remain unsold at the end of the offering.
<PAGE> 64
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-11 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Bethel, State of Connecticut, as of the 3rd day
of January, 2000.
EURO CAP CORPORATION
/s/Baik Suk Kim______
by: Baik Suk Kim,
Chairman of the Board
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities and on
the dates indicated:
NAME: TITLE: DATE SIGNED SIGNATURE:
BAIK SUK KIM Director, Chairman of the
Board of Directors, Chief
Executive Officer January 3, 2000 /s/Baik Suk Kim
JIN HO KIM President, Director January 3, 2000 /s/Jin Ho Kim
JEONG JA YOON Chief Financial Officer January 3, 2000 /s/Jeong Ja Yoon
YONG HO KIM Director January 3, 2000 /s/Yong Ho Kim
<PAGE> 65
BLANK PAGE
<PAGE> 66
Registration Number 000-1102267
SECURITIES & EXCHANGE COMMISSION
Washington, D.C 20549
FORM S-11
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933, AS AMENDED
EURO CAP CORPORATION
EXHIBITS
January 5, 1999
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