-----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, DYzrasuOieOk66/17HImlgQKsCSFhk5OrT5lLrakbOQddTXgfpqPyjxC3R1KEcCm UVqGpw7WANKHP1HDKIprPQ== /in/edgar/work/20000626/0000950147-00-000968/0000950147-00-000968.txt : 20000920 0000950147-00-000968.hdr.sgml : 20000920 ACCESSION NUMBER: 0000950147-00-000968 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000626 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ELLIGENT CONSULTING GROUP INC CENTRAL INDEX KEY: 0000814741 STANDARD INDUSTRIAL CLASSIFICATION: [4841 ] IRS NUMBER: 870453842 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-25257 FILM NUMBER: 660876 BUSINESS ADDRESS: STREET 1: 152 WEST 57TH STREET STREET 2: 41-625 ECLECTIC ST STE G1 CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2127652915 MAIL ADDRESS: STREET 1: 152 WEST 57TH STREET 40TH FL CITY: NEW YORK STATE: NY ZIP: 10019 FORMER COMPANY: FORMER CONFORMED NAME: ARENA GROUP INC DATE OF NAME CHANGE: 19970924 FORMER COMPANY: FORMER CONFORMED NAME: WESTSTAR GROUP INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: CORONADO VENTURES INC /NV/ DATE OF NAME CHANGE: 19900110 10QSB 1 0001.txt QUARTERLY REPORT FOR THE QTR ENDED 3/31/00 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-QSB QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2000 Commission File Number 000-25257 ELLIGENT CONSULTING GROUP, INC. ----------------------------------------------------- (Exact name of registrant as specified in its charter) Nevada 87-0453842 - ------------------------------- ------------------ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 152 West 57th Street, 40th Floor New York, N. Y. 10019 ---------------------------------------- (Address of principal executive offices) Registrant's current telephone number, including area code: (212) 765-2915 ---------------- 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 the number of shares outstanding of each class of the Registrant's Common Stock. The Registrant has only one class of Common Stock outstanding. As of March 31, 2000, there were 17,199,226 shares of the Registrant's Common Stock outstanding. Transitional Small Business Disclosure Format (check one): Yes [ ] No [X] ELLIGENT CONSULTING GROUP, INC. FORM 10-QSB FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000 TABLE OF CONTENTS PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheet as of March 31, 2000 (unaudited) 3 Consolidated Statement of Operations for the three months ended March 31, 2000 (unaudited) and for the three months ended March 31, 1999 (unaudited) 5 Consolidated Statement of Cash Flows for the three months ended March 31, 2000 (unaudited) and for the three months ended March 31, 1999 (unaudited) 6 Consolidated Statement of Stockholders' Equity for the three months ended March 31, 2000 (unaudited) 8 Notes to Consolidated Financial Statements (unaudited) 9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9 PART II. OTHER INFORMATION Item 2. Changes in Securities and Use of Proceeds 12 Item 6. Exhibits and Reports on Form 8-K 12 SIGNATURES 13 2 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS ELLIGENT CONSULTING GROUP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 2000 [UNAUDITED] ASSETS CURRENT ASSETS: Cash $ 193,911 Trade Accounts Receivable 792,001 Net Assets of Discountined Operations 726,013 Other assets 72,729 ---------- TOTAL CURRENT ASSETS 1,784,653 ---------- OTHER ASSETS 515,888 ---------- TOTAL ASSETS $2,300,541 ========== See Accompanying Notes to Consolidated Financial Statements. 3 ELLIGENT CONSULTING GROUP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 2000 [UNAUDITED] LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts Payable $ 1,453,138 Accrued Expenses 893,776 Income Taxes Payable 107,831 Accrued Interest Stockholders 106,233 Notes payable - Stockholders 2,500,000 Advances from Stockholders 3,069,888 Due to Affiliates 785,962 ----------- TOTAL CURRENT LIABILITIES 8,916,847 ----------- STOCKHOLDERS' EQUITY: Common Stock 16,979 Capital in excess of par value 6,026,971 Unearned compensation Accumulated Deficit (8,372,806) Current Loss (1,031,438) Less: Treasury Stock (3,006,012) Less: Subscription Receivable (250,000) ----------- TOTAL STOCKHOLDERS' EQUITY (6,616,306) ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,300,541 =========== See Accompanying Notes to Consolidated Financial Statements. 4 ELLIGENT CONSULTING GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS THREE MONTHS ENDED THREE MONTHS ENDED MARCH 31, 2000 MARCH 31, 1999 [UNAUDITED] [UNAUDITED] ------------ ------------ INCOME: Revenue $ 939,458 $ 496,349 Cost of services 639,549 401,145 ------------ ------------ Gross profit 299,910 95,204 ------------ ------------ COSTS AND EXPENSES: General and administrative 1,280,974 551,728 Depreciation 373 286 Amortization 0 2,634 ------------ ------------ Total Costs and Expenses 1,281,348 554,647 ------------ ------------ Operating loss (981,438) (459,444) ------------ ------------ Other expense: Interest Expense - Stockholders (50,000) (54) Interest Expense 0 (46,151) ------------ ------------ Total Other Expense (50,000) (46,205) ------------ ------------ Loss from Continuing Operations (1,031,438) (505,649) Income Tax Benefit (159,200) Discontinued Operations (346,449) ------------ ------------ Total Loss (1,031,438) (759,016) ============ ============ Loss per Share of Common Stock: Loss from Continuing Operations $ (0.06) $ (0.05) ============ ============ BASIC AND DILUTED LOSS PER SHARE $ (0.06) $ (0.05) ============ ============ WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING 16,623,670 14,684,675 ============ ============ See Accompanying Notes to Consolidated Financial Statements. 5 ELLIGENT CONSULTING GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS FOR THREE MONTHS ENDED MARCH 31, 2000 [UNAUDITED]
THREE MONTHS ENDED THREE MONTHS ENDED MARCH 31, 2000 MARCH 31, 1999 (UNAUDITED) (UNAUDITED) ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES Net loss $(1,031,438) $ (346,449) Adjustments to reconcile net income to cash provided by operating activities: Depreciation and Amortization 2,002 Provision for Doubtful Accounts Amortization of Discount 94,500 Imputed Interest Deferred income tax benefit Non-cash consideration for marketing services Change in Assets and Liabilities: [Increase] decrease in: Accounts receivable (324,927) (185,748) Other current assets (53,062) (201,124) Security Deposits 4,209 64,862 Due from employees Due from affiliates Increase [decrease] in: Accounts payable 288,385 463,982 Accrued expenses 140,210 105,311 Accrued expenses-stockholders (2,667) 246,366 Income taxes payable 0 (60,069) ----------- ----------- Total adjustments 146,648 435,584 ----------- ----------- NET CASH - OPERATING ACTIVITIES (884,790) 89,136 =========== =========== DISCONTINUED OPERATIONS: Loss From Discontinued Business (442,794) Depreciation and Amortization 0 Loss and Disposal of Business 0 Changes in Net Assets Liabilities 7,992,711 NET CASH - DISCONTINUED OPERATIONS 7,549,916 INVESTING ACTIVITIES Purchases of Property and Equipment 0 (203,711) ----------- ----------- FINANCING ACTIVITIES Increase(decrease) in cash overdraft(Continuing) (74,612) Increase(decrease) in cash overdraft(Operating) (130,496) Due to affiliates 570,445 (2,481,042) Advances from stockholders 197,732 (1,870,348) Proceeds from Notes Payable 400,000 Payments on notes and leases payable (60,809) Payment on notes payable - stockholders (3,197,000) Acquisition of Treasury Stock Issuance of common stock 250,001 ----------- ----------- NET CASH - FINANCING ACTIVITIES 1,018,177 (7,414,308) ----------- ----------- NET INCREASE IN CASH 133,388 21,034 CASH AT BEGINNING OF PERIOD 60,523 600 ----------- ----------- CASH AT END OF PERIOD $ 193,911 $ 21,634 =========== ===========
See Accompanying Notes to Consolidated Financial Statements. 6 ELLIGENT CONSULTING GROUP, INC. CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2000 [UNAUDITED] As more fully described in the Company's December 31, 1998, report on Form 10-KSB, 1998 operations are not meaningful. SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: During March and April 1999, the Company issued 250,001 shares of common stock valued at $1,500,000 to related parties in settlement of the January 21, 1999, installment of notes payable related to the acquisition of CSI. On April 15, 1999, the Company issued 63,000 shares of restricted common stock in connection with an agreement to obtain marketing services. The value associated with the issuance of these shares was $378,000. See Accompanying Notes to Consolidated Financial Statements. 7 ELLIGENT CONSULTING GROUP, INC. AND SUBSIDIARIES Consolidated Statement of Stockholder's Equity for the period March 31, 2000
COMMON STOCK CAPITAL IN EXCESS UNEARNED SHARES AMOUNT OF PAR VALUE COMPENSATION ------ ------ ------------ ------------ Balance - December 31, 1998 14,544,225 $ 14,544 $ 2,992,518 00 Equity of merged entity 1,000 00 Common Stock Issued 250,001 250 1,499,750 00 Common Stock issued in lieu of Cash Payment for Marketing Services 63,000 63 377,937 $ (378,000) Treasury Stock Purchased, 66,502 shares @$6.00 00 Treasury Stock sold 00 Options Exercised 122,000 122 5,978 00 Imputed Interest 151,788 00 Amortization of Unearned Compensation 283,500 Disposal of Subsidiary 00 Net Loss for the year ended 12/31/99 00 ----------- --------- ----------- ----------- Balance - December 31, 1999 14,979,226 $ 14,979 $ 5,028,971 $ (94,500) Common Stock Issued 2,000,000 2,000 998,000 00 Amortization of Unearned Compensation 94,500 Net Loss 00 ----------- --------- ----------- ----------- 16,979,226 16,979 6,026,971 0 =========== ========= =========== =========== TREASURY STOCK ACCUMULATED TOTAL STOCKHOLDER'S STOCK SUBSCRIPTION DEFICIT EQUITY ----- ------------ ------- ------ Balance - December 31, 1998 $(831,894) $ 2,175,168 Equity of merged entity $ (202,842) $ (201,842) Common Stock Issued $ 1,500,000 Common Stock issued in lieu of Cash Payment for Marketing Services $ 0 Treasury Stock Purchased, 66,502 shares @$6.00 $ (399,012) $ (399,012) Treasury Stock sold 33,000 $ 33,000 Options Exercised $ 6,100 Imputed Interest $ 151,788 Amortization of Unearned Compensation $ 283,500 Disposal of Subsidiary (2,640,000) $(2,640,000) Net Loss for the year ended 12/31/99 $(7,338,070) $(7,338,070) ----------- --------- ----------- ----------- Balance - December 31, 1999 $(3,006,012) $ 0 $(8,372,806) $(6,429,367) Common Stock Issued (250,000) $ 750,000 Amortization of Unearned Compensation $ 94,500 Net Loss (1,031,438) $(1,031,438) ----------- --------- ----------- ----------- (3,006,012) (250,000) (9,404,244) (6,616,307) =========== ========= =========== ===========
8 ELLIGENT CONSULTING GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS [UNAUDITED] For further financial information, see the NOTES to the Consolidated Financial Statements in the Company's Form 10-Q filing for December 31, 1999, which are included by reference hereinunder. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS In December 1999, the Company adopted a formal plan to dispose its operating subsidiary, Conversion Services International ("CSI"). The disposal date was March 31, 2000. The results of Discontinued Operations were reflected in the Company's operations as of December 31, 1999. Therefore, the results of CSI's operations are not accounted in the Company's operations as of March 31, 2000 and the comparable prior quarter of March 31, 1999. However, they are shown as profit or loss from Discontinued Operations in both of these quarters. The operations of the Company's other operating subsidiary, Elligent Consulting Services ("ECS"), are shown as part of the Company's operation, both in the March 31, 2000 and March 31, 1999 quarters, because the acquisition of this subsidiary in July 1999 is accounted for on the basis of a pooling of interests method. Finally, the results of operations of the Company's UK subsidiary, e-Vantage Company Ltd., are shown as part of the Company's March 31, 2000 quarter period. The remainder of management's discussion and analysis of financial condition and results of operations should be read in light of the preceding disclosure. SUMMARY FINANCIAL INFORMATION The following table contains certain selected financial data of the Company and is qualified by the more detailed financial statements and the notes thereto provided in this report. The financial data for the nine months ended March 31, 2000, has been derived from the Company's unaudited financial statements, which statements are included elsewhere in this Report. The pro forma (unaudited) twelve month numbers provide an historic view of our revenue growth. STATEMENT OF OPERATIONS DATA ($ in thousands) March 31, 2000 March 31, 1999 -------------- -------------- Gross revenue $939 $496 9 OVERVIEW. As part of the Reorganization, we changed our name to Elligent Consulting Group, Inc. on July 31, 1998. On September 3, 1998, with an effective date of August 1, 1998, for accounting purposes, we issued 12,950,000 shares of our restricted common stock to the then current shareholders of Patra Capital in exchange for all of the issued and outstanding common stock of Patra Capital. At that time, the management of Patra Capital became our management. The merger was accounted for as a recapitalization. On September 21, 1998, effective August 1, 1998, for accounting purposes, we, through our wholly owned subsidiary, Patra Capital, purchased Conversion Services International, Inc. Subsequently, the Company decided in December of 1999 to divest CSI and completed the divestiture on March 31, 2000 (see the accompanying discontinued operations note to the financial statements). In July 1999, the Company purchased the operations of ECS, which is a small technology consulting company that provides infrastructure consulting services to primarily New York financial services industry customers. During end of year 1999 and in the first quarter of 2000, the Company planned and began implementation of a shift and focus on e-business and e-architect services. It did so by discontinuation of its general technology consulting business, through the divestiture of its operating subsidiary in that area, CSI; by re-aligning and limiting the operations of its ECS subsidiary into the technology infrastructure area; and most importantly by acquiring and then investing in the growth of its international e-business and e-architect subsidiary, the e-Vantage Company Limited, which is exclusively focused on e-business. For the three month period ended March 31, 2000, we had revenue of $939,458 versus $496,349 in the year earlier period, an increase of almost 90%, and a loss from continuing operations of $1 million, versus a loss of $505,649 from continuing operations and a loss of $412,567 for Discontinued Operations in the comparable quarter in the prior year. The operating loss from our continued operations includes holding company management and overhead expenses, including legal and professional fees related to the Company's operation as a public company and to acquisition related activities and efforts to locate equity and debt financing required to achieve our growth goals. It also includes losses due to startup expenses in the Company's e-Vantage subsidiary in the UK. LIQUIDITY AND FINANCIAL CONDITION As of March 31, 2000, we had working capital deficit that reflected (i) accounts payable and accrued expenses of $2.4 million, and (ii) amounts due to related parties of $6.4 million, working capital advances and the funding of costs related to startup and expansion of our European operations. These latter amounts are principally due to our principal stockholder and entities owned or controlled by him, who's also CEO of the Company, Mr. Andreas Typaldos. 10 We believe that sufficient sources of funds can be found to cover the working capital needs of the Company. Such sources of funds are (i) from the projected cash flow from operations (ii) from the issuance of the Company's Common Stock, and (iii) from other public and private financing sources, including strategic partners with whom the Company is doing or plans to do business and existing shareholders of the Company that have an interest in preserving their investment in the Company. However, no assurance can be given that we will be successful in obtaining such financing, and the failure to obtain necessary financing could have a material adverse effect on the Company. At the present time, our management believes that while able to support day to day operations and reasonable internal growth, our current sources of funding are not adequate to support our growth plans. INFLATION Inflation has not had a material effect upon our results of operations to date. In the event the rate of inflation should accelerate in the future, it is expected that costs in connection with our provision of services and products will increase, and, to the extent such increased costs are not offset by increased revenues, our operations may be adversely affected. FORWARD LOOKING INFORMATION This report contains certain forward-looking statements and information. The cautionary statements made in this report should be read as being applicable to all related forward-looking statements wherever they appear. Forward-looking statements, by their very nature, include risks and uncertainties. Accordingly, our actual results could differ materially from those discussed herein. A wide variety of factors could cause or contribute to such differences and could adversely impact revenues, profitability, cash flows and capital needs. Such factors, many of which are beyond our control, include the following: our success in obtaining new contracts; the volume and type of work orders that are received under such contracts; levels of, and ability to, collect accounts receivable; availability of trained personnel and utilization of our capacity to complete work; competition and competitive pressures on pricing; availability, cost and terms of debt or equity financing; and economic conditions in the United States and in the regions served. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company is not exposed to material risk based on interest rate fluctuation, exchange rate fluctuation, or commodity price fluctuation. 11 PART II. OTHER INFORMATION ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS During the three months ended March 31, 2000, the Company issued 1,000,000 shares of common stock with a value of $500,000 to Hermann Seiler and 1,000,000 shares in consideration for the acquisition of the business e-Vantage Company Ltd. to the shareholders of that company. In addition, the Company received into treasury 1,100,000 shares of its Common Stock, which it had issued to Mssr. Newman and Peipert, as a result of the disposal of its CSI subsidiary. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 27 - Financial Data Schedule (b) Reports on Form 8-K None 12 SIGNATURES In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. ELLIGENT CONSULTING GROUP, INC. Dated: June 26, 2000 By: /s/ Andreas Typaldos --------------------------------- Andreas Typaldos Chairman of the Board and Chief Executive Officer 13 EX-27 2 0002.txt FINANCIAL DATA SCHEDULE
5 3-MOS DEC-31-2000 MAR-31-2000 193,911 0 792,001 0 0 1,784,653 0 373 2,300,541 8,916,847 0 0 0 16,979 0 2,300,541 939,458 299,910 639,549 1,281,348 (50,000) 0 (50,000) 0 0 0 0 0 0 (1,031,438) (0.06) (0.06)
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