6
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For Quarter Ending September 30, 1996
Commission File Number 0-16447
AMERICAN CONSOLIDATED GROWTH CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 52-1508578
(State of incorporation ) (I.R.S.
Employer ID Number)
8100 E. Arapahoe Road, Suite 309, Englewood, CO 80112
(Address of principal executive offices) (zip code)
(303) 220-8686
(Registrant'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 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 [ ]
As of September 30, 1996, 7,902,670 common shares, $0.10 par
value per share, were outstanding.
AMERICAN CONSOLIDATED GROWTH CORPORATION
and Wholly Owned Subsidiaries
INDEX
Part I FINANCIAL INFORMATION
Item 1. Consolidated Balance Sheets 3
September 30, 1995 and June 30, 1996
Consolidated Statements of Income 4
Three Months Ended September 30, 1996 and 1995
Consolidated Statements of Cash Flows 5
Three Months Ended September 30, 1996 and 1995
Consolidated Statement 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 9
Item 3. Default on Senior Securities 9
Item 4. Submission of Matters to a Vote of
Security Holders 9
Item 5. Other Information 9
Item 6. Exhibits and Reports on Form 8-K 9
Part III SIGNATURES 10
PART I.
ITEM 1. AMERICAN CONSOLIDATED GROWTH CORPORATION
(and Wholly Owned Subsidiaries)
CONSOLIDATED BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
September 30, 1996 June 30,1996
(unaudited)
<S> <C> <C>
Current assets
Cash $ 52,074 $ 156,067
Accounts receivable 851,586 1,060,389
Prepaid expenses 3,763 34,149
Total current assets 907,423 1,250,605
Furniture and equipment, net $ 178,969 $ 193,181
Other assets 20,723 20,723
Total assets $ 1,107,115 $ 1,464,509
LIABILITIES and SHAREHOLDERS' DEFICIT
Current liabilities
Current maturities of
long-term debt $ 113,136 $ 122,532
Common stock subject to
put option 76,600 84,724
Note payable 575,892 764,986
Notes payable - related party 223,700 206,700
Checks written in excess of
bank balance 190,105 115,610
Accounts payable 329,322 382,004
Accrued payroll 215,571 457,201
Accrued expenses - related party 55,630 84,248
Other current liabilities 141,530 84,750
Total current liabilities 1,921,486 2,302,755
Long-term debt $ 1,238,715 $ 1,230,594
Commitments and contingencies
Stockholders' 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.
7,877,315 shares issued
and outstanding $ 787,732 $ 757,597
Additional paid-in capital $29,622,942 $ 29,576,028
Accumulated deficit (32,463,760) (32,402,465)
(2,053,086) (2,068,840)
Total liabilities and
shareholders' deficit $ 1,107,115 $ 1,464,509
</TABLE>
AMERICAN CONSOLIDATED GROWTH CORPORATION
(and Wholly Owned Subsidiaries)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
1996 1995
<S> <C> <C>
Revenues $2,535,566 $2,405,010
Direct expenses 1,894,263 1,794,063
Gross margin 641,303 610,947
Other expenses
General and
administrative
expenses 565,386 545,604
Depreciation and amortization 15,616 21,014
Interest 121,596 80,295
702,598 646,913
(Loss) income from
continuing operations $ (61,295) $ (35,966)
Income (loss) per common share
From Continuing Operations $ (.01) $ (.01)
Weighted average shares
of common stock outstanding 7,705,489 7,180,086
</TABLE>
AMERICAN CONSOLIDATED GROWTH CORPORATION
(and Wholly Owned Subsidiaries)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
1996 1995
<S> <C> <C>
Cash flows from operating activities
Net loss $ (61,295) $(35,966)
Adjustments to reconcile net
loss to net cash used in
operations to net cash provided
by (used in) operating activities:
Depreciation and amortization
(including $9,797 from discontinued
operations in 1995) 15,616 21,014
Provision for losses on accounts
receivable
Loss on disposal of equipment
Settlement payments on unrecorded debt
Gain on sale of investments
Interest on put option conversion
Common stock issued for services
Impairment of investment in affiliates
and other investments
Changes in operating assets and
liabilities
Accounts receivable 208,803 106,120
Prepaid expenses 30,386 12,000
Other assets - 12,890
Accounts payable and accrued
liabilities 78,593 (147,936)
Accrued wages (241,630) -
Net cash used in operating
activities 30,473 $ (31,878)
Cash flows from investing activities
Acquisition of equipment (1,404) (23,179)
Proceeds from sale of investment 263,992
Net change in due from
related parties (5,699)
Net cash provided by
investing activities $ (1,404) $ 235,114
Cash flows from financing activities
Net change in note payable (197,218) (76,125)
Proceeds from related party
note payable (11,618)
Payments on due to related parties
Proceeds from long-term debt (1,275)
Principal payments on long-term debt (137,488)
Payments on capital lease obligations (1,400)
Payments on common stock subject
to put option (8,881)
Proceeds from issuance of common
stock 77,049 16,500
Net cash provided by
(used in) financing
activities (133,062) $(207,394)
Net increase (decrease) in cash (103,993) (4,158)
Cash at June 30, 156,067 4,158
Cash at September 30, $ 52,074 0
</TABLE>
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 does 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) 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-KSB/A for the year ended June 30, 1996.
ITEM 2: Management's Discussion and Analysis
In the fiscal quarter ending September 30, 1996, the Company
was primarily engaged in the financial development of its
subsidiary business, Eleventh Hour, Inc. ("EHI"). For the three
month period just ending, the Company produced revenues of
$2,535,566 with a net loss of ($61,295). The loss was attributed
to costs associated with the restructuring of AMGC and the
settlement of professional service fees provided by third
parties.
In the opinion of management, the Company has progressed
significantly as compared to the period ending. Following the
reduction of short term debt obligations of $1,599,296 in the
prior quarter, management has been engaged in negotiations to
secure new financing for EHI's accounts receivables. Subsequent
to September 30, 1996, a new line of credit of up to $1.5 million
has been provided by Concord Growth Corporation of Palo Alto,
California. The Company has been able to successfully continue
operations, to improve its position in the marketplace, to
acquire outside consulting expertise and to strengthen its
marketing strategies. All of these efforts have been made for
the purpose of increasing shareholders' equity and profitability
on a going forward basis. In the fiscal year ending June 30,
1996, such 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.
Liquidity and Capital Resources
Cash and cash equivalent's balance on September 30, 1996 was
$52,074 and current assets were $907,423. As of September 30,
1996, the Company had a working capital deficiency of $1,014,063
and a stockholders' deficit of $2,053,086, 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. In 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.
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 does 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) 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-KSB/A for the year ended June 30, 1996.
ITEM 2: Management's Discussion and Analysis
In the fiscal quarter ending September 30, 1996, the Company
was primarily engaged in the financial development of its
subsidiary business, Eleventh Hour, Inc. ("EHI"). For the three
month period just ending, the Company produced revenues of
$2,535,566 with a net loss of $(61,295), compared to revenues of
$2,405,010 and a loss of $(35,966) for the same period in 1995.
The loss was attributed primarily to costs associated with
settlement of professional services provided by third parties. In
the opinion of management, the Company has progressed
significantly as compared to the period ending September 30,
1995. Following the reduction of short term debt obligations of
$1,599,296 in March of 1996, which helped to improve cash flow
for EHI, management has been engaged in negotiations in the
current period to secure new financing for EHI's accounts
receivables. As of the date of the filing of this report, a new
$1.5 million line of credit has been secured with Concord Growth
Corporation.
As of September 30, 1996, the Company has been able to
successfully continue operations, to improve its position in the
marketplace, to acquire outside consulting expertise and to
strengthen its marketing strategies. All of these efforts have
been made for the purpose of increasing shareholders' equity and
profitability on a going forward basis. For the most recent
fiscal year ending June 30, 1996, such 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.
Liquidity and Capital Resources
Cash and cash equivalent's balance on September 30, 1996 was
$52,074 and current assets were $907,423. As of September 30,
1996, the Company had a working capital deficiency of $1,014,063
and a stockholders' deficit of $2,053,086, which includes non-
recurring losses of $7,976,740 in fiscal 1995 sustained due to
the write down and liquidation of certain technology assets and
resolution of outstanding issues related to the former business
of the Company. Although the Company continues to experience
working capital difficulties, in Management's opinion, assuming
EHI 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.
PART II.
ITEM 1. 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 September 30, 1996, the Company is unable to determine 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.
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. Although no formal suit
has been filed, the Company believes the inquiry 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 determine 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. A meeting was scheduled on October 9, 1996,
to be 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 2. Changes in Securities
(a) Security Ownership of Certain Beneficial Owners and
Management: the following sets forth the number of shares of the
Registrant's $0.10 par value common stock beneficially owned by:
(1) each person who, as of September 30, 1996, was known by the
Company to own beneficially more than five percent (5%) of its
common stock; (2) the individual Directors of the Registrant; and
(3) the Officers and Directors of the Registrant as a group. The
outstanding shares as of September 30, 1996 was 7,902,670.
Name and Address Number of Shares Held Percent of Class
Norman L. and Valerie A. Fisher 1,153,479 (a) 14.5 %
5002 Mineral Circle
Littleton, CO 80122
Cory J. Coppage 150,000 (b) 1.8 %
7255 E. Quincy Ave, #550
Denver, CO 80237
Geoff Dawson 1,750,000 (c)(d) 22.0 %
22 Kings Court South
Chelsea Manor Gardens
London, England SW3-5EG
Joe Lee 25,000 (e) .03 %
4250 S. Olive Street, #216
Denver, CO 80237
Mick Dragoo 1,110,050 14.0 %
8634 S. Willow
Tempe, AZ 85284
George & Philips Holdings, Ltd. 1,275,000 16.1 %
P.O. Box 438
Roadtown, Tortola BWI
GPD Holdings, Ltd. 450,000 5.6%
c/o Consolidated Services
P.O. Box HM 2257
Hamilton, Bermuda HM JX
(a) Includes options to purchase 600,000 shares. All shares are
held jointly by Mr. and Mrs. Fisher, who are married.
(b) Includes options to purchase 100,000 shares.
(c) Includes options to purchase 25,000 shares.
(d) Mr. Dawson's beneficial ownership of record includes
corporate ownership of AMGC shareholdings of George & Philips
Holdings, Ltd. and GPD Holdings, Ltd., as shown above. Mr.
Dawson is a managing director of both companies and represents
such interests as an outside director of the AMGC Board.
(e) Includes options to purchase 25,000 shares.
(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 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.
(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 of September 30, 1996, the Company is in arears on
$88,351 in redeemable common stock and is negotiating for the
settlement and conversion of this amount with third parties into
restricted common AMGC stock and/or seven year promissory notes
bearing 14% interest annually.
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 September 30, 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 July 3, 1996 hereby incorporated by reference.
8-K dated April 3, 1996 hereby incorporated by reference.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> SEP-30-1996
<CASH> 52,074
<SECURITIES> 0
<RECEIVABLES> 851,586
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 907,423
<PP&E> 178,969
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,107,115
<CURRENT-LIABILITIES> 1,921,486
<BONDS> 0
0
0
<COMMON> 787,732
<OTHER-SE> (2,840,818)
<TOTAL-LIABILITY-AND-EQUITY> 1,107,115
<SALES> 2,535,566
<TOTAL-REVENUES> 2,535,566
<CGS> 0
<TOTAL-COSTS> 2,475,265
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 121,596
<INCOME-PRETAX> (61,295)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (61,295)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
