-----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, WZHGZO6z7BZ0Ilpi3oyRk7VwDABHggUtWOLVHtgTCoi4XjkE4R1q++Vggz0Y+l9L 2bbIR5wX6jAy+kbdEICBpQ== 0000950144-99-004633.txt : 19990419 0000950144-99-004633.hdr.sgml : 19990419 ACCESSION NUMBER: 0000950144-99-004633 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990228 FILED AS OF DATE: 19990416 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONCAP INC CENTRAL INDEX KEY: 0000835909 STANDARD INDUSTRIAL CLASSIFICATION: BLANK CHECKS [6770] IRS NUMBER: 760252296 STATE OF INCORPORATION: TX FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-17597 FILM NUMBER: 99596329 BUSINESS ADDRESS: STREET 1: 3700 CRESTWOOD PARKWAY STREET 2: SUITE 1000 CITY: DULUTH STATE: GA ZIP: 30096 BUSINESS PHONE: 7706381019 MAIL ADDRESS: STREET 1: 3700 CRESTWOOD PARKWAY STREET 2: SUITE 1000 CITY: DULUTH STATE: GA ZIP: 30096 FORMER COMPANY: FORMER CONFORMED NAME: CONTINENTAL CAPITAL RESOURCES INC DATE OF NAME CHANGE: 19920703 10-Q 1 CONCAP INC 1 - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [MARK ONE] [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED FEBRUARY 28, 1999 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM____________TO____________ COMMISSION FILE NUMBER: 0-17597 CONCAP, INC. (Exact name of registrant as specified in its charter) (State or other Jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) TEXAS 76-0252296 (Address of principal executive offices) (Zip Code) 3700 CRESTWOOD PARKWAY 30096 SUITE 1000 DULUTH, GA
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (770) 638-1019 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 No X --- --- The number of shares of the issuer's class of capital stock as of February 28, 1999, the latest practicable date, is as follows: 11,869,000 shares of Common Stock $.001 par value. - -------------------------------------------------------------------------------- 2 PART 1 FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. Balance Sheet Income Statement Statement of Cash Flow 1. CONCAP, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FEBRUARY 28, 1999 (UNAUDITED) Organization Concap, Inc., (the "Company") was established in 1988 in the State of Texas. The Company is a holding company seeking the acquisitions of companies that provide technical and non-technical services to business internationally. Cash and Cash Equivalents The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash or cash equivalents. Furniture and Equipment Furniture and equipment are recorded at cost and are depreciated primarily using straight line depreciation over three to seven years. Revenue Recognition The Company's revenue are results of the revenue received by its subsidiary corporations. Revenue from subsidiary corporations is recognized upon signing of a contract for services, provided that amounts are due within one year and collection is considered probable. If significant delays are expected in collecting more than 50% of the contract value, the revenue from the sale of the contract is recognized using contract accounting. Deferred Revenues Revenue may be deferred due to installation, delivery or fulfillment not yet performed. Deferred Liabilities Liabilities may be deferred due to expected expenditure of labor costs. Payroll Taxes Payable Payroll Taxes payable includes a liability of approximately $460,000.00, the assumption of which was part of the agreement to acquire Intuitive Technology Consultants, Inc. Management has entered into an installment agreement with the Internal Revenue Service to satisfy this Liability and has been funding payments from the cash generated by operations. Management believes it can continue to reduce the liability accordingly without adversely affecting the continuing operations of the company. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The following discussion should be read in conjunction with the Financial Statements and Notes thereto included elsewhere in this filing. Certain statements made in this "Management's Discussion and Analysis of Financial Condition and Results of Operations are forward-looking statements. The forward-looking statements contained herein are based on current expectations and entail various risks and uncertainties that could cause actual results to differ materially from those expressed in such forward-looking statements. Overview Concap, Inc. is a holding company seeking to acquire corporations whose primary focus is technical, including software development, staffing and consulting. It should be noted that the Company is limiting itself to these areas. The Company's revenue consists of revenue as results of operations of its subsidiary corporations. The financial results referred to herein reflect the historical results of the Company. Prior to June 8, 1998, the Company had no material assets or operations. On July 8, 1998, the Company acquired all of the issued and outstanding capital stock of Intuitive Technology Consultants, Inc. ("ITC"). On November 15, 1998, ITC was merged with Elite Technologies, Inc., with Elite becoming the surviving member. Elite is composed 3 of two operating divisions. Elite's product division provides software solutions on an outsourced basis to companies seeking to upgrade or create new business solutions. These solutions are primarily project based. Elite's products are developed internally. Elite's services division provides temporary and permanent personnel to technology companies. Elite provides personnel on a fee basis (hourly basis for temporary personnel and flat fee basis for permanent personnel). Elite's clients are responsible for the management of such personnel on the job. On RESULTS OF OPERATIONS Three Months Ended February 28, 1999 Compared to Three Months Ended November 30, 1998 Revenue Total revenue decreased as a result of seasonal declines in operations. Total revenue of the subsidiary companies consists of software programming, permanent and temporary placement fees and consulting fees, as well as retail sales by the Companies "Scanlan Music" subsidiary. Software Programming Fees. Software programming fee revenue accounted for 27% of the revenue of Elite Technologies. Temporary and Permanent Placement Fees. Fees decreased by 12% as a result of seasonal business declines. Cost of Revenue The cost of revenue consists primarily of consultant and employee salaries and other personnel expenses incurred in the implementation of projects and placements. Costs of revenue increased proportionately primarily due to the increase of obligations under contracts for services. Operating Expenses Sales and Marketing. Sales and marketing expenses include salaries, commissions and other personnel related costs, travel expenses, advertising programs and other promotional activities. General and Administrative. General and administrative expenses consist primarily of salaries and other personnel related costs of executive, financial and secretarial personnel, as well as facilities, legal, insurance, accounting and other administrative expenses. The increase in general and administrative expenses was principally due to increased legal fees as a result of the acquisition of the subsidiary Scanlan Music Corporation, and investigation of the possible acquisition targets for the Company. The Company's operations and related revenue and operating results could vary substantially from quarter to quarter. Among the factors causing these potential variations are fluctuations in the demand for the Company's services, price competition in the Company's markets, the length of the Company's sales process, the Company's success in expanding its services as well as its direct sales force, commercial strategies adopted by competitors and general economic conditions. A substantial portion of the Company's operating expenses, particularly personnel and facilities costs, are relatively fixed in advance of any particular operating results in any particular quarter. THC and Elite's ability to undertake new projects and increase revenue is substantially dependant on the availability of consultants/personnel in the marketplace. As a result of the foregoing and other factors, the Company believes that Quarter to Quarter comparisons of results are not necessarily meaningful, and such comparisons should not be relied upon as indications of future performance. LIQUIDITY AND CAPITAL RESOURCES Since inception, Elite has funded its operations to date primarily through cash generated form operations. In addition, Elite has received approximately $550,000.00 from outside sources. The Company has guaranteed a line of credit for Accounts Receivable financing from American Factors Corporation of Dallas, Texas for a maximum of up to $1,000,000.00. As of February 28, 1999, the Company had $874,000.00 outstanding borrowings under the line of credit. 4 The Company believes that its existing liquidity and capital resources, including the cash generated from operations during fiscal 1999 will be sufficient to satisfy its cash requirements for at least the next twelve months. To the extent that such amounts are insufficient, the Company will be required to raise additional funds through equity or debt financing. There can be no assurance that the Company will be successful in raising additional funds on favorable terms or at all. IMPACT OF THE YEAR 2000 ISSUE On January 1, 2000, computer systems and software products worldwide may interpret the date as January 1, 1900 or some other random date, unless such products are coded to accept the four digit format in the date code field. This is generally referred to as the "year 2000 issue." Before the Year 2000 arrives, many computers and/or software packages will have to be upgraded to address the year 2000 issue. Therefore, significant uncertainty exists in the software industry concerning the potential effects associated with such compliance. The Company has designed all of its products to properly convert to the year 2000 ("Year 2000 Ready"). Therefore, it is not expected that the Company's products will be adversely affected by date changes in the year 2000. However, these can be no assurance that the Company's products contain and will contain all features and functionality considered necessary by the customers, distributors, resellers and systems integrators to be Year 2000 ready or that any difficulties will not have a material adverse effect on the operation of the Company's resulting business, financial condition and results of operations. The Company believes that the year 2000 issue may affect the purchasing habits of its present and potential customers. Due to the significant amount of resources being allocated by companies to address the year 2000 issue, they may have less money to spend on software products such as those offered by the Company. Customers may defer or accelerate their purchases of software products. Furthermore, they might switch to other systems or suppliers after evaluating their software needs as a result of the year 2000 issue. Finally, the Company's software could be integrated with a customer's non-year 2000 ready compliant system, which could lessen the effectiveness of the Company's solutions. Any of the foregoing could result in a material adverse effect on the company's business, operating results and financial condition. The Company has communicated with some, but not all, of its vendors, suppliers and other relevant third parties to determine whether the products and services they provide to the Company will be affected by the Year 2000 issue. To the Company's knowledge, the products and services of such third parties will not be adversely affected in any material respect by the Year 2000 issue. There can be no assurance, however, that all of the products and services supplied by third parties on which the Company's business relies have been or will continue to be Year 2000 ready or will not otherwise be materially and adversely affected by the Year 2000 issue. Such failures could have a material adverse affect on the Company's financial condition and results of operations. The cost for being Year 2000 ready has been immaterial to the Company's business, operating results and financial condition. Further, the Company does not anticipate incurring material cost in the future relating to the Year 2000 issue since the costs of developing products that are Year 2000 ready is a normal part of development. As a result, the Company does not currently have a contingency plan relating to the Year 2000 issue and it does not anticipate developing one in the future. 5 FORWARD LOOKING STATEMENTS Certain statements contained in this filing are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Investors are cautioned that any forward-looking statements are not guarantees of future performance and involve risks and uncertainties and that actual results may differ materially from those contemplated by such forward-looking statements. PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. The Company, both on its own and through its subsidiaries is subject to legal proceedings and claims which arise in the ordinary course of business. In the opinion of management, the amount of potential liability with respect to these potential actions would not materially affect the financial position or results of operations of the Company. ITEM 2. CHANGES IN SECURITIES. NONE ITEM 3. DEFAULTS UPON SENIOR SECURITIES. NONE ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. NONE ITEM 5. OTHER INFORMATION. In connection with the foregoing acquisition the Registrant effectuated a 1-for-100 reverse stock split. As a result of the reverse stock split, and other issuance of stock in connection with the acquisitions, the Registrant now has outstanding 11,869,000 shares of common stock. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) The Following exhibits are filed with this Report: Exhibit 27.1 Financial Data Schedule (to be filed by amendment). (b) Reports to be filed on Form 8-K The Company filed a Current Report on Form 8-K, dated June 8, 1998, reporting its acquisition of Scanlan Music Corporation. Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: April 15, 1999 By: /s/ Scott Schuster, President ---------------------------------- Scott Schuster, President 6 CONCAP, INC. Consolidated Balance Sheet 3nd Quarter Ending 2/28/99 (000's omitted)
CURRENT ASSETS 2/29/99 11/30/98 ----------------------- Cash 51 92 Accounts Receivable 1,082 1,050 Less Allowable Doubtful Accounts (55) (5) Total A/R 1,027 1,045 Inventory 33 0 Factoring Reserve 43 22 Office Supplies 2 3 Loans to Officers 266 266 Prepaid Expenses 52 52 ------ ------ TOTAL CURRENT ASSETS 1,474 1,480 FIXED ASSETS Furniture, Fixtures, Equip 59 36 Equipment- Computer 294 289 Software 56 32 Vehicles 82 82 Leasehold Improvements 20 16 Accum Depreciation - Furniture (9) (7) Accum Depreciation - Equipment (63) (53) Accum Depreciation - Software (17) (14) Accum Depreciation - Vehicles (17) (13) Accum Depreciation - Leasehold (6) (5) ------ ------ TOTAL FIXED ASSETS 399 363 ------ ------ TOTAL ASSETS 1,873 1,843 ====== ====== CURRENT LIABILITIES Accounts Payable 300 176 Sales Tax 5 0 Accrued Expenses 0 0 Loans Payable Officers 0 0 Wages Payable 0 79 ** Factoring - American Factors 874 755 * Payroll Taxes Payable 872 905 (Due from Seller per Purchase Agreement) (215) (215) ------ ------ Total Taxes Due 657 690 Total Current Liabilities 1,836 1,700 LONG TERM LIABILITIES 26 37 ------ ------ TOTAL LIABILITIES 1,862 1,737 CAPITAL Common Stock 1 1 Paid In Capital 391 391 Retained Earnings (286) (183) Net Income (95) (103) TOTAL CAPITAL 11 106 ------ ------ TOTAL LIABILITIES + CAPITAL 1,873 1,843 ====== ======
7 NOTES TO FINANCIAL STATEMENTS * Payroll Taxes payable includes a liability of approximately $460,000.00, the assumption of which was part of the agreement to acquire Intuitive Technology Consultants, Inc.. , as well as liabilities of Temporary Help Connection, Inc. Management has entered into an installment agreement with the Internal Revenue Service to satisfy this Liability and has been funding payments from the cash generated by operations. Management believes it can continue to reduce the liability accordingly without adversely affecting the continuing operations of the company. ** This amount is advanced against receivables. Amounts shown here are paid upon receipt by customer. The average balance is less than 30 days old. 8 CONCAP, INC. Consolidated Income Statement 3nd Quarter Ending 2/28/99 (000's omitted)
2/28/99 Year to Date ------------- -------------- REVENUES Fees 1,696 6,043 Other Income 0 53 Refunds 0 (17) TOTAL REVENUES 1,696 6,079 DIRECT COST OF SALES 125 125 GROSS PROFIT 1,571 5,954 OPERATING EXPENSES Advertising 21 44 Bad Debt 46 114 Bank Charges 2 4 Commissions 2 12 Computer Equipment Expense 12 74 Contract Labor 0 22 Depreciation 20 56 Dues and Subscriptions 0 1 Employee Education 2 4 Employee Expenses 4 5 Factoring 75 186 Forms/Printing 2 7 Gifts and Donations 0 4 Insurance 68 156 Late Fees 3 5 Lease 5 22 Lease on Autos 4 18 Lease on Furniture 6 20 Legal and Professional 41 140 License and Permits 1 1 Lodging 1 2 Maintenance 2 13 Meals and Enter 1 9 Medical Benefits 3 69 Misc 27 56 Office Supplies 5 12 Officer Benefit Programs 5 7 Office Expense 6 17 Officer Loan Expense 0 97 Payroll Tax Expenses 148 482 Postage & Deliver 5 8 Recruiting 7 20 Rent 55 162 Repairs 3 3 Salaries 849 1,779 Selling Expenses 12 41 Telecommunications 3 4 Telephone 29 66 Telephone - ISP 10 12
9 Transportation 41 141 Travel Expenses 15 59 Wages 125 2,198 TOTAL OPERATING EXPENSES 1,666 6,152 INCOME BEFORE TAXES (95) (198) EARNINGS (LOSS) PER SHARE $(0.0080) $(0.0167) ======== ========
10 CONCAP, INC. Consolidated Cash Flow Statement 3nd Quarter Ending 2/28/99 (000's omitted)
2/2/8/99 11/30/98 ------------ ----------- Cash Flows from Operating Activities (95) 54 Net Income Adjustment to reconcile net income to net cash provided by operating activities Depreciation expense 20 9 Increase in Inventory (33) 0 Accounts Receivable (18) (327) A/R American Factors 21 (8) Loans to Officers 0 (81) Accounts Payable 45 92 N/P American Factors 108 264 Payroll Taxes (33) 175 Medical Withheld 0 1 ----------- ----------- Total Adjustments 110 125 Net Cash provided by Operations 15 50 ----------- ----------- Cash Flows used from Investment Activities Purchase of Capital Equipment (56) (68) ----------- ----------- Net Cash Used in Investing (56) (68) ----------- ----------- Cash Flows from Financing Paid In Capital 0 (8) Loans 0 0 Paid In Capital 0 0 ----------- ----------- Net Cash Used in Financing 0 (8) ----------- ----------- Net Increase (decrease) in Cash (41) (26) =========== =========== Beginning Cash Balance 92 Ending Cash Balance 51 ===========
-----END PRIVACY-ENHANCED MESSAGE-----