4
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For Quarter Ending March 31, 1997
Commission File Number 0-16447
AMERICAN CONSOLIDATED GROWTH CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 52-1508578
(State of incorporation ) (I.R.S. Employer ID Number)
8100 E. Arapahoe Road, Suite 309, Englewood, CO 80112
(Address of principal executive offices) (zip code)
(303) 220-8686
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by section 13 or 15(d) of Securities
Exchange Act of 1934 during the preceding 12 months (or for such
a 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 [ ]
As of March 31, 1997, 9,754,190 common shares, $0.10 par value
per share, were outstanding.
AMERICAN CONSOLIDATED GROWTH CORPORATION
and Wholly Owned Subsidiaries
INDEX
Part I FINANCIAL INFORMATION
Item 1. Consolidated Balance Sheets 3
March 31, 1997 and June 30, 1996
Consolidated Statements of Income 4
Nine Months Ended March 31, 1997 and 1996
Consolidated Statements of Cash Flows 5
Nine Months Ended March 31, 1997 and 1996.
Consolidated Statement of Changes in Stockholders'
(Deficit) 6
Item 2. Management's Discussion and Analysis 7
Part II OTHER INFORMATION
Item 1. Legal Proceedings 8
Item 2. Changes in Securities 9
Item 3. Default on Senior Securities 9
Item 4. Submission of Matters to a Vote of Security
Holders 9
Item 5. Other Information 9
Item 6. Exhibits and Reports on Form 8-K 9
Part III SIGNATURES 10
PART I.
ITEM 1. AMERICAN CONSOLIDATED GROWTH CORPORATION
(and Wholly Owned Subsidiaries)
CONSOLIDATED BALANCE SHEET
ASSETS
March 31, 1997 June 30, 1996
(unaudited)
Current assets
Cash $ 204 $ 156,067
Accounts receivable 891,779 1,060,389
Prepaid expenses 10,200 34,149
Total current assets 902,183 1,250,605
Furniture and equipment, net 138,481 193,181
Other assets 19,993 20,723
Total assets $1,060,657 $1,464,509
LIABILITIES and SHAREHOLDERS' DEFICIT
Current liabilities
Current maturities of long-term
debt $ 138,136 $ 122,532
Common stock subject to put option 51,213 84,724
Note payable 699,005 764,986
Notes payable - related party 230,700 206,700
Checks written in excess of bank
balance 158,772 115,610
Accounts payable 553,995 382,004
Accrued payroll 112,725 457,201
Accrued expenses - related party 53,317 84,248
Other current liabilities 241,174 84,750
Total current liabilities 2,239,037 2,302,755
Long-term debt $1,267,999 $1,230,594
Commitments and contingencies
Stockholders' deficit
Series A, preferred stock, $0.10 par value;
40,000,000 shares authorized.
No shares issued and outstanding.
Common Stock, $0.10 par value;
40,000,000 shares authorized.
9,754,190 shares issued and
outstanding $ 972,880 $ 757,597
Additional paid-in capital 29,438,696 29,576,028
Accumulated deficit (32,857,955) (32,402,465)
(2,446,379) (2,068,840)
Total liabilities and shareholders'
deficit $1,060,657 $1,464,509
See notes to consolidated financial statements.
AMERICAN CONSOLIDATED GROWTH CORPORATION
(and Wholly Owned Subsidiaries)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Nine Months Ended
March 31,
1997 1996
Revenues $7,308,063 $4,552,617
Direct expenses 5,540,062 3,384,319
Gross margin 1,768,001 1,168,298
Other expenses
General and administrative expenses 1,857,638 1,208,923
Depreciation and amortization 53,097 40,537
Interest 312,756 170,342
2,223,491 1,419,802
(Loss) income from continuing
operations $ (455,490) $ (251,504)
Income (loss) per common share
From continuing operations $ (.05) $ (.03)
Weighted average shares
of common stock outstanding 9,754,190 7,339,887
See notes to consolidated financial statements.
AMERICAN CONSOLIDATED GROWTH CORPORATION
(and Wholly Owned Subsidiaries)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
March 31,
1997 1996
Cash flows from operating activities
Net loss $(455,490) $(35,966)
Adjustments to reconcile net loss
to net cash used in operations
to net cash provided by (used in)
operating activities:
Depreciation and amortization
(including $9,797 from discontinued
operations in 1995) 53,097 21,014
Provision for losses on accounts receivable
Loss on disposal of equipment
Settlement payments on unrecorded debt
Gain on sale of investments
Interest on put option conversion
Common stock issued for services
Impairment of investment in affiliates and other
investments
Changes in operating assets and liabilities
Accounts receivable 168,610 106,120
Prepaid expenses 23,949 12,000
Other assets 730 12,890
Accounts payable and accrued liabilities 328,415 (147,936)
Accrued wages (344,476) -
Net cash used in operating activities (225,165) (31,878)
Cash flows from investing activities
Acquisition of equipment 1,603 (23,179)
Proceeds from sale of investment - 263,992
Net change in due from related parties - (5,699)
Net cash provided by investing
activities 1,603 235,114
Cash flows from financing activities
Net change in note payable (65,981) (76,125)
Proceeds from related party - note payable (24,000)
Payments on due to related parties
Proceeds from long-term debt 54,515
Principal payments on long-term debt (137,488)
Payments on capital lease obligations (1,400)
Payments on common stock subject to
put option 25,213 (8,881)
Proceeds from issuance of common stock 77,952 16,500
Net cash provided by (used in)
financing activities 67,699 (207,394)
Net increase (decrease) in cash (155,863) (4,158)
Cash at June 30, 156,067 4,158
Cash at March 31, $ 204 $ 0
See notes to consolidated financial statements.
AMERICAN CONSOLIDATED GROWTH CORPORATION
Consolidated Statement of Changes in Stockholders' Deficit
March 31, 1997
Total
Common Stock Paid-in Accumulated Stockholders'
Shares Amount Capital Deficit Deficit
Balance June 30, 7,162,520 $716,252 $28,600,435 $(31,700,691) $(2,384,004)
1995
Common stock issued for
cash 5,000 500 4,500 - 5,000
Common stock issued for
services 495,750 49,575 62,800 - 112,375
Common stock issued for
conversion of notes
payable 109,167 10,917 98,898 - 109,815
Common stock issued for
conversion of put
options 368,702 36,870 331,832 - 368,702
Retirement of common (565,173) (56,517) 75,718 - 19,201
stock
Accrued officers'
salaries contributed
to capital - - 401,845 - 401,845
Net loss - - - (701,774) (701,774)
Balance June 30, 7,575,966 757,597 29,576,028 (32,402,465)(2,068,840)
1996
Common stock issued for
cash - - - - -
Common stock issued for
services 254,000 25,400 9,300 - 34,700
Common stock issued for
conversion of notes
payable 66,854 6,685 40,615 - 47,300
Common stock issued for
conversion of put
options 1,839,724 183,972 (183,973) - -
Retirement of common
stock (18,225) (1,826) (3,275) - (5,101)
Common stock 10,516 1,052 - - 1,052
Net loss - - - - (455,490)
Balance March 31,
1997 $9,728,835 972,880 $29,438,696 $(32,857,955) $(2,446,379)
See notes to financial statements.
AMERICAN CONSOLIDATED GROWTH CORPORATION
(and Wholly Owned Subsidiaries)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Management Representation
The accompanying unaudited interim financial statements have
been prepared in accordance with the instructions to Form 10-QSB
and does not include all the information and footnotes required
by generally accepted accounting principles for complete
financial statements. In the opinion of Management, all
adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. The
results of operations for any interim period are not necessarily
indicative of results for the year. These statements should be
read in conjunction with the financial statements and related
notes included in the Company's Annual Report to shareholders on
Form 10-KSB/A for the year ended June 30, 1996.
ITEM 2: Management's Discussion and Analysis
In the fiscal quarter ending March 31, 1997, the Company was
primarily engaged in the financial development of its subsidiary
business, Eleventh Hour, Inc. ("EHI"). For the nine month period
just ending, the Company produced revenues of $___________ with a
net loss of ($________). The loss was attributed to costs lower
than expected sales during the post holiday season, costs
associated with the restructuring of AMGC, interest expenses on
long term debt and the settlement of professional service fees
provided by third parties.
In the opinion of management, the Company has improved
significantly as compared to the period just ending. During the
quarter ended March 31, 1997, the Company successfully
implemented certain overhead cost reductions while adding new
sales team members to the Eleventh Hour, Inc. staff. The former
loss trend appears to be easing with March 1997 sales of
$______________, a ____% increase over the same monthly period
last year. The Company's growth strategies are designed expand
EHI's market presence in key markets and to improve profitability
on a going-forward basis.
During the quarter ended March 31, 1997, the Company
terminated negotiations with International Nursing Services,
Inc., (INS) concerning the proposed sale of Eleventh Hour, Inc.,
and subsequently began new negotiations with several interested
third parties. The proposed transaction entails a stock for
stock exchange with a financially stronger and larger public
company buyer. During the current period, the Company has been
able to successfully continue operations, to improve its position
in the marketplace, to acquire outside consulting expertise and
to strengthen its marketing strategies. All of these efforts
have been made for the purpose of increasing shareholders' equity
and profitability on a going forward basis. In the prior fiscal
year ending June 30, 1996, such efforts included the resolution
of numerous outstanding business matters related to the former
business of the Company, the reduction or elimination of
significant portions of short term debt and the adoption of new
measures designed to increase working capital and revenues.
AMERICAN CONSOLIDATED GROWTH CORPORATION
(and Wholly Owned Subsidiaries)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Management Representation
The accompanying unaudited interim financial statements have
been prepared in accordance with the instructions to Form 10-QSB
and does not include all the information and footnotes required
by generally accepted accounting principles for complete
financial statements. In the opinion of Management, all
adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. The
results of operations for any interim period are not necessarily
indicative of results for the year. These statements should be
read in conjunction with the financial statements and related
notes included in the Company's Annual Report to shareholders on
Form 10-KSB/A for the year ended June 30, 1996.
ITEM 2: Management's Discussion and Analysis
In the fiscal quarter ending March 31, 1997, the Company was
primarily engaged in the financial development of its subsidiary
business, Eleventh Hour, Inc. ("EHI"). For the nine month period
just ending, the Company produced revenues of $7,308,063 with a
net loss of ($455,490). The loss was attributed to unanticipated
seasonal factors affecting EHI sales in certain markets, costs
associated with the restructuring of AMGC, interest expenses on
long term debt and the settlement of professional service fees
provided by third parties.
In the opinion of management, the Company has improved
significantly as compared to the period just ending. During the
quarter ended March 31, 1997, the Company successfully
implemented certain overhead cost reductions while adding new
sales team members to the Eleventh Hour, Inc. staff. The former
loss trend appears to be easing through March 1997, with gross
sales of $2,755,446; a 61% increase over the same nine month
period last year. The Company's growth strategies are designed
to expand EHI's market presence in key markets, to improve asset
value, reduce debt, and to increase profitability through
generation of new sales.
During the quarter ended March 31, 1997, the Company
terminated negotiations with International Nursing Services,
Inc., (INS) concerning the proposed merger of Eleventh Hour, Inc.
into INS. Subsequent to March 31, 1997, the Board of Directors
continues to explore alternative financial structures and related
opportunities in order to provide additional financing for the
future growth of EHI and to maximize AMGC shareholder value over
the long term.
During the current period, the Company has been able to
successfully continue operations, to improve its position in the
marketplace, to acquire outside consulting expertise and to
strengthen its marketing strategies. All of these efforts have
been made for the purpose of increasing profitability and
shareholder value on a going forward basis. In the prior fiscal
year ended June 30, 1996, such efforts included the resolution of
numerous outstanding business matters related to the former
technology development business of the Company, the reduction or
elimination of significant portions of short term debt and the
adoption of new measures designed to increase working capital and
revenues.
Liquidity and Capital Resources
Cash and cash equivalent's balance on March 31, 1997 was
$204 and current assets were $902,183. As of March 31, 1997 the
Company had a working capital deficiency of $1,336,854 and a
stockholders' deficit of $2,446,379, which includes resolution of
outstanding issues related to the former business of the Company
and internal restructuring of AMGC.
Provided new sources of working capital can be secured, in
the opinion of management, the Company will be able to
successfully meet all of its current obligations. However, no
assurances can be given the Company will be successful in these
endeavors.
PART II.
ITEM 1. Legal Proceedings
During the quarter ended December 31, 1996, the Company was
a defendant in civil action 96-CV-1560, Division 5, Arapahoe
County, Colorado; Display Group, LLC vs. American Consolidated
Growth Corporation. The suit is a replevin action concerning the
Company's former shareholdings of ADTI common stock.
Following a preliminary finding of the Court, the shares
were turned over to Display Group, LLC, the management arm of
Advanced Display Technologies, Inc., a former affiliate of the
Company, pending the outcome of a jury trial. As of March 31,
1997, in the opinion of special AMGC legal counsel, the Company
is unable to determine the outcome of the case. However, no
other adverse consequences are anticipated to occur as the ADTI
shares were written to a value of zero in fiscal 1995.
As of March 31, 1997, the Company was the subject of an
informal inquiry from the North Dakota Securities Commission
alleging potential breach of the State's "Blue Sky" securities
laws. The Company believes the inquiry is the outgrowth of
certain debt conversion negotiations with a North Dakota resident
concerning a $50,000 investment made in Eleventh Hour, Inc. in
prior years. As of March 31, 1997, the Company is unable to
determine the outcome of this matter and what, if any, material
or financial consequences may result.
ITEM 2. Changes in Securities
(a) Security Ownership of Certain Beneficial Owners and
Management: the following sets forth the number of shares of the
Registrant's $0.10 par value common stock beneficially owned by:
(1) each person who, as of March 31, 1997 was known by the
Company to own beneficially more than five percent (5%) of its
common stock; (2) the individual Directors of the Registrant; and
(3) the Officers and Directors of the Registrant as a group.
The outstanding number of common shares as of March 31, 1997
was 9,754,190
(see table on page 9 of this report below).
Name and Address Number of Shares Held Percent of Class
Norman L. and Valerie A. Fisher 949,279 (a) 9.7 %
5002 Mineral Circle
Littleton, CO 80122
Cory J. Coppage 150,000 (b) 1.5 %
7255 E. Quincy Ave, #550
Denver, CO 80237
Geoff Dawson 1,750,000 (c)(d) 18 %
C/o Norris & Company
248 High Street
Beckenham, Kent, England BR3 1D2
Joe Lee 49,000 (e) .05 %
4250 S. Olive Street, #216
Denver, CO 80237
Mick Dragoo 1,110,050 11.3 %
10167 Quail View Dr.
Escondido, CA 92026
George & Philips Holdings, Ltd. 1,275,000 13 %
P.O. Box 438
Roadtown, Tortola BWI
GPD Holdings, Ltd. 450,000 4.6%
c/o Consolidated Services
P.O. Box HM 2257
Hamilton, Bermuda HM JX
(a) Includes options to purchase 400,000 shares. All shares are
held jointly by Mr. and Mrs. Fisher, who are married.
(b) Includes options to purchase 100,000 shares.
(c) Includes options to purchase 25,000 shares.
(d) Mr. Dawson's beneficial ownership of record includes
corporate ownership of AMGC shareholdings of George & Philips
Holdings, Ltd. and GPD Holdings, Ltd., as shown above. Mr.
Dawson is a managing director of both companies and represents
such interests as an outside director of the AMGC Board.
(e) Includes options to purchase 25,000 shares.
(1) All ownership is beneficial and of record except as
specifically indicated otherwise.
(2) Beneficial owners listed above have sole voting and
investment power with respect to the shares shown unless
otherwise indicated. Economic interest is calculated by
including shares directly owned and, in the case of individuals
and all directors and executive officers as a group, shares such
individuals or group are entitled to receive upon exercise of
outstanding options exercisable within 60 days of December 31,
1996. The economic interest and security ownership indicated
above includes qualified and non-qualified stock options awarded
by the Company to certain key executives on or before April 3,
1996.
(3) Beneficial ownership is calculated in accordance with Section
13(d) of the Exchange Act and the rules promulgated thereunder.
ITEM 3. Default on Senior Securities.
As of March 31, 1997, the Company is in arears on $88,351 in
redeemable common stock and is negotiating for the settlement and
conversion of this amount with third parties into restricted
common AMGC stock and/or seven year promissory notes bearing 14%
interest annually.
ITEM 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of the Security Holders
during this reporting period.
ITEM 5. Other Information.
During the quarter ended March 31, 1997, the Company was the
subject of an audit review by the Internal Revenue Service to
provide information concerning the tax year ended 1994. As of the
date of the filing of this report, the Company is unable to
determine the outcome of this examination and what, if any,
material or financial consequences may result.
As of March 31, 1997, the Company had no other reportable
events which were not previously disclosed in the below
referenced exhibits and reports.
ITEM 6. Exhibits and Reports on Form 8-K
Forms 8-K dated March 17, 1997, October 19, 1996, and July
3, 1996
hereby incorporated by reference.