INFORMATION STATEMENT OF
EUROTRONICS HOLDINGS INCORPORATED
1095 East 2100 South
Salt Lake City, Utah 84106
I. NOTICE OF ACTIONS TAKEN BY WRITTEN CONSENT OF SHAREHOLDERS
This Information Statement is being furnished on behalf of the board of
directors of Eurotronics Holdings Incorporated, a Utah corporation with
principal offices at 1095 East 2100 South, Salt Lake City, Utah 84106 (the
"Company"). The Company's telephone number is 801-487-0888. This Information
Statement is being provided to inform all nonconsenting shareholders of the
corporate actions that were approved by the holders of a majority of the
Company's capital stock.
On July 30, 1996, holders of 2,996,824 of the Company's 4,420,336
then-outstanding shares of common stock, par value $0.0001 ("Common Stock"),
gave written consent to several corporate actions. Pursuant to ss.16-10a-704 of
the Utah Revised Business Corporation Act, this written consent was obtained in
lieu of a shareholders meeting. The actions taken by means of the written
consent consisted of the following:
(a) The shareholders approved an Agreement for the Exchange of Stock
entered by and among the Company, InterConnect West, Inc., a Utah
corporation ("InterConnect"), and the sole shareholder of
InterConnect, Mark Tolman, whereby the Company will acquire
InterConnect as a wholly-owned subsidiary in exchange for the
Company's issuance of 194,936,834 shares of its Common Stock. The
Agreement was executed on July 16, 1996 and was made effective July
30, 1996. The shares to be issued pursuant to the Agreement shall be
issued prior to a reverse stock split also approved by the
shareholders and described more fully below.
(b) The shareholders authorized the Company to amend its Articles of
Incorporation by changing the Company's name to "Access Market Square,
Inc."
(c) The shareholders approved a 1-for-10 reverse stock split of the
Company's issued and outstanding Common Stock. This reverse split will
reduce the number of issued and outstanding shares to one-tenth the
number before the split, but the number of authorized shares of Common
Stock will remain unchanged.
(d) The shareholders approved, adopted and ratified the appointments of
Mark Tolman, Michael Brodsky and Pat Gallegos as members of the
Company's board of directors.
For more information on each of the actions approved by the shareholders, see
"Actions Taken Pursuant to the Written Consent" below.
These actions were approved by holders of a majority of the Common Stock
outstanding on July 30, 1996 and their written consent shall be effective once
proper notice of these actions has been delivered to all nonconsenting
shareholders. The Company is sending this Information Statement to all
shareholders of record as of December 26, 1996 ("Record Shareholders") and we
will begin mailing these materials on December 30, 1996. The effective date for
these corporate actions will be January 20, 1997. WE ARE NOT ASKING YOU FOR A
PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
<PAGE>
II. ACTIONS TAKEN PURSUANT TO THE WRITTEN CONSENT
A. Approval of Acquisition of InterConnect West
On July 16, 1996, the Company executed an Agreement of Exchange of Stock
(the "Agreement") with InterConnect and InterConnect's sole shareholder, Mark
Tolman. The Agreement was made effective July 30, 1996. Pursuant to the
Agreement, the Company will acquire 100% of InterConnect's outstanding capital
stock, making InterConnect its wholly-owned subsidiary. The acquisition was
structured as a tax-free exchange of stock under the Internal Revenue Code of
1986, as amended.
InterConnect is the developer of Access Market Square, an electronic
shopping mall on the World Wide Web. InterConnect designs web pages, known as
storefronts, for businesses interested in advertising and marketing their
products and services via the Internet. Through Access Market Square, Internet
users can browse through a business entity's catalog and place orders
electronically. Hundreds of businesses currently have storefronts in Access
Market Square and those storefronts are visited over 60,000 times daily. The
median cost for a storefront on Access Market Square is approximately $2,500 per
year. InterConnect's principal offices are located at 1095 East 2100 South, Salt
Lake City, Utah 84106. InterConnect's telephone number is 801-487-0888.
In exchange for the acquisition of InterConnect, the Company agreed to
issue shares of Common Stock to James Tilton, Canton Financial Services
Corporation, a Nevada corporation ("CFSC"), and Mark Tolman. Mr. Tilton, the
Company's former president and director, will receive a quantity of Common Stock
equaling 10% of the issued and outstanding Common Stock on the date the
Agreement was executed. Based on the 4,420,336 shares of Common Stock
outstanding on July 16, 1996, Mr. Tilton will receive 442,034 shares of Common
Stock. The shares to be issued to Mr. Tilton under the Agreement are
consideration for services rendered by Mr. Tilton in the negotiation of the
Agreement. The resale of these shares is restricted pursuant to Rule 144 ("Rule
144") under the Securities Act of 1933 (the "Act").
CFSC, who has served as a financial consultant to the Company since April
1995, will be issued shares of Common Stock as a finder's fee for introducing
the Company to InterConnect and for financial services CFSC rendered to the
Company in connection with the Agreement. CFSC will receive a quantity of shares
equaling 7.5% of the total outstanding Common Stock after the Agreement is
effective, which will equal 19,449,480 shares of Common Stock. All such shares
will be issued pursuant to ss.4(2) of the Act and restricted as to resale under
Rule 144. According to the Agreement, CFSC shall also receive a future payment
of $100,000 payable at the Company's option in either cash or Common Stock.
Finally, the Company will issue to Mark Tolman a quantity of shares
equaling 90% of its total issued and outstanding Common Stock after the
Agreement is effective. Mr. Tolman, the sole shareholder of InterConnect, shall
receive these shares as consideration for his transfer of 100% of InterConnect's
capital stock to the Company. Tolman will receive 175,045,320 shares of Common
Stock, all of which shall be restricted pursuant to Rule 144.
On July 16, 1996, the day the Company signed the Agreement, it also
released a public announcement of the Agreement's consummation and its key
terms. The high and low sale prices of the Company's Common Stock on the day
preceding this announcement, as quoted on the Over-the-Counter Bulletin Board
under the symbol "EUHI," were $0.63 and $0.13 respectively.
There were 4,420,336 shares of Common Stock issued and outstanding on the
date of the Agreement. The Company will issue an additional aggregate amount of
194,936,834 shares under the Agreement with InterConnect, such shares to be
issued on or after January 20, 1997. Thus, the ownership interest of the
Company's current shareholders will be reduced to 2.5% of the total outstanding
Common Stock as a result of this acquisition.
On July 30, 1996, a majority of the Company's shareholders consented to,
approved and ratified the Agreement with InterConnect and Mr. Tolman pursuant to
a written consent executed in lieu of a shareholders meeting. Of the 4,420,336
shares issued and outstanding on that date, shareholders owning 2,996,824
shares, or 67% of the outstanding Common Stock, voted to approve this
acquisition. There are no state regulatory requirements that must be complied
with prior to the transaction becoming effective. Accordingly, the acquisition
of InterConnect has been effected under state law and shall be effective under
federal law when this Information Statement has been properly disseminated to
all Record Shareholders who have not already approved the transaction. The
Common Stock to be issued pursuant to the Agreement shall be issued once the
Agreement is effective.
<PAGE>
B. Approval of Amendment to Company's Articles of Incorporation Effecting Name
Change
The Company does not have any current operations of its own. However,
through its new subsidiary InterConnect, the Company will focus its operations
on Internet-related marketing services. For more information on these operations
see "Section VII - Management's Discussion and Analysis." The Company's board of
directors has recommended that the Company change its name from Eurotronics
Holdings Incorporated to Access Market Square, Inc. to reflect the Company's
indirect ownership of Access Market Square, an existing electronic shopping
mall. The change will allow the Company to capitalize on the name recognition
associated with Access Market Square.
On July 30, 1996, a majority of the Company's shareholders consented to an
amendment to the Company's Articles of Incorporation changing the Company's name
to Access Market Square, Inc. Of the 4,420,336 shares issued and outstanding on
that date, shareholders owning 2,996,824 shares, or 67% of the outstanding
Common Stock, voted to approve this name change. This name change will be
effective January 20, 1997.
C. Approval of 1-for-10 Reverse Stock Split
By unanimous resolution effective July 30, the Company's board of directors
recommended that the Company effect a 1-for-10 reverse stock split of the
Company's issued and outstanding Common Stock. On the same day, 2,996,824 of the
4,420,336 shares of issued and outstanding Common Stock voted to approve the
reverse stock split. The reverse split will be effective on January 20, 1997. No
tax consequences shall result from the reverse split.
The reverse split will decrease the number of issued and outstanding shares
of Common Stock to ten percent (10%) of its level prior to the reverse split.
For every 10 shares of Common Stock now owned, the Company's shareholders shall
receive one share of post-reverse Common Stock. All fractional shares that
result from the reverse split shall be rounded up to one whole share. The number
of shares which the Company is authorized to issue (200,000,000) shall not
change as a result of the reverse split. Therefore, the number of shares of
Common Stock that remain authorized but unissued after the reverse split shall
increase to 180,064,283 from the 642,830 shares that will be authorized but
unissued prior to the reverse split.
The restricted shares that are to be issued to James Tilton, Canton
Financial Services Corporation and Mark Tolman under the InterConnect West
Agreement shall be issued prior to the reverse stock split. Accordingly, the
shares that each is entitled to receive shall be reduced to 10% of the figures
which appear in Subsection A above.
The board of directors recommended the reverse stock split because they
believed that the number of issued and outstanding shares of Common Stock was
disproportionately large compared to the Company's revenue, net income and net
worth. Moreover, after the InterConnect acquisition becomes effective, nearly
all of the authorized shares of Common Stock will be issued and outstanding. As
approved by the shareholders, the reverse stock split will increase the
authorized number of shares of Common Stock which the Company has available to
issue. The reverse split will allow the Company to issue Common Stock to make
further acquisitions or to expand operations. Such future issuances of stock
would dilute the ownership interest of the Company's current shareholders.
D. Shareholder Ratification of Officers and Directors
The Company underwent a change of control as a result of the July 16, 1996
Agreement executed by the Company, InterConnect, and Mark Tolman. On July 17,
1996, the Company's board of directors appointed Mark Tolman as a director of
the Company, Pat Gallegos as the Company's vice president and director, and
Michael Brodsky as the Company's secretary-treasurer and director. James Tilton,
who was the Company's only officer and director prior to these appointments,
then resigned from his positions as president and director. Mr. Tilton resigned
for personal reasons without any disagreements with the Company or its
management. Upon the resignation of Mr. Tilton, the remaining directors
appointed Mark Tolman as the Company's president. The appointment of Mr. Tolman
was based on his familiarity with InterConnect's operations and the controlling
interest in the Company he will receive when the agreement with InterConnect
becomes effective.
<PAGE>
On July 30, 1996, a majority of the Company's shareholders ratified the
appointments of Mark Tolman, Pat Gallegos and Michael Brodsky to their
respective positions as officers and directors. Of the 4,420,336 shares issued
and outstanding on that date, shareholders owning 2,996,824 shares, or 67% of
the outstanding Common Stock, voted to ratify these appointments. These
appointments are already effective and shall continue until the next annual
meeting of shareholders or until the resignation or proper removal of these
individuals as officers and directors of the Company.
III. DIRECTORS, EXECUTIVE OFFICERS AND CONTROL PERSONS
Name Age Position(s) and Office(s)
Mark Tolman 44 President and Director
Pat Gallegos 50 Vice President and Director
Michael Brodsky 49 Secretary-Treasurer and Director
Mark Tolman was appointed as the Company's president and director on July
17, 1996. Mr. Tolman founded InterConnect in early 1994, and currently serves as
its president, chief executive officer and chairman of the board. Prior to his
affiliation with InterConnect, Mr. Tolman was the manager of management
information systems for Evans and Sutherland Computer Corporation. Mr. Tolman
spent 14 years with Evans and Sutherland.
Pat Gallegos was appointed as the Company's vice president and director on
July 17, 1996. In addition to his affiliation with the Company, Mr. Gallegos
works as the director of human resources for Evans and Sutherland Computer
Corporation. Mr. Gallegos has served in this latter capacity for approximately
20 years.
Michael Brodsky was appointed as the Company's secretary-treasurer and
director on July 17, 1996. From 1983 to 1994, Mr. Brodsky was a consultant for
Ryland Homes. In 1994, Mr. Brodsky founded the Hamlet Companies, a collection of
residential development firms that specialize in home building and environmental
planning. In addition to his capacity with the Company, Mr. Brodsky serves as
chief executive officer of the Hamlet Companies.
IV. COMPENSATION TABLE
The Company has not established any compensation structure for its
executive officers or directors. Nor have any stock options or stock
appreciation rights ("SARs") regarding the Company's Common Stock ever been
granted to or exercised by any employee of the Company. The compensation below
discloses the number and value of restricted shares of Common Stock that will be
issued to James Tilton as a result of services rendered by Mr. Tilton under the
Agreement with InterConnect.
Number of
Restricted Shares of
Name and Position Dollar Value Common Stock to be Issued
James Tilton, Former President and CEO 183,444* 442,034
____________________________________
* The dollar value appearing above was determined by taking the number of
restricted shares received by Mr. Tilton pursuant to the Agreement and
multiplying them by the closing price of the Company's Common Stock on the date
of the Agreement. The closing price for the Company's Common Stock on July 16,
1996 was $0.415. There is, however, no market for restricted shares of the
Company's Common Stock and the numbers above therefore may not reflect the
actual value of the shares received by Mr. Tilton.
<PAGE>
V. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information concerning the ownership
of Common Stock as of December 13, 1996. The table discloses each entity known
to the Company to be the beneficial owner of more than 5 percent of the issued
and outstanding Common Stock and the stock holdings of all the Company's
directors and officers. Currently, Michael Brodsky is the only officer or
director who owns any Common Stock. However, as disclosed above, Mark Tolman
will be issued 175,045,320 pre-reverse shares of Common Stock (approximately 90%
of the total shares then to be issued and outstanding) when the Agreement with
InterConnect becomes effective on January 20, 1997. None of the other officers
or directors will receive any Common Stock as a result of the Agreement.
Additionally, Canton Financial Services Corporation will receive 19,449,480
shares of Common Stock (approximately 7.5% of the total shares issued and
outstanding) as a finder's fee, once the Agreement is effective.
Name and Address Amount and Nature of Percent
Title of Class of Beneficial Owner Beneficial Ownership of class
Common Stock Michael Brodsky 100,000* 2.2%
1095 East 2100 South
Salt Lake City, Utah 84106
Common Stock A-Z Professional Consultants, Inc. 824,129 18.2%
268 West 400 South, Suite 300
Salt Lake City, UT 84101
Common Stock BRIA Communications Corporation 566,038 12.5%
268 West 400 South, Suite 300
Salt Lake City, Utah 84101
Common Stock CEA Labs, Inc. 677,149 15%
400 North Woodlawn, Suite 18
Wichita, Kansas 67208
Common Stock Tianrong Building Material
Holdings Ltd. 677,149 15%
82-66 Austin Street
Kew Gardens, NY 11415
Common Stock Richard Surber 418,600 9.3%
268 West 400 South, Suite 300
Salt Lake City, Utah 84101
_________________________________
* These shares were issued to Mr. Brodsky as full payment of a $30,000 working
capital loan Mr. Brodsky previously made to InterConnect. At the time that the
loan was made, Mr. Brodsky was not a director or officer of either the Company
or InterConnect.
VI. BUSINESS OF ISSUER
The Company was originally incorporated on July 7, 1982 as Hamilton
Exploration Co., Inc. to engage in the investigation, acquisition, exploration,
development and mining of mineral properties. These activities were pursued by
the Company until December 1989 at which time the Company ceased all active
operations. From December 1989 to December 1995 the Company did not engage in
operations of any type. In December 1995, the Company executed an Agreement and
Plan of Exchange (the "Exchange Agreement") with Eurotronics International
Incorporated, a Nevada corporation ("EII"). Pursuant to the Exchange Agreement,
the Company acquired EII as a wholly-owned subsidiary. Through EII, the Company
was to design computer software systems. Pursuant to this acquisition, the
Company assumed its current name, Eurotronics Holdings Incorporated.
On May 8, 1996, the Company, EII and the shareholders of EII executed a
Rescission of Agreement and Release of All Claims (the "Rescission Agreement").
The Rescission Agreement was made effective as of December 20, 1996, thereby
unwinding the acquisition of EII from the beginning. Under the Rescission
Agreement, the Company returned all shares of stock in EII that it had acquired
from EII's shareholders. The shareholders of EII were required to return all
shares of the Company's Common Stock that they had acquired pursuant to the
Exchange Agreement. Both the Company and EII also mutually agreed to release the
other from any and all claims they may have had against the other stemming from
the Exchange Agreement. The decision to rescind the Exchange Agreement was
reached because EII had not been able to obtain audited financial statements as
required by the Exchange Agreement and neither the Company nor EII had the
financial resources to continue to wait for these documents.
<PAGE>
From May 8, 1996 to July 17, 1996, the Company resumed its status as a
public shell corporation available for merger, acquisition or takeover. As
discussed in "Section II - Actions Taken Pursuant to Written Consent," the
Company acquired all shares of InterConnect pursuant to the July 16, 1996
Agreement. The Company does not currently have any operations of its own.
However, through InterConnect, the Company operates an electronic shopping mall
on the World Wide Web. Known as Access Market Square, InterConnect's electronic
mall allows businesses to promote and sell their products over the Internet.
InterConnect designs and programs individual web pages, known as storefronts,
for its clients. A storefront is the equivalent of an electronic catalog,
containing information and advertising related to the vendor's products. Access
Market Square's web address is http://www.icw.com.
InterConnect currently employs five individuals, including two programmers
and a sales representative. InterConnect's sales representative seeks out
potential clients for its storefronts through a combination of cold calls and
leads generated through general advertising. Once a client is retained,
InterConnect's programmers design a storefront based on the client's
specifications. Currently, most of InterConnect's customers are located in the
Rocky Mountain region. However, the Company is attempting to implement a
marketing plan which will greatly increase the size and geographic scope of
InterConnect's operations. See "Section VII - Management's Discussion and
Analysis." InterConnect also intends to increase the size of its current
professional staff as its client base expands.
The market for Internet mall service providers is very competitive.
InterConnect's competitors are comprised mostly of small firms who offer
services and prices similar to those of InterConnect. However, several large and
well established companies, such as IBM and Microsoft, have begun to enter this
market. InterConnect competes in this industry based on its status, reputation
and longevity. Access Market Square is one of the oldest Internet malls in
existence, and in the Company's opinion is relatively well-known. Accordingly,
it experiences a large amount of traffic from Internet users. InterConnect is
able to market this exposure opportunity to potential clients.
Neither the Company nor InterConnect currently owns any real property, and
neither has any plans to acquire any real property.
VII. MANAGEMENT'S DISCUSSION AND ANALYSIS
The Company conducts all of its operations through InterConnect and has no
other operations. An understanding of the Company's financial condition is
therefore not possible without reference to the operations and financial
condition of InterConnect. Accordingly, even though the Agreement with
InterConnect is not yet effective for purposes of the Securities Exchange Act of
1934, the following discussion treats InterConnect as a consolidated subsidiary.
The Company's present focus is to increase InterConnect's revenues by
expanding InterConnect's operations. Pursuant to this objective, the Company is
attempting to implement an aggressive marketing plan. Beginning in late 1996,
InterConnect intends to hire two sales professionals to augment its current
staff of five. If hired, these employees will be responsible for making sales
calls to targeted businesses. They will also receive incoming sales calls from
leads generated by Access Market Square's printed and online advertising. The
Company also intends to hire a marketing professional to work with pricing,
advertising, product definition and other key marketing tenets.
To complement its current and anticipated future telemarketing, the Company
intends to employ a direct mailing campaign. This will consist of postage cards
to be disseminated to approximately 20,000 individuals per month. This
advertising will be targeted to individuals who seek programming and graphic art
work in connection with the development of a personal web page. The goal of this
direct mail marketing plan is to generate leads for the sale of Access Market
Square storefronts. The Company is also planning to conduct a series of seminars
to be held throughout North America during the next fiscal year. The goal of the
seminars is two-fold. First, the Company will conduct face to face marketing of
its storefronts to business entities suitable to market products and services
via Access Market Square. Second, the Company will market business opportunities
to individuals interested in selling Access Market Square storefronts on behalf
of InterConnect. InterConnect has been involved in these seminars in the past
and found them very lucrative.
<PAGE>
The Company hopes to implement this marketing plan as a means of increasing
InterConnect's revenues and market penetration. The Company has estimated the
annual cost of this new marketing plan at approximately $1,408,000. This amount
greatly exceeds the $67,825 in expenses which InterConnect incurred during the
1995 fiscal year, and will therefore put increased strain on InterConnect's
liquidity. However, the Company believes that such expenditures will result in
revenues for InterConnect that greatly exceed those of 1995. Therefore, the
Company has estimated that much of the cash flow necessary to implement the
marketing plan can be generated through revenues. These estimates are based on a
business plan formulated by the Company's management. The Company is currently
investigating additional methods of potential financing, including a potential
future private offering of debt securities and/or a public or private offering
of its Common Stock. No material steps toward obtaining such financing have been
taken and the Company can provide no assurances that InterConnect's revenues
will be sufficient to cover its marketing costs or that other means of raising
capital will be available to InterConnect.
The Company anticipates spending an additional $50,000 on computer
equipment and Internet connection fees to improve its current facilities. The
Company believes that these capital expenditures are necessary for InterConnect
to maintain its current service level in light of anticipated increases in the
scope of InterConnect's operations. Management believes that the cash needed for
this equipment can also be generated through InterConnect's revenues or through
an offering of the Company's securities.
Results of Operations
The results of operations set forth below compare the consolidated
financial results of the Company and InterConnect with the financial results of
InterConnect for the preceding fiscal year.
Gross revenues for the nine months ended September 30, 1996 were $253,762
compared to $81,999 for the same period in 1995. During the three months ended
September 30, gross revenue was $84,560 for 1996 and $63,020 for 1995.
Costs of revenues increased from $46,568 during the first nine months of
1995 to $98,713 for the same period in 1996. Costs of revenues for the third
quarter in 1996 were $29,165 compared to 31,133 for the same period in 1995.
Gross profit was $154,059 for the nine months ended September 30, 1996 and
$35,431 for the quarter ended the same date. Gross profit as a percentage of
revenues was 60.1% and 43.2%, respectively. Selling, general, and administrative
expenses were $170,337 from January 1 through September 30, 1995 and $32,312 for
the comparable period in 1996. For the quarter ended September 30, selling,
general, and administrative expenses were $22,029 for 1995 and $125,973 for
1996.
Net loss was $16,328 during the nine months ended September 30, 1996
compared to a net profit of $3,119 during the comparable period in 1995. For the
quarter ended September, the Company recorded a net loss in the amount of
$70,578 in 1996 compared to a net profit of $9,858 in 1995. This is primarily
attributable to a one-time expense of $100,000 related to the Company's
acquisition of InterConnect which is payable in Common Stock, but for which no
Common Stock has yet been issued.
Capital Resources and Liquidity
The Company had a net working capital deficit of $18,269 as of September
30, 1996 compared to a working capital deficit of $16,717 at the end of
September 1995. The main reason behind this working capital decrease is an
increase in accrued expenses from operations.
Net stockholders' equity in the Company was $126,518 at the end of December
1995, as compared to a deficit of $126,518 as of September 30, 1996. This
decrease is primarily due to the acquisition of InterConnect.
<PAGE>
VII. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock began trading on the OTC Bulletin Board on
November 15, 1995 under the symbol "HMLD." In December 1995, the symbol changed
to EUHI to reflect the change in the Company's name. The table set forth below
lists the range of high and low bids of the Company's Common Stock as reported
by NASDAQ for each quarter subsequent to the time trading commenced on November
15, 1995 through the end of the second quarter of 1996. The prices in the table
reflect inter-dealer prices, without retail markup, markdown or commission and
may not represent actual transactions.
Calendar Year Quarter High Low
1995 Fourth (partial period) .4375 .25
1996 First .75 .25
Second .75 .13
Third 1.31 .13
Fourth 1.31 .28
As of December 13, 1996, there were approximately 571 holders of record of
the Company's Common Stock.
Dividends
The Company has not declared any dividends on its Common Stock during the
last two fiscal years. There are no restrictions that limit the Company's
ability to pay dividends, other than those generally imposed by applicable state
law. The future payment of dividends, if any, on the Common Stock is within the
discretion of the board of directors and will depend on the Company's earnings,
capital requirements, financial condition, and other relevant factors. The
Company does not anticipate the payment of future dividends.
VIII. LEGAL PROCEEDINGS
The Company is not currently a party to any pending legal proceedings.
By order of the board of directors,
/s/ Mark A. Tolman
-------------------------
Mark A. Tolman, President
Salt Lake City, Utah
December 23, 1996
<PAGE>
INDEX TO EXHIBITS
Exhibit Letter Description Page Number
A Eurotronics Holdings Incorporated audited A-1
financial statements for fiscal year ended
December 31, 1995.
B InterConnect West, Inc. audited financial B-1
statements for fiscal year ended December 31,
1995.
C Eurotronics Holdings Incorporated unaudited C-1
financial statements for fiscal quarter ended
September 30, 1996.
D InterConnect West, Inc. unaudited financial **
statements for fiscal quarter ended September 30,
1996
** The acquisition of InterConnect was accounted for as a reverse merger because
the shareholders of InterConnect obtained control of the acquiring Eurotronics
Holdings. Eurotronics Holdings, therefore, prepared financial statements which
exactly reflect the operations of its subsidiary InterConnect. Since the
quarterly financial statements of the two companies are identical, the Company
has included this information only once.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders and Board of Directors
of Eurotronics Holdings, Inc. (formerly
Hamilton Exploration Co., Inc.)
Salt Lake City, Utah
We have audited the balance sheet of Eurotronics Holdings, Inc. (a development
stage company) as of December 31, 1995 and the related statements of operations,
changes in stockholders' equity, and cash flows from the date of inception
(January 7, 1982) through December 31, 1995. 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 audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinions.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Hamilton Exploration Co., Inc.
as of December 31, 1995 and the results of its operations, its changes in
stockholders' equity and its cash flows from the date of inception (January 7,
1982) through December 31, 1995, in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, since its inception (January 7, 1982), the Company has
been in the development stage and has suffered recurring losses from operations.
The long term continuation of the Company as a going concern is dependent upon
the Company's ability to obtain additional capital. The financial statements do
not include any adjustments that might result if the Company is unable to obtain
additional capital.
/s/ Anderson, Anderson & Strong
Anderson, Anderson & Strong
June 24, 1996
<PAGE>
<TABLE>
<CAPTION>
EUROTRONICS HOLDINGS, INC.
(A Development Stage Company)
Formerly Hamilton Exploration Co., Inc.
BALANCE SHEET
December 31, 1995
ASSETS
CURRENT ASSETS
<S> <C>
Cash ...................................................... $ 6,056
--------
Total current assets ..................................... 6,056
OTHER ASSETS
Investments - securities (Note 6) ......................... 169,812
--------
$175,868
========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accrued expenses ........................................ $ 52,089
---------
Total Current Liabilities ............................. 52,089
---------
STOCKHOLDERS' EQUITY (Note 1):
Common stock, $.0001 par value;
Authorized, 200,000,000 shares;
Issued, 4,420,336 shares at
at December 31, 1995 ................................... 442
Additional paid-in capital .............................. 884,734
Deficit accumulated during
development stage ..................................... (761,397)
---------
123,779
---------
$ 175,868
=========
The accompanying notes are an integral part of these
financial statements
</TABLE>
A-2
<PAGE>
<TABLE>
<CAPTION>
EUROTRONICS HOLDINGS, INC.
(A Development Stage Company)
Formerly Hamilton Exploration Co., Inc.
STATEMENTS OF OPERATIONS
Years Ended December 31, 1995 and 1994
Period From Date Of Inception (January 7, 1982) Through December 31, 1995
Inception
Through
Dec. 31,
1995 1994 1995
Revenue:
<S> <C> <C> <C>
Interest income ................ $ -- $ -- $ 61,208
--------- --------- ---------
-- -- 61,208
--------- --------- ---------
Expenses:
Investigation, evaluation and
exploration of prospective
mineral properties ............ -- -- 424,416
General and administrative ..... 321,124 -- 399,616
Amortization and depreciation .. -- -- 1,000
--------- --------- ---------
321,124 -- 825,032
--------- --------- ---------
Net loss before taxes and
extraordinary item ............. (321,124) -- (763,824)
Tax expense .................... -- -- 183
--------- --------- ---------
Loss before extraordinary item ... (321,124) -- (764,007)
Extraordinary item - debt
settlement (note 7) ............ 2,610 -- 2,610
--------- --------- ---------
NET LOSS ......................... $(318,514) $ -- $(761,397)
========= ========= =========
NET INCOME (LOSS) PER COMMON SHARE
Loss before extraordinary item $ (.70) $ --
Extraordinary item ............. .01 --
--------- ---------
TOTAL ............................ $ (.69) $ --
========= =========
Weighted average number of shares
outstanding ..................... 461,825 54,412
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements
A-3
<PAGE>
<TABLE>
<CAPTION>
EUROTRONICS HOLDINGS, INC.
(A Development Stage Company)
Formerly Hamilton Exploration Co., Inc.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Period From Date of Inception (January 7, 1982) Through December 31, 1995
Additional
Common Stock Common Stock Paid-in Accumulated
Shares Amount Capital Deficit
<S> <C> <C> <C> <C>
Issuance of common stock to incorporators
for cash - 1982 ........................................... 15,000,000 $ 1,500 $ 28,500 $ --
Change in number of shares issued to ....................... -- -- -- --
incorporators and price per share - 1983 .................. 2,142,857 214 ( 214) --
Issuance of common stock for cash - 1983 ................... 14,285,715 1,429 23,571 --
Public stock offering for cash, net of $111,627
in underwriting expenses - 1984 ........................... 49,500,000 4,950 378,423 --
Sale of warrants (no warrants exercised - expired 1989) .... -- -- 100 --
Net loss for the period from date of inception
(January 7, 1982) through December 31, 1993 ............... -- -- -- ( 442,883)
----------- ----------- ----------- -----------
Balance December 31, 1993 .................................. 80,928,572 8,093 430,380 (442,883)
----------- ----------- ----------- -----------
Results of operations year ended December 31, 1994 ......... -- -- -- --
----------- ----------- ----------- -----------
Balance December 31, 1994 .................................. 80,928,572 8,093 430,380 ( 442,883)
----------- ----------- ----------- -----------
Reverse stock split 1 for 1,500 ............................ (80,874,160) ( 8,088) 8,088 --
Issuance of shares for no determinable
consideration - May, 1995 ................................. 76,667 8 ( 8) --
Issuance of shares for cash - July, 1995 ................... 172,500 17 17,233 --
Issuance of shares for services - July, 1995 ............... 10,000 1 999 --
Issuance of shares for debt - July, 1995 (note 7) .......... 226,500 23 22,627 --
Isuance of shares for cash - November, 1995 ................ 510,000 51 50,949 --
Issuance of shares for services - November, 1995 ........... 112,000 11 11,189 --
Issuance of shares for cash - December, 1995 ............... 222,222 22 39,978 --
Issuance of shares for services - December, 1995 ........... 1,337,921 134 133,658 --
Issuance of shares for assets - December, 1995 ............. 1,698,114 170 169,641 --
Results of operations year ended December 31, 1995 ......... -- -- -- (318,514)
----------- ----------- ----------- -----------
Balance December 31, 1995 .................................. 4,420,336 $ 442 $ 884,734 $ (761,397)
=========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements
A-4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EUROTRONICS HOLDINGS, INC.
(A Development Stage Company)
Formerly Hamilton Exploration Co., Inc.
STATEMENTS OF CASH FLOWS
Years Ended December 31, 1995 and 1994
Period From Date Of Inception (January 7, 1982) Through December 31, 1995
Inception
Through
Dec. 31,
1995 1994 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net (Loss) .................................................... $(318,514) $ -- $(761,397)
--------- ---------
Adjustments to reconcile net (loss) to net cash
used by operating activities:
Increase (decrease) in accrued liabilities ................. 47,679 -- 52,089
Services paid with common stock ............................ 145,992 -- 145,992
Common stock issued for debt ............................... 22,650 -- 22,650
--------- ---------
Total adjustments .......................................... 216,321 -- 220,731
--------- ---------
Net cash (used) by operating activities ....................... (102,193) -- ( 540,666)
---------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital contributions by incorporators ........................ -- -- 55,000
Proceeds from public stock offering ........................... -- -- 383,473
Issuance of common stock for cash ............................. 108,249 -- 108,249
--------- ---------
Net cash provided by financing activities ..................... 108,249 -- 546,722
--------- ---------
Net increase in cash ............................................ 6,056 -- 6,056
Cash, beginning ................................................. -- -- --
--------- ---------
Cash, ending .................................................... $ 6,056 $ -- $ 6,056
=========== ========= =========
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND
FINANCING ACTIVITIES:
Issuance of common stock for services ......................... $ 145,992 $ -- $ 145,992
========= =========
Issuance of common stock for debt ............................. $ 22,650 $ -- $ 22,650
========= =========
Issuance of common stock for investments ...................... $ 169,812 $ -- $ 169,812
========= =========
The accompanying notes are an integral part of these financial statements
A-5
</TABLE>
<PAGE>
EUROTRONICS HOLDINGS, INC.
(A Development Stage Company)
Formerly Hamilton Exploration Co., Inc.
NOTES TO FINANCIAL STATEMENTS
As of December 31, 1995 and 1994
1. BUSINESS ACTIVITY
The Company was incorporated as a Utah corporation on January 7, 1982 for
the primary purpose of investigating and evaluating prospective mineral
properties for possible acquisition. On January 27, 1982, the Company sold
15,000,000 shares of its $.001 par value common stock for investment purposes to
two corporations and four individuals at $.002 per share for a total of $30,000.
On July 27, 1983, the Company adjusted the number of shares issued to reflect a
purchase price of $.00175 per share instead of $.002 per share. On August 5,
1983, the Company sold an additional 14,285,714 shares at $.00175 to two
affiliated corporations and two individuals for $25,000. During 1984, the
Company sold 49,500,000 shares of its common stock to the public at $.01 per
share and received net proceeds of $383,373. On May 22, 1995 the Company adopted
a 1,500 to 1 reverse stock split. On May 23, 1995 the Company issued 76,667
shares of common stock for services of undetermined value. Also during 1995 an
additional 4,289,257 shares were issued: 904,722 for cash, 1,459,921 for
services, 226,500 for debt, and 1,698,114 for other assets.
On December 20, 1995 the Company approved an Agreement and Plan of Exchange
between the Company, Eurotronics International Incorporated (EII) and EII's
shareholders. The agreement stipulated that the Company issue and exchange
shares of its common stock for all of the issued and outstanding shares of the
common stock of EII. On May 8, 1996, the Company, EII and EII,s shareholders
executed a rescission of the agreement. The rescission was made effective as of
the date of the original agreement, December 20, 1995. Pursuant to the
agreement, all shares of stock previously issued were returned, and all parties
agreed to hold one another harmless. Consistent with the effective date of the
rescission, this transaction has been considered void from its inception and,
therefore, is not reflected in the financial statements.
The Company's unpatented mining claims and mineral leases which were
acquired in 1987 have been lost because the Company had insufficient capital to
pay the mineral lease requirements and to perform the required minimum
assessment work. Between 1987 and April, 1994, the Company's activity was
largely restricted to maintaining its corporate legal status. The Company's
current business plan is to merge with or acquire another business entity.
<PAGE>
EUROTRONICS HOLDINGS, INC.
(A Development Stage Company)
Formerly Hamilton Exploration Co., Inc.
NOTES TO FINANCIAL STATEMENTS - Continued
As of December 31, 1995 and 1994
2. GOING CONCERN
The Company is in the development stage and its continuation as a going
concern will ultimately depend upon obtaining additional capital. The Company
believes it can sustain its existence for the next twelve months.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization Costs
Organization costs were capitalized and amortized over 60-month period on a
straight-line basis.
Exploration Expenses
Exploration expenditures were charged to expense as incurred. No mineral
reserves feasible for development were discovered.
Income (Loss) Per Share
The computation of income (loss) per common share is based on the average
number of shares outstanding during the period. A reverse stock split in May,
1995 is considered to have occurred retroactively for all periods shown in
statements of operations.
4. INCOME TAXES
Effective January 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes. The cumulative effect
of the change in accounting principle is immaterial. At December 31, 1995 the
Company had a net operating loss ("NOL") carryforward for United States income
tax purposes of approximately $760,000. The NOL carryforward expires in
increments beginning in 1999. The Company's ability to utilize its net NOL
carryforward is subject to the realization of taxable income in future years,
and under certain circumstances, the Tax Reform Act of 1986 restricts a
corporation's use of its NOL carryforward. Furthermore, due to the Company's
issuance of additional stock in 1995, the use of its NOL carryforward could be
substantially limited. The Company believes that there is at least a 50% chance
that the carryforward will expire unused, therefore, no tax benefit has been
reported in the financial statements.
<PAGE>
EUROTRONICS HOLDINGS, INC.
(A Development Stage Company)
Formerly Hamilton Exploration Co., Inc.
NOTES TO FINANCIAL STATEMENTS - Continued
As of December 31, 1995 and 1994
5. RELATED PARTY TRANSACTIONS
On June 29, 1995 the Company entered into a consulting agreement with
Canton Financial Services Corporation (CFS). At the time the consulting
agreement was executed, Richard Surber was the sole officer and sole director of
CFSC and also a director and vice president of the Company. On April 1, 1996 the
Company executed a new consulting agreement with CFSC which replaced the
previous one. Mr. Surber is no longer associated with the Company as an officer
or director. During 1995 the Company issued a total of 112,000 shares of its
common stock to CFS for services rendered in the amount of $11,200. The Company
also issued 185,600 shares to Richard Surber to satisfy a debt owed to CFS for
services rendered in the amount of $18,560, and 333,000 shares for services
rendered in the amount of $33,300.
During 1995 the Company issued 141,900 shares of its common stock to Ken
Kurtz, the former president of the Company, for services rendered in the amount
of $14,190. The Company also issued 83,792 shares to Parkstreet Investments for
services relating to the Eurotronics International acquisition in the amount of
$8,379. Mr. Kurtz is president of Parkstreet Investments.
In December of 1995, the Company executed several stock exchange and stock
purchase agreements with companies which are under common control. All shares of
stock issued pursuant to these agreements are restricted as regulated by Rule
144 under the Securities Act. The stock exchange and purchase agreements were
executed between the Company and: BRIA Communications, OMAP Holdings
Incorporated, and Tianrong Building Material Holdings, Ltd. At the time of the
of the exchanges, the Company's president was also an officer and director of
each of the other three corporations.
6. INVESTMENTS
Investment securities consist of the following at December 31,
1995:
Company Amount
OMAP $ 56,604
Tianrong 56,604
BRIA Communications 56,604
$169,812
<PAGE>
EUROTRONICS HOLDINGS, INC.
(A Development Stage Company)
Formerly Hamilton Exploration Co., Inc.
NOTES TO FINANCIAL STATEMENTS - Continued
As of December 31, 1995 and 1994
6. INVESTEMENTS - continued
Investments in equity securities that have readily determinable fair values
are stated at their market value in accordance with Financial Accounting
Standards ("FAS") No. 115. None of the above securities meets the specified
requirements of FAS No. 115 because they are restricted under Rule 144 of the
Securities Act. Valuation of other equity security investments are based on
acquisition costs. Markdowns are made to reflect significant impairment in
values.
7. DEBT SETTLEMENT
During 1995, the Company settled a debt with its transfer agent for cash,
resulting in a gain of $2,610. Also during 1995, the Company settled other debt
through the issuance of equity shares with no gain or loss, since the value of
shares issued was considered to be equal to the amount of the debt.
8. SUBSEQUENT EVENTS
Refer to Note 1. for a discussion of the rescinded transaction with
Eurotronics International Incorporated and its shareholders.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
CONSOLIDATED AUDITED CONDENSED FINANCIAL STATEMENTS FILED WITH THE COMPANY'S
INFORMATION STATEMENT PURSUANT TO REGULATION 14C OF THE SECURITIES AND EXCHANGE
ACT OF 1934 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<CIK> 0000734089
<NAME> EUROTRONICS HOLDINGS INCORPORATED
<MULTIPLIER> 1
<CURRENCY> U. S. DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<EXCHANGE-RATE> 1
<CASH> 6,056
<SECURITIES> 169,812
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 175,868
<CURRENT-LIABILITIES> 52,089
<BONDS> 0
0
0
<COMMON> 442
<OTHER-SE> 123,337
<TOTAL-LIABILITY-AND-EQUITY> 175,868
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 321,124
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (321,124)
<INCOME-TAX> 0
<INCOME-CONTINUING> (321,124)
<DISCONTINUED> 0
<EXTRAORDINARY> 2,610
<CHANGES> 0
<NET-INCOME> (318,514)
<EPS-PRIMARY> (0.69)
<EPS-DILUTED> (0.69)
</TABLE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Stockholders and Board of Directors of
InterConnect West, Inc.
Salt Lake City, Utah
We have audited the accompanying balance sheet of InterConnect West, Inc. (an S
Corporation), as of December 31, 1995, and the related statements of operations,
stockholders' equity and cash flows for the period April 21, 1995 (date of
inception) to December 31, 1995. 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 audit.
We conducted our audit 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 audit provides 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 InterConnect West, Inc. (an S
Corporation) as of December 31, 1995, and the results of its operations and cash
flows for the period April 21, 1995 (date of inception) to December 31, 1995, in
conformity with generally accepted accounting principles.
October 31, 1996
Salt Lake City, Utah
B-1
<PAGE>
<TABLE>
<CAPTION>
INTERCONNECT WEST, INC.
BALANCE SHEET
December 31, 1995
ASSETS
CURRENT ASSETS
<S> <C>
Cash and cash equivalents ................................... $17,782
Accounts receivable, net of allowance
for doubtful accounts of $5,357 .......................... 17,770
Total Current Assets .................................. 35,552
PROPERTY AND EQUIPMENT, at cost, net
of accumulated depreciation (Notes 2 and 3) ................. 23,638
$59,190
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
<S> <C>
Accounts payable ................................................ $ 4,822
Accrued expenses ................................................ 21,629
Current portion of long-term debt (Note 4) ...................... 4,284
Total Current Liabilities .................................... 30,735
LONG-TERM DEBT (Note 4) ............................................ 25,716
COMMITMENTS AND CONTINGENCIES
(Notes 6, 7 and 8) .............................................. --
STOCKHOLDERS' EQUITY
Common stock, $1,00 par value; authorized
1,000,000 shares; issued and outstanding 1,000 shares (Note 5) .. 1,000
Additional paid-in capital (Note 5) ............................. 3,764
Retained deficit ................................................ (2,025)
Total Stockholders' Equity ................................... 2,739
$ 59,190
</TABLE>
The accompanying notes are an integral part of these financial statements.
B-2
<PAGE>
<TABLE>
<CAPTION>
INTERCONNECT WEST, INC.
STATEMENT OF OPERATIONS
For the Period April 21, 1995 (Date of Inception) to December 31, 1995
REVENUES
<S> <C>
Advertising income ......................................... $ 103,854
Consulting income .......................................... 22,419
Graphics design income ..................................... 19,944
Other income ............................................... 196
Total Revenues .......................................... 146,413
COST OF SALES ................................................. 80,613
GROSS PROFIT .................................................. 65,800
GENERAL AND ADMINISTRATIVE EXPENSES
Auto expense ............................................... 3,760
Bad debt expense ........................................... 5,357
Depreciation ............................................... 4,882
Insurance .................................................. 732
Interest ................................................... 3,685
Meals and entertainment .................................... 1,253
Other 3,765
Office supplies ............................................ 2,985
Professional ............................................... 2,204
Rent ....................................................... 6,951
Recruiting expense ......................................... 6,287
Telephone .................................................. 17,255
Wages and employee benefits ................................ 8,709
Total General and Administrative Expenses ............... 67,825
Net loss ............................................... $ (2,025)
Loss per share (Note 2) ................................. $ (2.03)
Weighted average number of shares outstanding ........... 1,000
</TABLE>
The accompanying notes are an integral part of these financial statements.
B-3
<PAGE>
<TABLE>
<CAPTION>
INTERCONNECT WEST, INC.
STATEMENT OF CASH FLOWS
For the Period April 21, 1995 (Date of Inception) to December 31, 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C>
Net loss ........................................................ $ (2,025)
Adjustments to reconcile net loss to cash provided
by operating activities:
Depreciation ................................................. 4,882
Bad debt expense ............................................. 5,357
Changes in operating assets and liabilities:
Accounts receivable .......................................... (23,127)
Accounts payable ............................................. 4,822
Accrued expenses ............................................. 21,629
Net Cash Provided by Operating Activities ................. 11,538
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment - net ..................... (23,756)
Net Cash Used in Investing Activities ..................... (23,756)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of long-term debt ...................................... 30,000
Net Cash Provided by Financing Activities ................. 30,000
Net increase in cash and cash equivalents ....................... 17,782
Cash and cash equivalents at beginning of period ................ --
Cash and Cash Equivalents at End of Period ................ $ 17,782
SUPPLEMENTAL SCHEDULE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES
Transfer of assets and assumption of liabilities
in exchange for 1,000 shares of common stock (See Note 5) . $ 4,764
</TABLE>
The accompanying notes are an integral part of these financial statements.
B-4
<PAGE>
<TABLE>
<CAPTION>
INTERCONNECT WEST, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
For the Period April 21, 1995 (Date of Inception) to December 31, 1995
Additional
Common Stock Paid-in Retained
Shares Amount Capital Deficit Total
Issuance of common shares
for assets and the assumption
of liabilities ($4.76 per share)
<S> <C> <C> <C> <C> <C>
(Note 5) ..................... 1,000 $ 1,000 $ 3,764 $ -- $ 4,764
Net loss for the period April 21,
1995 (date of inception) to
December 31, 1995 ............ -- -- -- (2,025) (2,025)
Balance at December 31, 1995 .... 1,000 $ 1,000 $ 3,764 $(2,025) $ 2,739
</TABLE>
The accompanying notes are an integral part of these financial statements.
B-5
<PAGE>
INTERCONNECT WEST, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
1. ORGANIZATION AND BUSINESS ACTIVITY
Interconnect West, Inc. (the Company) was organized under the laws of the State
of Utah on April 21, 1995. The Company provides Internet marketing services
including the graphic design of web sites, consulting and Internet connection
services. The Company also sells store front sites in an on-line mall displayed
on the world wide web designed and operated by the Company called Access Market
Square.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash and Cash Equivalents
The Company considers all highly liquid instruments purchased with original
maturities of less than three months to be cash equivalents.
Income Taxes
The Company has elected to be taxed under the provisions of Subchapter S of the
Internal Revenue Code. Under those provisions, the Company does not pay federal
corporate income taxes on its taxable income. Instead, the shareholders are
liable for individual federal income taxes on their respective share of the
Company's taxable income.
As described in Note 7 to the financial statements, on June 17, 1996, the
Company entered into an agreement with Eurotronics Holdings Incorporated (EHI)
whereby, the Company would exchange all of its issued and outstanding shares of
capital stock for 90% of the issued and outstanding common stock of EHI. As a
result, the Company will lose its "S" status classification and will be taxed as
a "C" corporation under the Internal Revenue Code.
Property and Equipment
Property and equipment are stated at cost. Depreciation is calculated on a
straight-line basis over the estimated useful lives of the assets. Maintenance
and repairs are charged to operations when incurred. Betterments and renewals
are capitalized.
Dividend Policy
The Company anticipates that for the foreseeable future its earnings will be
retained for use in its business and no cash dividends will be paid. Declaration
and payment of dividends will remain within the discretion of the Company's
board of directors and will depend upon the Company's growth , profitability,
financial condition and other factors which the board of directors may deem
appropriate.
<PAGE>
INTERCONNECT WEST, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1995
2. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)-
Estimates and Assumptions
Management uses estimates and assumptions in preparing financial statements in
accordance with generally accepted accounting principles. Those estimates and
assumptions affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported revenues and
expenses. Actual results could vary from the estimates that were assumed in
preparing the financial statements.
Loss Per Share
The computation of primary loss per share is based on the weighted average
number of shares outstanding during the period.
3. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following at December 31, 1995:
Equipment $29,920
Office furniture 969
--------
30,889
Less accumulated depreciation (7,251)
$23,638
=======
Depreciation expense for the period April 21, 1995 (date of inception) to
December 31, 1995 was $4,882.
4. LONG-TERM DEBT
At December 31, 1995, long-term debt consisted of a note payable to an
individual in the amount of $30,000, with interest at 12% per annum. All accrued
and unpaid interest shall be paid on the first day of each twelve full calender
months following June 1, 1995. Thereafter, the principal amount and accrued and
unpaid interest shall be payable in 36 monthly installments of $996, payable on
the first day of each calender month beginning on July 1, 1996, and ending on
June 1, 1999, on which date all outstanding principal and accrued and unpaid
interest will be due and payable. A late charge of 5% of any late payment will
be due if payment has not been received within five days of its due date. The
note is unsecured.
<PAGE>
INTERCONNECT WEST, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1995
4. LONG-TERM DEBT (Continued)
The annual maturities of long-term debt for the next five years are as follows:
Year ending
December 31 Amount
1996 $ 4,284
1997 10,209
1998 11,619
1999 3,888
2000 -
$30,000
=======
5. COMMON STOCK
On April 21, 1995 (date of inception), the Company's primary stockholder
transferred assets and liabilities to the Company in the net amount of $4,764
(valued at the stockholder's basis) in exchange for 1,000 shares of the common
stock of the Company.
6. LEASES
The Company is obligated under one operating lease for rental of office space as
follows:
Rental expense for an operating lease for the period April 21, 1995 (date of
inception) to December 31, 1995 approximated $7,000. The Company is obligated
under the operating lease agreement to pay lease payments of $876 per month for
the period January 1, 1996 through June 30, 1996 and $924 per month for the
period July 1, 1996 through December 31, 1996. The Company may extend the lease
for one additional year by giving the landlord sixty days written notice prior
to the expiration of the lease.
<PAGE>
INTERCONNECT WEST, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1995
6. LEASES (Continued)
Future minimum lease payments under the noncancellable operating lease as of
December 31, 1995 are as follows:
Year ending
December 31 Amount
1996 $10,300
1997 -
1998 -
1999 -
2000 -
Total minimum lease payments $10,300
========
7. SUBSEQUENT EVENT
On June 17, 1996, the Company entered into an agreement with Eurotronics
Holdings Incorporated (EHI) whereby, the Company would exchange all of its
issued and outstanding shares of capital stock for 90% of the issued and
outstanding common stock of EHI which shall be issued pursuant to Rule 144 under
the Securities Act of 1933. From the date of closing, the Company will become a
wholly-owned subsidiary of EHI and the name of EHI will be changed to Access
Market Square, Inc. Both parties agree to utilize the services of Canton
Financial Services Corporation (CFSC) in connection with the Agreement. EHI and
the Company agree to issue to James Tilton (the president of EHI) 10% of the
then currently issued and outstanding common stock. The total amount of common
stock then currently issued and outstanding, including Mr. Tilton's shares, will
then be reduced to 2.5% of EHI's issued and outstanding by the issuance of 4000%
of the quantity of common stock then issued and outstanding, including 3600% to
the Company and 400% to CFSC. CFSC will also receive $100,000 payable at EHI's
option in either cash or common stock issued pursuant to Form S-8 under the
Securities Act of 1933. CFSC shall also be reimbursed for expenses incurred
during and in relation to the furtherance of this transaction.
8. LITIGATION
On February 3, 1995, Milne Jewelry Company asserted through Counsel that the
Company infringed its trade dress and copyright in and to its Internet web site
by its involvement in a so called "Santa Fe Silver Trading Post" web site. The
Company responded by denying the allegations and by taking
<PAGE>
INTERCONNECT WEST, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1995
8. LITIGATION (Continued)
steps to have the allegedly offending material removed. Counsel for Milne
Jewelry Company posted a letter dated February 23, 1995 continuing its
allegations. No action has been taken subsequent to that by either party.
Counsel for the Company states that no meaningful evaluation as to the range of
potential loss resulting from an unfavorable outcome can be made.
<TABLE>
<CAPTION>
EUROTRONICS HOLDINGS, INC.
Unaudited Balance Sheets
September 30, 1996 and December 31, 1995
September 30, December 31,
1996 1995
--------- --------
ASSETS
Current Assets
<S> <C> <C>
Cash ................................... $ 21,272 $ 17,782
Accounts Receivable .................... 89,375 17,770
-------- --------
Total Current Assets ................... 110,647 35,552
Equipment, net depreciation .................. 37,317 23,638
TOTAL ASSETS ................................. $147,964 $ 59,190
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable ............................... $ 22,074 $ 4,822
Accrued Expenses ............................... $ 106,842 $ 21,629
Current portion of long-term debt .............. 4,284 4,284
--------- ---------
Total Current Liabilities ...................... 133,200 30,735
Long Term Debt ....................................... 25,716 25,716
--------- ---------
TOTAL LIABILITIES .................................... 158,916 56,451
STOCKHOLDERS' EQUITY:
Common stock, $.0001 par value;
Authorized, 200,000,000 shares;
Issued, 19,935,717 shares at September 30,1996 . 1,993 1,000
Additional paid-in capital ..................... 5,408 3,764
Accumulated Deficit ............................ (18,353) (2,025)
--------- ---------
TOTAL STOCKHOLDERS' EQUITY ........................... (10,952) 2,739
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ........... $ 147,964 $ 59,190
========= =========
</TABLE>
See notes to unaudited financial statements.
C-1
<PAGE>
<TABLE>
<CAPTION>
EUROTRONICS HOLDINGS, INC.
Unaudited Statements of Operations
For The Three Months Ended September 30, 1996 and September 30, 1995
For the Nine Months Ended September 30, 1996 and September 30, 1995
Three Three Nine Nine
Months Months Months Months
1996 1995 1996 1995
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Revenue .......................................... $ 84,560 $ 63,020 $ 253,762 $ 81,999
Cost of Revenue .................................. $ 29,165 $ 31,133 $ 99,713 $ 46,568
------------ ------------ ------------ ------------
Gross Profit ..................................... 55,395 31,887 154,049 35,431
Expenses:
General and administrative ................. 124,760 22,029 166,739 32,312
Amortization and depreciation .............. 1,213 -- 3,638 --
------------ ------------ ------------ ------------
125,973 22,029 170,377 32,312
------------ ------------ ------------ ------------
Income (Loss) before income taxes: ............... (70,578) 9,858 (16,328) 3,119
Income taxes ............................... -- -- -- --
------------ ------------ ------------ ------------
NET INCOME (LOSS) ................................ $ (70,578) $ 9,858 $ (16,328) $ 3,119
============ ============ ============ ============
NET INCOME (LOSS) PER COMMON SHARE ............... $ -- $ -- $ -- $ --
============ ============ ============ ============
Weighted average number of shares
outstanding ...................................... 19,935,717 19,935,717 19,935,717 19,935,717
============ ============ ============ ============
See notes to unaudited financial statements.
C-2
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EUROTRONICS HOLDINGS, INC.
Unaudited Statements of Cash Flows
Nine Months Ended September 30, 1996 and September 30, 1995
Nine Nine
Months Months
1996 1995
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net Income (Loss) ................................. $(16,328) $ 3,119
Adjustments to reconcile net income (loss) to
net cash used by operating activities:
(Increase) decrease in accounts receivable ..... (71,605) (8,363)
Increase (decrease) in accounts payable ........ 17,252 17,786
Increase (decrease) in accrued liabilities
& current portion .............................. 85,213 652
-------- --------
Net cash (used) by operating activities ........... 14,532 13,194
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures .............................. (13,679) (20,151)
-------- --------
Net cash provided (used) by investing activities .. (13,679) (20,151)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net effect of recapitalization .................... 2,637 --
-------- --------
Net cash provided by financing activities ......... 2,637 --
-------- --------
Net increase (decrease) in cash and equivalents ........ 3,490 (6,957)
Cash and equivalents, beginning ........................ 17,782 --
-------- --------
Cash and equivalents, ending ........................... $ 21,272 $ (6,957)
======== ========
</TABLE>
See notes to unaudited financial statements.
C-3
<PAGE>
EUROTRONICS HOLDINGS, INC.
NOTES TO FINANCIAL STATEMENTS
September 30, 1996
NOTE 1: Basis of Presentation
The accompanying consolidated unaudited condensed financial statements have been
prepared by management in accordance with the instructions in Form 10-QSB and
therefore, do not include all information and footnotes required by generally
accepted accounting principles and should therefore, be read in conjunction with
the Company's Annual Report to Shareholders on Form 10-KSB for fiscal year ended
December 31, 1995.
In management's opinion, the accompanying consolidated unaudited condensed
financial state contain all adjustments, consisting only of normal recurring
adjustments necessary for a fair statement of the results for the interim
periods presented. The interim operation results are not necessarily indicative
of the results for the fiscal year ending December 31, 1996.
NOTE 2: Acquisition of InterConnect West, Inc.
On July 16, 1996, the Company executed an Agreement for Exchange of Stock (the
"Agreement") with InterConnect West, Inc., a Utah corporation ("ICW"), and Mark
Tolman who prior to the Agreement owned 100% of the outstanding stock of ICW.
The Agreement was made effective July 31, 1996. Under this Agreement, the
Company acquired all outstanding shares of ICW, making ICW the Company's
wholly-owned subsidiary.
As a result of this recapitalization of ICW, the common stock of ICW (1,000
shares with a par value of $1.00) was transferred to Eurotronics and Eurotronics
issued 17,504,532, shares of common stock. In addition, 1,944,948 shares of
common stock were issued to Canton Financial Services Corporation (CFS) for
services in arranging the recapitalization. CFS is also due a payment of
$100,000 payable at the Company's option in either cash or common stock. Also,
44,203 shares of common stock were issued to James Tilton, the Company's former
president and director for services in arranging the recapitalization. Prior to
the recapitalization, Eurotronics had 442,034 shares of common stock
outstanding. The Agreement has been approved by the Company's shareholders and
is effective under relevant state law. The Company has therefore treated the
Agreement as effective in its financial statements. However, the Agreement will
not be effective for purposes of the Securities Exchange Act of 1934 (the "Act")
until an information statement is distributed to the appropriate shareholders
pursuant to Regulation 14C under the Act. The Company is now in the process of
disseminating that information statement. All references to quantities of common
stock mentioned in this paragraph account for the 1 for 10 reverse split of the
Company's common stock which will also be effective upon proper dissemination of
an information statement.
For financial accounting purposes the acquisition is treated as a reverse
acquisition and ICW is treated as acquiring the Company. The comparative figures
presented in the consolidated financial statements are those of ICW and the
limited assets and liabilities of Eurotronics have been recorded under the
purchase method of accounting at their historical costs. The financial
statements include the operations of ICW for all periods presented with the
operations of Eurotronics included from the date of recapitalization. The
operations of Eurotronics were immaterial prior to the recapitalization.
NOTE 3: Debt Settlement
Prior the recapitalization described in Note 2, the Company settled all prior
fees due to CFS in connection with its consulting agreement with CFS through the
exchange of its investment securities. As a result of this transaction, the
Company eliminated all of its liabilities and was left with no assets.
NOTE 4: Additional footnotes included by reference
Except as indicated in the footnotes above there has been no other material
change in the information disclosed in the notes to the financial statements
included in the Company Annual Report on Form 10-KSB for the year ended December
31, 1995. Therefore those footnotes are included herein by reference.
C-4
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
CONSOLIDATED UNAUDITED CONDENSED FINANCIAL STATEMENTS FILED WITH THE COMPANY'S
INFORMATION STATEMENT FILED PURSUANT TO REGULATION 14C OF TE SECURITIES AND
EXCHANGE ACT OF 1934 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000734089
<NAME> EUROTRONICS HOLDINGS INCORPORATED
<MULTIPLIER> 1
<CURRENCY> U. S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 21,272
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 89,375
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 45,568
<DEPRECIATION> (7,251)
<TOTAL-ASSETS> 147,964
<CURRENT-LIABILITIES> 133,200
<BONDS> 0
442
0
<COMMON> 1,993
<OTHER-SE> (12,945)
<TOTAL-LIABILITY-AND-EQUITY> 147,964
<SALES> 0
<TOTAL-REVENUES> 256,762
<CGS> 0
<TOTAL-COSTS> 99,713
<OTHER-EXPENSES> 170,377
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (16,328)
<INCOME-TAX> 0
<INCOME-CONTINUING> (16,328)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (16,328)
<EPS-PRIMARY> (0.00)
<EPS-DILUTED> (0.00)
