SECURITIES & EXCHANGE COMMISSION
Washington, D.C., 20549
__________________________
FORM 10-KSB
ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d)
of the Securities Exchange Act of 1934
__________________________
For the Fiscal Year Ended December 31, 2000
Commission File Number: 0-27083
W3 GROUP, INC.
(Exact name of Registrant as specified in its Charter)
Colorado 84-1108035
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Ident. Number)
444 Madison Avenue, Suite 1710, New York, NY 10022
(Address of principal executive offices) (zip code)
(212) 317-0060
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Title of each class Name of each exchange on which registered
Common Stock, no par value None
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes _X_ No __
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Sec. 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K [ ]
Indicate the number of shares outstanding of each of issuer's classes of
common stock, as of the latest practicable date. At March 30, 2001, 3,888,435
shares of Common Stock, no par value were outstanding; at December 31,
2000, 3,844,935 shares , no par value, outstanding.
The aggregate market value of the voting stock held by non-affiliates of
registrant on March 30, 2001 was $131,309.
FORM 10-KSB
December 31, 2000
W3 GROUP, INC.
TABLE OF CONTENTS
Item
No. Description
Page
PART I
1. Business 3
2. Properties 4
3. Legal Proceedings 5
4. Submission of Matters to a Vote of Security Holder 5
PART II
5. Market for Registrant's Common Equity and Related
Stockholder Matters 5
6. Selected Financial Data 6
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
8. Financial Statements 8
9. Disagreements on Accounting and Financial Disclosure 23
PART III
10. Directors and Executive Officers of the Registrant 23
11. Executive Compensation 24
12. Security Ownership of Certain Beneficial Owners
and Management 24
13. Certain Relationships and Related Transactions 25
PART IV
14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K 26
Signatures
26
FORM 10-KSB
W3 GROUP, INC.
December 31, 2000
PART I
ITEM 1. BUSINESS: Introduction
W3 Group, Inc. ("Registrant" or the "Company" or "W3") was formed in 1988
under the laws of the state of Colorado for the purpose of participating,
either through acquisition or merger, in a viable business opportunity.
Registrant has since its inception been evaluating various privately held
companies which management believed could be viable business opportunities.
On September 23, 1996, the Company, then named Concorde Strategies Group,
Inc., entered into an Agreement and Plan of Reorganization pursuant to which
it acquired 100 percent of the issued and outstanding capital stock
of Concorde Management, Ltd. ("CML") and its wholly owned subsidiary,
L'Abbigliamento, Ltd. This acquisition was concluded as of July 1, 1997.
L'Abbigliamento, Ltd., a New York based distributor of Italian made men's
apparel, was later divested by the Company, effective March 31,1999, as
described below.
In the beginning of 1999, the Company decided to reorganize and focus its
acquisition efforts on Internet related technology companies. The Internet
industry is going through fundamental and rapid changes as technology
advances, providing significant business growth opportunities. The emergence
of the Internet into homes and offices has provided a powerful new mechanism
for areas such as electronic commerce, communication via E mail, and the
dissemination of information.
Reorganization of Business Operations
In regard to the Company's changed business focus, an Agreement and Plan of
Share Exchange was entered into with W3 Group, Inc., a privately held company,
and after approval by shareholders, said Agreement became effective on October
1, 1999 (Refer to Form 8-K filed on October 15, 1999). At that time, the
Company changed its corporation name to W3 Group, Inc. Also, as part of the
reorganization, the Company divested its subsidiary, L'Abbigliamento, Ltd.,
which resumed operations as an independent public company ( See "Note 8-
DIVESTITURE OF SUBSIDIARY"). The Company also effected a reverse split of its
Common Stock on the basis of one new share for each 30 existing shares, after
which 3,275,000 new shares (post reverse split) of Common Stock were issued to
W3 shareholders in exchange for 100 percent of the capital stock of W3 Group,
Inc. The Agreement and Plan of Share Exchange transaction was intended to
qualify as a tax free "reorganization" within the meaning of Section 368
(a)(1)(B) of the Internal Revenue Code of 1986, as amended.
The reverse split of the Company's Common Stock included a special
distribution, post split, of Common Stock Purchase Warrants ("Common
Warrants") to all holders of all classes of capital stock as of the close of
business on September 30, 1999. These Common Warrants each represent the right
to purchase one share of Common Stock at a price of $6.00 per share until
October 1, 2001 (Refer to Form 8-K filed on October 15, 1999 for additional
information regarding the Common Warrants).
Present Operations
W3 intends to acquire, finance, and restructure profitable companies that can
utilize the Internet to expand their business and distribution channel. These
companies would become wholly owned, or majority owned, subsidiaries of W3.
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. The Company's goal 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 objective is to better meet the needs of growing companies that may have
had difficulty obtaining capital from traditional sources such as banks, large
asset based lenders, and the public securities markets. Also, W3 believes
that its opportunity is enhanced because of the consolidation in the
commercial banking industry and the emphasis in investment banking toward
increasingly larger financings. The resulting diminishing of available
capital has affected the flow to smaller companies, where the need for capital
is the most critical.
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.
As described in the preceding section, "Reorganization of Business
Operations", as a result of the divestiture of L'Abbigliamento, Ltd.,
effective March 31, 1999, the Company essentially has not had any business
operations since that time, pending the completion of future acquisitions, of
which there can be no assurance.
Regulation
Although the Company's planned operations are not subject to any regulations
governing the Internet, services which are provided via the Internet or the
companies which provide such services, it is likely that, in the future,
such regulations will be instituted. Although it is not possible to predict
the extent of any such future regulations, and although management is not
aware of any pending regulations which would be applicable to its planned
business operations, it is possible that future or unforseen changes may have
an adverse impact upon the Company's ability to continue or expand its
operations as presently planned. The extent of such regulations is impossible
to predict, as it is the potential impact upon the business operations of the
Company in accordance with its business plan.
Competition
The Registrant is, and is expected to remain, an insignificant entity among a
great many other companies who are engaged in mergers and acquisitions of
other business entities. There are many established venture capital and
financial concerns seeking to attract merger or acquisition candidates,
virtually all of which have significantly greater financial and personnel
resources and technical expertise than the Registrant.
The Internet marketplace is new, rapidly evolving and highly competitive, and
it is expected that this competition will persist and intensify in the future,
New competitors may emerge and rapidly acquire significant market share.
Competitors may be able to respond more quickly than the Company to new or
emerging technologies and changes in the marketplace.
ITEM 2. PROPERTIES
Facilities
The Company utilizes the offices and business facilities of Ameristar Group
Incorporated ("Ameristar"), a privately held corporation principally owned and
controlled by two Directors of the Company, at a current monthly rental of
$4,061 ( See "Note 5- LEASES AND OTHER COMMITMENTS").
Employees
The Company's employees consist of its officers. The one outside Director is
engaged in other business activities and devotes so much of his time to the
affairs of the Company as is required.
ITEM 3. LEGAL PROCEEDINGS
The Company knows of no litigation pending, threatened or contemplated, or
unsatisfied judgments against it, or any proceedings in which the Company is a
party. The Company also knows of no legal action pending or threatened or
judgments entered against any officers or directors of the Company in their
capacity as such.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
A special meeting of shareholders was held on January 18, 2000. Reference is
made to Schedule 14A, Notice of Special Meeting of Shareholders, and Proxy
Statement filed on November 24, 1999 and Form 8-K filed on January 24, 2000.
This special meeting of shareholders did not involve the election of
directors. The only matter voted on, which was approved by shareholders, was
to amend the issuer's Articles of Incorporation to adjust the conversion
right of the Series B Convertible Preferred Stock from an amount equal to
.0416 shares to an amount equal to .5 (one half) share of Common Stock for
each one share of Series B Convertible Preferred Stock. A total of 2,823,942
votes were cast for this proposal, 50,156 votes against, 6,220 abstentions,
and 7,830 broker non-votes.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER
MATTERS
The Company's Common Stock trades under the symbol "WWWG" and the Series B
Convertible Preferred Stock trades under the symbol "WWWGP" on the OTC
Electronic Bulletin Board. The number of record shareholders on December 31,
2000 for the Company's Common Stock was 389 and for its Series B Convertible
Preferred Stock was 24 shareholders. There currently are 10 market makers
for the Company's Common Stock and 8 market makers for its Series B
Convertible Preferred Stock.
The following tables show for the periods indicated the range of high and low
bid quotes for the Common Stock and Series B Convertible Preferred Shares
obtained from the OTC Electronic Bulletin Board and are between dealers, do
not include retail mark-ups, mark-downs, or other fees or commissions, and may
not necessarily represent actual transactions.
COMMON STOCK TRADING HISTORY
Fiscal 1999
Quarter ended March 31, 1999 $0.6250 $0.0400
Quarter ended June 30, 1999 $0.5000 $0.1563
Quarter ended September 30, 1999 $0.3125 $0.1000
Quarter ended December 31, 1999 $9.5000 $1.2500
Fiscal 2000
Quarter ended March 31, 2000 $8.5000 $1.5000
Quarter ended June 30, 2000 $1.5000 $0.7500
Quarter ended September 30, 2000 $1.2500 $0.2500
Quarter ended December 31, 2000 $1.2500 $0.3750
SERIES B CONVERTIBLE PREFERRED SHARE TRADING HISTORY
Fiscal 1999
Quarter ended March 31, 1999 $6.0625 $1.5500
Quarter ended June 30, 1999 $6.1250 $2.0625
Quarter ended September 30, 1999 $6.3125 $1.0625
Quarter ended December 31, 1999 $3.0000 $0.9375
Fiscal 2000
Quarter ended March 31, 2000 $2.1250 $0.5000
Quarter ended June 30, 2000 $0.7000 $0.1875
Quarter ended September 30, 2000 $0.1875 $0.0625
Quarter ended December 31, 2000 $0.1250 $0.0625
The Company has not paid any dividends and, there are no plans to pay any cash
dividends in the foreseeable future. The declaration and payment of dividends
in the future, of which there can be no assurance, is determined by the
Board of Directors based upon conditions then existing. There are no
restrictions on the Company's ability to pay dividends.
ITEM 6. SELECTED FINANCIAL INFORMATION
Summary Balance Sheet Data: YEAR ENDED DECEMBER 31,
2000 1999 1998 1997
Total Assets $ 440,375 $ 247,263 $3,598,222 $3,440,634
Total Current Assets 439,656 228,136 3,454,374 3,341,282
Total Liabilities 421,915 287,780 2,041,520 2,276,451
Retained Earnings
(Deficit) (1,953,882) (1,650,359) (263,995) (111,164)
Stockholders' Equity $ 18,460 $ (40,517) $1,556,702 $1,164,183
Summary Earnings Data: YEAR ENDED DECEMBER 31,
2000 1999 1998 1997
Revenues $ 0 $ 837,486 $3,845,393 $1,827,502
Cost of goods sold 0 595,713 3,043,546 1,419,701
Selling, general &
administrative expense 327,398 1,124,623 899,077 495,162
Income (loss) from
operations (327,398) (882,850) (97,230) (87,361)
Net Income (Loss) (312,431) (869,904) (152,831) (100,361)
Earnings (Loss)
per Share (.085) (.91) ( 1.32)* (1.64)*
* Adjusted for reverse split of Common Stock on October 1, 1999, on 1-30
basis.
The foregoing is selected financial information only, and is qualified by the
financial statements and the notes thereto, in their entirety, which are set
forth elsewhere in this Report. The selected financial information for 1997
includes the results of the Company's subsidiary, L'Abbigliamento, Ltd. from
July 1, 1997, the effective date of the acquisition. The 1999 totals include
the results of L'Abbigliamento, Ltd. for the first quarter only since the
subsidiary was divested effective March 31, 1999 (See Item 7).
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND
RESULTS OF OPERATIONS
Results of Operations
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.
For the prior year ended December 31, 1999, consolidated results include the
results of operations of the Company's former subsidiary, L'Abbigliamento,
Ltd., for the three month period ended March 31, 1999, the effective date of
the divestiture of the Subsidiary.
The Company did not have any business operations during the year 2000. In
1999, the sales of $837,486 occurred during the first quarter from operation
of L"Abbigliamento, Ltd., as well as the gross profit realized of $241,773,
after cost of sales of $595,713.
Operating expenses for 2000 were $325,105 compared to $1,124,623 in 1999,
which included $199,428 for the operation of L'Abbigliamento, Ltd. Not
including L'Abbigliamento, Ltd., operating expenses in 2000 decreased
$600,900 from the prior year, resulting primarily from decreased consulting
fees for services performed.
The net loss for the twelve month period ended December 31, 2000 was $325,105
compared to a net loss of $912,249, not including L'Abbigliamento, Ltd., for
the prior year period, a decrease of $587,144, reflecting the decreased
consulting expenses.
The total cash and cash equivalents at December 31, 2000 totaled $120,
compared to $60,826 at December 31, 1999. Accounts payable at December 31,
2000 totaled $201,641, which represents the Company's normal business
overhead expenses and consulting services.
The Company is continuing to look for suitable acquisition candidates in its
new area of concentration, to wit, Internet technology and related companies.
As of the date of this Report, no additional acquisition candidates have
been found, and there is no assurance that any additional candidates will be
found.
Liquidity and Capital Resources
At the end of fiscal 2000, the Company had an insignificant amount of cash
totaling $120. There is no assurance that the Company will be able to raise
the amount of cash required for working capital purposes.
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 and raise capital.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Financial Statements:
For the Years Ended December 31, 2000 and 1999: Reference
Report of Janet Loss, C.P.A., P.C., Independent
Certified Public Accountant F-9
Report of Jay Fox, C.P.A., Independent
Certified Public Accountant F-10
Financial Statements:
Balance Sheet and Consolidated Balance Sheet F-11, 12
Statement of Operations and Consolidated Statement
Of Operations F-13
Statement of Cash Flows and Consolidated Statement
Of Cash Flows F-14
Statement of Stockholder's Equity and Consolidated Statement
Of Stockholders' Equity F-15, 16
Notes to Financial Statements F-17, 18, 19,
20, 21, 22
Janet Loss, C.P.A., P.C.
Certified Public Accountant
1780 S Bellaire Drive, Suite 500
Denver, Colorado 80222
Board of Directors
W3 Group, Inc.
(Formerly Known as W3 Group, Inc. and Subsidiary)
444 Madison Avenue, Suite 1710
New York, New York 10022
I have audited the accompanying balance sheet of W3 Group, Inc. as of December
31, 2000 and the consolidated balance sheet of W3 Group, Inc. and Subsidiary
as of December 31, 1999 and the related statement and consolidated statements
of income, changes in stockholders' equity and cash flows for the years ended
December 31, 2000 and 1999. The above-mentioned financial statements are the
responsibility of the Company's management. My responsibility is to express an
opinion on the financial statements at December 31, 2000 and the consolidated
financial statements at December 31, 1999 based on my audits. I did not audit
the statements of Company's former subsidiary, L'Abbigliamento, Ltd., as of
March 31, 1999 and the related statements of income, changes in stockholders'
equity and cash flows for the three months ended March 31, 1999. (See Note 1)
The former subsidiary's statements reflect total revenues of $837,486 for the
three months ended March 31, 1999. The subsidiary's financial statements are
included in the consolidated financial statements of W3 Group, Inc. and
Subsidiary until the completion of the divestiture of L'Abbigliamento, Ltd. at
March 31, 1999. The subsidiary's financial statements were audited by other
auditors whose report has been furnished to me, and my opinion in so far as it
relates to the comments of the subsidiary is based solely on the report of
such other auditors.
I conducted my audits in accordance with generally accepted accounting
standards. These standards require that I plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. I believe that my audit provides a reasonable basis
for my opinion.
In my opinion, based upon my audit and the report of other auditors the
financial statements at December 31, 2000 and the consolidated financial
statements at December 31, 1999 referred to above present fairly, in all
material respects, the financial position of W3 Group, Inc. and W3 Group, Inc.
and Subsidiary as of December 31, 2000 and 1999, and the results of their
operations and their cash flows for the years ended December 31, 2000 and 1999
in conformity with generally accepted accounting principles.
/s/Janet Loss
Janet Loss, C.P.A., P.C.
April 17, 2001
JAY FOX, C.P.A.
4315 AUSTIN BLVD.
ISLAND PARK, NY 11558
July 6, 1999
To the Board of Directors and Shareholders
L'Abbigliamento, Ltd. and Vista International Ltd.:
We have audited the accompanying consolidated balance sheet of
L'Abbigliamento, Ltd. and Vista International ltd. as of March 31, 1999, and
the related statements of income, retained earnings and cash flow for the
three months then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on the financial statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material aspects, the financial position of L'Abbigliamento, Ltd.
and Vista International Ltd. as of March 31, 1999, and the results of
its operations and its cash flows for the three months then ended in
conformity with generally accepted accounting principles.
/s/ Jay Fox
Jay Fox, C.P.A.
W3 GROUP, INC.
(Formerly W3 Group, Inc. and Subsidiary)
BALANCE SHEET AND CONSOLIDATED BALANCE SHEET
DECEMBER 31, 2000 AND 1999
2000 1999
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 120 $ 60,826
Prepaid Expenses 257,813 0
Loan Receivable (Note 8 and 10) 157,522 157,522
Interest Receivable (Note 8) 14,191 4,740
Rent Receivable 10,010 5,048
TOTAL CURRENT ASSETS: $ 439,656 $ 228,136
Fixed assets, net of accumulated
depreciation of 1,777 and $1,298 $ 719 $ 1,198
Deferred Offering Costs $ 0 17,929
TOTAL ASSETS $ 440,375 $ 247,263
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
2000 1999
CURRENT LIABILITIES:
Accounts payable $ 201,641 $ 138,307
Accrued interest 6,654 1,854
Stockholders' loans 40,000 40,000
Due to Ameristar
Capital Corporation $ 173,620 $ 107,619
TOTAL CURRENT LIABILITIES $ 421,915 $ 287,780
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock, no par value,
100,000,000 shares authorized. 0 0
Series A Convertible, redeemable
Preferred, 0 and 1,000 shares issued
at December 31, 2000 and 1999 0 0
Series B Convertible, non-dividend
bearing, 793,360 and 1,056,000
shares issued and outstanding $ 665,771 $ 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,
3,844,935 and 3,413,582 shares
issued and outstanding as of $ 946,346 $ 408,234
December 31, 2000 and 1999 *
Common stock issuable 0 50,000
Additional paid-in-capital 34,625 34,625
Retained earnings(Deficit) (1,953,882) (1,650,359)
TOTAL STOCKHOLDERS' EQUITY 18,460 (40,517)
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 440,375 $ 247,263
*Adjusted for October 1, 1999 reverse split on shares, 1-30 basis.
The accompanying notes are an integral part of these financial statements.
W3 GROUP, INC.
(Formerly W3 GROUP, INC. And Subsidiary)
STATEMENT OF OPERATIONS AND CONSOLIDATED STATEMENT OF
OPERATIONS
For the Years Ended December 31, 2000 and 1999
December 31, 2000 December 31, 1999
REVENUES
Sales $ 0 $ 837,486
COST OF GOODS SOLD 0 595,713
GROSS PROFIT: 0 $ 241,773
OPERATING EXPENSES:
L'Abbigliamento Expenses $ 0 $ 199,428
Consulting 206,688 789,909
Depreciation and amortization 479 3,695
Insurance 2,393 20,430
Office 5,639 6,378
Legal and Accounting 28,102 27,138
Rent 47,751 58,052
Transfer and filing fees 2,783 8,243
Marketing 33,563 11,350
TOTAL OPERATING EXPENSES 327,398 1,124,623
(LOSS) FROM OPERATIONS (327,398) (882,850)
OTHER INCOME AND (EXPENSES):
INTEREST INCOME 9,451 8,722
INTEREST (EXPENSE) (4,800) 0
EQUIPMENT RENTAL 0 5,048
FORGIVENESS OF DEBT 11,005 0
TOTAL OTHER INCOME AND (EXPENSES) 15,656 13,770
NET (LOSS) BEFORE
PROVISION FOR INCOME TAXES (311,742) (869,080)
PROVISION FOR INCOME TAXES 689 824
NET (LOSS) $ (312,431) $(869,904)
NET (LOSS PER SHARE) $ (.085) $ (0.91)
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 3,681,357 945,618*
*Adjusted for October 1, 1999 reverse split on shares, 1-30 basis.
The accompanying notes are an integral part of these financial statements.
W3 GROUP, INC.
(Formerly W3 GROUP, INC. And Subsidiary)
CASH FLOW STATEMENT AND CONSOLIDATED CASH FLOW STATEMENT
For the Years Ended December 31, 2000 and 1999
2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (312,431) $ (869,904)
Adjustments to reconcile
net loss to net cash flow
from operating activities:
Depreciation and amortization 479 3,695
Decrease in accounts receivable 0 1,361,173
Decrease (Increase)in inventory 0 2,014,517
Decrease (Increase)in prepaid expenses (257,813) 76,347
Decrease in Security Deposits 0 40,500
(Increase) in Loan Receivable 0 (157,522)
(Increase) in Interest Receivable (9,451) (4,740)
(Increase) in Rent Receivable 3,946 (5,048)
(Increase) in Deferred Offering Costs 17,929 (17,929)
(Decrease)Increase in payables 134,135 (1,116,678)
Increase(Decrease)in corporate income
taxes payable $ 0 $ (63,147)
Cash Used by Operating Activities $ (423,206) $1,261,264
CASH FLOWS FROM INVESTING ACTIVITIES:
Decrease (Increase) in fixed assets 0 41,139
Increase in Leasehold Improvements 0 57,317
Divestiture of Subsidiary 0 (516,460)
Net Cash used in investing activities 0 (418,004)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance
of preferred stock & warrants 0 582,000
Proceeds and (Return) of Common
Stock Issuable (50,000) 50,000
Proceeds from Issuance of Common
Stock and conversion of Common
Stock to Preferred Stock 532,025 100,395
Decrease in Preferred Stock due to
Conversion to Common Stock (119,525) 0
(Decrease) in additional Paid-in
Capital 0 (943,250)
Increase(Decrease)in amounts
due to factor 0 (394,185)
Repayment of bank and other loans 0 (219,731)
Increase in Stockholders'loans 0 40,000
Net cash provided (used) by
financing activities 362,500 (784,771)
Net Increase (Decrease)in Cash $ (60,706) $ 58,489
CASH, BEGINNING OF THE PERIOD $ 60,826 $ 2,337
CASH, END OF THE PERIOD $ 120 $ 60,826
The accompanying notes are an integral part of these financial statements.
W3 GROUP, INC.
(Formerly W3 GROUP, INC. AND SUBSIDIARY)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT) and
Consolidated Statements of Stockholders' Equity for the Years Ended December
31, 2000 and 1999
Preferred Series B
Stock Non- Convertible
Dividend Preferred Common Total
Bearing Stock Stock Common Common Additional
Stockholders'
Series B Purchase Number of Stock Stock Paid-in Deficit
Equity
Convertible Warrants Shares Amount Issuable Capital Accumulated
(deficit)
Balance, January 1, 1999 $209,383 $325,600 3,600,000 $307,839 -- $ 977,875
$(263,995) $ 1,556,702
April 1, 1999 Divestiture of
Subsidiary, L'Abbigliamento,
Ltd. (Note 12) $(976,000) $(516,460) $(1,492,460)
175,000 shares of Series B
Convertible Preferred Stock
issued for services April 1,
1999 $350,000 $ 350,000
May 21, 1999 199,995 shares
issued for consulting
services 199,995 $ 64,995 $ 64,995
116,000 shares of Series B
Convertible Preferred issued
for services, September 30,
1999 $232,000 $ 232,000
1-30 reverse split on
October 1, 1999 (3,673,213)
October 1, 1999, issuance of
3,275,000 shares, post
reverse split, for
acquisition of W3 Group,
Inc. (Note 13) 3,275,000 $ 32,750 32,750
October 16, 1999 Issues to
original private placements
investors 11,800 $ 35,400 35,400
Cash received for private
placement, December 1999 Net
loss for the year ended
December 31, 1999 -- -- -- -- -- -- $ (869,904) $ (869,904)
Balance, December 31, 1999 $ 791,383 $325.600 3,413,582 $408,234 50,000 $ 34,625
$(1,650,359) $ (40,517)
2000
Series of Series B
converted to Common Stock
(first quarter) $ (19,404) 13,317 $ 19,404
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)
190,428 shares of Series B
Convertible Preferred Stock
converted to Common Stock
(second quarter) $ (95,184) 94,836 $ 95,184
6,400 shares of Series B
Convertible Preferred Stock
converted to Common Stock
(third quarter) $ (1,024) 3,200 $ 1,024
40,000 shares of Series B
Convertible Preferred Stock
converted to Common Stock
(fourth quarter) $ (20,000) 20,000 $ 10,000
Net Loss for the year ended
December 31, 2000 (312,431) (312,431)
Balance, December 31, 2000 $ 655,771 $325,600 3,844,935 $946,346 0 $ 34,625
(1,962,790) $ 9,552
W3 GROUP, INC.
(Formerly W3 GROUP, INC. AND SUBSIDIARY)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED DECEMBER 31, 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.
As a result of the Company's changed focus, 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 was
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.
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 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. 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
December 31, 1999 include the results of the acquisition of Concorde
Management, Ltd. and its wholly owned subsidiary, L'Abbigliamento, Ltd., for
the first quarter of 1999, prior to the divestiture of 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) only.
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) subsequent to the period covered by this report, on
January 10, 2001, L'Abbigliamento, Ltd. paid off the balance due on its loan
from State Bank of Long Island, ending the Company's liability for said loan
pursuant to a guarantee of payment previously made by the Company.
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.
Note 10 - LOAN RECEIVABLE
L'Abbigliamento, Ltd., the Company's former subsidiary, is in default with its
payment obligations to repay the Company the principal amount of $157,522.
Management believes that the loan will be repaid but does not know when
payments will commence.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers and directors of the Company are as follows:
NAME Age POSITION(S) HELD
Robert Gordon 65 Executive Vice President
Martin I. Saposnick 54 Director of Corporate Development and
Director
Joseph J. Messina 46 Director
William C. Hayde 40 Secretary, Director
Profiles of the directors and officers of the Company are set forth below. All
directors hold office until the next annual shareholders meeting or until
their death, resignation, retirement, removal, disqualification or until their
successors have been elected and qualified. Vacancies in the Board may be
filled by majority vote of the remaining directors. Officers of the Company
serve at the will of the Board of Directors. There is no Executive Committee
or other committee of the Board of Directors. Election to the Board of
Directors is for a period of one year or until the next shareholder's meeting
and elections are ordinarily held at the Company's Annual Meeting of
Shareholders. There are no family relationships among officers and directors.
Profiles of Officers and Directors
Robert Gordon is Acting President and Executive Vice President. From
1996-1999, Mr. Gordon was President and a Director of Concorde Strategies
Group, Inc. and from 1993-1996, Executive Vice President of Contex, Inc., an
investment banking and consulting firm in Naples, Florida. From 1990-1993, as
Managing Director of a specialty apparel company, he was responsible for
marketing and sales, finance, manufacturing, retail and mail order operations,
MIS, strategic planning, organizational development, and re-structuring the
business. From 1988-1989, Mr. Gordon was President and Chief Operating Officer
of a public company that manufactured precision parts, performed
engineering design services, and conducted technology research and
development. Previously, he was Executive Vice President of a financial
services firm, responsible for administration, business operations, and
organizational development. Mr. Gordon also had a management consulting
practice and performed broad based professional services which included
strategic and financial planning, marketing and growth studies, business
re-structuring, acquisition plans, implementation of new business strategies,
MIS development, and training programs. Previously, Mr. Gordon was Director of
MIS for Kinney Shoe Corporation.
Mr. Gordon has conducted numerous business seminars and made presentations at
many conferences. He received an Achievement Award from the International
Association of Systems Management in recognition of his contribution
to the business systems profession, and is also a past Chapter President. He
was an advisor to Guidance International, a professional association of
computer users. Mr. Gordon has a B.A. in Economics from Union College.
Martin I. Saposnick is Director of Corporate Development and a Director of the
Company. Since 1992, Mr. Saposnick has also been President of Ameristar Group
Incorporated, a private investment and financial consulting firm specializing
in "micro cap" and "small cap" companies, and was a Director of Concorde
Strategies Group, Inc. until February, 1999. From 1983-1993, Mr. Saposnick
provided independent investment banking and financial consulting services and,
as President, founded Remsen Group, Ltd. Previously, Mr. Saposnick was
Chairman of the Board and President of Marsan Securities Co., Inc., a
financial services firm, which was a wholly owned subsidiary of Marsan Capital
Corporation, a publicly held company. Mr. Saposnick was also Chairman of the
Board and President of Marsan Capital Corporation. In 1985, Mr. Saposnick
entered into a consent decree with the Commission; the agreement ended
administrative proceedings initiated by the Commission in connection with Mr.
Saposnick's alleged participation in the initial public offering of securities
of North Atlantic Airlines, Inc. Previously, Mr. Saposnick was Vice
President of Chestman Securities, Co., Inc. and had been Assistant Manager of
Specialist Surveillance Division of the New York Stock Exchange. Mr.
Saposnick is a graduate of Hunter College and completed graduate studies in
Finance and Investments at Baruch College.
Joseph J. Messina is a Director. In 1992, he became Chairman and CEO of both
Ameristar Capital Corporation, a lease financing and asset based lender and
Ameristar Group Incorporated, an investment banking and financial consulting
firm specializing in "small cap" companies. Mr. Messina was a Director of
Concorde Strategies Group, Inc. From 1978-1992, Mr. Messina was President and
Chief Operating officer of Vendor Funding Co., Inc. a subsidiary of Bank of
Ireland First Holdings. Vendor Funding, a national middle market lessor and
asset based lender, was co-founded by Mr. Messina and subsequently sold to
First NH Banks of Manchester, New Hampshire. Mr. Messina is a Director of
Credit America Venture Capital, an entity formed to acquire the manufacturing
and distribution network of Mako Marine International, Inc. He is a former
Director of Mako Marine International, Inc., a publicly held corporation, and
past President of the Eastern Association of Equipment Lessors.
William C. Hayde is a Director and also Secretary. Mr. Hayde 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.
Changes in Officers and Directors
As reported in the Company's Form 10-QSB report for the period ended September
30, 2000, the Company accepted resignations on November 10, 2000 from P.
Richard Sirbu, Chairman, CEO, President and Director, and from Thomas C.
Hushen, Senior Vice President and Secretary. Mr. William C. Hayde was then
elected as a Director and appointed Secretary, and Mr. Robert Gordon,
Executive Vice President of the Company, was appointed acting President.
ITEM 11. EXECUTIVE COMPENSATION
Robert Gordon, Executive Vice President of the Company, currently receives
consulting fees of $52,000.00 per year. As of December 31, 2000, consulting
fees of $ 148,733.00 remain unpaid. In 1998, Robert Gordon was President of
the Company and received wages of $30,330.00 and consulting fees of
$15,000.00. As of December 31, 2000, the Company has accrued obligations for
payments to Mr. Gordon of $ 138,733.00. No other officers or directors
received compensation during 2000.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
PRINCIPAL SHAREHOLDERS
The following chart sets forth, at the date of this report, information with
respect to (1) any person known by the Company to own beneficially more than
five (5%) percent of the Company's Common Stock (2) Common Stock owned
beneficially by each officer or director of the Company and (3) the total of
the Company's Common Stock owned beneficially, directly or indirectly, by the
Company's officers and directors as a group.
Name Number of shares of Common Percentage of Class
Stock Owned
Sirbu Enterprises, LLLP
a Colorado Limited 525,000 13.50%
Liability Limited
Partnership (4)
16414 Sandstone Dr.
Morrison, CO 80465
Wilmont Holdings Corp.(5)*
33 Wilputte Place 630,000 16.20%
New Rochelle, NY 10804
Lomar Corp.(6)*
21 Schermerhorn 625,000 16.07%
Brooklyn, NY 11201
Thomas C. Hushen
33278 Bluebell Circle 500,000 12.86%
Evergreen, CO 80439
William C. Hayde*
76 Cliff Road 300,100 7.72%
Belle Terre, NY 11777
Robert Gordon*
201 East 19th Street
New York, NY 10003 103,667 2.67%
Dunhill Limited (7)*
444 Madison Avenue 3,333 .08%
New York, NY 10022
Remsen Group Ltd. (8)*
21 Schermerhorn Street 7,617 .20%
Brooklyn, NY 11201
Officers and Directors
as a Group (4 Persons)(3) 1,669,717 42.94%
* Officer and/or Director
__________________________
(1) Persons beneficially owning more than 5% of the Company's Common Stock.
(2) Common Stock beneficially owned by each officer and director of the
Company.
(3) Beneficially Owned, directly or indirectly, by the Company's officers
and directors as a group.
(4) Sirbu Enterprises, LLLP, a Colorado Limited Liability Limited
Partnership, is privately owned and controlled equally by
P. Richard Sirbu, former Officer and Director of the Company, and his
wife, Karen K. Sirbu. The total shares reflect a
donation of 100,000 shares to a charitable trust in late 1999. Mr. Sirbu
is not affiliated with the trust.
(5) Wilmont Holdings Corp. is a privately held corporation principally owned
and controlled by Joseph J. Messina, a Director
of the Company.
(6) Lomar Corp. is privately held corporation principally owned and
controlled by Martin I. Saposnick, a Director of the
Company.
(7) Dunhill Limited is privately held corporation principally owned and
controlled by Joseph J. Messina and Martin I.
Saposnick, Directors of the Company.
(8) Remsen Group, Ltd. is a privately held corporation principally owned and
controlled by Martin I. Saposnick, a Director
of the Company.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
8-K
(a) 1. The following documents are filed as a part of this report:
Financial Statements
Auditors Report of Janet Loss, C.P.A., P.C. dated April 17, 2001
together with;
Auditors Report of Jay Fox, C.P.A. dated July 6, 1999;
Balance Sheet and Consolidated Balance Sheet as of December 31, 2000 and
1999;
Statement of Operations and Consolidated Statement of Operations for the
years ended December
31, 2000 and 1999;
Statement of Stockholders' Equity and Consolidated Statement of
Stockholders' Equity for the years
ended December 31, 2000 and 1999;
Statement of Cash Flow and Consolidated Statement of Cash Flows for the
years ended December
31, 2000 and 1999;
Notes to Financial Statements.
2. Financial Statement Schedules.
All applicable information is contained in the financial statements or
notes thereto.
3. Exhibits -
Exhibit 27- Financial Data Schedules (Electronic filing only).
(b) Form 8-K filings:
January 24, 2000 re: Special meeting of shareholders concerning
adjustment of conversion right of
Series B Convertible Preferred Stock (See PART 1, ITEM 4).
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
W3 GROUP, INC.
Dated: April 25, 2001 By: /s/Robert Gordon
Robert Gordon
Acting President and Executive Vice President
Principal Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
Dated: April 25, 2001 By:/s/Martin I. Saposnick
Martin I. Saposnick
Director of Corporate Development and Director
Dated: April 25, 2001 By:/s/Joseph J. Messina
Joseph J. Messina
Director
Dated: April 25, 2001 By:/s/William C. Hayde
William C. Hayde
Director and Secretary