10QSB/A 1 june2001-10qa.txt SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-QSB/A QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2001 --------------- Commission File Number: 0-26322 --------- EAGLE BUILDING TECHNOLOGIES, INC. ----------------------------------------------------------------- (Exact Name of Small Business Issuer as Specified in its Charter) Nevada 88-0303769 ------------------------ ----------------------- (State of Incorporation) (IRS Employer I.D. No.) 20283 Powerline Road, Suite 213, Boca Raton, Florida 33498 ---------------------------------------------------------- (Address of principal executive offices ) (561) 487-3600 ------------------------------------------------ (Issuer's telephone number, including area code) EAGLE CAPITAL INTERNATIONAL, LTD. ----------------------------------------------------- (Former name, former address, and former fiscal year, if changed since last report) 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 CORPORATE ISSUERS There were 5,965,987 shares of Common Stock, $.001 par value, issued and outstanding at June 30, 2001. EAGLE BUILDING TECHNOLOGIES, INC. INDEX PART I. AMENDED FINANCIAL INFORMATION Item 1. Amended Financial Statements Balance Sheets - June 30, 2001 (Unaudited) and December 31, 2000 Statements of Operations - Three months and six months ended June 30, 2001 and 2000 (Unaudited). Statements of Cash Flows - Six months ended June 30, 2001 and 2000 (Unaudited). Notes to 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- EAGLE BUILDING TECHNOLOGIES, INC. This Form 10-QSB for the period ended June 30, 2001, has been amended from the original filing of August 13, 2001. During February 2002, the Company became aware that its former Chairman and Chief Executive Officer had prepared fraudulent documents to misrepresent the revenues, costs, and cash associated with operations conducted by the Company's wholly-owned subsidiary in India, and concerning certain loans and stock transactions. PART I - FINANCIAL INFORMATION Item I. Amended Financial Statements ---------------------------- -3- EAGLE BUILDING TECHNOLOGIES, INC. AMENDED CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS June 30, December 31, 2001 2000 ------------ ------------- (Unaudited) CURRENT ASSETS: Cash $ 2,755,895 $ - Receivable from officer 1,783,643 688,271 Investments 1,319,056 - Accounts Receivable 891,135 559,415 Other Advances 219,684 236,232 Inventories 1,178,342 1,348,518 Prepaid expenses 482,861 - ------------ ------------ TOTAL CURRENT ASSETS 8,630,616 2,832,436 ------------ ------------ PROPERTY AND EQUIPMENT, net 3,161,480 3,174,811 ------------ ------------ OTHER ASSETS - Deposits 5,200 120,146 Goodwill, net 2,984,234 3,063,170 Investment in unconsolidated subsidiaries 663,344 583,119 License rights, net 5,277,250 5,419,750 ------------ ------------ TOTAL OTHER ASSETS 8,930,028 9,186,185 ------------ ------------ TOTAL ASSETS $ 20,722,124 $ 15,193,432 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Cash overdraft $ - $ 439 Accounts payable and accrued expenses 1,313,092 3,513,745 Notes payable 5,379,510 7,007,266 Deposits 427,656 - ------------ ------------ TOTAL CURRENT LIABILITIES 7,120,258 10,521,450 ------------ ------------ LONG TERM LIABILITIES 4,900,105 50,775 ------------ ------------ REDEEMABLE COMMON STOCK, 155,834 shares issued and outstanding 1,168,748 1,168,748 ------------ ------------ SHAREHOLDERS' EQUITY: Common Stock, $.001 par value 11,666,666 shares authorized 5,965,987 and 4,034,243 shares issued and outstanding at June 30, 2001 and December 31, 2000 5,966 4,034 Additional paid in capital 24,192,099 17,697,898 Accumulated deficit (16,665,052) (14,249,473) ------------ ------------ TOTAL STOCKHOLDERS' EQUITY 7,533,013 3,452,459 ------------ ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 20,722,124 $ 15,193,432 ============ ============
See accompanying notes to condensed consolidated financial statements. -4- EAGLE BUILDING TECHNOLOGIES, INC. AMENDED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, ----------- ----------- ----------- ----------- SALES $ 1,805,267 $ - $ 2,416,411 $ - COSTS OF SALES 1,222,636 - 1,707,580 - ----------- ----------- ----------- ----------- GROSS PROFIT 582,631 - 708,831 - SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 1,877,267 2,530,243 3,383,531 3,707,190 ----------- ----------- ----------- ----------- LOSS FROM OPERATIONS (1,294,636) (2,530,243) (2,674,700) (3,707,190) OTHER INCOME (EXPENSES): Investment income 318,500 - 318,500 - Interest expense (36,990) - (59,379) (850,000) ----------- ----------- ----------- ----------- LOSS BEFORE INCOME TAXES (1,013,126) (2,530,243) (2,415,579) (4,557,190) PROVISION FOR INCOME TAXES - - - - ----------- ----------- ----------- ----------- NET LOSS $(1,013,126) $(2,530,243) $(2,415,579) $(4,557,190) =========== =========== =========== =========== WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - Basic 5,455,616 1,460,855 5,000,115 1,347,449 - Diluted 5,455,616 1,460,855 5,000,115 1,347,449 NET LOSS PER COMMON SHARE - Basic $ (.19) $ (1.73) $ (.48) $ (3.38) ----------- ----------- ----------- ----------- - Diluted $ (.19) $ (1.73) $ (.48) $ (3.38) =========== =========== =========== ===========
See accompanying notes to condensed consolidated financial statements. -5- EAGLE BUILDING TECHNOLOGIES, INC. AMENDED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Six Months Ended June 30, June 30, 2001 2000 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $(2,415,579) $(4,557,190) Adjustments to reconcile net loss to net cash used in operating activities: Amortization 221,436 165,430 Stock issued for services and interest 1,706,920 220,750 Depreciation 44,278 - Reinvested investment income (318,500) - Impairment of goodwill - 1,714,387 Interest expense from beneficial conversion feature on debt - 850,000 Changes in operating assets and liabilities: Advances 16,548 (60,778) Accounts receivable (331,720) - Inventories 170,176 - Prepaid expenses (482,861) - Deposits 542,602 - Accounts payable and accrued expenses (2,099,168) 932,360 ----------- ----------- NET CASH OPERATING ACTIVITIES (2,945,868) (735,041) ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Investment in subsidiaries (net of cash acquired) (80,225) (477,913) Investment in license rights - (5,000) Increase in investments (1,000,556) - Purchase of property, plant and equipment (30,947) (869,012) ----------- ----------- NET CASH USED IN INVESTING ACTIVITIES (1,111,728) (1,351,925) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Cash overdraft (439) - Net advances from officer (1,095,372) 569,002 Proceeds from notes payable 5,034,303 1,430,000 Purchase of treasury stock (50,000) - Proceeds from issuance of stock 2,924,999 72,500 ----------- ----------- NET CASH PROVIDED BY FINANCING ACTIVITIES 6,813,491 2,071,502 ----------- ----------- NET INCREASE (DECREASE ) IN CASH 2,755,895 (15,464) CASH AT BEGINNING OF PERIOD - 20,326 ----------- ----------- CASH AT END OF PERIOD $ 2,755,895 $ 4,862 =========== ===========
-6- EAGLE BUILDING TECHNOLOGIES, INC. AMENDED CONSOLIDATED STATEMENTS OF CASH FLOWS (Cont'd) (Unaudited)
Six Months Ended June 30, June 30, 2001 2000 ----------- ----------- CASH PAID DURING PERIOD FOR INTEREST $ 40,892 $ - SUPPLEMENTAL DISCLOSURE:
During the six months ended June 30, 2001, the Company issued stock at the following values: Note payable conversions $ 1,812,729 Settlement of accrued expense 101,485 Consulting and interest expense 1,706,920 See accompanying notes to condensed consolidated financial statements. -7- EAGLE BUILDING TECHNOLOGIES, INC. NOTES TO FINANCIAL STATEMENTS JUNE 30, 2001 NOTE 1 - BASIS OF PRESENTATION --------------------- The accompanying interim condensed consolidated financial statements of Eagle Building Technologies, Inc. (the "Company") are unaudited, but in the opinion of management reflect all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of the results for such periods. The results of operations for any interim period are not necessarily indicative of the results for the respective full year. These condensed financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company's annual report on Form 10-KSB for the year ended December 31, 2000 as filed with the Securities and Exchange Commission. Amended June 30, 2001 Balance Sheet and Statements of Operations for the Three and Six Months Then Ended ----------------------------------------------------- The accompanying financial statements have been amended from the original filing for adjustments made as reflected below. During February 2002, the Company became aware that its former Chairman and Chief Executive Officer had prepared fraudulent documents to misrepresent the revenues, costs, and cash associated with operations conducted by the Company's wholly-owned subsidiary in India, and concerning certain loans and stock transactions. The following represents the accounts adjusted which changed the net loss reported:
Three Months Ended Six Months Ended June 30, 2001 June 30, 2001 Amended Prior Change Amended Prior Change ---------- --------- ------------ ----------- ---------- ------------ Revenues $1,805,267 $5,290,120 $(3,484,853) $2,416,411 $9,388,781 $(6,972,370) Cost of Sales 1,222,636 2,707,485 1,484,849 1,707,580 4,389,929 2,682,349 Selling, general and administrative expenses 1,877,266 1,218,887 (658,379) 3,383,531 2,545,992 (837,539) Interest expense (36,990) (36,990) - 59,379 40,892 (18,487) ---------- --------- ----------- ----------- ---------- ----------- Increase in net loss (2,658,384) (5,146,047) Net income as originally reported 1,645,258 2,730,468 ----------- ----------- Net loss as amended $(1,013,126) $(2,415,579) =========== ===========
-8- EAGLE BUILDING TECHNOLOGIES, INC. NOTES TO FINANCIAL STATEMENTS JUNE 30, 2001 NOTE 1 - BASIS OF PRESENTATION (Cont'd) --------------------- The following represents the balance sheet accounts adjusted on the amended June 30, 2001 balance sheet:
Amended Prior Change ------------ ----------- ----------- Cash $ 2,755,895 $ 6,031,255 $(3,275,360) Receivable (payable) to Officer 1,783,643 (139,107) 1,922,750 Accounts receivable 891,135 932,099 (40,964) Other advances 219,684 668,894 (449,210) Property and equipment 3,161,480 2,737,980 423,500 Deposits 5,200 47,700 (42,500) Investment in unconsolidated subsidiaries 663,344 583,119 80,225 Redeemable common stock (1,168,748) -0- (1,168,748) Accounts payable and accrued expenses (1,313,092) (604,265) (708,827) Notes payable (5,379,510) (548,418) (4,831,092) Common stock and additional paid-in capital (24,198,065) (22,850,147) (1,347,918) Foreign currency translation adjustment -0- 81,489 (81,489) Accumulated deficit 16,665,052 7,145,420 9,519,632 $ -0-
NOTE 2 - STOCKHOLDERS' EQUITY -------------------- Changes in Stockholders' Equity - The following represents the changes in stockholders' equity from January 1, 2001 through June 30, 2001:
Additional Common Paid In Shares Amount Capital --------- -------- ----------- Balance - Jan. 1, 2001 4,034,243 $ 4,034 $17,697,898 Common stock sold for cash 1,016,668 1,017 2,923,982 Issuance of Common Stock for services and interest 266,001 266 1,706,654 Note payable conversions 604,243 604 1,812,125 Cancellation of treasury shares (6,667) (7) (49,993) Settlement of prior accrued expense 51,499 52 101,433 --------- -------- ----------- Balance - June 30, 2001 5,965,987 $ 5,966 $24,192,099 ========= ======== ===========
-9- EAGLE BUILDING TECHNOLOGIES, INC. NOTES TO FINANCIAL STATEMENTS JUNE 30, 2001 NOTE 3 - RECLASSIFICATION ---------------- Certain liability amounts in the Company's December 31, 2000, balance sheet have been reclassified to conform to the June 30, 2001 presentation. -10- 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, 2001, the Company had total assets of $20,722,124, as compared to total assets of $15,193,432 at December 31, 2000; current liabilities[1] of $7,120,258 at June 30, 2001, as compared to current liabilities of $10,521,450 at December 31, 2000; and stockholders' equity at June 30, 2001 of $7,533,013, as compared to $3,452,459 at December 31, 2000. The increase in stockholders' equity was primarily due to sales of the Company's common stock. Liquidity and Capital Resources As of June 30, 2001, the Company's cash totaled $2,755,895 as compared to a net cash overdraft of $439 at December 31, 2000. Net cash used in operations was $2,945,868 compared to $735,041 in the same six month period of 2000. The Company required additional financing to fund the acquisition of Master Door, an Italian door and hardware manufacturer. This funding came from $5 million in loans to the Company from a group of accredited investors led by Mr. Meyer Berman. The notes are convertible into the Company's restricted common stock at $10 per share. It is anticipated that product development expenditures will be significantly increased during the third quarter of 2001. The Company's liquidity will decrease in the third quarter of 2001 should the purchase of Master srl be finalized. In addition to the Master srl closing, 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 three and six months ended June 30, 2001 were $1,805,267 and $2,416,411 compared with sales of $0 in the same ----------------------- [1] As a result of the Company's investigation in connection with the restatement of its 2000 and 2001 financials, the Company believes that there may be third parties to whom Anthony D'Amato, the Company's former Chairman and CEO, has obligated, or made representations purporting to obligate, the Company, or to issue equity in the Company without the knowledge or authorization of the Company's Board of Directors. The Company will continue to investigate and determine the validity of any such third party claims on a case by case basis. At the time of this filing, the Company cannot determine the financial impact, if any, to the Company as a result of Mr. D'Amato's actions. -11- periods of 2000. The Company experienced a net loss of $1,013,126 for the quarter ended June 30, 2001, and a net loss of $2,415,579 for the six months ended June 30, 2001 compared to a net loss of $2,530,243 and $4,557,190 for the same periods of 2000. 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. -12- PART II - OTHER INFORMATION Item 1. LEGAL PROCEEDINGS ----------------- Not Applicable. 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 --------------------------------------------------- Not Applicable Item 5. OTHER INFORMATION ----------------- On August 2, 2001, Eagle Capital International, Ltd. ("Eagle") entered into an agreement with Aquila Ventures Corporation ("Aquila") to form a Joint Venture entity, Aquila Squared Building Corporation (the "Joint Venture"), to develop large scale social housing in Mexico. Eagle will work exclusively with the Joint Venture to manufacture and distribute the IMSI Building System throughout Mexico. As part of the Agreement, Aquila will purchase two million dollars ($2,000,000 US) of new equipment from Fleming Manufacturing Co., Inc. ("Fleming"), a wholly-owned subsidiary of Eagle. Eagle is responsible for quality control standards, structural engineering specifications, engineering and design supervision, and assistance in the sale and marketing of Eagle's products. Aquila will provide $2,000,000 to purchase the Fleming mobile block plant and necessary equipment, appropriate facilities for the Joint Venture's operations, assist in the procurement of all necessary licenses and permits, and other matters related to operations in a foreign country. Eagle will own fifty- five percent (55%) of the Joint Venture and Aquila will own forty-five percent (45%) of the Joint Venture. Eagle anticipates the Joint Venture being fully operational by the end of 2001. On April 16, 2001, Eagle Building Technologies, Inc. (the "Company") acquired eighty-five percent (85%) of the issued and outstanding securities of Master srl ("Master"), an Italian corporation located in Piacenza, Italy for an aggregate purchase price of 15,462,350,000 Lire or approximately $7,191,000 U.S. The acquisition -13- was subject to due diligence and a final audit. The audit, as completed to date, has raised certain issues concerning Master's sales revenues which the Company believes require further investigation. The Company has not previously, nor does the Company intend to, consolidate any financial information concerning Master's operations in the Company's financial statements until such time as the Company's due diligence and final audit is completed to the Company's satisfaction. 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)(i) On or about May 1, 2001, the Company filed a Report on Form 8-K announcing the acquisition of eighty-five percent (85%) of the issued and outstanding securities of Master srl ("Master"), an Italian corporation located in Piacenza, Italy, subject to completion of due diligence and a final audit. (ii) On or about May 10, 2001, the Company filed a Report on Form 8-K announcing the Company's name change to Eagle Building Technologies, Inc. and the new trading symbol to "EGBT". (iii) On or about May 18, 2001, an Amendment to the January 10, 2001 Form 8-K was filed providing the audited financials of Fleming Manufacturing Company, Inc. ("Fleming"), a wholly owned subsidiary of the Company, for the fiscal year ended December 31, 2000, and the Company's unaudited consolidated Proforma Financial Statement for the fiscal year ended December 31, 2000, inclusive of Fleming. -14- 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 BUILDING TECHNOLOGIES, INC. August 7, 2002 By: /s/Dan Curlee -------------------------------- Dan Curlee, President and CEO CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350 In connection with the accompanying quarterly Report on Form 10- QSB of Eagle Building Technologies, Inc.. for the period ended June 30, 2001, Dan Curlee, President and Chief Executive Officer, and Don Pollock, Senior Vice President of Manufacturing, Secretary, Treasurer, and Director of Eagle Building Technologies, Inc. hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge and belief, that: (a) such quarterly Report on Form 10-QSB for the period ended June 30, 2001, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (b) the information contained in such quarterly Report on Form 10- QSB for the period ended June 30, 2001, fairly presents, in all material respects, the financial condition and results of operations of Eagle Building Technologies, Inc. EAGLE BUILDING TECHNOLOGIES, INC. Dated: August 7, 2002 By: /s/Dan Curlee ---------------------------------- Dan Curlee, President and CEO Dated: August 7, 2002 By: /s/Dan Curlee ---------------------------------- Don Pollock, Treasurer -15-