<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
------------------
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________ to _______________
Commission file number 000-27039
CONVERGE GLOBAL, INC.
---------------------
(Exact name of small business issuer as specified in its charter)
Utah 87-0426858
------------------------------- --------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
233 Wilshire Boulevard, Suite 930, Santa Monica, CA 90401
----------------------------------------------------------
(Address of principal executive offices)
(310) 434-1974
--------------
(Issuer's telephone number)
N/A
--------------------------------------------------------------------------------
(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
-------------- _____________
As of November 16, 2000, the number of shares of Common Stock issued and
outstanding was 8,918,100.
Transitional Small Business Disclosure Format (check one):
Yes No X
______________ -------------
<PAGE>
CONVERGE GLOBAL, INC. AND SUBSIDIARY
INDEX
<TABLE>
<CAPTION>
Page
Number
------
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets - September 30, 2000 1
Condensed Consolidated Statement of Operations - For the three months and nine months
ended September 30, 2000 and 1999 2
Condensed Consolidated Statement of Cash Flows - For the nine months
ended September 30, 2000 and 1999 3
Notes to Condensed Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial Conditions
and Results of Operations 8
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 9
Item 2. Changes in Securities 9
Item 3. Defaults Upon Senior Securities 10
Item 4. Submission of Matters to a Vote of Security Holders 10
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 10
SIGNATURES 10
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
1
<PAGE>
CONVERGE GLOBAL, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED BALANCE SHEET - SEPTEMBER 30, 2000
(UNAUDITED)
ASSETS
Current assets -
Cash $ 137,287
Accounts Receivable 77,742
Loan to employees 9,358
Loan to related parties 187,651
-----------
Total current assets 412,038
-----------
Property and equipment, net of accumulated
depreciation and amortization 96,630
Website development 256,500
-----------
$ 765,168
-----------
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accrued expenses $ 219,398
-----------
Note payable, related party 250,000
Minority interest 1,466,060
Stockholders' deficit:
Common stock; $0.001 par value, 50,000,000 shares
authorized, 8,918,100 shares issued and outstanding 8,918
Common stock subscriptions receivable (2,000)
Additional paid in capital 361,132
Deficit accumulated during development stage (1,538,340)
-----------
Total stockholders' deficit (1,170,290)
-----------
$ 765,168
===========
<PAGE>
CONVERGE GLOBAL, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Period from inception
Three months ended Nine months ended of operations
September 30, September 30, October 4, 1985 to
2000 1999 2000 1999 September 30, 2000
---- ---- ---- ---- ------------------
<S> <C> <C> <C> <C> <C>
Revenues $ 177,695 $ - $ 178,053 $ 5,870 $ 183,923
Cost of revenues 61,194 - 61,194 - 61,194
------------- ------------ ---------------- ------------ -----------------
Gross profit 116,501 - 116,859 5,870 122,729
------------- ------------ ---------------- ------------ -----------------
Selling, general and administrative 548,915 278,597 1,353,991 629,517 2,082,630
------------- ------------ ---------------- ------------ -----------------
Loss from operations (432,414) (278,597) (1,237,132) (623,647) (1,959,901)
Gain on sale of subsidiary stock
to related parties 425,990 - 425,990 - 425,990
Interest expense (4,687) (5,000) (14,062) (5,000) (23,750)
------------- ------------ ---------------- ------------ -----------------
Loss before income taxes, equity in losses of
Medcom Network, Inc. and minority interest (11,111) (283,597) (825,204) (628,647) (1,557,661)
------------- ------------ ---------------- ------------ -----------------
Income taxes - - 800 800 1,600
Equity in losses of Medcom Network, Inc. - (7,000) - (7,000) (30,000)
Minority loss allocation 16,208 - (50,921) - (50,921)
------------- ------------ ---------------- ------------ -----------------
Net loss $ (27,319) $ (290,597) (775,083) (636,447) $ (1,538,340)
============= ============ ================ ============ =================
Weighted average number of
shares outstanding -
basic and diluted 8,918,100 7,600,374 8,918,100 7,600,374 8,918,100
============= ============ ================ ============ =================
Net Income (loss) per share -
basic and diluted $(0.00) $(0.04) $ (0.09) (0.08) $ (0.17)
============= ============ ================ ============ =================
</TABLE>
<PAGE>
CONVERGE GLOBAL, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(UNAUDITED)
<TABLE>
<CAPTION>
Period from Inception
Nine months ended Nine months ended of operations on
September 30 September 30 October 4, 1985 to
2000 1999 September 30, 2000
---- ---- ------------------
<S> <C> <C> <C>
Cash flows provided by (used for) operating activities:
Net loss $ (775,083) $ (636,447) $ (1,538,340)
Adjustments to reconcile net loss to net cash
provided by (used for) operating activities:
Depreciation and amortization 46,536 2,242 49,884
Services in exchange for common stock - 780 114,950
Loss on investment - 7,000 30,000
Issuance of options under stock option plan - 18,000 18,000
Minority interest (50,921) - (50,921)
Changes in operating assets and liabilities:
Increase in due from employees (9,358) - (9,358)
Increase in accounts receivable (77,742) - (77,742)
Increase in due from related party - (4,189) -
Increase in prepaid expenses - - -
Increase in accrued expenses (6,056) 162,647 219,398
--------------- ------------- --------------
Total adjustments (97,541) 186,480 294,211
--------------- ------------- --------------
Net cash provided by (used for) operating activities (872,624) (449,967) (1,244,129)
--------------- ------------- --------------
Cash flows used for investing activities:
Payments to acquire property and equipment (110,881) (21,133) (133,014)
Investment in Website Development (70,000) - (270,000)
Investment in Medcom, Inc. - (30,000) (30,000)
--------------- ------------- --------------
Net cash used for investing activities (180,881) (51,133) (433,014)
--------------- ------------- --------------
Cash flows provided by financing activities:
Proceeds from (payment of) loan payable, related parties (328,651) 17,000 (187,651)
Proceeds from note payable, net - 250,000 250,000
Proceeds from sale of securities of subsidiaries 1,516,981 - 1,516,981
Proceeds from issuance of common stock and paid in capital - 235,100 235,100
--------------- ------------- --------------
Net cash provided by financing activities 1,188,330 502,100 1,814,430
--------------- ------------- --------------
Net increase in cash 134,825 1,000 137,287
Cash, beginning of period 2,462 - -
--------------- ------------- --------------
Cash, end of period $ 137,287 $ 1,000 $ 137,287
=============== ============= ==============
Supplemental disclosure of cash flow information -
Income taxes paid $ 800 $ 800 $ 800
=============== ============= ==============
Supplemental disclosure of non cash investing
and financing activities:
Services rendered in exchange for common stock $ - $ 780 $ 114,950
=============== ============= ==============
Issuance of options under stock option plan $ - $ 18,000 $ 18,000
=============== ============= ==============
Exchange of subsidiary stock for cancellation
of debts from related parties $ 425,990 $ - $ 425,990
=============== ============= ==============
</TABLE>
4
<PAGE>
CONVERGE GLOBAL, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(1) Summary of Significant Accounting Policies:
Organization and Basis of Presentation:
The Company was organized October 4, 1985, under the laws of the
State of Utah, as Mormon Mint, Inc. The Company was inactive for
approximately 10 years.
On December 4, 1997, the Company changed its name from Mormon
Mint, Inc. to Capital Placement Specialists, Inc.
Pursuant to an acquisition agreement, dated January 5, 1999,
Bekam Investments, Ltd. ("Bekam") acquired one hundred percent
(100%) of the common shares of the Company at that time; or
2,340,100 shares. Bekam subsequently spun off the Company by
contributing the shares to the treasury of the Company for
redistribution to selected investors of Bekam. The Company then
changed its name to Converge Global, Inc.
Principles of Consolidation:
The accompanying financial statements include the accounts of
Converge Global, Inc. (the "Parent"), and its subsidiaries,
Digitalmen.com, Inc., Essential Tec, Inc. and LiquidationBid.com,
Inc. All significant intercompany accounts and transactions have
been eliminated in consolidation.
Percent of
Subsidiary ownership Description
---------- --------- ------------
Digitalmen.com, Inc. 84.24% Digitalmen.com, Inc.
(formerly Gearz.com,
Inc.) was formed on
February 5, 1999 in the
State of California.
During the period ended
September 30, 2000,
Digitalmen.com, Inc.
commenced three Private
Placement Offerings,
which are exempt from
registration under
Regulation D of The
Securities Act of 1933.
Total proceeds raised
during the period
amounted to $440,000 and
is ongoing. The offering
terms are as follows:
a. 1,000,000 shares of
Digitalmen.com,
Inc.'s restricted
common stock at
$0.50 per share.
<PAGE>
CONVERGE GLOBAL, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(1) Summary of Significant Accounting Policies (Continued):
Principles of Consolidation, Continued:
Percent of
Subsidiary ownership Description
---------- --------- -----------
b. 1,000,000 warrants of
Digitalmen.com at
$0.30 per warrant
which maybe exercised
at $2.50 per share to
acquire one share of
common stock for each
warrant.
c. 1,000,000 shares of
Digitalmen.com,
Inc.'s restricted
common stock at $3.50
per share.
Essential Tec, Inc. 55.77% Essential Tec, Inc. was
formed in the State of
California during 1999.
During the Period ended
September 30, 2000,
Essential Tec, Inc.
commenced three Private
Placement Offerings,
which are exempt from
registration under
Regulation D of The
Securities Act of 1933.
Total proceeds raised
during the period
amounted to $1,076,980 as
of September 30, 2000 and
is ongoing. The offering
terms are as follows:
a. 1,000,000 shares of
Essential Tec,
Inc.'s restricted
common stock at
$0.50 per share.
b. 1,000,000 warrants
of Essential Tec,
Inc. at $0.30 per
warrant which maybe
exercised at $1.00
per share to acquire
one share of common
stock for each
warrant.
c. 1,000,000 shares of
Essential Tec,
Inc.'s restricted
common stock at
$1.50 per share.
d. 1,000,000 shares of
Digitalmen.com,
Inc.'s restricted
common stock at
$3.50 per share.
<PAGE>
CONVERGE GLOBAL, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(1) Summary of Significant Accounting Policies (Continued):
Principles of Consolidation, Continued:
Percent of
Subsidiary ownership Description
---------- --------- -----------
LiquidationBid.com, Inc. 50% LiquidationBid.com, Inc.
(a development stage
company) was
incorporated on April 8,
1999 in the State of
Nevada. The Company was
awarded 1,000,000 of the
2,000,000 outstanding
shares of
LiquidationBid.com, Inc.
in exchange for the
rights to services. No
value has been assigned
to these future rights,
and therefore, there is
no cost basis in this
investment. Two of the
three board members of
LiquidationBid.com, Inc.
are officers and
stockholders of the
Company, thereby
demonstrating control
over LiquidationBid.com,
Inc. There were no
material operations
during the period ended
September 30, 2000.
Going Concern:
The Company's consolidated financial statements are prepared
using the generally accepted accounting principles applicable to
a going concern, which contemplates the realization of assets and
liquidation of liabilities in the normal course of business. The
Company has no current source of revenue. Without realization of
additional capital, it would be unlikely for the Company to
continue as a going concern. This factor raises substantial doubt
about the Company's ability to continue as a going concern.
Management recognizes that the Company must generate additional
resources to enable it to continue operations. The Company
intends to begin recognizing significant revenue during the year
2000. Management's plans also include the sale of additional
equity securities. However, no assurance can be given that the
Company will be successful in raising additional capital.
Further, there can be no assurance, assuming the Company
successfully raises additional equity, that the Company will
achieve profitability or positive cash flow. If management is
unable to raise additional capital and expected significant
revenues do not result in positive cash flow, the Company will
not be able to meet its obligations and will have to cease
operations.
<PAGE>
CONVERGE GLOBAL, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(1) Summary of Significant Accounting Policies (Continued):
Basis of Preparation:
The accompanying unaudited condensed consolidated interim
financial statements have been prepared in accordance with the
rules and regulations of the Securities and Exchange Commission
for the presentation of interim financial information, but do not
include all the information and footnotes required by generally
accepted accounting principles for complete financial statements.
The audited consolidated financial statements for the two years
ended December 31, 1999 was filed on April 14, 2000 with the
Securities and Exchange Commission and is hereby referenced. In
the opinion of management, all adjustments considered necessary
for a fair presentation have been included. Operating results for
the nine month period ended September 30, 2000 are not
necessarily indicative of the results that may be expected for
the year ended December 31, 2000.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The discussion and financial statements contained herein are for the three
months and nine months ended September 30, 2000 and 1999. The following
discussion regarding the financial statements of the Company should be read in
conjunction with the financial statements of the Company included herewith.
Overview
The Company's business is focused in the globally emerging electronic commerce
("e-commerce") industry.
(a) Plan of Operations
The Company's cash requirements for the next twelve months are approximately
$100,000 per month. The Company has a line of credit of $250,000 granted by a
director. The Company has also been able to secure $200,000 in convertible debt
financing to continue its operations (see "Results of Operations").
Digitalmen.com, a subsidiary of the Company, commenced three private placement
offerings in the nine months ended September 30, 2000, under Regulation D of the
Securities Act 1933. Total proceeds raised during the nine months amounted to
$440,000. EssTec, Inc., a subsidiary of the Company, raised under Regulation D,
$1,076,980 during the nine months ended September 30, 2000. While there is no
assurance the Company will be successful in raising additional capital, the
Company is actively seeking both institutional debt and private equity financing
to assure that it will be capable of financing the continuation of the business.
Any additional capital raised above and beyond what the Company needs as its
monthly expenditure would be used in increasing marketing and sales efforts of
the Company's Web sites. Should the Company fail to raise additional funding, it
will be forced to curtail its growth, cut back by reducing the number of
employees or even cease operations altogether.
The Company does not anticipate any new research and development to be conducted
in the near future. In the event there is a need for research and development,
the Company believes that its current work force is capable and equipped to
conduct such research and development internally. The Company does not
anticipate any purchase or sale of plant and/or equipment nor does the
management anticipate any increase in the number of employees.
The Company recently launched its first Web site, Digitalmen.com. The Company's
future development plans for DigitalMen are tied to raising additional capital.
The additional capital would be allocated to hiring additional Web content staff
as well as promotion and marketing personnel. Should the Company be unsuccessful
in raising the capital needed, it will continue to update the site with its
existing staff but will not be able to promote or market the site. During the
next six months, the Company plans to complete LiquidationBid.com, Machmail.com
and Desitv.com. The estimated cost to develop these products will be minimal as
the current staff of developers and engineers of the Company are working to
develop and launch these products. LiquidationBid, Machmail, and Desitv can all
be built within the monthly budget listed.
(b) Results of Operations
The Company has generated revenues of $178,053 in the nine month period ended
September 30, 2000 and does anticipate an increase in revenues in the future.
Currently, the Company's only cash requirements are for rent and salaries. The
following table sets forth, for the periods indicated, selected financial
information for the Company:
--------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
September 30 September 30
--------------------------------------------------------------------------------
2
<PAGE>
<TABLE>
------------------------------------------- ----------------------------
2000 1999 2000 1999
<S> <C> <C> <C> <C>
-------------------------------------------------------------------------------------------------
Total revenue 177,695 - 178,053 5,870
-------------------------------------------------------------------------------------------------
Cost of revenue 61,194 - 61,194 -
-------------------------------------------------------------------------------------------------
Gross profit 116,501 - 116,859 5,870
-------------------------------------------------------------------------------------------------
General, administrative, and selling 548,915 278,597 1,353,991 629,517
expenses
-------------------------------------------------------------------------------------------------
Income (loss) from operations (432,414) (278,597) (1,237,132) (623,647)
-------------------------------------------------------------------------------------------------
Gain on sale of subsidiary stock
to related parties 425,990 - 425,990 -
-------------------------------------------------------------------------------------------------
Interest expense (4,687) (5000) (14,062) (5,000)
-------------------------------------------------------------------------------------------------
Income (loss) before taxes (11,111) (283,597) (825,204) (628,647)
-------------------------------------------------------------------------------------------------
Income Taxes - - 800 800
-------------------------------------------------------------------------------------------------
Equity in losses of Medcom Network, inc. - (7,000) - (7,000)
-------------------------------------------------------------------------------------------------
Minority Loss allocation 16,208 - (50,921) -
-------------------------------------------------------------------------------------------------
Net income (loss) (27,319) (290,597) (775,083) (636,447)
-------------------------------------------------------------------------------------------------
</TABLE>
Three Months and Nine Months Ended September 30, 2000 as Compared to Three
Months and Nine Months Ended September 30, 1999
Revenues.
The Company had revenues of $177,695 and $178,053 for the three months and nine
months ended September 30, 2000 and $0 and $5,870 for the three months and nine
months ended September 30, 1999.
General, administrative, and selling expenses.
The Company incurred costs of $548,915 for the quarter ended September 30, 2000
as compared to $278,597 for the quarter ended September 30, 1999. The increase
in operating expenses is due to increase in payroll in the current period as
compared to the same period in the prior year since the Company hired additional
employees for the subsidiaries in the current period.
Gain on sale of subsidiary stock
During the quarter, the Company exchanged 425,990 shares of EssTec stock owned
by the Company at $1 per share for debts owed to related parties of $425,990,
resulting in a gain of $425,990.
Interest expense.
The Company had $4,687 of interest expenses for the three months ended September
30, 2000 as compared to $5,000 interest expense for the three months ended
September 30,1999. For the nine months ended September 30, 2000, the Company had
$14,062 of interest expense as compared to $5,000 for the nine months ended
September 30, 1999.
3
<PAGE>
Loss before taxes.
The Company has a loss before taxes and minority interest of $11,111 for the
three months ended September 30, 2000 as compared to $283,597 for the three
months ended September 30, 1999. For the nine months ended September 30, 2000,
the Company had a loss before taxes and minority interest of $825,204 as
compared to a loss before taxes of $628,647 for the nine months ended September
30, 1999.
Taxes on income.
Income taxes for the quarter ended September 30,2000 and 1999 amounted to $0.
Income taxes for the nine months ended September 30, 2000 were $800 as compared
to income taxes of $800 for the nine months ended September 30, 1999.
Net loss
The Company had a net loss of $27,319 for the quarter ended September 30, 2000
as compared a net loss of $290,597 for the quarter ended September 30, 1999. The
net loss for the nine months ended September 30, 2000 was $775,083 as compared
to a net loss of $636,447 for the nine months ended September 30, 1999.
Liquidity and Capital Resources
Digitalmen.com, a subsidiary of the Company, commenced a private placement
offering in the nine months period ended September 30, 2000, under Regulation D
of the Securities Act of 1933. Digitalmen.com did not raise any proceeds during
the quarter. EssTec, Inc., a subsidiary of the Company, raised $304,000
privately during the nine months period ended September 30, 2000.
The Company's sole source of capital during the nine months ended September 30,
2000, was investment capital provided by third parties. Also, on November 1,
1999 the Company's director provided an unsecured line of credit to the Company
to draw upon, interest free, in the amount of $250,000 to be payable by January
1, 2003.
On May 5, 1999, the Company executed a promissory note with holder, Verifica
International, Ltd., in the amount of $250,000. The note pays interest at an
annual rate of 7.5% on the outstanding balance and is due on April 15, 2002.
According to the Company's plan, this additional infusion of capital in addition
to capital raised during the nine months ended September 30, 2000, will allow
the Company to operate at its current cost rate of $100,000 per month well into
December 2000. For the most part, the Company doesn't anticipate any changes in
the number of employees or equipment. The Company does not have any research and
development costs and finds in the event such needs are apparent, the Company's
own technical staff is capable of conducting the research and development. The
Company anticipates that it will require additional capital contributions to
fund its operations during the Year 2000. The Company intends to seek investors
or go to the original group of investors for additional capital for continued
operations. In addition, the Company is actively seeking institutional type
investors as a source of funding and growing the business. In the event the
Company does not attract such capital, and is unable to generate revenues
sufficient to support its expenses, then the Company would be required to
eventually curtail or even cease operations. The Company's substantial financial
losses since its inception have raised a substantial doubt with the Company's
auditors as to the Company's ability to continue as a going concern.
The Company foresees a variety of methods for diversifying its operations and
pursuing its strategic and business objectives without pulling badly needed
capital from its on-going operations, or incurring onerous overhead and
financing obligations. These options include licenses, joint-ventures, and even
counter-trade (technologies for technologies) mechanisms as part of this
diversification methodology.
4
<PAGE>
The Company has not yet engaged in any counter-trade mechanisms trading
technology for technology, licenses nor joint ventures as of the date of this
filing. In addition, there are no assurances that the Company could find
adequate partners for each of these alternatives. In the event the Company is
unable to implement such alternative methods of funding and find other sources
of capital, the operation of the business would be severely and adversely
affected.
The Company does not believe that inflation has had a significant impact on its
operations since inception of the Company.
Subsidiaries
On February 5, 1999, the Articles of Incorporation for Gearz.com, Inc.
("Gearz.com") were filed with the California Secretary of State. The Articles
were subsequently amended on December 7, 1999, to change the name of Gearz.com
to Digitalmen.com, Inc. DigitalMen.com is an 84.24% owned subsidiary of the
Company whereby the Company holds 3,000,000 shares of common stock of
Digitalmen.com. Digitalmen.com is a portal site geared towards men's interests.
The target group ranges from ages 18 to 45 with interests in finance, travel,
entertainment, fashion and electronics.
On April 30, 1999, the Company became a 50% shareholder of LiquidationBid.com,
Inc. ("LiquidationBid") whereby the Company holds 1,000,000 shares of common
stock of LiquidationBid. Mr. Imran Husain serves as the President and Director
of LiquidationBid. LiquidationBid is in the business of global business-to-
business auctioning and bartering exchange. It assists corporate clients in
auctioning or bartering excess inventory or, in case of liquidation, selling of
assets or inventories to highest bidder in an efficient and cost-effective
manner.
The Company is a 20% shareholder of MedCom Network, Inc. ("Medcom"), a
California corporation which is developing an on-line data base of disease codes
which are codes found in the medical industry dictionaries. The Company invested
in MedCom by contributing $30,000 in cash for shares of restricted common stock
of MedCom. This was an investment made by the Company and the Company's officers
or directors have no management involvement in MedCom. As of September 30, 2000,
Medcom had no sales and cost of sales resulting in a loss from continuing
operations and net loss. The investment in Medcom is recorded at no value in the
financial statements as of September 30, 2000, as required by the equity method
of accounting.
EssTec, Inc. ("EssTec"), a 55.77% owned subsidiary of the Company, is an
information technology services company with an extensive technical labor force
in Pakistan. EssTec's software engineers are capable of providing high quality,
cost-effective services to clients in a resource-constrained environment. EssTec
services include e-Commerce Solutions, e-Procurement applications, auctioning
engines, and several other web based solutions. EssTec sells and markets its
services and products from its offices based in Santa Monica, California. On
October 6, 2000, the name of this subsidiary corporation was changed from
Essential Tec, Inc. to EssTec, Inc.
5
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
To the best knowledge of management, there is no material litigation pending or
threatened against the Company.
Item 2. Changes in Securities and Use of Proceeds
During the quarter ended September 30, 2000, the Company's subsidiary, EssTec,
Inc. sold 251,333 shares of common stock to six accredited investors for a total
of $259,000. This transaction was exempt from registration pursuant to Rule 506
of Regulation D of the Securities Act of 1933.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
The following documents are filed as part of this report:
1. The following Exhibits are filed herein: 27.1 Financial Data Schedule
2. Reports on Form 8-K filed: None.
6
<PAGE>
Signatures
In accordance with the Exchange Act, the registrant caused this report to be
signed on its behalf by the undersigned, duly authorized.
CONVERGE GLOBAL, INC.
DATED: November 20, 2000 By: _______________________________
Imran Husain, President and Chief
Executive Officer
/s/ Hamid Kabani
By: _______________________________
Hamid Kabani, Chief Financial
Officer
7
