UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
August 20, 1999
For the quarter ended: June 30, 1999
Commission file number: 0-26322
Eagle Capital International, Ltd.
a Nevada corporation
IRS Number 88-0303769
954 East 7145 South
Suite B-202
P.O. Box 9354
Midvale, UT 84047
(801) 569-0400
Check whether 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 _X__ No __
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
3,159,993 shares.
Transitional Small Business Disclosure Format (Check one): Yes ___ No _X_
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Eagle Capital International, Ltd.
(A development Stage Company)
Balance Sheet
June 30, 1999
(Unaudited)
ASSETS
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CURRENT ASSETS
Cash $ 81,436
--------------------
TOTAL CURRENT ASSETS 81,436
--------------------
OTHER ASSETS
Deposits on equipment 190,100
License rights 60,000
Investment in Joint Ventures 2,539,114
Investment in IMSI 2,625,000
--------------------
TOTAL OTHER ASSETS 5,414,214
--------------------
TOTAL ASSETS $ 5,495,650
====================
</TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
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CURRENT LIABILITIES
Accounts payable $ 95,393
Additional investments in Joint Ventures 275,000
====================
TOTAL CURRENT LIABILITIES $ 370,393
====================
STOCKHOLDERS' EQUITY
Preferred Series A stock, 10,000,000
shares authorized at $.001 par value; 1,586,400 outstanding 1,586
Preferred Series B stock, 1,000,000 shares authorized at $ .001,
to be issued 911
Capital stock, $.001 par value, 70,000,000
shares authorized; 3,159,993 shares outstanding 3,160
Capital Stock to be issued 374
Additional paid in capital 7,114,957
Accumulated deficit prior to January 1, 1998 (801,020)
Accumulated deficit during the development stage
(from January 1, 1998) (1,194,711)
--------------------
TOTAL STOCKHOLDERS' EQUITY 5,125,257
====================
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY $ 5,495,650
====================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Eagle Capital International, Ltd.
(A Development Stage Company)
STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 1999 AND 1998
(Unaudited)
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From inception of
Development Stage
on
January 1,
1999 1998 1998
------------------- ------------------- -------------------
TOTAL REVENUES
------------------- ------------------- -------------------
GENERAL AND ADMINISTRATIVE EXPENSES
Accounting $ 27,880 $ 41,380
Advertising 7,665 16,450
Auto expense 4,586
Bank charges 139 933
Interest 504 504
Financing fees 106,500 106,500
Consulting fees 434,200 938,739
Legal fees 25,493 63,096
Miscellaneous 1,998 31,912
Office 1,768 18,831
Rent 4,600 5,300
Taxes and licenses 479
Telephone and utilities 4,299 14,162
Travel 941 20,179
-------------------
-------------------
TOTAL EXPENSES 639,987 1,287,048
------------------- -------------------
income taxes 800 800
net loss $ 639,987 $ 800 $ 1,287,848
=================== =================== ===================
NET (LOSS) PER SHARE $ (0.20) $ (0.00) $ (0.41)
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Eagle Capital International, Ltd.
(A Development Stage Company)
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998
(Unaudited)
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From inception of
Development Stage
on
January 1,
1999 1998 1998
------------------- ------------------- -------------------
TOTAL REVENUES
------------------- ------------------- -------------------
GENERAL AND ADMINISTRATIVE EXPENSES
Accounting $ 35,805 $ 41,380
Advertising 13,125 16,450
Auto expense 4,586 4,586
Bank charges 313 933
Consulting fees 932,840 938,739
Equipment leases 24,000 24,000
Interest 504 504
Legal fees 57,179 63,096
Miscellaneous 30,887 31,912
Office 9,405 18,831
Rent 5,300 5,300
Taxes and licenses 229 479
Telephone and utilities 6,531 14,162
Travel 6,058 20,179
-------------------
===================
TOTAL EXPENSES 1,126,762 1,287,048
=================== ===================
INCOME TAXES 800 800
===================
NET LOSS $ 1,126,762 $ 800 $ 1,287,048
=================== =================== ===================
NET (LOSS) PER SHARE $ (0.36) $ $ (0.41)
(0.00)
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
STATEMENT OF CHANGES IN
STOCKHOLDERS' EQUITY (DEFICIT)
For the Six Months Ended June 30, 1999 and 1998
(Unaudited)
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Common Class A Class A Additional Retained
Common Stock Stock to be Preferred Preferred paid-in earnings
issued Stock to be issued capital (deficit) Total
Balance at
March 31, 1998 $ 4,402 $ 2,500 $699,027 $(708,682) $ (2,753)
Net loss for quarter 800 800
================================================================================================
Balance at
June 30, 1998 $ 4,402 $ 2,500 $699,027 $ (709,492) $ (3,553)
================================================================================================
Balance at
March 31, 1999 $ 2,182 $ 374 $ 1,586 $ 911 $6,114,960 $(1,448,890) $ 61,884
Sale of 600,000
shares for cash 600 833,323 833,923
Re-classify paid-in
capital to
accumulated
deficit (93,147) 93,147 0
Issue 200,000 shares
for services 200 199,800 200,000
Issue 60,200 shares
previously
classified as "Stock
to be issued" 60 (60) 120,340 120,400
Net loss for quarter (579,788)
------------------------------------------------------------------------------------------------
Balance at
June 30, 1999 $ 2,442 $ 914 $ 1,586 $ 911 $7,054,936 $(1,935,531) $4,671,122)
================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Eagle Capital International, Ltd.
(A development Stage Company)
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998
(Unaudited)
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From inception of
Development Stage
on
January 1,
1999 1998 1998
Cash Flows from Operating Activities:
Net Loss $ (1,173,063) $ (52,211) $ (1,119,277)
Amortization 1,429
Stock issued for services 688,400 4,317 688,400
Increase in deposits
Increase in accrued liabilities 40,128 38,181 (15,039)
------------------- ------------------- -------------------
New cash provided (used) by operations (444,535) (11,713) (444,487)
Cash used by investing activities:
Deposits on equipment (133,000) (133,000)
Cash used by financing activities:
Payments to JV partners (175,000) (175,000)
Cash from sale of stock 833,923 833,925
------------------- -------------------
658,925 658,925
------------------- -------------------
Net increase in cash 81,390 (11,713) 81,438
Cash at beginning of period 48 11,713
Cash at end of period $ 81,438 $ 0 $ 81,438
=================== =================== ===================
Supplemental Information:
Issued 200,000 shares of Common Stock
for services $ 200,000 $ 488,400
Issued 20,892 shares of Common Stock and
396,931 shares of Preferred B Stock in
exchange for JV partner investments 2,089,114
Incurred obligation for additional investment
in JV partners 150,000 450,000
Issued Common Stock for the purchase of
the net assets of IMSI Cap Fund, Inc. 118,423
=================== =================== ===================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Eagle Capital International, Ltd.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998
Note 1 - Organization, operations and summary of significant accounting
policies:
Organization:
Eagle Capital International, Ltd. (the Company) (formerly IAC, Inc.) is a Nevada
corporation involved in the manufacturing, worldwide marketing and distribution
of block building system products.
Estimates:
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amount of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Organizational Costs:
The Company has adopted statement of Position (SOP) No. 98-5, Reporting on the
Costs of Start-up Activities. In accordance with SOP
No. 98-5, the Company has expensed all organizational costs.
Cash and Cash Equivalents:
For purposes of the statement of cash flows, the Company considers investments
with an original maturity of less than three months to be cash equivalents.
Accounting Method:
The Company's financial statements are prepared using the accrual method of
accounting. The Company has elected a December 31
year-end.
Development Stage Company Reclassification:
Effective January 1, 1998, the Company was reclassified as a development stage
company, which was a retroactive reclassification based upon termination of a
management contract entered into by the Company while it was still IAC, Inc.
Therefore, 1998 Forms 10-QSB did not disclose cumulative revenues, expenses and
cash flows from inception. 1999 cumulative revenues, expenses and cash flows as
reported in these financials have been accumulated from the reclassification
date of January 1, 1998.
NOTE 2 - STOCKHOLDERS' EQUITY
On January 5, 1999 the Company amended its articles of incorporation as approved
by the shareholders, and thereby increased the number of authorized shares of
common stock to 70,000,000 and the amount of authorized preferred stock of all
present and future classes was increased to 20,000,000 shares.
Class A Preferred - The Company authorized 10,000,000 shares of Class A
preferred stock (Class A), which may be converted at the holders' option into
2.5 shares of common stock for each share of Class A. Class A also has
cumulative dividend and liquidation preferential rights over all other classes
of stock, with dividend rights equal to 20% of net income commencing with the
year ending December 31, 1998.
Class B Preferred - The Company has authorized 10,000,000 shares of Class B
preferred stock (Class B) which may be converted at the holders' option into 10
shares of common stock for each share of Class B held. Class B does not have
preferential cumulative dividend or liquidation rights.
NOTE 3 - INVESTMENT IN JOINT VENTURES
On January 15, 1999, the company issued 257,027 shares of its Class B preferred
stock to Great Wall New Building Systems, Inc. (Great Wall) in exchange for 64%
of the Great Wall's outstanding common stock. Great Wall is an entity that has
conducted the development of the IMSI block system in the Peoples' Republic of
China. Prior to the Company's purchase of Great Wall's common stock, Great Wall
had raised approximately $425,000 from private investors. This acquisition will
be accounted for as a purchase at fair market values and the operations will be
consolidated when the acquisition is complete. Although agreement in principle
for this purchase was reached on January 15, 1999, the Company did not have
effective financial control of Great Wall because the final acquisition terms
had not been completed yet.
On January 19,1999, the Company issued 103,6000 shares of its Class B preferred
stock to Construction Technologies of India, Inc. (CT India) in exchange for
approximately 40% of CT India's outstanding common stock. In addition, the
Company agreed to purchase an additional 600,000 shares from CT India at $0.25
per share for a total purchase price of $150,000. This acquisition will be
accounted for as a purchase at fair market values and the operations will be
consolidated when the acquisition is complete. Although agreement in principal
for this purchase was reached on January 19, 1999, the Company did not have
effective financial control of CT India because the final acquisition terms had
not been completed yet.
On January 19, 1999, the Company issued 57,250 shares of its Class B preferred
stock to Construction Technologies of Mexico, Inc. (CT Mexico) in exchange for
approximately 50% of CT Mexico's outstanding common stock. In addition, the
Company agreed to purchase an additional 600,000 shares from CT Mexico at $0.25
per share for a total purchase price of $150,000. This acquisition will be
accounted for as a purchase at their fair market values and the operations will
be consolidated when the acquisition is complete. Although agreement in
principle for this purchase was reached on January 19, 1999, the Company did not
have effective financial control of CT Mexico because the final acquisition
terms had not been completed yet.
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operations.
The following discussion relates to the unaudited Financial Statements
for the three month periods ended June 30, 1999 and 1998, which are included in
Item 1 above.
Basis of Presentation and Plan of Operations
The financial statements as of June 30, 1999 have been prepared on the
going concern basis. Eagle Capital International, LTD., has reported significant
losses from its reorganization effective January 1, 1998, however the Company
has formulated an aggressive business plan to manufacture, market and distribute
construction and building methods in major global markets. The company is
implementing its agenda by pursuing the following two strategies: creating and
expanding residential, commercial and industrial construction markets in
strategic locations throughout the world and by providing related capital
production equipment and components for lease or purchase to joint venture
partners and affiliated licensees as needed. Liquidity The Company obtained
additional capital funding during the three months ended June 30, 1999 through
the issuance of common stock. This funding was completed on August 4, 1999 in
the amount of One Million Dollars ($1,000,000).
Discussion of Quarterly Results
The Company has entered into negotiations for stock ownership and partnership
agreements for patented and trademarked surface bonding products and related
production plants, and expects to finalize these agreements in the current year.
The Company has purchased stock in three joint venture partnerships (China,
India, and Mexico) to market, sell and distribute building products. The Company
expects revenues from these ventures in the current year.
Year 2000
Management has compiled a list of both internally and externally supplied
information systems that utilize imbedded date codes which could experience
operational difficulties in the year 2000. The Company uses third party
applications or suppliers for all high level systems and reporting. These
systems will be tested and if necessary replaced. Management is testing new
systems for which it is responsible. The Company is planning complete internal
computer system replacement, which is totally year 2000 compliant. It is the
Company's objective to be in year 2000 compliance by the end of September 1999;
however, no assurance can be given that such objective will be met.
The Company knows of no unusual or infrequent events or transactions, nor
significant economic changes that could materially affect the amount of its
reported income from continuing operations for the six months ended June 30,
1999.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
On July 21, 1999 a derivative action was filed on behalf of the
shareholders of IMSI, Inc. naming the Company as one of a group of multiple
defendants. The Company is presently investigating the allegations set forth in
the complaint and is not yet in a position to evaluate the allegations or
determine the impact of the allegations on the operations of the Company.
Item 2. Changes in Securities.
NA.
Item 3. Defaults Upon Senior Securities.
NA.
Item 4. Submission of Matters to a Vote of Security Holders.
NA.
Item 5. Other Information.
NA.
Item 6. Exhibits and Reports on Form 8-K.
a. Exhibits
NA
b. Reports on Form 8-K.
Attached.
/S/ Anthony D'Amato, President
August 20, 1999
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE JUNE 30, 1999
FINANCIAL STATEMENTS OF EAGLE CAPITAL INTERNATIONAL,LTD. AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000947431
<NAME> Eagle Capital International, Ltd.
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 81,436
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 81,436
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,495,650
<CURRENT-LIABILITIES> 370,393
<BONDS> 0
0
2,497
<COMMON> 3,159
<OTHER-SE> 5,414,214
<TOTAL-LIABILITY-AND-EQUITY> 5,495,650
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 579,283
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 504
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (579,787)
<EPS-BASIC> (.18)
<EPS-DILUTED> (.03)
</TABLE>
