-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MO5qa790PC9a9oGtOiGel8sMJKsIMgj+9+eBVzUTUtINUb2keG6N5IhcDto6r6mP Gu7dzZwTECP7NsbbPrpnNQ== 0000949303-96-000075.txt : 19961113 0000949303-96-000075.hdr.sgml : 19961113 ACCESSION NUMBER: 0000949303-96-000075 CONFORMED SUBMISSION TYPE: 10KSB/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19961112 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN CONSOLIDATED GROWTH CORP CENTRAL INDEX KEY: 0000812407 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-HELP SUPPLY SERVICES [7363] IRS NUMBER: 521508578 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10KSB/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-16447 FILM NUMBER: 96658382 BUSINESS ADDRESS: STREET 1: 8100 E ARAPAHOE RD STREET 2: SUITE 309 CITY: ENGLEWOOD STATE: CO ZIP: 80012 BUSINESS PHONE: 3032208686 MAIL ADDRESS: STREET 1: 8100 E ARAPAHOE ROAD CITY: DENVER STATE: CO ZIP: 80112 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN CONSOLIDATED GOLD CORP DATE OF NAME CHANGE: 19910528 10KSB/A 1 21 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-KSB/A ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ending June 30, 1996 Commission File Number 0-16447 AMERICAN CONSOLIDATED GROWTH CORPORATION (Exact name of Issuer as specified in its charter) Delaware 52-1508578 (State of incorporation ) (I.R.S. Employer Identification No.) 8100 E. Arapahoe Road, Suite 309, Englewood, CO 80112 (Address of principle executive offices) (Zip Code) (303) 220-8686 (Issuer'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 Class: Common Stock $.10 par value Check mark whether the Issuer (1) 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 [ ] Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B is contained in this form and no disclosure will be contained, to the best of the Issuer's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB. [X ] Issuer's revenues for its most recent fiscal year: $8,897,455. The aggregate market value of the voting stock of the Issuer held by non-affiliates as computed by reference to the prices at which the stock was sold and the average of the bid and ask prices of such stock within the prior sixty days as of June 30, 1996, was $853,198. A total of 3,412,792 shares were owned by non-affiliates as of June 30, 1996. The number of shares of Common Stock, $.10 par value, outstanding on June 30, 1996 was 7,601,321 shares. Transitional Small Business Disclosure (check one): Yes___ No _X_ Documents Incorporated by Reference None. Table of Contents Part I Item 1. Description of Business Item 2. Description of Property Item 3. Legal Proceedings Item 4. Submission of Matters to a Vote of Security Holders Part II Item 5. Market for Common Equity and Related Stockholder Matter Item 6. Management's Discussion and Analysis or Plan of Operation Item 7. Financial Statements Item 8. Changes in and Disagreements with Accountants and Financial Disclosure Part III Item 9. Directors and Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act Item 10. Executive Compensation Item 11. Security Ownership of Certain Beneficial Owners and Management Item 12. Certain Relationships and Related Transactions Item 13. Exhibits and reports on Form 8-K SIGNATURES FINANCIAL STATEMENTS AND SCHEDULES PART I Item 1. Description of Business. American Consolidated Growth Corporation (the "Company" or "AMGC") is a U.S. public company engaged in the financial development of its wholly owned subsidiary, Eleventh Hour, Inc., a national staffing services business. The common stock of the Company is traded under the symbol "AMGC" on the Electronic Bulletin Board, NASDAQ (OTC-BB). The principle executive offices of the Company are located at 8100 E. Arapahoe Road, Suite 309, Englewood, CO 80112. Telephone number: (303) 220-8686. Facsimile number: (303) 220-3288. Prior to the acquisition of Eleventh Hour, Inc. in June of 1994, the primary purpose and business of the Company was "technology banking," or the acquisition of and investment in U.S.-based emerging growth technologies. The primary technology assets formerly held were significant equity positions in two Colorado corporations: Advance Display Technologies, Inc., ("ADTI") a research and development stage company engaged in the fiber optics display field, and Ultratech Knowledge Systems, Inc., DBA AGTsports, Inc., ("AGT") a research and development stage company engaged in the computer software and services business for the golf and recreation industries. Subsequent to fiscal year ended June 30, 1995, due to continuing financial difficulties and the inability of Advanced Display Technologies, Inc. and AGTsports, Inc. to bring their products to market, both of these investments were written down to zero value on the books of the Company. (See the Company's Form 10-KSB/A, June 30, 1995). On July 1, 1994, the Company acquired 100% of the issued and outstanding common shares of a private company, Eleventh Hour, Inc., ("EHI"), and its affiliated entities, in consideration for one million restricted shares of the Company's issued and outstanding common stock. EHI is a national staffing services company engaged in temporary and permanent employee placement and outsourcing. The company and its operations are discussed in- depth herein. (See "Business of Issuer" and "Investments - Eleventh Hour, Inc."). On January 26, 1995, the Company acquired new management and changed the Company's primary purpose and business to engage exclusively in developing the staffing services business of Eleventh Hour, Inc. In order to increase shareholder value, management authorized implementation of a restructuring plan calling for the termination of all former technology-related activities and the elimination of all non-producing assets of the Company. On June 27, 1996, the annual meeting of AMGC stockholders was held in Englewood, Colorado. The stockholders ratified the election of the newly expanded Board of Directors of the Company and approved three stock option plans. (See - Part I , Item 4. "Submission of Matters for a Vote of Security Holders " and Part III. Item 9. "Directors and Executive Officers"). As of June 30, 1996, the Company had a working capital deficiency of approximately $1,052,000 and a stockholders' deficit of $2,069,000. Although the Company continues to experience lack of adequate funding to fully pursue its business objectives, following the recent completion of the internal restructuring efforts and assuming new sources of financing will be secured, the Company believes it will be able to successfully meet all of its current obligations. Investments As of June 30, 1996, the Company had active investments in one company: Eleventh Hour, Inc., a wholly owned subsidiary engaged in the staffing services industry. (See "Business of Issuer" below). As of June 30, 1996, the Company held 1,400,000 common shares of Advanced Display Technologies, Inc., a research and development company and former affiliate of AMGC. During the year ended June 30, 1995, due to ADTI's failure to bring its products to market and as a result of the significant decrease in trading volume and quoted stock price of ADTI, the shares were written down to a value of zero on the books of the Company. Additionally, as reported in the Legal Proceedings section of this report, the shares have become the subject of a lawsuit in Colorado. (see "Legal Proceedings - ADTI"). Pursuant to the internal restructuring plan authorized by the Board of Directors in fiscal 1995, the Company divested itself of its former shareholdings and investment in AGTsports, Inc. in September of 1995. The Company entered into a joint venture agreement with Global Links Trading, Limited, ("GLT") a computer software licensing company and transferred 100% of its shareholdings of AGTsports, Inc. to GLT in exchange for an overriding royalty of 15% on gross sales of certain GLT products. For the fiscal year ending June 30, 1996, GLT produced no sales relating to the Company's joint venture agreement with GLT. The agreement carries no expense to the Company. Pending further development of GLT products and markets, management can provide no assurance GLT will be successful in its business plan or in achieving sales which would result in material royalty payments to the Company. Due to the recurring loss history of the Company and considering the limited number of sources of new funding for working capital, the auditors of the Company have raised significant doubts as to the abilities of the Company to continue as a going concern. Business of Issuer The primary business of the Issuer is development of its wholly owned subsidiary, Eleventh Hour, Inc., a national staffing services business. Eleventh Hour, Inc. ("EHI") was acquired on June 30, 1994 for 1,000,000 shares of the issued and outstanding common stock of the Company. The acquisition successfully retired $720,996 of EHI long term debt and converted $1,658,000 of outstanding EHI notes into redeemable common stock, ("puts") of AMGC. The acquisition was accounted for as a purchase as reported in the Company's Form 10-KSB/A for the fiscal year ended June 30, 1995. In fiscal 1996, AMGC converted these common stock puts into equity and seven year promissory notes. (See "Notes to Consolidated Financial Statements - Note 8"). Services and Products of EHI EHI is a national provider of temporary personnel and outsourcing services to businesses, professional and service organizations and government agencies. The Company provides a broad range of staffing services through its national network of eight (8) Company-owned branch locations in California, Colorado, Kansas and Missouri. During its most recent fiscal year, the subsidiary served more than 5,000 customers across the U.S. The primary product of the business is represented by temporary placement of individuals who possess a wide variety of office, light industrial and other skills, including secretarial, word processing, data entry, telemarketing, assembly, picking, packing and sorting and shipping and receiving. In addition, the Company provides temporary personnel with various technical and professional skills such as programming, designing, engineering and accounting. Permanent placement of qualified personnel represents another important product for the Company. Taken together, the services provided by EHI can be viewed as a spectrum ranging from traditional temporary services to value- added outsourcing solutions. EHI has established an Onsite Staffing Coordinator Program; a cost effective solution for clients who spend administrative and personnel department time and resources managing employees whose jobs are generally routine and are characterized by high turnover rates. This program most often includes the placement of an EHI Staffing Specialist onsite who coordinates and supervises all staffing service functions for the client. The specialist typically interfaces with the client's Human Resources department, helping to increase management time where it is more effectively spent and reducing unnecessary functions where needed. The onsite program utilizes temporary staff to help control overhead costs and to improve profitability in positions previously filled by permanent employees. This service is often provided to clients who have highly fluctuating personnel needs such as light manufacturing companies and assembly and packaging businesses. Eleventh Hour, Inc. was founded by Norman L. and Valerie A. Fisher, (See "Biographical Data"), who established the staffing business as a Colorado corporation on December 21, 1988. EHI utilizes a central headquarters located in Englewood, Colorado for management of its affiliate branch offices, including all accounting, support and supervisory services. The address and telephone number of the principle executive offices of EHI are: Eleventh Hour, Inc., 8100 East Arapahoe Road, Suite 311, Englewood, CO, 80112. Telephone number: (303) 220-5300. Markets of EHI According to the August 1996 issue of the Staffing Industry Report, published by Staffing Industry Analysts, Inc., revenues from combined U.S. staffing industry segments generated an estimated $62.9 billion in 1995, with combined temporary help services generating an estimated $40.6 billion. Temporary help is one of the fastest growing segments, especially in the areas of light industrial, medical and technical support personnel. Eleventh Hour, Inc. employs over 4,000 temporaries annually, chiefly in the areas of clerical and light industrial services. These employees represented over 85% of EHI's annual gross revenues in fiscal 1996. Permanent placement of executives is a secondary market for EHI. Another independent industry study published in May of 1996 by the National Association of Temporary and Staffing Services reports payroll receipts for the temporary help segment in excess of $7 billion for the first quarter of 1996. The study forecasts continuing growth in the staffing services industry due to several factors: the need for business organizations to remain flexible in order to compete in an interconnected global economy; the ever-evolving social contract between the workforce and business organizations wherein larger numbers of people view temporary employment as a way to gain greater job security and higher career paths; the difficulties all types of business organizations experience in attracting, evaluating and recruiting employees; a broadening of the types of staffing arrangements offered by staffing companies, as reflected in the expanding services industries; and the overall health of the U.S. economy, which celebrated its fifth anniversary of growth in March, 1996. Distribution Methods of Company's Services EHI plans to continue providing a wide range of high quality services to a diverse group of clients through its 8 existing branch office locations. EHI promotes a philosophy of developing and maintaining long term relationships with its clients, striving to achieve high levels of performance and customer satisfaction to attract and retain local, regional and national accounts. The Company continues to explore growth opportunities to expand its existing service offerings, develop additional skill classes and enter new markets by selectively expanding its offices through targeted acquisitions. Prominent industry analysts such as the N.A.T.S.S. and Staffing Analysts, Inc. have reported extensively on the ongoing trend toward consolidation within the Staffing Services industry. In conjunction with this trend, management of EHI has adopted plans to target and acquire smaller companies for the purpose of expanding EHI's market presence in fiscal 1997. The profile for such targets includes businesses with core temporary accounts generating revenues of up to $5,000,000 annually. Management believes such acquisitions can be made without excessive capital outlay utilizing existing EHI resources management and personnel. Competitive Business Conditions Demographically, the U.S. staffing services industry is highly fragmented, with an estimated 3,000 to 5,000 private firms operating over 10,000 offices. The size of these companies varies greatly, ranging from smaller "mom and pop" temporary service businesses with annual revenues of less than $500,000 to larger international companies such as Manpower, Inc., a company with revenues in excess of $6 billion. Despite the considerable competition, smaller, well-managed companies, especially those with a specialized focus, can succeed on a local or regional basis. For employers, the use of temporary personnel is a proven technique to mitigate the rising costs of recruiting, fringe benefits, employee turnover and other employee-related expenses. These advantages have led many companies to adopt business strategies which focus on their core business competencies, with non-core business support functions being "outsourced" to service companies such as EHI. Outsourcing services remains an emerging industry and is, as such, still relatively undefined. It parallels the temporary help services industry in that it is also highly fragmented, with few large companies operating on a national level. EHI believes all segments within the industry are experiencing a trend toward consolidation and has implemented new strategies to help adapt to the changing marketplace. Compliance with Government Regulations The operations of Eleventh Hour, Inc. do not involve mandatory compliance with non-environmental federal regulations other than employer-related issues such as the 1995 federal Family Medical Leave Act ("FMLA"). As of June 30, 1996, EHI fully complies with the terms of this legislation as a U.S. employer. Research and Development Costs As of June 30, 1996, EHI has not engaged in any material research and development activities or related costs in the prior two years. Trademarks and Trade Names. The Company, through its wholly owned subsidiary, Eleventh Hour, Inc. owns one Trade Name: "XIth Hour, Inc." Compliance with Environmental Laws and Regulations The Company liquidated all of its mining properties and operations in the fiscal year ended June 30, 1992. The Company does not believe that it is subject to any local, state, or federal statutory and regulatory requirements with respect to environmental safety and land reclamation that would affect it adversely in the future. However, there can be no assurance of this. Compliance to date has had no material effect on the Company's method of conducting its business and the cost of such compliance has not been significant. Employees During the period ending June 30, 1996, the Company had one full time employee together with 38 full time employees of the wholly owned subsidiary, Eleventh Hour, Inc. None of these employees are represented by any Union or collective bargaining group and there is no prior history of any strikes, slow-downs or other labor disputes. The Company is highly dependent on its full time employee and certain members of EHI management. (See Part III, Item 9 and Item 10, "Directors and Executive Officers of the Registrant - Biographical Information"). International Operations The Company conducted operations only in the United States. Item 2. Properties During the fiscal year ending June 30, 1996, the Company's business offices were located at 8100 East Arapahoe Road, Suite 309, Englewood, CO, 80112, where the Company offices at present. The office space, located in a modern three story building completed in 1987, is leased under a three year non cancelable lease expiring in March, 1998, with a renewal option for an additional two years at the then-current market rate. EHI leases office space for its branch offices in Overland Park, Kansas, Tustin, California, Englewood, Colorado and Springfield, Missouri. (See Operating Leases in Notes to Consolidated Financial Statements). The following is a schedule of future minimum rental payments required under the above referenced operating leases as of June 30, 1996:
Years-Ending June 30 Amount 1997 $ 230,218 1998 208,972 1999 111,364 2000 84,305 $ 634,859
Total rent expense charged to operations for the years ended June 30, 1995 and 1996 was $221,948 and $264,924, respectively. The Company's operating leases require current monthly payments of $21,960 with expirations at various dates through May, 2000. Item 3. Legal Proceedings On July 19, 1996, the Company became a defendant in Display Group, LLC vs. American Consolidated Growth Corporation, Civil Action No. 96-CV-1560, Division 5 of Arapahoe County District Court, in the State of Colorado. The suit is a replevin action concerning 1,400,000 shares of ADTI common stock brought by Display Group, LLC, the management arm of Advanced Display Technologies, Inc., a former affiliate of the Company. As of September 30, 1996, the preliminary finding of the Court was that a reasonable probability existed for possession of the shares to be held by the Plaintiff and the shares were turned over to Display Group pending the outcome of a jury trial on the matter. As of the date of the filing of this report, the Company is unable to predict the outcome of this matter. In the event the Company is unsuccessful in its efforts to retain the subject shares, in the opinion of counsel, no adverse consequences are anticipated to occur, other than the loss of the title to the stock. Although the shares were written to a value of zero in fiscal 1995, the Company believes the case is material due to other outstanding issues arising from transactions involving the Company and Display Group, LLC, ADTI and their officers and directors. Upon review of the facts and historical evidence available to the Company, Management believes there is a strong likelihood it shall become involved in extensive litigation with these parties in order to recover property of the Company and to protect the interests of the Company and its shareholders. (See "Notes to Consolidated Financial Statements - "Footnote 12"). In September of 1996, as a separate matter unrelated to the replevin case, the Company received notice from Jeff Robinson of Corporate Partners, Inc. of a claim involving a $250,000 license fee allegedly due CPI as a result of agreements related to the licensing of the ADTI technology between CPI and former management of the Company in prior years. Although no formal suit has been filed, the Company believes there is no basis for the allegation and intends to refute and vigorously defend any such action, if necessary. (See "Notes to Consolidated Financial Statements - "Footnote 12"). In June of 1996, the Company received notice of Complaint from the North Dakota Securities Commission alleging breach of the State's "Blue Sky" securities laws. The Company believes the action is the outgrowth of an offer by AMGC in February, 1996 to convert a $50,000 obligation owed to a former EHI investor and North Dakota resident into restricted common stock and/or a promissory note. As of June 30, 1996, the Company believes the Commissioner's office will pursue the matter and a hearing was scheduled to be held in October of 1996. The Company has retained special legal counsel in North Dakota to review the case and as of the date of the filing of this report, the Company is unable to predict the outcome of this matter and what, if any, material or financial consequences may result. In September of 1996, the Company received notice from the Internal Revenue Service to provide information concerning the tax year ended 1994. On October 9, 1996, a meeting was held at the offices of the Company with an agent of the IRS to determine the accuracy of certain items reported on the Company's tax returns for those periods. 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. Item 4. Submission of Matters to a Vote of Security Holders On June 27, 1996, the following directors were appointed for a three year term of service at the annual meeting of security holders of the Company in Englewood, Colorado,: Norman L. Fisher, Valerie A. Fisher, Cory J. Coppage, Geoff Dawson and Joe Lee. The security holders of the Company ratified the following items as contained in the 1996 annual proxy statement: 1) Election of Directors: The following directors were appointed for a three year term of service:
VOTES: For Against Abstain Norman L. Fisher 4,993,423 21,232 12,770 Valerie A. Fisher 5,003,426 18,725 2,767 Cory J. Coppage 5,003,425 18,723 2,768 Geoff Dawson 5,003,433 9,644 2,760 Joe Lee 5,003,433 9,643 2,760 2) Equity Incentive Plan: 4,184,338 21,401 85,881 (See below) 3) Non-Employee Director Plan. 4,147,182 58,873 85,565 (See below) 4) Employee Non-Qualified Plan. 4,165,739 36,240 89,641 (See below) 5) Annual Meeting Matters. 4,157,694 14,630 119,276 (None required)
Equity Incentive Plan. The 1996 Equity Incentive Plan (the "Incentive Plan") was adopted in order to provide for the grant of qualified incentive stock options to full time employees of the Company. The Incentive Plan provides for a maximum number of 800,000 shares of Common Stock. Incentive Plan participation is limited to employees who perform vital services in the management, operation and development of the Company and who significantly contribute to the achievement of the Company's long- term corporate economic objectives. The following employees received 100,000 share incentive stock options under the Incentive Plan: Norman L. Fisher, President, Treasurer and Director, Valerie A. Fisher, Vice President and Director, Cory J. Coppage, Chief Operating Officer, Secretary and Director, and Mary Y. Hartley, EHI Vice President and Controller. All options were granted with an exercise price over thirty percent above the fair market value of the Common Stock at the time of the grant ($0.76 per share), or at $1 per share. As of June 30, 1996, the current market value of the Common Stock remains below the exercise price, therefore no dollar value is attached to the options at present. Non-Employee Director Stock Option Plan. The 1996 Non-Employee Director Stock Option Plan, (the "Director Plan") was adopted in order to provide non-employee directors with added incentive to continue in the service of the Company. Awards under the Non- Employee Director Plan provide for the grant of options to each non-employee member of the Company's Board of Directors at an exercise price equal to or not less than the fair market value of the Common Stock on the date of grant. Under the Director Plan, the maximum number of shares of Common Stock that may be granted is 100,000. Two directors have been granted 25,000 share options under the Director Plan: Geoff Dawson and Joe Lee. Both options carry an exercise price equal to the fair market value of the Company's Common Stock at the time of grant, ($0.25). Employee Non-Qualified Stock Option Plan. The 1996 Employee Non- Qualified Stock Option Plan (the "Employee Plan") was adopted in order to provide for the grant of non-qualified incentive stock options to a key employee of the Company. Under the Employee Plan, the maximum number of shares of Common Stock represented by options is 400,000 shares. Upon exercise of the options, the option holders must pay to the Company the full exercise price as established by the plan in order to acquire their shares. Employee Plan participation is limited to Norman L. Fisher, the Chief Executive Officer of the Company's wholly owned subsidiary, Eleventh Hour, Inc., who performs vital services in the management, operation and development of EHI and significantly contributes to the achievement of the Company's long-term corporate economic objectives. Mr. Fisher received a 400,000 share option to purchase shares of the Company's Common Stock at an exercise price of $1.00 per share. As of June 30, 1996, the exercise price of the option remains above the current market value of the stock and as such, no dollar value is attached to the option. Part II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters Market Information The Company's common stock, par value $.10 per share ("Common Stock") is traded in the over-the-counter market, NASDAQ, (OTC-BB) under the stock trading symbol "AMGC."
(1) Bid Quarter Ending (2) High (3) Low June 30, 1996 $ 0.37 $ .25 March 31, 1996 0.37 .25 December 31, 1995 0.25 .18 September 30, 1995 0.44 .37 June 30, 1995 0.41 .25 March 31,1995 1.25 .38 December 31, 1994 4.50 1.37 September 30, 1994 10.00b 8.50 (4) June 30, 1994 3.50 1.50
(1) Such over-the-counter market quotations reflect inter-dealer prices, without any retail markup, markdown, or commission and may not necessarily represent actual transactions. (2)(3) At the time of this report, the only activities in the Company's trading Common stock, of which the Company is aware, is by Broker/Dealers known as wholesalers. Consequently, there has been little or no retail trading activity in the Company's securities during the fiscal year ended June 30, 1996. The quotes shown above were arrived at by averaging the bid and the ask price in the marketplace during these periods and are provided for informational purposes only. The Company believes these quotes to be estimates and therefore should not be relied upon for investment purposes. (4) In May of 1993, the Company reverse-split its common stock 10 for 1, which likely contributed to the significant rise in the stock price as shown. Holders of Record As of June 30, 1996, there were approximately 2,100 shareholders of record of Common Stock. Dividends For the fiscal years 1994, 1995 and 1996, no dividends were declared or issued by the Company. Due to insufficient capital resources and earnings generated from operations during these years, the Company has been limited in its ability to declare or issue dividends. For these same reasons, in 1995, the Company rescinded a dividend declared by former management in 1991 of $687,435, (See Notes to Consolidated Financial Statements - Note 7. "Commitments"). There are no contractual or written limitations concerning the Company's declaration of dividends in the by-laws or records of the Company. Item 6. Management's Discussion and Analysis of Financial Condition and Results of Operations In the fiscal year ending June 30, 1996, revenues were $8,897,455 as compared to the year ending June 30, 1995 of $10,372,461. Following the change in the primary purpose and business of the Company, net loss decreased from $9,973,547 in fiscal 1995 to a net loss of $701,774 in fiscal 1996. However, gross margins remained relatively stable over the same period: $2,682,410 in fiscal 1995 compared to $2,259,221 in fiscal 1996. For the year ended June 30, 1996, direct expenses were $6,638,234 and interest expenses totaled $467,481. In fiscal 1995, the Company experienced a non-recurring loss of $7,976,740 resulting from costs associated with the write down and liquidation of certain assets and the internal restructuring of the Company. In fiscal 1996, income related to certain discontinued operations was recognized of $84,237. The Company experienced significant legal, accounting and other related costs which are included in both discontinued and continuing operations. Certain legal costs included in discontinued operations were offset by the gain on sale of investments of approximately $170,000. Decrease in revenues was also attributed to the termination of a major client account in fiscal 1996 as a result of expenses related to workers compensation claims which made the account unprofitable. As of June 30, 1996, the Company believes the primary internal restructuring measures have been successfully completed. These efforts included a change in the primary purpose and business of the Company, the write down and liquidation of all non-performing assets, 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. In the opinion of management, the Company has progressed significantly as compared to the period ending June 30, 1995. Short term debt obligations were reduced by 45% through the conversion of $1,599,296 of short term debt into equity and long term promissory notes, thereby increasing cash flow of the Company. The Company assisted in providing new working capital and management support to alleviate certain debts of EHI and improve its operations. Subsequent to June 30, 1996, the Company entered into a preliminary financing agreement with Concord Growth Corporation, of Palo Alto, California to refinance the accounts receivables of EHI. The agreement is expected to significantly reduce EHI's interest expense on accounts receivables financing by over fifty percent and provides a new credit line of up to $1.5 million. The Company believes EHI will utilize the new financing to complete targeted acquisitions of local and regional staffing businesses in the period ending December 31, 1997 and to accomodate future sales growth of EHI. Although no assurance can be provided that acquisitions will be made or EHI future sales will increase, in the opinion of management, the savings to the Company in annual interest payments resulting from the accord will be significant and will have a favorable material impact on the future profitability of the Company. During fiscal 1996, the Company has been able to successfully continue operations, to reposition itself in the marketplace, to acquire new management and consulting expertise and to improve its marketing strategies. All of these efforts have been made for the purpose of increasing shareholders' equity and profitability on a going forward basis. The foregoing discussion contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which are intended to be covered by the safe harbors created thereby. These statements include the plans and objectives of management for future operations, including plans and objectives relating to development of new business and predictions concerning the results of various legal proceedings as discussed in Item 3. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. Assumptions related to the foregoing involve judgements with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the Company. Although the Company believes that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could be innaccurate and, therefore, there can be no assurance that the forward-looking statements included in this Form 10-KSB will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the objectives and plans of the Company will be achieved. Liquidity and Capital Resources Cash and cash equivalent's balance on June 30, 1996 was $156,067 and current assets were $1,250,605. Current ratios for the year ending June 30, 1996 were .54 to 1 as compared to .31 to 1 the previous year. There was a significant change in working capital during fiscal year 1996 due mainly to the change in the purpose and primary business of the Company. As of June 30, 1996, the Company had a working capital deficiency of $1,052,150 and a stockholders' deficit of $2,068,840 which includes non- recurring losses of $7,976,740 in fiscal 1995 sustained due to the write down and liquidation of certain technology assets, resolution of outstanding issues related to the former business of the Company and internal restructuring of AMGC. Assuming the subsidiary business continues to experience positive cash flow and to be profitable on a going forward basis and provided new sources of outside financing are secured, Management believes 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. Material Commitments for Capital Expenditures As of June 30, 1996, the Company has material commitments for capital expenditures including promissory notes of $1,230,594 which come due in February, 2003 and carry 14% interest. The interest is payable quarterly at approximately $45,000 per quarter. (See Notes to Consolidated Financial Statements - Note 8). Unfavorable Trends or Uncertainties The business of Eleventh Hour, Inc. may be subject to various unfavorable trends or uncertainties such as increased competition in the marketplace, rapid consolidation of the staffing services industry and/or a significant decline the health of the U.S. economy. The Company may also be affected by a significant rise or decline in interest rates and the U.S. trading markets and current proposed legislation to increase the minimum wage. The Company can make no determination as to the effect of these factors on operations or the probability such factors will occur. Seasonal Aspects Bearing Upon Operations Eleventh Hour, Inc. is not subject to seasonal fluctuations in its business cycle which have a material impact on operations, other than national and banking holidays, which result in vacation time for many temporary and permanent EHI employees. Item 7. Financial Statements and Supplementary Data This response is submitted as a separate section of this report (see Consolidated Financial Statements - Pages F-1 to F- 19). Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure There have been no disagreements with the Company's independent accountants on accounting or financial disclosure. Part III Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act. As of June 30, 1996, the Executive Officers and Directors of the Company, their ages and positions held in the Company were as follows:
Name Age Positions held Norman L. Fisher 49 President, Treasurer, Director Valerie Fisher 48 Vice President and Director Cory J. Coppage 33 Chief Operating Officer Secretary and Director Joe Lee 62 Director Geoff Dawson 54 Director
The directors serve for a term of three years. All of the above directors were elected at the Company's annual meeting held on June 27, 1996 and will serve until their successors are duly elected and qualified or until their earlier resignation or removal. Biographical Information Norman L. Fisher - President, Treasurer and Director Mr. Fisher is the co-founder, President and Chief Executive Officer of EHI and the President and Treasurer and Director of the Company. He has over twenty years of management experience, including four years with Norrell Services as a Regional Manager from 1978 to 1982 and six years as an Executive Vice President and Managing Director of Talent Tree, Inc. from 1982 to 1988. As a member of the Executive Committee and Board of Directors of Talent Tree, Inc. Mr. Fisher was responsible for the nationwide expansion of operations from a local Houston, Texas-based business with three offices to a major national service with 135 branch locations and approximately $250 million in annual sales. In 1988, Mr. Fisher co-founded EHI in Englewood, Colorado. Mr. Fisher, 49, is a graduate of Western State College and holds a Bachelor of Science Degree in Business Administration. He is a well-known figure in the personnel services industry and has served in various capacities in both national and local industry associations. Mr. Fisher is married to Valerie A. Fisher. Valerie Fisher - Vice President and Director Mrs. Fisher, 48, is the co-founder and Executive Vice President of EHI and Vice President and Director of AMGC. She has over eighteen years of experience in the personnel services industry, entering the business as an Account Manager for Norrell Services in 1977. In 1979, Mrs. Fisher was responsible for establishing a new branch location for Norrell in Anaheim, California, which achieved profitability within its first six months of operation. In 1982, she left Norrell to join her husband, Mr. Norman Fisher, in establishing operations in Colorado for Talent Tree, Inc.; a successful enterprise which also achieved profitability within its first seven months of operation. In 1983, as a Managing Director, Mrs. Fisher expanded Talent Tree's presence in Colorado and later, as Vice President and General Manager of the Company's Colorado branch, was responsible for developing a state-of-the- art computer system for the Company, including the majority of all operating systems, accounting systems and sales management functions. Mrs. Fisher was responsible for the creative development of many of Talent Tree's marketing and staffing concepts and supervises these and other functions at EHI. Cory J. Coppage - Chief Operating Officer, Secretary and Director Mr. Coppage, 33, is the Chief Operating Officer, Secretary and Director of the Company. He has over seven years of business management experience including two years of administration service with AMGC. Mr. Coppage is a graduate of Regis University, where he earned a Bachelor of Science Degree in Business Administration. From 1989 to 1994, he gained valuable management experience in the liability insurance field as a licensed property & casualty agent and field manager for Liability Insurance Operations Network, Inc., and W.J. Plemons Insurance Agency of Atlanta, GA, prior to joining the Company as assistant Secretary of the Corporation and aide to the Chairman in 1994. In 1995, Mr. Coppage became the Secretary of AMGC and received an appointment to the AMGC Board of Directors. He has studied corporate finance and marketing and has successfully completed educational programs in the areas of SEC reporting of public companies and shareholder and investor relations. He is the Director of Shareholder Relations and assists in the development, publishing and distribution of informational materials on the Company. Geoff Dawson - Director Mr. Dawson, 55, accepted an appointment as an outside member of the Board of Directors of AMGC on January 25, 1996. He is the Non-Executive Chairman of Global Links Trading, Ltd., Chief Executive Officer of R.S.P.D. International, Ltd., G.P.D. Holdings, Ltd., and a Director of Promindus BVBA (Belgium), George Philips Holdings, Ltd. and ACCRESS BVBA (Belgium). Mr. Dawson has wide experience in international business with an emphasis on real estate investments and international trade projects in developing countries. He is a British citizen and a graduate of the Chambers College of Engineering and the Northhampton School of Architecture. From 1980 to 1990, Mr. Dawson was a Director of the European Property Trust. His present duties at R.S.P.D. International, Ltd. include initiating, building and expanding the Company's acitivites throughout Europe and in South Africa as a major real estate investment, development and trading company. Joe Lee - Director Mr. Lee, 58, accepted an appointment as an outside member of the Board of Directors of AMGC on January 25, 1996. He is Chairman of the Board of Directors of Denver Business College, Inc., General Manager of Universal Management, Inc., President of School Management, Inc. and the General Partner of The Educational Plaza, a 110,000 square foot private educational facility located in Denver, Colorado. Mr. Lee has expertise in the administration and management of independent colleges and schools, with a special emphasis on financial and staff personnel management. He is a past president and past commissioner of the Association of Independent Colleges and Schools. From 1973 to 1982, Mr. Lee owned and operated Parks College, Inc., formerly Parks School of Business, in Denver, Colorado. From 1984 to 1986 he was Chairman of Trend Systems, Inc., where he supervised the operation of nine schools and three branch campuses in the states of Washington and Oregon. Mr. Lee's present duties as Chairman of Denver Business College, Inc. include overall responsibility for operation of the main campus and three branch campuses. Mr. Lee is also a Director of Prides Business College in Adelaide, South Australia. None of the above directors have held any equity stake in any business that has declared bankruptcy; nor have been convicted of any criminal offense other than minor traffic violations, nor have had any judgements entered against them which would restrict or preclude the director from being involved in securities transactions; nor have any record of violations of securities or commodities laws. Compliance with Section 16(a) of the Securities Exchange Act of 1934 Section 16(a) of the Securities Exchange Act of 1934 requires the Company's executive officers and directors to file initial reports of ownership and reports of changes in ownership with the Securities Exchange Commission. Executive officers and directors are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file. Based solely on a review of the copies of such forms furnished to the Company and written representations from the Company's executive officers and directors, as of the date of this report, the Company is unable to make a determination as to whether or not any officers or directors failed to file on a timely basis any reports relating to transactions involving common stock of the Company owned by them. The Company has implemented internal procedures for the purpose of determining whether officers or directors have failed to file timely reports relating to transactions involving common stock of the Company, and, if necessary, to file any such reports in the appropriate time and manner. Item 10. Executive Compensation The following table sets forth the salary, bonus and other compensation approved by Board of Directors of the Company for the President and the Company's four other most highly compensated executive officers (the "named executive officers").
Name and Position Annual Compensation Long Term Compensation Salary Securities Underlying Options (1) Norman L. Fisher $113,960 (2) $500,000 President and Treasurer President & CEO of EHI Valerie A. Fisher $123,527 (2) $100,000 Vice President Executive Vice President of EHI Cory J. Coppage $46,512 (3) $100,000 Chief Operating Officer and Secretary
(1) All stock options as indicated above were established by the Compensation Committee of the Company on April 3, 1996 at a fair market value of $0.76 per share. The options carry an exercise price of $1.00 per share and were ratified at the annual meeting held on June 27, 1996. As of June 30, 1996, none of the stock options have been exercised. (See "Part I. Item 4 - Submission of Matters for a Vote of Security Holders"). (2) Indicates salary paid by the Company's wholly owned subsidiary, Eleventh Hour, Inc. Mr. and Mrs. Fisher are full time employees of EHI. (3) Indicates salary paid by the Company's wholly owned subsidiary, Eleventh Hour, Inc. Mr. Coppage is a full time employee of the Company and EHI charges this expense back to AMGC. Other Compensation Additional compensation paid to officers of the Company during fiscal 1996 included salary and expenses of $18,900 to B. Greg Bohannon, C.P.A., who served as interim Chief Financial Officer from January 25, 1996 to June 14, 1996. The compensation was paid subsequent to June 30, 1996 in the form of 15,000 restricted common AMGC shares at $1.00 per share, with the balance of $3,900 to be paid in cash or by note in the future. On January 25, 1996, Mr. Bohannon received a stock award of 50,000 restricted common AMGC shares as consideration for joining the Company and entered into a stock purchase agreement for an additional 50,000 restricted common AMGC shares. The fair market value of the stock as determined by the Board on January 25, 1996 was $0.25 per share. The stock purchase was made with a one year collateralized note of $12,500 which was accelerated and paid in full on June 27, 1996. (See Item 12. "Certain Relationships and Related Party Transactions"). Mickey E. Fouts, former interim Chairman and Chief Executive Officer, received compensation of $34,667, including salary and expenses for the period January 17, 1996 to June 27, 1996. On January 17, 1996, Mr. Fouts entered into a stock purchase agreement for 300,000 restricted common AMGC shares at $0.17 per share, the fair market value of the stock as determined by the Board on that date. The purchase was made with a one year collateralized note which was accelerated and paid in full on June 27, 1996. (See Item 12. "Certain Relationships and Related Party Transactions"). During fiscal 1996, Mary Y. Hartley, Vice President and Controller of EHI, received salary of $66,865 and stock options under the Equity Incentive Plan of 100,000 shares with an exercise price of $1.00 per share. As of June 30, 1996, the options have not been exercised and the stock has not been issued. (See "Part I. Item 4 - Submission of Matters for a Vote of Security Holders - Equity Incentive Plan"). Other fiscal 1996 compensation for Norman L. Fisher, as CEO and President of EHI included life insurance premiums of $2,792.40 for an Executive Key Man Life Insurance Policy paid to First Colony Life Insurance Company. The premiums were paid by EHI and expensed to AMGC. During fiscal 1996, the Company provided group medical insurance to AMGC officers and employees under EHI's health plan: secretary and C.O.O., Cory J. Coppage, former treasurer Gary Flater, former CEO, Mickey E. Fouts and former AMGC CFO, B. Greg Bohannon. The plan, which is offered through InterCare of Colorado, Inc., provides life, medical, dental and disability coverage at an average cost of approximately $245 monthly per individual. The individuals were covered by the Company under EHI' plan during their respective terms of service. All premiums were paid by EHI and charged as an expense back to the Company. Norman and Valerie Fisher were covered under the same plan as full time employees of EHI. The Company made no contributions to any Defined Contribution Benefit Plans on behalf of its employees in fiscal 1996, other than provision of insurance coverages as described above. Meetings of the Board of Directors On January 17, 1996, the Board of Directors nominated Mr. Geoff Dawson and Mr. Joe Lee to serve as independent outside members of the AMGC Board of Directors. During fiscal 1996, the expanded AMGC Board convened on two occasions at the principle offices of the Company: on March 27, 1996 and June 26, 1996. In total, there were four meetings held by the AMGC Board during fiscal 1996. There were no incumbent directors who attended less than 75% of the meetings of the Board and Committees thereof on which such director served during that period. Director Agreements and Compensation On March 27, 1996, the Company executed outside director agreements with Mr. Dawson and Mr. Lee. The agreements, which became effective on January 17, 1996, provide for a three year term of service and compensation in the form of non-qualified stock options of 25,000 shares per director. Additionally, directors receive $1,600 for attending each of the four quarterly scheduled meetings of the Board, plus expenses. Compensation for meeting attendance is payable at the Company's option in cash or in equivalent AMGC restricted common shares set at the market price on the day of issue. Directors who are U.S. residents are entitled to participate in the Company's health and welfare benefit programs. Employee directors are not entitled to receive compensation for Board service. During fiscal 1996, no compensation was paid or distributed to any directors of the Company. Subsequent to fiscal year ended June 30, 1996, Mr. Dawson received $3,200 for Board meetings attended on March 27, 1996 and June 26, 1996. Item 11. Security Ownership of Certain Beneficial Owners and Management Stock Ownership The following table sets forth certain information regarding the beneficial and economic ownership of AMGC common stock as of June 30, 1996 by: (1) each stockholder known by the Company to be the beneficial owner of more than 5% of the outstanding Common Stock; (2) each director and nominee for director; (3) all directors and executive officers as a group. The beneficial ownership reflected in the following table is calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934 (the "Exchange Act"). Shares issuable on exercise of options exercisable within 60 days of June 30, 1996 are deemed to be outstanding for the purpose of computing the percentage of ownership of persons beneficially owning such options, but have not been deemed to be outstanding for the purpose of computing the percentage ownership of any other person. As of June 30, 1996, the total outstanding shares of the Company's common stock were 7,601,321.
Name and Address Number of Shares Held Percent of Class Norman L. Fisher, President and Treasurer 1,053,479 (a)(b) 13.8 % 5002 Mineral Circle Littleton, CO 80122 Valerie A. Fisher, Vice President 635,229 (b)(c) 8.4 % 5002 Mineral Circle Littleton, CO 80122 Cory J. Coppage, Chief Operating Officer and Secretary 150,000 (d) 1.9 % 7255 E. Quincy Ave, #550 Denver, CO 80237 Geoff Dawson, Director 1,750,000 (e)(f)(h)(i) 23.0 % 22 Kings Court South Chelsea Manor Gardens London, England SW3-5EG Joe Lee, Director 25,000 (g) .03 % 4250 S. Olive Street, #216 Denver, CO 80237 Mick Dragoo, Shareholder 1,110,050 14.6 % 8634 S. Willow Tempe, AZ 85284 George & Philips Holdings, Ltd., Shareholder 1,275,000 (h) 16.7 % P.O. Box 438 Roadtown, Tortola BWI GPD Holdings, Ltd., Shareholder 450,000 (i) 5.9% c/o Consolidated Services P.O. Box HM 2257 Hamilton, Bermuda HM JX Officers and Directors as a Group (five persons) 3,078,479 (j) 39%(j)
(a) Includes options to purchase 500,000 shares. (b) Includes 535,229 shares held jointly by Mr. and Mrs. Fisher, who are married. (c) Includes options to purchase 100,000 shares. (d) Includes options to purchase 100,000 shares. (e) Includes options to purchase 25,000 shares. (f) As of June 30, 1996, Mr. Dawson's beneficial ownership of record as indicated above includes the corporate AMGC shareholdings of George & Philips Holdings, Ltd. See footnote (h)(i) below. (g) Includes options to purchase 25,000 shares. (h) Mr. Dawson is a managing director of George & Philips Holdings, Ltd. The Company believes Mr. Dawson shares the voting rights to and exercises certain voting authority over these shares. (i) Mr. Dawson is a managing director of GPD Holdings, Ltd. The Company believes Mr. Dawson shares the voting rights to and exercises certain voting authority over these shares. (j) Includes all shares depicted except for those shares held by Mick Dragoo, who is neither an officer nor director, and 535,229 shares held jointly by Mr. and Mrs. Fisher and added in the calculation as such. All ownership is beneficial and of record except as specifically indicated otherwise. 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 June 30, 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. Beneficial ownership is calculated in accordance with Section 13(d) of the Exchange Act and the rules promulgated thereunder. Item 12. Certain Relationships and Related Transactions Subsequent to June 30, 1996, the Company entered into a note payable with an employee in the amount of $35,000. The note provides for monthly interest payments at 14% through April 1997 when all principle and unpaid interest is due. The note is convertible into restricted common stock in $10,000 increments at a conversion price equal to 65% of the average bid price during the thirty days prior to conversion. During fiscal 1996, 400,000 shares of common stock were issued to officers for services. During fiscal 1995, 1,231,167 shares of common stock were issued to either board of directors members or related companies due to common board members for services rendered. Conversion and cash proceeds from related party stock issuance were $185,650. (See "Certain Relationships and Related Party Transactions" and "Notes to Consolidated Financial Statements - Note 10".) PART IV Item 13. Exhibits, Financial Statement Schedules and Reports on Form 8-K (a)(1) and (a)(2) List of Financial Statements and Schedules (a)(3) List of Exhibits (in accordance with Item 601 of Regulation S-B). Exhibit Number Description of Exhibit 3.1 Articles of Incorporation of the Company* 3.2 Bylaws of the Company* 3.3 Material Contracts 3.4 1996 Annual Proxy Statement 3.5 Financial Data Schedule * (Incorporated by reference to the Company's Form S-4 Registration Statement, effective with the Commission on August 7, 1987, file number 33-13335). SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this amendment to its registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Englewood, County of Arapahoe, State of Colorado, on this 16th of October, 1996. Registrant: AMERICAN CONSOLIDATED GROWTH CORPORATION By: /s/ Norman L. Fisher Norman L. Fisher, President, Treasurer and Chief Executive Officer Pursuant to the requirements of the Securities Act of 1933, this amendment to registration statement has been signed below by the following persons in the capacities and on the date indicated. Signature Title Date /s/ Norman L. Fisher President, Chief Executive October 16, 1994 Norman L. Fisher Officer, Treasurer (Principal Accounting Officer) and Director /s/ Valerie A. Fisher Vice President and Director October 16, 1994 Valerie A. Fisher /s/ Cory J. Coppage Chief Operating Officer, October 16, 1994 Cory J. Coppage Secretary and Director -----END PRIVACY-ENHANCED MESSAGE-----