UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
of the
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 4, 1996
TIANRONG BUILDING MATERIAL HOLDINGS, LTD.
(Exact name of registrant as specified in its charter)
UTAH
(State or other jurisdiction of incorporation or organization)
0-19664 59-2729321
(Commission File Number) (IRS Employer Identification Number)
82-66 Austin Street, Kew Gardens, New York 11415
(Address of principal executive offices)
(718) 847-1531
(Registrant's telephone number, including area code)
<PAGE>
ITEM 6. RESIGNATION OF REGISTRANT'S DIRECTORS
The term "Company" shall hereinafter refer to Tianrong Building
Material Holdings, Ltd., a Utah corporation, and any of its subsidiaries and
predecessors, unless the context indicates otherwise. On October 4, 1996, the
Company received a letter of resignation (the "Letter") from Aster De Schrijver,
then the Company's chairman of the board of directors. The Letter is attached
hereto as Exhibit 17(a) and incorporated herein by this reference.
In the Letter, Mr. De Schrijver indicated that the Company has failed
to perform necessary due diligence with respect to the Company's proposed
acquisitions of International Construction Technology, Inc., a Canadian company
which is currently acquiring license agreements to manufacture and sell building
materials in China ("ICT"), and Agra-Products International, Inc., a Canadian
company which is currently negotiating a joint venture to produce and market
dairy products in China ("API"). Mr. De Schrijver stated that he repeatedly
requested information regarding these companies, including audited financial
statements and business plans, but did not receive any meaningful responses to
these requests. Therefore, Mr. De Schrijver suggests that the Company's current
officers and directors have breached their duty of care to the Company's
shareholders.
Although the Company has received and accepted the resignation of Mr.
De Schrijver, the Company believes that Mr. De Schrijver has misunderstood the
nature of the negotiations with ICT and API. While the Company has had
negotiations with both ICT and API concerning the possible acquisitions of these
entities, all discussions have been preliminary and no acquisition agreements
have been reached. The Company recently received financial statements and
business plans from both ICT and API and is now reviewing these documents. The
Company has also requested additional financial schedules from these entities.
The Company's current officers and directors do not intend, and have not at any
time intended, to finalize any discussions or execute any acquisition agreement
until they are satisfied that an adequate due diligence investigation has been
conducted. It is the Company's opinion, then, that no breach of the duty of care
could have been committed with regard to these acquisitions since no
acquisitions have yet been consummated.
In the Letter, Mr. De Schrijver suggests that the possible acquisitions
of ICT and API are part of a scheme on behalf of the Company to inflate the
price of the Company's stock in order to appease or benefit certain investors of
the Company. The Letter also makes allusions to market manipulation and
securities fraud, but does not give any substantiation to these allegations.
The Company does not understand the accusations set forth by Mr. De
Schrijver, nor can it adequately address such broad and indefinite allegations.
The Company's objective is to continually search for suitable acquisition
candidates that can enhance the Company's financial position and revenues.
Accordingly, the Company's management has investigated and negotiated with
several business entities in the past and continues to do so in the present. The
potential acquisitions of ICT and API are part of this overall effort, and the
Company will not ultimately effect these transactions unless the board of
directors determines them to be in the best interest of the Company's
shareholders. The Company believes these accusations of criminality and
impropriety are spurious and the Company is currently investigating whether or
not it has any civil remedies against Mr. De Schrijver for his allegations.
Finally, in the Letter Mr. De Schrijver accuses the Company of
promoting itself through misleading press releases. In his letter, Mr. De
Schrijver does not specify those press releases which he believes to be
misleading, but only refers to them as having been disseminated recently. The
Company is not aware of any press releases that have been issued by or on behalf
of the Company in the past several months. The last press release of which the
Company is aware was issued on June 26, 1996. This press release described a
financing agreement which ADS Group, a corporation controlled by Mr. De
Schrijver, had reached with First Liberty to acquire a company involved in the
manufacture of metal houses. This press release was issued at the instruction of
Mr. De Schrijver. Accordingly, the Company believes that Mr. De Schrijver's
allegations regarding misleading press releases are also unfounded.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: October 17, 1996
Tianrong Building Material Holdings, Ltd.
/S/ James Tilton
------------------------------------------
James Tilton, President and Director
<PAGE>
INDEX TO EXHIBITS
Exhibit Number Page Number Description
17(a) 5 Aster De Schrijver's Letter of
Resignation as chairman of the board of
directors of Tianrong Building Material
Holdings
<PAGE>
EXHIBIT 17(a)
<PAGE>
ASTER DE SCHRIJVER
c/o INDUSTRIELAAN 12
B-9800 DEINZE
BELGIUM
October 4, 1996
Mr. James Tilton
Tianrong Building Material Holdings, Ltd.
82-66 Austin Street
Kew Gardens, NY 11415
Dear James:
You proposed that Tianrong acquire two Canadian companies,
International Construction Technology Canada and API Canada, and suggested that
we act quickly and close on these entities as soon as possible, preferably by
the end of this week or early next week. However, you have failed to respond in
a meaningful way to my repeated requests for information and due diligence,
including audited financial statements and business plans on those companies.
On the basis of the limited information available to me, API and its
daughter company in China are not active in pre-engineered buildings, but are
instead presently involved in the food industry, hardly an obvious match with
Tianrong. Moreover, while International Construction Technology Canada is active
in the building materials industry in Canada, in my opinion their technology has
not been properly evaluated. Therefore, I don't see how the board of directors
of Tianrong, if it is to act in a responsible manner, can proceed with these
acquisitions, which we have barely had the opportunity to discuss, let alone
evaluate.
I now understand that your urgency in wanting to close these
acquisitions so quickly stems from the fact that you and Ed Williamson wish to
persuade the Belgium broker Nedee and various investors in Tianrong that
Tianrong's stock price will likely rise as a result of public announcements of
these acquisitions, which would in turn allow them to liquidate their shares. Of
course, you must realize that I believe this is irresponsible and not in the
best interests of Tianrong and its shareholders. I further believe that this
suggests manipulation and may be in violation of securities laws. I will have no
part of such a scheme.
Moreover, I hesitate to place any trust in your representations in
light of the fact that a three-year business plan was developed and agreed upon
the Board of Directors of Tianrong at the company's inception, and no part of
that plan has since been implemented or accomplished.
Recently, and contrary to our written agreement, you and Williamson,
without my consent, have promoted both Tianrong and Omap through press releases,
using information that I believe is factually incorrect and misleading, and
should be corrected by prompt public statements and SEC filings, including a
reference to a possible shutdown or bankruptcy or Kohl if the funding repeatedly
promised by you and Williamson is not delivered immediately.
In light of these, and other actions taken by you, my colleagues and I
are sending you our resignations as officers and/or directors of Tianrong, a
company in which the ADS Group is still a major shareholder and into which I
have invested a tremendous amount of time as well as capital.
Very truly yours,
/s/ Aster De Schrijver
-----------------------
Aster De Schrijver
<PAGE>
October 4, 1996
Tianrong Building Material Holdings, Ltd.
82-66 Austin Street
Kew Gardens, NY 11415
Attention: Mr. James Tilton
Re: Tianrong Building Material Holdings, Ltd.
Dear Mr. Tilton:
I hereby resign as an officer and director of Tianrong Building Material
Holdings, Ltd. effective immediately.
Very Truly Yours,
/s/ Aster De Schrijver
----------------------
Aster De Schrijver
