21
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB/A
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ending June 30, 1996
Commission File Number 0-16447
AMERICAN CONSOLIDATED GROWTH CORPORATION
(Exact name of Issuer as specified in its charter)
Delaware 52-1508578
(State of incorporation )
(I.R.S. Employer Identification No.)
8100 E. Arapahoe Road, Suite 309, Englewood, CO 80112
(Address of principle executive offices) (Zip Code)
(303) 220-8686
(Issuer's telephone number including area code)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Title of Class: Common Stock $.10 par value
Check mark whether the Issuer (1) filed all reports required
to be filed by section 13 or 15(d) of Securities Exchange Act of
1934 during the preceding 12 months (or for such a 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 [ ]
Check if there is no disclosure of delinquent filers in
response to Item 405 of Regulation S-B is contained in this form
and no disclosure will be contained, to the best of the Issuer's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB. [X ]
Issuer's revenues for its most recent fiscal year:
$8,897,455.
The aggregate market value of the voting stock of the Issuer
held by non-affiliates as computed by reference to the prices at
which the stock was sold and the average of the bid and ask
prices of such stock within the prior sixty days as of June 30,
1996, was $853,198. A total of 3,412,792 shares were owned by
non-affiliates as of June 30, 1996.
The number of shares of Common Stock, $.10 par value,
outstanding on June 30, 1996 was 7,601,321 shares.
Transitional Small Business Disclosure (check one): Yes___
No _X_
Documents Incorporated by Reference
None.
Table of Contents
Part I
Item 1. Description of Business
Item 2. Description of Property
Item 3. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security
Holders
Part II
Item 5. Market for Common Equity and Related Stockholder Matter
Item 6. Management's Discussion and Analysis or Plan of
Operation
Item 7. Financial Statements
Item 8. Changes in and Disagreements with Accountants and
Financial Disclosure
Part III Item 9. Directors and Executive Officers, Promoters
and Control Persons; Compliance with Section 16(a)
of the Exchange Act
Item 10. Executive Compensation
Item 11. Security Ownership of Certain Beneficial Owners
and Management
Item 12. Certain Relationships and Related Transactions
Item 13. Exhibits and reports on Form 8-K
SIGNATURES
FINANCIAL STATEMENTS AND SCHEDULES
PART I
Item 1. Description of Business.
American Consolidated Growth Corporation (the "Company" or
"AMGC") is a U.S. public company engaged in the financial
development of its wholly owned subsidiary, Eleventh Hour, Inc.,
a national staffing services business. The common stock of the
Company is traded under the symbol "AMGC" on the Electronic
Bulletin Board, NASDAQ (OTC-BB). The principle executive offices
of the Company are located at 8100 E. Arapahoe Road, Suite 309,
Englewood, CO 80112. Telephone number: (303) 220-8686.
Facsimile number: (303) 220-3288.
Prior to the acquisition of Eleventh Hour, Inc. in June of
1994, the primary purpose and business of the Company was
"technology banking," or the acquisition of and investment in
U.S.-based emerging growth technologies. The primary technology
assets formerly held were significant equity positions in two
Colorado corporations: Advance Display Technologies, Inc.,
("ADTI") a research and development stage company engaged in the
fiber optics display field, and Ultratech Knowledge Systems,
Inc., DBA AGTsports, Inc., ("AGT") a research and development
stage company engaged in the computer software and services
business for the golf and recreation industries. Subsequent to
fiscal year ended June 30, 1995, due to continuing financial
difficulties and the inability of Advanced Display Technologies,
Inc. and AGTsports, Inc. to bring their products to market, both
of these investments were written down to zero value on the books
of the Company. (See the Company's Form 10-KSB/A, June 30,
1995).
On July 1, 1994, the Company acquired 100% of the issued and
outstanding common shares of a private company, Eleventh Hour,
Inc., ("EHI"), and its affiliated entities, in consideration for
one million restricted shares of the Company's issued and
outstanding common stock. EHI is a national staffing services
company engaged in temporary and permanent employee placement and
outsourcing. The company and its operations are discussed in-
depth herein. (See "Business of Issuer" and "Investments -
Eleventh Hour, Inc.").
On January 26, 1995, the Company acquired new management and
changed the Company's primary purpose and business to engage
exclusively in developing the staffing services business of
Eleventh Hour, Inc. In order to increase shareholder value,
management authorized implementation of a restructuring plan
calling for the termination of all former technology-related
activities and the elimination of all non-producing assets of the
Company.
On June 27, 1996, the annual meeting of AMGC stockholders
was held in Englewood, Colorado. The stockholders ratified the
election of the newly expanded Board of Directors of the Company
and approved three stock option plans. (See - Part I , Item 4.
"Submission of Matters for a Vote of Security Holders " and Part
III. Item 9. "Directors and Executive Officers").
As of June 30, 1996, the Company had a working capital
deficiency of approximately $1,052,000 and a stockholders'
deficit of $2,069,000. Although the Company continues to
experience lack of adequate funding to fully pursue its business
objectives, following the recent completion of the internal
restructuring efforts and assuming new sources of financing will
be secured, the Company believes it will be able to successfully
meet all of its current obligations.
Investments
As of June 30, 1996, the Company had active investments in
one company: Eleventh Hour, Inc., a wholly owned subsidiary
engaged in the staffing services industry. (See "Business of
Issuer" below).
As of June 30, 1996, the Company held 1,400,000 common
shares of Advanced Display Technologies, Inc., a research and
development company and former affiliate of AMGC. During the
year ended June 30, 1995, due to ADTI's failure to bring its
products to market and as a result of the significant decrease in
trading volume and quoted stock price of ADTI, the shares were
written down to a value of zero on the books of the Company.
Additionally, as reported in the Legal Proceedings section of
this report, the shares have become the subject of a lawsuit in
Colorado. (see "Legal Proceedings - ADTI").
Pursuant to the internal restructuring plan authorized by
the Board of Directors in fiscal 1995, the Company divested
itself of its former shareholdings and investment in AGTsports,
Inc. in September of 1995. The Company entered into a joint
venture agreement with Global Links Trading, Limited, ("GLT") a
computer software licensing company and transferred 100% of its
shareholdings of AGTsports, Inc. to GLT in exchange for an
overriding royalty of 15% on gross sales of certain GLT products.
For the fiscal year ending June 30, 1996, GLT produced no sales
relating to the Company's joint venture agreement with GLT. The
agreement carries no expense to the Company. Pending further
development of GLT products and markets, management can provide
no assurance GLT will be successful in its business plan or in
achieving sales which would result in material royalty payments
to the Company.
Due to the recurring loss history of the Company and
considering the limited number of sources of new funding for
working capital, the auditors of the Company have raised
significant doubts as to the abilities of the Company to continue
as a going concern.
Business of Issuer
The primary business of the Issuer is development of its
wholly owned subsidiary, Eleventh Hour, Inc., a national staffing
services business. Eleventh Hour, Inc. ("EHI") was acquired on
June 30, 1994 for 1,000,000 shares of the issued and outstanding
common stock of the Company. The acquisition successfully
retired $720,996 of EHI long term debt and converted $1,658,000
of outstanding EHI notes into redeemable common stock, ("puts")
of AMGC. The acquisition was accounted for as a purchase as
reported in the Company's Form 10-KSB/A for the fiscal year ended
June 30, 1995. In fiscal 1996, AMGC converted these common stock
puts into equity and seven year promissory notes. (See "Notes to
Consolidated Financial Statements - Note 8").
Services and Products of EHI
EHI is a national provider of temporary personnel and
outsourcing services to businesses, professional and service
organizations and government agencies. The Company provides a
broad range of staffing services through its national network of
eight (8) Company-owned branch locations in California, Colorado,
Kansas and Missouri. During its most recent fiscal year, the
subsidiary served more than 5,000 customers across the U.S.
The primary product of the business is represented by
temporary placement of individuals who possess a wide variety of
office, light industrial and other skills, including secretarial,
word processing, data entry, telemarketing, assembly, picking,
packing and sorting and shipping and receiving. In addition, the
Company provides temporary personnel with various technical and
professional skills such as programming, designing, engineering
and accounting. Permanent placement of qualified personnel
represents another important product for the Company. Taken
together, the services provided by EHI can be viewed as a
spectrum ranging from traditional temporary services to value-
added outsourcing solutions.
EHI has established an Onsite Staffing Coordinator Program;
a cost effective solution for clients who spend administrative
and personnel department time and resources managing employees
whose jobs are generally routine and are characterized by high
turnover rates. This program most often includes the placement
of an EHI Staffing Specialist onsite who coordinates and
supervises all staffing service functions for the client. The
specialist typically interfaces with the client's Human
Resources department, helping to increase management time where
it is more effectively spent and reducing unnecessary functions
where needed. The onsite program utilizes temporary staff to
help control overhead costs and to improve profitability in
positions previously filled by permanent employees. This service
is often provided to clients who have highly fluctuating
personnel needs such as light manufacturing companies and
assembly and packaging businesses.
Eleventh Hour, Inc. was founded by Norman L. and Valerie A.
Fisher, (See "Biographical Data"), who established the staffing
business as a Colorado corporation on December 21, 1988. EHI
utilizes a central headquarters located in Englewood, Colorado
for management of its affiliate branch offices, including all
accounting, support and supervisory services. The address and
telephone number of the principle executive offices of EHI are:
Eleventh Hour, Inc., 8100 East Arapahoe Road, Suite 311,
Englewood, CO, 80112. Telephone number: (303) 220-5300.
Markets of EHI
According to the August 1996 issue of the Staffing Industry
Report, published by Staffing Industry Analysts, Inc., revenues
from combined U.S. staffing industry segments generated an
estimated $62.9 billion in 1995, with combined temporary help
services generating an estimated $40.6 billion. Temporary help is
one of the fastest growing segments, especially in the areas of
light industrial, medical and technical support personnel.
Eleventh Hour, Inc. employs over 4,000 temporaries annually,
chiefly in the areas of clerical and light industrial services.
These employees represented over 85% of EHI's annual gross
revenues in fiscal 1996. Permanent placement of executives is a
secondary market for EHI.
Another independent industry study published in May of 1996
by the National Association of Temporary and Staffing Services
reports payroll receipts for the temporary help segment in excess
of $7 billion for the first quarter of 1996. The study forecasts
continuing growth in the staffing services industry due to
several factors: the need for business organizations to remain
flexible in order to compete in an interconnected global economy;
the ever-evolving social contract between the workforce and
business organizations wherein larger numbers of people view
temporary employment as a way to gain greater job security and
higher career paths; the difficulties all types of business
organizations experience in attracting, evaluating and recruiting
employees; a broadening of the types of staffing arrangements
offered by staffing companies, as reflected in the expanding
services industries; and the overall health of the U.S. economy,
which celebrated its fifth anniversary of growth in March, 1996.
Distribution Methods of Company's Services
EHI plans to continue providing a wide range of high quality
services to a diverse group of clients through its 8 existing
branch office locations. EHI promotes a philosophy of
developing and maintaining long term relationships with its
clients, striving to achieve high levels of performance and
customer satisfaction to attract and retain local, regional and
national accounts. The Company continues to explore growth
opportunities to expand its existing service offerings, develop
additional skill classes and enter new markets by selectively
expanding its offices through targeted acquisitions.
Prominent industry analysts such as the N.A.T.S.S. and
Staffing Analysts, Inc. have reported extensively on the ongoing
trend toward consolidation within the Staffing Services industry.
In conjunction with this trend, management of EHI has adopted
plans to target and acquire smaller companies for the purpose of
expanding EHI's market presence in fiscal 1997. The profile for
such targets includes businesses with core temporary accounts
generating revenues of up to $5,000,000 annually. Management
believes such acquisitions can be made without excessive capital
outlay utilizing existing EHI resources management and personnel.
Competitive Business Conditions
Demographically, the U.S. staffing services industry is
highly fragmented, with an estimated 3,000 to 5,000 private firms
operating over 10,000 offices. The size of these companies
varies greatly, ranging from smaller "mom and pop" temporary
service businesses with annual revenues of less than $500,000 to
larger international companies such as Manpower, Inc., a company
with revenues in excess of $6 billion. Despite the considerable
competition, smaller, well-managed companies, especially those
with a specialized focus, can succeed on a local or regional
basis.
For employers, the use of temporary personnel is a proven
technique to mitigate the rising costs of recruiting, fringe
benefits, employee turnover and other employee-related expenses.
These advantages have led many companies to adopt business
strategies which focus on their core business competencies, with
non-core business support functions being "outsourced" to service
companies such as EHI. Outsourcing services remains an emerging
industry and is, as such, still relatively undefined. It
parallels the temporary help services industry in that it is also
highly fragmented, with few large companies operating on a
national level. EHI believes all segments within the industry
are experiencing a trend toward consolidation and has implemented
new strategies to help adapt to the changing marketplace.
Compliance with Government Regulations
The operations of Eleventh Hour, Inc. do not involve
mandatory compliance with non-environmental federal regulations
other than employer-related issues such as the 1995 federal
Family Medical Leave Act ("FMLA"). As of June 30, 1996, EHI
fully complies with the terms of this legislation as a U.S.
employer.
Research and Development Costs
As of June 30, 1996, EHI has not engaged in any material
research and development activities or related costs in the prior
two years.
Trademarks and Trade Names.
The Company, through its wholly owned subsidiary, Eleventh
Hour, Inc. owns one Trade Name: "XIth Hour, Inc."
Compliance with Environmental Laws and Regulations
The Company liquidated all of its mining properties and
operations in the fiscal year ended June 30, 1992. The Company
does not believe that it is subject to any local, state, or
federal statutory and regulatory requirements with respect to
environmental safety and land reclamation that would affect it
adversely in the future. However, there can be no assurance of
this. Compliance to date has had no material effect on the
Company's method of conducting its business and the cost of such
compliance has not been significant.
Employees
During the period ending June 30, 1996, the Company had one
full time employee together with 38 full time employees of the
wholly owned subsidiary, Eleventh Hour, Inc. None of these
employees are represented by any Union or collective bargaining
group and there is no prior history of any strikes, slow-downs or
other labor disputes. The Company is highly dependent on its
full time employee and certain members of EHI management. (See
Part III, Item 9 and Item 10, "Directors and Executive Officers
of the Registrant - Biographical Information").
International Operations
The Company conducted operations only in the United
States.
Item 2. Properties
During the fiscal year ending June 30, 1996, the Company's
business offices were located at 8100 East Arapahoe Road, Suite
309, Englewood, CO, 80112, where the Company offices at present.
The office space, located in a modern three story building
completed in 1987, is leased under a three year non cancelable
lease expiring in March, 1998, with a renewal option for an
additional two years at the then-current market rate. EHI leases
office space for its branch offices in Overland Park, Kansas,
Tustin, California, Englewood, Colorado and Springfield,
Missouri. (See Operating Leases in Notes to Consolidated
Financial Statements). The following is a schedule of future
minimum rental payments required under the above referenced
operating leases as of June 30, 1996:
<TABLE>
<CAPTION>
<S> <C> <C>
Years-Ending
June 30 Amount
1997 $ 230,218
1998 208,972
1999 111,364
2000 84,305
$ 634,859
</TABLE>
Total rent expense charged to operations for the years ended
June 30, 1995 and 1996 was $221,948 and $264,924, respectively.
The Company's operating leases require current monthly payments
of $21,960 with expirations at various dates through May, 2000.
Item 3. Legal Proceedings
On July 19, 1996, the Company became a defendant in Display
Group, LLC vs. American Consolidated Growth Corporation, Civil
Action No. 96-CV-1560, Division 5 of Arapahoe County District
Court, in the State of Colorado. The suit is a replevin action
concerning 1,400,000 shares of ADTI common stock brought by
Display Group, LLC, the management arm of Advanced Display
Technologies, Inc., a former affiliate of the Company. As of
September 30, 1996, the preliminary finding of the Court was that
a reasonable probability existed for possession of the shares to
be held by the Plaintiff and the shares were turned over to
Display Group pending the outcome of a jury trial on the matter.
As of the date of the filing of this report, the Company is
unable to predict the outcome of this matter. In the event the
Company is unsuccessful in its efforts to retain the subject
shares, in the opinion of counsel, no adverse consequences are
anticipated to occur, other than the loss of the title to the
stock. Although the shares were written to a value of zero in
fiscal 1995, the Company believes the case is material due to
other outstanding issues arising from transactions involving the
Company and Display Group, LLC, ADTI and their officers and
directors. Upon review of the facts and historical evidence
available to the Company, Management believes there is a strong
likelihood it shall become involved in extensive litigation with
these parties in order to recover property of the Company and to
protect the interests of the Company and its shareholders. (See
"Notes to Consolidated Financial Statements - "Footnote 12").
In September of 1996, as a separate matter unrelated to the
replevin case, the Company received notice from Jeff Robinson of
Corporate Partners, Inc. of a claim involving a $250,000 license
fee allegedly due CPI as a result of agreements related to the
licensing of the ADTI technology between CPI and former
management of the Company in prior years. Although no formal
suit has been filed, the Company believes there is no basis for
the allegation and intends to refute and vigorously defend any
such action, if necessary. (See "Notes to Consolidated Financial
Statements - "Footnote 12").
In June of 1996, the Company received notice of Complaint
from the North Dakota Securities Commission alleging breach of
the State's "Blue Sky" securities laws. The Company believes the
action is the outgrowth of an offer by AMGC in February, 1996 to
convert a $50,000 obligation owed to a former EHI investor and
North Dakota resident into restricted common stock and/or a
promissory note. As of June 30, 1996, the Company believes the
Commissioner's office will pursue the matter and a hearing was
scheduled to be held in October of 1996. The Company has
retained special legal counsel in North Dakota to review the case
and as of the date of the filing of this report, the Company is
unable to predict the outcome of this matter and what, if any,
material or financial consequences may result.
In September of 1996, the Company received notice from the
Internal Revenue Service to provide information concerning the
tax year ended 1994. On October 9, 1996, a meeting was held at
the offices of the Company with an agent of the IRS to determine
the accuracy of certain items reported on the Company's tax
returns for those periods. As of the date of the filing of this
report, the Company is unable to determine the outcome of this
examination and what, if any, material or financial consequences
may result.
Item 4. Submission of Matters to a Vote of Security Holders
On June 27, 1996, the following directors were appointed for
a three year term of service at the annual meeting of security
holders of the Company in Englewood, Colorado,: Norman L.
Fisher, Valerie A. Fisher, Cory J. Coppage, Geoff Dawson and Joe
Lee. The security holders of the Company ratified the following
items as contained in the 1996 annual proxy statement:
1) Election of Directors: The following directors were
appointed for a three year term of service:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
VOTES: For Against Abstain
Norman L. Fisher 4,993,423 21,232 12,770
Valerie A. Fisher 5,003,426 18,725 2,767
Cory J. Coppage 5,003,425 18,723 2,768
Geoff Dawson 5,003,433 9,644 2,760
Joe Lee 5,003,433 9,643 2,760
2) Equity Incentive Plan: 4,184,338 21,401 85,881
(See below)
3) Non-Employee Director
Plan. 4,147,182 58,873 85,565
(See below)
4) Employee Non-Qualified
Plan. 4,165,739 36,240 89,641
(See below)
5) Annual Meeting Matters. 4,157,694 14,630 119,276
(None required)
</TABLE>
Equity Incentive Plan. The 1996 Equity Incentive Plan (the
"Incentive Plan") was adopted in order to provide for the grant
of qualified incentive stock options to full time employees of
the Company. The Incentive Plan provides for a maximum number of
800,000 shares of Common Stock. Incentive Plan participation is
limited to employees who perform vital services in the
management, operation and development of the Company and who
significantly contribute to the achievement of the Company's long-
term corporate economic objectives. The following employees
received 100,000 share incentive stock options under the
Incentive Plan: Norman L. Fisher, President, Treasurer and
Director, Valerie A. Fisher, Vice President and Director, Cory J.
Coppage, Chief Operating Officer, Secretary and Director, and
Mary Y. Hartley, EHI Vice President and Controller. All options
were granted with an exercise price over thirty percent above the
fair market value of the Common Stock at the time of the grant
($0.76 per share), or at $1 per share. As of June 30, 1996, the
current market value of the Common Stock remains below the
exercise price, therefore no dollar value is attached to the
options at present.
Non-Employee Director Stock Option Plan. The 1996 Non-Employee
Director Stock Option Plan, (the "Director Plan") was adopted in
order to provide non-employee directors with added incentive to
continue in the service of the Company. Awards under the Non-
Employee Director Plan provide for the grant of options to each
non-employee member of the Company's Board of Directors at an
exercise price equal to or not less than the fair market value of
the Common Stock on the date of grant. Under the Director Plan,
the maximum number of shares of Common Stock that may be granted
is 100,000. Two directors have been granted 25,000 share options
under the Director Plan: Geoff Dawson and Joe Lee. Both
options carry an exercise price equal to the fair market value of
the Company's Common Stock at the time of grant, ($0.25).
Employee Non-Qualified Stock Option Plan. The 1996 Employee Non-
Qualified Stock Option Plan (the "Employee Plan") was adopted in
order to provide for the grant of non-qualified incentive stock
options to a key employee of the Company. Under the Employee
Plan, the maximum number of shares of Common Stock represented by
options is 400,000 shares. Upon exercise of the options, the
option holders must pay to the Company the full exercise price as
established by the plan in order to acquire their shares.
Employee Plan participation is limited to Norman L. Fisher, the
Chief Executive Officer of the Company's wholly owned subsidiary,
Eleventh Hour, Inc., who performs vital services in the
management, operation and development of EHI and significantly
contributes to the achievement of the Company's long-term
corporate economic objectives. Mr. Fisher received a 400,000
share option to purchase shares of the Company's Common Stock at
an exercise price of $1.00 per share. As of June 30, 1996, the
exercise price of the option remains above the current market
value of the stock and as such, no dollar value is attached to
the option.
Part II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters
Market Information
The Company's common stock, par value $.10 per share
("Common Stock") is traded in the over-the-counter market,
NASDAQ, (OTC-BB) under the stock trading symbol "AMGC."
<TABLE>
<CAPTION>
(1) Bid
<S> <C> <C>
Quarter Ending (2) High (3) Low
June 30, 1996 $ 0.37 $ .25
March 31, 1996 0.37 .25
December 31, 1995 0.25 .18
September 30, 1995 0.44 .37
June 30, 1995 0.41 .25
March 31,1995 1.25 .38
December 31, 1994 4.50 1.37
September 30, 1994 10.00b 8.50 (4)
June 30, 1994 3.50 1.50
</TABLE>
(1) Such over-the-counter market quotations reflect inter-dealer
prices, without any retail markup, markdown, or commission and
may not necessarily represent actual transactions.
(2)(3) At the time of this report, the only activities in the
Company's trading Common stock, of which the Company is aware, is
by Broker/Dealers known as wholesalers. Consequently, there has
been little or no retail trading activity in the Company's
securities during the fiscal year ended June 30, 1996. The
quotes shown above were arrived at by averaging the bid and the
ask price in the marketplace during these periods and are
provided for informational purposes only. The Company believes
these quotes to be estimates and therefore should not be relied
upon for investment purposes.
(4) In May of 1993, the Company reverse-split its common stock
10 for 1, which likely contributed to the significant rise in the
stock price as shown.
Holders of Record
As of June 30, 1996, there were approximately 2,100
shareholders of record of Common Stock.
Dividends
For the fiscal years 1994, 1995 and 1996, no dividends were
declared or issued by the Company. Due to insufficient capital
resources and earnings generated from operations during these
years, the Company has been limited in its ability to declare or
issue dividends. For these same reasons, in 1995, the Company
rescinded a dividend declared by former management in 1991 of
$687,435, (See Notes to Consolidated Financial Statements - Note
7. "Commitments"). There are no contractual or written
limitations concerning the Company's declaration of dividends in
the by-laws or records of the Company.
Item 6. Management's Discussion and Analysis of Financial
Condition and Results of Operations
In the fiscal year ending June 30, 1996, revenues were
$8,897,455 as compared to the year ending June 30, 1995 of
$10,372,461. Following the change in the primary purpose and
business of the Company, net loss decreased from $9,973,547 in
fiscal 1995 to a net loss of $701,774 in fiscal 1996. However,
gross margins remained relatively stable over the same period:
$2,682,410 in fiscal 1995 compared to $2,259,221 in fiscal 1996.
For the year ended June 30, 1996, direct expenses were $6,638,234
and interest expenses totaled $467,481. In fiscal 1995, the
Company experienced a non-recurring loss of $7,976,740 resulting
from costs associated with the write down and liquidation of
certain assets and the internal restructuring of the Company. In
fiscal 1996, income related to certain discontinued operations
was recognized of $84,237. The Company experienced significant
legal, accounting and other related costs which are included in
both discontinued and continuing operations. Certain legal costs
included in discontinued operations were offset by the gain on
sale of investments of approximately $170,000. Decrease in
revenues was also attributed to the termination of a major client
account in fiscal 1996 as a result of expenses related to workers
compensation claims which made the account unprofitable.
As of June 30, 1996, the Company believes the primary
internal restructuring measures have been successfully completed.
These efforts included a change in the primary purpose and
business of the Company, the write down and liquidation of all
non-performing assets, the resolution of numerous outstanding
business matters related to the former business of the Company,
the reduction or elimination of significant portions of short
term debt and the adoption of new measures designed to increase
working capital and revenues. In the opinion of management, the
Company has progressed significantly as compared to the period
ending June 30, 1995. Short term debt obligations were reduced
by 45% through the conversion of $1,599,296 of short term debt
into equity and long term promissory notes, thereby increasing
cash flow of the Company. The Company assisted in providing new
working capital and management support to alleviate certain debts
of EHI and improve its operations.
Subsequent to June 30, 1996, the Company entered into a
preliminary financing agreement with Concord Growth Corporation,
of Palo Alto, California to refinance the accounts receivables of
EHI. The agreement is expected to significantly reduce EHI's
interest expense on accounts receivables financing by over fifty
percent and provides a new credit line of up to $1.5 million.
The Company believes EHI will utilize the new financing to
complete targeted acquisitions of local and regional staffing
businesses in the period ending December 31, 1997 and to
accomodate future sales growth of EHI. Although no assurance
can be provided that acquisitions will be made or EHI future
sales will increase, in the opinion of management, the savings to
the Company in annual interest payments resulting from the accord
will be significant and will have a favorable material impact on
the future profitability of the Company.
During fiscal 1996, the Company has been able to
successfully continue operations, to reposition itself in the
marketplace, to acquire new management and consulting expertise
and to improve its marketing strategies. All of these efforts
have been made for the purpose of increasing shareholders' equity
and profitability on a going forward basis.
The foregoing discussion contains certain forward-looking
statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of
1934, which are intended to be covered by the safe harbors
created thereby. These statements include the plans and
objectives of management for future operations, including plans
and objectives relating to development of new business and
predictions concerning the results of various legal proceedings
as discussed in Item 3. The forward-looking statements included
herein are based on current expectations that involve numerous
risks and uncertainties. Assumptions related to the foregoing
involve judgements with respect to, among other things, future
economic, competitive and market conditions and future business
decisions, all of which are difficult or impossible to predict
accurately and many of which are beyond the control of the
Company. Although the Company believes that the assumptions
underlying the forward-looking statements are reasonable, any of
the assumptions could be innaccurate and, therefore, there can be
no assurance that the forward-looking statements included in this
Form 10-KSB will prove to be accurate. In light of the
significant uncertainties inherent in the forward-looking
statements included herein, the inclusion of such information
should not be regarded as a representation by the Company or any
other person that the objectives and plans of the Company will be
achieved.
Liquidity and Capital Resources
Cash and cash equivalent's balance on June 30, 1996 was
$156,067 and current assets were $1,250,605. Current ratios for
the year ending June 30, 1996 were .54 to 1 as compared to .31 to
1 the previous year. There was a significant change in working
capital during fiscal year 1996 due mainly to the change in the
purpose and primary business of the Company. As of June 30,
1996, the Company had a working capital deficiency of $1,052,150
and a stockholders' deficit of $2,068,840 which includes non-
recurring losses of $7,976,740 in fiscal 1995 sustained due to
the write down and liquidation of certain technology assets,
resolution of outstanding issues related to the former business
of the Company and internal restructuring of AMGC.
Assuming the subsidiary business continues to experience
positive cash flow and to be profitable on a going forward basis
and provided new sources of outside financing are secured,
Management believes the Company will be able to successfully meet
all of its current obligations. However, no assurances can be
given the Company will be successful in these endeavors.
Material Commitments for Capital Expenditures
As of June 30, 1996, the Company has material commitments
for capital expenditures including promissory notes of $1,230,594
which come due in February, 2003 and carry 14% interest. The
interest is payable quarterly at approximately $45,000 per
quarter. (See Notes to Consolidated Financial Statements - Note
8).
Unfavorable Trends or Uncertainties
The business of Eleventh Hour, Inc. may be subject to
various unfavorable trends or uncertainties such as increased
competition in the marketplace, rapid consolidation of the
staffing services industry and/or a significant decline the
health of the U.S. economy. The Company may also be affected by
a significant rise or decline in interest rates and the U.S.
trading markets and current proposed legislation to increase the
minimum wage. The Company can make no determination as to the
effect of these factors on operations or the probability such
factors will occur.
Seasonal Aspects Bearing Upon Operations
Eleventh Hour, Inc. is not subject to seasonal fluctuations
in its business cycle which have a material impact on operations,
other than national and banking holidays, which result in
vacation time for many temporary and permanent EHI employees.
Item 7. Financial Statements and Supplementary Data
This response is submitted as a separate section of this
report (see Consolidated Financial Statements - Pages F-1 to F-
19).
Item 8. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
There have been no disagreements with the Company's
independent accountants on accounting or financial disclosure.
Part III
Item 9. Directors, Executive Officers, Promoters and Control
Persons; Compliance with Section 16(a) of the Exchange
Act.
As of June 30, 1996, the Executive Officers and Directors of
the Company, their ages and positions held in the Company were as
follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Name Age Positions held
Norman L. Fisher 49 President, Treasurer, Director
Valerie Fisher 48 Vice President and Director
Cory J. Coppage 33 Chief Operating Officer
Secretary and Director
Joe Lee 62 Director
Geoff Dawson 54 Director
</TABLE>
The directors serve for a term of three years. All of the above
directors were elected at the Company's annual meeting held on
June 27, 1996 and will serve until their successors are duly
elected and qualified or until their earlier resignation or
removal.
Biographical Information
Norman L. Fisher - President, Treasurer and Director
Mr. Fisher is the co-founder, President and Chief Executive
Officer of EHI and the President and Treasurer and Director of
the Company. He has over twenty years of management experience,
including four years with Norrell Services as a Regional Manager
from 1978 to 1982 and six years as an Executive Vice President
and Managing Director of Talent Tree, Inc. from 1982 to 1988. As
a member of the Executive Committee and Board of Directors of
Talent Tree, Inc. Mr. Fisher was responsible for the nationwide
expansion of operations from a local Houston, Texas-based
business with three offices to a major national service with 135
branch locations and approximately $250 million in annual sales.
In 1988, Mr. Fisher co-founded EHI in Englewood, Colorado. Mr.
Fisher, 49, is a graduate of Western State College and holds a
Bachelor of Science Degree in Business Administration. He is a
well-known figure in the personnel services industry and has
served in various capacities in both national and local industry
associations. Mr. Fisher is married to Valerie A. Fisher.
Valerie Fisher - Vice President and Director
Mrs. Fisher, 48, is the co-founder and Executive Vice President
of EHI and Vice President and Director of AMGC. She has over
eighteen years of experience in the personnel services industry,
entering the business as an Account Manager for Norrell Services
in 1977. In 1979, Mrs. Fisher was responsible for establishing a
new branch location for Norrell in Anaheim, California, which
achieved profitability within its first six months of operation.
In 1982, she left Norrell to join her husband, Mr. Norman Fisher,
in establishing operations in Colorado for Talent Tree, Inc.; a
successful enterprise which also achieved profitability within
its first seven months of operation. In 1983, as a Managing
Director, Mrs. Fisher expanded Talent Tree's presence in Colorado
and later, as Vice President and General Manager of the Company's
Colorado branch, was responsible for developing a state-of-the-
art computer system for the Company, including the majority of
all operating systems, accounting systems and sales management
functions. Mrs. Fisher was responsible for the creative
development of many of Talent Tree's marketing and staffing
concepts and supervises these and other functions at EHI.
Cory J. Coppage - Chief Operating Officer, Secretary and
Director
Mr. Coppage, 33, is the Chief Operating Officer, Secretary and
Director of the Company. He has over seven years of business
management experience including two years of administration
service with AMGC. Mr. Coppage is a graduate of Regis
University, where he earned a Bachelor of Science Degree in
Business Administration. From 1989 to 1994, he gained valuable
management experience in the liability insurance field as a
licensed property & casualty agent and field manager for
Liability Insurance Operations Network, Inc., and W.J. Plemons
Insurance Agency of Atlanta, GA, prior to joining the Company as
assistant Secretary of the Corporation and aide to the Chairman
in 1994. In 1995, Mr. Coppage became the Secretary of AMGC and
received an appointment to the AMGC Board of Directors. He has
studied corporate finance and marketing and has successfully
completed educational programs in the areas of SEC reporting of
public companies and shareholder and investor relations. He is
the Director of Shareholder Relations and assists in the
development, publishing and distribution of informational
materials on the Company.
Geoff Dawson - Director
Mr. Dawson, 55, accepted an appointment as an outside member
of the Board of Directors of AMGC on January 25, 1996. He is the
Non-Executive Chairman of Global Links Trading, Ltd., Chief
Executive Officer of R.S.P.D. International, Ltd., G.P.D.
Holdings, Ltd., and a Director of Promindus BVBA (Belgium),
George Philips Holdings, Ltd. and ACCRESS BVBA (Belgium). Mr.
Dawson has wide experience in international business with an
emphasis on real estate investments and international trade
projects in developing countries. He is a British citizen and a
graduate of the Chambers College of Engineering and the
Northhampton School of Architecture. From 1980 to 1990, Mr.
Dawson was a Director of the European Property Trust. His
present duties at R.S.P.D. International, Ltd. include
initiating, building and expanding the Company's acitivites
throughout Europe and in South Africa as a major real estate
investment, development and trading company.
Joe Lee - Director
Mr. Lee, 58, accepted an appointment as an outside member of
the Board of Directors of AMGC on January 25, 1996. He is
Chairman of the Board of Directors of Denver Business College,
Inc., General Manager of Universal Management, Inc., President of
School Management, Inc. and the General Partner of The
Educational Plaza, a 110,000 square foot private educational
facility located in Denver, Colorado. Mr. Lee has expertise in
the administration and management of independent colleges and
schools, with a special emphasis on financial and staff personnel
management. He is a past president and past commissioner of the
Association of Independent Colleges and Schools. From 1973 to
1982, Mr. Lee owned and operated Parks College, Inc., formerly
Parks School of Business, in Denver, Colorado. From 1984 to 1986
he was Chairman of Trend Systems, Inc., where he supervised the
operation of nine schools and three branch campuses in the states
of Washington and Oregon. Mr. Lee's present duties as Chairman
of Denver Business College, Inc. include overall responsibility
for operation of the main campus and three branch campuses. Mr.
Lee is also a Director of Prides Business College in Adelaide,
South Australia.
None of the above directors have held any equity stake in
any business that has declared bankruptcy; nor have been
convicted of any criminal offense other than minor traffic
violations, nor have had any judgements entered against them
which would restrict or preclude the director from being involved
in securities transactions; nor have any record of violations of
securities or commodities laws.
Compliance with Section 16(a) of the Securities Exchange Act of
1934
Section 16(a) of the Securities Exchange Act of 1934
requires the Company's executive officers and directors to file
initial reports of ownership and reports of changes in ownership
with the Securities Exchange Commission. Executive officers and
directors are required by SEC regulations to furnish the Company
with copies of all Section 16(a) forms they file. Based solely
on a review of the copies of such forms furnished to the Company
and written representations from the Company's executive officers
and directors, as of the date of this report, the Company is
unable to make a determination as to whether or not any officers
or directors failed to file on a timely basis any reports
relating to transactions involving common stock of the Company
owned by them. The Company has implemented internal procedures
for the purpose of determining whether officers or directors have
failed to file timely reports relating to transactions involving
common stock of the Company, and, if necessary, to file any such
reports in the appropriate time and manner.
Item 10. Executive Compensation
The following table sets forth the salary, bonus and other
compensation approved by Board of Directors of the Company for
the President and the Company's four other most highly
compensated executive officers (the "named executive officers").
<TABLE>
<CAPTION>
<S> <C> <C>
Name and Position Annual Compensation Long Term Compensation
Salary Securities
Underlying Options (1)
Norman L. Fisher $113,960 (2) $500,000
President and Treasurer
President & CEO of EHI
Valerie A. Fisher $123,527 (2) $100,000
Vice President
Executive Vice President of EHI
Cory J. Coppage $46,512 (3) $100,000
Chief Operating Officer
and Secretary
</TABLE>
(1) All stock options as indicated above were established by the
Compensation Committee of the Company on April 3, 1996 at a fair
market value of $0.76 per share. The options carry an exercise
price of $1.00 per share and were ratified at the annual meeting
held on June 27, 1996. As of June 30, 1996, none of the stock
options have been exercised. (See "Part I. Item 4 - Submission
of Matters for a Vote of Security Holders").
(2) Indicates salary paid by the Company's wholly owned
subsidiary, Eleventh Hour, Inc. Mr. and Mrs. Fisher are full
time employees of EHI.
(3) Indicates salary paid by the Company's wholly owned
subsidiary, Eleventh Hour, Inc. Mr. Coppage is a full time
employee of the Company and EHI charges this expense back to
AMGC.
Other Compensation
Additional compensation paid to officers of the Company
during fiscal 1996 included salary and expenses of $18,900 to B.
Greg Bohannon, C.P.A., who served as interim Chief Financial
Officer from January 25, 1996 to June 14, 1996. The compensation
was paid subsequent to June 30, 1996 in the form of 15,000
restricted common AMGC shares at $1.00 per share, with the
balance of $3,900 to be paid in cash or by note in the future.
On January 25, 1996, Mr. Bohannon received a stock award of
50,000 restricted common AMGC shares as consideration for joining
the Company and entered into a stock purchase agreement for an
additional 50,000 restricted common AMGC shares. The fair
market value of the stock as determined by the Board on January
25, 1996 was $0.25 per share. The stock purchase was made with a
one year collateralized note of $12,500 which was accelerated and
paid in full on June 27, 1996. (See Item 12. "Certain
Relationships and Related Party Transactions").
Mickey E. Fouts, former interim Chairman and Chief Executive
Officer, received compensation of $34,667, including salary and
expenses for the period January 17, 1996 to June 27, 1996. On
January 17, 1996, Mr. Fouts entered into a stock purchase
agreement for 300,000 restricted common AMGC shares at $0.17 per
share, the fair market value of the stock as determined by the
Board on that date. The purchase was made with a one year
collateralized note which was accelerated and paid in full on
June 27, 1996. (See Item 12. "Certain Relationships and Related
Party Transactions").
During fiscal 1996, Mary Y. Hartley, Vice President and
Controller of EHI, received salary of $66,865 and stock options
under the Equity Incentive Plan of 100,000 shares with an
exercise price of $1.00 per share. As of June 30, 1996, the
options have not been exercised and the stock has not been
issued. (See "Part I. Item 4 - Submission of Matters for a Vote
of Security Holders - Equity Incentive Plan").
Other fiscal 1996 compensation for Norman L. Fisher, as CEO
and President of EHI included life insurance premiums of
$2,792.40 for an Executive Key Man Life Insurance Policy paid to
First Colony Life Insurance Company. The premiums were paid by
EHI and expensed to AMGC. During fiscal 1996, the Company
provided group medical insurance to AMGC officers and employees
under EHI's health plan: secretary and C.O.O., Cory J. Coppage,
former treasurer Gary Flater, former CEO, Mickey E. Fouts and
former AMGC CFO, B. Greg Bohannon. The plan, which is offered
through InterCare of Colorado, Inc., provides life, medical,
dental and disability coverage at an average cost of
approximately $245 monthly per individual. The individuals were
covered by the Company under EHI' plan during their respective
terms of service. All premiums were paid by EHI and charged as
an expense back to the Company. Norman and Valerie Fisher were
covered under the same plan as full time employees of EHI.
The Company made no contributions to any Defined
Contribution Benefit Plans on behalf of its employees in fiscal
1996, other than provision of insurance coverages as described
above.
Meetings of the Board of Directors
On January 17, 1996, the Board of Directors nominated Mr.
Geoff Dawson and Mr. Joe Lee to serve as independent outside
members of the AMGC Board of Directors. During fiscal 1996, the
expanded AMGC Board convened on two occasions at the principle
offices of the Company: on March 27, 1996 and June 26, 1996. In
total, there were four meetings held by the AMGC Board during
fiscal 1996. There were no incumbent directors who attended less
than 75% of the meetings of the Board and Committees thereof on
which such director served during that period.
Director Agreements and Compensation
On March 27, 1996, the Company executed outside director
agreements with Mr. Dawson and Mr. Lee. The agreements, which
became effective on January 17, 1996, provide for a three year
term of service and compensation in the form of non-qualified
stock options of 25,000 shares per director. Additionally,
directors receive $1,600 for attending each of the four quarterly
scheduled meetings of the Board, plus expenses. Compensation for
meeting attendance is payable at the Company's option in cash or
in equivalent AMGC restricted common shares set at the market
price on the day of issue. Directors who are U.S. residents are
entitled to participate in the Company's health and welfare
benefit programs. Employee directors are not entitled to receive
compensation for Board service. During fiscal 1996, no
compensation was paid or distributed to any directors of the
Company. Subsequent to fiscal year ended June 30, 1996, Mr.
Dawson received $3,200 for Board meetings attended on March 27,
1996 and June 26, 1996.
Item 11. Security Ownership of Certain Beneficial Owners and
Management
Stock Ownership
The following table sets forth certain information regarding
the beneficial and economic ownership of AMGC common stock as of
June 30, 1996 by: (1) each stockholder known by the Company to be
the beneficial owner of more than 5% of the outstanding Common
Stock; (2) each director and nominee for director; (3) all
directors and executive officers as a group. The beneficial
ownership reflected in the following table is calculated in
accordance with Section 13(d) of the Securities Exchange Act of
1934 (the "Exchange Act"). Shares issuable on exercise of
options exercisable within 60 days of June 30, 1996 are deemed to
be outstanding for the purpose of computing the percentage of
ownership of persons beneficially owning such options, but have
not been deemed to be outstanding for the purpose of computing
the percentage ownership of any other person. As of June 30,
1996, the total outstanding shares of the Company's common stock
were 7,601,321.
<TABLE>
<CAPTION>
<S> <C> <C>
Name and Address Number of Shares Held Percent of Class
Norman L. Fisher,
President and Treasurer 1,053,479 (a)(b) 13.8 %
5002 Mineral Circle
Littleton, CO 80122
Valerie A. Fisher,
Vice President 635,229 (b)(c) 8.4 %
5002 Mineral Circle
Littleton, CO 80122
Cory J. Coppage,
Chief Operating Officer
and Secretary 150,000 (d) 1.9 %
7255 E. Quincy Ave, #550
Denver, CO 80237
Geoff Dawson, Director 1,750,000 (e)(f)(h)(i) 23.0 %
22 Kings Court South
Chelsea Manor Gardens
London, England SW3-5EG
Joe Lee, Director 25,000 (g) .03 %
4250 S. Olive Street, #216
Denver, CO 80237
Mick Dragoo, Shareholder 1,110,050 14.6 %
8634 S. Willow
Tempe, AZ 85284
George & Philips Holdings,
Ltd., Shareholder 1,275,000 (h) 16.7 %
P.O. Box 438
Roadtown, Tortola BWI
GPD Holdings, Ltd., Shareholder 450,000 (i) 5.9%
c/o Consolidated Services
P.O. Box HM 2257
Hamilton, Bermuda HM JX
Officers and Directors
as a Group (five persons) 3,078,479 (j) 39%(j)
</TABLE>
(a) Includes options to purchase 500,000 shares.
(b) Includes 535,229 shares held jointly by Mr. and Mrs. Fisher,
who are married.
(c) Includes options to purchase 100,000 shares.
(d) Includes options to purchase 100,000 shares.
(e) Includes options to purchase 25,000 shares.
(f) As of June 30, 1996, Mr. Dawson's beneficial ownership of
record as indicated above includes the corporate AMGC
shareholdings of George & Philips Holdings, Ltd. See footnote
(h)(i) below.
(g) Includes options to purchase 25,000 shares.
(h) Mr. Dawson is a managing director of George & Philips
Holdings, Ltd. The Company believes Mr. Dawson shares the voting
rights to and exercises certain voting authority over these
shares.
(i) Mr. Dawson is a managing director of GPD Holdings, Ltd. The
Company believes Mr. Dawson shares the voting rights to and
exercises certain voting authority over these shares.
(j) Includes all shares depicted except for those shares held by
Mick Dragoo, who is neither an officer nor director, and 535,229
shares held jointly by Mr. and Mrs. Fisher and added in the
calculation as such.
All ownership is beneficial and of record except as
specifically indicated otherwise. Beneficial owners listed above
have sole voting and investment power with respect to the shares
shown unless otherwise indicated. Economic interest is
calculated by including shares directly owned and, in the case of
individuals and all directors and executive officers as a group,
shares such individuals or group are entitled to receive upon
exercise of outstanding options exercisable within 60 days of
June 30, 1996. The economic interest and security ownership
indicated above includes qualified and non-qualified stock
options awarded by the Company to certain key executives on or
before April 3, 1996. Beneficial ownership is calculated in
accordance with Section 13(d) of the Exchange Act and the rules
promulgated thereunder.
Item 12. Certain Relationships and Related Transactions
Subsequent to June 30, 1996, the Company entered into a note
payable with an employee in the amount of $35,000. The note
provides for monthly interest payments at 14% through April 1997
when all principle and unpaid interest is due. The note is
convertible into restricted common stock in $10,000 increments at
a conversion price equal to 65% of the average bid price during
the thirty days prior to conversion.
During fiscal 1996, 400,000 shares of common stock were
issued to officers for services. During fiscal 1995, 1,231,167
shares of common stock were issued to either board of directors
members or related companies due to common board members for
services rendered. Conversion and cash proceeds from related
party stock issuance were $185,650.
(See "Certain Relationships and Related Party Transactions" and
"Notes to Consolidated Financial Statements - Note 10".)
PART IV
Item 13. Exhibits, Financial Statement Schedules and Reports on
Form 8-K
(a)(1) and (a)(2) List of Financial Statements and Schedules
(a)(3) List of Exhibits (in accordance with Item 601 of
Regulation S-B).
Exhibit Number Description of Exhibit
3.1 Articles of Incorporation of the Company*
3.2 Bylaws of the Company*
3.3 Material Contracts
3.4 1996 Annual Proxy Statement
3.5 Financial Data Schedule
* (Incorporated by reference to the Company's Form S-4
Registration Statement, effective with the Commission on August
7, 1987, file number 33-13335).
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933, the Registrant certifies that it has reasonable grounds
to believe that it meets all of the requirements for filing on
Form S-8 and has duly caused this amendment to its
registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of
Englewood, County of Arapahoe, State of Colorado, on this 16th
of October, 1996.
Registrant:
AMERICAN CONSOLIDATED
GROWTH CORPORATION
By: /s/ Norman L. Fisher
Norman L. Fisher, President, Treasurer and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of
1933, this amendment to registration statement has been signed
below by the following persons in the capacities and on the
date indicated.
Signature Title Date
/s/ Norman L. Fisher President, Chief Executive October 16, 1994
Norman L. Fisher Officer, Treasurer (Principal
Accounting Officer) and Director
/s/ Valerie A. Fisher Vice President and Director October 16, 1994
Valerie A. Fisher
/s/ Cory J. Coppage Chief Operating Officer, October 16, 1994
Cory J. Coppage Secretary and Director
