SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
Commission File Number: 0-26322
EAGLE CAPITAL INTERNATIONAL, LTD.
(Exact Name of Small Business Issuer as Specified in its Charter)
Nevada 88-0303769
(State of Incorporation) (IRS Employer I.D. No.)
1900 Corporate Blvd., 4th Floor, East Tower, Boca Raton, FL 33431
(Address of principal executive offices )
(561) 988-2550
(Issuer's telephone number, including area code)
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 [X] No [_]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Exchange Act
after the distribution of securities under a plan confirmed by a
court. Yes [_] No [X]
APPLICABLE ONLY TO CORPORATE ISSUERS
There were 9,925,968 shares of Common Stock, $.01 par value,
issued and outstanding at June 30, 2000.
<PAGE>
EAGLE CAPITAL INTERNATIONAL, LTD.
INDEX
PART I. CONSOLIDATED FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Balance Sheets - June 30, 2000 (Unaudited) and
December 31, 1999
Statements of Operations - For the three and six
months ended June 30, 2000 and 1999 (Unaudited).
Statements of Cash Flows - Six months ended June
30, 2000 and 1999 (Unaudited).
Notes to Consolidated Financial Statements.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security-Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
-2-
<PAGE>
EAGLE CAPITAL INTERNATIONAL, LTD.
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
---------------------------------
-3-
<PAGE>
EAGLE CAPITAL INTERNATIONAL, LTD.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
June 30, December 31,
2000 1999
----------- ------------
(Unaudited) (Audited)
<S> <C> <C>
CURRENT ASSETS:
Cash $ 755,036 $ 20,326
Advances to Bullhide 51,250 -
Advances to
Business Dimensions 6,000 -
Employee advances 3,528 -
----------- -----------
TOTAL CURRENT ASSETS 815,814 20,326
----------- -----------
FIXED ASSETS -
Mobile Block Plant #1 550,612 -
Fixed Block Plant #2 680,382 -
Mobile Block Plant #3 200,000 -
Mobile Block Plant #4 255,000 -
Mobile SB Machine 218,500 185,100
Other 2,857 -
----------- -----------
TOTAL FIXED ASSETS 1,907,351 185,100
----------- -----------
OTHER ASSETS -
Equipment Deposits - 300,000
Investments:
Bullhide 201,363 -
Great Wall/China - 1,771,018
C.T. India - 1,150,800
C.T. Mexico - 681,830
I.M.S.I. 5,600,000 5,600,000
Purchased goodwill in
consolidated subsidiaries 3,578,755 -
License Rights 95,000 90,000
----------- -----------
TOTAL OTHER ASSETS 9,475,118 9,593,648
----------- -----------
TOTAL ASSETS $12,198,283 $ 9,799,074
=========== ===========
</TABLE>
See notes to financial statements.
-4-
<PAGE>
EAGLE CAPITAL INTERNATIONAL, LTD.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
June 30, December 31,
2000 1999
----------- ------------
(Unaudited) (Audited)
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 146,033 $ 94,173
Advances from officer 862,990 5,860
Commitments payable to
unconsolidated subsidiaries - 149,500
Other short term notes payable 2,575,000 475,000
------------ ------------
TOTAL CURRENT LIABILITIES 3,584,023 724,533
------------ ------------
SHAREHOLDERS' EQUITY:
Preferred Stock A, $.001
par value, 10,000,000 shares
authorized, 967,400 and
1,080,600 shares issued
and outstanding at
June 30, 2000 and
December 31, 1999 967 1,081
Preferred Stock B, $.001
par value, 10,000,000 shares
authorized, 605,531 and 856,021
shares issued and outstanding
at June 30, 2000 and
December 31, 1999 606 856
Common Stock, $.001 par value,
70,000,000 shares authorized,
9,925,968 and 7,103,228 shares
issued and outstanding
at June 30, 2000 and
December 31, 1999 9,926 7,103
Additional paid in capital 13,817,214 13,202,755
Deficit accumulated prior to
January 1, 1998 (708,682) (708,682)
Deficit accumulated during
development stage (from
January 1, 1998) (4,505,771) (3,428,572)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 8,614,260 9,074,541
------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 12,198,283 $ 9,799,074
============ ============
</TABLE>
See notes to financial statements.
-5-
<PAGE>
EAGLE CAPITAL INTERNATIONAL, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
TOTAL REVENUES $ 750,000 $ -0- $ 750,000 $ -0-
GENERAL AND ADMINISTRATIVE
EXPENSES:
Accounting 26,347 8,451 26,347 16,903
Advertising/marketing 32,680 7,005 37,680 14,010
Bank charges 1,950 - 2,740 -
Management Fees 30,085 32,500 40,085 65,000
Common stock for services 220,750 472,100 220,750 944,200
Consulting fees 9,040 28,910 18,040 57,820
Contributions - - 5,000 -
Contract labor 15,061 - 15,061 -
Employee costs 80,031 - 80,031 -
Financing fees 67,241 - 152,241 -
Legal fees 55,218 33,397 80,248 66,794
Lone Wolf settlement - - 1,000,000 -
Miscellaneous 2,058 - 2,178 -
Office 4,738 19,271 5,076 38,542
Postage and freight 20,849 - 20,849 -
Rent 13,906 27,710 47,414 55,420
Taxes and licenses 455 - 455 -
Telephone 11,620 - 11,620 -
Travel 58,223 12,108 61,384 24,211
----------- ---------- ----------- -----------
TOTAL EXPENSES 650,252 641,452 1,827,199 1,282,900
PROVISION FOR INCOME TAXES - - - -
----------- ---------- ----------- -----------
NET INCOME (LOSS) $ 99,748 $ (641,452) $(1,077,199) $(1,282,900)
=========== ========== =========== ===========
</TABLE>
-6-
<PAGE>
EAGLE CAPITAL INTERNATIONAL, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS (Cont'd)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING:
- Basic 8,244,178 4,388,528 9,015,578 4,588,128
- Diluted 17,608,333 7,090,028 17,251,636 9,489,340
NET INCOME (LOSS) PER
COMMON SHARE:
- Basic $ .01 $ (.15) $ (.12) $ (.28)
=========== =========== =========== ==========
- Diluted $ .01 $ (.09) $ (.06) $ (.14)
=========== =========== =========== ==========
</TABLE>
See notes to financial statements.
-7-
<PAGE>
EAGLE CAPITAL INTERNATIONAL, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30, June 30,
2000 1999
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss $(1,077,199) $(1,282,900)
Stock issued for services 220,750 944,200
Net change in operating assets
and liabilities:
Prepaid expenses and advances (60,778) -
Commitments payable to
unconsolidated subsidiaries (149,500) -
Note payable - Lone Wolf 1,000,000 -
Accounts payable 51,860 40,129
----------- -----------
NET CASH USED IN OPERATIONS (14,867) (298,571)
----------- -----------
CASH USED IN INVESTING
ACTIVITIES:
Deposits on equipment - (73,000)
Investment in unconsolidated
subsidiaries (655,684) (339,541)
Investment in license rights (5,000) (60,000)
Purchase of property and
equipment (871,869) -
----------- -----------
NET CASH USED IN INVESTING
ACTIVITIES (1,532,553) (472,541)
----------- -----------
CASH PROVIDED BY FINANCING
ACTIVITIES:
Advances from officer 857,130 -
Short term loans 1,350,000 -
Cash for sale of stock 75,000 852,500
----------- -----------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 2,282,130 852,500
----------- -----------
NET INCREASE IN CASH 734,710 81,388
CASH AT BEGINNING OF PERIOD 20,326 48
----------- -----------
CASH AT END OF PERIOD $ 755,036 $ 81,436
=========== ===========
</TABLE>
See notes to financial statements.
-8-
<PAGE>
EAGLE CAPITAL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(June 30, 2000)
NOTE 1 - THE COMPANY
-----------
Eagle Capital International, Ltd. and its wholly-owned
and majority owned subsidiaries ("the "Company") is a
Nevada corporation in the business of the manufacture,
distribution and application of technologically advanced
building products through a series of licensing
agreements with Integrated Masonry Systems International,
Inc. ("IMSI"), a Nevada corporation, and through license
and distribution rights of other technologically advanced
building products.
In March 2000, the Company acquired approximately 44% of
Bullhide Liner Corporation ("Bullhide") in exchange for
approximately $200,000. Bullhide has patented
technologies and methods which management believes will
compliment the Company's international plans.
On April 25, 2000, proxies were submitted by a majority
of the shareholders of the Company approving a change of
the Company's name to Eagle Building Technologies, Ltd.
It is anticipated that the name change will take effect
in the third quarter of 2000.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
Basis of Presentation - The accompanying unaudited
consolidated financial statements have been prepared in
accordance with generally accepted accounting principles
for interim financial information and with instructions
to Form 10-Q and Regulation S-B. Accordingly, they do
not include all of the information and footnotes
required by generally accepted accounting principles for
complete financial statements. In the opinion of
management, all adjustments (which include only normal
recurring adjustments) considered necessary for a fair
presentation have been included. For further information,
refer to the consolidated financial statements and
footnotes thereto included in the Company's annual report
on Form 10-KSB for the year ended December 31, 1999.
In order to maintain consistency and comparability
between periods presented, certain amounts have been
reclassified from the previously reported financial
statements in order to conform with the financial
statement presentation of the current period.
-9-
<PAGE>
EAGLE CAPITAL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(June 30, 2000)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
------------------------------------------
Principles of Consolidation - As of June 30, 2000 and for
the six months then ended, the accompanying financial
statements included the accounts of Eagle Capital
International, Ltd, and its wholly-owned subsidiaries, CT
Great Wall of China and CT Mexico and its majority owned
(70%) subsidiary, CT India. All intercompany accounts
and transactions are eliminated in consolidation. The
Company has recorded purchased goodwill in the amount of
$3,578,755 as of June 30, 2000, which represents the
recorded cost of such subsidiaries in excess of the fair
market value of the subsidiaries net assets.
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
statements 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.
NOTE 3 - STOCKHOLDERS' EQUITY
Net Loss Per Common Share - Net loss per common share
(basic) is based on the weighted average of common shares
outstanding during the periods. Net loss per common
share (diluted) is based on the weighted average of
common shares plus all common stock equivalents including
the conversion of outstanding preferred stock and
convertible notes payable.
Class A Preferred - The Company has 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 ended December 31, 1998.
-10-
<PAGE>
EAGLE CAPITAL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(June 30, 2000)
NOTE 3 - STOCKHOLDERS' EQUITY (Cont'd)
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 4 - SHORT-TERM LOANS
In March 2000, the Company commenced a Private Placement
Offering (the "Offering") of an $850,000 convertible note
to "accredited investors" under the Securities Act of
1933, as amended. The Note is convertible into shares of
the Company's common stock at a conversion price of $1.00
per share. The Offering was completed on March 13, 2000.
On February 18, 2000, the Company entered into an
Agreement for Termination of Master Equipment Sales
Agreement ("Termination Agreement") with Lone Wolf.
Under this Termination Agreement, Lone Wolf agreed to
cancel a Master Equipment Sales Agreement dated February
26, 1999, entered into between Lone Wolf Energy Inc.
("Lone Wolf") and the Company wherein the Company was
obligated to purchase a minimum of ten Mobile Block
Plants from Lone Wolf and pay Lone Wolf $.035 per block
produced. As consideration to Lone Wolf for their
agreement to cancel the Company's purchase obligations
under the Master Equipment Sales Agreement, the Company
entered into a $1,000,000 non-interest bearing note
payable to Lone Wolf. The note is due on July 31, 2000
(as amended), and if not paid or otherwise becomes
delinquent, accrues interest from July 31, 2000 forward.
The Company has agreed to pay Lone Wolf $12,000 per month
for the months of May, June and July 2000 for extending
the due date to July 31, 2000.
Other short-term loans used for working capital totaled
$725,000 as of June 30, 2000.
NOTE 5 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company's President and Chief Executive Officer,
Anthony D'Amato, has made certain short term loans to the
Company from time to time during the period ending June
30, 2000 totaling $862,990.
The Company's Director, Robert Kornahrens, made a short
term loan to the Company during the period ending June
30, 2000, totaling $500,000.
-11-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
The analysis of the Company's financial condition, liquidity,
capital resources and results of operations should be viewed in
conjunction with the accompanying financial statements including
the notes thereto.
Financial Condition
At June 30, 2000, the Company had total assets of $12,198,283,
as compared to total assets of $9,799,074 at December 31, 1999;
current liabilities and total liabilities of $3,584,023 at June 30,
2000, as compared to current liabilities and total liabilities of
$724,533 at December 31, 1999; and stockholders' equity at June 30,
2000 of $8,614,260, as compared to $9,074,541 at December 31, 1999.
The decrease in stockholders' equity was due to the recording
during the six months ended June 30, 2000 of a $1,000,000 note
payable and related expense thereon to Lone Wolf in exchange for
the cancellation of an earlier purchase commitment the Company had
entered into with Lone Wolf.
Liquidity and Capital Resources
As of June 30, 2000, the Company's cash totaled $755,036 as
compared to $20,326 at December 31, 1999. Net cash used in
operations was $14,867 compared to $298,571 in the same quarter of
1999. The ability of the Company to generate cash flow in excess
of its operating requirements depends in the short term on the
performance of its India, China and Mexico subsidiaries. Management
believes based upon current results that the company will be able
to fund its operations entirely from revenue by the third quarter
of 2000. The Company may require additional financing to fund
existing operations until sufficient revenues are generated. The
Company anticipates raising capital from the sale of its securities
during the third quarter of 2000; however, in the interim for the
months of July, August and September, 2000, certain directors and
officers of the Company will advance funds sufficient to meet
operational expenses. The timing and amount of the Company's
additional financing needs will depend, inter alia, upon the
revenues generated by the Company. It is anticipated that product
development expenditures will be significantly increased during the
third quarter of 2000, but it is also anticipated that such
expenditures will be paid from then existing revenues.
The Company has no present additional commitment that is
likely to result in its liquidity increasing or decreasing in any
significant way. In addition, the Company knows of no trend,
additional demand, event or uncertainty that will result in, or
that are reasonably likely to result in the Company's liquidity
increasing or decreasing in any material way.
Results of Operations
Sales for the period ended June 30, 2000 were $750,00 compared
with sales of $0 in the same quarter of 1999. Based upon current
contracts, the Company expects sales of $23 million for fiscal
2000. In June 2000, Eagle received a non-refundable commission of
-12-
<PAGE>
$750,000 on a project in Bombay, India that will ultimately use
over 3,000,000 of the patented IMSI System blocks. It is
anticipated that production will commence on this project in
September 2000. The Company experienced net income of $99,748
for the quarter ended June 30, 2000, and a net loss of $1,077,199
for the six months ended June 30, 2000 compared to a net loss of
$641,452 and $1,282,900 for the same periods of 1999. Net loss
recorded for the six months ended June 30, 2000, is primarily due
to the recording of a $1,000,000 note payable and related
$1,000,000 expense to Lone Wolf in exchange for the cancellation by
Lone Wolf of an earlier purchase commitment entered into by the
Company with Lone Wolf.
FORWARD LOOKING STATEMENTS
Statements made in this Management's Discussion and Analysis
and elsewhere in this Annual Report that state the Company's or
management's intentions, hopes, beliefs, expectations or
predictions of the future contain forward looking statements. Such
forward looking statements include, without limitation, statements
regarding the Company's planned capital expenditure requirements,
cash and working capital requirements, the Company's expectations
regarding the adequacy of current financing arrangements, product
demand and market growth, other statements regarding future plans
and strategies, anticipated events or trends, and similar
expressions concerning matters that are not historical facts. It
should be noted that the Company's actual results could differ
materially from those contained in such forward looking statements
mentioned above due to adverse changes in any number of factors
that affect the Company's business including, without limitation,
risks associated with investing in and the marketing of IMSI's Wall
System, risks concerning the protection of IMSI's patents, reliance
upon distributors, regulatory risks, risks of expansion, product
liability and other risks described herein.
-13-
<PAGE>
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
On July 21, 1999, the Company was named as a defendant in
a derivative action filed on behalf of the shareholders
of IMSI, Inc. The Company was one of multiple defendants
named in the suit filed in the Third Judicial District
Court for Salt Lake City, Utah. On March 3, 2000 the
parties signed a binding settlement agreement to resolve
the matter.
Item 2. CHANGE IN SECURITIES
Not Applicable
Item 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On April 25, 2000, proxies were submitted by a majority
of the shareholders of Eagle Capital International, Ltd.
approving a change of the Company name to Eagle Building
Technologies, Ltd. It is anticipated that the name change
will take effect in the third quarter of 2000.
Item 5. OTHER INFORMATION
On May 26, 2000, Richard W. Lahey resigned as a Director
and Treasurer of the company. Mr. Lahey left to pursue
other business ventures and still works closely with the
Company and remains a large shareholder.
On June 2, 2000, the Company appointed Donald Pollock as
a Director and Corporate Treasurer.
On June 2, 2000, the Company appointed Robert Kornahrens
as a Director.
On August 1, 2000, the Company appointed Wilfred C.
Mango, Jr. as Chief Operating Officer.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) There are no exhibits required to be filed for the
period covered by this Report.
(b) There were no reports on Form 8-K filed for the
period covered by this Report.
-14-
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
EAGLE CAPITAL INTERNATIONAL, LTD.
August 10, 2000 By:/s/ Anthony D'Amato
------------------------------
Anthony D'Amato, President
-15-
<PAGE>
