SECURITIES & EXCHANGE COMMISSION
Washington, D.C., 20549
__________________________
FORM 10-KSB
ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d)
of the Securities Exchange Act of 1934
__________________________
For the Fiscal Year Ended December 31, 1998
Commission File Number: 33-21546-D
CONCORDE STRATEGIES GROUP, INC.
(Exact name of Registrant as specified in its Charter)
Colorado 84-1108035
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Ident. Number)
444 Madison Avenue, Suite 1710, New York, NY 10022
(Address of principal executive offices) (zip code)
(212) 317-0060
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 15(d) of the Act:
Title of each class Name of each
exchange on which registered
Common Stock, no par value None
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes _X_ No __
Indicate the number of shares outstanding of each of issuer's classes of
common stock, as of the latest practicable date. At June 2, 1999,
3,600,000 shares of Common Stock, no par value were outstanding.
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (Sec. 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by reference in
Part III of this Form 10-K [ ]
The aggregate market value of the voting stock held by non-affiliates of
registrant on June 2, 1999 was $469,989. .
FORM 10-KSB
DECEMBER 31, 1998
CONCORDE STRATEGIES GROUP, INC.
TABLE OF CONTENTS
Item
No. Description Page
PART I
1. Business 3
2. Properties 5
3. Legal Proceedings 5
4. Submission of Matters to a Vote of Security Holders 5
PART II
5. Market for Registrant's Common Equity and Related
Stockholder Matters 6
6. Selected Financial Data 7
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
8. Financial Statements 11
9. Disagreements on Accounting and Financial Disclosure 27
PART III
10. Directors and Executive Officers of the Registrant 27
11. Executive Compensation 28
12. Security Ownership of Certain Beneficial Owners
and Management 29
13. Certain Relationships and Related Transactions 30
PART IV
14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K 30
Signatures
FORM 10-KSB
CONCORDE STRATEGIES GROUP, INC.
December 31, 1998
PART I
ITEM 1. BUSINESS: Introduction
Concorde Strategies Group, Inc. ("Registrant" or the "Company" or
"Concorde") was formed under the laws of the state of Colorado for the
purpose of participating, either through acquisition or merger, in a viable
business opportunity. Registrant has since its inception been evaluating
various privately held companies which management believed could be viable
business opportunities.
On September 23, 1996, the Company entered into an Agreement and Plan of
Reorganization pursuant to which it acquired 100 percent of the issued and
outstanding capital stock of Concorde Management, Ltd. ("CML"). This
acquisition was concluded as of July 1, 1997.
Reorganization of Business Operations
The Company reached agreement in April, 1999, subject to approval by
shareholders, for the divestiture of L'Abbigliamento, Ltd., which has been
Concorde's sole operating subsidiary. Under the terms of the Termination
Agreement, which will be effective as of the close of business on March 31,
1999, L'Abbigliamento, Ltd. will resume operations as an independent
private company. Also, L'Abbigliamento, Ltd. will return 100 percent of
Concorde Class A Preferred Shares in exchange for the return of 100 percent
of the capital stock of L'Abbigliamento, Ltd. held by Concorde. As part of
the divestiture, L'Abbigliamento, Ltd. will repay its outstanding
indebtedness to Concorde in the principal amount of $158,000 in five equal
monthly payments of $1,300, plus 55 equal monthly payments of $1,700, which
payments shall be inclusive of interest at the rate of six percent per
annum, to be followed by a final payment at the end of the aforesaid term
equal to the sum of any accrued but unpaid interest due thereon plus the
entire unpaid principal amount.
In further regard to the Company's Reorganization Plan, Concorde announced
on March 26,1999 that it entered into a Letter of Intent with W3 Group,
Inc., a privately held company engaged in the business of acquiring and
developing young companies whose businesses involve the development of
Internet related technology and applications. The Letter of Intent calls
for Concorde to effect a reverse split of its Common Stock of not less than
1 for 15 and not more than 1 for 30, after which approximately 3,275,000
new shares of Concorde Common Stock will be issued to W3 shareholders in
exchange for 100 percent of the capital stock of W3 Group, Inc. The number
of outstanding shares of Concorde's Series B Convertible Preferred Stock
will remain unchanged, however, the conversion feature will be adjusted to
reflect the reverse split. Certain present and former officers and
directors of Concorde also have an interest in W3 Group, Inc. On April 21,
1999, Concorde entered into a formal Agreement and Plan of Share Exchange
with W3 Group, Inc., subject to approval by shareholders.
All of the foregoing is subject to approval by shareholders, and management
expects to call a special meeting of shareholders as soon as practicable.
Present Operations
Concorde engages in the business of acquiring small growing companies in
diverse industries, providing value added management services to those
companies, and assisting with capital formation. These companies will
become wholly owned, or majority owned, subsidiaries of Concorde.
Concorde's objective is to better meet the needs of growing companies that
may have had difficulty obtaining capital from traditional sources such as
banks, large asset based lenders, and the public securities markets. Also,
Concorde believes that its opportunity is enhanced because of the
consolidation in the commercial banking industry and the emphasis in
investment banking toward increasingly larger financings. The resulting
diminishing of available capital has affected the flow to smaller
companies, where the need for capital is the most critical.
Concorde's approach is to develop "partnerships" with companies having
exceptional management in order to improve the long term value of a
business. The participation of management through equity based
compensation and stock ownership is a crucial ingredient of Concorde's
plan.
In the beginning of 1999, the Company decided to focus its acquisition
efforts on Internet related technology companies. The Internet industry is
going through fundamental and rapid changes as technology advances,
providing significant business growth opportunities. The emergence of the
Internet into homes and offices has provided a powerful new mechanism for
areas such as electronic commerce, communication via E mail, and the
dissemination of information.
Operations of Subsidiary
The Registrant's wholly owned Subsidiary, L'Abbigliamento, Ltd. (the
"Subsidiary") was divested by Registrant as of March 31, 1999, subsequent
to the period covered by this report.
Acquisition of New Subsidiary
The Company's proposed new subsidiary, W3 Group, Inc. intends to acquire,
finance, and restructure profitable companies that can utilize the Internet
to expand their business and distribution channel. W3's plan is based on
analysis and evaluation of the current industry environment, trends, and
perceived opportunities in certain industries within the Internet. W3
intends to focus on existing companies that have proven markets,
profitability, and management. W3's objective is to provide a platform for
selected companies to expand their markets via use of the Internet,
strengthen internal functions by providing consulting services and
professional management support, and expansion capital, while allowing the
companies to continue management of daily operations.
On March 26, 1999, it was announced that W3 Group, Inc. executed letters
of intent to acquire two privately owned companies, CompuNational, Inc.
and Secure-Net Services, Inc., through an exchange of shares.
CompuNational, Inc. is located in Van Nuys, California and was founded in
1997. The company provides services to the construction industry through
its Plans on Demand (TM) system. This secure Internet system is a unique,
cost effective, state of the art system for quick and customized electronic
transmission of blueprints and specification documents. The company also
offers the construction industry web design services; "CompuWheel", a
digital pen for calculations; archiving systems, advertising capability,
and hardware sales.
Secure-Net Services, Inc. is located in Coral Springs, Florida and was
founded in 1996. The company is marketing an authentication software
security product for Windows 95/98 based systems. This leading edge
software requires both a password and hand held token in order to gain
entry into secured systems.
<PAGE>
Regulation
Although the Company's planned operations are not subject to any
regulations governing the Internet, services which are provided via the
Internet or the companies which provide such services, it is likely that,
in the future, such regulations will be instituted. Although it is not
possible to predict the extent of any such future regulations, and although
management is not aware of any pending regulations which would be
applicable to its planned business operations, it is possible that future
or unforseen changes may have an adverse impact upon the Company's ability
to continue or expand its operations as presently planned. The extent of
such regulations is impossible to predict, as it is the potential impact
upon the business operations of the Company in accordance with its business
plan.
Competition
Registrant is, and is expected to remain, an insignificant entity among a
great many other companies who are engaged in mergers and acquisitions of
other business entities. There are many established venture capital and
financial concerns seeking to attract merger or acquisition candidates,
virtually all of which have significantly greater financial and personnel
resources and technical expertise than Registrant.
The Internet marketplace is new, rapidly evolving and highly competitive,
and it is expected that this competition will persist and intensify in the
future, New competitors may emerge and rapidly acquire significant market
share. Competitors may be able to respond more quickly than the Company to
new or emerging technologies and changes in the marketplace.
ITEM 2. PROPERTIES
Facilities
The Company utilizes the offices and business facilities of Ameristar Group
Incorporated ("Ameristar"), which serves as a consultant to Concorde.
Until October 31, 1997, the Company had the use of these offices and
business facilities rent free. Since November 1, 1997, the Company has
paid a monthly rental of $3,846.00 for use of the office space and related
business facilities to Ameristar.
Employees
The Company has no full time employees except for its President, Mr. Robert
Gordon. The officers and directors, all of whom are engaged in other full
time business activities, devote so much of their time to the affairs of
the Company as is required.
ITEM 3. LEGAL PROCEEDINGS
The Company knows of no litigation pending, threatened or contemplated, or
unsatisfied judgments against it, or any proceedings in which the Company
is a party. The Company also knows of no legal action pending or
threatened or judgments entered against any officers or directors of the
Company in their capacity as such.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The Units sold in the Company's original public offering in 1989 had been
trading on a limited basis, with only a limited trading market for the
shares of common stock having ever been established. The principal market
on which the Company's securities have in the past traded was the
over-the-counter market in the "pink sheets."
There had not been any trading market in the Company's securities from July
19, 1989 through March 24, 1997. The stock resumed trading on March 24,
1997 under the symbol "CSGG" on the OTC Electronic Bulletin Board. The
number of record shareholders on December 31, 1998 for the Company's Common
Stock was 232 and for its Series B Convertible Preferred Stock was 55
shareholders. There currently are 7 market makers for the Company's Common
Stock and 9 market makers for its Series B Convertible Preferred Stock.
The following tables show for the periods indicated the range of high and
low bid quotes for the Common Stock and Series B Convertible Preferred
Shares obtained from the OTC Electronic Bulletin Board and are between
dealers, do not include retail mark-ups, mark-downs, or other fees or
commissions, and may not necessarily represent actual transactions.
COMMON STOCK TRADING HISTORY (Since March 24, 1997)
Fiscal 1997 High Low
Quarter ended March 31, 1997 $0.6250 $0.3750
Quarter ended June 30, 1997 $0.8750 $0.8125
Quarter ended September 30, 1997 $2.0000 $0.6250
Quarter ended December 31, 1997 $1.9375 $1.3437
Fiscal 1998
Quarter ended March 31, 1998 $1.5625 $0.6250
Quarter ended June 30, 1998 $1.0000 $0.4375
Quarter ended September 30, 1998 $0.7500 $0.0313
Quarter ended December 31, 1998 $0.1875 $0.0313
Fiscal 1999
Quarter ended March 31, 1999 $0.6250 $0.0400
SERIES B CONVERTIBLE PREFERRED SHARE TRADING HISTORY (Since December 4,
1997)
Fiscal 1997 High Low
Quarter ended December 31, 1997 $0.3125 $0.8750
Fiscal 1998
Quarter ended March 31, 1998 $4.7500 $0.4375
Quarter ended June 30, 1998 $5.0625 $4.1250
Quarter ended September 30, 1998 $5.1250 $0.4375
Quarter ended December 31, 1998 $1.8750 $1.0625
Fiscal 1999
Quarter ended March 31, 1999 $6.0625 $1.5500
On June 22, 1998, the registrant issued 300,000 shares of Common Stock to a
company which has performed services on behalf of the registrant. The
shares were issued pursuant to an option in the Consulting Agreement to pay
for the consulting fees through the issuance of restricted shares of Common
Stock at the agreed upon rate of $.47 per share.
On August 12, 1998, the Company completed a Private Placement of 337,600
Series B Convertible Preferred Stock Purchase Warrants. All of the
Warrants were sold by the Company and no Placement Agent was involved in
this Offering. The Warrants were sold at a purchase price of $1.00 per
Warrant and the Company realized proceeds of $325,600 from the Offering,
net of offering expenses in the amount of $12,000. The Warrants were sold
through a Private Placement pursuant to the exemption provided by Rule 504
of Regulation D under the Securities Act of 1933, as amended. Each warrant
entitles the holder thereof to purchase one Series B Convertible Preferred
Share at a price of $3.00 per share during the period commencing thirteen
months after the date of the issuance thereof and continuing thirty (30)
months thereafter. The warrants are redeemable by the Company at any time
after thirteen months after their issuance and prior to their expiration at
a price of $0.05 per warrant, upon 30 days prior written notice, provided
that the closing sale price of the shares as reported on the OTC Electronic
Bulletin Board shall have been at least $4.80 (160% of the exercise price
of the warrants) on each of the 20 consecutive trading days ending on the
tenth day prior to the day on which the notice of redemption is given.
Subsequent to the period covered by this report, in April, 1999, the
Company sold 175,000 shares of Series B Convertible Preferred stock to
certain parties who had performed services on behalf of the Company,
including one company which is principally owned by a Director of the
Company. The shares were sold by the Company in consideration for the
cancellation of payments owed by the Company at the agreed upon rate of
$2.00 per share and were sold through a Private Placement pursuant to the
exemption provided by Rule 504 of Regulation D under the Securities Act of
1933, as amended. The sale of these shares will be reflected in the
Company's financial statements for the quarterly period ended June 30,1999.
The Company has not paid any dividends and, there are no plans to pay any
cash dividends in the foreseeable future. The declaration and payment of
dividends in the future, of which there can be no assurance, is determined
by the Board of Directors based upon conditions then existing. There are
no restrictions on the Company's ability to pay dividends.
ITEM 6. SELECTED FINANCIAL INFORMATION
Summary Balance Sheet Data: YEAR ENDED DECEMBER 31,
1998 1997 1996
Total Assets $3,598,222 $3,440,634 $ -0-
Total Current Assets 3,454,374 3,341,282 -0-
Total Liabilities 2,041,520 2,276,451 105,543
Retained Earnings (Deficit) (263,995) (111,164) (244,527)
Stockholders' Equity 1,556,702 $1,164,183 $ (105,543)
<PAGE>
Summary Earnings Data: YEAR ENDED DECEMBER 31,
1998 1997 1996
Revenues $3,845,393 $1,827,502 -0-
Cost of goods sold 3,043,546 1,419,701 -0-
Selling, general &
administrative expense 899,077 495,162 149,543
Income (loss) from operations (97,230) (87,361) (149,543)
Net Income (Loss) (152,831) (100,361) (149,543)
Earnings (Loss) per
Share (.05) $ (.05) $ n/a
The foregoing is selected financial information only, and is qualified by
the financial statements and the notes thereto, in their entirety, which
are set forth elsewhere in this Report. The selected financial information
for 1997 includes the results of the Company's subsidiary, L'Abbigliamento,
Ltd. from July 1, 1997, the effective date of the acquisition.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Divesture of L'Abbigliamento, Ltd.
The Company has developed a new business strategy which is focused on
seeking acquisition opportunities with Internet related technology
companies. As the first step in its reorganization process, the Company
reached an agreement in April, 1999 for the divesture of L'Abbigliamento,
Ltd., Concorde's sole operating subsidiary. L'Abbigliamento, ltd. is a
wholesaler of imported menswear, which does not fit the Company's new
direction. The agreement is subject to approval by shareholders.
The following discussion is included only as historical information to
comply with disclosure requirements for the year ended December 31, 1998.
Investors and shareholders should bear in mind that the Company's only
operating subsidiary was fully divested effective March 31, 1999, the end
of the first quarter of fiscal 1999.
Results of Operations
Until fiscal 1992, Registrant had generated only interest income since its
inception. Commencing in fiscal 1992, Registrant's available cash was
reduced to a level where it ceased to generate any interest revenues at
all. Following the write-off of the judgement obtained against Nite-Lite,
Limited, a Delaware corporation, Registrant had no realistic expectation of
any future revenues, including interest income since its cash position has
been depleted to a balance of $-0- as of March, 31, 1997.
In April, 1996, Registrant undertook a private placement of its securities
pursuant to the provisions of Rule 504 under Regulation D under the
Securities Act of 1933, as amended, whereby it issued 9,000,000 shares of
its Common Stock in exchange for the satisfaction of $45,000 in debts owed
by the Company. Also in
April 1996, the Company effected a 1-for-10 reverse split of its common
stock as the result of which the
Company had, following the aforesaid private offering, 1,200,000 shares
issued and outstanding. This reverse split was effected in anticipation of
management's renewed efforts to find a suitable business opportunity for
the Company.
The results of operations for the Company's subsidiary have been included
in the consolidated results of the Company for the year ended December 31,
1998. For the year ended December 31, 1997, consolidated results of the
Company include the Subsidiary's results of operations for the six month
period beginning on July 1, 1997, the effective date of the acquisition of
the Subsidiary.
Sales were $3,845,393 for the twelve month period ended December 31, 1998,
all of which resulted from the operation of the Company's subsidiary,
L'Abbigliamento, Ltd., which was acquired effective July 1, 1997. For the
same period in 1997, the Company did not have any sales for the six months
ended June 30, 1997, which was prior to the acquisition of the Subsidiary,
and had sales of $1,827,502 for the six months ended December 31, 1997, all
of which resulted from the Subsidiary's operations. After cost of sales of
$3,043,546 gross profit realized was $801,847 for the period ended
December 31, 1998. All of the gross profit resulted from operations of the
Company's subsidiary. The Company had gross profit of $407,801 for the six
months ended December 31, 1997. Gross profit for the year ended December
31, 1998 was 20.9 per cent of sales, a decrease of 1.4 percent from the
gross profit of 22.3 percent of sales for the six month period ended
December 31, 1997.
Consolidated operating expenses for 1998 were $899,077, which includes the
Subsidiary's total of $619,181 and the parent Company's total of $279,896.
The parent Company's operating expenses increased $170,213 from 1997
primarily due to increased rent, salaries, consulting and professional
fees. The Subsidiary's operating expenses were 16.1 per cent of sales for
the period reported.
The net loss for the twelve month period ended December 31, 1998 was
$(152,831) compared to a net loss of
$(100,361) for the comparable period ended December 31, 1997, an increase
of $52,470.
The total cash and cash equivalents at December 31, 1998 totaled $2,337.
Of that amount the Subsidiary's total was $1,329, and the parent company's
total was $1,008.
Accounts receivable at December 31, 1998 totaled $1,361,173 all of which is
owed to the Subsidiary. Of that total, 25 per cent is current, 25 per cent
is 30-60 days old, and 50 per cent is over 60 days old. This pattern is
characteristic of the subsidiary's industry and customer base.
Inventory at December 31, 1998 totaled $2,014,517, which was all maintained
by the Subsidiary. Of that total, $826,000 represented raw material
(fabric) for production.
Accounts payable at December 31, 1998 totaled $1,340,483, all of which is
current. Of that amount, the Subsidiary's accounts payable total was
$1,256,059, and the parent company's total was $84,424. The Subsidiary's
accounts payable total consists mostly of raw material purchases and cost
of finished goods, consistent with the Subsidiary's Cost of Goods Sold and
Operating Expense percentages of sales. The parent Company's accounts
payable represents its normal business overhead expenses and consulting
services.
The amount of $394,185 due to a factor and the long term bank loans in the
amount of $173,381 represent borrowings by the Subsidiary, as a result of
the need to carry customer accounts receivable and to purchase fabric
inventory in advance of the selling season.
The Company is continuing to look for suitable acquisition candidates in
its new area of concentration, to wit, Internet technology and related
companies. As of the date of this Report, no additional acquisition
candidates have been found other than the planned acquisition of W3
discussed above. There is no assurance that any additional candidates will
be found.
<PAGE>
Liquidity and Capital Resources
At the end of fiscal 1998, the Company and its subsidiary had cash totaling
$2,337, which is not adequate for working capital requirements, There is no
assurance that the Company will be able to raise the amount of capital
needed to meet its working capital needs.
Year 2000 Compliance
The Company has completed a preliminary review of its management
information systems and structure for Year 2000 compliance. The parent
Company utilizes basic software packages and personal computers only, and
it is not anticipated that any system failures or miscalculations will
result from their use. The parent Company does not currently have any
information regarding the Year 2000 compliance of its suppliers, but is not
dependent on any significant supplier in conducting its business.
As prospective subsidiaries are evaluated, management will assess their
Year 2000 compliance and develop plans to resolve Year 2000 problems for
acquired companies. There can be no assurance that Year 2000 problems will
not be discovered, nor that these problems will not cause any interruption
of business activities. As of the date of this report, the Company does not
have any information necessary to estimate the costs of such potential Year
2000 problems.
General Risk Factors Affecting the Company and its Subsidiary
Various factors could cause actual results of the Company to differ
materially from those indicated by forward-looking statements made from
time to time in news releases, reports, proxy statements, registration
statements and other written communications (including the preceding
sections of this document), as well as oral statements made from time to
time by representatives of the Company. Except for historical information,
matters discussed in such oral and written communications are forward-looking
statements that involve risks and uncertainties, including, but not
limited to the following:
Continued growth, use, and acceptance of the Internet as a business
medium, and development of the required infrastructure to support
Internet growth
Rapidly changing technology
Intense competition within the Internet marketplace
Many well established companies and smaller entrepreneurial companies
have significant resources that will compete with the Company's
limited resources in the acquisition of Internet technology companies.
There can be no assurance that the Company will be able to compete
successfully in the acquisition of subsidiary companies
The management of growth is expected to place significant pressure on
the Company's managerial, operational, and financial resources
The Company will not be able to accomplish its growth strategy if it
is not able to consummate future acquisitions
Change in Control
On April 21, 1999, Concorde entered into a formal Agreement and Plan of
Share Exchange with W3 Group, Inc. subject to approval by shareholders,
whereby Concorde will acquire 100 percent of the capital stock of W3 Group,
Inc. in exchange for shares of Concorde's Common Stock. Prior to the
closing of this Agreement, current and former Officers and Directors of
Concorde own 48.6 percent of the issued and outstanding shares of the
capital stock of W3 Group, Inc. Subsequent to the closing of this
Agreement, if approved by shareholders, current and former Officers and
Directors of Concorde will own 48.2 percent of the issued and outstanding
shares of Common Stock of the new entity.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Financial Statements:
For the Years Ended December 31, 1998 and 1997:
Reference
Report of Janet Loss, C.P.A., P.C., Independent Certified Public Accountant F-12
Report of Jay Fox, C.P.A., Independent Certified Public Accountant F-13
Consolidated Financial Statements:
Balance Sheets F-14, 15
Statements of Operations F-16
Statements of Cash Flows F-17
Statements of Stockholder's Equity (Deficit) F-18, 19
Notes to Financial Statements F-20, 21, 22, 23, 24, 25, 26
<PAGE>
Janet Loss, C.P.A., P.C.
Certified Public Accountant
3525 S. Tamarac Drive, Suite 125
Denver, Colorado 80237
Board of Directors
Concorde Strategies Group, Inc. and Subsidiary
444 Madison Avenue, Suite 1710
New York, New York 10022
I have audited the accompanying consolidated balance sheets of Concorde
Strategies Group, Inc. and subsidiary as of December 31, 1998 and 1997 and
the related consolidated statements of income, changes in stockholders'
equity and cash flows for the year ended December 31, 1998 and 1997. The
above-mentioned financial statements are the responsibility of the
Company's management. My responsibility is to express an opinion on the
consolidated financial statements at December 31, 1998 and 1997 based on my
audits. I did not audit the subsidiary's statement of financial condition
as of December 31, 1998 and 1997 nor the subsidiary's related statement of
income, changes in stockholders' equity and cash flows for the year ended
December 31, 1998 and 1997. The subsidiary's statements reflect total
assets of $3,524,717.00 and $3,368,406.00 as of December 31, 1998 and 1997
respectively and total revenues of $3,845,509 for the year December 31,
1998 and total revenues of $1,827,502.00 for the six month period ended
December 31, 1997. The subsidiary's financial statements are included in
the consolidated financial statements of Concorde Strategies Group, Inc.
The subsidiary's financial statements were audited by other auditors whose
report has been furnished to me, and my opinion in so far as it relates to
the comments of the subsidiary is based solely on the report of such other
auditors.
I conducted my audits in accordance with generally accepted accounting
standards. These standards require that I plan and perform the audit to
obtain reasonable assurance about whether the 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 financial statement presentation. I believe that my audit
provides a reasonable basis for my opinion.
In my opinion, based upon my audit and the report of other auditors, the
consolidated financial statements at December 31, 1998 and 1997 referred to
above present fairly, in all material respects, the financial position of
Concorde Strategies Group, Inc. and subsidiary as of December 31, 1998 and
1997, and the results of their operations and their cash flows for the
years ended December 31, 1998 and 1997 in conformity with generally
accepted accounting principles.
/s/Janet Loss
Janet Loss, C.P.A., P.C.
June 2, 1999
<PAGE>
JAY FOX, C.P.A.
4315 AUSTIN BLVD.
ISLAND PARK, NY 11558
March 31, 1999
To the Board of Directors and Shareholders
L'Abbigliamento, Ltd. and Vista International Ltd.:
We have audited the accompanying consolidated balance sheet of
L'Abbigliamento, Ltd. and Vista International ltd. as of December 31,
1998, and the related consolidated statements of income and retained
earnings and cash flows for the twelve months then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on the financial statements based
on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the 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 financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material aspects, the financial position of L'Abbigliamento, Ltd.
and Vista International Ltd. as of December 31, 1998, and the results of
its operations and its cash flows for the twelve months then ended in
conformity with generally accepted accounting principles.
/s/ Jay Fox
Jay Fox, C.P.A.
<PAGE>
CONCORDE STRATEGIES GROUP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
CONSOLIDATED
BALANCE SHEET BALANCE SHEET
1998 1997
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 2,337 $ 133,606
Accounts receivable 1,361,173 1,374,546
Inventory (as submitted) 2,014,517 1,819,695
Prepaid Expenses 76,347 13,435
TOTAL CURRENT ASSETS: $ 3,454,374 $ 3,341,282
Fixed assets, net of accumulated
depreciation of $26,299 $ 46,031 $ -
Leasehold improvements net of
accumulated amortization of $2,534 57,317 58,852
Security Deposits 40,500 40,500
TOTAL ASSETS $ 3,598,222 $ 3,440,634
<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
1998 1997
CURRENT LIABILITIES:
Accounts payable $1,340,483 $1,487,426
Payroll taxes payable 591 0
Due to Factor 394,185 361,098
Bank and other loans payable
(current) 46,350 73,130
Corporate income taxes payable 63,147 13,000
Due to Ameristar
Capital Corporation $ 23,383 $ 89,383
TOTAL CURRENT LIABILITIES $1,868,139 $2,024,037
LONG TERM LIABILITIES:
Bank and other loans $ 173,381 $ 252,414
TOTAL LIABILITIES: $2,041,520 $2,276,451
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock, no par value,
100,000,000 shares authorized.
Series A Convertible, redeemable,
1,000 shares issued and out-
standing.
Series B Convertible,non-dividend
bearing, 765,000 shares issued
and outstanding $ 209,383 $ 130,633
Series B Convertible Preferred
Stock Purchase Warrants issued $ 325,600 $ 0
and outstanding
Common stock, no par value,
500,000,000 shares authorized,
3,600,000 and 3,300,000 shares
issued and outstanding as of $ 307,839 $ 166,839
December 31, 1998 and 1997
Additional paid-in-capital 977,875 977,875
Retained earnings(Deficit) (263,995) (111,164)
TOTAL STOCKHOLDERS' EQUITY 1,556,702 1,164,183
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $3,598,222 $3,440,634
The accompanying notes are an integral part of these financial statements.
CONCORDE STRATEGIES GROUP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended December 31, 1998 and 1997
December 31, 1998 December 31, 1997
REVENUES
Sales $ 3,845,393 $ 1,827,502
COST OF GOODS SOLD 3,043,546 1,419,701
GROSS PROFIT: 801,847 $ 407,801
OPERATING EXPENSES:
Transfer and filing fees $ 3,004 $ 884
Insurance 44,110 23,067
Officers' salary 243,433 -
Payroll and payroll taxes 91,112 117,941
Rent 135,622 42,486
Utilities and telephone 16,484 13,598
Commissions 44,656 23,626
Auto and travel 13,482 9,940
Entertainment 12,067 4,886
Bank charges and interest 36,034 31,935
Advertising 17,654 22,003
Office Expenses 24,223 10,954
Repairs and maintenance 7,885 4,177
Consulting 104,196 157,900
Professional Fees 87,778 25,462
Depreciation and amortization 6,926 4,288
Printing expenses 1,421 2,015
Freight out 8,033 0
Fines and penalties 957 0
TOTAL OPERATING EXPENSES 899,077 495,162
INCOME(LOSS) FROM OPERATIONS (97,230) (87,361)
OTHER INCOME AND (EXPENSES):
INTEREST INCOME 3,443 0
NET INCOME(LOSS) BEFORE
PROVISION FOR INCOME TAXES (93,787) (87,361)
ESTIMATED PROVISION FOR
INCOME TAXES 59,044 13,000
NET (LOSS) $ (152,831) $(100,361)
NET (LOSS PER SHARE) $ (.05) $ (.05)
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 3,450,000 1,825,000
The accompanying notes are an integral part of these financial statements.
CONCORDE STRATEGIES GROUP, INC. AND SUBSIDIARY
CONSOLIDATED CASH FLOW STATEMENTS
For the Years Ended December 31, 1998 and 1997
1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (152,831) $ (100,361)
Adjustments to reconcile
net loss to net cash flow
from operating activities:
Depreciation and amortization 6,926 4,288
Decrease(Increase)in accounts receivable 13,373 (197,931)
(Increase)in inventory (194,821) (393,915)
(Increase)in prepaid expenses (62,912) (1,081)
(Decrease)Increase in payables (212,352) 646,066
Increase(Decrease)in corporate income
taxes payable $ 50,147 $ (3,773)
Cash Used by Operating Activities $ (552,470) $ (46,707)
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in fixed assets (51,423) (3,082)
Increase in leasehold improvements 0 (11,217)
Net Cash used in investing
activities (51,423) (14,299)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance
of preferred stock 78,750 130,633
Proceeds from issuance of preferred
stock purchase warrants 325,600 0
Proceeds from issuance of stock 141,000 30,000
Increase(Decrease)in amounts
due to factor 33,087 (13,902)
Repayment of bank and other loans (105,813) 0
Net cash provided by
financing activities 472,624 146,731
Net Increase (Decrease)in Cash $ (131,269) $ 85,725
CASH, BEGINNING OF THE PERIOD $ 133,606 $ 47,881
CASH, END OF THE PERIOD $ 2,337 $ 133,606
The accompanying notes are an integral part of these financial statements.
<TABLE>
CONCORDE STRATEGIES GROUP, INC. AND SUBSIDIARY
CONCORDE STRATEGIES GROUP, INC. AND SUBSIDIARY
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
Consolidated Statement of Stockholders' Equity
for the Year Ended December 31, 1998 and 1997
<CAPTION>
Preferred Series B
Stock Non- Convertible
Dividend Preferred Total
Bearing Stock Common Stock Additional Stockholders'
Series B Purchase Number of Common Stock Paid-in Deficit Equity
Convertible Warrants Shares Amount Capital Accumulated (Deficit)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance,
January 1, 1997 1,200,000 136,839 1,875 (244,257) (105,543)
300,000 shares
issued for services,
June 13, 1997 300,000 30,000 -- -- 30,000
Shares issued for
acquisition
effective July 1,
1997 1,800,000 -- 976,000 233,454 1,209,454
450,000 shares
of Preferred
Stock, Non-
Dividend 130,633 -- -- -- -- 130,633
Bearing Series
B Convertible
Net (loss) for
the year ended
December 31, 1997 -- -- -- -- (100,361) (100,361)
Balance, December
31, 1997 $ 130,633 3,300,000 $166,839 $977,875 $(111,164) $1,164,183
315,000 shares
of Series B
Convertible 78,750 -- -- -- -- -- $ 78,750
Preferred Stock
issued for
services,
January 7, 1998
300,000 shares of
Common Stock issued
for services, -- -- 300,000 141,000 -- -- 141,000
June 22, 1998
Private Placement
of Series B -- $325,600 -- -- -- -- 325,600
Convertible
Preferred Stock
Purchase Warrants,
for cash issued,
August 12, 1998
Net (loss) for
the Year Ended
December 30, 1998 -- -- -- -- -- (152,831) (152,831)
Balance,
December 31, 1998 $209,383 $325,600 3,600,000 $307,839 $977,875 $(263,995) $1,556,702
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
CONCORDE STRATEGIES GROUP, INC. AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
Note 1 - ORGANIZATION AND HISTORY
The Company is a Colorado corporation and the Company had been in the
development stage since its formation on February 12, 1988. The Company was
formed to seek potential business acquisitions and its activities since
inception are primarily related to its initial public offering and merger
activities.
Upon the completion of the acquisition of Concorde Management, Ltd. and its
wholly owned subsidiary, L'Abbigliamento, Ltd., the Company has ceased from
being a development stage company. This acquisition was effective July 1,
1997.
L'Abbigliamento, Ltd. is a New York State corporation which was incorporated
in New York State in March of 1992. L'Abbigliamento, Ltd. commenced
operations in August of 1992 as an importer of fine men's clothing. In
October of 1995 Vista International Ltd., incorporated in the Cayman Islands,
was organized to acquire raw material and to sell finished goods to areas
outside the United States. Effective July 1, 1997 L'Abbigliamento, Ltd. and
Vista International Ltd. were acquired through an exchange of stock by
Concorde Strategies Group, Inc.
Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Consolidation of Financial Information - See Note 12.
Accounting Method
The Company records income and expenses on the accrual method.
Cash and cash equivalents
Cash and cash equivalents includes cash on hand, cash on deposit and highly
liquid investments with maturities generally of three months or less to
L'Abbigliamento, Ltd. At December 31, 1998, there were no cash equivalents.
Organization Costs
Costs incurred in organizing the Company are being amortized over a sixty-month
period.
Deferred Offering Costs
Costs associated with the Company's private offerings have been charged to
the proceeds of the offering. If the offerings are unsuccessful, the costs
will be charged to operations.
Sales and expenses
Sales and expenses are recorded using the accrual basis of accounting.
Inventory shipped on consignment is recorded as a sale when it is sold by the
customer.
Inventory
Inventory is stated at the lower of first-in first-out; cost or market and is
based upon physical counts taken by management at December 31, 1998 and 1997.
Fixed assets and accumulated depreciation
Fixed assets consist of a computer system and are stated at cost less
accumulated depreciation which is provided for by charges to operations over
the estimated useful lives of the assets. The assets are depreciated over
five years utilizing Internal Revenue Code Section 179 expense deduction of
$17,500 annually with the remaining basis, when applicable, being depreciated
using an accelerated cost revenue method.
Leasehold improvements and accumulated amortization
Leasehold improvements are stated at cost less accumulated amortization which
is provided for by charges to operations over 31.5 years using a straight
line method.
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
revenues and expenses during the reporting period. Actual results could
differ from those estimates.
Note 3 - AGING OF ACCOUNTS RECEIVABLE AND PAYABLE
The percentage aging of trade accounts receivable and accounts payable at
December 31, 1998 is as follows:
Accounts Receivable Accounts Payable
Current 25% 100%
30-60 days 25%
over 60 days 50%
100%
Note 4 - INVENTORY
Inventory at December 31, 1998 was as follows:
Raw material (fabric) $ 826,000
Finished goods 1,188,517
Total $ 2,014,517
Effective October 1, 1997, L'Abbigliamento, Ltd. entered into consignment
sales arrangement with two mass merchandisers of men's clothing. During
1998, L'Abbigliamento, Ltd. added additional consignment customers.
Management believes that this newly instituted marketing strategy will
improve sales, profit margins and collection cycles.
Note 5 - FACTORING OF ACCOUNTS RECEIVABLE
The subsidiary has entered into a non-recourse agreement with an independent
factor. The balances advanced by the factor bear a one-time fee of 5% of the
invoice and is secured by post dated checks issued by the customer.
Note 6 - BANK LOAN
At December 31, 1998, the subsidiary had outstanding debt in the amount of
$219,731($46,350- current) with interest related thereto at 2% - 7% over the
prime rate. These obligations mature over the next five years with a
remaining balloon payment of $40,000 due at that time. The bank loan is
secured by inventory and accounts receivable.
Note 7 - CAPITALIZATION
In April 1996, the Company undertook a private placement of its securities
pursuant to the provisions of Rule 504 under Regulation D under the
Securities Act of 1933, as amended, whereby it issued 9,000,000 shares of its
Common Stock in exchange for the satisfaction of $45,000 in debts owed by the
Registrant. Also in April 1996, the Company effected a 1-for-10 reverse split
of its common stock as the result of which the Company had, following the
aforesaid private offering, 1,200,000 shares issued and outstanding. This
reverse split was effected in anticipation of management's renewed efforts to
find a suitable business opportunity for the Company.
In June, 1997 the Company issued 300,000 shares of common stock to certain
parties who had performed services on behalf of the Company. The shares were
issued in consideration for the cancellation of payments owed by the Company
at the agreed upon rate of $.10 per share and were sold through a Private
Placement pursuant to the exemption provided by Rule 504 of Regulation D
under the Securities Act of 1933, as amended.
On October 24, 1997, the Company completed a Private Placement Offering of
450,000 non dividend bearing, no par value, Series B Convertible Preferred
Shares. All of the shares were sold by the Company and no Placement Agent
was involved in this Offering. The shares were sold at a purchase price of
$.3125 per share and the Company realized proceeds of $130,633 from the
Offering, net of offering expenses in the amount of $9,992. The shares were
sold through a Private Placement pursuant to the exemption provided by Rule
504 of Regulation D under the Securities Act of 1933, as amended. Each
Preferred Share is convertible into one and one quarter (1.25) shares of the
Company's Common Stock, no par value, at the election of the Preferred
Shareholder at any time after thirteen months from the date of issuance
thereof and for a period of four years thereafter.
On January 7, 1998, the Company issued 315,000 shares of Series B Convertible
Preferred shares to certain parties who had performed services on behalf of
the Company, including two companies which are principally owned by two
Directors of the Company. The shares were issued by the Company in
consideration for the cancellation of debt owed by the Company at the agreed
upon rate of $.25 per share and were sold through a Private Placement
pursuant to the exemption provided by Rule 504 of Regulation D under the
Securities Act of 1933, as amended.
On June 22, 1998, the registrant issued 300,000 shares of Common Stock to a
company which has performed services on behalf of the registrant. The shares
were issued pursuant to an option in the Consulting Agreement to pay for the
consulting fees through the issuance of restricted shares of Common Stock at
the agreed upon rate of $.47 per share.
On August 12, 1998, the Company completed a Private Placement of 337,600
Series B Convertible Preferred Stock Purchase Warrants. All of the Warrants
were sold by the Company and no Placement Agent was involved in this
Offering. The Warrants were sold at a purchase price of $1.00 per Warrant
and the Company realized proceeds of $325,600 from the Offering, net of
offering expenses in the amount of $12,000. The Warrants were sold through
a Private Placement pursuant to the exemption provided by Rule 504 of
Regulation D under the Securities Act of 1933, as amended. Each warrant
entitles the holder thereof to purchase one Series B Convertible Preferred
Share at a price of $3.00 per share during the period commencing thirteen
months after the date of the issuance thereof and continuing thirty (30)
months thereafter. The warrants are redeemable by the Company at any time
after thirteen months after their issuance and prior to their expiration at
a price of $0.05 per warrant, upon 30 days prior written notice, provided
that the closing sale price of the shares as reported on the NASD Electronic
Bulletin Board shall have been at least $4.80 (160% of the exercise price of
the warrants) on each of the 20 consecutive trading days ending on the tenth
day prior to the day on which the notice of redemption is given.
Subsequent to the period covered by this report, in April, 1999, the Company
sold 175,000 shares of Series B Convertible Preferred stock to certain
parties who had performed services on behalf of the Company, including one
company which is principally owned by a Director of the Company. The shares
were sold by the Company in consideration for the cancellation of payments
owed by the Company at the agreed upon rate of $2.00 per share and were sold
through a Private Placement pursuant to the exemption provided by Rule 504 of
Regulation D under the Securities Act of 1933, as amended. The sale of these
shares will be reflected in the Company's financial statements for the
quarterly period ended June 30,1999.
Note 8 - PROVISION FOR TAXES ON INCOME
The estimated provision for income taxes are based on the statutory federal
and state income tax rates. The State of New York does not allow a foreign
company to offset its income by the parent company's losses.
Note 9 - LEASES AND OTHER COMMITMENTS
The parent company leases its premises from Ameristar, an affiliated company,
for the following annual rent expenses.
(eleven months) November 1, 1997 thru September 30, 1998 $41,173
October 1, 1998 thru September 30, 1999 46,152
October 1, 1999 thru September 30, 2000 47,424
October 1, 2000 thru September 30, 2001 48,732
Total Rent Commitment $183,481
The subsidiary leases it premises from a company whose owner is related to a
shareholder of Concorde Strategies Group, Inc. at an annual rent of $84,000,
for each of the next five years with annual adjustment for real estate taxes.
The subsidiary has an employment agreement with its key executive officer for
five years at base compensation, of $200,000 per year. The contract also
provides for additional incentives based upon performance standards and
annual adjustments to the base for changes in the consumer price index.
Note 10 - RELATED PARTY TRANSACTIONS
The Company has received advances of monies for its operating expenses from
an affiliated company, Ameristar Group Incorporated. That company
("Ameristar") also serves as a consultant to Concorde. Concorde Strategies
Group, Inc. is leasing office space from Ameristar on a monthly rental,
commencing on November 1, 1997 for a term of three years and eleven (11)
months. (see note 10)
The Company has incurred consulting fees of $132,833 to its President, and
$45,000 to "Ameristar" (an affiliate corporation) since the beginning of
1996.
The Company has issued 200,000 shares of common stock to two related
privately owned companies in consideration of $.10 per share for consulting
services performed on behalf of the Company. (See Note 7. - Capitalization)
On January 7, 1998, the Company issued 315,000 shares of Series B Convertible
Preferred Stock to certain parties who had performed services on behalf of
the Company. Of that total, 222,000 shares were issued to two related
privately owned companies in consideration of $.25 cents per share.
On June 22, 1998, the Registrant issued 300,000 shares of its Common Stock to
a company principally owned by a Director of the Registrant in consideration
of $.47 per share for consulting services performed on behalf of the
Registrant. (See Note 7 - Capitalization).
As discussed in note 10, the subsidiary leases it facilities from a company
whose owner is related to a shareholder of Concorde Strategies Group, Inc.
Rent paid under this lease is believed by management to be at arm's length
rates. Additionally, L'Abbigliamento, Ltd. received advances from its
parent, Concorde Strategies Group, Inc. which bear interest at market rate.
Note 11 - CONSOLIDATION OF FINANCIAL INFORMATION
The consolidated financial statements of the Company for the year ended
December 31, 1998 include the results of the Company's wholly owned
subsidiary, L'Abbigliamento, Ltd. The financial statements for the year
ended December 31, 1997 include the full year results of operations for the
parent company and results of the Subsidiary from July 1, 1997, the date of
the acquisition, through December 31, 1997.
All material intercompany accounts and transactions have been eliminated.
Note 12 - SUBSEQUENT EVENTS
The Company reached agreement in April, 1999, subject to approval by
shareholders, for the divestiture of L'Abbigliamento, Ltd., which has been
Concorde's sole operating subsidiary. Under the terms of the Termination
Agreement, which will be effective as of the close of business on March 31,
1999, L'Abbigliamento, Ltd. will resume operations as an independent private
company. Also, L'Abbigliamento, Ltd. will return 100 percent of Concorde
Class A Preferred Shares in exchange for the return of 100 percent of the
capital stock of L'Abbigliamento, Ltd. held by Concorde. As part of the
divestiture, L'Abbigliamento, Ltd. will repay its outstanding indebtedness to
Concorde in the principal amount of $158,000 in five equal monthly payments
of $1,300, plus 55 equal monthly payments of $1,700, which payments shall be
inclusive of interest at the rate of six percent per annum, to be followed by
a final payment at the end of the aforesaid term equal to the sum of any
accrued but unpaid interest due thereon plus the entire unpaid principal
amount.
In further regard to the Company's Reorganization Plan, Concorde announced on
March 26,1999 that it entered into a Letter of Intent with W3 Group, Inc., a
privately held company engaged in the business of acquiring and developing
young companies whose businesses involve the development of Internet related
technology and applications. The Letter of Intent calls for Concorde to
effect a reverse split of its Common Stock of not less than 1 for 15 and not
more than 1 for 30, after which approximately 3,275,000 new shares of
Concorde Common Stock will be issued to W3 shareholders in exchange for 100
percent of the capital stock of W3 Group, Inc. The number of outstanding
shares of Concorde's Series B Convertible Preferred Stock will remain
unchanged, however, the conversion feature will be adjusted to reflect the
reverse split. Certain present and former officers and directors of Concorde
also have an interest in W3 Group, Inc. On April 21, 1999, Concorde entered
into a formal Agreement and Plan of Share Exchange with W3 Group, Inc.,
subject to approval by shareholders.
<PAGE>
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers and directors of the Company are as follows:
NAME Age POSITION(S) HELD
Robert Gordon 63 President, Director
Gera Laun 34 Secretary
Joseph J. Messina 44 Director
Martin I. Saposnick 52 Director (Resigned effective February 25, 1999)
David A. Vigor 61 Director
William C. Hayde 39 Director
Profiles of the directors and officers of the Company are set forth below.
All directors hold office until the next annual shareholders meeting or until
their death, resignation, retirement, removal, disqualification or until
their
successors have been elected and qualified. Vacancies in the Board may be
filled by majority vote of the remaining directors. Officers of the Company
serve at the will of the Board of Directors. There is no Executive Committee
or other committee of the Board of Directors. Election to the Board of
Directors is for a period of one year or until the next shareholder's meeting
and elections are ordinarily held at the Company's Annual Meeting of
Shareholders. There are no family relationships between officers and
directors.
Profiles of Officers and Directors
ROBERT GORDON is President. Mr. Gordon was previously Executive Vice
President of Contex, Inc., an investment banking and consulting firm in
Naples, Florida. Prior to Contex, Mr. Gordon was Managing Director of an
apparel company, President and Chief Operating officer of a public company
that manufactures precision
parts and conducted research and development, a management consultant,
Executive Vice President of a financial services company, and Director of MIS
for Kinney Shoe Corporation. Mr. Gordon has a B.A. degree in Economics from
Union College.
GERA LAUN is Secretary. Ms. Laun is also Secretary and Treasurer of
Ameristar Capital Corporation, an equipment leasing company. Previously, Ms.
Laun was Manager, Processing Department of Vendor Funding Co., Inc. an
equipment leasing and asset based lending company. Also, Ms. Laun was
Manager, Mail Order
Catalog/Retail for La Shack, Inc.
JOSEPH J. MESSINA is a Director. He is also Chairman and CEO of both
Ameristar Capital Corporation, a lease financing and asset based lender and
Ameristar Group Incorporated, an investment banking and financial consulting
firm specializing in "small cap" companies. Mr. Messina was previously
President and Chief Operating Officer of Vendor Funding Co., Inc., a
subsidiary of the Bank of Ireland First Holdings. Vendor Funding, a national
middle market lessor and asset based lender, was co-founded by Mr. Messina
and subsequently sold to First NH Banks of Manchester, New Hampshire. Mr.
Messina is a Director of Credit America Venture Capital, an entity formed to
acquire the manufacturing and distribution network of Mako Marine
International, Inc. He is also a Director of Mako Marine International,
Inc., a publicly held corporation, and past President of the Eastern
Association of Equipment Lessors.
MARTIN I. SAPOSNICK was a Director until his resignation effective February
25, 1999. He is President of Ameristar Group Incorporated, an investment
banking and financial consulting firm specializing in "small cap" companies.
Previously Mr. Saposnick was President of Remsen Group, an independent
investment banking and financial consulting services company. Prior to
Remsen Group, Mr. Saposnick was Chairman of the Board and President of Marsan
Securities Co., Inc., a financial services firm, which was a wholly owned
subsidiary of Marsan Capital Corporation, a publicly held company. Mr.
Saposnick was also Chairman of the Board and President of Marsan Capital
Corporation. Previously, Mr. Saposnick was Vice President of Chestman
Securities, Co., Inc. and had been Assistant Manager of Specialist
Surveillance Division of the New York Stock Exchange. Mr. Saposnick is a
graduate of Hunter College and completed graduate studies in Finance and
Investments at Baruch College.
DAVID A. VIGOR is a Director and is also Executive Vice President, Chief
Financial Officer and a Director of Phytomed, Inc. an early stage
biopharmaceutical company. Previously, Mr. Vigor was Vice President, Finance
and Chief Financial Officer of Ohmeda, an international manufacturer of
pharmaceuticals and medical devices, which is a Division of BOC Group. In
other executive positions with the BOC Group, Mr. Vigor was Vice President,
Finance and Information Systems of Gases Western Hemisphere and Vice
President, Finance of Ohmeda (A Division of BOC Health Care). Mr. Vigor was
also Vice President, Finance for Millipore Corporation, a "Fortune 1000"
manufacturer of membrane filters and liquid chromatographs and Vice
President,
Corporate Information Resources for the Foxboro Company, and Finance Director
for foreign subsidiaries of
Westinghouse Electric Corporation. Mr. Vigor was an Audit Supervisor for
Barton, Mahew & Co. (Ernst & Young). His education includes the Institute of
Chartered Accounts in England and Wales and the Executive MBA program at
Suffolk University in Boston.
WILLIAM C. HAYDE is a Director. Mr. Hayde is also an investment banker and
co-owner of Brockington Securities, a broker-dealer specializing in wholesale
and institutional trading, mergers and acquisitions, and equity and debt
financings. Mr. Hayde is also President of B.R. Equities, which owns and
operates an electronic
trading room, as well as Chairman of the Board of The Paris Group, Ltd. a
venture capital and consulting
company. Mr. Hayde, who has been active in the brokerage business since
1983, was previously Director of Corporate Finance for Aegis Capital. He has
a Bachelor's degree in Psychology from Stonybrook University.
ITEM 11. EXECUTIVE COMPENSATION
Robert Gordon, President and a Director of the Company, currently receives
wages of $4,333.00 per month. During 1997, the Company advanced consulting
fees of $17,000 for services. In 1998, the President received wages of
$30,330.00 and consulting fees of $15,000.00. As of December 31, 1998, the
Company has accrued obligations for payments to Mr. Gordon of $51,833.00.
<PAGE>
TEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth at the date of this report the stock ownership
of each person known by the Company to be a beneficial owner of five (5%) per
cent or more of the Company's Common Stock and by all officers and
directors, individually and as a group:
Number Percentage
of Shares of
Name Owned(1) Class(1)
Robert Gordon* 110,000 3.06%
Gera Laun* 3,000 0.08%
Dunhill Limited*(2) 100,000 2.78%
Remsen Group, Ltd.*(3) 150,000 4.17%
Wilmont Holdings Corp.*(4) 150,000 4.17%
David A. Vigor* 25,000 0.69%
FNB Nominee FBO*(5) 25,000 0.69%
David Vigor IRA
Ameristar Group Incorporated*(6) 675,000 18.75%
Paolo Vista(7) 125,000 3.47%
Toscana Group, Inc. *(8) 353,500 9.8%
Officers and Directors as a 1,591,500 44.21%
group (6 persons)
*Officer and/or Director
(1) Assumes a total number of shares outstanding of 3,600,000 shares
(2) Dunhill Limited is a privately held corporation principally owned
and controlled by Joseph J. Messina and Martin I. Saposnick,
directors of the Company.
(3) Remsen Group, Ltd. is a privately held corporation principally
owned and controlled by Mr. Martin I. Saposnick, a director of
the Company.
(4) Wilmont Holdings Corp. is a privately held corporation principally
owned and controlled by Mr. Joseph J. Messina, a director of the
Company.
(5) FNB Nominee is trustee for IRA account of Mr. David A. Vigor, a
director of the Company.
(6) Ameristar Group Incorporated is a privately held corporation
principally owned and controlled by Joseph J. Messina and Martin I.
Saposnick, directors of the Company.
(7) Paolo Vista is President of L'Abbigliamento, Ltd., the Company's
wholly owned subsidiary, which was fully divested effective March
31, 1999.
(8) Toscana Group, Inc. is a privately held corporation principally owned
and controlled by Mr. William C. Hayde, a director of the Company.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
Financial Statements included in this Report:
Auditors Report of Janet Loss, C.P.A., P.C. dated June 2, 1999 together
with;
Auditors Report of Jay Fox, C.P.A. dated March 31,1999;
Consolidated Balance Sheets as of December 31, 1998 and 1997;
Consolidated Statements of Income and Retained Earnings for the years ended
December 31, 1998 and 1997;
Consolidated Statements of Stockholders' Equity for the year ended December
31, 1998 and 1997;
Consolidated Statements of Cash Flows for the years ended December 31, 1998
and 1997;
Notes to Consolidated Financial Statements.
(c) Form 8-K filings: January 13, 1998 re: increase in the number of
directors, and election of Mr. William C. Hayde
to serve as a Director.
May 21, 1999 re: resignation of Martin I. Saposnick
as a Director.
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.
CONCORDE STRATEGIES GROUP, INC.
Dated: June 18, 1999 By: /s/ Robert Gordon
Robert Gordon
President & Principal Executive
Officer and Principal Financial and
Accounting Officer
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Dated: June 18, 1999 By: /s/ Robert Gordon
Robert Gordon
President & Principal Executive Officer
and Principal Financial and Accounting
Officer
Dated: June 18, 1999 By: /s/ Gera Laun
Gera Laun
Secretary
Dated: June 18, 1999 By: /s/Joseph J. Messina
Joseph J. Messina
Director
Dated: June 18, 1999 By: /s/ Martin I. Saposnick
Martin I. Saposnick
Director
Dated: June 18, 1999 By: /s/ David A. Vigor
David A. Vigor
Director
Dated: June 18, 1999 By: /s/ William C. Hayde
William C. Hayde
Director
