<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended June 30, 2000
OR
[ ] 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: 1-12536
-------------------------------
STRATEGIC SOLUTIONS GROUP, INC.
-------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 11-2964894
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1598 Whitehall Road, Suite E
Annapolis, Maryland 21401
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code: (410) 757-2728
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 __
---
7,856,690 Common Shares, $.0001 par value were issued and outstanding at
June 30, 2000.
<PAGE>
STRATEGIC SOLUTIONS GROUP, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Part I - Financial Information
Consolidated Balance Sheets, June 30, 2000 and
December 31, 1999 (unaudited) 3
Consolidated Statements of Operations for the three and six
months ended June 30, 2000 and 1999 (unaudited) 4
Consolidated Statements of Cash Flows for the three and six
months ended June 30, 2000 and 1999 (unaudited) 5
Notes to Consolidated Financial Statements (unaudited) 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Part II - Other Information
Item 1. Legal Proceedings 11
Item 2. Changes in Securities and Use of Proceeds 11
Item 6. Exhibits and Reports on Form 8-K 12
</TABLE>
<PAGE>
STRATEGIC SOLUTIONS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
--------------- --------------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 90,497 $ 146,107
Accounts receivable, net of allowance for doubtful
accounts of $35,000 for both periods 351,631 190,653
Prepaid expenses and other assets 65,533 22,085
--------------- --------------
Total current assets 507,661 358,845
--------------- --------------
Property and equipment, at cost
Computers, furniture and equipment 439,165 416,602
Less accumulated depreciation 387,263 365,622
--------------- --------------
Net property and equipment 51,902 50,980
--------------- --------------
Other assets 13,492 13,591
--------------- --------------
$ 573,055 $ 423,416
=============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities $ 184,282 $ 369,643
Capital lease obligation 1,171 ---
Notes payable 95,045 ---
Convertible subordinated debenture ---- 779,650
Other current liabilities 54,160 183,000
--------------- --------------
Total current liabilities 334,658 1,332,293
--------------- --------------
Convertible subordinated debenture 197,385 ---
--------------- --------------
Total liabilities 532,043 1,332,293
--------------- --------------
Commitments and contingencies
Stockholders' Equity
Common stock, $.0001 par value. Authorized 25,000,000
and 10,000,000 shares; issued and outstanding 7,856,690
and 5,356,690 shares as of June 30, 2000
and December 31, 1999 786 536
Additional paid-in capital 15,962,094 15,370,848
Accumulated deficit (15,902,478) (16,241,480)
Deferred compensation (19,390) (38,781)
--------------- --------------
Total stockholders' equity 41,012 (908,877)
--------------- --------------
$ 573,055 $ 423,416
=============== ==============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE>
STRATEGIC SOLUTIONS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the three and six months ended June 30, 2000 and 1999
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
------------------------------ ------------------------------
2000 1999 2000 1999
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues
Service revenues $ 394,806 $ 273,378 $ 665,167 $ 544,589
Royalty revenues 2,986 10,114 7,025 14,589
------------- ------------- ------------- -------------
Total revenue 397,792 283,492 672,192 559,178
------------- ------------- ------------- -------------
Expenses
Cost of service revenues 139,110 138,820 253,432 267,049
Research and development --- 9,348 3,357 38,729
Selling, general and administrative 248,613 147,890 539,252 314,732
------------- ------------- ------------- -------------
Total operating expenses 387,723 296,058 796,041 620,510
------------- ------------- ------------- -------------
Income (loss) from operations 10,069 (12,566) (123,849) (61,332)
Other income (expense), net 55,024 40,396 54,597 (21,999)
------------- ------------- ------------- -------------
Income (loss) before extraordinary item 65,093 27,830 (69,252) (83,331)
Extinguishment of Debt --- --- 408,255 ---
------------- ------------- ------------- -------------
Net income (loss) $ 65,093 $ 27,830 $ 339,003 $ (83,331)
============= ============= ============= =============
Earnings per share - Basic
Income (loss) before extraordinary item $ 0.01 $ 0.01 $ (0.01) $ (0.02)
Extraordinary item $ 0.00 $ 0.00 $ 0.06 $ 0.00
------------- ------------- ------------- -------------
Net income (loss) per common share $ 0.01 $ 0.01 $ 0.05 $ (0.02)
============= ============= ============= =============
Weighted average number of common
shares outstanding - basic 7,774,272 4,007,309 6,776,225 3,710,954
============= ============= ============= =============
Earnings per common share - assuming dilution
Income (loss) before extraordinary income $ 0.01 $ 0.01 $ (0.01) $ (0.02)
Extraordinary item $ 0.00 $ 0.00 $ 0.05 $ 0.00
------------- ------------- ------------- -------------
Net income (loss) per common share $ 0.01 $ 0.01 $ 0.04 $ (0.02)
============= ============= ============= =============
Weighted average number of common
shares outstanding - assuming dilution 9,059,717 4,008,289 7,885,336 3,710,954
============= ============= ============= =============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE>
STRATEGIC SOLUTIONS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six months ended
June 30,
----------------------------------
2000 1999
--------------- ---------------
<S> <C> <C>
Cash flows from operating activities
Net income (loss) $ 339,003 $ (83,331)
Adjustments to reconcile net income (loss) to net cash used
in operating activities
Depreciation and amortization 21,641 129,727
Amortization of deferred financing costs 5,040 ---
Interest expense associated with beneficial conversion
feature on convertible subordinated debentures 2,172 ---
Deferred compensation 19,391
Gain on debt extinguishment (408,255) ---
Other (60,000) ---
Changes in assets and liabilities:
Accounts receivable (160,978) (4,758)
Prepaid expenses and other current assets 34,152 9,721
Other assets 100 (530)
Accounts payable and accrued liabilities (9,668) 80,441
Other liabilities 1,171 (2,190)
-------------- ---------------
Net cash (used in) provided by operating activities (216,231) 129,080
-------------- ---------------
Cash flows from investing activities
Capital expenditures (22,563) (5,630)
-------------- ---------------
Net cash used in investing activities (22,563) (5,630)
-------------- ---------------
Cash flows from financing activities
Proceeds from convertible debentures 250,000 ---
Proceeds from sale of common stock 250,000 ---
Payments on financing debt and promissory note (101,816) ---
Redemption of convertible debt (215,000) ---
-------------- ---------------
Net cash (used in) provided by financing activities 183,184 ---
-------------- ---------------
Net increase (decrease) in cash and cash equivalents (55,610) 123,450
Cash and cash equivalents, beginning of period 146,107 67,991
-------------- ---------------
Cash and cash equivalents, end of period $ 90,497 $ 191,441
============== ===============
Supplemental disclosures of cash paid:
Interest $ 2,021 $ ---
Supplemental schedule of non-cash investing and financing activities:
Options issued as payment for professional fees $ 53,101 $ ---
Discount on convertible subordinated debentures 22,500 ---
Stock issued upon conversion of convertible debentures 250,000 57,008
Stock issued for investing by convertible subordinated debenture 250,000 ---
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE>
STRATEGIC SOLUTIONS GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. FINANCIAL STATEMENT PRESENTATION
Strategic Solutions Group, Inc. (the "Company") has prepared the
accompanying unaudited condensed consolidated financial statements pursuant
to the rules and regulations of the Securities and Exchange Commission (the
"Commission"). These financial statements should be read together with the
financial statements and notes in the Company's Annual Report on Form 10-
KSB for the fiscal year ended December 31, 1999 (the "1999 Form 10-KSB").
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. The accompanying condensed
consolidated financial statements reflect all adjustments and disclosures
which, in our opinion, are necessary for fair presentation. All such
adjustments are of a normal recurring nature. The results of operations for
the interim periods are not necessarily indicative of the results of the
entire year.
The Company currently operates in only one segment.
2. CONVERTIBLE DEBT
In January 1998, the Company issued a notice of redemption of its
Subordinated Convertible Debenture (the "Debenture") based on management's
interpretation of the contract and issued 1,052,624 shares of its common
stock in payment of the redemption amount. The holder of the Debenture
refused to accept the shares tendered, delivered a notice of partial
conversion of the Debenture, and filed suit against the Company in the
Delaware Chancery Court alleging that the terms of the Debenture permitted
cash redemption only, that the redemption was therefore invalid, and that
the Company was required to honor the holder's conversion notice. On April
23, 1998, the Court ruled in favor of the Debenture holder, declaring the
redemption invalid and imposing a penalty of $106,000 against the Company
for delay in delivering the shares issuable in accordance with the holder's
conversion notice.
The $106,000 penalty was expensed in the second quarter of 1998. In
addition, the Company executed a judgement note payable with the Debenture
holder to pay the $106,000 in monthly payments of $7,500 until paid in full
with interest at 10% per annum and acceleration upon SSGI's receipt of
payments from U. S. Technologies, Inc. ("UST"). The Company received final
payment from UST in August 1999 and at December 31, 1999 was in default on
its payment of the penalty. Subsequently, the Debenture holder requested
payment of an additional penalty of $160,000, claiming that the Company did
not register the common stock issuable upon conversion of the Debenture
under the Securities Act of 1933 within the time required by a registration
rights agreement between the Company and the Debenture holder.
On March 1, 2000 the Company settled all outstanding issues with the holder
of this Debenture. Under the terms of the Settlement Agreement with
Releases, the Company paid the holder of the Debenture $200,000 cash,
issued a $100,000 non-interest bearing promissory note secured by certain
assets of the Company, payable in installments of $10,000 per month
beginning in March 2000 and. issued 1,000,000 shares of the Company's
common stock, and transferred to the holder certain other assets owned by
the Company which had a negligible book value. The Company also incurred
legal fees totaling $15,000 related to this transaction.
The Company recognized a gain on the cancellation and extinguishments of
this debt and the related accrued interest and penalties as an
extraordinary item in the operating statement of $408,255.
6
<PAGE>
On February 24, 2000 ("Issuance Date"), the Company issued a convertible
subordinated debenture for $250,000. This debenture bears interest at 10%,
matures February 24, 2004 and is convertible into common stock, beginning
the earlier of 180 days after the Issuance Date or the effective date of
the Registration Statement filed pursuant to a Registration Rights
Agreement, at a conversion price of $0.28 (the "Conversion Price").
The Company has the right to redeem this debenture at redemption prices
increasing from 125% of the principal amount of the debenture, if redeemed
before the first anniversary of the Issuance Date, to 200% of the principal
amount of the debenture after the third anniversary date of the Issuance
Date. Upon notice of redemption, the holder of the debenture has the right
to convert the redemption proceeds into common stock at the above
Conversion Price.
The Company granted the holder of this debenture a security interest in
641,045 shares of common stock that the Company owns in Digital Chainsaw,
Inc.
In connection with the issuance of this debenture, the Company issued a
stock purchase warrant for the purchase of up to 250,000 shares of the
Company's common stock at $0.75 per share. This stock purchase warrant
expires on February 24, 2004. Based on the relative fair value of the
debenture and stock purchase warrant, the stock purchase warrant has been
assigned a value of $22,500, which represents a debenture discount and will
be amortized to interest expense over the life of the debenture.
As part of the debenture, the Company was obligated to issue 250,000 shares
of its common stock to the investor. In the quarter ended June 30, 2000,
the Company recorded the market value of these shares as a reduction in the
recorded amount of the debenture and as common stock and additional paid in
capital.
In connection with these investments, the Company entered into a
registration rights agreement with this investor that required the Company
to file a registration statement with the SEC to register the shares of
common stock related to these investments by June 26, 2000 or incur a
penalty of up to 7% of the investment amount. The Company has decided not
to pursue registration of these shares and is negotiating with the investor
to waive the penalty provisions of the registration rights agreements
entered into as part of these investments and has not accrued any amounts
for such. The Company incurred approximately $19,000 during the three
months ended June 30, 2000 in connection with the preparation of
registration statements, which has been netted against the investment
proceeds received.
3. STOCKHOLDERS' EQUITY
During the six months ended June 30, 2000, the Company sold 1,250,000
shares of common stock in a private placement of $250,000. In connection
with this investment, the Company entered into a registration rights
agreement with this investor that required the Company to file a
registration statement with the SEC to register the shares of common stock
related to this investment by May 10, 2000 or incur a penalty of up to 7%
of the investment amount. The Company has decided not to pursue
registration of these shares and is negotiating with the investor to waive
the penalty provisions of the registration rights agreements entered into
as part of these investments and has not accrued any amounts for such. A
debenture holder was granted 250,000 shares of common stock in connection
with the debenture agreement.
On February 23, 2000 the Board of Directors authorized the adoption of a
Stock Option Plan, for the issuance of stock options to purchase up to
1,600,000 shares of the Company's common stock.
4. EARNINGS PER SHARE
7
<PAGE>
Basic earnings per share for each period presented is computed by dividing
net income by the weighted average number of shares of common stock
outstanding during the period. Diluted earnings per share reflects the
dilutive effect of additional shares of common stock that could be issued
upon the exercise of outstanding stock options and the conversion of the
convertible subordinated debenture.
The following shows the determination of income for the purpose of the
earnings per share computions:
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
---------------------------- ------------------------------
2000 1999 2000 1999
---------------------------- ------------------------------
<S> <C> <C> <C> <C>
Net income before extraordinary item $ 65,093 $ 27,830 $ (69,252) $ (83,331)
Extraordinary item -- -- 408,255 --
--------------------------- -----------------------------
Income available for common stockholders,
for basic earnings per share 65,093 27,830 339,003 (83,331)
Plus interest on convertible subordinated
debentures, net of income taxes 1,791 -- 2,499 --
--------------------------- -----------------------------
Income available for common stockholders,
used for diluted earnings per share $ 66,884 $ 27,830 $ 341,502 $ (83,331)
=========================== =============================
</TABLE>
The following shows the determination of the number of shares used in the
earnings per share computions:
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
---------------------------- ------------------------------
2000 1999 2000 1999
---------------------------- ------------------------------
<S> <C> <C> <C> <C>
Weighted average number of shares outstanding 7,774,272 4,007,309 6,776,225 3,710,954
Net number of shares issued on the assumed
exercise of stock options 1,035,445 980 941,529 --
Shares issued on the assumed conversion of
convertible subordinated debenture 250,000 -- 167,582 --
---------------------------- ------------------------------
Number of shares used in the computation of
dituted earnings per share 9,059,717 4,008,289 7,885,336 3,710,954
============================ ==============================
</TABLE>
5. OTHER INCOME
Other income for the three and six months ended June 30, 2000 consists primarily
of the partial satisfaction ($10,000) of an amount payable the Company exchanged
for 10,000 shares of Digital Chainsaw, Inc., an investment the Company received
in connection with its divestiture of U.S. Technologies, and the reversal
($50,000) of an amount previously recorded as a payable to a consultant in 1998
for which the Company has no obligation to satisfy.
6. RELATED PARTY TRANSACTION
During the three months ended June 30, 2000, the Company converted approximately
$54,000 of amounts due to its non-employee directors into options to purchase
approximately 385,000 shares of the Company's common stock at $0.14 per share,
which represented the market price per share on the date of grant, and the fair
value of the accrued liability.
8
<PAGE>
Management's Discussion and Analysis of Financial Condition
and Results of Operations
Overview
--------
The Company's revenues are comprised primarily of service fees and royalties.
Service fees are generated from the development of custom multimedia software,
and royalties are paid to the Company by customers who resell copies of software
developed by the Company for such customers.
Results of Operations
---------------------
Three and Six Months Ended June 30, 2000 Compared to Three and Six Months Ended
June 30, 1999 Total revenue for the three months ended June 30, 2000 was
$397,792 as compared to $283,492 for the same period of 1999, an increase of
approximately $114,000. Total revenue for the six months ended June 30, 1999 was
$672,192 as compared to $559,178 for the same period of 1999, an increase of
approximately $113,000. The increase in revenue for these periods is due
primarily to an increase in both the size and volume of new contracts and the
timing of completion of existing contracts with our customers.
During the three and six month periods ended June 30, 2000, revenue from custom
multimedia software development services was $394,806 and $665,167,
respectively, as compared to $273,378 and $544,589, respectively, for the same
periods of the prior year, increases of approximately $121,000 and $120,000,
respectively. The increases are primarily a result of an increase in both the
size and volume of new contracts and the timing of completion of the Company's
contracts with customers. The Company's strategy to increase revenues
prospectively includes targeting its sales and marketing efforts of technology-
based training solutions to the manufacturing and transportation industries.
The Company has entered into agreements that allow certain customers to resell
copies of the Company's software products in exchange for royalty payments.
Royalties were $2,986 and $7,025, respectively, during the three and six month
periods ended June 30, 2000, as compared to $10,114 and $14,589, respectively,
for the same periods of the prior year, a decrease of approximately $7,100 and
$7,600, respectively. The Company generally expects royalty revenue to remain
constant with current levels due to the aging shelf life of products for which
the Company currently receives royalties. However, the Company continually
explores additional marketing and development partners to increase revenues
generated from royalty arrangements.
The net income and earnings per share were $65,093 and $0.01, respectively, for
the three month period ended June 30, 2000, as compared to $27,830 and $0.01,
respectively, for the same period in 1999. The increase in net income of
approximately $37,000 is primarily due to the increased gross margin the Company
is realizing during 2000 compared to 1999. The net income and earnings per share
were $339,003 and $0.05, respectively, for the six month period ended June 30,
2000, as compared to a net loss and net loss per share of $83,331 and $0.02,
respectively, for the same period of the prior year. The increase in net income
of approximately $422,000 is primarily due to an extraordinary gain of $408,255
from the conversion and cancellation of debt (see Note 2 to the Financial
Statements).
The net income and net income per share - diluted were $66,884 and $0.01 per
share, respectively, for the three months ended June 30, 2000, as compared to
$27,830 and $0.01 per share, respectively, for the same period of the prior
year. Our net income for the three months ended June 30, 2000 is due to an
operational net income of $10,069 and other income of $60,000. The net income
and net income per share - diluted were $341,502 and $0.04 per share,
respectively, for the six months ended June 30, 2000, as compared to a net loss
and net loss per share of $83,331 and $0.02 per share, respectively, for the
same period of the prior year. Our net income for the six months ended June 30,
2000 is due to
9
<PAGE>
extraordinary gain of $408,255 from the conversion and cancellation of debt (see
Note 2 to the Financial Statements).
For the three and six month periods ended June 30, 2000, the cost of service
revenues for custom multimedia software was $139,110 and $253,432, respectively,
as compared to approximately $138,820 and $267,049, respectively, for the same
periods of the prior year, resulting in gross margins of approximately 65% and
62%, respectively, as compared to gross margins of 49% and 50%, respectively,
for the same periods of 1999. Management expects gross margins to drop slightly
with an increase in the work force expected in future periods while revenues
increase proportionally.
During the three and six month periods ended June 30, 2000, total operating
expenses were $387,723 and $796,041, respectively, as compared to $296,058 and
$620,510, respectively, for the same periods of the prior year, increases of
approximately $91,700 and $175,500, respectively. These increases were primarily
attributable to the inclusion of professional fees associated with the
conversion and cancellation of debt.
During the three month period ended June 30, 2000, we incurred no research and
development expenses compared to $9,348 for the same period in 1999. During the
six month period ended June 30, 2000, research and development expenses were
$3,357 as compared to $38,728 for the same period of the prior year. Research
and development expenses include improvements on existing tools and the
development of software tools and applications to be sold. The decrease is
primarily attributed to less time devoted to research and development as
compared to contract work.
During the three and six month periods ended June 30, 2000, selling, general and
administrative expenses were $248,613 and $539,252, respectively, as compared to
$147,890 and 314,732, respectively, for the same periods of the prior year,
increases of approximately $101,000, or 68% and $225,000, or 71%, respectively.
The increases are primarily the result of professional fees associated with the
conversion and cancellation of debt.
Cash Flow, Liquidity and Capital Resources
------------------------------------------
The Report of Independent Accountants on the 1999 consolidated financial
statements of the Company includes an explanatory paragraph stating that the
recurring losses from operations and the existing cash resources may be
insufficient to fund planned operations and that these conditions raise
substantial doubt about the Company's ability to continue as a going concern.
For the year ended December 31, 1999 the Company had net income of $216,195, but
had a loss from operation of $415,179. In addition, as of December 31, 1999, the
Company had an accumulated deficit of $16,241,480. For the three and six month
periods ended June 30, 2000, the Company had net income of $65,093 and $339,003.
As discussed in Strategy to Achieve Profitable Operations below, the Company's
plans to implement certain actions to address the losses and liquidity matters.
However, there can be no assurance that such actions will generate sufficient
cash flow to ensure the continued existence of the Company; or that additional
financing will be available from any sources at terms and conditions suitable to
the Company. In February and March 2000, the Company received $500,000 from the
sale of convertible debentures and common stock.
For the six months ended June 30, 2000, the Company used cash of $216,231 from
operations. In addition to the net income, the Company experienced a net
increase in the extinquishment of debt and accounts receivable. The Company used
cash of $22,563 for investing activities. The Company received net cash of
$183,184 from financing activities.
For the six month period ended June 30, 1999, the Company's operations provided
cash of approximately $129,080. Included in net income for the six month period
ended June 30, 1999 is the receipt of $100,000 as partial payment on the
Company's promissory note with UST. In addition, the Company experienced a net
increase in accounts payable and accrued liabilities during the period. Net cash
of approximately $5,600 was used for investing activities for the purchase of
equipment. The Company did not receive or use any cash for financing activities.
10
<PAGE>
Strategy to Achieve Profitable Operations
During 1998, management laid out its Strategy to Achieve Profitable Operations,
which included intensified development of its technology-based training
software, greater penetration of the needs of existing, major customers, and
initial exploitation of the internet applications for Strategic Solutions
Group's expertise. Coupled with careful management, the Company believes it
began to stabilize its business during 1999. There are no assurances that the
Company can achieve its strategy.
Strategic Solutions Group entered year 2000 with backlog for its multimedia
products, and with indications that the market demand is increasing. Without the
financial impediment formally imposed by an outstanding convertible debenture
issue, and with a modest amount of new operating funding in hand, management can
address this growing market appropriately.
During year 2000, Strategic Solutions Group expects to achieve higher revenues
and positive financial results in part through its expanding presence in the
fast-growing field of web-based training. The Company was an early entrant in
this specialty, and its experience and reputation are advantages. The Company
has also taken initial steps to participate in the joint-venture development of
a related product line, working closely with one of Strategic Solutions Group's
principal investors. The Company believes that this joint effort will create
expanded future sales opportunities.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995: The statements contained in this document and other statements which are
not historical facts are forward looking statements that involve risks and
uncertainties, including, the success of newly implemented sales strategies; the
continued existence of agreements with product providers; market acceptance of
the Company's products and services; the ability to obtain a larger number and
size of contracts; the timing of contract awards; work performance and customer
response; the impact of competitive products and pricing; technological
developments by the Company's competitors or difficulties in the Company's
research and development efforts; and other risks as detailed in the Company's
Securities and Exchange Commission filings.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings:
-----------------
The Company has previously disclosed a prior legal proceeding with the holder of
a Subordinated Convertible Debenture. On March 1, 2000, the Company settled all
outstanding issues with the holder of the Debenture, the terms of which have
been previously disclosed in the Company's Quarterly Report for the quarter
ended March 31, 2000.
The Company is not subject to any other legal proceedings other than claims that
arise in the ordinary course of its business.
Item 2. Changes in Securities and Use of Proceeds:
-----------------------------------------
On March 10, 2000, the Company completed a closing of a private placement of its
Common Stock. The Company sold 1,250,000 shares in the private placement. The
Company raised $250,000 in gross proceeds. The Company used $200,000 of such
proceeds to pay the debenture holder under the Settlement Agreement as described
more fully in Note 2 to the financial statements hereto and used the remainder
of the proceeds for general corporate purposes.
The private placement was not registered under the Securities Act of 1933, as
amended (the "Securities Act"), and was made in reliance on Section 4(2) of the
Securities Act. The purchaser in the private placement was an accredited
investor. The purchaser was granted registration rights with respect to the
shares of Common Stock he purchased, but the Company has not registered his
shares. For a more complete description, please see Note 3 to the financial
statements hereto.
Item 6. Exhibits and Reports on Form 8-K:
--------------------------------
(a) Exhibits
4.1 Securities Purchase Agreement between Thomas Stone and the
Company dated February 24, 2000.
4.2 10% Convertible Subordinated Debenture due February 24, 2004
to Thomas Stone (incorporated by reference to Exhibit 10(G) to
the Company's Quarterly Report on Form 10-Q for the quarter
ended March 30, 2000).
11
<PAGE>
4.3 Registration Rights Agreement between Thomas Stone and the
Company dated February 24, 2000.
4.4 Stock Purchase Warrant dated February 24, 2000 to Thomas
Stone.
4.5 Securities Purchase Agreement between Michael Damas and the
Company dated March 10, 2000.
4.6 Registration Rights Agreement between Michael Damas and the
Company dated March 10, 2000.
10.1 Settlement Agreement between Supermex Trading Co., Ltd. and
the Company dated March 1, 2000.
10.2 Promissory Note in the amount of $100,000 to Supermex Trading
Co., Ltd. dated March 1, 2000.
27.1 Financial data schedule.
(b) Reports on Form 8-K filed during the three months ended June 30,
2000: On May 15, 2000 the Company filed a Form 8-K related to a
change in its independent accountants
SIGNATURE
Pursuant to the requirements 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.
STRATEGIC SOLUTIONS GROUP, INC.
-------------------------------
(Registrant)
Dated: August 3, 2000
BY: /s/ John J. Cadigan
---------------------
John J. Cadigan
Chief Executive Officer
12
