SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB/A-2
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Fiscal Year Ended: Septmber 30, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Transition Period From ____ to ____
Commission File Number: 033-20848-D
CONDOR CAPITAL, INC.
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(Exact name of Registrant as specified in its charter)
Nevada 91-2301401
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(State or other jurisdiction of (I.R.S. Employer I.D. Number)
Incorporation or organization)
3753 Howard Hughes Pkwy, Suite 2012, Las Vegas, Nevada 89109
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(Address of principal executive offices) (Zip Code)
(702) 892-3730
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(Registrant's Telephone number, including area code)
Securities Company pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.001 per share
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(Title of Class)
Indicated by check mark whether the Registrant has (1) filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
during the preceding 12 months (or for such shorter period that the Company was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark 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 Company's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-KSB or any amendment to this Form 10-KSB. [X]
The issuer's revenues for the year ended September 30, 2000 were $0.00.
As of September 30, 2000 there were 20,155,010 shares of the Registrant's
Common Stock outstanding and the aggregate market value of such shares held by
non-affiliates of the Company (based on the closing bid of such shares on the
OTC Bulletin Board on September 30, 2000) was approximately $ 14,410,832.15 ($
0.715 per share).
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
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CONDOR CAPITAL, INC.
FORM 10-KSB
For The Fiscal Year Ended September 30, 2000
INDEX
PART I
Page
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Item 1. Description of Business ....................................... 3
Item 2. Description of Properties ..................................... 17
Item 3. Legal Proceedings ............................................. 17
Item 4. Submission of Matters to a Vote of Security Holders............ 17
PART II
Item 5. Market for Common Equity and Related Stockholder Matters........ 17
Item 6. Management Discussion and Analysis or Plan of Operation ........ 18
Item 7. Financial Statements ........................................... 20
Item 8. Changes in and Disagreements With Accountants on Accounting
and Financial Disclosures ...................................... 36
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act .............. 36
Item 10. Executive Compensation ......................................... 40
Item 11. Security Ownership of Certain Beneficial Owners
and Management ............................................... 42
Item 12. Certain Relationships and Related Transactions ................. 43
Item 13. Exhibits and Reports on Form 8-K ............................... 45
Signatures .............................................................. 46
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Forward-Looking Statements
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This Annual Report on Form 10-KSB and the documents incorporated herein by
reference contain forward-looking statements that have been made pursuant to the
provisions of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements are based on current expectations, estimates and
projections about Condor and its subsidiaries industry, management's beliefs,
and assumptions made by management. Words such as "anticipates," "expects,"
"intends," "plans," "believes," "seeks," "estimates," variations of such words
and similar expressions are intended to identify such forward-looking
statements. These statements are not guarantees of future performance and are
subject to certain risks, uncertainties and assumptions that are difficult to
predict; therefore, actual results and outcomes may differ materially from what
is expressed or forecasted in any such forward-looking statements. Such risks
and uncertainties include those set forth herein under "Risk Factors" on pages
13 through 20 as well as those noted in the documents incorporated herein by
reference. Unless required by law, Condor undertakes no obligation to update
publicly any forward-looking statements, whether as a result of new information,
future events or otherwise.
PART I
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ITEM 1. DESCRIPTION OF BUSINESS
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(a) General Development of Business.
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Condor Capital, Inc., (the "Company") is a corporation formed under the
laws of the State of Colorado on December 22, 1987 to evaluate, structure and
complete a merger with, or to acquire business prospects consisting of private
companies, partnerships or sole proprietorships.
By Prospectus dated June 8, 1988, the Company conducted a public offering
whereby it sold 30,000,000 Units at $0.01 per Unit, for net proceeds of
approximately $243,000. The public offering closed on October 20, 1988. Each
Unit consisted of one share of the Company's no par common stock and four (4)
Class A Common Stock purchase warrants. Each Class A Warrant entitled the holder
at a price of $0.02 per Class A Warrant exercised, to purchase one share of
Common Stock and one Class B Common Stock Purchase Warrant during the two year
period commencing June 8, 1988. Each Class B Warrant entitled the holder to
purchase one share of Common Stock at $0.03 per share during the three year
period commencing on June 8, 1988. The exercise period of the Class A Warrants
was extended from time to time but all extension periods have lapsed prior to
exercise of any Class A Warrants. Accordingly, all of the Class A Warrants and
Class B Warrants have expired by their terms.
On October 27, 1989, the Company and Redding Acquisition Corp., a New York
corporation, and B. Meyers & Company, the sole shareholder of Redding
("Redding's Shareholder") entered into an agreement whereby Redding was to
become a wholly owned subsidiary of the Company. In connection therewith, the
Company was to issue 133,100,000 restricted shares of its no par value common
stock and 141,100 shares of its Class A no par preferred stock to Redding's
Shareholder, in exchange for all of the issued and outstanding shares of
Redding.
Redding Acquisition Corp. intended to acquire a television station using
the Company's capital. Management of Redding represented to management of the
Company that they were prepared to conclude an acquisition for an identified
television station.
On October 27, 1989, pursuant to the terms of the agreement, Messrs. Dale
B. Carson, Robert M. Geller and Sanford L. Schwartz resigned as officers and
Directors of the Company, and Mr. Allen R. Goldstone resigned as President while
remaining on the Board of Directors. Messrs. Tom LaRousch and Bill O'Callaghan
were elected President and Secretary/Treasurer, respectively, and were also
appointed to the Board of Directors.
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On November 17, 1989, the Company's shareholders, at a special meeting,
replaced the new Board of Directors with Messrs. Goldstone, Geller and Schwartz,
which Directors then replaced Messrs. LaRousch and O'Callaghan with Mr.
Goldstone as President, Mr. Geller as Vice President and Mr. Schwartz as
Secretary and Treasurer of the Company. These Directors also resolved on
November 17, 1989, that it would be in the best interest of the Company and its
shareholders to seek rescission of the Company's acquisition of Redding and to
recover as much of the Company's remaining funds as possible.
The Board of Directors' decision to seek rescission was based upon the
Board's opinion that the officers appointed pursuant to the October 27, 1989
Agreement could not or would not satisfactorily perform their duties and that
the continuation of Redding Acquisition Corp. as a wholly owned subsidiary of
the Company did not sufficiently improve the Company's ability to further its
business plan nor advance the interests of shareholders so as to justify the
number of shares to be issued to Redding's Shareholder, nor justify the further
expenditure of its capital pursuant to the business plan of the Redding
appointed management.
On December 20, 1989, the Company entered into a settlement agreement with
Redding, Meyers and the former officers, directors, shareholder and/or
consultant of Redding whereby the Acquisition Agreement of October 27, 1989 was
rescinded, the shares to be issued to Redding and to Meyers were canceled and
approximately $160,000 was returned to the Company.
On December 14, 1989, the Company entered into a letter of intent with
Aviation Management Group, Inc. ("AMG"), pursuant to which the Company proposed
to acquire 100% of the issued and outstanding common stock of AMG in exchange
for 160,000,000 restricted shares of the Company's no par value common stock and
140,000 shares of the Company's convertible preferred stock.
The definitive agreement with AMG and its shareholders was executed on
January 22, 1990. Pursuant to the agreement, 160,000,000 shares of the Company's
no par value common stock and 140,000 shares of the Company's Class B
convertible preferred stock were issued to the shareholders of AMG in exchange
for 100% of the outstanding common stock of AMG. Sixty million (60,000,000)
shares of the Company's no par value common stock issued to the AMG shareholders
were placed in escrow with legal counsel to the Company at that time to be
released if and when the Company at that time became listed for trading on the
National Association of Securities Dealers Automated Quotation (NASDAQ) system
by January 25, 1994. The Company's Board of Directors set the preferences of the
Class B convertible preferred stock as a $0.01 per preferred share liquidation
preference prior to a distribution of liquidated assets to common stock,
conversion of 40,000 shares of the Class B Preferred to up to 40,000,000 shares
of its common stock upon the Company's Common Stock becoming listed for trading
on NASDAQ, and conversion of the remaining 100,000 shares of the preferred to up
to 100,000,000 shares of common stock upon the Company having a net worth of at
least $2,000,000 as shown on the Company's audited financial statements. The
60,000,000 shares of common stock held in escrow were subsequently canceled for
failure to obtain NASDAQ listing within the prescribed deadline.
Also pursuant to the AMG Agreement, Messrs. Goldstone, Carson, Schwartz and
Geller resigned as officers and Directors of the Company and Messrs. Andrew L.
Stumpf, Burnell M. Calvin, John T. Forrester, Robert J. Brozovich and Robert
Hirsekorn were appointed to the Board of Directors of the Company. Messrs.
Stumpf, Calvin and Forrester were appointed President and Vice Presidents.
Kathleen S. Stumpf was appointed Secretary and Treasurer.
The business plan of the Company's new management was to develop a regional
airline Company through acquisitions and joint ventures. The business plan
required significantly greater capital than the Company possessed. The Company's
available business development capital was to be used to pay management's
salaries and expenses while seeking potential acquisitions and joint ventures as
well as additional financing.
In March 1990, the new Management of the Company began contacting airline
and aircraft repair businesses offered for sale in trade publications and
evaluating the responses for possible acquisitions. During the fiscal year, the
Company evaluated approximately twenty-five (25) responses to its inquiries.
While several discussions were held with potential acquisitions, no preliminary
or definitive agreements were concluded.
On May 21, 1990 the Company, through a newly formed wholly owned
subsidiary, Condor Printing and Publishing, Inc., entered into an agreement with
Kevin P. Hager, an unaffiliated individual, to purchase a printing business
operating as Speedy Print of Aurora for a $55,000 promissory note to be repaid
from the operations of the printing business. The Company and its President, Mr.
Stumpf, guaranteed payment of the Note. Management of the Company intended to
operate this business in order to generate revenue to continue the primary
objective of seeking acquisition of an airline or aircraft repair station.
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Also in May 1990, the Company, through Condor Insurance Services, Inc., a
newly formed, wholly owned subsidiary, entered into an agreement with Burnell
Calvin, the Company's Vice President at the time, to operate Mr. Calvin's
insurance business in Colorado Springs, Colorado. Management of the Company
intended to operate this second business in order to generate revenue to
continue the primary objective of seeking acquisition of an airline or aircraft
repair station.
On January 31, 1991, the Company, its wholly owned subsidiary Condor
Printing and Publishing, Inc., Mr. Stumpf and Mr. Hager entered into an
agreement whereby the Company transferred all assets of the Speedy Print of
Aurora business back to Mr. Hager. The Agreement also released the Company's
guarantee under the May 21, 1990 Agreement.
On February 18, 1991, the Company entered into agreements with Mr. Stumpf
and Mr. Calvin respectively whereby in consideration of the transfer to the
Company of all of each of their respective shares of common stock in the Company
and mutual indemnification, the Company transferred all of its shares in Condor
Printing and Publishing, Inc. to Mr. Stumpf and all of its shares in Condor
Insurance Services, Inc., to Mr. Calvin. Pursuant to these agreements Messrs.,
Stumpf and Calvin transferred to the Company the 93,120,000 shares of common
stock and 6,400,000 shares of common stock issued to them respectively pursuant
to the AMG agreement. These shares have since been canceled. A portion of the
shares agreed to be canceled were included within the 60,000,000 escrowed shares
described above. In addition, all 140,000 shares of the Company's Class B
convertible preferred stock were subsequently returned to the Company for
cancellation. As a result of these transactions, AMG remained a subsidiary of
the Company, but effective January 1, 1995, AMG was administratively dissolved
by the office of the Colorado Secretary of State.
On February 18, 1991, the Board of Directors of the Company met to discuss
the financial condition of the Company. Mr. Stumpf reported that Mr. Forester
had resigned his positions with the Company due to other responsibilities
preventing him from active participation in the affairs of the Company. Mr.
Stumpf further reported that despite conservative efforts the Company's funds
had been dissipated in the pursuit of acquisition candidates and that while the
corporation's liabilities would be met, the Company did not have sufficient
capital to continue its search for acquisitions and would have to discontinue
operations. Mr. Virgil Rose was appointed to the Board of Directors and Messrs.
Stumpf and Calvin and Ms. Stumpf resigned their respective positions with the
Company. Thereafter, Mr. Rose was appointed President and Mr. Hirsekorn was
named as Secretary/Treasurer. The Board also authorized the issuance of
2,000,000 restricted shares of common stock of the Company to Robert D.
Hirsekorn in consideration of his past services to the Company.
The reconstituted Management of the Company resolved to preserve the
remaining assets and the corporate existence of the Company while continuing to
seek a business combination with another entity seeking the advantages of an
existing publicly held corporation notwithstanding the Company's lack of
capital. Management recognized that the Company's lack of capital was a serious
disadvantage both in terms of attractiveness to a potential acquiring entity as
well as restricting Management's ability to promote the Company and pursue
negotiations. It was determined that the best way to proceed was to seek a
business combination partner through the personal business contacts of
Management.
In April 1992, the Company entered into negotiations with Analytical
Development Corporation (ADC), a Company headquartered in Colorado Springs,
Colorado, engaged in the business of water pollution remediation through
chemical processes. The proposed transaction with ADC contemplated a Plan of
Merger with ADC to be submitted to the Company's and ADC's shareholders pursuant
to a combined proxy and prospectus. On May 15, 1992, ADC terminated the
negotiations.
In August 1992, the Company entered into a letter of intent with
International Golf Investments (IGI), a California corporation whereby the
Company agreed to issue to the shareholders of IGI a number of shares of the
Company's common stock representing not less than ninety percent (90%) of the
issued and outstanding shares of the Company's common stock in exchange for one
hundred percent (100%) of the outstanding shares of IGI. In conjunction with the
exchange of shares, nominees designated by IGI would be appointed to the Board
of Directors of the Company and would constitute a majority of the Board of
Directors. IGI was to be engaged in the business of acquiring, developing and
operating golf courses in the United States including the retailing of golf
related merchandise in its golf course pro shops.
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The letter of intent with IGI contemplated the execution of a definitive
agreement containing customary terms for the proposed exchange of shares and
change in control. On January 27, 1993, the Company informed IGI that the letter
of intent was terminated.
Effective, December 31, 1992, Virgil Rose resigned as President and
Director. Also effective that date John Henz was appointed as Director, Mr.
Hirsekorn was named President and Mr. Henz was named Secretary/Treasurer.
Thereafter the Company resumed its original business direction of seeking a
merger, reverse acquisition or other defined change in control agreement which
would be in the best interests of the Company's shareholders. As a result
thereof, the Company began negotiations with GolfNet Corporation (GolfNet), a
California corporation, for a business combination with the Company. GolfNet was
engaged in the distribution of golf related merchandise, primarily through golf
course pro shops. The Company entered into an Agreement with GolfNet on August
10, 1993. In connection with the proposed transaction, on August 10, 1993 the
Board of Directors authorized a one (1) for two hundred (200) reverse stock
split of its common stock, which became effective August 19, 1993.
For various reasons, the Company and GolfNet determined not to proceed to
complete the transactions contemplated by the August 10, 1993 Agreement. As a
result of the conclusion of the relationship with GolfNet, the Registration was
left with virtually no funds and no pending prospects for developing business
relationships with other companies. The Company did not file any periodic
reports with the Securities and Exchange Commission subsequent to the Form 10-Q
filed for the quarter ended December 31, 1989 and a Form 8-K on May 10, 1990.
In August 1997, John Venette and Sheryl Allen were appointed to the Board
of Directors by the Company's then sole director, Robert Hirsekorn. In September
1997, the Company completed a private placement of 11,236,651 shares of its
common stock for a total purchase price of $33,434.66.
In May of 1998, Sheryl Allen resigned as Secretary and a member of the
Board of Directors. John Venette assumed the responsibilities as Secretary.
In January of 1999, the Company completed a private placement of 5,500,000
shares of its common stock for a total purchase price of $11,000.
In February of 1999, the Company entered into an Acquisition Agreement and
Plan of Reorganization with the Shareholders of Rogart Limited, a corporation
organized under the laws of the Turkish Republic of Northern Cyprus. Per the
terms of the Agreement the Company acquired all of the issued and outstanding
capital stock of Rogart from its Shareholders in exchange for 2,500,000 shares
of the Company's previously authorized but unissued unregistered and restricted
shares of Common Stock.
On February 16, 2000 Robert Hirsekorn and John Venette resigned from their
respective positions as officers and directors of the Company in conjunction
with the closing of the Acquisition Agreement and Plan of Reorganization with
Rogart Limited. Also on February 16, 2000 and in conjunction with the closing of
the Acquisition Agreement and Plan of Reorganization with Rogart Limited, Lee
Gahr, W. Patrick Battista and George Lerg were all duly elected as directors of
the Company. Further, the appointments of Lee Gahr and W. Patrick Battista to
the offices of Chairman, C.E.O., President and C.F.O., Secretary were made
respectively.
Effective February 25, 2000, Condor Capital, Inc., a Colorado corporation
(the "Company") dismissed Gordon, Hughes & Banks, LLP ("GHB") as its independent
public accountants. The Board of Directors of the Company approved this action.
During the two most recent fiscal years and through December 16, 2000, there
were no disagreements with GHB on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure which
disagreements, if not resolved to the satisfaction of GHB, would have caused GHB
to make reference to the subject matter of the disagreement(s) in its reports.
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Effective February 25, 2000, the Company engaged the accounting firm of HJ
& Associates, LLC, formerly known as Jones, Jensen & Company as independent
public accountants of the Company for the fiscal year ending September 30, 2000.
HJ & Associates has not previously served as the Company's independent
accountants. However, the Company believes HJ & Associates has the
qualifications, skills, and reputation necessary to adequately represent the
interests of the Company. The services to be provided to the Company by HJ &
Associates in fiscal 2000 include examination of the Company's consolidated
financial statements, review of quarterly reports and services in connection
consultations on various tax and information matters.
On April 19, 2000 at the Annual Meeting of the Shareholders, the
Shareholders approved and ratified an Agreement and Plan of Merger, whereby the
Company, Condor Capital, Inc., a Colorado corporation, was merged with and into
Condor Capital, Inc., a Nevada Corporation, for the sole purpose of changing its
corporate domicile from the State of Colorado to the State of Nevada. Under the
terms of the plan each share of Common Stock issued and outstanding of Condor
Colorado, which consisted of 20,155,000, was to be converted into Shares of
Common Stock of Condor Nevada on a one to one basis (1:1). The new authorized
share capital became 125,000,000 shares consisting of 100,000,000 common shares,
par value $ .001 and 25,000,000 preferred shares, no par value.
Also on April 19, 2000 at the Annual Meeting of Shareholders, the
Shareholders approved the adopted a Stock Option Plan adopted by the Board of
Directors of the Company on March 1, 2000. The Purpose of the Stock Option Plan
is to provide a method whereby key employees and persons providing services to
the Company may be offered incentives in addition to those presently available.
Under the terms of the plan five million shares of Common Stock were reserved
and authorized to be issued pursuant to the exercise of options granted under
the plan.
On April 24, 2000 George Lerg resigned from his position of Director.
On May 23, 2000, the Company entered into a management consulting agreement
with Renfrew Corporate Management Services Ltd. whereby Renfrew provides certain
dedicated financial management and consulting services regarding capital
investment strategies. The agreement was for a six month period at a monthly fee
of $6,000, renewable for additional three month periods at the option of both
parties.
On June 7, 2000 the Company entered into a Joint Venture Agreement with
Tech-Catalyst Ventures, Inc. (a British Columbia corporation) for the purpose of
further developing and implementing a real-time, interactive digital data
network, initially targeted at the Media Industry, owned by its 100% Delaware
subsidiary, Applied Communications Techniques, Inc.
The Agreement called for the creation of a new entity called Konnect Corp.
(a Delaware corporation), for the Company to advance $1 million into Konnect
Corp. and for Tech - Catalyst Ventures, Inc. to cause Applied Communications
Techniques, Inc. to be merged into Konnect Corp. In consideration thereof both
parties would be issued 10,000,000 shares in the capital stock of the newly
formed Konnect Corp. Konnect Corp. was incorporated on March 14, 2000 and
10,000,000 shares in the capital stock was issued to the Company and
Tech-Catalyst, respectively, on August 14, 2000. The Agreement also calls for
Tech - Catalyst Ventures, Inc. to supply full operational, technical and
customer support services and for the Company to be responsible for financial
administration and capital equipment requirements as well as any additional
financing requirements such as working capital and security deposits.
As of the date of this report, Condor has contributed $473,995 and the
merger of Applied Communication Techniques, Inc. with and into Konnect Corp. has
not been completed.
On September 18, 2000 Mr. P. L. Hammond, C.A. was appointed a Director of
the Company and was also appointed as the Chief Financial Officer of the
Company.
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(b) Narrative Description of Business.
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The Company has insufficient capital with which to finance cash
acquisitions of other business entities. Accordingly, the Company will be
incapable of acquiring the assets or business of other entities except in those
instances where the Company exchanges its common stock with those held by the
target Company and/or the target Company's shareholders. The Company may
entertain the sale of common stock to accredited investor(s) with the goal to
raise the amount of capital required for either acquisitions, the continuation
of operations, or both. Another possibility, although less likely, is that the
Company may give its common stock to a target in exchange for the target's
assets. Management expects that an exchange of the Company's Common Stock in a
merger or acquisition, if ever, would require the Company to issue a substantial
number of shares of its common stock. Accordingly, the percentage of common
stock held by the Company's then current shareholders would be reduced as a
result of the increased number of shares of common stock issued and outstanding
following any such merger or acquisition.
The Company expects to continue to concentrate primarily on the
identification and evaluation of prospective merger or acquisition "target"
entities. The Company does not intend to act as a general or limited partner in
connection with partnerships it may merge with or acquire. Management has not
identified any particular area of interest within which the Company will
continue its efforts. The Company's officers and directors will devote only such
time as is necessary to seek out a suitable opportunity.
Management contemplates that the Company will seek to merge with or acquire
a target Company with either assets or earnings, or both, and that preliminary
evaluations undertaken by the Company will assist in identifying possible target
companies. The Company has not established a specific level of earnings or
assets below which the Company would not consider a merger or acquisition with a
target Company. Moreover, Management may identify a target Company generating
losses which the Company will seek to acquire or merge with the Company. There
is no assurance that if the Company acquires a target Company with assets or
earnings, or both, that the price of the Company's common stock will increase.
Plan of Acquisition
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In evaluating target companies, Management intends to concentrate on
identifying any number of preliminary prospects which may be brought to the
attention of management through present associations or otherwise. Management
will then apply certain of its broad criteria to the preliminary prospects.
Essentially, this will entail a determination by Management as to whether or not
the prospects are in an industry which appears promising and whether or not the
prospects themselves have potential within their own industries. During this
initial screening process, Management will ask and receive answers to questions
framed to provide appropriate threshold information, depending upon the nature
of the prospect's business. If a prospect is selected for an in-depth review,
Management will review in detail the prospect's business activities, including
its audited financial statements, if any.
Management expects to enter into further negotiations with target Company
management following successful conclusion of financial and evaluation studies.
Negotiations with target Company management will be expected to focus on the
percentage of the Company which target Company shareholders would acquire in
exchange for their shareholdings in the target Company. Depending upon, among
other things, the target Company's assets and liabilities, the Company's
shareholders will in all likelihood hold a lesser percentage ownership interest
in the Company following any merger or acquisition. The percentage ownership may
be subject to significant reduction in the event the Company acquires a target
Company with substantial assets. Any merger or acquisition effected by the
Company can be expected to have a significant dilutive effect on the Percentage
of shares held by the Company's then current shareholders.
The final stage of any merger or acquisition to be effected by the Company
will require the Company to retain the services of its counsel and a qualified
accounting firm in order to properly effect the merger or acquisition. The
Company would incur significant legal fees and accounting costs during the final
stages of a merger or acquisition. Also, if the merger or acquisition is
successfully completed, Management anticipates that certain costs will be
incurred for public relations, such as the dissemination of information to the
public, to the shareholders and to the financial community. If the Company is
unable to complete the merger or acquisition for any reason, the Company's then
supply of capital may be substantially depleted if legal fees and accounting
costs have been incurred. Management intends to retain legal and accounting
services only on an as-needed basis in the latter stages of a proposed merger or
acquisition. It is likely that the Company will seek to accomplish any business
combination in a manner which will not require shareholder approval.
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The Company may be required to seek additional financing in order to
proceed with any proposed transaction with a target Company, which could be
accomplished by either the sale of common stock, the issuance of debt, or both.
The Company's Subsidiaries and the Nature of Products and Services Offered
The Company currently has two subsidiaries. Rogart Ltd., a wholly owned
subsidiary, acquired for the development of DesignerMale.com an online men's
boutique. Due to the changing environment within internet commerce,
DesignerMale.com has ceased operations though the Company continues to own 100%
of Rogart Ltd. Currently, Rogart Ltd. has no operations or ongoing business.
In addition, the Company has a 50% ownership in Konnect Corp., a Delaware
corporation. Konnect is the developer of a digital network layer required by
Application Service Providers for real time interactive data networking. This
network operating environment will set new standards in the communications
industry. Constructed of fiber optics, wireless and conventional systems,
Konnect enables RELIABLE, SECURE, HIGH SPEED, HIGH QUALITY application services.
Konnects' network operating system poses a significant alternative to internet
services and expensive private networks as a communications platform.
The services offered consist of: audio & video conferencing, digital media
storage and transfer, digital collaboration, e-commerce transaction fulfillment,
unified messaging (including email)and generic internet / web data services. The
services are wrapped in a user friendly support environment that provides for 24
hour - 7 day per week on-line and off-line maintenance, support, and data
security.
Target Markets
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Konnects' initial target market is the Media Creation and Distribution
Industry, as this highly visible community has the greatest communications
needs. In addition, these groups are responsible for creating the world's most
valuable digitally distributable products; products that can be streamed in real
time over the Konnects' network operating system. The initial network will link
the cities of Los Angeles, Vancouver (BC), Toronto (Ontario), Montreal (Quebec),
Chicago and New York.
Business Model and Products
---------------------------
The business case for Konnect is based on the actual needs of the target
market, particularly in that the target market must collaborate intensively to
create media products. Through the digital re-engineering of workflow, companies
are able to cost effectively and productively work in real-time collaborative
environments irrespective of geographic location. Two members of the senior
management of Konnect have worked under contract to assist a major Hollywood
Studio appreciate workflow re-engineering for an on-line digital environment.
Perhaps of even greater importance is the secure storage and transfer of
digital products made possible by Konnect. The Media Industry currently loses
over Four and One Half Billion Dollars per year to piracy, according to the
Motion Picture Association (MPA) and World Intellectual Property Organization
(WIPO). Most of these losses are attributed to security problems in the media
production process which Konnect is able to minimize.
Distribution methods of the products or services
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The Company's sales and marketing teams are configured in a manner that
maintain entire industries (vertical markets) while at the same time supporting
the specific requirements of individual or regional customers (horizontal
markets). The intelligence gathering and cultivating of information acquired by
the sales and marketing teams, assist in the development of further services and
applications that benefit not only the horizontal but also vertical markets.
These further developments are crucial in these competitive, evolving
marketplaces.
Competition
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There are numerous companies engaged in endeavors similar to those engaged
in by the Company; many of these companies have substantial current assets and
cash reserves. Competitors also include many publicly held companies whose
business operations have proven unsuccessful, and whose only viable business
opportunity is that of providing a publicly held vehicle through which a private
entity may have access to the public capital markets. There is no reasonable way
to predict the competitive position of the Company or any other entity in these
endeavors. Employees
9
<PAGE>
The Company does not have any employees, and did not have any during the
fiscal year ended September 30, 2000.
Dependence on one or a few major customers
------------------------------------------
The Company believes that the diversity of the products and services
offered alleviates the dependence on any customer. Through the widespread use of
the Company's and its subsidiaries' products and services, in multimedia,
electronic commerce, publishing, Internet and other developing industries, the
Company will develop a wide base of customers. No customer in 1999-2000
accounted for more than 10% of the net sales.
Patents, trademarks, license, franchises, concessions, royalty agreements
or labor contracts
---------------------------------------------------------------------------
Neither the Company nor any of its subsidiaries presently holds any
patents, copyrights or trademarks for their products or services offered or the
names under which they operate. However, the Company and its subsidiaries are
currently in the process of seeking copyright and trademark protection of its
trade names and website addresses.
Need for Government approval
----------------------------
With the exception of the requirement that the Company and its subsidiaries
be registered or qualified to do business in the States and foreign countries in
which they will do business, the products and services provided through use of
the Company's technology are not subject to approval of any government
regulation.
Effect of existing or probable governmental regulations on the business.
-----------------------------------------------------------------------
The Company's common stock is registered pursuant to Section 12(g) of the
Securities Exchange Act of 1934. As a result of such registration, the Company
is subject to Regulation 14A of the Securities Exchange Act of 1934, as amended
(the "1934 Act"), which regulates proxy solicitations. Section 14(a) requires
all companies with securities registered pursuant to Section 12(g) thereof to
comply with the rules and regulations of the Commission regarding proxy
solicitations, as outlined in Regulation 14A. Matters submitted to stockholders
of the Company at a special or annual meeting thereof or pursuant to a written
consent will require the Company to provide its stockholders with the
information outlined in Schedules 14A or 14C of Regulation 14; preliminary
copies of this information must be submitted to the Commission at least 10 days
prior to the date that definitive copies of this information are forwarded to
stockholders.
The Company is also required to file annual reports on Form 10-KSB and
quarterly reports on Form 10-QSB with the Commission on a regular basis, and
will be required to timely disclose certain events (e.g., changes in corporate
control; acquisitions or dispositions of a significant amount of assets other
than in the ordinary course of business; and bankruptcy) in a Current Report on
Form 8-K.
The Company is not aware of any other governmental regulations now in
existence or that may arise in the future that would have an effect on the
business of the Company.
Research and Development
------------------------
The Company does not have any research and development facilities or
operations except for those found with the Konnect subsidiary.
The Company is not effected by any environmental laws, Federal, State or
Local.
The Company does not plan to manufacture the products that are derived from
the application and use of its technology. The Company does not feel that it is
effected by any rules which have been enacted or adopted regulating the
discharge of material into the environment
10
<PAGE>
RISK FACTORS
------------
Consideration should be given to the risks described below before making an
investment decision in the Company. The risks and uncertainties described below
are not the only ones facing the Company and there may be additional risks that
are not presently known or are currently deemed immaterial. All of these risks
may impair business operations.
The Company's present and proposed business operations will be highly
speculative and subject to the same types of risks inherent in any new or
unproven venture, as well as risk factors particular to the industries in which
it will operate, and will include, among other things, those types of risk
factors outlined below.
In any business venture, there are substantial risks specific to the
particular enterprise which cannot be ascertained until a potential acquisition,
reorganization or merger candidate has been identified; however, at a minimum,
the Company's present and proposed business operations will be highly
speculative and subject to the same types of risks inherent in any new or
unproven venture, and will include those types of risk factors outlined below.
Risks of "Penny Stock.
---------------------
The Company's common stock may, at some future time, be deemed to be "penny
stock" as that term is defined in Rule 3a51-1 of the Exchange Act of 1934. Penny
stocks are stocks (i) with a price of less than five dollars per share; (ii)
that are not traded on a "recognized" national exchange; (iii) whose prices are
not quoted on the NASDAQ automated quotation system (NASDAQ-listed stocks must
still meet requirement (i) above); or (iv) of an issuer with net tangible assets
less than US$2,000,000 (if the issuer has been in continuous operation for at
least three years) or US$5,000,000 (if in continuous operation for less than
three years), or with average annual revenues of less than US$6,000,000 for the
last three years.
A principal exclusion from the definition of a penny stock is an equity
security that has a price of five dollars ($5.00) of more, excluding any broker
or dealer commissions, markups or markdowns. As of the date of this Annual
Report the Company's common stock has a price less than $5.00 and would
therefore be deemed a penny stock.
If a Company's Common Stock is deemed a penny stock, section 15(g) and Rule
3a51-1 of the Exchange Act of 1934 would require broker-dealers dealing in the
Company's Common Stock to provide potential investors with a document disclosing
the risks of penny stocks and to obtain a manually signed and dated written
receipt of the document before effecting any transaction in a penny stock for
the investor's account. Potential investors in the Company's common stock are
urged to obtain and read such disclosure carefully before purchasing any shares
that are deemed to be "penny stock."
Moreover, Rule 15g-9 of the Exchange Act of 1934 requires broker-dealers in
penny stocks to approve the account of any investor for transactions in such
stocks before selling any penny stock to that investor. This procedure requires
the broker-dealer to (i) obtain from the investor information concerning his or
her financial situation, investment experience and investment objectives; (ii)
reasonably determine, based on that information, that transactions in penny
stocks are suitable for the investor and that the investor has sufficient
knowledge and experience as to be reasonably capable of evaluating the risks of
penny stock transactions; (iii) provide the investor with a written statement
setting forth the basis on which the broker-dealer made the determination in
(ii) above; and (iv) receive a signed and dated copy of such statement from the
investor, confirming that it accurately reflects the investor's financial
situation, investment experience and investment objectives. Compliance with
these requirements may make it more difficult for investors in the Company's
common stock to resell their shares to third parties or to otherwise dispose of
them.
11
<PAGE>
Competition.
-----------
There are numerous corporations, firms and individuals, which are engaged
in the type of business activities in which the Company is presently engaged.
Some of those entities are more experienced and possess substantially greater
financial, technical and personnel resources than the Company or its
subsidiaries. Many of the Company's competitors have longer operating histories
than the Company, and thus may be able to respond more quickly to new or
changing opportunities, technologies and customer requirements. Many of the
Company's competitors also have greater name recognition and larger customer
bases that could be leveraged, thereby gaining market share from the Company.
Such competitors may conduct more extensive promotional activities and offer
better terms and lower prices to customers than the Company can. Moreover,
certain competitors have established cooperative relationships among themselves
or with third parties to enhance their services and products. Accordingly, it is
possible that new competitors or alliances among existing competitors may
significantly reduce the Company's market share. While the Company cannot
predict the type and extent of competitive services that ultimately may be
offered, or whether legislative barriers will be modified, the Company may be
adversely affected by such competition or legislation. To the extent the
Company's competitors are able to attract and retain customers, the Company's
business or ability to grow could be adversely affected. In many instances, the
Company is competing with such organizations for the same customers. In
addition, competition among telecommunication services firms exists for
experienced technical and other personnel. There can be no assurance that the
Company will be able to compete effectively with current or future competitors
or that such competition will not have a material adverse effect on the
Company's business, financial condition and operating results. While the Company
hopes to be competitive with other similar companies, there can be no assurance
that such will be the case.
Volatile Market for Common Stock.
--------------------------------
The Company's common stock is quoted on the OTC Bulletin Board under the
symbol "CNOP." The market price of the Company's Common Stock has been and is
likely to continue to be highly volatile and subject to wide fluctuations due to
various factors, many of which may be beyond the Company's control, including:
quarterly variations in operating results; announcements of technological
innovations or new software, services or products by the Company or its
competitors; and changes in financial estimates and recommendations by
securities analysts. In addition, there have been large price and volume
fluctuations in the stock market which have affected the market prices of
securities of many technology and services companies, often unrelated to the
operating performance of such companies. These broad market fluctuations, as
well as general economic and political conditions, may adversely affect the
market price of the Company's common stock. In the past, volatility in the
market price of a Company's securities has often led to securities class action
litigation. Such litigation could result in substantial costs and diversion of
the Company's attention and resources, which could have a material adverse
effect on the Company's business, financial condition and operating results.
Discretionary Use of Proceeds.
-----------------------------
Because of management's broad discretion with respect to the acquisition of
assets, property or business, the Company may be deemed to be a growth oriented
Company. Although management intends to apply substantially all of the proceeds
that it may receive through the issuance of stock or debt to suitable
acquisitions such proceeds will not otherwise be designated for any more
specific purpose. The Company can provide no assurance that any allocation of
such proceeds will allow it to achieve its business objectives.
Unascertainable Risks Associated with Potential Future Acquired Businesses.
--------------------------------------------------------------------------
To the extent that the Company may acquire a business in a highly risky
industry, the Company will become subject to those risks. Similarly, if the
Company acquires a financially unstable business or a business that is in the
early stages of development, the Company will become subject to the numerous
risks to which such businesses are subject. Although management intends to
consider the risks inherent in any industry and business in which it may become
involved, there can be no assurance that it will correctly assess such risks.
12
<PAGE>
Risks Associated with Acquisitions, Strategic Relationships.
-----------------------------------------------------------
The Company may acquire other companies or technologies in the future, and
the Company regularly evaluates such opportunities. Acquisitions entail numerous
risks, including: difficulties in the assimilation of acquired operations and
products; diversion of management's attention from other business concerns;
amortization of acquired intangible assets; and potential loss of key employees
of acquired companies. No assurance can be given as to the Company's ability to
integrate successfully any operations, personnel, services or products that
might be acquired in the future. Failure to successfully assimilate acquired
organizations could have a material adverse effect on the Company's business,
financial condition and operating results. The Company has established a number
of strategic relationships with online and Internet service providers and
software and information service providers. There can be no assurance that any
such relationships will be maintained, or that if they are maintained, they will
be successful or profitable. Additionally, the Company may not develop any new
such relationships in the future. Due to the foregoing factors, quarterly
revenues and operating results are difficult to forecast. The Company believes
that period-to-period comparisons of the Company's operating results will not
necessarily be meaningful and you should not rely on them as any indication of
future performance. The Company's future quarterly operating results may not
consistently meet the expectations of securities analysts or investors, which in
turn may have an adverse effect on the market price of the Company's Common
Stock. Additionally, to the extent that the Company may acquire a business in a
highly risky industry, the Company will become subject to those risks.
Similarly, if the Company acquires a financially unstable business or a business
that is in the early stages of development, the Company will become subject to
the numerous risks to which such businesses are subject. Although management
intends to consider the risks inherent in any industry and business in which it
may become involved, there can be no assurance that it will correctly assess
such risks.
Uncertain Structure of Future Acquisitions.
------------------------------------------
Although management has engaged in preliminary contact and/or discussions
regarding arrangements to acquire other specific assets, property or business,
and there are current plans, proposals to engage in such, it is unclear whether
such any such acquisition would take the form of an exchange of capital stock, a
merger or an asset acquisition at this time. Management's current plans are to
pursue acquisitions on a cash investment basis.
Conflicts of Interest; Related Party Transactions.
-------------------------------------------------
The possibility exists that the Company may acquire or merge with a
business or Company in which the Company's executive officers, directors,
beneficial owners or their affiliates may have an ownership interest. Although
there is no formal bylaw, stockholder resolution or agreement authorizing any
such transaction, corporate policy does not forbid it and such a transaction may
occur if management deems it to be in the best interests of the Company and its
stockholders, after consideration of the above referenced factors. A transaction
of this nature would present a conflict of interest to those parties with a
managerial position and/or an ownership interest in both the Company and the
acquired entity, and may compromise management's fiduciary duties to the
Company's stockholders. An independent appraisal of the acquired Company may or
may not be obtained in the event a related party transaction is contemplated.
Furthermore, because management and/or beneficial owners of the Company's common
stock may be eligible for finder's fees or other compensation related to
potential acquisitions by the Company, such compensation may become a factor in
negotiations regarding such potential acquisitions. It is the Company's
intention that all future transactions be entered into on such terms as if
negotiated at arms length, unless the Company is able to received more favorable
terms from a related party.
13
<PAGE>
Risks Associated with Systems Failures.
--------------------------------------
The Company depends heavily on the integrity of the electronic systems
supporting its activities, including the Company's internal software programs
and computer systems. The Company's systems or any other systems of third
parties whom the we utilize could slow down significantly or fail for a variety
of reasons including: undetected errors in the Company's internal software
programs or computer systems; the Company's inability to effectively resolve any
errors in the Company's internal software programs or computer systems once they
are detected; or heavy stress placed on the Company's system during certain peak
hours of usage of either the Company's own or its third party provider systems.
If the Company's systems or any other systems which the Company relies on slow
down significantly or fail even for a short time, the Company's customers would
suffer delays and dissatisfaction. The Company could experience future system
failures and degradations. The Company could experience a number of adverse
consequences as a result of these systems failures including the loss of
existing customers and the inability to attract or retain new customers. There
can be no assurance that the Company's network structure or those of third party
service providers will operate appropriately in any of the following events:
subsystem, component or software failure; a power or telecommunications failure;
human error; an earthquake, fire or other natural disaster; or an act of God or
war. There can be no assurance that in any such event, we will be able to
prevent an extended systems failure. Any such systems failure that interrupts
the Company's operations could have a material adverse effect on the Company's
business, financial condition and operating results.
Risks Associated with Encryption Technology.
-------------------------------------------
A significant barrier to online commerce is the secure transmission of
confidential information over public networks. The Company relies on encryption
and authentication technology to provide secure transmission of confidential
information. There can be no assurance that advances in computer and
cryptography capabilities or other developments will not result in a compromise
of the encryption and authentication technology we use to protect customer
transaction data. If any such compromise of the Company `s security were to
occur, it could have a material adverse effect on the Company's business,
financial condition and operating results.
Risks Associated with Significant Fluctuations In Operating Results.
-------------------------------------------------------------------
The Company expects to experience large fluctuations in future quarterly
operating results that may be caused by many factors, including the following:
the timing of introductions or enhancements to services and other products by
the Company or its competitors; market acceptance of services and products; the
pace of development of the market for online commerce; changes in trading volume
in securities markets; trends in securities markets; domestic and international
regulation of the communications industry; changes in pricing policies by the
Company or its competitors; changes in strategy; the success of or costs
associated with acquisitions, joint ventures or other strategic relationships;
changes in key personnel; seasonal trends; the extent of international
expansion; the mix of international and domestic revenues; changes in the level
of operating expenses to support projected growth; and general economic
conditions. The Company will also experience fluctuations in the average number
of customer transactions per day. Thus, the rate of growth in customer
transactions at any given time is not necessarily indicative of future
transaction activity.
Risks Associated with Management of a Changing Business.
-------------------------------------------------------
Rapid change and expansion places significant demands on the Company's
administrative, operational, financial and other resources. The Company expects
operating expenses and staffing levels to increase substantially in the future.
Competition for such personnel is intense, and there can be no assurance that
the Company will be able to find or keep additional suitable senior managers or
technical persons in the future. The Company also expects to expend resources
for future expansion of the Company's accounting and internal information
management systems and for a number of other new systems and procedures. In
addition, the Company expects that future expansion will continue to challenge
the Company's ability to successfully hire and retain associates. If the
Company's revenues do not keep up with operating expenses, the Company's
information management systems do not expand to meet increasing demands, the
Company fails to attract, assimilate and retain qualified personnel, or the
Company fails to manage the Company's expansion effectively, there would be a
material adverse effect on the Company's business, financial condition and
operating results. As the Company acquires new equipment and applications
quickly, the Company has less time and ability to test and validate hardware and
software, which could lead to performance problems.
14
<PAGE>
Risks Associated with Delays In Introduction of New Services and Products.
-------------------------------------------------------------------------
The Company's future success depends in part on the Company's ability to
develop and enhance the Company's services and products. There are significant
technical risks in the development of new services and products or enhanced
versions of existing services and products. There can be no assurance that the
Company will be successful in achieving any of the following: effectively using
new technologies; adapting the Company's services and products to emerging
industry standards; developing, introducing and marketing service and product
enhancements; or developing, introducing and marketing new services and
products. The Company may also experience difficulties that could delay or
prevent the development, introduction or marketing of these services and
products. Additionally, these new services and products may not adequately meet
the requirements of the marketplace or achieve market acceptance. If the Company
is unable to develop and introduce enhanced or new services and products quickly
enough to respond to market or customer requirements, or if they do not achieve
market acceptance, the Company's business, financial condition and operating
results will be materially adversely affected.
Risks Associated with Dependence on Intellectual Property Rights.
----------------------------------------------------------------
Neither the Company or any of its subsidiaries presently holds any patents,
copyrights or trademarks for their products or services offered or the names
under which they operate. However, the Company and its subsidiaries are
currently in the process of seeking copyright and trademark protection of its
trade names and website addresses. The Company's success and ability to compete
are dependent to a degree of the Company's and its subsidiary's name and product
recognition. Accordingly, the Company will primarily rely on copyright, trade
secret and trademark law to protect the product, services and brand names on or
under which the Company and its subsidiaries conduct their business. Effective
trademark protection may not be available for the Company's trademarks. There
can be no assurance that the Company will be able to secure significant
protection for the Company's trademarks. The Company's competitors or others may
adopt product or service names similar to the Company's, thereby impeding the
Company's ability to build brand identity and possibly leading to customer
confusion. The Company's inability to adequately protect its product, brand,
trade names and trademarks would have a material adverse effect on the Company's
business, financial condition and operating results. Despite any precautions the
Company takes, a third party may be able to copy or otherwise obtain and use the
Company's software or other proprietary information without authorization or to
develop similar software independently. Policing unauthorized use of the
Company's technology is made especially difficult by the global nature of the
business and difficulty in controlling the security of software or other data
transmitted on it. The laws of other countries may afford us little or no
effective protection for the Company's intellectual property. There can be no
assurance that the steps the Company takes will prevent misappropriation of the
Company's technology or that agreements entered into for that purpose will be
enforceable. In addition, litigation may be necessary in the future to enforce
the Company's intellectual property rights; protect the Company's trade secrets;
determine the validity and scope of the proprietary rights of others; or defend
against claims of infringement or invalidity. Such litigation, whether
successful or unsuccessful, could result in substantial costs and diversions of
resources, either of which could have a material adverse effect on the Company's
business, financial condition and operating results.
15
<PAGE>
Risks Associated with Infringement.
----------------------------------
The Company may in the future receive notices of claims of infringement on
other parties' proprietary rights. There can be no assurance that claims for
infringement or invalidity (or any indemnification claims based on such claims)
will not be asserted or prosecuted against the Company. Any such claims, with or
without merit, could be time consuming and costly to defend or litigate, divert
the Company's attention and resources or require the Company to enter into
royalty or licensing agreements. There can be no assurance that such licenses
would be available on reasonable terms, if at all, and the assertion or
prosecution of any such claims could have a material adverse effect on the
Company's business, financial condition and operating results.
Risks Associated with Entering New Markets.
------------------------------------------
One element of the Company's strategy is to leverage the Company's brand
names and services that the Company and its subsidiaries provide. No assurance
can be given that the Company will be able to successfully adapt the Company's
products and services for use in other markets. Even if the Company does adapt
the Company's products to other markets, no assurance can be given that the
Company will be able to compete successfully in any such new markets. There can
be no assurance that the Company's marketing efforts or the Company's pursuit of
any new opportunities will be successful. If the Company's efforts are not
successful, the Company could realize less than expected earnings, which in turn
could result in a decrease in the market value of the Company's Common Stock.
Furthermore, such efforts may divert management attention or inefficiently
utilize the Company's resources.
Risks Associated with International Strategy.
--------------------------------------------
One component of the Company's strategy is a planned increase in efforts to
attract additional international customers and to expand the Company's services
and products into international markets. There can be no assurance that the
Company and the Company's subsidiaries will be able to market the Company's
branded services and products successfully in international markets. In
addition, there are certain risks inherent in doing business in international
markets, such as: unexpected changes in regulatory requirements, tariffs and
other trade barriers; difficulties in staffing and managing foreign operations;
political instability; fluctuations in currency exchange rates; reduced
protection for intellectual property rights in some countries; seasonal
reductions in business and potentially adverse tax consequences. Any of the
foregoing could adversely impact the success of the Company's international
operations. Under these agreements, the Company relies upon third parties for a
variety of business and regulatory compliance matters. The Company has limited
control over the management and direction of these third parties. The Company
runs the risk that their action or inaction could harm the Company's operations
and/or the goodwill associated with the Company's brand names. As a result, the
risk to our operations and goodwill is higher. There can be no assurance that
one or more of the factors described above will not have a material adverse
effect on the Company's future international operations, if any, and,
consequently, on our business, financial condition and operating results.
16
<PAGE>
ITEM 2. DESCRIPTION OF PROPERTIES
-------------------------
The Company leases office space at 2012 Howard Hughes Parkway, Las Vegas,
Nevada 89109 from HQ Global Workplaces, Inc. at a nominal rate of $175.00 per
month. The lease is for a period of one year ending September 30, 2001 and can
be renewed for periods of one year at a time. The lease is cancelable by either
party upon 30 days written notice.
The Company also maintains an office in Vancouver, Canada, under a
month-to-month arrangement with Konnect Strategic Services Ltd. The monthly cost
is $1,850.
At this time the Company owns basic office furnishings and equipment
required for the continuation of business.
ITEM 3. LEGAL PROCEEDINGS
-----------------
There are no pending legal proceedings involving the Company and the
Company is not aware of any proceeding that any governmental authority or any
other party is contemplating.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
No matter was submitted during the fourth quarter of the fiscal year
covered by this report to a vote of security holders, through the solicitation
of proxies, or otherwise.
PART II
-------
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS
---------------------------------------------------------
(a) Market Information.
------------------
The Company's Common Stock is listed and traded on the OTC Bulletin Board
under the symbol "CNOP." There has been relatively limited trading activity in
the Company's stock since inception. The following table represents the high and
low closing prices for the Company's Common Stock for each quarter of the fiscal
year ended September 30, 2000.
Fiscal 2000 High Low
-----------------------------------------------
First Quarter $0.0625 $0.0625
Second Quarter $1.75 $0.0625
Third Quarter $2.25 $0.906
Fourth Quarter $1.68 $0.625
(b) Holders.
-------
The approximate number of holders of record of the Company's Common Stock
as of October 2, 2000 was 1,002.
(c) Dividends.
---------
Holders of common stock are entitled to receive such dividends as may be
declared by the Company's Board of Directors. No dividends have been paid with
respect to the Company's common stock and no dividends are anticipated to be
paid in the foreseeable future.
(d) Recent Sales of Unregistered Shares of Common Stock.
---------------------------------------------------
None.
17
<PAGE>
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
---------------------------------------------------------------
The following discussion and analysis should be read together with the
Annual Report of Condor Capital Inc., Consolidated Financial Statements of
Condor Capital Inc. and the notes to the Consolidated Financial Statements
included elsewhere in this Form 10-KSB.
This discussion summarizes the significant factors affecting the
consolidated operating results, financial condition and liquidity and cash flows
of Condor Capital Inc. for the year ended September 30, 2000. Except for
historical information, the matters discussed in this Management's Discussion
and Analysis of Financial Condition and Results of Operations are forward
looking statements that involve risks and uncertainties and are based upon
judgments concerning various factors that are beyond our control. Actual results
could differ materially from those projected in the forward-looking statements
as a result of, among other things; the factors described below under the
caption "Cautionary Statements and Risk Factors."
Overview
--------
During the past year, the Company continued to concentrate primarily on the
identification and evaluation of prospective merger or acquisition "target"
entities. During this period the Company has made one acquisition of Rogart
Ltd., a private corporation, solely for the purpose of acquiring shares in
DesignerMale.com, a private Florida internet retailer. Due to the business
environment within the internet retail marketplace, DesignerMale.com has ceased
operations. Rogart continues to be a 100% owned subsidiary of the Company though
it currently has no active business or operations. The Company has also created
a joint venture entity, Konnect Corp. a Delaware corporation, specifically for
the development of a digital network required by Application Service Providers
for real time interactive data networking, enabling reliable, secure, high
speed, high quality application services within digital data management.
Management believes that it has isolated demand for future growth in the
multi-faceted communication and fiber optics industry, specifically within
digital data management, and has therefore targeted potential acquisition,
merger or partnership candidates who will ensure growth in broadband application
layer network environments.
Plan of Acquisition
-------------------
In evaluating target companies, Management intends to concentrate on
identifying prospects that ensure the Company growth in broadband application
layer network environments. Essentially, this will entail a determination by
Management as to whether or not the prospects are in an environment that appears
promising and whether or not these prospects themselves have the potential to
enhance the Company's position within the targeted industry. The Company is in
the process of overhauling its current corporate infrastructure, pursuing
strategic acquisitions, mergers, partnerships or alliances, and pursuing capital
funding to support this new initiative.
TWELVE MONTHS ENDED SEPTEMBER 30, 2000
--------------------------------------
NET SALES AND GROSS PROFIT The Company did not realize any sales or other
areas of revenue generation during the period ending September 30, 2000. The
Company did not realize any sales or profit for the twelve-month period ended
September 30, 2000.
OPERATING AND GENERAL AND ADMINISTRATIVE EXPENSES The Company realized
operating expenses of $73,963 and general and administrative expenses of
$188,025 on costs related to the Company for the period ended September 30,
2000.
The increase in expenses is primarily due to the Company's pursuit of
acquisition, merger or partnership candidates and the cost associated with
increased legal fees, filings and other general expenses relating to the normal
operation of the Company.
EXTRAORDINARY EXPENSES The Company realized an extraordinary loss during
the period as a result of a write down of good will, $1,578,350.00 and a loss on
investment of $220,000.00. These extraordinary expenses resulted in a fully
diluted loss of $0.09 per share.
18
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
The Company's primary needs for funds are to provide working capital
associated with the normal operations of the Company and for financial demands
required to complete the acquisition, merger or partnership with strategically
positioned entities necessary for the fulfillment of the Company's Digital Data
Management directive. Funds are also required to promote future business
development and market awareness. Working capital for the twelve months ended
September 30, 2000 was funded primarily through management and shareholder
loans.
Cash used in operating activities during the twelve months ended September
30, 2000 was $ 381,687. Cash was used primarily in legal fees, proxies, transfer
agent costs, filings and other costs relating to the daily operation of the
Company
No shares of Common Stock were issued for the year ended September 30,
2000. On November 24, 2000, Subsequent to the year ended, the Company executed a
promissory note in favor of Shefik Hassan in the principal amount of
$508,904.67, relating to advances to the Company. As of September 30, 2000 these
advances totaled $380,881.
At present, the Company's anticipated capital commitments are primarily for
the expenditures associated with the acquisition, merger or partnership with
strategically positioned entities necessary for the fulfillment the Company's
directive. The Company has insufficient capital to meet the needs and goals of
the Company. Based on the current operating plan, the Company anticipates that
further capital will be required during the next twelve months to satisfy our
expected increased working capital and the Company's acquisition, merger or
partnership directives. The Company is currently exploring alternatives to
fulfill the needed financing requirements though no assurance can be given that
additional financing will be available when needed or that, if available, it
will be on terms favorable to our stockholders and management. If needed funds
are not available, the Company may be required to curtail operations, which
could have a material adverse effect on business, operating results and
financial condition. There can be no assurance that the working capital
requirements during this period will not exceed its available resources or that
these funds will be sufficient to meet the Company's longer-term cash
requirements for operations.
CAUTIONARY FORWARD - LOOKING STATEMENT
--------------------------------------
Statements included in this Management's Discussion and Analysis of
Financial Condition and Results of Operations, and in future filings by the
Company with the Securities and Exchange Commission, in the Company's press
releases and in oral statements made with the approval of an authorized
executive officer which are not historical or current facts are "forward-looking
statements" made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995 and are subject to certain risks and
uncertainties that could cause actual results to differ materially from
historical earnings and those presently anticipated or projected. The Company
wishes to caution readers not to place undue reliance on any such
forward-looking statements, which speak only as of the date made. The following
important factors, among others, in some cases have affected and in the future
could affect the Company's actual results and could cause the Company's actual
financial performance to differ materially from that expressed in any
forward-looking statement: (i) the extremely competitive conditions that
currently exist in the three dimensional software development marketplace are
expected to continue, placing further pressure on pricing which could adversely
impact sales and erode profit margins; (ii) many of the Company's major
competitors in its channels of distribution have significantly greater financial
resources than the Company; and (iii) the inability to carry out marketing and
sales plans would have a materially adverse impact on the Company's projections.
The foregoing list should not be construed as exhaustive and the Company
disclaims any obligation subsequently to revise any forward-looking statements
to reflect events or circumstances after the date of such statements or to
reflect the occurrence of anticipated or unanticipated events.
19
<PAGE>
ITEM 7. FINANCIAL STATEMENTS
--------------------
The following financial statements are filed as part of this Form 10-KSB:
consolidated balance sheets as of September 30, 2000 and September 30, 1999;
consolidated statements of operations for the years ended September 30, 2000 and
1999 and cumulative since October 1, 1990 (inception of development stage);
consolidated statements of changes in stockholders' equity (deficit) for the
years ended September 30, 2000 and September 30, 1999; consolidated statements
of cash flows for the years ended September 30, 2000 and 1999 and cumulative
since October 1, 1990 (inception of development stage); independent auditor's
report.
CONDOR CAPITAL, INC.
(A Development Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2000
C O N T E N T
Page
-----
Independent Auditors' Report ......................................... 21
Consolidated Balance Sheet ........................................... 22
Consolidated Statements of Operations ................................ 24
Consolidated Statements of Stockholders' Equity (Deficit)............. 25
Consolidated Statements of Cash Flows ................................ 28
Notes to the Consolidated Financial Statements ....................... 30
20
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
Condor Capital, Inc.
Torrance, California
We have audited the accompanying consolidated balance sheet of Condor
Capital, Inc. (a development stage company) as of September 30, 2000, and the
related consolidated statements of operations, stockholders' equity (deficit)
and cash flows for the year then ended. These consolidated financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audit. The financial statements for the cumulative period October 1, 1990
(inception of the development stage) to September 30, 1992 were audited by other
auditors, whose report dated May 4, 1993, expressed an opinion that contained a
paragraph that indicated substantial doubt about the Company's ability to
continue as a going concern. The financial statements for the cumulative period
October 1, 1992 to September 30, 1999 were audited by other auditors, whose
report dated December 16, 1999, expressed an opinion that contained a paragraph
that indicated substantial doubt about the Company's ability to continue as a
going concern.
We conducted our audit in accordance with generally accepted auditing
standards accepted in the United States. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall consolidated financial statement presentation. We
believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Condor
Capital, Inc. as of September 30, 2000, and the results of their operations and
their cash flows for the year then ended and for the cumulative period October
1, 1999 to September 30, 2000, in conformity with generally accepted accounting
principles accepted in the United States.
The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed in Note
1, the Company does not have ongoing operations and its ability to establish
itself as a going concern is dependent upon the Company obtaining sufficient
financing to develop viable business operations and, ultimately, to achieve
profitable operations. These conditions raise substantial doubt about the
Company's ability to continue as a going concern. The consolidated financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
HJ & Associates, LLC
Salt Lake City, Utah
January 2, 2001
21
<PAGE>
CONDOR CAPITAL, INC.
(A Development Stage Company)
Consolidated Balance Sheet
ASSETS
------
<TABLE>
<CAPTION>
September 30,
2000
-------------
<S> <C>
CURRENT ASSETS
Cash $ 83,922
-------------
Total Current Assets 83,922
-------------
FIXED ASSETS (Note 1)
Office furniture 10,000
Computers and equipment 10,879
Leasehold improvements 1,802
Less: accumulated depreciation (1,219)
-------------
Total Fixed Assets 21,462
OTHER ASSETS
Deposits 169,687
-------------
Total Other Assets 169,687
-------------
TOTAL ASSETS $ 275,071
=============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
22
<PAGE>
CONDOR CAPITAL, INC.
(A Development Stage Company)
Consolidated Balance Sheet (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
----------------------------------------------
<TABLE>
<CAPTION>
September 30,
2000
-------------
<S> <C>
CURRENT LIABILITIES
Accounts payable $ 53,369
Accrued expenses 15,977
Payable - related party (Note 2) 30,558
Notes payable (Note 7) 380,881
-------------
Total Current Liabilities 480,785
-------------
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock: no par value, 25,000,000 shares
authorized, none issued and outstanding -
Common stock: $0.001 par value; 100,000,000 shares
authorized, 20,155,010 shares issued and outstanding 20,155
Additional paid-in capital 2,190,861
Deficit accumulated prior to the development stage (172,222)
Deficit accumulated during the development stage (2,244,508)
-------------
Total Stockholders' Equity (Deficit) (205,714)
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 275,071
=============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
23
<PAGE>
CONDOR CAPITAL, INC.
(A Development Stage Company)
Consolidated Statements of Operations
<TABLE>
<CAPTION> From Inception
of the
Development
Stage on
For the Years Ended October 1,
September 30, 1990 Through
------------------------ September 30,
2000 1999 2000
--------- -------- -----------
<S> <C> <C> <C>
REVENUE $ - $ - $ -
COST OF SALES - - -
------------- ---------- -----------
GROSS PROFIT - - -
------------- ---------- -----------
EXPENSES
Depreciation 1,219 - 1,219
Professional fees 52,677 - 52,677
Rent 20,067 - 20,067
General and administrative 188,025 11,056 366,379
------------- ---------- -----------
Total Expenses 261,988 11,056 440,342
------------- ---------- -----------
LOSS FROM OPERATIONS (261,988) (11,056) (440,342)
------------- ---------- -----------
OTHER INCOME (EXPENSE)
Write down of goodwill (1,578,350) - (1,578,350)
Interest income - - 471
Interest expense (13,567) - (13,567)
Loss on exchange rate (410) - (410)
Loss on investment (220,000) - (220,000)
Gain on settlement of debt - - 7,690
------------- ---------- -----------
Total Other Income (Expense) (1,812,327) - (1,804,166)
------------- ---------- -----------
LOSS BEFORE INCOME TAXES (2,074,315) (11,056) (2,244,508)
PROVISION FOR INCOME TAXES - - -
------------- ---------- -----------
NET LOSS $ (2,074,315) $ (11,056) $(2,244,508)
============= ========== ===========
BASIC LOSS PER SHARE $ (0.11) $ (0.00)
============= ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
24
<PAGE>
CONDOR CAPITAL, INC.
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit)
<TABLE>
<CAPTION>
Deficit Deficit
Accumulated Accumulated
Preferred Stock Common Stock Additional During the Prior to the
-------------------------- -------------------------- Paid Development Development
Shares Amount Shares Amount Capital Stage Stage
------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at inception of the
development stage on
October 1, 1990 140,000 $ - 1,135,280 $ 1,135 $ 236,346 $ - $ (172,222)
Cash contributed to capital - - - - 14,000 - -
Issuance of common stock
to a shareholder for
services valued at
approximately $0.16
per share - - 38,620 39 6,061 - -
Shares issued in stock
split - - 459 - - - -
Management services
contributed by
shareholders - - - - 23,900 - -
Sale of common stock
for cash at $0.003
per share - - 11,236,651 11,237 22,198 - -
Return and cancellation
of common stock
and preferred shares (140,000) - (93,400) (93) 93 - -
Cancellation of common
stock held in escrow
and in treasury - - (497,600) (498) 498 - -
Net loss from inception
of the development
state on October 1,
1990 through
September 30, 1997 - - - - - (135,904) -
------------ ------------ ------------ ------------ ------------ ------------ ------------
Balance,
September 30, 1997 - $ - 11,820,010 $ 11,820 $ 303,096 $ (135,904) $ (172,222)
------------ ------------ ------------ ------------ ------------ ------------ ------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
25
<PAGE>
CONDOR CAPITAL, INC.
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit) (Continued)
<TABLE>
<CAPTION>
Deficit Deficit
Accumulated Accumulated
Preferred Stock Common Stock Additional During the Prior to the
-------------------------- -------------------------- Paid Development Development
Shares Amount Shares Amount Capital Stage Stage
------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Balance, September 30, 1997 - $ - 11,820,010 $ 11,820 $ 303,096 $ (135,904) $ (172,222)
Management services
contributed by officers - - - - 4,000 - -
Net loss for the year ended
September 30, 1998 - - - - - (23,233) -
------------ ------------ ------------ ------------ ------------ ------------ ------------
Balance, September 30, 1998 - - 11,820,010 11,820 307,096 (159,137) (172,222)
Sale of common stock for cash
at $0.002 per share - - 5,500,000 5,500 5,500 - -
Shares issued for services
valued at $0.002 per share - - 300,000 300 300 - -
Management services
contributed by officers - - - - 4,000 - -
Net loss for the year ended
September 30, 1999 - - - - - (11,056) -
------------ ------------ ------------ ------------ ------------ ------------ ------------
Balance, September 30, 1999 - $ - 17,620,010 $ 17,620 $ 316,896 $ (170,193) $ (172,222)
------------ ------------ ------------ ------------ ------------ ------------ ------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
26
<PAGE>
CONDOR CAPITAL, INC.
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit) (Continued)
<TABLE>
<CAPTION>
Deficit Deficit
Accumulated Accumulated
Additional During the Prior to the
Preferred Stock Common Stock Paid Development Development
Shares Amount Shares Amount Capital Stage Stage
------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Balance, September 30, 1999 - $ - 17,620,010 $ 17,620 $ 316,896 $ (170,193) $ (172,222)
Common stock issued for
services valued at
approximately $0.04
per share - - 35,000 35 1,465 - -
Common stock issued in
acquisition of Rogart
Ltd. valued at $0.75
per share - - 2,500,000 2,500 1,872,500 - -
Net loss for the year ended
September 30, 2000 - - - - - (2,074,315) -
------------ ------------ ------------ ------------ ------------ ------------ ------------
Balance, September 30, 2000 - $ - 20,155,010 $ 20,155 $ 2,190,861 $(2,244,508) $ (172,222)
============ ============ ============ ============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
27
<PAGE>
CONDOR CAPITAL, INC.
(A Development Stage Company)
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
From Inception
of the
Development
Stage on
For the Years Ended October 1,
September 30, 1990 Through
--------------------------- September 30,
2000 1999 2000
------------ ------------ --------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C> <C>
Net loss $(2,074,315) $ (11,056) $ (2,244,508)
Adjustments to reconcile net loss to net
cash used by operating activities:
Loss on disposal of assets - - 20,169
Depreciation 1,219 - 1,219
Common stock issued for services 1,500 600 8,200
Write-down of goodwill 1,578,350 - 1,578,350
Allowance for investments 220,000 - 220,000
Management services contributed - 4,000 31,900
Changes in assets and liabilities:
(Increase) decrease in prepaid expenses - - 3,634
(Increase) decrease in deposits (169,687) - (169,687)
Increase (decrease) in accounts payable 45,269 (4,244) 52,230
Increase (decrease) in accrued expenses 15,977 - 15,977
------------ ------------ --------------
Net Cash Used by Operating Activities (381,687) (10,700) (482,516)
------------ ------------ --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (22,681) - (22,681)
------------ ------------ --------------
Net Cash Used by Financing Activities (22,681) - (22,681)
------------ ------------ --------------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash proceeds from acquisition of subsidiary 76,650 - 76,650
Proceeds from sale of common stock - 11,000 44,435
Proceeds from notes payable 380,881 1,000 382,881
Payment of notes payable - (2,000) (2,000)
Proceeds from related parties 30,558 - 30,558
Contributions to capital - - 14,000
------------ ------------ --------------
Net Cash Provided by Financing Activities $ 488,089 $ 10,000 $ 546,524
------------ ------------ --------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
28
<PAGE>
CONDOR CAPITAL, INC.
(A Development Stage Company)
Consolidated Statements of Cash Flows (Continued)
<TABLE>
<CAPTION>
From Inception
of the
Development
Stage on
For the Years Ended October 1,
September 30, 1990 Through
--------------------------- September 30,
2000 1999 2000
------------ ------------ --------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN CASH $ 83,721 $ (700) $ 41,327
CASH AT BEGINNING OF PERIOD 201 901 42,595
------------ ------------ --------------
CASH AT END OF PERIOD $ 83,922 $ 201 $ 83,922
============ ============ ==============
SUPPLEMENTAL DISCLOSURES
OF NON-CASH INVESTING AND
FINANCING ACTIVITIES:
Stock issued in acquisition of subsidiary $ 1,875,000 $ - $ 1,875,000
Common stock issued for services $ 1,500 $ 600 $ 8,200
CASH PAID FOR:
Interest $ - $ - $ -
Income taxes $ - $ - $ -
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
29
<PAGE>
CONDOR CAPITAL, INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
September 30, 2000
NOTE 1 - OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Organization
Condor Capital, Inc. (the "Company") was incorporated in Colorado on
December 22, 1987. In January 1990, Condor Capital, Inc. acquired all
of the outstanding common stock of Aviation Management Group, Inc.
("AMG" and also referred to as the "Company"). For accounting
purposes, the acquisition was treated as a recapitalization of the
Company with AMG being treated as the acquirer (in a reverse
acquisition).
After the acquisition, AMG conducted business as Condor Capital, Inc.
AMG was incorporated January 5, 1987 under the name Spectrum
Publications, Inc. ("Spectrum") as a Colorado corporation. In November
1989, Spectrum amended its Articles of Incorporation and changed its
name to Aviation Management Group, Inc. The Company had no operations
prior to October 1989. In October 1989, the Company entered the
insurance and printing business. Later in 1990, all of the Company's
insurance and printing operations were terminated. Therefore,
effective October 1, 1990, the Company reentered the development stage
as defined in Statement of Financial Accounting Standards No. 7,
"Accounting and Reporting by Development Stage Enterprises."
Effective January 1, 1995, AMG was administratively dissolved by the
office of the Colorado Secretary of State. As a result, Condor
Capital, Inc. (the former legal acquirer) ceased to have a subsidiary
and became the sole surviving entity.
On February 11, 2000, the Company acquired 100% of Rogart Ltd.
(Rogart), a corporation organized under the laws of Turkish Republic
of Northern Cyprus, by issuing 2,500,000 shares of its common stock in
exchange for all of the outstanding stock of Rogart. The shares were
valued at $1,875,000 or $0.75 per share, the trading price of the
common stock on the date of acquisition. The acquisition has been
accounted for under the purchase method of accounting, with acquired
assets and liabilities recorded at their fair market value.
On March 14, 2000, the Company changed its state of domicile from
Colorado to Nevada. As part of the change, the Company increased its
authorized shares to 125,000,000 consisting of 100,000,000 shares of
common stock and 25,000,000 preferred shares. The par value of the
common shares was also changed from no par value to $0.001 par value.
30
<PAGE>
CONDOR CAPITAL, INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
September 30, 2000
NOTE 1 - OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
b. Basis of Presentation and Going Concern
The accompanying consolidated financial statements have been prepared
on a going concern basis, which contemplates the realization of assets
and the satisfaction of liabilities in the normal course of business.
The financial statements do not include any adjustments relating to
the amount and classification of liabilities that might be necessary
should the Company be unable to continue as a going concern. The
Company's continuation as a going concern is dependent upon its
ability to obtain additional financing as may be required and to
develop viable business operations that will generate sufficient cash
flow to meet its obligations on a timely basis. If the Company cannot
raise additional capital or debt financing, it may not be able to
continue as a going concern.
c. Cash and Cash Equivalents
For purposes of financial statement presentation, the Company
considers all highly liquid investments with a maturity of three
months or less, from the date of purchase, to be cash equivalents.
d. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
Significant estimates have been made with regards to estimates of
contributed services.
e. Reverse Stock Split
Effective August 19, 1993, the Company approved a one for two hundred
reverse stock split of all outstanding common shares and common stock
purchase warrants. All share amounts, warrant amounts and (losses) per
share amounts have been retroactively restated for the reverse stock
split.
f. Fixed Assets
Fixed assets are recorded at cost. Major additions and improvements
are capitalized. Minor replacements, maintenance and repairs that do
not increase the useful life of the assets are expensed as incurred.
Depreciation of property and equipment is determined using the
straight-line method over the expected useful lives of the assets as
follows:
Description Useful lives
----------- ------------
Computers and equipment 3 years
Leasehold improvements 3 years
Office furniture 5 years
Depreciation expense was $1,219 for the year ended September 30, 2000.
31
<PAGE>
CONDOR CAPITAL, INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
September 30, 2000
NOTE 1 - OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
g. New Accounting Pronouncement
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities" which requires companies to record
derivatives as assets and liabilities, measured at fair market value.
Gains or losses resulting from changes in the values of those
derivatives would be accounted for depending on the use of the
derivative and whether it qualifies for hedge accounting. The key
criterion for hedge accounting is that the hedging relationship must
be highly effective in achieving offsetting changes in fair value or
cash flows. SFAS No. 133 is effective for all fiscal quarters of
fiscal years beginning after June 15, 1999. The adoption of this
statement had no material impact on the Company's consolidated
financial statements.
h. Basic Loss Per Share
The computation of basic loss per share of common stock is based on
the weighted average number of shares outstanding during the period of
the consolidated financial statements as follows:
Loss Shares Per Share
(Numerator) (Denominator) Amount
----------- ------------- ---------
For the year ended
September 30, 2000 $(2,074,315) 19,230,529 $ (0.11)
For the year ended
September 30, 1999 $ (11,056) 15,970,010 $ (0.00)
Fully diluted loss per share is not presented, as any common stock
equivalents would be antidilutive in nature.
i. Accounting Method
The Company's consolidated financial statements are prepared using the
accrual method of accounting. The Company has elected a September 30
year end.
j. Goodwill
The excess of the purchase price over the fair market value of the
assets and liabilities acquired in the purchase of Rogart was
$1,578,350 and was recorded as goodwill. The goodwill was written off
in the current year because it was determined that the investment was
not recoverable.
32
<PAGE>
CONDOR CAPITAL, INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
September 30, 2000
NOTE 1 - OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
k. Principles of Consolidation
The consolidated financial statements include those of Condor Capital,
Inc. (Condor) and its wholly-owned subsidiary, Rogart Limited
(Rogart), and its 50% owned subsidiary, Konnect Corporation (Konnect),
and Konnect's wholly-owned subsidiary, Konnect Strategic Services
Limited. All significant intercompany accounts and transactions have
been eliminated.
i. Foreign Currency Translation
All transactions in currencies other than the United States dollar
during the year are translated at the exchange rates on the
transaction dates. Monetary assets and liabilities denominated in a
foreign currency are translated at the prevailing year-end rates of
exchange. Exchange gains or losses are included in the consolidated
statements of operations.
NOTE 2 - PAYABLES - RELATED PARTIES
During 1999, a stockholder advanced the Company $1,000 which was paid
in 1999. Also during 1999, the Company repaid a stockholder advanced
note payable in the amount of $1,000. The unsecured notes payable to
the stockholders carried no interest rate or maturity date.
During 2000, the President of the Company advanced $30,558 to the
Company. The advances are short-term (due on demand) and non-interest
bearing.
NOTE 3 - COMMON AND PREFERRED STOCK
In January 1990 and in conjunction with the acquisition of AMG, the
Company had established a series B convertible preferred stock with
140,000 shares authorized. The 140,000 shares of preferred stock were
issued to former AMG stockholders. The preferred stock was convertible
into common stock. The preferred shares were returned to the Company
and canceled in 1997 along with the shares of common stock, as
described below.
In fiscal 1991 and 1993, the Company issued 15,000 shares of common
stock to the Company's management for services valued at $6,000. In
1993 and 1994, the Company conducted merger negotiations with Golfnet
Corporation ("Golfnet"). At that time, Golfnet paid a total of $14,000
for legal and accounting services provided to the Company in
connection with the merger. To facilitate the merger, the Board of
Directors of the Company enacted a 200 for 1 reverse split of the
Company's common stock and negotiated with former AMG shareholders to
retrieve and cancel 497,600 common shares and 140,000 preferred shares
originally issued to them. However, the negotiations with Golfnet
terminated. The Company retained those shares and canceled them, along
with an additional 93,400 shares returned by AMG shareholders, in
1997.
33
<PAGE>
CONDOR CAPITAL, INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
September 30, 2000
NOTE 3 - COMMON AND PREFERRED STOCK (Continued)
During the year ended September 30, 1997, the Company awarded 23,620
shares of common stock to the Company's president and valued the
transaction at $100. Management services during the year valued at
$3,900 were contributed by officers and certain shareholders. The
Company sold 2,462,814 shares, 3,273,810 shares and 1,920,000 shares
to current stockholders for $5,835, $9,167 and $6,500, respectively.
In addition, the Company sold 3,580,000 shares to outside investors
for $11,993.
During the year ended September 30, 1998, there were no common or
preferred stock transactions. However, management services valued at
$4,000 were contributed to the company by certain shareholders.
During the year ended September 30, 1999, the Company awarded 300,000
shares of common stock to officers of the Company and valued the
transaction at $600. Management services during the year valued at
$4,000 were contributed by officers and certain shareholders. The
Company sold 5,500,000 shares to current and new stockholders for
$11,000.
During the year ended September 30, 2000, the Company issued 35,000
shares of common stock for services valued at $1,500. The Company also
issued 2,500,000 shares of common stock in the acquisition of Rogart
(see Note 1).
NOTE 4 - RELATED PARTY TRANSACTIONS
From 1993 to the present time, management has contributed services
without compensation. The services have been valued and expensed at a
range of $4,000 to $8,000 per year for a cumulative total of $31,900.
NOTE 5 - INCENTIVE STOCK OPTION PLAN
In March 2000, the Company's Board of Directors authorized an
Incentive Stock Option Plan and reserved 5,000,000 shares of the
Company's no par value common stock for issuance to key employees. The
Board of Directors is authorized to determine the exercise price, time
period, number of shares subject to the option, and the identity of
those persons receiving the options. As of September 30, 2000, no
options have been granted pursuant to the plan.
NOTE 6 - INCOME TAXES
At September 30, 2000, the Company has a net operating loss (NOL)
carryforward for tax purposes of approximately $900,000 (expiring in
the years 2004 to 2020).
34
<PAGE>
CONDOR CAPITAL, INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
September 30, 2000
NOTE 6 - INCOME TAXES (Continued)
Deferred income taxes are recorded to reflect the tax consequences on
future years of differences between the tax basis of assets and
liabilities and their financial reporting amounts at each year end.
Deferred income tax assets are recorded to reflect the tax
consequences on future years of income tax carryforward benefits,
reduced by benefit amounts not expected to be realized by the Company.
Deferred tax assets at September 30, 2000 and 1999 were reduced by
equal amounts due to management's estimation of their ultimate
realizability.
There was no income tax provision or benefit for the years ended
September 30, 2000 and 1999.
NOTE 7 - NOTES PAYABLE
The Company has borrowed $380,881 from an individual during the year
ended September 30, 2000. The note bears interest at 12% per year, is
payable on demand and is unsecured. At September 30, 2000, this note
had accrued interest of $13,567.
NOTE 8 - SUBSEQUENT EVENT
Subsequent to September 30, 2000, the individual mentioned in Note 7
loaned the Company an additional $128,024 with interest at 12% per
year and payable on demand. The Company has not made any payments on
the note.
35
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Effective February 25, 2000, Condor Capital, Inc., a Colorado corporation
(the "Company") dismissed Gordon, Hughes & Banks, LLP ("GHB") as its independent
public accountants. The Board of Directors of the Company approved this action.
During the two most recent fiscal years and through December 16, 2000,
there were no disagreements with GHB on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure which
disagreements, if not resolved to the satisfaction of GHB, would have caused GHB
to make reference to the subject matter of the disagreement(s) in its reports.
GHB audited the balance sheets of the Company at September 30, 1999 and
1998, and the related statements of operations, stockholders' equity and cash
flows, for the fiscal years ended September 30, 1999 and September 30, 1998
(collectively, the "Financial Statements"). GHB's reports on the Financial
Statements did not contain an adverse opinion or disclaimer of opinion, and with
the exception of a standard "Going Concern" qualification because of the lack of
material operations of the Company on the dates of the above referenced
Financial Statements, were not qualified or modified as to uncertainty, audit
scope or accounting principles.
The Company provided GHB with a copy of the above statements, and requested
that GHB furnish a letter addressed to the Securities and Exchange Commission
(the "Commission") stating whether GHB agrees with such statements. A copy of
the letter of GHB to the Commission, dated March 1, 2000, was filed as an
exhibit to a report on Form 8-K filed March 3, 2000.
Effective February 25, 2000, the Company engaged the accounting firm of HJ
& Associates, LLC, formerly known as Jones, Jensen & Company as independent
public accountants of the Company for the fiscal year ending September 30, 2000.
HJ & Associates has not previously served as the Company's independent
accountants. However, the Company believes HJ & Associates has the
qualifications, skills, and reputation necessary to adequately represent the
interests of the Company. The services to be provided to the Company by HJ &
Associates in fiscal 2000 include examination of the Company's consolidated
financial statements, review of quarterly reports and services in connection
consultations on various tax and information matters.
PART III.
--------
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16 (a) OF THE EXCHANGE ACT
-------------------------------------------------------------
(a) Identity of Directors and Executive Officers.
--------------------------------------------
Name and Address Age Position Term Served Since
------------------------------------------------------------------------
Lee E. Gahr 37 President, CEO 1 Year February 16,
#518-1489 Marine Drive Director 2000
West Vancouver, BC,
Canada V7T-1B8
W. Patrick Battista 54 Secretary, 1 Year February 16,
3858 W. Carson Street Director 2000
Suite 127, Torrance
California 90503-6705
Paul Leslie Hammond 54 CFO 1 Year September 18,
4018 Bayridge Crescent Director 2000
West Vancouver, BC,
Canada V7V-3K4
36
<PAGE>
The following persons serve as the directors and officers of the Company.
Lee E. Gahr
-----------
Mr. Gahr, a resident of Vancouver, BC, has a strong background in
international trade and finance. Mr. Gahr studied business administration and
computer drafting while at the same time establishing an international marketing
and trading Company based in Edmonton, Alberta.
Mr. Gahr relocated to Vancouver, BC in 1988 to participate as a
draftsperson on the Alcan "Kemano" power plant project. While in Vancouver, Mr.
Gahr established a trading Company which dealt primarily in goods and services
for the Far East markets. In 1991, as a result of businesses in Eastern Russia,
Mr. Gahr became a consultant for the Khabarovsk, Krai Administration, detailing
economic growth and expansion for the city and region of Khabarovsk in the
Russian Federation. His increased involvement in commerce in the Far East
allowed him to relocate in Hong Kong in 1992.
While residing in Hong Kong, Mr. Gahr advised selective corporations on
expansion into the Peoples Republic of China. The focus of this consultation was
for corporations based in Hong Kong, Singapore and Malaysia to expend their
growth in to the Chinese economy beyond that of traditional trade. This
involvement in China contributed to Mr. Gahr becoming a special consultant to
the Ministry of Agriculture regarding the rebuilding and growth of selective
areas within the Ministry of Agriculture. In 1994 Mr. Gahr returned to Vancouver
where he established himself in the field of international financing. For the
years since, Mr. Gahr has been involved either as consultant or participant in
numerous financings, both within the public and private arenas. These projects
have required Mr. Gahr's participation in locations stretching across North
America, Eastern and Western Europe, the United Arab Emirates, Turkey and
Mexico.
Presently, Mr. Gahr has divested himself of all business interests save
that of serving as Chairman, President and CEO of Condor Capital Inc. He
continues to serve as a contributing member of a think-tank committee for the
development and integration of Eastern Europe and Middle Eastern business into
the European Union marketplace.
W. Patrick Battista
-------------------
Mr. Battista, a native of Chicago Illinois, is a long term resident of Los
Angeles, California. The majority of Mr. Battista's scholastic years where spent
in California where, while attending college, he joined a large aero-space firm
located in the Los Angeles area. He became project manager in charge of research
and development of environmental cryogenic systems for all space projects under
contract with the Company.
Subsequent to aerospace industry, Mr. Battista became Vice President of
Marketing for a manufacture of computerized audio/visual advertising equipment,
which also provided consulting services to independent computer peripheral
equipment manufacturers. His responsibility was for initial development,
research and feasibility studies of product marketability and the implementation
of local, national and international sales, coordinated national and
international national media placement and public relations for product
promotion.
Mr. Battista formed Battista Investments, Inc., which acquired, brokered
and developed numerous real estate investments. For more than twenty years, Mr.
Battista was involved in the real estate market, experienced in the sale of
single family residences, managing multiple residential offices, operating
income and investment divisions for a conglomerate tax preparation firm, and the
organization of group investments for the acquisition of commercial and
residential income property.
Currently, Mr. Battista is President of Desert Gaming Inc. (1993) and North
Bay Gaming Inc. (1994). Desert Gaming and North Bay Gaming have the exclusive
distribution rights of electronic technologies used in the gaming industry.
Desert Gaming is predominant in the State of Arizona while North Bay has rights
for ten Northeastern and Central States.
37
<PAGE>
Paul Leslie Hammond, C.A.
------------------------
Paul Leslie (Les) Hammond, a native of Vancouver, Canada, received his
Bachelor of Arts degree in Economics and Commerce, from Simon Fraser University
in 1968, articling as a Chartered Accountant with Arthur Andersen & Co. from
1968 through 1973.
After his time at Arthur Andersen & Co., Mr. Hammond spent five years with
the customs brokerage firm of Milne & Craighead as Treasurer / Vice-President
Finance and Administration, responsible for acquisitions, fund management and
investment, and management of informational systems and accounting procedures.
From 1978 through to 1989, Mr. Hammond was a tax partner with the firm of
Manning Jamison Chartered Accountants before establishing his own accounting
based consulting firm, providing financial, merger and acquisitions, and
taxation services to three hundred clients.
During the years following, Mr. Hammond has served as a director and/or
officer for a number of public and private companies including, but not limited
to: Okanagan Spring Brewery Ltd. (Canada), Cusac Gold Mines Ltd. (Canada), Thai
Growth Industries Company Ltd. (Thailand), ProComm Communications International
Inc. (China), Xpedite Systems Inc. (USA), SVC Group comprised of Swift Global
Communications Inc. (New York) - Comwave Communications AG (Switzerland) - Vitel
International Holdings Inc. (California), and Quadrant Financial Corporation
(Canada)
Mr. Hammond's last position was that of President and Chief Executive
Officer of Advanced Card Technologies Plc. (U.K) and President of Advanced Card
Technologies Inc. (Delaware). Advanced Card Technologies is a United Kingdom
based corporation that provides enhanced telecommunications services and
technologies.
In addition to being the Chief Financial Officer and Director of Condor
Capital, Inc. (Nevada) Mr. Hammond continues to maintain his active memberships
with the Institute of Chartered Accountants British Columbia and the Canadian
Institute of Chartered Accountants.
The Company's directors hold office until the next annual meeting of the
Company's shareholders, and officers of the Company hold office until removed or
replaced by the directors of the Company. There is no arrangement or
understanding between any director and any other person pursuant to which he or
she was selected as a director and officer of the Company.
(b) No Significant Employees.
------------------------
The Company does not employ any person who is expected to make significant
contributions to the business of the Company who is not an executive officer.
(c) No Family Relationships.
-----------------------
There are no family relationships between any director and any person who
may be nominated or chosen to be a director or executive officer.
(d) Involvement in Certain Legal Proceedings.
----------------------------------------
During the past five years, no present or former director, executive
officer or person nominated to become a director or an executive officer of the
Company:
(1) was a general partner or executive officer of any business against
which any bankruptcy petition was filed, either at the time of the
bankruptcy or two years prior to that time;
(2) was convicted in a criminal proceeding or named subject to a pending
criminal proceeding (excluding traffic violations and other minor
offenses);
(3) was subject to any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining, barring,
suspending or otherwise limiting his involvement in any type of
business, securities or banking activities; or
(4) was found by a court of competent jurisdiction (in a civil action),
the Securities and Exchange Commission or the Commodity Futures
Trading Commission to have violated a Federal or state securities or
commodities law, and the judgment has not been reversed, suspended or
vacated.
38
<PAGE>
Section 16 (a) Beneficial Ownership Compliance.
----------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers, directors and persons who own more than ten percent of the
Company's Common Stock, to file initial reports of beneficial ownership on Form
3, changes in beneficial ownership on Form 4 and an annual statement of
beneficial ownership on Form 5, with the SEC. Such executive officers, directors
and greater than ten percent shareholders are required by SEC rules to furnish
the Company with copies of all such forms that they have filed.
Based on its review of the copies of such forms received by the Company and
representations from certain reporting persons, the Company believes that during
the period from October 19, 1999 (the date which the Company first became
subject to Section 16(a)) until September 30, 2000, that the Company is
currently delinquent in some of its required Section 16(a) filing requirements
applicable to its executive officers and directors. Specifically, although none
of the officers and directors are the beneficial owners of any shares of Common
Stock of the Company, certain officers and directors of the Company have been
granted non-qualified stock options to acquire shares of Common Stock of the
Company. These officers and directors have advised the Company that they will
cure the failure to file a Form 3 through the filing of this information I their
Form 5, Annual Statement of Beneficial Ownership.
39
<PAGE>
ITEM 10. EXECUTIVE COMPENSATION
----------------------
The following table sets forth the aggregate compensation paid by the
Company for services rendered during the periods indicated:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
---------------------------
Long Term Compensation
--------------------------------------------------
Annual Compensation Awards Payouts
-----------------------------------------------------------------------------------------------
Securities All
Other Underlying Other
Annual Restricted Options/ LTIP Compen-
Name and Year or Compen- Stock SAR's Payouts sation
Principal Period Salary Bonus sation) Awards (#) ($) ($)
Position Ended ($) ($) ($)
(a) (b) (c) (d) (e) (f) (g) (h) (i)
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert D.
Hirsekorn 2000 $0 0 0 0 0 0 0
President, CEO 1999 $0 0 0 0 0 0 0
1998 $0 0 0 0 0 0 0
Lee E. Gahr 2000 $0 0 0 0(1) 0 0 0
President, CEO 1999 $0 0 0 0 0 0 0
1998 $0 0 0 0 0 0 0
W. Patrick Battista 2000 $0 0 0 0(2) 0 0 0
Secretary 1999 $0 0 0 0 0 0 0
1998 $0 0 0 0 0 0 0
Paul l. Hammond 2000 $0 0 0 0(3) 0 0 0
CFO 1999 $0 0 0 0 0 0 0
1998 $0 0 0 0 0 0 0
</TABLE>
As at September 30, 2000 the directors and officers have not taken any
directors fees, salaries or exercised any options.
---------------------
(1) On November 20, 2000, subsequent to the fiscal year ended September
30, 2000, the Company granted Mr. Gahr a non-qualified stock option to
purchase 580,358 shares of Common Stock of the Company, at an exercise
price of $.55 per share. Said options vest immediately and are
exercised for a period of three years expiring on November 19, 2003.
(2) On November 20, 2000, subsequent to the fiscal year ended September
30, 2000, the Company granted Mr. Battista a non-qualified stock
option to purchase 100,000 shares of Common Stock of the Company, at
an exercise price of $.55 per share. Said options vest immediately and
are exercised for a period of three years expiring on November 19,
2003.
(3) On November 20, 2000, subsequent to the fiscal year ended September
30, 2000, the Company granted Shangri-La Management Ltd., a Bristish
Virgin Island corporation, a non-qualified stock option to purchase
1,000,000 shares of Common Stock of the Company, at an exercise price
of $.55 per share. Said options vest immediately and are exercised for
a period of three years expiring on November 19, 2003. Shangri-La
Management Ltd., is 100% owned by director and Chief Financial
Officer, Paul Les Hammond, and as such Shangir-La Management Ltd., is
considered an affiliated of the Company.
(4) On November 20, 2000, subsequent to the fiscal year ended September
30, 2000, the Company granted Renfrew Corporate Management Services
Ltd., a non-qualified stock option to purchase 335,142 shares of
Common Stock of the Company, at an exercise price of $.55 per share.
Said options vest immediately and are exercised for a period of three
years expiring on November 19, 2003. Renfrew Corporate Management
Services Ltd., is not an affiliate with the Company.
As of the date of this Annual Report none of these options have been
exercised.
40
<PAGE>
Stock Options
-------------
On March 1, 2000, the Board of Directors adopted the Condor Capital, Inc.
2000 Stock Option Plan (the "2000 Plan"). The 2000 Plan allows the Company to
attract and retain employees and directors of the Company and its subsidiaries
and to provide such persons with incentives and awards for superior performance.
The 2000 Plan is administered by a committee appointed by the Board of Directors
of the Company, which has broad flexibility in designing stock-based incentives.
The Board of Directors determines the number of shares granted and the option
exercise price, but such exercise price of Incentive Stock Options (ISO) may not
be less than one hundred percent of the fair market value of Common Stock on the
grant date.
The following table reflects certain information, with respect to stock
options granted to certain executive officers and directors during the fiscal
year ended September 30, 2000.
<TABLE>
<CAPTION>
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
--------------------------------------
Number Of % Of Total
Securities Options
Underlying Granted To Exercise
Options Employees Or Base
Granted In Fiscal Price Expiration
Name (#) Year(%) ($/Sh)(1) Date
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Lee E. Gahr 0 0.00% N/A N/A
W. Patrick Battista 0 0.00% N/A N/A
Paul Leslie Hammond 0 0.00% N/A N/A
</TABLE>
The following tables reflect certain information, with respect to the
exercise of stock options by certain executive officers during fiscal 2000.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR
---------------------------------------------------
Number Of
Securities Value Of
Underlying Unexercised
Unexercised In-The-Money
Options At Options At
Fy-End(#) Fy-End($)(1)
------------------------------------------
Shares Value
Acquired On Realized Exercisable(E)/ Exercisable(E)/
Name Exercise(#) ($) Unexercisable(U) Unexercisable(U)
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Lee E. Gahr 0 0 0 0
W. Patrick Battista 0 0 0 0
Paul Leslie Hammond 0 0 0 0
</TABLE>
41
<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------------------------------------
(a) Security Ownership of Certain Beneficial Owners.
------------------------------------------------
The following table sets forth the number of shares of the Company's Common
Stock owned by each person who, as of December 21, 2000, was known by the
Company to own beneficially more than five percent (5%) of the Company's
outstanding Common Stock, Based upon 20,155,010 shares of Common Stock
outstanding on December 21, 2000.
Amount and Nature of Beneficial Ownership
-----------------------------------------
Common
Name and Address reholders Stock Percent
------------------------------------------------------------------
Fatma Yerli 1,250,000 6.2%
3 Namik Kemal
Cad. Girne
Sefik Yerli 1,250,000 6.2%
3 Namik Kemal
Cad. Girne
(b) Security Ownership of Management.
--------------------------------
The following table sets forth, as of December 21, 2000 the total number of
shares of Common Stock owned by the Company's Officers and Directors, Lee E.
Gahr, W. Patrick Battista, and Paul Leslie Hammond.
Executive Officers, Directors Common
And Principal Shareholders Stock Total Percent
------------------------------------------------------------------
Lee E. Gahr 0 0 0
W. Patrick Battista 0 0 0
Paul Leslie Hammond 0 0 0
(c) Changes in Control.
-------------------
The Company is aware that some shareholders have been in negotiations with
prospective purchasers of their shares, which if accomplished, would result in a
change in control of the Company. To the knowledge of the Company, there are no
legally binding agreements with respect to any such proposed sales.
42
<PAGE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
There have not been any reportable transactions during the last two years,
and there are no proposed reportable transactions, to which the Company was or
is to be a party, in which any of the following persons had or is to have a
direct or indirect material interest: any director or executive officer of the
Company, any nominee for election as a director, any security holder owning more
than five percent (5%) of the Common Stock, or any member of the immediate
family of any of the foregoing group.
Subsequent Events
-----------------
Granting of Non-Qualified Stock Options
---------------------------------------
On November 20, 2000, subsequent to the fiscal year ended September 30,
2000, the Company granted certain officers and directors non-qualified stock
options to purchase an aggregate of 2,015,5000 shares of Common Stock of the
Company, at an exercise price of $.55 per share. Said options vest immediately
and are exercised for a period of three years expiring on November 19, 2003.
The options were granted as follows:
Name of Optionee Options
------------------------------- ----------------
Mr. Lee Gahr 580,358 shares
Mr. Pat Battista 100,000 shares
Shangri-La Management Ltd.(1) 1,000,000 shares
Renfrew Corporate Management Services Ltd. 335,142 shares
---------------
(1) Shangri-La Management Ltd., is a British Virgin Island corporation
owned 100% by director and Chief Financial Officer, Paul Les Hammond.
As of the date of this report the options had not been issued.
Demand Note in Favor of Shefik Hassan and Warrants
--------------------------------------------------
On November 24, 2000, subsequent to the year covered by this report, the
Company executed a promissory note in favor of Shefik Hassan in the principal
amount of $508,904.67, relating to advances to the Company. The note is a demand
note which bears interest on the unpaid principal amount at the rate of 12% per
annum. There is no prepayment penalty and the Company can repay any outstanding
amount at any time. As of September 30, 2000 the total principal amount due and
owing was $380,881.
In conjunction with and as a condition to such loan, the Company authorized
and granted a warrant to Shefik Hassan, entitling Mr. Hassan to acquire one
share of the Common Stock of the Company for each dollar advanced by Mr. Hassan.
Said warrants are exercisable at an exercise price of $0.55 per share and
expire in three years on November 23, 2003.
Agreement with May Davis Group $1.3 Million Convertible Debenture Placement
--------------------------------------------------------------------------
On December 4, 2000, subsequent to the year covered by this report,, the
Company entered into an Placement Agent Agreement with The May Davis Group, Inc.
("May Davis'), under which May Davis, as the exclusive placement agent for the
Company would undertake to sell in an exempt private placement, pursuant to Rule
506 of Regulation D, an aggregate of $1.3 million of Convertible Debentures of
the Company. Under the terms of the offering, the Company proposes to offer for
sale to Accredited Investors only, an aggregate of $1.3 million of Convertible
Debentures of the Company. The Convertible Debentures have five (5) year terms,
a 5 % interest rate and convertibility at the lower of 120% of the Closing Bid
Price as of the date of the Debenture or 80% of the averaged five (5) lowest
Closing Bid Prices of the Common Stock for the twenty (20) trading days
immediately preceding the Conversion. The holders of the Convertible Debenture
shall have registration rights under which the Company is obligated to register
the resale of the Conversion Shares under the Securities Act of 1933. Interest
is payable at the Conversion date or upon maturity, whichever occurs first.
43
<PAGE>
Agreement with May Davis Group for $10 Million Equity Line Financing.
--------------------------------------------------------------------
On December 4, 2000, subsequent to the year covered by this report, the
Company, through The May Davis Group, entered into an Equity Credit Line
agreement under the auspices of a registration on Form SB-2, with GMF Holdings
whereby the Company shall issue and sell to GMF Holdings, from time to time, up
to Ten Million ($10,000,000) Dollars of the Company's common stock, par value
$0.001. The Company is required, prior to advance of funds, to have filed a
Registration Statement with respect to the resale of the Registrable Securities
and such Registration Statement shall have become effective. The purchase price
of the common stock from time to time shall be 91% of the market price. The
maximum amount to be advanced from time to time shall be equal to one hundred
and fifty percent (150%) of the average daily volume of the Company's common
stock multiplied by the purchase price.
Management Agreement with Shangri-La Management Ltd.
---------------------------------------------------
On December 8, 2000, subsequent to the year covered by this report, the
Company entered into a Management Consulting Agreement with Shangri-La
Management Ltd., a British Virgin Island corporation which is wholly owned by
director and Chief Financial Officer, Paul Les Hammond. Under the Consulting
Agreement, Shangri - La would provide the services of Mr. P. L. Hammond to the
Company and its subsidiaries as a Director and Chief Financial Officer. The term
of the Agreement is for three years and the monthly compensation is set at
$5,000 for the first six months at which time the compensation will be
re-negotiated.
44
<PAGE>
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
(a) List of Exhibits attached or incorporated by reference pursuant to Item
601 of Regulation S-B.
EXHIBIT INDEX
-------------
Exhibit
Number Description
--------- ----------------------------------------------------------
2.1(a)(+) Acquisition Agreement and Plan of Reorganization with Rogart
Limited, a corporation organized under the laws of the Turkish
Republic of Northern Cyprus. (Incorporated from the Company's
Form 8-K filed February 16, 2000, Commission file number
33-20848-D)
2.1(b)(+) Articles of Merger of Condor Capital, Inc. a Colorado
Corporation into Condor Capital, Inc. a Nevada Corporation.
(Incorporated from the Company's Form 8-K filed May 17, 2000,
Commission file number 33-20848-D)
3.1(a)(+) Articles of Incorporation of Company as amended.
(Incorporated by reference to Company's Form 10-KSB filed for the
fiscal year ended September 30, 1997)
3.1(b)(+) Bylaws of Company. (Incorporated by reference to Company's
Form 10-KSB filed for the fiscal year ended September 30, 1997)
3.1(c)(+) Articles of Incorporation of Condor Capital, Inc., a Nevada
Corporation (Incorporated by reference to Company's Form 14A
Proxy Statement filed March 28, 2000).
3.1(d)(+) Bylaws of Condor Capital, Inc. a Nevada Corporation
(Incorporated from the Company's Form 8-K filed May 17, 2000,
Commission file number 33-20848-D)
4.1(+) Specimen certificate for common stock. (Incorporated by
reference to Company's Form 10-SB filed for the fiscal year ended
September 30, 1997)
10.1(+) On March 22, 2000 the Company entered into a Joint Venture
Agreement with Tech-Catalyst Ventures Inc., of Vancouver, British
Columbia (Incorporated by reference to Company's Form 8-K filed
March 22, 2000)
10.2(+) On June 7, 2000 the Company entered into an Amended and
Restated Joint Venture Agreement with Tech-Catalyst Ventures
Inc., of Vancouver, British Columbia (Incorporated by reference
to Company's Form 8-K filed June 9, 2000)
21(+)(+) Subsidiaries of the Company.
27.1(+)(+) Financial Data Schedule (submitted electronically for SEC
information only).
(+) Previously filed.
(+)(+) Filed herewith.
(b) Reports on Form 8-K. There were no other reports on Form 8-K filed
during the last quarter of the period covered by this report.
45
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of Section 13 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.
CONDOR CAPITAL INC.
(Registrant)
Dated: January 15, 2001 /s/ Lee Gahr
------------------------------
By: Lee E. Gahr
Its: President and CEO
Dated: January 15, 2001 /S/ Paul Les Hammond
-------------------------------
By: Paul Les Hammond
Its: CFO
46
