U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 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 0-27083
W3 GROUP, INC.
(Exact name of small business issuer as specified in its charter)
Colorado 84-1108035
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
444 Madison Avenue, Suite 1710, New York, NY 10022
(Address of principal executive offices)
(212) 317-0060
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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
3,821,735 shares of Common Stock, no par value, outstanding on June 30, 2000.
W3 GROUP, INC. and SUBSIDIARY
Form 10-QSB Quarterly Report
For Period Ended June 30, 2000
Table of Contents
Page
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements 3
Unaudited Consolidated Balance Sheets at
June 30, 2000 and December 31, 1999 4 - 5
Unaudited Consolidated Statements of Operations
For Six Months Ended June 30, 2000 and 6
June 30, 1999
Unaudited Consolidated Statements of Cash Flows For Six
Months Ended June 30, 2000 and June 30, 1999 7
Statement of Stockholders' Equity (Deficit) 8
Notes to Financial Statements 9 - 14
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 15
PART II -- OTHER INFORMATION 17
SIGNATURES 17
Item 1. Financial Statements:
BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements are presented in
accordance with generally accepted accounting principles for interim financial
information and the instructions to Form 10-QSB and item 310 under subpart A of
Regulation S-B. In the opinion of management, all adjustments considered
necessary for a fair presentation have been included. The results of operations
for the six months ended June 30, 1999 include results of the Company's former
operating subsidiary which was divested effective March 31, 1999. Operating
results for the six months ended June 30, 2000 are not necessarily indicative of
results that may be expected for the year ending December 31, 2000. For further
information, refer to the consolidated financial statements and footnotes,
thereto included in the Company's annual report on form 10-KSB for the year
ended December 31, 1999.
W3 GROUP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Unaudited) Audited
June 30, December 31,
2000 1999
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 308 $ 60,826
Loan Receivable (Note 12) 157,522 157,522
Interest Receivable (Note 12) 8,304 4,740
Rent Receivable 5,048 5,048
Prepaid Expenses $ 360,937 $ 0
TOTAL CURRENT ASSETS: $ 532,119 $ 228,136
Fixed assets, net of accumulated
depreciation of $1,538 and $1,298 958 1,198
Deferred Offering Costs $ 0 17,929
TOTAL ASSETS $ 533,077 $ 247,263
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
(Unaudited) Audited
June 30, December 31,
2000 1999
CURRENT LIABILITIES:
Accounts payable $ 170,664 138,307
Accrued interest 4,254 1,854
Stockholders' loans 40,000 40,000
Due to Ameristar
Capital Corporation $ 132,087 $ 107,619
TOTAL CURRENT LIABILITIES $ 344,408 $ 287,780
LONG TERM LIABILITIES: 0 0
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock, no par value,
100,000,000 shares authorized 0 0
Series B Convertible, non-dividend
bearing, 839,760 and 1,056,000
shares issued and outstanding $ 676,795 $ 791,383
Series B Convertible Preferred
Stock Purchase Warrants issued $ 325,600 $ 325,600
and outstanding
Common stock, no par value,
500,000,000 shares authorized,
3,821,735 and 3,413,582 shares
issued and outstanding as of
June 30, 2000 and
December 31, 1999 $ 935,322 $ 408,234
Common stock issuable (Note 10) 0 50,000
Additional paid-in-capital 34,625 34,625
Retained earnings(Deficit) (1,786,270) (1,650,359)
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) 186,072 (40,517)
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY (DEFICIT) $ 533,077 $ 247,263
The accompanying notes are an integral part of these financial statements.
CONCORDE STRATEGIES GROUP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS AND
STATEMENT OF OPERATIONS (Unaudited)
Statement of Consolidated Statements of
Operations Operations
For the Three For the Six
Months Ended June 30 Months Ended June 30
2000 1999 2000 1999
REVENUES
Sales $ 0 $ 0 $ 0 $ 0
COST OF GOODS SOLD $ 0 $ 0 $ 0 $ 0
GROSS PROFIT: $ 0 $ 0 $ 0 $ 0
OPERATING EXPENSES:
L'Abbigliamento $ 0 0 $ 0 $ 181,292
Consulting 64,563 445,620 77,563 475,745
Depreciation 120 199 240 399
Insurance $ 1,197 2,432 2,394 2,825
Office 2,020 2,437 3,383 4,320
Legal & Accounting 5,525 7,978 29,352 10,572
Rent 11,856 11,538 23,712 23,076
Transfer & Filing Fees 215 2,344 911 2,880
TOTAL OPERATING EXPENSES $ 85,496 $ 472,548 $ 137,555 $ 701,109
NET INCOME(LOSS) BEFORE
OTHER EXPENSES $ (85,496) $ 0 $ (137,555) $ 0
OTHER INCOME AND (EXPENSES):
INTEREST INCOME $ 2,370 $ 1,584 $ 4,733 $ 1,593
INTEREST (EXPENSE) (1,200) 0 (2,400) 0
TOTAL OTHER INCOME AND
(EXPENSES) $ 1,170 0 $ 2,333 0
NET INCOME (LOSS) BEFORE
PROVISION FOR INCOME TAXES $ (84,326) (470,964) $ (135,222) $(452,870)
ESTIMATED PROVISION FOR
INCOME TAXES $ 0 $ 0 $ 689 $ 6,799
NET INCOME (LOSS) $ (84,326) $(470,964)$ (135,911) $(459,669)
NET (LOSS) PER SHARE $ (.024) $ (.13) $ (.04) $ (3.83)
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 3,624,317 3,420,240 3,624,317 120,000 (1)
(1) Adjusted for 1-30 reverse split on October 1, 1999
The accompanying notes are an integral part of these financial statements.
W3 GROUP, INC. AND SUBSIDIARY
CONSOLIDATED CASH FLOW STATEMENTS
For the Six Months Ended June 30, 2000 and 1999 (Unaudited)
Consolidated Cash Flow Statements
June 30, 2000 June 30, 1999
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (135,911) $ (459,699)
Adjustments to reconcile net loss to net
cash flow from operating activities:
Depreciation and amortization 240 3,295
(Increase)in receivable (3,564) 1,361,173
(Increase)in inventory 0 2,014,517
(Increase)in prepaid expenses (360,937) 41,097
Increase in due to Ameristar Capital 24,468 47,505
(Increase) in loan receivable 0 (158,000)
Decrease in security deposits 0 40,500
Increase in payables 32,357 (1,241,844)
Increase in accrued interest 2,400 0
(Increase) in interest receivable 0 (1,584)
Decrease in deferred offering costs 17,929 0
Increase in income taxes payable $ 0 $ (63,147)
Cash Provided (Used) by
Operating Activities $ (423,018) $1,583,843
CASH FLOWS FROM INVESTING ACTIVITIES:
Decrease in fixed assets 0 41,139
Decrease in leasehold improvements 0 57,317
Divestiture of subsidiary 0 (509,661)
Net Cash used in investing activities 0 (411,205)
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (Decrease) of amount
due to factor 0 (394,185)
(Decrease) in Bank and other loans 0 (219,731)
(Decrease) in common stock issuable (50,000) 64,995
Proceeds from issuance of
Preferred Stock 0 350,000
Proceeds from issuance of Common Stock 412,500 0
Reduction in additional paid in capital 0 (976,000)
Net Cash Provided by Financing Activities $ 362,500 $(1,174,921)
Net Increase (Decrease)in Cash $ (60,518) $ (2,283)
CASH, BEGINNING OF THE PERIOD $ 60,826 $ 2,337
CASH, END OF THE PERIOD $ 308 $ 54
The accompanying notes are an integral part of these financial statements.
<TABLE>
W3 GROUP, INC. AND SUBSIDIARY
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
Consolidated Statement of Stockholders' Equity
for the Six Months Ended June 30, 2000
Preferred Series B
Stock Non- Convertible
Dividend Preferred Total
Bearing Stock Common Stock Common Common Additional
Stockholders'
Series B Purchase Number of Stock Stock Paid-in Deficit Equity
Convertible Warrants Shares Amount Issuable Capital Accumulated (Deficit)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance,
January 1, 2000 $791,383 $325,600 3,413,582 $408,234 $50,000 $34,625 $(1,650,359) $(40,517)
25,872 shares of
Series B Convertible
Preferred Stock
converted to
Common Stock
(first quarter) (19,404) 13,317 19,404 0
300,000 shares
issued for
consulting services
on April 27, 2000 300,000 412,500 412,500
Return of Private
Placement Proceeds
on May 3,2000 (50,000) (50,000)
190,368 shares of
Series B Convertible
Preferred Stock (95,184) 94,836 95,184
converted to Common
Stock (second quarter)
Net loss for the
Six Months Ended
June 30, 2000 -- -- -- -- -- -- (135,911) $(135,911)
Balance,
June 30, 2000 $676,495 $325,600 3,821,735 935,322 $ 0 $34,625 $(1,786,270) $ 186,072
<FN>
<FN1>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
W3 GROUP, INC. AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED June 30, 2000
Note 1 - ORGANIZATION AND HISTORY
The Company is a Colorado corporation and 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 had ceased 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 March, 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. An agreement
for the divestiture of L'Abbigliamento, Ltd. effective March 31, 1999, was
approved by shareholders on August 12, 1999 (see Note 8), and the divestiture
has been completed.
On April 21, 1999, the Company entered into an Agreement and Plan of Share
Exchange with W3 Group, Inc. a Delaware corporation which was formed to acquire
and develop young companies whose businesses involve the development of Internet
related technology and applications. Effective October 1, 1999, the Agreement
was completed and the Company changed its name to W3 Group, Inc. (see Notes 9).
Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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.
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.
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 - 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.
On April 1, 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.
On May 21, 1999, 199,995 restricted shares of Common Stock were sold to a
principal of L'Abbigliamento, Ltd. who had performed consulting services on
behalf of the registrant. These shares were issued in October, 1999 in
consideration for the cancellation of payments in the total amount of $64,995
owed by the registrant for said services.
In October, 1999, the Company issued 116,000 shares of the Series B Convertible
Preferred Stock to three shareholders in satisfaction of a previously existing
obligation relating to consulting services performed on behalf of the Company
by an independent third party.
Effective October 1, 1999, the Agreement and Plan of Share Exchange (the
"Agreement") with W3 Group, Inc. a privately owned company, was completed.
(See Note 13). Under the terms of this Agreement, Concorde acquired 100 percent
of the capital stock of W3 Group, Inc. in exchange for an equal number of shares
(3,250,000) of Concorde's post split Common Stock. W3 Group, Inc, became a
wholly owned subsidiary of Concorde, and Concorde changed its
corporation name to W3 Group, Inc.
Also, on October 1, 1999, the reverse split of Concorde's Common Stock on the
basis of one new share for each 30 existing shares was effected. The number of
outstanding shares of Concorde's Series B Convertible Preferred Stick and Series
B Convertible Preferred stock Purchase Warrants remained unchanged, however, the
conversion feature has been adjusted to reflect the reverse split.
As per the Agreement, a special distribution of 520,056 Common Stock Purchase
Warrants was made on October 4, 1999 to holders of the registrant's Common
Stock, Series B Convertible Preferred Stock, and Series B Convertible Preferred
Stock Purchase Warrants. The special distribution was made on the basis of one
Common Stock Purchase Warrant for each ten shares of Common Stock (pre-reverse
split) either outstanding as of September 30, 1999 or committed to be issued
upon conversion of the then outstanding Preferred shares, or the currently
outstanding Warrants to purchase Preferred Shares. The Common Stock Purchase
Warrants are callable and each represent the right to purchase one share of
Common Stock at a price of $6.00 per share during the exercise period, which
is from the date of their issuance until October 1, 2001.
On October 16, 1999, the Company issued 11,800 shares of Common Stock to the
original investors in Series B Convertible Preferred Stock and Series B
Convertible Preferred Stock Purchase Warrants to adjust for the effect of the
Company's restructuring.
At a special meeting of shareholders on January 18, 2000, shareholders approved
amending the articles of incorporation to adjust the conversion right of the
Series B Convertible Preferred Stock from an amount equal to 0.0416 shares to
0.5 (one half) share of Common Stock for each one share of Series B Convertible
Preferred Stock. Series B Convertible Preferred Stock may be converted to Common
Stock at the election of the shareholder until October 14, 2002.
On April 27, 2000, the registrant issued 300,000 restricted shares of Common
Stock to a former director of the Company in consideration for services being
performed on behalf of the registrant. The shares were issued in lieu of cash
payment at the agreed upon rate of $1.375 per share.
The Company has withdrawn its private placement offering which had commenced on
December 14, 1999, and returned the private placement proceeds of $50,000 to the
subscribers on May 3, 2000.
Note 4 - 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 5 - 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
Note 6 - RELATED PARTY TRANSACTIONS
The Company has received advances of monies for its operating expenses from an
affiliated company, Ameristar Group Incorporated. Ameristar also serves as a
consultant to W3 Group, Inc. W3 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 5)
The Company has incurred consulting fees of $184,833 to its Executive Vice
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 3. - 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 3 - Capitalization).
On April 1, 1999, the Registrant issued 71,666 of its preferred stock to a
company principally owned by a Director of the Registrant in consideration of
$2.00 per share for consulting services performed on behalf of the Registrant.
(See Note 3 Capitalization).
On May 21, 1999, 199,995 restricted shares of common stock were sold to a
principal of L'Abbigliamento, Ltd. who had performed consulting services on
behalf of the registrant. These shares were issued in October, 1999 in
consideration for the cancellation of payments in the total amount of $64,995
owed by the registrant for said services.
Note 7 - CONSOLIDATION OF FINANCIAL INFORMATION
The consolidated financial statements of the Company for the period ended June
30, 1999 include the results of the acquisition of Concorde Management, Ltd.
and its wholly owned subsidiary, L'Abbigliamento, Ltd.
All material inter-company accounts and transactions have been eliminated.
Due to the divestiture of the subsidiary, effective April 1, 1999, the financial
statements from April 1, 1999 reflect financial data of the parent company and
its wholly owned subsidiary, W3 Group, Inc. (Delaware).
Note 8 - DIVESTITURE OF SUBSIDIARY
A Termination Agreement was executed on May 5, 1999, for the divestiture of
L'Abbigliamento, Ltd., the Company's sole operating subsidiary and was ratified
by shareholders on August 12, 1999. Under the terms of the Agreement, (1)
management of both companies mutually elected to rescind and cancel the
acquisition of L'Abbigliamento, Ltd. by the Company, effective as of the
close of business on March 31, 1999; (2) L'Abbigliamento, Ltd. returned to
the Company 100 percent of the Class A Preferred Shares in exchange for which
the Company delivered 100 percent of the L'Abbigliamento, Ltd. capital stock
held by it; (3) L'Abbigliamento, Ltd. will repay its outstanding indebtedness
to the Company in the principal amount of $158,000 in five equal monthly
payments of $1,300, plus 55 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 aforesaid term equal to the sum of any accrued
but unpaid interest due thereon plus the entire unpaid principal amount; (4) the
Company remains liable pursuant to a guarantee of payment made to State Bank
of Long Island in connection with certain outstanding loans that are being paid
according to their terms by L'Abbigliamento, Ltd.(Reference is made to Form 8-K
and Exhibits thereto dated October 12, 1999).
Note 9 - MERGER AND ACQUISITIONS
On April 21, 1999, the Company entered into an Agreement and Plan of Share
Exchange with W3 Group, Inc., which was approved by shareholders on August 12,
1999, whereby Concorde acquired 100 percent of the Common Stock of W3 Group,
Inc. in exchange for the issuance of 3,275,000 shares of post reverse split
Common Stock of Concorde Strategies Group, Inc., at the rate of one Concorde
Share for one W3 Share. Upon completion of the exchange of shares,
effective October 1, 1999, W3 Group, Inc. became a wholly owned subsidiary of
Concorde and Concorde amended its Articles of Incorporation to change its
corporation name to W3 Group, Inc. Concorde conducted a meeting of shareholders
on August 12, 1999 to ratify the Agreement and certain other matters which had
been approved by its Board of Directors.
ITEM 2: Management's Discussion and Analysis of Financial Conditions and
Results of Operations:
Results of Operations
The following discussion includes historical information to comply with
disclosure requirements for the quarterly period ended June 30, 2000.
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. The results of operations for the Company's
divested subsidiary have been included in the consolidated results of the
Company for the six month period ended June 30, 1999.
The Company did not have any revenue during the six month period ended June
30, 2000. For the six month period ended June 30, 1999, revenue totalled
$837,486 and gross profit realized was $241,773, all of which resulted from
the operation of the Company's former operating subsidiary, L'Abbigliamento,
Ltd. (During the three month period ended March 31, 1999).
Consolidated operating expenses for six month period ended June 30, 2000 were
$137,555, a decrease of $563,550 from the prior year's period, which included
total operating expenses of $181,292 for L'Abbigliamento, Ltd. Excluding
L'Abbigliamento, Ltd., the current period's operating expenses of $137,555
decreased $382,262 from the prior year's period, resulting primarily from a
decrease of $398,182 in consulting expenses and an increase in legal and
accounting fees of $18,780.
The net loss for the six month period ended June 30, 2000 was $135,911 compared
to net loss of $459,669 for the comparable period in the prior year, a decrease
of $323,758 in net loss.
The total cash and cash equivalents at June 30, 2000 totalled $308, compared to
$52,600 at March 31, 1999, a decrease of $52,292. Accounts Payable at June 30,
2000 totalled $170,664 compared to $152,925 at March 31, 1999, an increase of
$17,739.
The Company is continuing to look for suitable acquisition candidates. As of
the date of this Report, no additional acquisition candidates have been found,
and there is no assurance that any additional candidates will be found.
Business Objectives
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.
W3'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 W3's plan.
Liquidity and Capital Resources
At June 30, 2000, the Company had cash totalling $308, 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 reviewed its management information systems and structure for
Year 2000 compliance. The 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 Company does not currently have
any information regarding the Year 2000 compliance of its suppliers, nor is it
aware of any problems encountered by them, and is not dependent on any
significant supplier in conducting its business. Although the change in date to
the Year 2000 has occurred, no assurance can be made that all aspects of the
Year 2000 issue that may affect the Company including those related to
suppliers, or other third parties, have been fully resolved. As of the date of
this report, no additional costs have been incurred by the Company resulting
from the Year 2000 issue.
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
OTHER INFORMATION
Item 1. Legal Proceedings. Not Applicable.
Item 2. Change in Securities. None
Item 3. Defaults Upon Senior Securities. Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders. None.
Item 5. Other Information. None
Item 6. Exhibits and Reports of Form 8-K.
Exhibit 27- Financial Data Schedules (Electronic Filing Only)
SIGNATURES
Pursuant to the requirements of Section 13 of 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed in its
behalf by the undersigned, thereunto duly authorized.
Date: August 11, 2000 By:/s/ Robert Gordon
Robert Gordon
Executive Vice President
Principal Financial Officer
<PAGE>
[ARTICLE] 5
<TABLE>
<S> <C> <C>
[PERIOD-TYPE] 3-MOS YEAR
[FISCAL-YEAR-END] DEC-31-2000 DEC-31-2000
[PERIOD-END] JUN-30-2000 DEC-31-2000
[CASH] 308 60826
[SECURITIES] 0 0
[RECEIVABLES] 170,874 167,310
[ALLOWANCES] 0 0
[INVENTORY] 0 0
[CURRENT-ASSETS] 0 17,929
[PP&E] 2,496 2,496
[DEPRECIATION] (1,538) (1,298)
[TOTAL-ASSETS] 532,119 247,263
[CURRENT-LIABILITIES] 344,048 287,780
[BONDS] 0 0
[PREFERRED-MANDATORY] 0 0
[PREFERRED] 1,002,395 1,116,983
[COMMON] 935,322 408,234
[OTHER-SE] (1,751,645) (1,565,734)
[TOTAL-LIABILITY-AND-EQUITY] 533,077 247,263
[SALES] 0 0
[TOTAL-REVENUES] 0 0
[CGS] 0 0
[TOTAL-COSTS] 0 0
[OTHER-EXPENSES] 85,496 0
[LOSS-PROVISION] 0 0
[INTEREST-EXPENSE] (1,200) 0
[INCOME-PRETAX] (84,326) 0
[INCOME-TAX] 0 0
[INCOME-CONTINUING] 0 0
[DISCONTINUED] 0 0
[EXTRAORDINARY] 0 0
[CHANGES] 0 0
[NET-INCOME] (84,326) 0
[EPS-BASIC] (.024) 0
[EPS-DILUTED] 0 0
<F1>
<FN>
<F1>The accompanying notes are an integral part of the financial statements.
</FN>
</TABLE>
