SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[ X ]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OF 15(d) OF THE EXCHANGE ACT OF 1934
From the transition period from ____________ to ___________.
Commission File Number 0-6456
INFRASTRUCTURE INTERNATIONAL, INC.
-----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Nevada 87-0287034
------------------------------ ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
Rm. 2211-2215, Science and Technology Building, No. 1001
Shangbuzhong Road, Fution District Shenzhen, PRC
--------------------------------------------------------
(Address of principal executive offices)
011-77-55-369-0588
---------------------------
(Issuer's telephone number)
N/A
----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) filed all reports
required to be filed by Section 13 or 15(d) of the Exchange Act during the past
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days:
Yes No X
---- -----
Class Shares Outstanding Date
Common, $.001 par value 2,430,000 December 1, 1999
<PAGE>
INFRASTRUCTURE INTERNATIONAL, INC.
INDEX
Page
Number
-------
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets - March 31, 1997 and
December 31, 1996........................................ 3
Condensed Statements of Operations - For the three
months and nine months ended March 31, 1997 and 1996..... 4
Condensed Statements of Cash Flows - For the nine
months ended March 31, 1997 and 1996..................... 5
Notes to Condensed Financial Statements.................. 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations..................... 8
PART II - OTHER INFORMATION................................................ 8
Item 6. Exhibits and Reports on Form 8-K......................... 8
SIGNATURES................................................................. 9
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INFRASTRUCTURE INTERNATIONAL, INC.
Balance Sheet
<TABLE>
March 31, 1997 December 31, 1996
---------------- -------------------
<S> <C> <C>
Assets
Current assets:
Cash $ 0 $ 481
Due from shareholders 0 13,000
-------- ------------
Total current assets $ 0 $ 13,481
Property, net 0 24,215,838
-------- ------------
Total assets $ 0 $ 24,229,319
======== ============
Liabilities and Shareholders's Equity
Current Liabilities
Accrued expenses $ 110,500 $ 32,000
Due to related company 0 74,855
Due to a joint venture partner 0 2,192,146
Loan from a joint venture partner 0 16,446,897
-------- ------------
Total liabilities $ 110,500 $ 18,745,898
-------- ------------
Minority interest 0 2,384,922
-------- ------------
Stockholders' Equity
Preferred stock, Series A convertible and redeemable, par
value $.001 issued and outstanding: 2,000 as of 9/30/97
and 3,000 as of 12/31/96
2 3
Preferred stock, Series B supervoting, par value $.001
issued and outstanding: 100,000 as of 9/30/97 and as of
12/31/96 100 100
Common stock, par value $.001 issued and outstanding:
2,430,000 as of 9/30/97 and 9,680,000 as of 12/31/96
2,430 9,680
Additional paid in capital 3,512,884 3,513,584
Accumulated deficit (3,625,916) (430,948)
Cumulative translation adjustments 0 6,080
-------- ------------
Total stockholders' equity $ (110,500) $ 3,098,499
Total liabilities and stockholders' equity $ 0 $ 24,229,319
======== ============
</TABLE>
See Notes to the Financial Statements
3
<PAGE>
INFRASTRUCTURE INTERNATIONAL, INC.
Statement of Operations
<TABLE>
For the Three Months Ended March 31,
------------------------------------
1997 1996
-------- --------
<S> <C> <C>
Revenues $ 0 $ 0
General and administrative expenses $ (51,401) $ (1,290)
-------- --------
Loss from continuing operations before income taxes
$ (51,401) $ (1,290)
Provision for income taxes $ 0 $ 0
-------- --------
Loss from continuing operations $ (51,401) $ (1,290)
Discontinued operations
Income (loss) from discontinued operations of toll road
$ 0 $ 0
Loss on disposal of discounted operations $(3,152,072) $ 0
--------- --------
Income (loss) before minority interests $(3,203,473) $ (1,290)
Minority interests $ 0 $ 0
--------- --------
Net income / (Loss) $(3,203,473) $ (1,290)
========= ========
Basic earnings (loss) per common share
Loss from continuing operations (.021) (.002)
Income (loss) from discontinued operations (1.297) (0)
--------- --------
(1.318) (.002)
========= ========
Diluted earnings (loss) per common share
Loss from continuing operations (.012) .002
Income (loss) from discontinued operations (.751) 0
========= ========
$ (.763) $ (.002)
========= ========
Average shares outstanding 2,430,000 524,227
========= ========
</TABLE>
See Notes to the Financial Statements
4
<PAGE>
INFRASTRUCTURE INTERNATIONAL, INC.
Statement of Cash Flows
<TABLE>
For the Three Months Ended March 31,
-----------------------------------
1997 1996
------ ------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(3,203,473) (1,290)
Adjustments to reconcile net income (loss) to net cash provided by
operating activities
Loss on disposal of discontinued operations $ 3,152,072 $ 0
Increase (decrease) in operating assets -
Due from shareholders $ 13,000 $ 0
Increase (decrease) in operating liabilities -
Accrued expenses 78,500 0
Due to related parties (34,019) 0
--------- --------
Net cash provided by (used for) operating activities $ 6,080 $ (1,290)
--------- --------
CASH FLOW FROM INVESTING ACTIVITIES:
Cash outflow from disposal of subsidiary $ (481) $ 0
--------- --------
Net cash provided by (used in) investing activities $ (481) $ 0
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Loans from shareholders $ 0 $ 1,290
--------- --------
Net cash provided by financing activities $ 0 $ 1,290
--------- --------
Net increase (decrease) in cash: 5,599 0
Effect of translation adjustments (6,080) 0
Beginning cash balance 481 0
--------- --------
Ending cash balance $ 0 $ 0
========= ========
</TABLE>
See Notes to the Financial Statements
5
<PAGE>
INFRASTRUCTURE INTERNATIONAL, INC.
Notes to the Financial Statements
March 31, 1997
1. General
The interim financial statements are prepared pursuant to the requirements
for reporting on Form 10-QSB. The December 31, 1996 balance sheet data was
derived from audited financial statements but does not include all disclosures
required by generally accepted accounting principles. The interim financial
statements and notes thereto should be read in conjunction with the financial
statements and notes included in the Company's Form 10-KSB for the year ended
December 31, 1996. In the opinion of management, the interim financial
statements reflect all adjustments of a normal recurring nature necessary for a
fair statement of the results for the interim periods presented.
2. Foreign Currency Conversion
The Company's financial information is presented in U.S. dollars. Renminbi
have been converted into U.S. dollars at the exchange rate of 8.32 to 1.
3. Significant Events
Transfer of Ownership
---------------------
In December 1996, the Company acquired 100% interest in Guanghui Highway
Project Company Limited ("GHHP"), a BVI company, from Yiu Yat Hung and Yiu Yat
On, GHHP's principal shareholders by issuing 8,430,000 shares of the Company's
common stock, par value $.001, and 100,000 shares of Series B supervoting
preferred stock.
On January 2, 1997, Yiu Yat On transferred (i) 5,000,000 shares of common
stock of the Company to New Eagle Infrastructure Limited ("NEI" a company
incorporated in the British Virgin Islands), (ii) 1,100,000 shares of common
stock of the Company and 100,000 shares of Series B supervoting preferred stock
of the Company to New Silver Eagle Holdings Limited ("NSEHL" a company
incorporated in the British Virgin Islands), and (iii) 2,330,000 shares of
common stock of the Company to unrelated parties. NEI is wholly owned by NSEHL,
which is beneficially owned by Yiu Yat On, Yiu Yat Hung and their family
members.
On May 1, 1997, 700 shares of Series A convertible and redeemable preferred
stock, par value US$0.001 each were converted into 700,000 shares of common
stock, par value US$0.001 each. In addition, 300 shares of Series A convertible
and redeemable preferred stock were tendered for cancellation in December 1997.
6
<PAGE>
Disposal of a subsidiary - GHHP
- -------------------------------
In June 1997, the Company entered into an agreement to dispose of 100%
interest in GHHP to Yiu Yat On and New Silver Eagle Holdings Limited. This
Agreement was retroactive to December 1, 1996. As consideration, Yiu Yat On and
New Silver Eagle Holdings Limited have agreed to surrender to the Company their
interest in 8,430,000 shares of common stock of the Company and 100,000 shares
of Series B supervoting preferred stock of the Company. This was considered done
as of January 1, 1997. As of December 31, 1997, Yiu Yat On and New Silver Eagle
Holdings Limited had only surrendered 7,950,000 shares of common stock, which
have been canceled. In connection with the disposal of GHHP, GHHP agreed to
return the sum of US$3,000,000 contributed by the Company to GHHP in 1996.
However, it is uncertain whether GHHP has the necessary resources to repay its
obligation to the Company and, consequently, the Company has recorded a full
provision of US$3,000,000 against this receivable as of December 31, 1997. The
operating results of GHHP have been accounted for as discontinued operations for
the years ended December 31, 1996 and 1997.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
In June 1997, the Company entered into an agreement to dispose of 100%
interest in Guanghui Highway Project Company Limited, ("GHHP") to Yiu Yat On and
New Silver Eagle Holdings Limited. As consideration, Yiu Yat On and New Silver
Eagle Holdings Limited agreed to surrender to the Company their interest in
8,430,000 shares of common stock of the Company and 100,000 shares of Series B
supervoting preferred stock of the Company. This Agreement was retroactive to
December 1, 1996. In connection with the disposal of GHHP, GHHP agreed to return
the sum of US$3,000,000 contributed by the Company to GHHP in 1996. However, it
is uncertain whether GHHP has the necessary resources to repay its obligation to
the Company and, consequently, the Company has recorded a full provision of
US$3,000,000 against this receivable as of December 31, 1997. The operating
results of GHHP have been accounted for as discontinued operations for the years
ended December 31, 1996 and 1997. GHHP had no revenue for the year ended
December 31, 1997.
As a result of accounting for the operating results of GHHP as discontinued
operations for the years ended December 31, 1996 and 1997, comparison of
revenues and expenses, and assets and liabilities is irrelevant.
Although the Company has no liquidity, it believes that it will be able to
find a suitable Company with which to merge.
Year 2000 Compliance
Because the Company has no operations, the year 2000 compliance is not an
issue for the Company.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
10.1 Termination Agreement
27.1 Financial Data Schedule
b) Reports on Form 8-K
None
8
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
INFRASTRUCTURE INTERNATIONAL, INC.
Date: December 3, 1999 By: /s/ Yiu Yat On
---------------------------------
Yiu Yat On, Chairman
and Principal Executive Officer
Date: December 3, 1999 By: /s/ Ma Ding Jie
---------------------------------
Ma Ding Jie, Chief Financial Officer
TERMINATION AGREEMENT
TERMINATION AGREEMENT, dated June 6, 1997 but effective December 1, 1996 by
and between INFRASTRUCTURE INTERNATIONAL, INC., a Nevada corporation
(hereinafter "III"), GUANG HUI HIGHWAY PROJECT COMPANY LIMITED (hereinafter
"Guang Hui") and NEW SILVER EAGLE HOLDINGS LIMITED (hereinafter the
"Shareholder").
RECITALS
WHEREAS, III and the shareholders of Guang Hui entered into an Exchange
Agreement (the "Agreement") in December of 1996 pursuant to which III agreed to
acquire, and the shareholders of Guang Hui agreed to sell, 100% of the
outstanding securities of Guang Hui in exchange (the "Exchange") for 8,430,000
shares of common stock (the "Exchange Shares") and 100,000 shares of Series B
Preferred Stock (the "Series B Shares");
WHEREAS, the Exchange was undertaken based upon various representations of
III, including representations that III was a reporting company under the
Securities Exchange Act of 1934, which, among other things, were intended to
assure that III would be an attractive vehicle in which to raise capital;
WHEREAS, subsequent to the purported closing of the Exchange, it has come
to the attention of Guang Hui and the Shareholder that III had not made required
filings with the Securities and Exchange Commission ("SEC") for more than twenty
years and, as a result thereof, III has encountered substantial regulatory
obstacles to the creation of a trading market in its securities which has in
turn resulted in III being unable to raise necessary capital to fully fund the
operations of Guang Hui, other than $3,000,000 which was raised through the
efforts of Guang Hui from the sale of Series A Preferred Stock (the "Series A
Shares");
WHEREAS, in order to consummate the Exchange and to pay substantial legal,
accounting and other costs and expenses incurred in connection with efforts to
bring III into compliance with applicable SEC disclosure rules, Shareholder has
advanced substantial sums on behalf of III (the "Loans"); and
WHEREAS, in order to resolve any disputes arising with respect to the
performance under the Agreement and to settle amounts owed pursuant to the
Loans, III, Guang Hui and the Shareholder desire to terminate the Agreement and
to restore the various parties to their original position and to cause shares of
III to be issued in full satisfaction of the Loans.
NOW, THEREFORE, in consideration of the premises herein contained and the
mutual covenants hereinafter set forth, the parties hereto covenant and agree as
follows:
1. Termination of Agreement. The parties hereto hereby terminate the
Agreement effective as of December 1, 1996.
<PAGE>
2. Obligations of III. III hereby agrees:
a. to transfer all of the issued and outstanding shares of Guang Hui
held by III to such persons as the Shareholder shall instruct;
b. to utilize the funds to be provided by Guang Hui pursuant to
paragraph 3.b. below to redeem all outstanding Series A Shares;
and
c. to return to Guang Hui all corporate records and documents of or
pertaining to Guang Hui.
3. Obligations of Guang Hui and the Shareholder. Guang Hui and the
Shareholder hereby jointly agree:
a. to cause all of the Exchange Shares and Series B Shares to be
returned to III for cancellation. Should Guang Hui and/or the
Shareholder be unable to return all of the Exchange Shares and
Series B Shares to III, Guang Hui and/or the Shareholder shall
acquire in the open market such number of shares of common stock
and/or Series B Shares as shall be necessary to cause a total of
8,430,000 shares of common stock and 100,000 shares of Series B
Preferred Stock to be surrendered to III for cancellation. Should
Guang Hui and/or the Shareholder be unable to return all of the
Exchange Shares and Series B Shares, notwithstanding its efforts
to acquire shares in the open market, Guang Hui and/or the
Shareholder shall pay to III an amount in cash equal to the fair
market value of any shares not so delivered as agreed upon by
III, Guang Hui and the Shareholder or, at the election of the
Shareholder, shall offset those shares against the shares
issuable pursuant to paragraph 4 below;
b. to cause the sum of $3,000,000 to be paid to III in repayment of
all amounts advanced to Guang Hui from III pursuant to the sale
of the Series A Shares. If agreed to by III, Guang Hui may pay
the sum of $3,000,000 directly to the holders of the Series A
Shares in redemption of such shares which payment shall be deemed
to satisfy Guang Hui's obligations hereunder as well as the
obligations of III pursuant to paragraph 2.b;
c. to cause the holders of the Series A Shares to agree, and to
execute such documents as shall be necessary, to permit the
redemption of the Series A Shares for $3,000,000; and
<PAGE>
d. to return to III all corporate records and documents of or
pertaining to III.
4. Settlement of Loans. III agrees to issue, and the Shareholder agrees to
accept, 3,600,000 shares of common stock of III in full settlement of all Loans
made on behalf of or to III by the Shareholder through the Closing date.
5. Closing. The parties hereto shall hold a formal closing of this
Termination Agreement as soon as possible at such time and place as the parties
shall mutually agree ("Closing"). At Closing, III shall deliver the items called
for by paragraph 2 along with the shares required to be issued pursuant to
paragraph 4, Guang Hui and/or the Shareholder shall deliver the items called for
by paragraph 3 and the Shareholder shall deliver a release of all claims to
repayment of the Loans.
6. Release and Indemnification. Effective on Closing,
a. III releases Guang Hui and each of the pre-Exchange shareholders
of Guang Hui from all obligations and liability under or arising
from the Agreement and agrees to indemnify and hold Guang Hui and
each of the pre-Exchange shareholders of Guang Hui harmless from
and against any liability, cost, expense or claim which may be
asserted or imposed from time to time as a result of the
Agreement or the termination of the Agreement pursuant hereto.
b. Guang Hui and the Shareholder release III from all obligations
and liability under or arising from the Agreement except as such
liability arise in connection with third party claims asserted as
a result of the Agreement or the termination of the Agreement
pursuant hereto.
7. Miscellaneous.
a. By execution of this Agreement, each of the parties hereto hereby
represents that it has the requisite power and authority to enter
into this Termination Agreement.
b. Unless required by applicable law or regulatory authority, none
of the parties will issue any report, statement or press release
to the general public, to the trade, to the general trade or
trade press, or to any third party (other than its advisors and
representatives in connection herewith) or file any document,
relating to this Termination Agreement, except as may be mutually
agreed by the parties.
<PAGE>
c. Each party hereto will bear its own expenses, including legal,
accounting and professional fees, incurred in connection with the
transactions contemplated hereby.
d. This Termination Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all
of which taken together shall be but a single instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date and year first above written.
INFRASTRUCTURE INTERNATIONAL, INC.
By:
----------------------
President
By:
----------------------
Pre-Exchange President
GUANG HUI HIGHWAY PROJECT
COMPANY LIMITED
By:
----------------------
Title:
-------------------
SHAREHOLDER:
NEW SILVER EAGLE HOLDINGS LIMITED
By:
----------------------
Title:
-------------------
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 110,500
<BONDS> 0
0
102
<COMMON> 2,430
<OTHER-SE> (113,032)
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 51,401
<TOTAL-COSTS> 51,401
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 51,401
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (51,401)
<INCOME-TAX> 0
<INCOME-CONTINUING> (51,401)
<DISCONTINUED> (3,152,072)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,203,473)
<EPS-BASIC> (1.458)
<EPS-DILUTED> (.763)
</TABLE>
