Edgar Filing: W3 GROUP INC

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C., 20549

FORM 10-KSB

Annual Report pursuant to section 13 or 15(d)
of the Securities Exchange Act of 1934

For the Fiscal Year Ended December 31, 2002

Commission File Number: 0-27083

W3 GROUP, INC.
(Exact name of Registrant as specified in its Charter)

Colorado 84-1108035
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)

444 Madison Avenue, Suite 2904, New York, New York 10022
(Address of principal executive offices) (Zip code)

(212) 750-7878
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:
Title of each class: Name of each exchange on which registered:
Common Stock, no par value None

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes _X_ No ___

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Sec. 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of Registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-KSB. [ ]

Registrant had no revenues during its most current fiscal year.

Indicate the number of shares outstanding of each of issuer's classes of common
stock, as of the latest practicable date. At December 31, 2002, 3,892,085
shares of Common Stock, no par value, were outstanding.

The aggregate market value of the voting stock held by non-affiliates of
registrant on December 31, 2002 was $44,447.

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W3 GROUP, INC.
FORM 10-KSB
December 31, 2002

TABLE OF CONTENTS

FORWARD LOOKING STATEMENTS 2

PART I

ITEM 1. Description of Business 2
ITEM 2. Description of Property 3
ITEM 3. Legal Proceedings 4
ITEM 4. Submission of Matters to a Vote of Security Holder 4

PART II

ITEM 5. Market for Registrant's Common Equity
and Related Stockholder Matters 4
ITEM 6. Management's Discussion and Analysis of Financial Condition
and Results of Operations 5
ITEM 7. Financial Statements 6
ITEM 8. Changes in and Disagreements with Accountants 6

PART III

ITEM 9. Directors, Executive Officers, Promoters and Control Persons 7
ITEM 10. Executive Compensation 8
ITEM 11. Security Ownership of Certain Beneficial
Owners and Management 9
ITEM 12. Certain Relationships and Related Transactions 10

PART IV

ITEM 13. Exhibits and Reports on Form 8-K 10
ITEM 14. Controls and Procedures 11

PART F/S

Financial Statements F-1 to F-13

SIGNATURES 11

CERTIFICATIONS 12

FORWARD-LOOKING STATEMENTS

Some of the information contained in this Report may constitute forward-
looking statements or statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements are based on
current expectations and projections about future events. The words "estimate",
"plan", "intend", "expect", "anticipate" and similar expressions are intended
to identify forward-looking statements which involve, and are subject to, known
and unknown risks, uncertainties and other factors which could cause the
Company's actual results, financial or operating performance, or achievements
to differ from future results, financial or operating performance, or
achievements expressed or implied by such forward-looking statements.
Projections and assumptions contained and expressed herein were reasonably
based on information available to the Company at the time so furnished and as
of the date of this filing. All such projections and assumptions are subject
to significant uncertainties and contingencies, many of which are beyond the
Company's control, and no assurance can be given that the projections will be
realized. Potential investors are cautioned not to place undue reliance on
any such forward-looking statements, which speak only as of the date hereof.
The Company undertakes no obligation to publicly release any revisions to
these forward-looking statements to reflect events or circumstances after the
date hereof or to reflect the occurrence of unanticipated events.

PART I

ITEM 1. BUSINESS

Introduction
------------

W3 Group, Inc. ("Registrant" or the "Company" or "W3") was formed in 1988
under the laws of the State of Colorado for the purpose of participating, either
through acquisition or merger, in a viable business opportunity. Registrant
has, since its inception, been evaluating various privately held companies which
management believed could be viable business opportunities.

On September 23, 1996, the Company, then named Concorde Strategies Group,
Inc. ("Concorde"), entered into an Agreement and Plan of Reorganization pursuant
to which it acquired 100%of the issued and outstanding capital stock of Concorde
Management, Ltd. ("CML") and its wholly owned subsidiary, L'Abbigliamento, Ltd.
This acquisition was concluded as of July 1, 1997. L'Abbigliamento, Ltd., a New
York based distributor of Italian made men's apparel, was later divested by the
Company, effective March 31, 1999. (Refer to Financial Statements "Note 7 -
Divestiture of Subsidiary".)

In 1999, the Company decided to reorganize and focus its acquisition
efforts on internet related technology companies. Accordingly, Concorde entered
into an Agreement and Plan of Share Exchange with W3 Group, Inc., a privately
held company, and said Agreement became effective on October 1, 1999, after
approval by shareholders. At that time, Concorde changed its corporation name
to W3 Group, Inc. (Refer to Form 8-K filed on October 15, 1999.)

Present Overview
----------------

W3 intends to acquire, finance, and restructure profitable companies that
can utilize the internet to expand their business and distribution channel. As a
result of the significant changes in the internet industry, the Company's focus
is no longer on Internet related companies. The Company is seeking to acquire
companies that would become wholly owned, or majority owned, subsidiaries of W3.

W3 intends to concentrate on existing companies that have proven markets,
profitability, and management. The Company's goal is to provide a platform for
selected companies to expand their markets, strengthen internal functions by
providing consulting services and professional management support, and expand
capital while allowing the companies to continue management of daily operations.

W3's objective is to better meet the needs of growing companies that may
have had difficulty obtaining capital from traditional sources such as banks,
large asset based lenders, and the public securities markets. Also, W3 believes
that its opportunity is enhanced because of the consolidation in the commercial
banking industry and the emphasis in investment banking toward increasingly
larger financings. The resulting diminishing of available capital has affected
the flow to smaller companies, where the need for capital is the most critical.

W3's approach is to develop "partnerships" with companies having
exceptional management in order to improve the long term value of a business.
The participation of management through equity based compensation and stock
ownership is a crucial ingredient of W3's plan.

As described in the preceding section, "Reorganization of Business
Operations", as a result of the divestiture of L'Abbigliamento, Ltd., effective
March 31, 1999, the Company essentially has not had any business operations
since that time. While the Company is seeking acquisition candidates, there can
be no assurance that any acquisition will be consummated.

Competition
-----------

The Registrant is, and is expected to remain, an insignificant entity among
a great many other companies who are engaged in mergers and acquisitions of
other business entities. There are many established venture capital and
financial concerns seeking to attract merger or acquisition candidates,
virtually all of which have significantly greater financial and personnel
resources and technical expertise than the Registrant.

The Company's intended marketplace is rapidly changing and highly
competitive, and it is expected that this competition will persist and intensify
in the future. New competitors may emerge and rapidly acquire significant market
share. Competitors may be able to respond more quickly than the Company to new
or emerging technologies and changes in the marketplace.

ITEM 2. PROPERTIES

Facilities
----------

The Company has utilized the offices and business facilities of Ameristar
Group Incorporated ("Ameristar"), a privately held corporation principally owned
and controlled by two Directors of the Company, on rent free basis since January
1, 2002. (See Financial Statements "Note 5 - Leases and Other Commitments".)

Employees
---------

The Company's employees consist of its officers. The outside Directors are
engaged in other business activities and devote so much of their time to the
affairs of the Company as is required.

ITEM 3. LEGAL PROCEEDINGS

The Company knows of no litigation pending, threatened or contemplated, or
unsatisfied judgments against it, or any proceedings in which the Company is a
party. The Company also knows of no legal action pending or threatened or
judgments entered against any Officers or Directors of the Company in their
capacity as such.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS

The Company's Common Stock trades under the symbol "WWWG" and the Series B
Convertible Preferred Stock trades under the symbol "WWWGP" on the OTC
Electronic Bulletin Board. The number of record shareholders on December 31,
2002 for the Company's Common Stock was 399 and for its Series B Convertible
Preferred Stock was 26 shareholders. There currently are 4 market makers for
the Company's Common Stock and 3 market makers for its Series B Convertible
Preferred Stock.

The following tables show for the periods indicated the approximate range
of high and low bid quotes for the Common Stock and Series B Convertible
Preferred Shares obtained from the OTC Electronic Bulletin Board and are between
dealers, do not include retail mark-ups, mark-downs, or other fees or
commissions, and may not necessarily represent actual transactions.

COMMON STOCK TRADING HISTORY
2001 2002
----------------- -----------------
High Low High Low
------- ------- ------- -------
Quarter ended March 31 $ 0.100 $ 0.080 $ 0.033 $ 0.030
Quarter ended June 30 $ 0.050 $ 0.040 $ 0.050 $ 0.033
Quarter ended September 30 $ 0.050 $ 0.040 $ 0.048 $ 0.030
Quarter ended December 31 $ 0.040 $ 0.030 $ 0.035 $ 0.020

SERIES B CONVERTIBLE PREFERRED SHARE TRADING HISTORY

2001 2002
----------------- -----------------
High Low High Low
------- ------- ------- -------
Quarter ended March 31 $ 0.050 $ 0.040 $ 0.040 $ 0.010
Quarter ended June 30 $ 0.040 $ 0.030 $ 0.010 $ 0.010
Quarter ended September 30 $ 0.030 $ 0.010 $ 0.030 $ 0.010
Quarter ended December 31 $ 0.030 $ 0.010 $ 0.010 $ 0.0005

The Company has not paid any dividends and there are no plans to pay any
cash dividends in the foreseeable future. The declaration and payment of
dividends in the future, of which there can be no assurance, is determined by

the Board of Directors based upon conditions then existing. There are no
restrictions on the Company's ability to pay dividends.

On February 1, 2002, all of the Company's then outstanding 337,600 Series B
Convertible Stock Purchase Warrants expired, with none of said Warrants having
been exercised. (See Financial Statements "Note 3 - Capitalization".)

On September 23, 2002, a resolution was passed by the Board of Directors,
which extended the conversion period of the Series B Convertible Preferred Stock
from October 14, 2002 until the close of business on April 14, 2003. Each share
of Series B Preferred Stock may be converted to 0.5 (one half) share of Common
Stock at the election of the shareholder (See Financial Statements, "Note 3 -
Capitalization").

Subsequent to the period covered by this Report, on January 10, 2003, the
Board of Directors authorized the issuance of 1,499,999 restricted shares of
Common Stock to two creditors of the Company in payment of their outstanding
invoices for services. These shares were issued at the agreed upon rate of $.03
per share.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Results of Operations
---------------------

The Company did not have any revenue during the years 2001 or 2002 , or in
2003 as of the date of this Report.

Operating expenses for 2002 were $97,877 compared to $477,022 in 2001, a
decrease of $379,145 from the prior year, resulting primarily from decreased
consulting fees, decreased bad debt expense and decreased rent.

The net loss for the twelve month period ended December 31, 2002 was
$102,677 compared to a net loss of $481,822 for the prior year period, a
decrease of $379,145, reflecting the aforementioned decreased operating
expenses.

The Company had no cash and cash equivalents at December 31, 2002 and
December 31, 2001. Accounts payable at December 31, 2002 totaled $293,999,
compared to $252,447 at December 31, 2001, an increase of $41,552 resulting from
expenses accrued for professional fees.

The Company is still pursuing L'Abbigliamento, Ltd. in regard to obtaining
payments toward the loan made by the Company in the amount of $157,522 and
interest in the amount of $13,140. These amounts were written off during the
quarter ended September 30, 2001 (See Financial Statements "Note 9 - Write Off
of Bad Debt"). No assurances can be given regarding the collection of any
payments from L'Abbigliamento, Ltd.

The Company is continuing to look for suitable acquisition candidates. As
of the date of this Report, no additional acquisition candidates have been
found, and there no assurance can be given that any candidates will be found.

Liquidity and Capital Resources
-------------------------------

At the end of fiscal 2002, the Company had no cash. The Company has
received an audit opinion, which includes a "going concern" risk, which raises
substantial doubt regarding the Company's ability to continue as a going
concern. Management is re-evaluating business opportunities and looking for a
new direction for the Company.

General Risk Factors Affecting the Company
------------------------------------------

Various factors could cause actual results of the Company to differ
materially from those indicated by forward-looking statements made from time to
time in news releases, reports, proxy statements, registration statements and
other written communications (including the preceding sections of this
document), as well as oral statements made from time to time by representatives
of the Company. Except for historical information, matters discussed in such
oral and written communications are forward-looking statements that involve
risks and uncertainties, including, but not limited to the following:

o Rapidly changing business environment.
o Intense competition within the market place.
o Many well established companies and smaller entrepreneurial companies
have significant resources that will compete with the Company's
limited resources in the acquisition of companies.
o There can be no assurance that the Company will be able to compete
successfully in the acquisition of subsidiary companies.
o The management of growth is expected to place significant pressure
on the Company's managerial, operational, and financial resources.
o The Company will not be able to accomplish its growth strategy if it
is not able to consummate future acquisitions and raise capital.
o The Company may not be able to operate as a going concern. Refer to
independent auditor's report accompanying the Company's financial
statements and Note 10 to financial statements.

ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Audited financial statements for the fiscal years ended December 31, 2002
and 2001 are submitted herein as PART F/S on Pages F-1 to F-13.

ITEM 8. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

PART III

ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The executive officers and directors of the Company are as follows:

Name Age Position(s) Held

Robert Gordon 67 Acting President
Martin I. Saposnick 56 Director of Corporate Development and Director
Joseph J. Messina 48 Director
William C. Hayde 42 Secretary, Director

Profiles of the Directors and Officers of the Company are set forth below.
All Directors hold office until the next annual shareholders meeting or until
their death, resignation, retirement, removal, disqualification or until their
successors have been elected and qualified. Vacancies in the Board may be
filled by majority vote of the remaining Directors. Officers of the Company
serve at the will of the Board of Directors. There is no Executive Committee or
other committee of the Board of Directors. Election to the Board of Directors
is for a period of one year or until the next shareholder's meeting and
elections are ordinarily held at the Company's Annual Meeting of Shareholders.
There are no family relationships among Officers and Directors.

Profiles of Officers and Directors
----------------------------------

Robert Gordon is Acting President. From 1999 to August, 2002 Mr. Gordon
was President of Lifen, Inc. From 1996-1999, Mr. Gordon was President and a
Director of Concorde Strategies Group, Inc. and from 1993-1996, Executive Vice
President of Contex, Inc., an investment banking and consulting firm in Naples,
Florida. From 1990-1993, as Managing Director of a specialty apparel company, he
was responsible for marketing and sales, finance, manufacturing, retail and mail
order operations, MIS, strategic planning, organizational development, and re-
structuring the business. From 1988-1989, Mr. Gordon was President and Chief
Operating Officer of a public company that manufactured precision parts,
performed engineering design services, and conducted technology research and
development. Previously, he was Executive Vice President of a financial services
firm, responsible for administration, business operations, and organizational
development. Mr. Gordon also had a management consulting practice and performed
broad based professional services which included strategic and financial
planning, marketing and growth studies, business re-structuring, acquisition
plans, implementation of new business strategies, MIS development, and training
programs. Previously, Mr. Gordon was Director of MIS for Kinney Shoe
Corporation.

Mr. Gordon has conducted numerous business seminars and made presentations
at many conferences. He received an Achievement Award from the International
Association of Systems Management in recognition of his contribution to the
business systems profession, and is also a past Chapter President. He was an
advisor to Guidance International, a professional association of computer users.
Mr. Gordon has a B.A. in Economics from Union College.

Martin I. Saposnick is Director of Corporate Development and a Director of
the Company. Since 1992, Mr. Saposnick has also been President of Ameristar
Group Incorporated, a private investment and financial consulting firm
specializing in "micro cap" and "small cap" companies, and was a Director of
Concorde Strategies Group, Inc. until February, 1999. From 1983-1993, Mr.
Saposnick provided independent investment banking and financial consulting
services and, as President, founded Remsen Group, Ltd. Previously, Mr.
Saposnick was Chairman of the Board and President of Marsan Securities Co.,
Inc., a financial services firm, which was a wholly owned subsidiary of Marsan
Capital Corporation, a publicly held company. Mr. Saposnick was also Chairman
of the Board and President of Marsan Capital Corporation. In 1985, Mr.
Saposnick entered into a consent decree with the Commission; the agreement ended
administrative proceedings initiated by the Commission in connection with Mr.
Saposnick's alleged participation in the initial public offering of securities
of North Atlantic Airlines, Inc. Previously, Mr. Saposnick was Vice President
of Chestman Securities, Co., Inc. and had been Assistant Manager of Specialist
Surveillance Division of the New York Stock Exchange. Mr. Saposnick is a
graduate of Hunter College and completed graduate studies in Finance and
Investments at Baruch College.

Joseph J. Messina is a Director. In 1992, he became Chairman and CEO of
both Ameristar Capital Corporation, a lease financing and asset based lender and
Ameristar Group Incorporated, an investment banking and financial consulting
firm specializing in "small cap" companies. Mr. Messina was a Director of
Concorde Strategies Group, Inc. From 1978-1992, Mr. Messina was President and
Chief Operating officer of Vendor Funding Co., Inc. a subsidiary of Bank of
Ireland First Holdings. Vendor Funding, a national middle market lessor and
asset based lender, was co-founded by Mr. Messina and subsequently sold to
First NH Banks of Manchester, New Hampshire. Mr. Messina is a Director of Credit
America Venture Capital, an entity formed to acquire the manufacturing and
distribution network of Mako Marine International, Inc. He is a former Director
of Mako Marine International, Inc., a publicly held corporation, and past
President of the Eastern Association of Equipment Lessors.

William C. Hayde is a Director and also Secretary. Mr. Hayde is an
investment banker and co-owner of Brockington Securities, a broker-dealer
specializing in wholesale and institutional trading, mergers and acquisitions,
and equity and debt financings. Mr. Hayde is also President of B. R. Equities,
which owns and operates an electronic trading room, as well as Chairman of the
Board of Toscana Group, Inc., a venture capital and consulting company. Mr.
Hayde, who has been active in the brokerage business since 1983, was previously
Director of Corporate Finance for Aegis Capital. He has a Bachelor's Degree in
Psychology from Stony Brook University.

ITEM 10. EXECUTIVE COMPENSATION

The Company accrued consulting fees of $1,000 per week for Mr. Robert
Gordon, Acting President, through December 31, 2001. No consulting fees were
accrued in 2002. In 1998, Robert Gordon was President of the Company and
received wages of $30,330 and consulting fees of $15,000. As of December 31,
2002, the Company has accrued obligations for payments to Mr. Gordon of
$190,733. No other officers or directors received compensation during 2002.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Principal Shareholders
----------------------

The following chart sets forth, at the date of this report, information
with respect to (1) any person known by the Company to own beneficially more
than five (5%) percent of the Company's Common Stock, based on 3,892,085 shares
issued and outstanding as of December 31, 2002; (2) Common Stock owned
beneficially by each Officer or Director of the Company; and (3) the total of
the Company's Common Stock owned beneficially, directly or indirectly, by the
Company's Officers and Directors as a group.

Number of shares of
Name Common Stock Owned Percentage of Class
--------------------------------- ------------------- -------------------
Sirbu Enterprises, LLLP
A Colorado Limited Liability
Limited Partnership (4)
16414 Sandstone Dr.
Morrison, CO 80465 525,000 13.49%

Wilmont Holdings Corp.(5)*
33 Wilputte Place
New Rochelle, NY 10804 630,000 16.19%

Lomar Corp.(6)*
21 Schermerhorn
Brooklyn, NY 11201 625,000 16.06%

Thomas C. Hushen
33278 Bluebell Circle
Evergreen, CO 80439 500,000 12.85%

William C. Hayde*
76 Cliff Road
Belle Terre, NY 11777 300,100 7.71%

Robert Gordon*
444 Madison Avenue, Suite 2904
New York, NY 10022 103,667 2.66%

Dunhill Limited (7)*
444 Madison Avenue, Suite 2904
New York, NY 10022 3,333 0.08%

Remsen Group Ltd. (8)*
21 Schermerhorn Street
Brooklyn, NY 11201 7,617 0.20%

Officers and Directors
as a Group (4 Persons)(3) 1,669,717 42.90%

* Officer and/or Director
__________________________

(1) Persons beneficially owning more than 5% of the Company's Common Stock.
(2) Common Stock beneficially owned by each officer and director of the Company.
(3) Beneficially Owned, directly or indirectly, by the Company's officers and
directors as a group.
(4) Sirbu Enterprises, LLLP, a Colorado Limited Liability Limited Partnership,
is privately owned and controlled equally by P. Richard Sirbu, former
Officer and Director of the Company, and his wife, Karen K. Sirbu. The total
shares reflect a donation of 100,000 shares to a charitable trust in late
1999. Mr. Sirbu is not affiliated with the trust.
(5) Wilmont Holdings Corp. is a privately held corporation principally owned and
controlled by Joseph J. Messina, a Director of the Company.
(6) Lomar Corp. is privately held corporation principally owned and controlled
by Martin I. Saposnick, a Director of the Company.
(7) Dunhill Limited is privately held corporation principally owned and
controlled by Joseph J. Messina and Martin I. Saposnick, Directors of
the Company.
(8) Remsen Group, Ltd. is a privately held corporation principally owned and
controlled by Martin I. Saposnick, a Director of the Company.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Company currently utilizes the offices and facilities of Ameristar
Group Incorporated ("Ameristar"), a privately held corporation principally
owned and controlled by two Directors of the Company, on rent free basis.
(Refer to "PART I, ITEM 2. PROPERTIES").

PART IV

ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) 1. The following documents are filed in PART F/S, as a part of this
report on pages F-1 to F-13.

PART F/S
Financial Statements;
Auditor's Report of Janet Loss, C.P.A., P.C. dated March 25, 2003
together with;
Balance Sheet as of December 31, 2002 and 2001;
Statement of Operations for the years ended December 31, 2002 and
2001;
Statement of Stockholders' Equity for the years ended December 31,
2002 and 2001;
Statement of Cash Flow for the years ended December 31, 2002 and
2001; and
Notes to Financial Statements.

2. Financial Statement Schedules.

All applicable information is contained in the financial
statements or notes thereto.

3. Exhibits: None.

(b) Form 8-K filings: None.

ITEM 14. CONTROLS AND PROCEDURES

Subsequent to December 31, 2002 and prior to the filing of this Report, we
conducted an evaluation of the effectiveness of the design and operation of our
disclosure controls and procedures under the supervision of and with the
participation of our management, including the Acting President and Principal
Financial Officer. Based on that evaluation, our management, including the
Acting President and Principal Financial Officer, concluded that our disclosure
controls and procedures were effective at December 31, 2002, and during the
period prior to the execution of this report. There have been no significant
changes in our internal controls or in other factors that could significantly
affect internal controls subsequent to December 31, 2002.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

W3 GROUP, INC.

Dated: March 26, 2003 By: /s/ Robert Gordon
----------------------------------
Robert Gordon
Acting President and
Principal Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

Dated: March 26, 2003 By: /s/ Martin I. Saposnick
----------------------------------
Martin I. Saposnick
Director of Corporate Development and
Director

Dated: March 26, 2003 By: /s/ Joseph J. Messina
----------------------------------
Joseph J. Messina
Director

Dated: March 26, 2003 By: /s/ William C. Hayde
----------------------------------
William C. Hayde
Secretary and Director

CERTIFICATE PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of W3 Group, Inc.. (the "Company") on
Form 10-KSB for the fiscal year ended December 31, 2002 as filed with the
Securities and Exchange Commission (the "Report"), the undersigned, in the
capacity and on the date indicated below, hereby certifies pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that:

1. the Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

2. the information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of
the Company.

Dated: March 26, 2003 By: /s/ Robert Gordon
----------------------------------
Robert Gordon
Acting President and
Principal Financial Officer

CERTIFICATION PURSUANT TO RULE 13a-14 AND 15d-14
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, Robert Gordon, Acting President of W3 Group, Inc., certify that:

1. I have reviewed this annual report on Form 10-KSB of W3 Group, Inc.;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
Registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we have:

(a) designed such disclosure controls and procedures to ensure that
material information relating to the Registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this annual report is being prepared;

(b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days of the filing date of this
annual report (the "Evaluation Date"); and

(c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
of the Evaluation Date;

5. The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of the registrant's board of directors (or persons performing the
equivalent function):

(a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

(b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and

6. The registrant's other certifying officer and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Dated: March 26, 2003 By: /s/ Robert Gordon
----------------------------------
Robert Gordon
Acting President and
Principal Financial Officer

PART F/S
For the Years Ended December 31, 2002 and 2001

Reference
---------

Part F/S Table of Contents F-1

Report of Janet Loss, C.P.A., P.C.,
Independent Certified Public Accountant F-2

Balance Sheets F-3

Statements of Operations F-4

Statements of Cash Flows F-5

Statements of Stockholder's Equity F-6

Notes to Financial Statements F-7 to 13

F-1

Janet Loss, C.P.A., P.C.
Certified Public Accountant
1780 South Bellaire Street
Suite 500
Denver, CO 80222

Board of Directors
W3 Group, Inc.
444 Madison Avenue, Suite 2904
New York, New York 10022

I have audited the accompanying balance sheets of W3 Group, Inc. as of
December 31, 2002 and 2001, and the related statements of operations, changes in
stockholders' equity and cash flows for the years ended December 31, 2002 and
2001. These financial statements are the responsibility of the Company's
management. My responsibility is to express an opinion on these financial
statements based on my audit.

I conducted my audit in accordance with generally accepted accounting
standards in the United States of America. These standards require that I plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. I believe that my audit provides a reasonable
basis for my opinion.

In my opinion, based upon my audit, the financial statements at December
31, 2002 and 2001, and referred to above present fairly, in all material
respects, the financial position of W3 Group, Inc. as of December 31, 2002 and
2001, and the results of its operations and its cash flows for the years ended
December 31, 2002 and 2001 in conformity with generally accepted accounting
principles applied on a consistent basis.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 10 to the
financial statements, the Company has incurred recurring losses from operations
and has no cash. These conditions raise substantial doubt about the Company's
ability to continue as a going concern. Management's plan in regard to these
matters is also described in Note 10. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.

/s/ Janet Loss
----------------------------------
Janet Loss, C.P.A., P.C.
March 25, 2003

F-2

W3 GROUP, INC.

BALANCE SHEETS
--------------
DECEMBER 31, 2002 AND 2001

ASSETS
------
2002 2001
---- ----
CURRENT ASSETS:
Prepaid Expenses $ 0 $ 51,561
------------ ------------
TOTAL CURRENT ASSETS: $ 0 $ 51,561
------------ ------------
Fixed assets, net of accumulated
depreciation of 2,496 and 2,257 $ 0 $ 239
------------ ------------
TOTAL ASSETS $ 0 $ 51,800
------------ ------------
------------ ------------

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
----------------------------------------------

2002 2001
---- ----
CURRENT LIABILITIES:
Accounts payable $ 293,999 $ 252,447
Accrued interest 16,254 11,454
Stockholders' loans 40,000 40,000
Due to Ameristar Group, Inc. 224,694 220,169
------------ ------------
TOTAL CURRENT LIABILITIES $ 574,947 $ 524,070
------------ ------------

STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock, no par value,
100,000,000 shares authorized
Series B Convertible, non-dividend bearing,
699,060 shares issued and outstanding $ 523,891 $ 523,891
Series B Convertible Preferred Stock
Purchase Warrants issued and outstanding 0 325,600
Common stock, no par value,
500,000,000 shares authorized,
3,892,085 shares issued and outstanding
as of December 31, 2002 and 2001 1,088,226 1,088,226
Additional paid-in-capital 360,225 34,625
Retained earnings (Deficit) (2,547,289) (2,444,612)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (574,947) (472,270)
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 0 $ 51,800
------------ ------------
------------ ------------

The accompanying notes are an integral part of these financial statements.

F-3

W3 GROUP, INC.

STATEMENTS OF OPERATIONS
------------------------
FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001

2002 2001
---- ----
REVENUES: $ 0 $ 0
------------ ------------
OPERATING EXPENSES:
Consulting $ 51,561 $ 258,252
Depreciation and amortization 239 480
Office 310 1,320
Legal and Accounting 45,000 0
Rent 0 44,049
Transfer and filing fees 767 2,259
Bad Debt Expense 0 170,662
------------ ------------
TOTAL OPERATING EXPENSES $ 97,877 $ 477,022
------------ ------------

(LOSS) FROM OPERATIONS (97,877) (477,022)

OTHER INCOME AND (EXPENSES):
INTEREST INCOME 0 0
INTEREST (EXPENSE) (4,800) (4,800)
------------ ------------
TOTAL OTHER INCOME AND (EXPENSES) (4,800) (4,800)
------------ ------------

NET (LOSS) BEFORE PROVISION FOR INCOME TAXES (102,677) (481,822)
PROVISION FOR INCOME TAXES 0 0
------------ ------------
NET (LOSS) $ (102,677) $ (481,822)
------------ ------------
NET (LOSS PER SHARE) $ ( 0.026) $ (0.125)
------------ ------------
------------ ------------

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 3,892,085 3,871,222
------------ ------------
------------ ------------

The accompanying notes are an integral part of these financial statements.

F-4

W3 GROUP, INC.

CASH FLOW STATEMENTS
--------------------
FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001

2002 2001
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (102,677) $ (481,822)
Adjustments to reconcile net loss to
net cash flow from operating activities:
Depreciation and amortization 239 480
Decrease (Increase) in prepaid expenses 51,561 206,252
Increase in Due to Ameristar Group 4,525 46,549
Decrease in Loan Receivable 0 157,522
Decrease (Increase) in Interest Receivable 0 14,191
Decrease (Increase) in Rent Receivable 0 1,102
(Decrease) Increase in payables 46,352 55,606
------------ ------------
CASH USED BY OPERATING ACTIVITIES 0 (120)
------------ ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Issuance of Common Stock and
conversion of Preferred Stock to Common Stock 0 70,669
Decrease in Preferred Stock due to
conversion to Common Stock 0 (70,669)
------------ ------------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES 0 0

NET INCREASE (DECREASE) IN CASH 0 (120)

CASH, BEGINNING OF THE PERIOD 0 120
------------ ------------
CASH, END OF THE PERIOD $ 0 $ 0
------------ ------------

The accompanying notes are an integral part of these financial statements.

F-5

W3 GROUP, INC.

STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
--------------------------------------------
FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001

Preferred Series B
Stock Convertible
Non-Dividend Preferred Common Total
Bearing Stock Stock Common Additional Stockholders'
Series B Purchase Number of Stock Paid-in Deficit Equity
Convertible Warrants Shares Amount Capital Accumulated (Deficit)
------------ ------------ ------------ ------------ ------------ ------------ -------------

Balance
December 31, 2000 $ 594,560 $ 325,600 3,844,935 $ 1,017,557 $ 34,625 $(1,962,790) $ 9,552
------------ ------------ ------------ ------------ ------------ ------------ -------------
2001
----
87,000 shares of
Series B Convertible
Preferred Stock
converted to
Common Stock
(first quarter) $ (65,198) 43,500 $ 65,198

7,300 shares of
Series B Convertible
Preferred Stock
converted to
Common Stock
(fourth quarter) $ (5,471) 3,650 $ 5,471

Net Loss for
the year ended
December 31, 2001 $ (481,822) $ (481,822)

Balance
December 31, 2001 $ 523,891 $ 325,600 3,892,085 $ 1,088,226 $ 34,625 $(2,444,612) $ (472,270)
------------ ------------ ------------ ------------ ------------ ------------ -------------
2002
----
Expiration of
Series B Warrants on
February 1, 2002 $ (325,600) $ 325,600

Net Loss for
the year ended
December 31, 2002 $ (102,677) $ (102,677)

Balance
December 31, 2002 $ 523,891 $ 0 3,892,085 $ 1,088,226 $ 360,225 $(2,547,289) $ (574,947)
------------ ------------ ------------ ------------ ------------ ------------ -------------
------------ ------------ ------------ ------------ ------------ ------------ -------------

The accompanying notes are an integral part of these financial statements.

F-6

W3 GROUP, INC.

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 20021

Note 1 - Organization and History

The Company is a Colorado corporation and had been in the development stage
since its formation on February 12, 1988. The Company was formed to seek
potential business acquisitions and its activities since inception are primarily
related to its initial public offering and merger activities.

Upon the completion of the acquisition of Concorde Management, Ltd. and
its wholly owned subsidiary, L'Abbigliamento, Ltd., the Company had ceased being
a development stage company. This acquisition was effective July 1, 1997.

L'Abbigliamento, Ltd. is a New York State corporation which was
incorporated in March, 1992. L'Abbigliamento, Ltd. commenced operations in
August of 1992 as an importer of fine men's clothing. In October of 1995 Vista
International Ltd., incorporated in the Cayman Islands, was organized to acquire
raw material and to sell finished goods to areas outside the United States.
Effective July 1, 1997 L'Abbigliamento, Ltd. and Vista International Ltd. were
acquired through an exchange of stock by Concorde Strategies Group, Inc. As a
result of the Company's changed focus, an agreement for the divestiture of
L'Abbigliamento, Ltd. effective March 31, 1999, was approved by shareholders on
August 12, 1999, (see "Note 7 - Divestiture of Subsidiary" and "Note 8 - Merger
and Acquisitions") and the divestiture was completed.

On April 21, 1999, the Company entered into an Agreement and Plan of Share
Exchange with W3 Group, Inc. a Delaware corporation which was formed to acquire
and develop young companies whose businesses involved the development of
internet related technology and applications. Effective October 1, 1999, the
agreement was completed and the Company changed its name to W3 Group, Inc.
(See "Note 8 - Merger and Acquisitions".)

Note 2 - Summary of Significant Accounting Policies

Accounting Method
-----------------

The Company records income and expenses on the accrual method.

Cash and Cash Equivalents
-------------------------

Cash and cash equivalents include cash on hand, cash on deposit and highly
liquid investments with maturities generally of three months or less.

Deferred Offering Costs
-----------------------

Costs associated with the Company's private offerings have been charged to
the proceeds of the offering. If the offerings are unsuccessful, the costs are
charged to operations.

F-7

Sales and Expenses
------------------

Sales and expenses are recorded using the accrual basis of accounting.

Fixed Assets and Accumulated Depreciation
-----------------------------------------

Fixed assets consist of a computer system and are stated at cost less
accumulated depreciation which is provided for by charges to operations over the
estimated useful lives of the assets.

Use of Estimates
----------------

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and revenues and expenses during the reporting period. Actual results
could differ from those estimates.

Note 3 - Capitalization

In April 1996, the Company undertook a private placement of its securities
pursuant to the provisions of Rule 504 under Regulation D under the Securities
Act of 1933, as amended, whereby it issued 9,000,000 shares of its Common Stock
in exchange for the satisfaction of $45,000 in debts owed by the Registrant.
Also in April 1996, the Company effected a 1-for-10 reverse split of its Common
Stock as the result of which the Company had, following the aforesaid private
offering, 1,200,000 shares issued and outstanding. This reverse split was
effected in anticipation of management's renewed efforts to find a suitable
business opportunity for the Company.

In June 1997, the Company issued 300,000 shares of Common Stock to certain
parties who had performed services on behalf of the Company. The shares were
issued in consideration for the cancellation of payments owed by the Company at
the agreed upon rate of $.10 per share and were sold through a private placement
pursuant to the exemption provided by Rule 504 of Regulation D under the
Securities Act of 1933, as amended.

On October 24, 1997, the Company completed a private placement offering of
450,000 non-dividend bearing, no par value, Series B Convertible Preferred
Shares. All of the shares were sold by the Company and no placement agent was
involved in this offering. The shares were sold at a purchase price of $.3125
per share and the Company realized proceeds of $130,633 from the offering, net
of offering expenses in the amount of $9,992. The shares were sold through a
private placement pursuant to the exemption provided by Rule 504 of Regulation
D under the Securities Act of 1933, as amended. Each Preferred Share is
convertible into one and one quarter (1.25) shares of the Company's Common
Stock, no par value, at the election of the Preferred Shareholder at any time
after thirteen months from the date of issuance thereof and for a period of four
years thereafter, ending on October 14, 2002. This date was extended until April
14, 2003 by the Board of Directors on September 23, 2002. As discussed below,
the conversion right of the Series B Preferred Shares was adjusted as a result
of a 1-for-30 reverse split of the Company's Common Stock on October 1, 1999.
Also, as discussed below, the conversion right was further adjusted on January
18, 2000 so that each share of Series B Preferred Stock may be converted to 0.5
(one half) share of Common Stock at the election of the shareholder.

F-8

On January 7, 1998, the Company issued 315,000 shares of Series B
Convertible Preferred Shares to certain parties who had performed services on
behalf of the Company, including two companies which are principally owned by
two Directors of the Company. The shares were issued by the Company in
consideration for the cancellation of debt owed by the Company at the agreed
upon rate of $.25 per share and were sold through a private placement pursuant
to the exemption provided by Rule 504 of Regulation D under the Securities Act
of 1933, as amended.

On June 22, 1998, the Registrant issued 300,000 shares of Common Stock to a
company which has performed services on behalf of the Registrant. The shares
were issued pursuant to an option in the consulting agreement to pay for the
consulting fees through the issuance of restricted shares of Common Stock at the
agreed upon rate of $.47 per share.

On August 12, 1998, the Company completed a private placement of 337,600
Series B Convertible Preferred Stock Purchase Warrants ("B Warrants"). All of
the B Warrants were sold by the Company and no placement agent was involved in
this offering. The B Warrants were sold at a purchase price of $1.00 per
Warrant and the Company realized proceeds of $325,600 from the offering, net of
offering expenses in the amount of $12,000. The B Warrants were sold through a
private placement pursuant to the exemption provided by Rule 504 of Regulation
D under the Securities Act of 1933, as amended. Each B Warrant entitled the
holder thereof to purchase one Series B Convertible Preferred Share at a price
of $3.00 per share during the period commencing thirteen months after the date
of the issuance thereof and continuing until February 1, 2002. None of the
337,600 B Warrants were exercised and all of them expired on February 1, 2002.

On April 1, 1999, the Company sold 175,000 shares of Series B Convertible
Preferred Stock to certain parties who had performed services on behalf of the
Company, including one company which is principally owned by a Director of the
Company. The shares were sold by the Company in consideration for the
cancellation of payments owed by the Company at the agreed upon rate of $2.00
per share and were sold through a private placement pursuant to the exemption
provided by Rule 504 of Regulation D under the Securities Act of 1933, as
amended.

On May 21, 1999, 199,995 restricted shares of Common Stock were sold to a
principal of L'Abbigliamento, Ltd. who had performed consulting services on
behalf of the Registrant. These shares were issued in October, 1999 in
consideration for the cancellation of payments in the total amount of $64,995
owed by the Registrant for said services.

In October, 1999, the Company issued 116,000 shares of the Series B
Convertible Preferred Stock to three shareholders in satisfaction of a
previously existing obligation relating to consulting services performed on
behalf of the Company by an independent third party.

Effective October 1, 1999, the Agreement and Plan of Share Exchange (the
"Agreement") with W3 Group, Inc. a privately owned company, was completed. (See
"Note 8 - Merger and Acquisitions".) Under the terms of this Agreement, Concorde
acquired one hundred (100%) percent of the capital stock of W3 Group, Inc. in
exchange for an equal number of shares (3,250,000) of Concorde's post split
Common Stock. W3 Group, Inc, became a wholly owned subsidiary of Concorde, and
Concorde changed its corporation name to W3 Group, Inc.

F-10

Also, on October 1, 1999, the reverse split of Concorde's Common Stock on
the basis of one new share for each 30 existing shares was effected. The number
of outstanding shares of Concorde's Series B Convertible Preferred Stock and
Series B Convertible Preferred Stock Purchase Warrants remained unchanged,
however, the conversion feature has been adjusted to reflect the reverse split.

As per the Agreement, a special distribution of 520,056 Common Stock
Purchase Warrants was made on October 4, 1999 to holders of the Registrant's
Common Stock, Series B Convertible Preferred Stock, and Series B Convertible
Preferred Stock Purchase Warrants. The special distribution was made on the
basis of one Common Stock Purchase Warrant for each ten shares of Common Stock
(pre-reverse split) either outstanding as of September 30, 1999 or committed to
be issued upon conversion of the then outstanding Preferred Shares, or the
currently outstanding Warrants to purchase Preferred Shares. The Common Stock
Purchase Warrants are callable and each represents the right to purchase one
share of Common Stock at a price of $6.00 per share during the exercise period,
which is from the date of their issuance until October 1, 2001. None of the
Common Stock Purchase Warrants were exercised during the exercise period and all
such Warrants expired on October 1, 2001.

On October 16, 1999, the Company issued 11,800 shares of Common Stock to
the original investors in Series B Convertible Preferred Stock and Series B
Convertible Preferred Stock Purchase Warrants to adjust for the effect of the
Company's restructuring.

At a special meeting of shareholders on January 18, 2000, shareholders
approved amending the Articles of Incorporation to adjust the conversion right
of the Series B Convertible Preferred Stock from an amount equal to 0.0416
shares to 0.5 (one half) share of Common Stock for each one share of Series B
Convertible Preferred Stock. Series B Convertible Preferred Stock were to be
converted to Common Stock at the election of the shareholder until October 14,
2002.

On April 27, 2000, the Registrant issued 300,000 restricted shares of
Common Stock to a former Director of the Company in consideration for services
being performed on behalf of the Registrant. The shares were issued in lieu of
cash payment at the agreed upon rate of $1.375 per share.

The Company withdrew its private placement offering which had commenced on
December 14, 1999, and returned the private placement proceeds of $50,000 to the
subscribers on May 3, 2000.

On October 1, 2001, all of the 520,056 Common Stock Purchase Warrants then
outstanding expired. These Warrants had been issued by the Company on October 4,
1999 and none had been exercised.

Subsequent to the period covered by this Report, on January 10, 2003, the
Board of Directors authorized the issuance of 1,499,999 restricted shares (the
"Shares") of Common Stock to two creditors of the Company in payment of their
outstanding invoices for services. The Shares were issued at the agreed upon
rate of $0.03 per share.

Note 4 - Provision for Taxes on Income

The estimated provision for income taxes is based on the statutory federal
and state income tax rates.

F-10

Note 5 - Leases and Other Commitments

The Company leased its premises from Ameristar Group Incorporated
("Ameristar"), an affiliated company, for the following annual rent expenses:

November 1, 1997 thru September 30, 1998 (eleven months) $ 41,173
October 1, 1998 thru September 30, 1999 46,152
October 1, 1999 thru September 30, 2000 47,424
October 1, 2000 thru September 30, 2001 48,732
October 1, 2001 thru December 31, 2001 7,500
----------
Total Prior Rent Commitment $ 190,981

As of October 1, 2001, the Company rented space from Ameristar on a month
to month basis at a monthly cost of $2,500, and as of January 1, 2002, space has
been provided by Ameristar on a rent free basis.

Note 6 - Related Party Transactions

The Company has received advances of monies for its operating expenses from
Ameristar. W3 leased office space from Ameristar on a monthly rental, commencing
on November 1, 1997 for a term of three years and eleven (11) months, ending on
September 30, 2001, and thereafter on a month to month basis. As of January 1,
2002, space has been provided to the Company by Ameristar on a rent free basis.
(See "Note 5 - Leases and Other Commitments".)

The Company has incurred consulting fees of $236,833 to its Executive Vice
President, and $45,000 to Ameristar since the beginning of 1996. No such
consulting fees have been incurred since December 31, 2001.

In June, 1997 the Company issued 200,000 shares of Common Stock to two
related privately owned companies in consideration of $.10 per share for
consulting services performed on behalf of the Company. (See "Note 3 -
Capitalization")

On January 7, 1998, the Company issued 315,000 shares of Series B
Convertible Preferred Stock to certain parties who had performed services on
behalf of the Company. Of that total, 222,000 shares were issued to two related
privately owned companies in consideration of $.25 per share.

On June 22, 1998, the Registrant issued 300,000 shares of its Common Stock
to a company principally owned by a Director of the Registrant in consideration
of $.47 per share for consulting services performed on behalf of the Registrant.
(See "Note 3 - Capitalization")

On April 1, 1999, the Registrant issued 71,666 of its preferred stock to a
company principally owned by a Director of the Registrant in consideration of
$2.00 per share for consulting services performed on behalf of the Registrant.
(See "Note 3 - Capitalization")

F-11

Note 7 - Divestiture of Subsidiary

A termination agreement was executed on May 5, 1999, for the divestiture of
L'Abbigliamento, Ltd., the Company's sole operating subsidiary and was ratified
by shareholders on August 12, 1999. Under the terms of the Agreement, (1)
management of both companies mutually elected to rescind and cancel the
acquisition of L'Abbigliamento, Ltd. by the Company, effective as of the close
of business on March 31, 1999; (2) L'Abbigliamento, Ltd. returned to the Company
one hundred (100%) percent of the Class A Preferred Shares in exchange for which
the Company delivered one hundred (100%) percent of the L'Abbigliamento, Ltd.
capital stock held by it; (3) L'Abbigliamento, Ltd. will repay its outstanding
indebtedness to the Company in the principal amount of $158,000 in five equal
monthly payments of $1,300, plus 55 monthly payments of $1,700, which payments
shall be inclusive of interest at the rate of six (6%) percent per annum, to be
followed by a final payment at the end of aforesaid term equal to the sum of any
accrued but unpaid interest due thereon plus the entire unpaid principal amount;
(4) On January 10, 2001, L'Abbigliamento, Ltd. paid off the balance due on its
loan from State Bank of Long Island, ending the Company's liability for said
loan pursuant to a guarantee of payment previously made by the Company.

Note 8 - Merger and Acquisitions

On April 21, 1999, the Company entered into an Agreement and Plan of Share
Exchange with W3 Group, Inc., which was approved by shareholders on August 12,
1999, whereby Concorde acquired 100 percent of the Common Stock of W3 Group,
Inc. in exchange for the issuance of 3,275,000 shares of post reverse split
Common Stock of Concorde, at the rate of one Concorde share for one W3 share.
Upon completion of the exchange of shares, effective October 1, 1999, W3 Group,
Inc. became a wholly owned subsidiary of Concorde and Concorde amended its
Articles of Incorporation to change its corporation name to W3 Group, Inc.
Concorde conducted a meeting of shareholders on August 12, 1999 to ratify the
Agreement and certain other matters which had been approved by its Board of
Directors.

Note 9 - Write off of Bad Debt

Pursuant to SFAS-5, "Accounting for Contingencies," the Company has written
off the loan receivable in the amount of $157,522 and related interest
receivable in the amount of $13,140 during the quarter ended September 30, 2001,
and charged a total of $170,662 to bad debt expense. Said loan had been made to
the Company's former operating subsidiary, L'Abbigliamento, Ltd., and had been
in default for over two years. (See "Note 7 - Divestiture of Subsidiary")
Repayment of the loan and related interest cannot be reasonably assured.

F-12

Note 10 - Going Concern

As of December 31, 2002, the Company had a stockholders' deficit of
$574,947 and no cash. As a result, substantial doubt exists about its ability
to continue as a going concern. These financial statements have been prepared
on the going concern basis under which an entity is considered to be able to
realize its assets and satisfy its liabilities in the ordinary course of
business. Operations to date have been primarily financed by equity
transactions. Management is re-evaluating business opportunities and looking
for a new direction for the Company. The financial statements do not include
any adjustments that might be necessary should the Company be unable to continue
as a going concern.

F-13