<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 June 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 August 7, 2000, the number of shares of Common Stock issued and
outstanding was 8,928,170.
Transitional Small Business Disclosure Format (check one):
Yes No X
--- ---
<PAGE>
CONVERGE GLOBAL, INC. AND SUBSIDIARY
INDEX
<TABLE>
<CAPTION>
Page
Number
------
<S> <C> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets - June 30, 2000 2
Condensed Consolidated Statement of Operations - For the three months
and six months ended June 30, 2000 and 1999 3
Condensed Consolidated Statement of Cash Flows - For the six months
ended June 30, 2000 and 1999 4
Notes to Condensed Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial Conditions
and Results of Operations 9
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 2. Changes in Securities 14
Item 3. Defaults Upon Senior Securities 14
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 15
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CONVERGE GLOBAL, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED BALANCE SHEET - JUNE 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Current assets -
Cash $ 469,531
Loan to employees 2,500
-----------
Total current assets 472,031
Property and equipment, net of accumulated
depreciation and amortization 71,709
Website development 270,000
------------
$ 813,740
============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accrued expenses $ 234,270
Loans payable, officer stockholders 326,590
-----------
Total current liabilities 560,860
-----------
Note payable, related party 250,000
-----------
Minority interest 1,145,851
-----------
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 361,131
Deficit accumulated during development stage (1,511,020)
-----------
Total stockholders' deficit (1,142,971)
-----------
$ 813,740
============
</TABLE>
2
<PAGE>
CONVERGE GLOBAL, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Period from inception
Three months ended Six months ended of operations on
June 30, June 30, October 4, 1985 to
2000 1999 2000 1999 June 30, 2000
---- ---- ---- ---- -------------
<S> <C> <C> <C> <C> <C>
Revenues $ 358 $ 5,870 $ 358 $ 5,870 $ 6,228
Cost of revenues - - - - -
----------- ---------- ---------- ------------ --------------
Gross profit 358 5,870 358 5,870 6,228
----------- ---------- ---------- ------------ --------------
Selling, general and administrative 631,195 160,199 805,076 350,920 1,533,714
----------- ---------- ---------- ------------ --------------
Loss from operations (630,837) (154,329) (804,718) (345,050) (1,527,486)
Interest expense 4,688 - 9,375 - 19,063
----------- ---------- ---------- ------------ --------------
Loss before income taxes, equity in losses of
Medcom Network, Inc. and minority interest (635,525) (154,329) (814,093) (345,050) (1,546,549)
----------- ---------- ---------- ------------ --------------
Income taxes - - 800 800 1,600
Equity in losses of Medcom Network, Inc. - - - - 30,000
Minority loss allocation (63,372) - (67,129) - (67,129)
----------- ---------- ---------- ------------ --------------
Net loss $ (572,153) $ (154,329) (747,764) (345,850) $ (1,511,020)
=========== ========== ========== ============ ==============
Weighted average number of
shares outstanding -
basic and diluted 8,918,100 6,834,404 8,918,100 6,834,404 8,918,100
=========== ========== ========== ============ ==============
Net loss per share -
basic and diluted $ (0.06) $ (0.02) $ (0.08) (0.05) $ (0.17)
=========== ========== ========== ============ ==============
</TABLE>
3
<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
Six months ended Six months ended of operations on
June 30 June 30 October 4, 1985 to
2000 1999 June 30, 2000
---- ---- -------------
<S> <C> <C> <C>
Cash flows provided by (used for)
operating activities:
Net loss $ (747,764) $ (345,850) $ (1,511,020)
Adjustments to reconcile net loss
to net cash provided by (used
for) operating activities:
Depreciation and amortization 18,902 1,042 22,250
Services in exchange for common stock - 780 114,950
Loss on investment - - 30,000
Issuance of options under stock option plan - 18,000 18,000
Minority interest (67,129) (67,129)
Changes in operating assets and liabilities:
Increase in due from employees (2,500) (2,500)
Increase in due from related party - - -
Increase in prepaid expenses - - -
Increase in accrued expenses 8,816 100,360 234,269
------------ -------------- -------------
Total adjustments (41,911) 120,182 349,840
------------ -------------- -------------
Net cash used for operating activities (789,675) (225,668) (1,161,180)
------------ -------------- -------------
Cash flows used for investing activities:
Payments to acquire property and equipment (71,826) (12,500) (93,959)
Investment in Website Development (70,000) (270,000)
Investment in Medcom, Inc. - (30,000) (30,000)
------------ -------------- -------------
Net cash used for investing activities (141,826) (42,500) (393,959)
------------ -------------- -------------
Cash flows provided by financing activities:
Proceeds from loan payable, related parties 185,590 17,000 326,590
Proceeds from note payable, net - 35,000 250,000
Proceeds from sale of securities of subsidiaries 1,212,980 1,212,980
Proceeds from issuance of common stock
and paid in capital - 235,100 235,100
------------ -------------- -------------
Net cash provided by financing activities 1,398,570 287,100 2,024,670
------------ -------------- -------------
Net increase in cash 467,069 18,932 469,531
Cash, beginning of period 2,462 - -
------------ -------------- -------------
Cash, end of period $ 469,531 $ 18,932 $ 469,531
============ ============== =============
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 $ - $ 18,000 $ 18,000
============ ============== =============
</TABLE>
4
<PAGE>
CONVERGE GLOBAL, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED June 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 June 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.
5
<PAGE>
CONVERGE GLOBAL, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED June 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 may be 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. 75% Essential Tec, Inc. was formed in the
State of California during 1999.
During the period ended June 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
$772,980 as of June 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 may be 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.
6
<PAGE>
CONVERGE GLOBAL, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED June 30, 2000 AND 1999
(1) Summary of Significant Accounting Policies (Continued):
Principles of Consolidation, Continued:
Percent of
Subsidiary ownership Description
---------- --------- -----------
LiquidationBid.com, 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
June 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.
7
<PAGE>
CONVERGE GLOBAL, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED June 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 six month period ended June 30, 2000 are not
necessarily indicative of the results that may be expected for the year
ended December 31, 2000.
8
<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 six months ended June 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 six months ended June 30, 2000, under
Regulation D of the Securities Act 1933. Total proceeds raised during the six
months amounted to $440,000. Essential Tec, Inc., raised under Regulation D,
$772,980 during the quarter ended June 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 minimal revenues and does not anticipate
generating any material revenues in the near future. Currently, the Company's
only cash requirements are for rent and salaries. The Company's sole source of
capital during the six months ended June 30, 2000, was investment capital
provided by third parties. As a result, to cover expenses that arise, on
November 1, 1999 the Company's
9
<PAGE>
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. The
Company has drawn on the line approximately $240,000 through June 30, 2000.
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. In
addition, on January 19, 2000, the Company executed a convertible preferred
promissory note in the amount of $200,000 with Knightrider Investments Ltd. The
note is payable within one year with 8% annual interest. Should the Company fail
to pay the principal and interest, the outstanding balance will be converted
into restricted shares at a 30% discount based on the market price on the
previous day's close. According to the Company's plan, this additional infusion
of capital in addition to capital raised during the six months ended June 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 following table sets forth, for the periods indicated, selected financial
information for the Company:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30 June 30
-------------------------------------------------------------------------------------------------------------
2000 1999 2000 1999
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Total revenue 358 5,870 358 5,870
-------------------------------------------------------------------------------------------------------------
Cost of revenue - - - -
-------------------------------------------------------------------------------------------------------------
Gross profit 358 5,870 358 5,870
-------------------------------------------------------------------------------------------------------------
General, administrative, and selling
expenses 631,195 160,199 805,076 350,920
-------------------------------------------------------------------------------------------------------------
Income (loss) from operations (630,837) (154,329) (804,718) (345,050)
-------------------------------------------------------------------------------------------------------------
Interest expense 4,688 - 9,375 -
-------------------------------------------------------------------------------------------------------------
Income (loss) before taxes (635,525) (154,329) (814,093) (345,050)
-------------------------------------------------------------------------------------------------------------
Income Taxes - - 800 800
-------------------------------------------------------------------------------------------------------------
Minority Loss allocation 63,372 - 67,129 -
-------------------------------------------------------------------------------------------------------------
Net income (loss) (572,153) (154,329) (747,764) (345,850)
-------------------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE>
Three Months and Six Months Ended June 30, 2000 as Compared to Three Months and
Six Months Ended June 30, 1999
Revenues.
The Company had insignificant revenues for the three months and six months
ended June 30, 2000 and the three months and six months ended June 30, 1999.
General, administrative, and selling expenses.
The Company incurred costs of $631,195 for the quarter ended June 30, 2000
as compared to $160,199 for the quarter ended June 30, 1999. Operating expenses
were $805,076 for the six months ended June 30, 2000 as compared to $350,920 for
the six months ended June 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.
Interest expense.
The Company had $4,688 of interest expenses for the three months ended June
30, 2000 as compared to no interest expense for the three months ended June
30,1999. For the six months ended June 30, 2000, the Company had $9,375 of
interest expense as compared to no expense for the six months ended June 30,
1999.
Income (loss) before taxes.
The Company has a loss before taxes and minority interest of $635,525 for
the three months ended June 30, 2000 as compared to a loss before taxes of
$154,329 for the three months ended June 30, 1999. For the six months ended June
30, 2000, the Company had a loss before taxes and minority interest of $814,093
as compared to a loss before taxes of $345,050 for the six months ended June 30,
1999.
Taxes on income.
Income taxes for the six months ended June 30, 2000 were $800 as compared
to income taxes of $800 for the six months ended June 30, 1999.
Net loss
The Company had a net loss of $572,153 for the quarter ended June 30, 2000
as compared a net loss of $154,329 for the quarter ended June 30, 1999. The net
loss for the six months ended June 30, 2000 was $747,764 as compared to a net
loss of $345,850 for the six months ended June 30, 1999.
11
<PAGE>
Liquidity and Capital Resources
Digitalmen.com, a subsidiary of the Company, commenced three private
placement offerings in the six months period ended June 30, 2000, under
Regulation D of the Securities Act of 1933. Total proceeds raised during the
quarter amounted to $440,000. Essential Tec, Inc., under Regulation D, also
raised $772,980 during the six months period ended June 30, 2000.
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. 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.
On May 5, 1999, the Company executed a promissory note with the holder,
Verifica International, Ltd., in the amount of $250,000. The note pays an annual
interest rate of 7.5% on the outstanding balance and is due on April 15, 2002.
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 January 19, 2000, the Company executed a
convertible preferred promissory note in the amount of $200,000 with Knightrider
Investments, Ltd. The note is payable within one year with 8% annual interest.
Should the Company fail to pay the amount, it will be converted into equity at a
30% discount to the closing price on the previous day. For example, if the
Company is unable to pay the $200,000 debt owed under this note by the due date
of April 15, 2001, then the note holder would have the right to convert the note
into 142,857 shares (utilizing a 30% discount from the $2.00 market price); this
would constitute approximately 1.6% of the Company's present outstanding stock.
The greater the stock price at the time of conversion, the less would be the
number of shares into which the promissory note would be convertible.
Conversely, the less the stock price at the time of conversion, the greater
would be the number of shares into which the promissory note would be
convertible. In the event the stock price at the time of conversion was
substantially less than $2.00, the existing shareholders of the Company could
incur substantial dilution upon conversion of the promissory note.
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 directors
of Gearz.com, Inc. are Imran Husain and Samar Khan. The Articles were
subsequently amended on December 7, 1999, to change the name of Gearz.com to
Digitalmen.com, Inc. Such action was approved and ratified by unanimous board
of directors and shareholders.
Digitalmen.com is a 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
12
<PAGE>
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, 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 the Company. This was an investment made by the Company and the
Company's officers or directors have no management involvement in MedCom. As of
June 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 June 30, 2000, as required by the equity
method of accounting.
Essential Tec, Inc. ("Essential Tec"), a 75% owned subsidiary of the
Company, has been formed as an information technology services Company with an
extensive technical labor force in Pakistan. Essential Tec's software engineers
are capable of providing high quality, cost-effective services to clients in a
resource-constrained environment. Essential Tec services include e-Commerce
Solutions, e-Procurement applications, auctioning engines, and several other web
based solutions. Essential Tec sells and markets its services and products from
its offices based in Santa Monica, California.
13
<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 June 30, 2000, the Company's subsidiary,
Digitalmen.com, Inc. sold 250,000 shares of common stock to an accredited
investor for a total of $125,000. This transaction was exempt from
registration pursuant to Rule 506 of Regulation D of the Securities Act of
1933.
During the quarter ended June 30, 2000, the Company's subsidiary,
Essential Tec, Inc. sold 755,333 shares of common stock to eight accredited
investors for a total of $533,000. Essential Tec, Inc. also sold 383,333
warrants for common stock, exercisable for $1.00 per share, for $115,000.
These transactions were 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: On June 5, 2000, the Company
filed a Form 8-K disclosing a
change in officers and
directors.
14
<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: August 9, 2000 By: /s/ Imran Husain
------------------------------
Imran Husain, President and
Chief Executive Officer
By: /s/ Hamid Kabani
------------------------------
Hamid Kabani, Chief Financial
Officer
15
