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 September 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
3,824,935 shares of Common Stock, no par value, outstanding on
September 30, 2000.
<PAGE>
W3 GROUP, INC. and SUBSIDIARY
Form 10-QSB Quarterly Report
For Period Ended September 30, 2000
Table of Contents
Page
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements 3
Unaudited Consolidated Balance Sheets at
September 30, 2000 and December 31, 1999 4 - 5
Unaudited Consolidated Statements of Operations
For Nine Months Ended September 30, 2000 and 6
September 30, 1999
Unaudited Consolidated Statements of Cash Flows For Nine
Months Ended September 30, 2000 and September 30, 1999 7
Statement of Stockholders' Equity (Deficit) 8
Notes to Financial Statements 9 - 15
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 16
PART II -- OTHER INFORMATION 17
SIGNATURES 18
<PAGE>
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
nine months ended September 30, 1999 include results of the Company's
former operating subsidiary which was divested effective March 31,
1999. Operating results for the nine months ended September 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.
<PAGE>
W3 GROUP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Unaudited) Audited
September 30, December 31,
2000 1999
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 128 $ 60,826
Loan Receivable (Note 8) 157,522 157,522
Interest Receivable (Note 8) 9,504 4,740
Rent Receivable 4,497 5,048
Prepaid Expenses $ 309,374 0
__________ __________
TOTAL CURRENT ASSETS: $ 481,025 $ 228,136
Fixed assets, net of accumulated
depreciation of $1,658 and $1,298 838 1,198
Deferred Offering Costs $ 0 17,929
TOTAL ASSETS $ 481,863 $ 247,263
<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
(Unaudited) Audited
September December 31,
2000 1999
CURRENT LIABILITIES:
Accounts payable $ 198,099 138,307
Accrued interest 5,454 1,854
Stockholders' loans 40,000 40,000
Due to Ameristar
Capital Corporation $ 158,943 $ 107,619
TOTAL CURRENT LIABILITIES $ 402,496 $ 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, 833,360 and 1,056,000
shares issued and outstanding $ 675,771 $ 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,
3,824,935 and 3,413,582 shares
issued and outstanding as of
September 30 and
December 31, 1999 $ 936,346 $ 408,234
Common stock issuable (Note 3) 0 50,000
Additional paid-in-capital 34,625 34,625
Retained earnings(Deficit) (1,892,975) (1,650,359)
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) 79,367 (40,517)
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY (DEFICIT) $ 481,863 $ 247,263
The accompanying notes are an integral part of these financial statements.
<PAGE>
W3 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 Nine
Months Ended Sept. 30 Months Ended Sept. 30
2000 1999 2000 1999
REVENUES
Sales $ 0 $ 0 $ 0 $ 837,486
COST OF GOODS SOLD $ 0 $ 0 $ 0 $ 595,713
GROSS PROFIT: $ 0 $ 0 $ 0 $ 241,773
OPERATING EXPENSES:
L'Abbigliamento $ 0 0 $ 0 $ 181,290
Consulting 64,563 262,625 142,126 738,370
Depreciation 120 200 360 599
Insurance $ 0 1,180 2,394 4,005
Office 718 1,338 4,101 7,584
Legal & Accounting 0 9,725 29,352 20,297
Rent 11,856 11,538 35,568 34,614
Transfer & Filing Fees 218 2,810 1,129 5,690
Marketing 30,400 0 30,400 0
TOTAL OPERATING EXPENSES $ 107,875 $ 289,416 $ 245,430 $ 992,451
NET INCOME(LOSS) BEFORE
OTHER EXPENSES $(107,875) $ (289,416) $(245,430) $ (750,678)
OTHER INCOME AND (EXPENSES):
INTEREST INCOME $ 2,370 $ 2,389 $ 7,103 $ 3,982
INTEREST (EXPENSE) (1,200) (3,600)
OTHER INCOME 3,394 3,394
TOTAL OTHER INCOME AND
(EXPENSES) $ 1,170 5,783 $ 3,503 7,376
NET INCOME (LOSS) BEFORE
PROVISION FOR INCOME TAXES $ (106,705) (283,633) $ (241,927) $ (743,302)
ESTIMATED PROVISION FOR
INCOME TAXES $ 0 $ 300 $ 689 $ 300
NET INCOME (LOSS) $ (106,705) (283,933) $ (242,616) $ (743,602)
NET (LOSS) PER SHARE $ (.028) $ (.08) $ (.064)$ (6.20)
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 3,824,935 3,600,000 3,823,335 120,000 (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 Nine Months Ended September 30, 2000 and 1999 (Unaudited)
Consolidated Cash
Flow Statements
Sept. 30, 2000 Sept. 30, 1999
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (242,616) $(743,602)
Adjustments to reconcile net loss to net
cash flow from operating activities:
Depreciation and amortization 360 3,495
(Increase)in receivable (4,764) 1,361,173
(Increase)in inventory 0 2,014,517
(Increase)in prepaid expenses (309,374) 58,722
Increase in due to Ameristar Capital 51,324 76,544
(Increase) in loan receivable 0 (157,522)
Decrease in security deposits 0 40,500
Increase in payables 59,792 (1,234,033)
Increase in accrued interest 3,600 0
(Increase) in interest receivable 0 (3,394)
Decrease in rent receivable 551
Decrease in deferred offering costs 17,929 0
Increase in income taxes payable $ 0 $ (63,147)
Cash Provided (Used) by
Operating Activities $ (423,198) $1,353,253
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 0 582,000
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 $ (942,921)
Net Increase (Decrease)in Cash $ (60,698) $ (873)
CASH, BEGINNING OF THE PERIOD $ 60,826 $ 2,337
CASH, END OF THE PERIOD $ 128 $ 1,464
The accompanying notes are an integral part of these financial statements.
<PAGE>
W3 GROUP, INC. AND SUBSIDIARY
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
Consolidated Statement of Stockholders' Equity
for the Nine Months Ended September 30, 2000
<TABLE>
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)
6,400 shares of Series B
Convertible Preferred
Stock converted to
Common Stock
(third quarter) (1,024) 3,200 1,024
Net loss for the
Nine Months Ended
Sept 30, 2000 -- -- -- -- -- -- (242,616) $(242,616)
Balance,
Sept 30, 2000 $675,771 $325,600 3,824,935 $ 936,346 $ 0 $34,625 $(1,892,975)
$ 79,367
<FN>
<F1>
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 SEPTEMBER 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 Note 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 withdrew 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.
<PAGE>
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 September 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 nine month period ended
September 30, 1999.
The Company did not have any revenue during the nine month period ended
September 30, 2000. For the nine month period ended September 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).
In the Company's report for the quarterly period ended June 30, 2000,
revenue information for the the six months ended June 30, 1999 was
inadvertenly omitted. Sales totaling $837,486, Cost of Goods Sold of
$595,713, and Gross Profit of $241,773 should have been included, all of
which resulted from operation of the Company's former operating
subsidiary during the first quarter of 1999. The net loss of $459,669 for
the six month period ended June 30, 1999 was correctly stated.
Consolidated operating expenses for the three month period ended
September 30, 2000 were $107,875, compared to $289,416 for the comparable
period in in 1999, a decrease of $181,541, resulting primarily from a
decrease in consulting fees of $198,062, a decrease in legal and
accounting fees of $9,725 and an increase in marketing expenses of
$30,400.
Consolidated operating expenses for nine month period ended September 30,
2000 were $245,430, a decrease of $747,021 from the prior year's period,
which included total operating expenses of $181,292 for L'Abbigliamento,
Ltd. Excluding L'Abbigliamento, Ltd., the current nine month period's
operating expenses of $245,430 decreased $565,729 from the prior year's
period, resulting primarily from a decrease of $596,244 in consulting
expenses and increases in legal and accounting fees of $9,055 and
marketing expenses of $30,400.
The net loss for the nine month period endedSeptember30, 2000 was
$242,616 compared to net loss of $743,602 for the comparable period in
the prior year, a decrease of $500,986 in net loss.
The total cash and cash equivalents at September 30, 2000 totalled $128,
compared to $1,464 at September 30, 1999, a decrease of $1,336.
Accounts Payable at September 30, 2000 totalled $198,099 compared to
$107,042 at September 30, 1999, an increase of $91,057
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 September 30, 2000, the Company had an insignificant amount of cash
totalling $128. The Company does not have adequate funds for working
capital requirements, and there is no assurance that the Company will be
able to raise the amount of funds needed to meet its working capital
needs.
Year 2000 Compliance
The Company has not experienced any problems to date as a result of the
Year 2000 issue. 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 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.
On November 10, 2000, the Company accepted resignations from P.
Richard Sirbu, Chairman, President, CEO, and Director, and from
Thomas C. Hushen, Senior Vice President and Secretary. On
November 13, 2000, the remaining Board of Directors elected
William C. Hayde as a Director and also appointed him as
Secretary. Mr. Hayde, a former Director of the Company, is 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
Toscana Group, Inc., 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 Stony Brook
University. Robert Gordon, Executive President of the Company, has
been appointed acting President.
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: November 13, 2000 By:/s/ Robert Gordon
Robert Gordon
Executive Vice President
Principal Financial Officer
