<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act of
1934 for the quarterly period ended March 31, 1998.
[ ] Transition Report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
(No Fee Required)
For the transition period from to .
--------- -----------
Commission File No. 2-86551C
Concourse Corporation
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(Name of small business issuer in its charter)
Minnesota 41-1368898
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2545 Dunwoody Lane, Wayzata, Minnesota 55391
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(Address of principal executive offices) (Zip Code)
(612) 471-7246
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Issuer's telephone number
Indicate by check mark whether the registrant (1) filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 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 [ ] No [ X ]
Indicate the number of shares outstanding of each of the Issuer's
classes of common stock, as of the latest practical date: 3,067,502 shares of
Common Stock (par value $0.01 per share) outstanding on September 30, 1998.
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PART 1
FINANCIAL INFORMATION
Item 1. Financial Statements
Concourse Corporation
Condensed Balance Sheets (Unaudited)
<TABLE>
<CAPTION>
March 31, 1998 December 31, 1997
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Assets
<S> <C> <C>
Current assets
Cash and cash equivalents $ 9,942 $10,537
Accounts receivable 30,368 32,835
Inventory 4,845 6,525
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Total current assets 45,155 49,897
Equipment, furniture and
leasehold improvements 36,929 36,929
Less accumulated depreciation (36,038) (35,830)
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TOTAL ASSETS $46,046 $50,996
Liabilities and Stockholder Equity
Current liabilities
Accounts payable 10,201 13,267
Accrued expenses - employees 35,072 36,002
Accrued expenses and taxes 3,252 2,389
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TOTAL LIABILITIES $48,525 $51,658
Stockholder's equity (deficiency in assets)
Capital stock, 10,000,000 authorized;
6,000,000 designated as common stock,
par value $0.01; 2,704,600 issued and
outstanding at December 31, 1997 and
March 31, 1998. 27,046 27,046
Additional paid-in-capital 1,951,385 1,951,385
Retained earnings (deficit) (1,980,910) (1,979,093)
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TOTAL STOCKHOLDERS EQUITY (2,479) (662)
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TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 46,046 $ 50,996
========== ===========
</TABLE>
2
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Concourse Corporation
Condensed Statement of Income (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
----------------------------
March 31, March 31,
1998 1997
Revenues $60,910 $30,970
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Costs and Other Expenses:
<S> <C> <C>
Cost of products sold and
services rendered 45,821 8,138
Selling, general and
administrative expenses 16,906 22,559
Product development 0 1,235
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Total Costs and Expenses 62,727 31,932
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Operating Loss ($1,817) ($ 962)
======= =======
Retained Earnings
Deficit at beginning of period (1,979,093) (1,962,924)
Deficit at end of period (1,980,910) (1,963,886)
Profit (loss) per common share ($.00) ($.00)
Weighted average no. of
shares outstanding 2,704,600 2,704,600
</TABLE>
3
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Concourse Corporation
Cash Flows from Operating Activities (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31, 1998 March 31, 1997
-------------- --------------
<S> <C> <C>
Net income (loss) $(1,817) $ (962)
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 208 367
(Increase) decrease in accounts receivable 2,467 (7,951)
(Increase) decrease in inventory 1,680 784
Increase (decrease) in accounts payable (3,066) 0
Increase (decrease) in accrued expenses (67) 163
Net cash provided by (used in) investing
activities 0 0
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NET INCREASE (DECREASE) IN CASH (595) (7,599)
====== ======
Supplemental Cash Flow Information
Cash at beginning of period 10,537 16,189
Cash at end of period 9,942 8,590
Cash paid during the period for interest
or income taxes 100 100
</TABLE>
4
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Notes to Interim Financial Statements
March 31, 1998
NOTE 1 - Basis of Presentation
The accompanying unaudited financial statements have been prepared in
accordance with the instructions to Form 10-QSB and therefore do not include all
information and disclosures necessary for a fair presentation of results of
operations, financial position and changes in financial position in conformity
with generally accepted accounting principles. The accompanying unaudited
financial statements contain, in the opinion of management, all adjustments
(which include only normal, recurring adjustments) necessary for a fair
presentation of the results of operations for the periods presented.
NOTE 2 - Net Income Per Share
Net income per common share is computed by dividing net income by the
number of common shares and common share equivalents outstanding.
Item 2. Management's Discussion and Analysis or Plan of Operation
General
Through its President, William A. Hultgren, the Company provides consulting
and training services to companies engaged in manufacturing and management
quality improvement programs. In addition, through one independent sales
representative, the Company markets a proprietary product called SMIP, in both
computer-aided and video versions, which facilitates the training of
manufacturing floor personnel in the use of statistical methods to achieve
quality control. Most of the Company's revenues are derived from consulting and
training services. Until consummation of the merger described below, the Company
will continue to focus on professional consulting services, and the sale of its
SMIP product, while maintaining tight control over expenditures and conserving
working capital.
The Company and its newly formed subsidiary ("Peoples Acquisition
Corporation"), entered into an Amended and Restated Agreement and Plan of Merger
in September 1998, with The Peoples Publishing Group, Inc. ("Peoples") whereby
Peoples will be merged into the Company's subsidiary, and will be the surviving
corporation. Peoples, with principal offices in Maywood, New Jersey, is engaged
primarily in the publishing of books for use in elementary and secondary
schools, grades K through 12. Upon completion of the merger, which is expected
as of November 1, 1998, the shareholders of Peoples will own approximately 95%
of the Company's voting equity securities, and the business of the Company will
be that of Peoples. There are no assurances that the merger will be consummated.
5
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Results of Operations
Revenues of $60,910 for the three months ending March 31, 1998, increased
by $29,940, or 97%, when compared to the same period in 1997. Of the 1998
revenues, $40,088 were generated from consulting services provided to clients by
the Company's one executive officer. The increase in the first quarter 1998
revenues came entirely from consulting services, offset partially by a small
decrease in sales of training products during the same periods. Virtually all
consulting services revenue is passed to the Company's executive officer as
compensation, accounting for the $37,683, or a 463%, increase in cost of
products sold and services rendered in the first quarter of 1998, over the same
quarter in 1997. Selling, general and administrative expenses decreased by
$5,653, or 25%, in the first quarter of 1998 as compared to 1997, primarily as
the result of a reduction in administrative salaries, insurance costs and
promotional expenses, offset in part by an increase in payroll and unemployment
taxes as a result of an increase in the president's salary reflected in cost of
goods sold. The Company had a loss of $1,817 for the quarter ended March 31,
1998, compared to a loss of $962 for the comparative quarter in 1997, which does
not represent a material change.
Liquidity and Capital Resources
The Company's working capital deficit of $3,370 at March 31, 1998,
represents only a slight $1,609 decrease in working capital from December 31,
1997. All other balance sheet changes were similarly immaterial. During the
remainder of 1998, and until the consummation of the merger, the Company expects
to rely on revenues from continuing operations to fund the business. Because of
the Company's low and controlled overhead, and assuming that it will not be
called upon to repay a $25,000 loan made to the Company in its second quarter of
1998, the Company's cash on hand should be sufficient to permit the Company to
operate for at least the next 12 months.
PART 2
OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities and Use of Proceeds
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
6
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Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
None
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934,
the Registrant has caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: October 27, 1998 CONCOURSE CORPORATION
/s/ William A. Hultgren
----------------------------------------
William A. Hultgren, President and Chief
Executive Officer, and Treasurer and
Chief Financial Officer
7
<TABLE> <S> <C>
<ARTICLE> 5
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1
<CASH> 9,942
<SECURITIES> 0
<RECEIVABLES> 30,368
<ALLOWANCES> 0
<INVENTORY> 4,845
<CURRENT-ASSETS> 45,155
<PP&E> 36,929
<DEPRECIATION> 36,038
<TOTAL-ASSETS> 46,046
<CURRENT-LIABILITIES> 48,525
<BONDS> 0
0
0
<COMMON> 27,046
<OTHER-SE> (29,525)
<TOTAL-LIABILITY-AND-EQUITY> 46,046
<SALES> 60,910
<TOTAL-REVENUES> 60,910
<CGS> 45,821
<TOTAL-COSTS> 45,821
<OTHER-EXPENSES> 16,906
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,817)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,817)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,817)
<EPS-PRIMARY> (.00)
<EPS-DILUTED> (.00)
</TABLE>
