UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C., 20549
FORM 10-QSB
(Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 2002
[ ] TRANSACTION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transaction Period from to
Commission File Number: 0-27083
W3 GROUP, INC.
(Exact Name of Registrant as Specified in its Charter)
Colorado
(State or Other Jurisdiction of 84-1108035
Incorporation or Organization) (I.R.S. Employer Identification Number)
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)
Check whether the Issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 [ ]
3,892,085 shares of Common Stock, no par value, outstanding on March 31, 2002.
W3 GROUP, INC.
Form 10-QSB Quarterly Report
For Period Ended March 31, 2002
Table of Contents
Page
PART I. FINANCIAL INFORMATION 1
Item 1. Financial Statements 1
Unaudited Balance Sheet at March 31, 2002
and Audited Balance Sheet at December 31, 2001 1
Unaudited Statements of Operations
For Three Months Ended March 31, 2002
and March 31, 2001 3
Unaudited Statements of Cash Flows
For Three Months Ended March 31, 2002
and March 31, 2001 4
Statements of Stockholders' Equity (Deficit) 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 13
PART II. OTHER INFORMATION 15
SIGNATURE 15
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
Basis of Presentation
The accompanying unaudited financial statements are presented in
accordance with generally accepted accounting principles for interim financial
information and the instructions to Form 10-QSB and item 310 under subpart A
of Regulation S-B. In the opinion of management, all adjustments considered
necessary for a fair presentation have been included. Operating results for
the three months ended March 31, 2002 are not necessarily indicative of results
that may be expected for the year ending December 31, 2002. For further
information, refer to the financial statements and footnotes thereto included in
the Company's annual report on Form 10-KSB for the year ended December 31, 2001.
W3 GROUP, INC.
BALANCE SHEETS
ASSETS
(Unaudited) Audited
March 31 December 31
2002 2001
----------- -----------
CURRENT ASSETS:
Cash and cash equivalents $ 0 $ 0
Prepaid expenses 0 51,561
----------- -----------
TOTAL CURRENT ASSETS $ 0 $ 51,561
Fixed assets, net of accumulated
depreciation of 2,377 and $1,897 $ 119 $ 239
TOTAL ASSETS $ 119 $ 51,800
----------- -----------
----------- -----------
W3 GROUP, INC.
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
(Unaudited) Audited
March 31 December 31
2002 2001
----------- -----------
CURRENT LIABILITIES:
Accounts payable $ 252,447 $ 252,447
Accrued interest 12,654 11,454
Stockholders' loans 40,000 40,000
Due to Ameristar Group Incorporated $ 220,169 $ 220,169
----------- -----------
TOTAL CURRENT LIABILITIES $ 525,270 $ 524,070
----------- -----------
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred Stock, no par value,
100,000,000 shares authorized
Series B Convertible Stock,
non-dividend bearing,
699,060 shares issued
and outstanding $ 523,891 $ 523,891
Common Stock, no par value,
500,000,000 shares authorized,
3,892,085 shares issued
and outstanding
as of March 31, 2002
and December 31, 2001 1,088,226 1,088,226
Additional paid-in-capital 360,225 360,225
Retained earnings (Deficit) (2,497,493) (2,444,612)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (525,151) (472,270)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 119 $ 51,800
----------- -----------
----------- -----------
W3 GROUP, INC.
STATEMENTS OF OPERATIONS (UNAUDITED)
For the Three Months Ended
March 31,
2002 2001
----------- -----------
REVENUES: $ 0 $ 0
----------- -----------
OPERATING EXPENSES:
Consulting $ 51,561 $ 64,563
Depreciation expense 120 120
Office expense and postage 0 508
Rent 0 12,183
Transfer and filing fees 0 402
----------- -----------
TOTAL OPERATING EXPENSES $ 51,681 $ 77,776
----------- -----------
NET INCOME (LOSS) BEFORE OTHER EXPENSES (51,681) (77,776)
OTHER INCOME AND (EXPENSES):
Interest income 0 2,363
Interest (Expense) (1,200) (1,200)
TOTAL OTHER INCOME AND (EXPENSES) (1,200) 1,163
----------- -----------
NET INCOME (LOSS) BEFORE PROVISION
FOR INCOME TAXES (52,881) (76,613)
ESTIMATED PROVISION FOR INCOME TAXES 0 0
----------- -----------
NET INCOME (LOSS) $ (52,881) $ (76,613)
----------- -----------
NET INCOME (LOSS) PER SHARE $ (0.014) $ (0.020)
----------- -----------
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 3,892,085 3,866,685
----------- -----------
----------- -----------
W3 GROUP, INC.
STATEMENTS OF CASH FLOWS
For the Three Months Ended
March 31,
2002 2001
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (52,881) $ (76,613)
Adjustments to reconcile net loss to net cash
flow from operating activities:
Depreciation and amortization 120 120
Decrease (Increase) in prepaid expenses 51,561 51,563
Increase in due to Ameristar Group Incorporated 0 13,183
Decrease (Increase) in interest receivable 0 (1,261)
Increase in accrued interest 1,200 1,200
(Decrease) Increase in payables 0 11,962
----------- -----------
CASH USED BY OPERATING ACTIVITIES 0 154
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds and (return) of Common Stock issuable 0 0
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
----------- -----------
W3 GROUP, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE THREE MONTHS ENDED MARCH 31, 2002
Preferred Series B
Stock Non- Convertible Common Total
Dividend Preferred Stock Stock-
Bearing Stock Number Common Additional holders'
Series B Purchase of Stock Paid-in- Deficit Equity
Convertible Warrants Shares Amount Capital Accumulated (Deficit)
----------- ----------- ----------- ----------- ----------- ------------ -----------
Balance,
January 1, 2002 $ 523,891 $ 325,600 3,892,085 $ 1,088,226 $ 34,625 $(2,444,612) $ (472,270)
Expiration of
Series B Warrants on
February 1, 2002 (325,600) 325,600
Net loss for the
three months ended
March 31, 2002 -- -- -- -- -- (52,881) (52,881)
----------- ----------- ----------- ----------- ----------- ------------ -----------
Balance,
March 31, 2002 $ 523,891 $ 0 3,892,085 $ 1,088,226 $ 360,225 $(2,497,493) $ (525,151)
----------- ----------- ----------- ----------- ----------- ------------ -----------
----------- ----------- ----------- ----------- ----------- ------------ -----------
W3 GROUP, INC.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MARCH 31, 2002
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 includes cash on hand, cash on deposit and
highly liquid investments with maturities generally of three months or less.
Deferred Offering Costs
Costs associated with the Company's private offerings have been charged
to the proceeds of the offering. If the offerings are unsuccessful, the costs
are charged to operations.
Sales and Expenses
Sales and expenses are recorded using the accrual basis of accounting.
Fixed Assets and Accumulated Depreciation
Fixed assets consist of a computer system and are stated at cost less
accumulated depreciation which is provided for by charges to operations over the
estimated useful lives of the assets.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Note 3 - CAPITALIZATION
In April 1996, the Company undertook a private placement of its
securities pursuant to the provisions of Rule 504 under Regulation D under the
Securities Act of 1933, as amended, whereby it issued 9,000,000 shares of its
Common Stock in exchange for the satisfaction of $45,000 in debts owed by the
Registrant. Also in April 1996, the Company effected a 1-for-10 reverse split of
its Common Stock as the result of which the Company had, following the aforesaid
private offering, 1,200,000 shares issued and outstanding. This reverse split
was effected in anticipation of management's renewed efforts to find a suitable
business opportunity for the Company.
In June, 1997 the Company issued 300,000 shares of Common Stock to
certain parties who had performed services on behalf of the Company. The shares
were issued in consideration for the cancellation of payments owed by the
Company at the agreed upon rate of $.10 per share and were sold through a
private placement pursuant to the exemption provided by Rule 504 of Regulation D
under the Securities Act of 1933, as amended.
On October 24, 1997, the Company completed a private placement offering
of 450,000 non-dividend bearing, no par value, Series B Convertible Preferred
Shares. All of the shares were sold by the Company and no placement agent was
involved in this offering. The shares were sold at a purchase price of $.3125
per share and the Company realized proceeds of $130,633 from the offering, net
of offering expenses in the amount of $9,992. The shares were sold through a
private placement pursuant to the exemption provided by Rule 504 of Regulation D
under the Securities Act of 1933, as amended. Each Preferred Share is
convertible into one and one quarter (1.25) shares of the Company's Common
Stock, no par value, at the election of the Preferred Shareholder at any time
after thirteen months from the date of issuance thereof and for a period of four
years thereafter, ending on October 14, 2002. As discussed below, the conversion
right of the Series B Preferred Shares has been adjusted as a result of a 1-for-
30 reverse split of the Company's Common Stock on October 1, 1999.
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
reviously 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 100 percent of the capital stock of W3 Group, Inc. in exchange for an
equal number of shares (3,250,000) of Concorde's post split Common Stock. W3
Group, Inc, became a wholly owned subsidiary of Concorde, and Concorde changed
its corporation name to W3 Group, Inc.
Also, on October 1, 1999, the reverse split of Concorde's Common Stock
on the basis of one new share for each 30 existing shares was effected. The
number of outstanding shares of Concorde's Series B Convertible Preferred 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 represent the right to purchase one
share of Common Stock at a price of $6.00 per share during the exercise period,
which is from the date of their issuance until October 1, 2001. 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 may be
converted to Common Stock at the election of the shareholder until October
14, 2002.
On April 27, 2000, the Registrant issued 300,000 restricted shares of
Common Stock to a former Director of the Company in consideration for services
being performed on behalf of the Registrant. The shares were issued in lieu of
cash payment at the agreed upon rate of $1.375 per share.
The Company withdrew its private placement offering which had commenced
on December 14, 1999, and returned the private placement proceeds of $50,000 to
the subscribers on May 3, 2000.
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.
Note 4 - PROVISION FOR TAXES ON INCOME
The estimated provision for income taxes are based on the statutory
federal and state income tax rates.
Note 5 - LEASES AND OTHER COMMITMENTS
The Company leases its premises from Ameristar Group Incorporated
("Ameristar"), an affiliated company, for the following annual rent expenses:
(eleven months) November 1, 1997 thru September 30, 1998 $ 41,173
October 1, 1998 thru September 30, 1999 46,152
October 1, 1999 thru September 30, 2000 47,424
October 1, 2000 thru September 30, 2001 48,732
October 1, 2001 thru December 31, 2001 7,500
Total 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, 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. (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 were incurred for the period covered by this Report.
The Company has issued 200,000 shares of Common Stock to two related
privately owned companies in consideration of $.10 per share for consulting
services performed on behalf of the Company. (See "Note 3 - CAPITALIZATION".)
On January 7, 1998, the Company issued 315,000 shares of Series B
Convertible Preferred Stock to certain parties who had performed services on
behalf of the Company. Of that total, 222,000 shares were issued to two related
privately owned companies in consideration of $.25 cents per share.
On June 22, 1998, the Registrant issued 300,000 shares of its Common
Stock to a company principally owned by a Director of the Registrant in
consideration of $.47 per share for consulting services performed on behalf of
the Registrant. (See "Note 3 - CAPITALIZATION".)
On April 1, 1999, the Registrant issued 71,666 of its preferred stock
to a company principally owned by a Director of the Registrant in consideration
of $2.00 per share for consulting services performed on behalf of the
Registrant. (See "Note 3 - CAPITALIZATION".)
On May 21, 1999, 199,995 restricted shares of Common Stock were sold to
a principal of L'Abbigliamento, Ltd. who had performed consulting services on
behalf of the Registrant. These shares were issued in October, 1999 in
consideration for the cancellation of payments in the total amount of $64,995
owed by the Registrant for said services.
Note 7 - DIVESTITURE OF SUBSIDIARY
A termination agreement was executed on May 5, 1999, for the divestiture
of L'Abbigliamento, Ltd., the Company's sole operating subsidiary and was
ratified by shareholders on August 12, 1999. Under the terms of the Agreement,
(1) management of both companies mutually elected to rescind and cancel the
acquisition of L'Abbigliamento, Ltd. by the Company, effective as of the close
of business on March 31, 1999; (2) L'Abbigliamento, Ltd. returned to the
Company 100 percent of the Class A Preferred Shares in exchange for which the
Company delivered 100 percent of the L'Abbigliamento, Ltd. capital stock held
by it; (3) L'Abbigliamento, Ltd. will repay its outstanding indebtedness to the
Company in the principal amount of $158,000 in five equal monthly payments of
$1,300, plus 55 monthly payments of $1,700, which payments shall be inclusive of
interest at the rate of 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 (see Statement of
Operations). Said loan had been made to the Company's former operating
subsidiary, L'Abbigliamento, Ltd., and has been in default for over two years.
(See "Note 7 - DIVESTITURE OF SUBSIDIARY".) Repayment of the loan and related
interest cannot be reasonably assured.
Note 10 - GOING CONCERN
As of December 31, 2001, the Company had a stockholders' deficit of
$2,444,379, 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.
Item 2. Management's Discussion and Analysis of Financial Conditions
and Results of Operations
Results of Operations
The Company did not have any revenue during the three month period ended
March 31, 2002, or during the comparable period for the prior year, and has not
had any revenue since the first quarter of 1999.
Operating expenses for the three month period ended March 31, 2002 were
$51,681, a decrease of $26,095 from the prior year's period, resulting primarily
from decreased consulting and rent expenses.
The net loss for the three month period ended March 31, 2002 was $52,881
compared to a net loss of $76,613 for the comparable period in the prior year,
a decrease of $23,732, resulting from the aforementioned decrease in
consulting and rent expenses and a decrease in other income.
The Company had no cash at March 31, 2002 and at December 31, 2001.
Accounts payable at March 31, 2002 totaled $252,447, which was the same at
December 31, 2001.
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 is no assurance that any additional candidates will be found.
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 expansion capital, while allowing the
companies to continue management of daily operations.
W3's objective is to better meet the needs of growing companies that
may have had difficulty obtaining capital from traditional sources such as
banks, large asset based lenders, and the public securities markets. Also, W3
believes that its opportunity is enhanced because of the consolidation in the
commercial banking industry and the emphasis in investment banking toward
increasingly larger financings. The resulting diminishing of available
capital has affected the flow to smaller companies, where the need for
capital is the most critical.
W3's approach is to develop "partnerships" with companies having
exceptional management in order to improve the long term value of a business.
The participation of management through equity based compensation and stock
ownership is a crucial ingredient of W3's plan.
Liquidity and Capital Resources
At March 31, 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:
* Rapidly changing business environment.
* Intense competition within the market place.
* 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.
* There can be no assurance that the Company will be able to
compete successfully in the acquisition of subsidiary companies.
* The management of growth is expected to place significant
pressure on the Company's managerial, operational, and financial
resources.
* The Company will not be able to accomplish its growth strategy
if it is not able to consummate future acquisitions and raise
capital.
* The Company may not be able to operate as a going concern.
Refer to independent auditor's report accompanying the Company's
financial statements included in the Company's annual report on
Form 10-KSB and Note 10 to financial statements.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings. Not Applicable.
Item 2. Change in Securities. None
Item 3. Defaults Upon Senior Securities. Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders. None.
Item 5. Other Information. None
Item 6. Exhibits and Reports of Form 8-K. None.
SIGNATURE
Pursuant to the requirements of Section 13 of 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed in
its behalf by the undersigned, thereunto duly authorized.
Date: May 6, 2002 By: /s/ Robert Gordon
Robert Gordon
Acting President
Executive Vice President
Principal Financial Officer