U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC. 20549
FORM 10-KSB/A
(Amendment No. 1)
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[x] Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended September 30, 1997
or
[ ] Transition Report under Section 13 or 15(d) of
the Securities Exchange Act of 1934
Commission file number 0-22388
EIF HOLDINGS, INC.
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(Exact name of small business issuer as specified in its charter)
Hawaii 99-0273889
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
54 Stiles Road
Salem, NH 03079
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(Address of principal (Zip Code)
executive offices)
(603) 890-3680
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(Issuer's telephone number, including area code)
Securities registered under Section 12(b)of the Exchange Act:
None
Securities registered under Section 12(g)of the Exchange Act:
Common Stock,
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(Title of Class)
Check whether the Issuer (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
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Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.[ ]
State Issuer's revenues for its most recent fiscal year: $13,434,423
State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of a specified date within the past 60
days: December 31, 1997: $7,276,372 (15,818,201 shares held by persons other
than affiliates) at an average of the high and low bid and high and low asked
price $.46 as reported by the National Quotation Bureau, Inc.
The Number of shares of Common Stock outstanding at December 31, 1997:
24,618,201.
Transitional Small Business Disclosure Format (Check one):
YES NO X
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ITEMS 10, 11, 12 and 13 of PART III of the Annual Report on FORM 10-KSB of
EIF Holdings, Inc. (the "Company"), which was filed with the Securities and
Exchange Commission on January 13, 1998, are hereby amended in their entirety
and read as follows.
Page 1
<PAGE>
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS, COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT
The following table sets forth certain information concerning the directors
and executive officers of the Company as of December 31, 1998.
Position With Year
Name Age the Company Became Director
---------------------- ---- ---------------------- ----------------
Frank J. Fradella 42 Chairman, President, 1997
CEO and Director
J. Drennan Lowell 41 Vice President, Chief N/A
Financial Officer;
Treasurer and Secretary
Michael E. McGinnis 47 Director 1996
Joseph L. Vaillancourt 30 Corporate Controller, N/A
Assistant Treasurer and
Assistant Secretary
Michael J. Chakos 40 Vice President of Nominee
JL Manta, Inc.
Andreas O. Tobler 47 Director 1993
The terms of the directors will expire at the next annual meeting and
until their successors are elected and qualified. The Company's officers are
elected by the Board of Directors and hold office at the will of the Board of
Directors. There is no family relationship between any of the nominees.
Frank J. Fradella has been President, CEO and a director of the Company
since May 1997 and has been Chairman since November 1997. From October 1996 to
May 1997, he was Executive Vice President and Chief Operating Officer of
American Eco. From February 1993 to October 1996, he was employed by NSC
Corporation, a specialty contractor, having been serving as its President and
CEO since September 1994. From February 1991 to January 1993, Mr. Fradella was
Vice President of Kaselaan & D'Angelo Associates.
J. Drennan Lowell has been Vice President, Chief Financial Officer,
Treasurer and Secretary of the Company since October 1997. Previously, Mr.
Lowell was employed by NSC Corporation where he held the positions of Vice
President, Chief Financial Officer and Secretary from November 1993 through
August 1997 and Treasurer from May 1994 through August 1997. Prior to joining
NSC, Mr. Lowell served as Vice President of Finance for Wheelabrator Clean Air
Systems Inc. from December 1992 to November 1993 and for Wheelabrator Clean
Water Systems Inc. from August 1991 to November 1993.
Michael E. McGinnis has been a director of the Company since February
1996, and served as Chairman of the Board from February 1996 to November 1997
and as President of the Company from March 1996 until August 1996. Mr. McGinnis
has served as the President and Chief Executive Officer of American Eco since
1993, Chairman since May 1997 and as a director since 1994. He was the President
and Chief Executive Officer of Eco Environmental, Inc., a provider of
environmental remediation services to industrial clients, when it was acquired
by American Eco in 1993. Prior to joining Eco Environmental, Inc. in 1992, Mr.
McGinnis was employed with The Brand Companies which he joined in 1965 and
served in various operational and administrative capacities for more than 27
years. Since February 1998, Mr. McGinnis has been a director of Dominion Bridge
Corporation (Nasdaq NMS).
Page 2
<PAGE>
Joseph L. Vaillancourt has been Corporate Controller, Assistant Treasurer
and Assistant Secretary of the Company since September 1997. Prior to joining
the Company, Mr. Vaillancourt served as Assistant Controller of NSC Corporation
from February 1996 to August 1997. From June 1994 to February 1996 Mr.
Vaillancourt served as Corporate Accounting Manager for Corning Costar
Corporation. From June 1993 to June 1994 Mr Vaillancourt served as Corporate
Accounting Manager for Foster Medical Supply, Inc.
Michael J. Chakos has served as Chief Financial Officer of JL Manta, Inc.
since March 1993, and Vice President since November 1992, having been co-owner
of such corporation until November 1997 when it was acquired by the Company.
From February 1992 to March 1993, he was employed by The Brand Companies as a
regional controller. Prior to February 1992, Mr. Chakos served as Chief
Financial Officer of Hydro Services, Inc., a hydroblasting and vacuum services
company based in California, since 1988. Since March 1995, he has owned and
served as President of CUBS Construction Company.
Andreas O. Tobler has served as a director of the Company since November
1993. He served as Vice President and Treasurer of the Company from January 1995
and November 1993, respectively, to February 1996, having been an employee from
October 1991 through February 1997. Since October 1996, Mr. Tobler has served as
a principal and an officer of Online Capital GmbH, a Swiss private investment
company, and also served as the Managing Director of its affiliate Cornerstone
Financial Corporation, a U.S. private financial company. From 1989 to 1991, Mr.
Tobler was Managing Partner of Royal Trust (Switzerland).
Board Meetings and Committees
The Board of Directors of the Company held a total of four meetings during
the fiscal year ended September 30, 1997, including actions by unanimous written
consent. No director attended fewer than 75% of all meetings of the Board of
Directors.
The Board of Directors of the Company currently does not have either a
standing compensation committee or audit committee. It is anticipated that the
directors elected at the Meeting will establish such committees. The
compensation committee would recommend the compensation arrangements with the
executive officers and the Company's compensation plans, and would administer
the stock option plan, see Proposal No. 4 - "Approve a Plan of Merger to Change
the State of Incorporation of the Company from Hawaii to Delaware Business and
Financial Condition." The audit committee would oversee the financial reporting
by the Company and consult, as required, with the Company's chief financial
officer and independent accountants.
Section 16(a) Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who own more than 10% of the
Company's Common Stock, to file reports of ownership and changes in ownership
with the Securities and Exchange Commission ("SEC") and any national securities
exchange or quotation system on which such class of equity securities is listed.
Officers, directors and greater than 10% shareholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms filed.
Based solely on the Company's review of the copies of such forms received
by it, or on written representation from certain reporting persons, the Company
discovered that Mr. Fradella had neglected to file certain Section 16(a) forms.
However, Mr. Fradella is to report these transactions on Form 5.
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<PAGE>
ITEM 10. EXECUTIVE COMPENSATION AND EMPLOYMENT AGREEMENTS
The following table sets forth all cash compensation for the fiscal year
ended September 30, 1997 of the Company's Chief Executive Officer and the most
highly compensated executive officers whose compensation exceeded $100,000 for
services rendered to the Company (the "Named Executive Officers").
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation
Long-Term
Other Annual Compensation
Salary Bonus Compensation Options
Name Principal Position Year ($) ($) ($) (#)
- -------------------- ------------------ ------ --------- ------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Frank J. Fradella 1/ President and CEO 1997 $ 107,665 -- -- --
David L. Norris 2/ President and CEO 1997 116,667 -- -- --
<FN>
1/ Mr.Fradella became President and CEO on May 1, 1997.
2/ Mr.Norris was President and CEO from September 1, 1996 through April 30,
1997.
</FN>
</TABLE>
The following table sets forth individual grants of stock options made by
the Company during the fiscal year ended September 30, 1997 to the Named
Executive Officers.
<TABLE>
<CAPTION>
Option Grants in Last Fiscal Year
Individual Grants
% of total options
granted to
employees in Exercise or base Expiration
Name Option Granted fiscal year price ($/sh) date
- -------------------- -------------- ------------------- ----------------- ----------
<S> <C> <C> <C> <C>
Frank J. Fradella -- -- -- --
David L. Norris -- -- -- --
</TABLE>
The following table sets forth information regarding each exercise of stock
options rights during the last fiscal year by each Named Executive Officer and
the fiscal year-end value of unexercised options and stock appreciation rights
provided on an aggregate basis.
<TABLE>
<CAPTION>
Aggregated Option Exercises in Last Fiscal Year
and FY-End Option Values
Number of Value of Unexercised
Unexercised In-the-Money
Options at Options at
FY-End ($) FY-End ($)
Shares acquired Exercisable/ Exercisable/
Name on Excercise (#) Value Realized Unexercisable/ Unexercisable/
- -------------------- ---------------- -------------- -------------- ----------------------
<S> <C> <C> <C> <C>
Frank J. Fradella -0- -0- -0- -0-
David L. Norris -0- -0- -0- -0-
</TABLE>
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<PAGE>
Employment Contracts
Mr. Fradella is employed as Chairman, President and CEO of the Company at a
salary of $250,000 at an annum rate. He does not have an employment agreement.
As of October 1, 1997, J. Drennan Lowell became Vice President and Chief
Financial Officer of the Company at a base annual salary of $175,000. He
received a $50,000 "signing" bonus and is to receive a $70,000 "performance"
bonus on or about March 15, 1998. The performance bonus is to compensate him for
the target bonus he was to have received from his prior employer. In the event
the Company terminates Mr. Lowell's employment without cause, he would be
entitled to severance in the amount of one year's salary. In addition, as part
of the proposed arrangement with American Eco (see "Certain Transactions"
below), Mr. Lowell is to receive options from the purchasing group to purchase
1,000,000 shares of the Company's Common Stock at an exercise price of $.65 per
share, vesting over a three year period with automatic vesting upon a "change of
control" of the Company (without giving effect to the proposed Reverse Stock
Split).
Upon the closing of the Manta Acquisition, Mr. Chakos entered into an
Employment Agreement with Manta providing for him to serve as Vice President of
Manta for a period of three years at an annual base salary of $150,000.
ITEM 11 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS AND
EXECUTIVE OFFICERS
The following table sets forth information regarding the beneficial ownership
of the Common Stock of the Company as of the Record Date concerning (i) persons
known to the Company to be the beneficial owners of more than 5% of the
outstanding Common Stock, (ii) by each director and nominee, (iii) by each
current executive officer named in the Summary Compensation Table and (iv) by
all directors and officers as a group.
<TABLE>
<CAPTION>
Amount and Nature
Status of of Beneficial
Name of Beneficial Owner Beneficial Owner Ownership(1) Percent
- ------------------------ ------------------------ ----------------- -------
<S> <C> <C> <C>
American Eco Corporation** Beneficial Owner of more 8,800,000(2) 35.7%
than 5% of Common Stock
Frank J. Fradella Chairman, President and 8,800,000(3) 35.7%
Director
J. Drennan Lowell Vice President, Chief -- --
Financial Officer,
Treasurer and Secretary
Michael E. McGinnis Director 8,800,000(4) 35.7%
Andreas O. Tobler Director 25,450 *
Joseph L. Vaillancourt Corporate Controller, -- --
Assistant Treasurer and
Assistant Secretary
Michael J. Chakos Nominee 15,000(5) *
All executive officers and 8,840,450(6) 35.9%
directors as a group (5 persons)
- --------------------------------------
<FN>
Page 5
<PAGE>
* Represents less than 1% of the issued and outstanding shares of Common
Stock.
** The principal executive offices of American Eco Corporation ("American
Eco") are 154 University Avenue, Toronto, Ontario, Canada M5H 3Y9.
(1) Unless otherwise noted, all of the shares shown are held by individuals or
entities possessing sole voting and investment power with respect to such
shares. The number of shares beneficially owned includes shares which each
beneficial owner has the right to acquire within 60 days of the Record
Date.
(2) These shares are subject to an option granted to Mr. Fradella and his
wife, see note (3) below. Does not include (i) 10,000,000 shares
purchasable upon the closing of a Stock Purchase Agreement, which closing
is subject to shareholder approval of Proposals Nos. 2 and 4 or (ii)
shares subject to conversion rights under a line of credit agreement.
See ITEM 12 -- Certain Relationships and Related Transactions" for
information regarding the interest of American Eco in the Company.
(3) Includes 8,800,000 shares subject to an option granted by American Eco
during the term of the option, see note (2) above.
(4) Includes 8,800,000 shares beneficially owned by American Eco, of which Mr.
McGinnis is Chairman of the Board, President and CEO. Mr. McGinnis
disclaims beneficial ownership of the Company's securities owned by
American Eco.
(5) Includes 15,000 shares subject to options, and does not include (i) 30,000
shares subject to options which are not exercisable within 60 days from
the Record Date or (ii) 30,000 shares which will be subject to options
issued upon shareholder approval of Proposals No. 2 and 4.
(6) Includes 15,000 shares subject to options. See Notes (2) and (5) above.
</FN>
</TABLE>
ITEM 12 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In January 1996, American Eco agreed to purchase 10,000,000 shares of the
Company's Common Stock at a price of $.10 per share, or an aggregate purchase
price of $1,000,000, pursuant to a Stock Purchase Agreement. The closing has
been conditioned upon Company shareholders approving an increase in its
authorized shares of Common Stock to have sufficient shares to issue upon the
closing. One reason for the Reverse Stock Split, which is Proposal No. 2 at this
Meeting, is to permit the Company to have authorized but unissued shares of
Common Stock available for the closing of the Stock Purchase Agreement with
American Eco.
In February 1996, American Eco agreed to loan money to the Company pursuant
to an unsecured line of credit agreement (the "Line of Credit") with a maximum
borrowing of $5,250,000, bearing interest at the prime rate plus 2%. The Line of
Credit initially was to expire on July 31, 1997, and was modified as of July 31,
1997, and the availability was increased to $15,000,000 and extended to February
18, 1998. As of September 30, 1997, the availability was increased to
$20,000,000 in order to permit the Company to meet certain of its existing
obligations. As of November 30, 1997, $17,873,000, including accrued interest,
was outstanding under the Line of Credit. American Eco was the Company's primary
source of funding in fiscal 1997. Upon the closing of the Stock Purchase
Agreement, the outstanding principal amount on the Line of Credit would be
reduced by $1,000,000, representing the purchase price under such Agreement. The
modifications of the Line of Credit also granted American Eco the right to
convert all, and not less than all, of the remaining principal amount thereunder
into shares of the Company's Common Stock at a conversion price equal to 85% of
the five-day weighted average closing market price of such Common Stock
immediately prior to the conversion date.
Page 6
<PAGE>
When Mr. Fradella became employed by American Eco in October 1996 he
received a $350,000 loan to cover the purchase of a home. This loan is repayable
in five years, without interest, subject to an annual $70,000 principal
reduction upon each anniversary of his employment with American Eco. In
September 1997, American Eco assigned this loan to the Company, increasing the
principal amount under the Line of Credit by $280,000. At November 30, 1997, the
outstanding principal amount of this loan was $280,000, reflecting a reduction
of $70,000 upon the first anniversary.
American Eco has also guaranteed certain indebtedness and leases of the
Company. At September 30, 1997, the outstanding aggregate principal amount of
the obligations being guaranteed was $404,500. During the 1997 fiscal year, the
Company repaid a bank loan and certain other outstanding obligation in the
amount of $4,207,000, which had been guaranteed by American Eco. Subsequent to
September 30, 1997, the amount of the Company's outstanding obligations
guaranteed by American Eco was reduced to $127,000.
American Eco and the Company also entered into a Management Agreement as of
October 1, 1996 pursuant to which American Eco provided management and financial
guidance to the Company and also guaranteed certain of the Company's obligations
in order to allow the Company to receive more favorable terms from creditors.
The Agreement called for a quarterly fee of $1,000,000. American Eco ceased
providing the management services to the Company shortly after the appointment
of Mr. Fradella as President and CEO of the Company in May 1997. The fee for the
first two fiscal quarters and pro rata for the third quarter was in the
aggregate amount of $2,300,000. This amount was not paid, but added to the
principal amount of the Line of Credit. The Management Agreement was terminated
as of June 30, 1997.
In December 1997, American Eco granted an option to Mr. Fradella and his
wife to purchase its 8,800,000 shares of the Company's Common Stock at an
exercise price of $.65 per share exercisable for a period of one year. Pursuant
to the grant of this option, the Company granted Mr. Fradella and his wife a
proxy to vote all of the option shares. The purpose of the option was to give
Mr. Fradella a major stake in the Company.
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<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on behalf of the undersigned
hereunto duly authorized.
EIF HOLDINGS, INC.
/S/ J. Drennan Lowell
-------------------------------------
J. Drennan Lowell
Vice President, Chief Financial Officer,
Treasurer and Secretary
April 9, 1998
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