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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
Quarterly Report Under Section 13 or 14(d) of the
Securities Exchange Act of 1934
FOR QUARTER ENDING MARCH 31, 1996
COMMISSION FILE NUMBER: 0-16447
AMERICAN CONSOLIDATED GROWTH CORPORATION
and Wholly Owned Subsidiaries
(Exact name of small business issuer as specified in its charter)
DELAWARE 52-1508578
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(State of incorporation) ( IRS Employer ID number)
8100 EAST ARAPAHOE ROAD, SUITE 309, ENGLEWOOD, COLORADO 80112
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(Address of principal executive offices) (zip code)
303-220-8686
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(Issuer's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such fling
requirements for the last 90 days.
YES X NO
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As of March 31, 1995, 7,739,181 common shares, $.10 par value per share were
outstanding.
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AMERICAN CONSOLIDATED GROWTH CORPORATION
AND WHOLLY OWNED SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION PAGE #
Item 1. CONSOLIDATED BALANCE SHEETS 3
MARCH 31, 1996 AND JUNE 30, 1995
CONSOLIDATED STATEMENTS OF INCOME 4
NINE MONTHS ENDED MARCH 31, 1996 AND 1995
CONSOLIDATED STATEMENTS OF CASH FLOWS 5
NINE MONTHS ENDED MARCH 31, 1996 AND 1995
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS'
EQUITY ( DEFICIT) 6
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS 7
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS 8
Item 2. CHANGES IN SECURITIES 8
Item 3. DEFAULT ON SENIOR SECURITIES 9
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS 9
Item 5. OTHER INFORMATION 9
Item 6. EXHIBITS AND REPORTS ON FORM 8-K 9
PART III. SIGNATURES 10
2
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PART 1.
ITEM 1.
AMERICAN CONSOLIDATED GROWTH CORPORATION
(and Wholly Owned Subsidiaries)
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
ASSETS 31-MAR-96 30-JUN-95
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(UNAUDITED)
<S> <C> <C>
Current Assets
Cash 0 4,158
Accounts Receivables 765,807 1,025,982
Due from Related Parties 38,875 7,310
Prepaid Expenses 5,030 12,000
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Total Current Assets $ 809,712 $ 1,049,450
Furniture and Equipment, Net 201,505 243,480
Investments 0 263,992
Other Assets 6,357 24,018
Total Assets $ 1,017,574 $ 1,580,940
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LIABILITIES and SHAREHOLDERS' DEFICIT
Current Liabilities
Note Payable - Finance Company 519,924 715,355
Note Payable - Officers 136,645 0
Current Portion of Common Stock Subject To Put Option 0 1,047,227
Current Portion of Long Term Debt 93,136 374,113
Current Portion of Capital Lease Obligation 0 6,588
Accounts Payable 198,339 225,593
Accrued Wages-Related Parties 0 446,259
Other Accrued Expenses 504,933 510,468
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Total Current Liabilities $ 1,452,977 $ 3,325,603
Long-Term Debt 1,317,978 95,514
Capital Lease Obligation 0 20,213
Common Stock Subject To Put Option 0 523,614
Stockholder's Deficit
Series A, preferred stock, $0.10 par value;
40,000,000 shares authorized.
No shares issued and outstanding.
Common Stock, $0.10 par value;
40,000,000 shares authorized.
7,162,520 shrs. outstanding at June 30, 1995 and
and 7,739,181 shrs. outstanding at March 31, 1996. 773,918 716,252
Additional Paid-In-Capital 29,169,041 28,600,435
Retained Deficit (31,696,340) (31,700,691)
Total Liabilities and Shareholder's Deficit $ 1,017,574 $ 1,580,940
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</TABLE>
3
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AMERICAN CONSOLIDATED GROWTH CORPORATION
(and Wholly Owned Subsidiaries)
CONSOLIDATED STATEMENTS OF OPERATIONS
NINE MONTHS ENDED
MARCH 31,
1996 1995
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Revenues $ 6,528,021 $ 7,798,935
Direct Expenses 4,804,525 5,808,452
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Gross Margin $ 1,723,496 $ 1,990,483
Other Expenses
General & Administration 1,972,971 2,769,682
Depreciation & Amortization 39,743 53,135
Interest 277,617 210,846
LOSS FROM CONTINUING OPERATIONS $ (566,835) $(1,043,180)
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Investment Income/Loss 174,029 (1,386,195)
Other Income/Loss 397,157 0
NET INCOME (LOSS) $ 4,351 $(2,429,375)
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Earnings (Loss) Per Share
From Continuing Operations ($0.08) ($0.17)
Equivalent Shares 7,530,429 6,122,500
4
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AMERICAN CONSOLIDATED GROWTH CORPORATION
(and Wholly Owned Subsidiaries)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
MARCH 31,
1996 1995
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) $ 4,351 $(2,429,375)
Adjustments To reconcile Net Income (Loss)
to Net Cash Provided by (used in) Operating Activities
Depreciation and Amortization 39,743 14,523
(Increase) Decrease in Due from Related Parties (31,565) (3,061)
(Increase) Decrease in Accounts Receivables 260,175 (7,263)
(Increase) Decrease in Prepaid Expenses 6,970 13,198
(Increase) Decrease in Other Assets 19,893 46,416
Increase (Decrease) in Accounts Payable (27,254) 47,889
Increase (Decrease) in Notes Payable (65,374) 0
Increase (Decrease) in Accrued Expenses (5,535) 0
Increase(Decrease) in Accrued Wages (446,259) 0
Repayment of Long Term Debt (649,567) 0
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Net Cash Provided by (used in) Operating Activities $ (894,422) $(2,317,673)
CASH FLOWS FROM INVESTING ACTIVITIES $ 263,992 $ 2,322,805
CASH FLOWS FROM FINANCING ACTIVITIES $ 626,272 $ -
NET INCREASE (DECREASE) IN CASH $ (4,158) $ 5,132
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CASH AT THE BEGINNING OF YEAR $ 4,158 $ 167
CASH AT MARCH 31, 1996 $ - $ 5,299
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</TABLE>
5
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AMERICAN CONSOLIDATED GROWTH CORPORATION
(and Wholly Owned Subsidiaries)
CONSOLIDATED STATEMENT OF CHANGES STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
TOTAL
COMMON STOCK ADDITIONAL ACCUMULATED STOCKHOLDERS'
SHARES AMOUNT PAID-IN-CAPITAL DEFICIT EQUITY(DEFICIT)
------ ------ --------------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
BALANCE, JUNE 30, 1995 7,162,520 716,252 28,600,435 (31,700,691) (2,384,004)
COMMON STOCK ISSUE IN PAYMENT OF DEBT 28,667 2,867 56,633 59,500
NET LOSS (35,966) (35,966)
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BALANCE, SEPTEMBER 30, 1995 7,191,187 719,119 28,657,068 (31,736,657) (2,360,470)
COMMON STOCK ISSUED FOR SERVICES 112,161 11,216 39,530 50,746
COMMON STOCK ISSUED IN PAYMENT OF DEBT 5,750 575 1,300 1,875
COMMON STOCK RETURNED TO TREASURY 30,789 3,079 3,079
NET LOSS (215,538) (215,538)
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BALANCE, DECEMBER 31, 1995 7,339,887 733,989 28,697,898 (31,952,195) (2,520,308)
COMMON STOCK ISSUED FOR SERVICES 400,000 40,000 36,000 76,000
COMMON STOCK ISSUED IN PAYMENT OF DEBT 600,971 60,097 435,143 495,240
COMMON STOCK RETURNED TO TREASURY (601,677) (60,168) (60,168)
NET INCOME 255,855 255,855
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BALANCE, MARCH 31, 1996 7,739,181 773,918 29,169,041 (31,696,340) (1,753,381)
</TABLE>
6
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AMERICAN CONSOLIDATED GROWTH CORPORATION
(AND WHOLLY OWNED SUBSIDIARIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. MANAGEMENT REPRESENTATION
The accompanying unaudited interim financial statements have been prepared
in accordance with the instructions to form 10-QSB and do not include all the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of Management, all
adjustments (consisting of normal recurring accruals) and considered necessary
for a fair presentation have been included. The results of operations for any
interim period are not necessarily indicative of results for the year. These
statements should be read in conjunction with the financial statements and
related notes included in the Company's Annual Report to shareholders on form
10-K for the year ended June 30, 1995.
ITEM 2: MANAGEMENT'S DISCUSSION & ANALYSIS
RESULTS OF OPERATIONS
In the fiscal quarter ending March 31, 1996, the Company was primarily
engaged in the financial development of its subsidiary business. The Company
had a net loss from continuing operations of $(566,835) and overall net income
of $4,351 for the nine month period just ending. The net loss from continuing
operations was attributed to significant nonrecurring expenses at the parent
company level as well as external factors affecting AMGC's subsidiary, Eleventh
Hour, Inc. (EHI); increased competition for major accounts, an increase in the
cost of workers compensation insurance and unanticipated seasonal fluctuations
occurring in the permanent placement services portion of EHI's business. The
$4,351 in net income was attributed to the gain on sale of investments and the
write-off of $397,157 of Accrued Officers compensation.
In the opinion of management, the above described factors together with
internal restructuring measures implemented in the second and third quarters of
the current fiscal year have decreased performance in the short term. EHI
produced gross revenues of $ 6,528,021 for the current nine month period
compared to $ 7,798,935 in gross revenues for the same period in the prior year.
In considering the present and historical growth patterns demonstrated by the
U.S. staffing services industry, management believes EHI's operating revenue
volume will remain stable throughout fiscal 1996. For the fiscal year ending
June 30, 1995, the Company reported gross revenues of $10,372,461.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 1996, total current assets were $809,712.
The accompanying Consolidated Balance Sheet reflects non-recurring losses
recorded at fiscal year ended June 30, 1995, which the Company experienced from
non-performing assets other than Eleventh Hour, Inc. As of March 31, 1996, the
company had a working capital deficiency of $643,265 and a stockholders'
deficit of $31,696,340. In management's opinion, the Company has inadequate
working capital to pursue the business opportunities identified in its business
plan. As a result, the Company has authorized the implementation of secondary
financing measures in conjunction with the appointment of a mergers and
acquisitions committee recommended by the Board of Directors. Assuming the
subsidiary continues to be profitable and that efforts to obtain additional
sources of financing are successful, Management believes the Company will be
able to successfully meet all of its current obligations.
7
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PART II: OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS
As of March 31, 1996, the Company continues to review, with the assistance
of legal council, the facts and historical evidence available regarding AMGC's
former agreements and investments in Advanced Display Technologies, Inc.,
(ADTI). AMGC's management continues to believe that AMGC will initiate
comprehensive litigation to protect the interest and rights of Company's
shareholders.
ITEM 2: CHANGES IN SECURITIES
(a) Security Ownership of Certain Beneficial Owners and Management: The
following sets forth the number of the Registrant's $0.10 par value common stock
beneficially owned by; (I) each person who, as of March 31,1996, was known by
the company to own beneficially more than five percent (5%) of its common stock;
(II) the individual Directors of the Registrant, and (III) the Officers and
Directors of the Registrant as a group. The outstanding shares as of March 31,
1996 was 7,739,181.
NAME AND ADDRESS NUMBER OF SHARES PERCENT OF CLASS
Mickey E. Fouts 320,000 4.2%
AMGC CHAIRMAN AND CEO
3921 Bellaire Street
Denver, Colorado 80237
B. Greg Bohannon 100,000 1.3%
AMGC CHIEF FINANCIAL OFFICER
429 South Pennsylvania St.
Denver, Colorado 80209
Norman L. and Valerie A. Fisher 539,644 7.0%
EHI TREASURER AND VICE PRESIDENT (RESPECTIVELY)
5002 Mineral Circle
Littleton, CO 80122
Cory J. Coppage 50,000 0.7%
AMGC SECRETARY
7255 E. Quincy Ave. #550
Denver, CO 80237
Geoff Dawson* 1,725,000 22.3%
AMGC OUTSIDE DIRECTOR
22 Kings Court South,
Chelsea Manor Garden
London, England SW3-5EG
Joe Lee 0 0%
Outside Director
4250 South Olive Street, #216
Denver, Colorado 80237
Total by Officers and Directors 2,734,644 35.9%
as a group.
8
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ITEM 2: CHANGES IN SECURITIES - CONTINUED
* Note: Mr. Geoff Dawson's beneficial ownership of record as indicated above
represents corporate ownership of the AMGC shares held by GPD Holdings Ltd.
(450,000 shares) and George & Phillips Holdings Ltd. (1,275,000), respectively.
Mr. Dawson is a managing director of both companies and represents such
interests in his capacity as an outside director of the company.
Mick Dragoo (& Related Parties) 1,110,050
8634 South Willow
Tempe, AZ 85284
GPD Holdings, Ltd. 450,000
c/o Consolidated Services Ltd.
P.O. Box HM 2257
Hamilton, HM JX, Bermuda
George & Phillips Holdings Ltd. 1,275,000
P.O. Box 438
Roadtown, Tortola BWI
(1) All ownership is beneficial and of record except as specifically
indicated otherwise.
(2) Beneficial owners listed above have sole voting and investment power
with respect to shares shown unless otherwise indicated. As described above,
Mr. Geoff Dawson is a managing director of GPD Holdings, Ltd. and George &
Phillips Holdings, Ltd. The Company believes he represents the interest of
these shareholders and exercises voting authority and control over such
shareholdings.
(3) Beneficial ownership is calculated in accordance with section 13(d) of
the Exchange Act and the rules promulgated thereunder.
ITEM 3: DEFAULT ON SENIOR SECURITIES
As reported in the April 4, 1996 Form 8-K, the company executed
Subscription Agreements with certain AMGC debt holders and converted $1,599,563
short term debt to 368,702 in AMGC restricted common stock and $1,230,861 to a
14%, seven year promissory note. The Company is in final negotiations on the
conversion of the remaining $88,351 in redeemable commonstock on which the
company currently in arrears.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Security Holders during this
reporting period.
ITEM 5: OTHER INFORMATION
As of March 31, 1996, the Company had no other reportable events which were
not previously disclosed in the below referenced Form 8-K.
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
8-K dated February 1,1996 hereby incorporated by reference.
8-K dated April 3, 1996 hereby incorporated by reference.
9
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SIGNATURES
Pursuant to the requirements of Section 14 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized on the 14th day of
February, 1996.
AMERICAN CONSOLIDATED
GROWTH CORPORATION
MICKEY E. FOUTS
BY: /s/ Mickey E. Fouts
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MICKEY E. FOUTS
CHAIRMAN & CHIEF EXECUTIVE OFFICER
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant in the capacities and on the date indicated above.
AMERICAN CONSOLIDATED
GROWTH CORPORATION
MICKEY E. FOUTS
BY: /s/ Mickey E. Fouts
------------------------------
MICKEY E. FOUTS
CHAIRMAN & CHIEF EXECUTIVE OFFICER
10
