As filed with the Securities and Exchange Commission on December 7, 2004
Registration Number:
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM SB-2
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
Global Concepts, Ltd.
--------------------------------------------
(Name of Small Business Issuer in its Charter)
Colorado 4231 84-1191355
-----------------------------------------------------------------------------
(State or other Jurisdiction (Primary Standard (I.R.S. Employer
of Incorporation or Industrial Classification Identification
Organization) Code Number) No.)
MICHAEL MARGOLIES, CHAIRMAN
Global Concepts, Ltd.
14 Garrison Inn Lane
Garrison, NY 10524
(845) 424-4100
------------------------------------------------------------------------
(Address and telephone number of Registrant's principal executive offices,
principal place of business, and agent for service of process.)
_________________________________
Copy to
ROBERT BRANTL, ESQ.
322 Fourth Street
Brooklyn, NY 11215
Attorney for Issuer
(718) 768-6045
_________________________________
Approximate Date of Commencement of Public Sale: As soon as practicable
after the Registration Statement becomes effective.
If this form is filed to register additional securities for
an offering pursuant to Rule 462(b) under the Securities Act,
check the following box and list the Securities Act registration
statement number of the earlier effective registration statement
for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following box and
list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to
Rule 462(d) under the Securities Act, check the following box
and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made
pursuant to Rule 434, check the following box. [ ]
CALCULATION OF REGISTRATION FEE
Title of Each Proposed Proposed
Class of Amount Maximum Maximum Amount of
Securities To Be To Be Offering Price Aggregate Offering Registration
Registered Registered Per Share (2) Price (2) Fee
--------------------------------------------------------------------------------
Common Stock, no
par value 239,792,663(1) $0.035 $8,392,744 $1,063.37
--------
Total Fee: $1,063.37
========
(1) The amount registered is the sum of (a) 75,757,576 shares,
which represent 500% of the number of shares that would be
issued to Cornell Capital Partners, LP if it converted its
5% Secured Convertible Debenture at a conversion price based
on the closing price on November 16, 2004, (b) 159,489,633
shares that would be issued to Cornell Capital Partners, LP
if all shares that may be put to Cornell Capital Partners,
LP under the Standby Equity Distribution Agreement were put
to it at a purchase price based on the closing price on
November 16, 2004, and (c) 4,545,454 shares now owned by
Cornell Capital Partners and Newbridge Securities
Corporation.
(2) The proposed offering price is estimated solely for the
purpose of calculating the registration fee. Pursuant to
Rule 457(c), the registration fee is based on $.035, the
closing price of the Common Stock reported on the OTC
Bulletin Board on December 2, 2004.
The Registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the Registrant shall file a further amendment which
specifically states that this registration statement shall
thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Securities and
Exchange Commission, acting pursuant to said Section 8(a), may
determine.
GLOBAL CONCEPTS, LTD.
Common Stock
239,792,663 Shares
Two shareholders are offering shares of Global Concepts common stock
to the public by means of this prospectus.
Global Concepts' common stock is quoted on the OTC Bulletin Board
under the trading symbol "GCCP.OB."
The selling shareholders intend to sell the shares into the public
market from time to time. They will negotiate with the market makers for
Global Concepts common stock to determine the prices for each sale.
They expect each sale price to be near to the market price at the time
of the sale.
PURCHASE OF GLOBAL CONCEPTS COMMON STOCK INVOLVES SUBSTANTIAL RISK.
PLEASE SEE "RISK FACTORS," WHICH BEGINS ON PAGE 4 OF THIS PROSPECTUS.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities
or passed upon the adequacy or accuracy of this prospectus. Any
representation to the contrary is a criminal offense.
THE DATE OF THIS PROSPECTUS IS DECEMBER , 2004
TABLE OF CONTENTS
PROSPECTUS SUMMARY . . . . . . . . . . . . . . . . . . . . . .-3-
Summary Financial Information . . . . . . . . . . . . . .-4-
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . .-5-
YOU SHOULD NOT RELY ON
FORWARD LOOKING STATEMENTS . . . . . . . . . . . . . . . . . .-9-
DIVIDEND POLICY. . . . . . . . . . . . . . . . . . . . . . . .-9-
CAPITALIZATION . . . . . . . . . . . . . . . . . . . . . . . .-9-
Market for the Common Stock . . . . . . . . . . . . . . -10-
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS. . . . . . . . -11-
BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . -14-
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . -18-
Executive Compensation. . . . . . . . . . . . . . . . . -19-
Limitation of Liability and Indemnification . . . . . . -20-
PRINCIPAL SHAREHOLDERS . . . . . . . . . . . . . . . . . . . -20-
SELLING SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . -22-
Plan of Distribution. . . . . . . . . . . . . . . . . . -23-
LEGAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . -25-
EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . . -25-
ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . -25-
INDEX TO FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . -27-
-2-
PROSPECTUS SUMMARY
Global Concepts, Ltd.
Global Concepts, Ltd. is a holding company with three
subsidiaries:
Compagnie Logistique de Transports Automobiles
("CLTA"). CLTA is a French corporation located in Nugent sur
Oise, France. Its principal business is warehousing automobiles
for Peugeot and Citroen, then completing the final dealer
preparation work before the automobiles are delivered. CLTA also
performs brake installation and testing of new cars for Peugeot.
Advanced Medical Diagnostics LLC . Advanced Medical
Diagnostics is engaged in the business of manufacturing and
distributing the "Advanced Medical Diagnostics HIV (1 & 2) Rapid
Test." This diagnostic kit, which we sell for under $5.00,
permits an individual to test himself for the HIV virus.
Advanced Medical Diagnostics is marketing the kit in Asia, Africa
and Latin America. The kit is not approved for sale in the
United States or within the European Union.
J&J Marketing, LLC. J&J Marketing is engaged in the
business of producing and distributing non-medicated
pharmaceutical personal care products under the trademark "Savage
Beauty."
The executive offices of Global Concepts are located at 14
Garrison Inn Lane, Garrison, NY 10524. Our telephone number is
845-424-4100.
The Selling Shareholders
Cornell Capital Partners, LP is using this prospectus to
sell shares of Global Concepts common stock to the public.
Cornell Capital Partners currently owns 4,242,424 shares of our
common stock. Cornell Capital Partners may acquire additional
Global Concepts shares in two ways:
- Cornell Capital Partners may use this prospectus
to reoffer to the public shares that it is
entitled to acquire by converting into common
stock a 5% Secured Convertible Debenture issued to
it by Global Concepts. Depending on the market
price of Global Concepts common stock when Cornell
Capital Partners converts the Debenture, it may
acquire and reoffer up to 75,757,576 shares in
this manner.
- Cornell Capital Partners may also use the
prospectus to reoffer to the public up to
159,489,633 shares that it may purchase from
Global Concepts from time to time pursuant to the
terms of a Standby Equity Distribution Agreement.
The Standby Equity Distribution Agreement gives
Global Concepts a conditional right to sell shares
to Cornell Capital Partners at a discount to the
market price, which Cornell Capital Partners will
then resell to the public using this prospectus.
-3-
The Agreement permits Global Concepts to demand a
maximum of $250,000 from Cornell Capital Partners
every six trading days until November 15, 2006.
At the market price of $.035 on November 16, 2004,
a drawdown of $250,000 would entail the sale of
approximately 7,518,786 shares by Global Concepts
to Cornell Capital Partners.
In each of the situations described above, the number of
shares that Cornell Capital Partners may acquire, either
voluntarily by conversion or as a result of a demand by Global
Concepts, can never be such that Cornell Capital Partners would
own more than 9.9% of the outstanding shares of Global Concepts.
Newbridge Securities Corporation is also using this prospectus
to offer 303,030 shares of our common stock.
Outstanding Shares
Global Concepts has only one class of stock outstanding. On
the date of this prospectus there were 67,645,454 shares of common
stock outstanding. Other than the 5% Secured Convertible Debenture
held by Cornell Capital Partners, there are no options, warrants
or convertible securities outstanding.
Summary Financial Information
We have derived the information in this table from the
financial statements that are at the end of this prospectus.
Nine Months
Ended Year Ended Year Ended
Statement of Operations 9/30/04 6/30/04 6/30/03
----------- ---------- ----------
Revenue $ 10,350 $ 65,533 $ 0
Direct Expenses 0 0 0
-------- --------- --------
Gross Profit 10,350 65,533 0
Operating Expenses 387,466 773,989 352,850
-------- --------- --------
(Loss) Before
Discontinued Operations (377,116) (708,456) (352,850)
(Loss) From Discontinued
Operations 0 (1,620,260) (407,201)
------- --------- -------
Net (Loss) $(377,116) $(2,328,716) $(760,051)
======= ========= =======
Net (Loss) Per Share $ (0.01) $ (0.06) $ (0.02)
======= ========= =======
Weighted Average
Number of Shares
Outstanding 42,522,254 40,396,338 34,374,627
-4-
Balance Sheet Data At 9/30/04 At 6/30/04
---------- ----------
Working Capital/
(Deficit) $(1,951,209) $(1,696,751)
Total Assets 273,751 1,564
Shareholders' (Deficit) (2,754,304) (2,716,961)
RISK FACTORS
You should carefully consider the risks described below
before buying our common stock. If any of the risks described
below actually occurs, that event could cause the trading price
of our common stock to decline, and you could lose all or part of
your investment.
WE MAY BE UNABLE TO SATISFY OUR CURRENT DEBTS.
Our debts are far in excess of the book value of our assets.
At September 30, 2004 our debts totaled $3,028,055, and our
liquid assets totaled $227. We are engaged in efforts to
negotiate compromises and extensions with major creditors. If
those negotiations are unsuccessful, however, our business will
fail.
WE LACK CAPITAL TO FUND OUR OPERATIONS.
At the beginning of 2004 Global Concepts had no operating
businesses. In the past several months we have acquired three
business operations. All three of them, however, will require
capital in order to prosper. We have no capital at this time.
We do not know yet if the equity line of credit that we secured
from Cornell Capital Partners will be adequate to provide us the
necessary capital. If we cannot obtain additional capital, it is
unlikely that our subsidiaries will ever be prosperous.
EACH OF OUR SUBSIDIARIES HAS NEGATIVE NET WORTH, AND WILL
NOT BE ABLE TO CONTINUE OPERATIONS WITHOUT ADDITIONAL CAPITAL.
We have acquired three subsidiaries since June 2004. Each
of them has more liabilities than assets, and none of them is
operating profitably. We will need to infuse capital into each
subsidiary in order for the subsidiary to sustain operations and
become profitable.
THE ISSUANCE OF SHARES UNDER OUR AGREEMENTS WITH CORNELL
CAPITAL PARTNERS COULD INCREASE OUR OUTSTANDING SHARES BY OVER
250%.
-5-
Global Concepts is party to an Standby Equity Distribution
Agreement pursuant to which Global Concepts may sell stock to
Cornell Capital Partners. The Agreement permits Global Concepts
to require Cornell Capital Partners to purchase Global Concepts
common stock for up to $5,000,000 during the next two years.
Based on the market price of $.035 on November 16, 2004, Global
Concepts could issue over 159,000,000 shares to Cornell Capital
Partners during the next 24 months if it demanded the full
$5,000,000 available to it under the Standby Equity Distribution
Agreement. In addition, Cornell Capital Partners owns a 5%
Secured Convertible Debenture that it may convert into Global
Concepts common stock. At the market price on November 16, 2004,
the debenture could be converted into over 15,000,000 shares.
The likely result of Cornell Capital Partners selling such large
quantities of stock to the public would be a steep reduction in
the market price of Global Concepts common stock. Since both the
pricing under the Standby Equity Distribution Agreement and the
conversion feature of the 5% Secured Convertible Debenture are
determined by the market price, a reduction in the market price
could result in even larger numbers of shares being issued, if
Global Concepts were to take advantage of the full line of
credit.
NONE OF OUR SUBSIDIARIES HAS SUFFICIENT BUSINESS HISTORY TO
PERMIT A RELIABLE ESTIMATE OF ITS FUTURE PROSPECTS.
Our business operations are carried out by three
subsidiaries. Advanced Medical Diagnostics was only recently
organized and has no reported revenue. J&J Marketing was a part-
time family business until we acquired it, and has minimal
reported revenue. CLTA has a considerable business history, but
only recently emerged from legal proceedings in France that
substantially reorganized it. None of these companies,
therefore, can point to a meaningful history of operations. In
each of these companies we will face all of the risks of a start-
up company, including uncertainty about access to the market,
uncertainty about our ability to service the market, and
uncertainty about our ability to operate efficiently.
WE MAY NOT BE ABLE TO EFFECTIVELY MANAGE A SUBSIDIARY IN FRANCE
Our largest business operation is CLTA. CLTA is a French
company with all of its business operations located in France.
Its primary customers are French. No one associated with Global
Concepts has any significant experience managing a business in
France. It may occur that our ignorance about French business
practices will prevent us from adequately overseeing the
operations of this subsidiary.
OUR LARGEST SUBSIDIARY HAS ONE PRIMARY CUSTOMER, AND WOULD
BE SERIOUSLY AFFECTED BY ANY INTERRUPTION OF ITS BUSINESS WITH
THAT CUSTOMER.
CLTA is the only subsidiary of Global Concepts that
currently generates more than nominal revenues. Over 90% of
CLTA's business consists of warehousing, servicing and delivering
automobiles for the company that distributes Peugeot and Citroen
in Europe. If that business relationship were damaged, or if
CLTA's customer suffered a serious business reverse, the adverse
effect on CLTA's business could be dramatic.
-6-
A DOWNTURN IN THE FRENCH ECOMONY WOULD BE LIKELY TO REDUCE
DEMAND FOR CLTA'S SERVICES.
The business of CLTA consists of warehousing and delivering
new cars, primarily in France. If the economy of France suffers
a recession and the volume of new car sales is reduced, the
revenue earned by CLTA will likewise be reduced.
INCREASED FUEL PRICES WILL REDUCE THE PROFITS OF OUR
TRANSPORTATION SUBSIDIARY, CLTA.
A significant portion of the business of CLTA - and the area
in which its plans for expansion are focused - consists of
transporting automobiles to dealerships in Europe. When fuel oil
prices are high, as they are now relative to historical prices,
CLTA's profit margins are reduced. If fuel oil prices remain
high or climb even higher, it will have an adverse effect on
CLTA's financial results.
OUR HIV TESTING KIT DOES NOT CONTAIN ANY PROPRIETARY
TECHNOLOGY, AND COULD BE REPLICATED BY COMPETITORS.
Our subsidiary, Advanced Medical Diagnostics, LLC developed
its HIV (1+2) Rapid Self-Test Kit from readily-available
components known to be effective in testing for HIV infection.
We are already aware of one U.S. competitor who is following a
business plan very similar to ours, distributing an HIV(1+2)
testing kit in Asia and Africa. If we or our competitors are
successful in marketing testing kits, additional competitors
could easily introduce similar kits in competition with us.
OUR MEDICAL DEVICES SUBSIDIARY DOES NOT HAVE INSURANCE
AGAINST PRODUCT LIABILITY CLAIMS.
Advanced Medical Diagnostics, LLC is engaged in the business
of distributing an HIV home-testing kit in Africa, Asia and Latin
America. Advanced Medical Diagnostics does not have an insurance
policy that will indemnify it against any product liability
claims. Such a claim, if successfully prosecuted, could result
in a judgment that Advanced Medical Diagnostics would be unable
to pay, forcing it into bankruptcy.
OUR BUSINESS DEVELOPMENT COULD BE HINDERED IF WE LOST THE
SERVICES OF OUR CHIEF EXECUTIVE OFFICER.
Michael Margolies is the only executive officer of Global
Concepts. Mr. Margolies is responsible for strategizing not only
our business plan but also the means of financing it. If Mr.
Margolies were to leave Global Concepts or become unable to
fulfill his responsibilities, our business would be imperiled.
At the very least, there would be a delay in the development of
Global Concepts until a suitable replacement for Mr. Margolies
could be retained.
-7-
GLOBAL CONCEPTS IS NOT LIKELY TO HOLD ANNUAL SHAREHOLDER
MEETINGS IN THE NEXT FEW YEARS.
Since it became a public company in 2000, Global Concepts
has never held an annual meeting of shareholders. The Board of
Directors of Global Concepts consists of Michael Margolies, who
has served since 2000, and Stanley Chason, who was appointed to
the Board by Mr. Margolies. Management does not expect to hold
annual meetings of shareholders in the next few years, due to the
expense involved. As a result, the shareholders of Global
Concepts will have no effective means of exercising control over
the operations of Global Concepts.
THE VOLATILITY OF THE MARKET FOR GLOBAL CONCEPTS COMMON
STOCK MAY PREVENT A SHAREHOLDER FROM OBRAINING A FAIR PRICE FOR
HIS SHARES.
The common stock of Global Concepts is quoted on the OTC
Bulletin Board. Trading volume is usually relatively small, and
prices vary dramatically from time to time. It is impossible to
say that the market price on any given day reflects the fair
value of Global Concepts, since the price sometimes moves up or
down by 50% in a week's time. A shareholder in Global Concepts
who wants to sell his shares, therefore, runs the risk that at
the time he wants to sell, the market price may be much less than
the price he would consider to be fair.
THE RESALE OF SHARES ACQUIRED BY CORNELL CAPITAL PARTNERS
FROM GLOBAL CONCEPTS MAY REDUCE THE MARKET PRICE OF GLOBAL
CONCEPTS' SHARES.
Global Concepts and Cornell Capital Partners are parties to
a Standby Equity Distribution Agreement and a 5% Secured
Convertible Debenture. The Standby Equity Distribution Agreement
provides that Global Concepts may sell shares to Cornell Capital
Partners for up to $5,000,000. The 5% Secured Convertible
Debenture permits Cornell Capital Partners to purchase Global
Concepts shares for up to $400,000 at an 80% discount to market
We expect that Cornell Capital Partners will promptly resell into
the public market any shares it acquires under either of these
arrangements. Future resales by Cornell Capital Partners are
likely to reduce the market price of Global Concepts' common
stock.
GLOBAL CONCEPTS WILL BE QUOTED ON THE OTC BULLETIN BOARD FOR
THE IMMEDIATE FUTURE.
Global Concepts does not meet the eligibility requirements
for listing on the NASDAQ Stock Market. Until we meet those
standards and are accepted into the NASDAQ Stock Market, or
unless we are successful in securing a listing on the American
Stock Exchange or some other exchange, Global Concepts common
stock will be quoted only on the OTC Bulletin Board. Such a
listing is considered less prestigious than a NASDAQ Stock Market
or an exchange listing, and many brokerage firms will not
recommend Bulletin Board stocks to their clients. This situation
may limit the liquidity of your shares.
-8-
ONLY A SMALL PORTION OF THE INVESTMENT COMMUNITY WILL
PURCHASE "PENNY STOCKS" SUCH AS GLOBAL CONCEPTS COMMON STOCK.
Global Concepts' common stock is defined by the SEC as a
"penny stock" because it trades at a price less than $5.00 per
share. Global Concepts' common stock also meets most common
definitions of a "penny stock," since it trades for less than
$1.00 per share. Many brokerage firms will discourage their
customers from purchasing penny stocks, and even more brokerage
firms will not recommend a penny stock to their customers. Most
institutional investors will not invest in penny stocks. In
addition, many individual investors will not consider a purchase
of a penny stock due, among other things, to the negative
reputation that attends the penny stock market. As a result of
this widespread disdain for penny stocks, there will be a limited
market for Global Concepts' common stock as long as it remains a
"penny stock." This situation may limit the liquidity of your
shares.
YOU SHOULD NOT RELY ON
FORWARD LOOKING STATEMENTS
This prospectus contains a number of forward-looking
statements regarding our future prospects. Among the forward-
looking statements are descriptions of our plans to return CLTA
to profitability, our plans to enter the market for home medical
diagnostic kits, and our plans to penetrate the market for non-
medicinal beauty aids. These forward-looking statements are a
true statement of our present intentions, but are neither
predictions of the future nor assurances that any of our
intentions will be fulfilled. Many factors beyond our control
could act to thwart Global Concepts in its efforts to develop and
market its products, including factors discussed in "Risk
Factors" as well as factors we have not foreseen. In addition,
changing circumstances may cause us to determine that a change in
plans will be in the best interests of Global Concepts.
DIVIDEND POLICY
We have never declared or paid any dividends on our common
stock. We expect to retain future earnings, if any, for use in
the operation and expansion of our business, and do not
anticipate paying any cash dividends in the foreseeable future.
CAPITALIZATION
Our authorized capital stock consists of 500,000,000 shares
of common stock and 5,000,000 shares of preferred stock. There
are 67,645,454 shares of our common stock outstanding and no
shares of preferred stock outstanding.
-9-
Common Stock
As a holder of our common stock, you will be entitled to one
vote for each share in the election of directors and in all other
matters to be voted on by the shareholders. There is no
cumulative voting in the election of directors. Our by-laws
require that only a majority of the issued and outstanding shares
of common stock must be represented to constitute a quorum and to
transact business at a shareholders meeting.
You will be entitled to receive dividends if the Board of
Directors declares dividends. In the event that Global Concepts
is liquidated or dissolved, you will receive a distribution, on a
per share basis, of any assets remaining after payment of all
liabilities and any preferential payments that must be made to
preferred shareholders, if any. You will have no preemptive or
conversion rights and you will not be subject to any calls or
assessments. There are no redemption or sinking fund provisions
applicable to the common stock.
Preferred Stock
The Board of Directors is authorized to issue the preferred
stock in one or more classes, and to designate the preferences,
limitations, and relative rights of each class. The authority
given to the Board of Directors permits the Board to issue
preferred stock with voting rights and liquidation rights
superior to those of the holders of common stock, if the Board
believes such an issuance would be in the best interest of Global
Concepts.
Market for the Common Stock
Our common stock is listed for quotation on the OTC Bulletin
Board under the trading symbol "GCCP." The following table sets
forth the bid prices quoted for our common stock on the OTC
Bulletin Board during the last eleven calendar quarters.
Bid
Period: High Low
--------------------
Jan. 1, 2002 - Mar. 31, 2002 $ .22 $ .06
Apr. 1, 2002 - June 30, 2002 $ .13 $ .05
July 1, 2002 - Sep. 30, 2002 $ .06 $ .02
Oct. 1, 2002 - Dec. 31, 2002 $ .04 $ .01
Jan. 1, 2003 - Mar. 31, 2003 $ .01 $ .01
Apr. 1, 2003 - June 30, 2003 $ .01 $ .01
July 1, 2003 - Sep. 30, 2003 $ .01 $ .01
Oct. 1, 2003 - Dec. 31, 2003 $ .01 $ .01
Jan. 1, 2004 - Mar. 31, 2004 $ .01 $ .01
Apr. 1, 2004 - June 30, 2004 $ .44 $ .01
July 1, 2004 - Sep. 30, 2004 $ .19 $ .05
-10-
Our shareholders list contains the names of 99 registered
stockholders of record of the Company's Common Stock. Based upon
information from nominee holders, the Company believes the number
of owners of its Common Stock exceeds 600.
Registrar and Transfer Agent
The Registrar and Transfer Agent for the common stock is:
American Registrar and Transfer Company
P.O. Box 1798
Salt Lake City, UT 84110
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion in conjunction with
our Financial Statements and the notes to the Financial
Statements, which appear at the end of this prospectus. A
summary of the Financial Statements appears in the Prospectus
Summary at the beginning of this prospectus.
Results of Operations
Global Concepts
Effective as of June 30, 2003, the Company terminated the
operations of Xcalibur Xpress, the only operation which had been
continuing prior to that date. The Company liquidated the assets
of Xcalibur Xpress and used the proceeds to reduce its debts. In
its financial statements for the first nine months of 2003 the
Company recorded a $357,046 "loss from discontinued operations of
subsidiary."
The only revenue recorded by the Company for the first nine
months of 2004 was $10,350 that it was paid for consulting
services rendered. Between June 1, 2004 and October 1, 2004,
however, the Company acquired three new businesses: Advanced
Medical Diagnostics LLC, Compagnie Logistique de Transports
Automobiles ("CLTA"), and J&J Marketing, LLC. Advanced Medical
Diagnostics has not generated any revenue to date. CLTA and J&J
Marketing were acquired on October 1, 2004 and, accordingly,
their financial results are not reflected in the Company's
consolidated financial statements for the period ended September
30, 2004. In its annual report for 2004, the Company will record
revenue from the operations of J&J Marketing and CLTA.
Pro Forma Financial Statements showing the effect of
consolidating the historical financial results of Global Concepts
and its three new subsidiaries are set forth at the end of this
prospectus.
-11-
Compagnie Logistique de Transports Automobiles
CLTA carries on its business operations in Euros. In the
following discussion, the financial results realized by CLTA have
been expressed in U.S. Dollars at the conversion rate in effect
on November 19, 2004: 0.8 U.S. Dollars to 1 Euro.
For the year ended June 30, 2004, CLTA reported gross revenue
of $13,735,177. It incurred $8,899,259 in direct costs in producing
those revenues, yielding a gross profit of $4,835,918.
CLTA's gross profit for the year barely exceeded its labor
costs of $4,580,120. These labor costs, combined with other
operating expenses, caused CLTA to realize an operating loss for
the year ended June 30, 2004 of $819,725. Because French labor
laws provide workers extensive job protection, it will be
difficult for CLTA to significantly reduce its labor costs. In
order to be profitable, CLTA will have to increase its revenue to
a point at which it can utilize its labor force efficiently. The
contract recently signed by CLTA with its primary customer
provides for a sizeable increase in revenue beginning in 2005.
We do not know yet, however, whether these increased operations
can be carried out with the efficiencies necessary to produce
profits.
CLTA's loss for the year ended June 30, 2004 was further
increased by two significant "other expenses." CLTA incurred an
aggregate of $217,592 in damages to it equipment that were not
covered by insurance. In addition, CLTA wrote-off a receivable
of $269,444 from a previous customer that became insolvent.
As a result of these event, CLTA realized a net loss of
$1,136,897 for the twelve months ended June 30, 2004.
Advanced Medical Diagnostics
Advanced Medical Diagnostics continues to develop its
network of affiliations worldwide. It has not recorded any
revenue to date, as all shipments of goods have been for testing
purposes only. At the same time, however, it incurs little
expense, since most of the individuals working on behalf of
Advanced Medical Diagnostics are working in the expectation of
sales commissions or other contingent compensation.
When sales do commence, Advanced Medical Diagnostics expects
to realize a gross margin of approximately 40% on sales of its
HIV (1+2) Rapid Self-Test Kit. That estimate is based on the
terms of our contract with our manufacturer in China, our plan to
pass shipping costs along to our customers, and our expectations
regarding commissions and sales costs we will incur. If our
assumptions are not realized, our expectation regarding gross
margin will have to be altered.
-12-
Until we obtain capital resources that can be dedicated to
Advanced Medical Diagnostics, we will have to secure the credit
needed to manufacture goods by assigning the credits given to us
by our customers to secure their orders. This could
significantly delay sales and cash flow.
J&J Marketing
J&J Marketing's financial results to date reflect the
difficulty of engaging in the personal care products business
without a distribution network. The fact that our Savage Beauty
products can be found in 75 stores nationwide indicates the
attractiveness of the product. But the fact that we have been
able to sustain operations only by increasing our payables
indicates how inefficient it is to sell the products direct to
stores in small quantities, as we have done to date.
In order for J&J Marketing to become efficient, funds need
to be committed to production of a sufficient inventory that we
can retain a national-base distributor to provide warehousing and
fulfillment services. That association would increase the
profitability of each of our sales many-fold. We are actively
pursuing both a national-base distributor and the necessary
financing sources, but have not to date secured any commitment.
Liquidity and Capital Resources
At September 30, 2004 Global Concepts had no operating
assets and $3,028,055 in net liabilities. The subsequent
acquisitions of J&J Marketing and CLTA increased Global Concepts'
operating assets, but did not ameliorate its debt situation.
At June 30, 2004 CLTA had $3,079,425 in assets, over 91% of
which consisted of accounts receivable from its primary customer.
The average age of CLTA's receivables is 38 days, which requires
CLTA to age its payables as well. CLTA's delays in paying its
bills impairs its relationship with its primary vendors, who are
unwilling to afford CLTA the full extent of credit that they
would afford to a customer that paid more promptly.
At June 30, 2004 CLTA had total liabilities of $3,591,323,
all of which were currently due and payable. The largest
liability was $2,383,066 due to the French government for payroll
taxes. To date the government has tolerated the debt, as CLTA
worked to recover from several years of mismanagement by its
prior owners. If the government were to compel CLTA to make
payments of the past-due taxes, it could significantly interfere
with CLTA's ability to carry on its business.
The sale of the 5% Convertible Debenture in November 2004
provided funds to Global Concepts that were used, in part, to
repay a portion of the $500,000 loan that Global Concepts took
for the purpose of acquiring CLTA. Another part of the proceeds
was used to pay a deposit on a fourth acquisition that Global
Concepts is negotiating. Global Concepts, therefore, has no
significant cash assets. Its only source of credit at this time
is the Standby Equity Distribution Agreement with Cornell Capital
Partners. It is unclear, however, whether the market for Global
Concepts' common stock will be sufficiently liquid to permit
Global Concepts to make extensive use of the standby equity line
of credit.
-13-
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have
or are reasonably likely to have a current or future effect on
our financial condition or results of operations.
BUSINESS
Global Concepts, Ltd. was organized in 1998 under the name
"Transportation Logistics Int'l, Inc." During its first five
years, it was engaged in a number of transportation-related
businesses. Those were gradually terminated or sold, and in July
2003 the last of our transportation-related subsidiaries
terminated operations. Since July 2003 we have changed our
corporate name, and expanded our focus. We have been
investigating business opportunities in a wide variety of fields,
and we continue to do so. Since June 2004 we have invested in
three businesses, each of which is now a subsidiary of Global
Concepts. These three are now the business operations of Global
Concepts.
Our parent company, Global Concepts, has only two employees:
our Chairman and his administrative assistant. The executive
offices of Global Concepts are leased from the family of our
Chairman, Michael Margolies for a fee of $1,000 per month.
COMPAGNIE LOGISTIQUE DE TRANSPORTS AUTOMOBILES
On October 1, 2004 Global Concepts acquired fifty-four
percent (54%) of the capital stock of Compagnie Logistique de
Transports Automobiles ("CLTA"). The remaining 46% is owned by
four French individuals, two of whom are the senior management of
CLTA. CLTA is a French corporation whose executive offices are
located in Nugent sur Oise, France.
Over 90% of CLTA's business arises from its contract with
Compagnie D'Affretement et de Transport ("CAT"), the company
responsible for all distribution of Peugeot and Citroen
automobiles in Europe. CLTA warehouses the vehicles, completes
the final dealer preparation work before the automobiles are
delivered, and delivers the automobiles to dealerships throughout
Europe. CLTA also performs brake installation and testing of new
cars for Peugeot. CLTA has the exclusive contract to perform the
warehousing and vehicle preparation services required by CAT. It
currently performs about 12% of the distribution work required by
CAT, but believes that portion can increase if CLTA obtains the
funds needed to purchase additional vehicle transporters.
CLTA currently leases a fleet of 63 auto transporters as
well as 38 other vehicles used in its warehousing and preparation
activities. CLTA's immediate plans are to expand its fleet of
auto transporters in order to increase its share of CAT's
-14-
distribution business. CLTA is also actively pursuing other
firms in the same or similar business as potential acquisition
targets, its goal being to accomplish the same end as purchasing
a larger fleet. Since the business potential from its
relationship with CAT is considerable, CLTA has no immediate
plans to initiate any other lines of business.
CLTA's largest expense, after rent and labor, is insurance.
For 2005 CLTA will maintain policies with three insurers, and pay
over 288,000 Euros (@ $375,000).
CLTA's administrative offices and its warehousing location
are located in a facility leased by CLTA in Chambly, France for a
term ending June 2013. CLTA also has long-term leases for two
parking facilities.
CLTA currently has 136 full-time employees. None of them is
represented by a union.
ADVANCED MEDICAL DIAGNOSTICS, LLC
Advanced Medical Diagnostics LLC was organized in the Fall
of 2003. In June 2004 Global Concepts acquired 100% of the
equity in Advanced Medical Diagnostics.
Advanced Medical Diagnostics has developed a kit which
enables an individual to test his or her blood for evidence of
HIV infection. The test is manually-performed and visually read.
It can be completed in less than 15 minutes with the blood
obtained from a finger puncture. Properly utilized, the test
will identify the presence of HIV-1 infection and/or HIV-2
infection with over 99% accuracy.
Human Immunodeficiency Viruses type 1 and type 2 ("HIV") are
etiological agents of the acquired immunodeficiency syndrome
("AIDS"). HIV has been isolated from patients with AIDS, AIDS-
related complex, and from healthy individuals at high risk for
AIDS. Infection with HIV is followed by an acute flu-like
illness. This phase may remain unnoticed and the relationship to
HIV infection may not be clear in many cases. The acute phase is
typically followed by an asymptomatic carrier state, which
progresses to clinical AIDS in about 50% of infected individuals
within ten years after seroconversion. Serological evidence of
HIV infection may be obtained by testing for HIV antigens or
antibodies in serum of individuals suspected of HIV infection.
Antigens can generally be detected only during the acute phase
and during the symptomatic phase of AIDS. Antibodies to HIV-1
and/or HIV-2 can be detected throughout virtually the total
infection period, starting at or shortly after the acute phase
and lasting until the end stage of AIDS. Therefore the use of
highly sensitive antibody assays is the primary approach in
serodiagnosis of HIV infection.
Our "HIV (1+2) Rapid Self-Test Kit" contains an immunoassay for the
qualitative detection of antibodies to HIV-1 and HIV-2 in human whole blood.
The test is comprised of a single use test device and a single use vial
containing a pre-measured amount of a buffered developer solution. Each
component is sealed in separate compartments of a single couch to form the
-15-
test. A fingerstick whole blood specimen is collected and transferred into
the sterile pipette, two drops from the pipette are deposited into the well of
the test cassette. Two drops of the developed solution are then added to the
test cassette well. As the diluted specimen flows through the test cassette,
it re-hydrates the protein-A gold colorimetric reagent contained in the
device. As the specimen continues up the strip, it encounters the T zone. If
the specimen contains antibodies that react with the antigens immobilized on
the nitrocellulose membrane, a reddish-purple line will appear, indicating the
presence of antibodies to HIV in the specimen.
Advanced Medical Diagnostics owns no proprietary technology. The
components of its HIV (1+2) Rapid Self-Test Kit are available to the public,
and their utility for testing the presence of HIV infection is well-known.
What Advanced Medical Diagnostics has added to the progress of medicine in
this area is to organize the components into a kit that Advanced Medical
Diagnostics is able to market profitably at a wholesale price of $5.20.
To develop the kit, Advanced Medical Diagnostics has spent approximately
$80,000 on research and development.
The relatively low price of the kit makes it particularly attractive
in the "Third World" countries of Africa, Asia and Latin America. In
many of these countries AIDS is rapidly becoming a social and economic
catastrophe. Still other countries in these regions are seeking pro-
active solutions to prevent the spread of AIDS. For this reason,
Advanced Medical Diagnostics has been engaged in active discussions
with governments in each of these regions regarding distribution of
the kit. Within recent months both China and Peru have approved the
kit for sale in their countries. Others are expected to follow in
the near future. To date, however, we have received only preliminary
orders for testing quantities of the kits, which do not produce significant
revenues.
Advanced Medical Diagnostics has no plans to seek approval to
market the HIV (1+2) Rapid Self-Test Kit in either the United
States or the European Union. The cost of obtaining approval in
these countries precludes us from doing so. Our market for the
foreseeable future will include Asia, Africa and Latin America
only. We have engaged dealers in each of those regions to market
the HIV (1+2) Rapid Self-Test Kit, primarily to governments and
non-governmental-organizations.
The HIV (1+2) Rapid Self-Test Kit is manufactured for
Advanced Medical Diagnostics by a single contractor located in
China. Our arrangement with the manufacturer requires that we
post a letter of credit in the amount that we will pay for the
kits. We are not able at this time, therefore, to maintain an
inventory of kits, but must manufacture to order using our
customer's credit to support our credit.
Advanced Medical Diagnostics employs five individuals, only
one of whom is employed full-time. It will add additional
employees as sales warrant. Its offices are located in an office
building in East Orange owned by members of its management, and
are provided free-of-charge.
-16-
J & J MARKETING, LLC
On October 1, 2004 Global Concepts acquired 80% of the
equitable interest in J&J Marketing. The remaining 20% is owned
by the founders of J&J Marketing, Jane and Michael Schub. The
Schubs retained an option to repurchase the interest they sold to
Global Concepts if, prior to May 15, 2005, Global Concepts enters
bankruptcy proceedings or is party to a merger or acquisition or
sale of assets in which it is not the surviving entity.
J&J Marketing produces and sells a line of six skin care
products, including cleanser, facial scrub, toner, moisturizer,
lifting mask, and moisturizing eye serum. The products are all
natural with many organic ingredients. They are free of chemicals
and preservatives. J&J Marketing sells them under the trademark
"Savage Beauty ."
The market for personal care products in the United States is
dominated by a small number of industry giants, such as Avon,
Proctor & Gamble, and Estee Lauder. Entry into that market is
extremely difficult. J&J Marketing is seeking to enter the
portion of that market devoted to natural and organic products, a
niche which is more hospitable to small start-up brands.
Nevertheless, even in that niche, J&J Marketing will face a
considerable number of well-established brands, such as Kiss My
Face, Weleda and Dr. Hauska that have already developed a presence
in the market and can apply substantial financial resources to the
task of preserving their market position.
J&J Marketing will attempt to compete in this market by
combining an emphasis on the purity of its contents with
sophisticated product packaging. Our goal is to present a product
that is equally at home in health food store or a luxury boutique,
thus differentiating our products from the more "earthy" character
often associated with natural products. We are also seeking to
build a place in the market by developing advantageous marketing
relationships with brokers and independent sales representatives,
and the kind of specialty stores where the style of our products
will be advantageous. Our largest customer to date, for example,
has been the specialty food chain, Whole Foods Market.
J&J Marketing commenced operations in 2002, as a part-time
activity of its founders, Jane and Michael Schub. With the
acquisition of J&J Marketing by Global Concepts in October 2004,
our plan is to secure the funding that will enable this business
to expand into a substantial business operation. To date we have
marketed our products direct to stores, since we lacked sufficient
inventory to permit us to engage a distributor. Now, however, J&J
Marketing is engaged in redesigning our packaging in a manner
which will substantially reduce production costs. This redesign
will then be implemented in a production run of each product that
will enable us to engage one or more distributors for Savage
Beauty . Once we have a distributor engaged, we will be able to
market to the larger mass market retailers.
Our products are manufactured to our order by an FDA-
approved manufacturer located in South Carolina. We have not
incurred any research and development expense, since product
formulation was carried out by the manufacturer under our
direction. We presently carry a $2 million product liability
policy, which we consider sufficient for our current level of
operations.
-17-
The operations of J&J Marketing are currently conducted from
offices in New York State provided by Jane and Michael Schub free-
of-charge. Until we obtain funds sufficient to expand our
operations, Jane and Michael Schub will remain the only employees
of J&J Marketing, and neither of them will be employed on a full-
time basis.
MANAGEMENT
The officers and directors of the Company are:
Name Age Position with Director
the Company Since
----------------------------------------------------------------
Michael Margolies 76 Chairman, Chief
Executive Officer, 2000
Chief Financial
Officer, Secretary
Stanley Chason 76 Director 2001
Michael Margolies organized our first business operations in 1998.
Mr. Margolies previously served as Chief Executive Officer of U.S.
Transportation Systems, Inc. from its creation in 1975. USTS was a
NASDAQ-listed holding company involved in a diversified group of
transportation-related businesses (e.g. bus charters, freight-hauling, bus
leasing, limousines). Mr. Margolies left USTS in 1998 when it was sold to
Precept Business Services, Inc. for approximately $43 million.
Stanley Chason became a director of Global Concepts in November 2001.
From 1962 until his retirement in 1984, Mr. Chason held various positions
with Gelco Corporation, a company listed on the New York Stock Exchange which
is involved in all aspects of vehicle leasing. His last position with Gelco
was as Executive Vice President and member of the Board of Directors. Mr.
Chason was also Chairman and Chief Executive Officer of the Fleet and
Management Services Division of Gelco.
Audit Committee
The Board of Directors does not have an audit committee
financial expert. The Board of Directors has not attempted to
recruit an audit committee financial expert because the Company
did not have business operations from July 2003 until June 2004,
and has only recently acquired significant business operations.
Code of Ethics
The Company does not have a written code of ethics applicable
to its executive officers. The Board of Directors has not adopted
a written code of ethics because there are so few members of
management.
-18-
Executive Compensation
This table itemizes the compensation we paid to Michael
Margolies, who has served as our Chief Executive Officer since the
formation of our company. There was no other officer whose salary
and bonus for services rendered during the year ended December 31,
2003 exceeded $100,000.
Compensation
Year Salary Stock Grant
------------ -----------
Michael Margolies....... 2003 $ 0
2002 0 (1)
2001 0
________________________
(1) Mr. Margolies received a restricted stock grant of 10,000,000 shares
during 2002. The restrictions were removed at the beginning of 2004.
Employment Agreements
All of our employment arrangements with our executives are on
an at will basis.
Compensation of Directors
Our directors are reimbursed for out-of-pocket expenses incurred on our
behalf, but receive no additional compensation for service as directors.
Equity Grants
The following tables set forth certain information regarding
the stock options acquired by the Company's Chief Executive
Officer during the year ended December 31, 2003 and those options
held by him on December 31, 2003.
Option Grants in the Last Fiscal Year
Percent
of total Potential realizable
Number of options value at assumed
securities granted to annual rates of
underlying employees Exercise appreciation of
option in fiscal Price Expiration for option term
Name granted year ($/share) Date 5% 10%
-------------------------------------------------------------------------------
M. Margolies 0 N.A. N.A. N.A. 0 0
-19-
Aggregated Fiscal Year-End Option Values
Number of securities underlying Value of unexercised in-the-
unexercised options at fiscal money options at fiscal
Name year-end (#) (All exercisable) year-end ($) (All exercisable)
-------------------------------------------------------------------------------
Michael Margolies 0 0
Limitation of Liability and Indemnification
Our bylaws, as well as Colorado corporation law, provides
that our directors and officers may be indemnified by us, at the
discretion of our Board of Directors, against liabilities arising
from their service as directors and officers. Insofar as
indemnification for liabilities under the Securities Act of 1933
may be permitted to our directors, officers or controlling persons
pursuant to the foregoing provision or otherwise, we have been
advised that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as
expressed in that Act and is, therefore, unenforceable.
PRINCIPAL SHAREHOLDERS
The following table sets forth information known to us with
respect to the beneficial ownership of our voting stock as of the
date of this prospectus by the following:
* each shareholder known by us to own beneficially more than
5% of either class of our voting stock;
* Michael Margolies;
* each of our directors; and
* all directors and executive officers as a group.
There are 67,645,454 shares of our common stock outstanding
on the date of this prospectus. Except as otherwise indicated, we
believe that the beneficial owners of the voting stock listed
below have sole voting power and investment power with respect to
their shares, subject to community property laws where
applicable. Beneficial ownership is determined in accordance with
the rules of the Securities and Exchange Commission.
In computing the number of shares beneficially owned by a
person and the percent ownership of that person, we include shares
of voting stock subject to options or warrants held by that person
that are currently exercisable or will become exercisable within
60 days. We do not, however, include these "issuable" shares in
the outstanding shares when we compute the percent ownership of
any other person.
-20-
Amount and
Nature of
Name and Address Beneficial Percentage
of Beneficial Owner(1) Ownership(2) of Class
---------------------------------------------------------------
Michael Margolies 17,497,439(2) 25.9%
Stanley Chason 0 0%
All officers and
directors as a
group (2 persons) 17,497,439(2) 25.9%
Kevin Waltzer 8,439,000(3) 12.5%
14 Larkspur Lane
Newtown, PA 18904
(1) Except as otherwise noted, the address of each of these
shareholders is c/o Global Concepts, Ltd., 14 Garrison Inn
Lane, Garrison, NY 10524.
(2) Includes 2,180,850 shares owned by the Margolies Family
Trust. The Trustee of the Margolies Family Trust is Mr.
Margolies spouse, and the beneficiaries of the Trust are his
spouse and children.
(3) Includes 2,455,000 shares held by Lisa Waltzer, Mr. Waltzer's
spouse.
Equity Compensation Plan Information
The information set forth in the table below regarding equity compensation
plans (which include individual compensation arrangements) was determined as
of June 30, 2004.
Number of
securities
Number of remaining
securities to be Weighted available
issued upon average for future
exercise of exercise price issuance
outstanding of outstanding under equity
options, warrants options,warrants compensation
and rights and rights plans
--------------------------------------------------------------------------------
Equity compensation plans
approved by security
holders.......... 0 -- 0
Equity compensation plans
not approved by security
holders*......... 0 -- 0
Total............ 0 -- 0
-21-
SELLING SHAREHOLDERS
The table below lists the selling shareholders and other information
regarding the beneficial ownership of our common stock by the selling
shareholderss. As the selling shareholders acquire and/or resell shares
of common stock, we will file prospectus supplements as necessary to update
the number of shares of common stock that the selling shareholders intend
to sell, reflecting prior resales.
Shares
Shares Owned Owned
--------------------------------- After
Shares Put by Shares Acquired Offering
Global Concepts on Conversion of Shares Is
Name Per SEDA 5% Debenture Other Offered Complete
-------------------------------------------------------------------------------
Cornell Capital
Partners 159,489,633(1) 15,151,515(2) 4,242,424 4,242,424 0
Newbridge
Securities Corp. - - 303,030 303,030 0
_____________________________
(1) Represents the maximum number of shares that Global Concepts may
sell to Cornell Capital Partners pursuant to the Standby Equity
Distribution Agreement if the market price of Global Concepts common
stock is $.035.
(2) Represents number of shares that may be acquired on conversion when
market price is $.035.
Standby Equity Distribution Agreement
On November 16, 2004 Global Concepts signed a Standby Equity
Distribution Agreement with Cornell Capital Partners. Global
Concepts issued 4,242,424 shares to Cornell Capital Partners on
that date to compensate it for entering into the Agreement.
Global Concepts also issued 303,030 shares to Newbridge
Securities Corp. to compensate it for acting as an advisor to
Global Concepts in connection with the negotiation of the
Agreement.
The Standby Equity Distribution Agreement provides that
during the two years commencing on November 16, 2004 Global
Concepts may demand that Cornell Capital Partners purchase shares
of common stock from Global Concepts. Global Concepts may make a
demand no more than once every six trading days. The maximum
purchase price on each demand is $250,000. The aggregate maximum
that Global Concepts may demand from Cornell Capital Partners is
$5,000,000. The number of shares that Cornell Capital Partners
will purchase after a demand will be determined by dividing the
dollar amount demanded by a per share price. The per share price
used will be 95% of the lowest daily volume-weighted average
price during the five trading days that follow the date a demand
is made by Global Concepts. Cornell Capital Partners is required
by the Agreement to pay each amount demanded by Global Concepts,
unless (a) there is no prospectus available for Cornell Capital
Partners to use in reselling the shares, (b) the purchase would
result in Cornell Capital Partners owning over 9.9% of Global
Concepts outstanding shares, or (c) the representations made by
Global Concepts in the Agreement prove to be untrue.
-22-
The Standby Equity Distribution Agreement requires that we
register the shares for resale by the Cornell Capital Partners.
We will pay the registration and filing fees, printing expenses,
listing fees, blue sky fees, if any, and fees and disbursements
of our counsel in connection with this offering. Cornell Capital
Partners will pay the fees and disbursements of its own counsel,
as well as any underwriting discounts, selling commissions, and
similar expenses relating to the sale of the shares. We have
agreed to indemnify Cornell Capital Partners and some of its
affiliates against certain liabilities, including liabilities
under the Securities Act, in connection with this offering. In
turn, Cornell Capital Partners has agreed to indemnify us and our
directors and officers, as well as any person who controls us,
against certain liabilities, including liabilities under the
Securities Act. Insofar as indemnification for liabilities under
the Securities Act may be permitted to our directors and
officers, or persons that control us, we have been informed that
in the opinion of the SEC such indemnification is against public
policy as expressed in the Securities Act and is therefore
unenforceable.
5% Secured Convertible Debenture
On November 16, 2004 Global Concepts sold to Cornell Capital
Partners two 5% Secured Convertible Debentures. Each Debenture is
in the principal sum of $200,000. Cornell Capital Partners paid
$360,000 for the Debentures, from which it paid a $10,000 fee for
Cornell Capital Partner's legal counsel in connection with the
Debentures and a $10,000 fee for Cornell Capital Partner's legal
counsel in connection with the Standby Equity Distribution
Agreement.
The principal and interest on the Debentures may be
converted by Cornell Capital Partners into shares of Global
Concepts common stock. On November 16, 2006, if a Debenture
remains outstanding, Global Concepts must either pay the
principal and accrued interest or convert same into shares of
common stock. The conversion price in either event will be the
lesser of $.042 or 80% of the lowest closing bid price for the
five trading days preceding conversion. Global Concepts'
obligations under the Debentures are secured by a pledge of all
of Global Concepts' assets.
Other Relationships with Global Concepts
Neither Cornell Capital Partners nor Newbridge Securities
Corp. has had any relationship with Global Concepts or its
subsidiaries or affiliates within the past three years, other
than the relationships created by the Equity Line of Credit
Agreement and the 5% Secured Convertible Debenture described
above.
Plan of Distribution
The selling shareholders may sell shares from time to time
in public transactions, on or off the OTC Bulletin Board, or in
private transactions, at prevailing market prices or at privately
negotiated prices, including, but not limited to, one or more of
the following types of transactions:
* ordinary brokers' transactions;
* transactions involving cross or block trades
-23-
* purchases by brokers, dealers or underwriters as
principal and resale by such purchasers for their own
accounts pursuant to this prospectus;
* "at the market" to or through market makers or into an
existing market for our common stock;
* in other ways not involving market makers or established
trading markets, including direct sales to purchasers or
sales effected through agents;
* through transactions in options, swaps or other
derivatives (whether exchange-listed or otherwise);
* in privately negotiated transactions; or
* to cover short sales.
In effecting sales, brokers or dealers engaged by the
selling shareholders may arrange for other brokers or dealers to
participate in the resales. The selling shareholders may enter
into hedging transactions with broker-dealers, and in connection
with those transactions, broker-dealers may engage in short sales
of the shares. The selling shareholders may also sell shares
short and deliver the shares to close out the short position.
The selling shareholders may also enter into option or other
transactions with broker-dealers that require the delivery to the
broker-dealers of the shares, which the broker-dealer may resell
using this prospectus. The selling shareholders may also pledge
the shares to a broker-dealer and, upon a default, the broker or
dealer may effect sales of the pledged shares using this
prospectus.
Brokers, dealers or agents may receive compensation in the
form of commissions, discounts, or concessions from selling
shareholders in amounts to be negotiated in connection with the
sale. The selling shareholders and any participating brokers or
dealers will be deemed to be "underwriters" within the meaning of
the Securities Act in connection with such sales, and any such
commission, discount or concession may be deemed to be
underwriting compensation.
Information as to whether underwriters whom the selling
shareholders may select, or any broker-dealer, is acting as
principal or agent for the selling shareholders, the compensation
to be received by underwriters that the selling shareholders may
select or by any broker or dealer acting as principal or agent
for the selling shareholders, and the compensation to be paid to
other broker-dealers, in the event the compensation of such other
broker-dealers is in excess of usual and customary commissions,
will, to the extent required, be set forth in a supplement to
this prospectus. Any dealer or broker participating in any
distribution of the shares may be required to deliver a copy of
this prospectus, including a prospectus supplement, if any, to
any person who purchases any of the shares from or through such
broker or dealer.
We have advised the selling shareholders that, during any
time when they are engaged in a distribution of the shares, they
are required to comply with Regulation M promulgated under the
Securities Exchange Act. With certain exceptions, Regulation M
precludes any selling shareholder, any affiliated purchasers and
any broker-dealer or other person who participates in a
distribution from bidding for or purchasing or attempting to
induce any person to bid for or purchase any security that is the
subject of the distribution until the entire distribution is
-25-
complete. Regulation M also prohibits any bids or purchases made
in order to stabilize the price of a security in connection with
the distribution of that security. All of the foregoing may
affect the marketability of our common stock.
We will not receive any of the proceeds from the selling
shareholders' sale of their common stock.
LEGAL MATTERS
The validity of the common stock which the selling
shareholders are selling by means of this prospectus has been
passed upon by our counsel, Robert Brantl, Esq., 322 Fourth
Street, Brooklyn, New York 11215.
EXPERTS
The financial statements of Global Concepts, Ltd. and of
Advanced Medical Diagnostics, LLC included in this prospectus and
in the registration statement have been audited by Rosenberg Rich
Baker Berman & Company, independent certified public accountants,
to the extent and for the periods set forth in their report
appearing elsewhere in this prospectus and in the registration
statement, and are included in reliance upon such report given
upon the authority of said firm as experts in auditing and
accounting.
The financial statements of J&J Marketing, LLC included in
this prospectus and in the registration statement have been
audited by Thomas J. Kellerman, CPA, to the extent and for the
periods set forth in his report appearing elsewhere in this
prospectus and in the registration statement, and are included in
reliance upon such report given upon the authority of Mr.
Kellerman as an expert in auditing and accounting.
The financial statements of Compagnie Logistique de
Transports Automobiles included in this prospectus and in the
registration statement have been audited by _____________
__________________________, to the extent and for the periods set
forth in their report appearing elsewhere in this prospectus and
in the registration statement, and are included in reliance upon
such report given upon the authority of said firm as experts in
auditing and accounting.
ADDITIONAL INFORMATION
We have filed with the Securities and Exchange Commission a
registration statement on Form SB-2, including exhibits and
schedules, under the Securities Act with respect to the shares to
be sold in the offering. This prospectus does not contain all the
information set forth in the registration statement. In
particular, the statements in this prospectus regarding the
contents of contracts, agreements or other documents are not
necessarily complete. You can find further information about us
in the registration statement and the exhibits and schedules
attached to the registration statement. In addition, we file
annual, quarterly and current reports, proxy statements and other
information with the Commission, which may assist you in
understanding our company.
-25-
You may read and copy the registration statement or any
reports, statements or other information that we file at the
Commission's Public Reference Room at 450 Fifth Street, N.W.,
Washington, D.C. 20549. You can request copies of these documents,
upon payment of a duplicating fee, by writing to the Commission.
Please call the Commission at 1-800-SEC-0330 for further information
on the operation of the Public Reference Room. Our Commission filings,
including the registration statement, are also available to you on
the Commission's Web site at http://WWW.SEC.GOV.
We do not currently send annual reports to our shareholders,
due to the expense involved. Until our resources permit, we do
not expect to send annual reports unless we are soliciting
proxies for an annual meeting of shareholders. You may, however,
obtain a copy of our annual or our quarterly report to the
Commission by writing to us at our executive offices.
-26-
INDEX TO FINANCIAL STATEMENTS
I. GLOBAL CONCEPTS, LTD.
1. Audited Financial Statements for the Years
Ended December 31, 2003 and 2002
Pages
Report of Independent Auditors F-1
Balance Sheet F-2
Statements of Operations F-3
Statements of Comprehensive Income F-4
Statements of Shareholders' Equity F-5
Statements of Cash Flows F-6
Notes to Financial Statements F-7
2. Unaudited Financial Statements for the Nine
Months Ended September 30, 2004 and 2003
Balance Sheet F-15
Statements of Operations F-16
Statements of Cash Flows F-17
Notes to Financial Statements F-18
II. ADVANCED MEDICAL DIAGNOSTICS, LLC
1. Audited Financial Statements for the Period
Ended December 31, 2003
Report of Independent Auditors F-20
Balance Sheet F-21
Statements of Income and Members' Equity (Deficit) F-22
Statements of Cash Flows F-23
Notes to Financial Statements F-24
2. Unaudited Financial Statements for the Three
Months Ended March 31, 2004
Balance Sheet F-26
Statements of Income and Members' Equity (Deficit) F-27
Statements of Cash Flows F-28
Notes to Financial Statements F-29
III. J&J MARKETING, LLC
1. Audited Financial Statements for the Years
Ended December 31, 2003 and 2002 and the
Six Months Ended June 30, 2004
Report of Independent Auditors F-30
Balance Sheet F-31
Statements of Operations, Members' Equity
and Retained Earnings F-32
Statements of Cash Flows F-33
Notes to Financial Statements F-34
IV. COMPAGNIE LOGISTIQUE DE TRANSPORTS AUTOMOBILES
V. PRO FORMA FINANCIAL STATEMENTS
Independent Auditors' Report
To the Board of Directors and Stockholders of
Global Concepts, Ltd. and Subsidiaries
We have audited the accompanying consolidated balance sheet of Global
Concepts, Ltd. and Subsidiaries as of December 31, 2003, and the related
consolidated statements of operations, comprehensive income,
shareholders equity, and cash flows for the years ended December 31,
2003 and 2002. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that
we 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. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Global
Concepts, Ltd. and Subsidiaries as of December 31, 2003, and the results
of their operations and their cash flows for the years ended December
31, 2003 and 2002 in conformity with accounting principles generally
accepted in the United States of America.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 1
to the financial statements, the Company's significant operating loss
raise substantial doubt about its ability to continue as a going
concern. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
/s/ Rosenberg Rich Baker Berman & Company
-----------------------------------------
Rosenberg Rich Baker Berman & Company
Bridgewater, New Jersey
April 9, 2004 F-1
Global Concepts, Ltd. and Subsidiaries
Consolidated Balance Sheet
December 31, 2003
Assets
Cash $ 1,564
----------
Total Assets $ 1,564
==========
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable and accrued expenses 132,388
Convertible debenture (NOTE 10) 200,000
Net liabilities of discontinued
operations (NOTE 4) 1,365,927
----------
Total Current Liabilities 1,698,315
Loan payable (NOTE 8) 1,020,210
----------
Total Liabilities 2,718,525
----------
Commitments and Contingencies (NOTE 9) -
Stockholders' Equity
Preferred stock, $.01 par value;
5,000,000 shares authorized, and 0
shares issued and outstanding -
Common stock, no par value;
50,000,000 shares authorized,
40,631,990 shares issued and
40,396,338 shares outstanding 3,659,492
Additional paid-in capital -
stock options (NOTE 3) 36,748
Retained earnings (deficit) (5,430,664)
Consulting services to be provided
(NOTE 7) (460,000)
Less: treasury stock, 235,652 shares
at cost (522,537)
----------
Total Stockholders' Equity (2,716,961)
----------
Total Liabilities and Stockholders' Equity $ 1,564
==========
F-2
See notes to the consolidated financial statements.
Global Concepts, Ltd. and Subsidiaries
Consolidated Statements of Operations
Year Ended December 31,
2003 2002
-----------------------
(Restated)
Operating Revenues (NOTES 1 and 4) $ 65,533 $ -
Direct Operating Expenses - -
---------- --------
Gross Profit 65,533 -
---------- --------
Operating Expenses
Selling, general and administrative 138,489 50,150
Stock based compensation (NOTE 7) 635,500 302,700
---------- --------
Total Operating Expenses 773,989 352,850
---------- --------
(Loss) Before Income Taxes (708,456) (352,850)
(Provision) Benefit for Income Taxes (NOTE 2) - -
---------- --------
(Loss) Before Discontinued Operations (708,456) (352,850)
Discontinued Operations (NOTE 4)
Loss from discontinued operations of subsidiary
(net of tax effect of $0) (1,620,260) (407,201)
---------- --------
Net (Loss) $(2,328,716) $(760,051)
========== ========
Earnings (Loss) Per Share (NOTE 1)
(Loss) from continuing operations $ (0.02) $ (0.01)
(Loss) from discontinued operations (0.04) (0.01)
---------- --------
Basic and diluted earnings (loss) per share $ (0.06) $ (0.02)
========== ========
Weighted Average Number of Common Shares
Outstanding (Restated)
Basic 40,396,338 34,374,627
========== ==========
Diluted 40,396,338 34,374,627
========== ==========
See notes to the consolidated financial statements.
F-3
Global Concepts, Ltd. and Subsidiaries
Consolidated Statements of Comprehensive Income
Year Ended December 31,
2003 2002
--------------------------
Net (Loss) $(2,328,716) $ (760,051)
Other Comprehensive Income
Foreign Currency Translation Adjustment - 54,706
---------- ----------
Other Comprehensive (Loss) Income Before Tax - 54,706
Income Tax Expense Related to Other
Comprehensive Income - -
---------- ----------
Other Comprehensive (Loss) Income Net of Tax - 54,706
---------- ----------
Comprehensive (Loss) $(2,328,716) $ (705,345)
========== ==========
F-4
See notes to the consolidated financial statements.
Global Concepts, Ltd. and Subsidiaries
Consolidated Statement of Shareholders' Equity
Years Ended December 31, 2003 and 2002
Additional
Accumulted Paid-in Consulting
Preferred Stock Common Stock Other Capital - Services
--------------- ---------------------- Retained Comprehensive Treasury Stock to be
Shares Amount Shares Amount Earnings Income Stock Options Provided Total
----------------------------------------------------------------------------------------------------------------------------------
Balance December
31, 2001 - $ - 22,227,205 $ 2,261,292 $(2,341,897) $ (54,706) $ (456,675) $36,748 $ - $ (555,238)
--------------------------------------------------------------------------------------------------------------
Foreign currency
translation - - - - - 54,706 - - - 54,706
Issuance of common
stock for consulting
services - - 9,110,000 798,200 - - - - (798,200) -
Shares issued for other
compensation - - 10,000,000 600,000 - - - - (600,000) -
Shares surrendered in
connection with sale
of TLI (UK) - - (940,867) - - - (65,862) - - (65,862)
Net loss for the years
ended December 31, 2002 - - - - (760,051) - - - - (760,051)
Amortization of prepaid
consulting services - - - - - - - - 302,700 302,700
----------------------------------------------------------------------------------------------------------
Balance December
31, 2002 - - 40,396,338 3,659,492 (3,101,948) - (522,537) 36,748 (1,095,500) (1,023,745)
Net loss for the year
ended December
31, 2003 - - - - (2,328,716) - - - - (2,328,716)
Amortization of
prepaid consulting
services - - - - - - - - 635,500 635,500
-----------------------------------------------------------------------------------------------------------
Balance December
31, 2003 - $ - 40,396,338 $ 3,659,492 $(5,430,664) $ - $ (522,537) $36,748 $ (460,000) $(2,716,961)
===========================================================================================================
See notes to the consolidated financial statements.
F-5
Global Concepts, Ltd. and Subsidiaries
Consolidated Statements of Cash Flows
Year Ended December 31,
2003 2002
--------------------------
(Restated)
Cash Flows From Operating Activities
Continuing Operations
Loss before income taxes $ (708,456) $ (352,850)
Amortization of stock based compensation 635,500 302,700
Adjustments to Reconcile Net Income to Net
Cash Used In Operating Activities
(Decrease) increase in accounts payable
and accrued expenses 38,304 2,521
--------- ---------
Cash Used by Continuing Operations (34,652) (47,629)
--------- ---------
Discontinued Operations
Loss before income taxes (1,620,260) (407,201)
Adjustments to reconcile net loss to
net cash Used In discontinued operations
(Increase) decrease in net assets of
discontinued operations 1,663,135 433,920
--------- ---------
Cash Provided By Discontinued Operations 42,875 (26,719)
--------- ---------
Net Cash Provided by (Used in) Operating
Activities 8,223 (20,910)
--------- ---------
Cash from financing activities
Proceeds from loan payable 111,417 -
Repayment of long term debt (120,833) -
--------- ---------
Net Cash Used in Financing Activities (9,416) -
--------- ---------
Net Decrease in Cash and Equivalents (1,193) (20,910)
Cash and Equivalents at Beginning of Period 2,757 23,667
--------- ---------
Cash and Equivalents at End of Period $ 1,564 $ 2,757
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest $ - $ -
========= =========
Income taxes $ - $ -
========= =========
See notes to the consolidated financial statements.
F-6
Global Concepts, Ltd. and Subsidiaries
Notes to the Consolidated Financial Statements
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Organization
Global Concepts, Ltd. (TLI or the Company) is an international logistics
management company which owned and operated several subsidiaries, each of
which did business within the various facets of transportation including
intermodal trucking, factoring receivables and employee leasing for
logistic companies. In 2003 the Company discontinued all of those
operations by May 2003. Since May 2003, the Company has been
providing consulting services while seeking new business ventures.
The Company's financial statements have been presented on the basis that
it is a going concern, which contemplates the realization of assets and
the satisfaction of liabilities in the normal course of business. The
Company has incurred substantial losses, and has a working capital deficit
as of December 31, 2003. The Company's continued existence is dependent
upon its ability to secure adequate financing. The Company plans to raise
additional capital in the future; however there are no assurances that such
plan will be successful. The financial statements do not include any
adjustments that might result from the outcome of these uncertainties.
Effective April 1, 1999 the Company was assigned all of the issued and
outstanding capital stock of Transportation Logistics Int'l (UK), a United
Kingdom corporation, Pupil Transportation, Inc., a New Jersey Corporation
and CDA North America, Inc., a New York corporation (the subsidiaries) from
Transportation Equities, Inc. (assignor). The Company was sold in 2002.
Effective March 26, 1999 the Company acquired all the shares and assets of
Transportation Logistics Int'l UK (TLIUK) formerly Avair Freight Services
Ltd. (UK), an international freight brokerage company. The Company issued
100,000 common shares (524,000 restated common shares) to the former
shareholders of Avair Freight Services (UK) Ltd.
Effective June 4, 2001, the Company entered into an operating agreement
with Humanaforce Logistics, LLC and Subsidiaries. In accordance with the
operating agreement the Company had a 51% interest in Humanaforce Logistics,
LLC and Subsidiaries. The Company ceased operations in October 2002.
Effective May 23, 2002, the Company acquired all of the outstanding capital
stock of Xcalibur Express, Inc., which provided intermodal trucking and
delivery, warehousing and third party logistics for its clients. The
capital stock was acquired in exchange for (1) the Company's understanding
to provide financial services to Xcalibur Express and (2) the agreement by
the Company to forebear immediate collection of $200,000 owed by Xcalibur
Express to the Company. The Company ceased operations and declared
bankruptcy in 2003.
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 statement and the reported amounts of revenue and expenses during
the reporting period. Actual results could differ from these estimates.
Principles of Consolidation
The accompanying consolidated balance sheet at December 31, 2003 includes
the accounts of the Company and its wholly owned subsidiaries
Transportation Logistics Int'l (UK), Pupil Transportation, Inc. Excalibur
Express, Inc. All material inter-company accounts and transactions have
been eliminated.
Property and Equipment
Property and equipment are valued at cost. Gains and losses on
disposition of property are reflected in income. Depreciation is computed
using the straight-line method over three to five year estimated useful
lives of the assets.
Repairs and maintenance which do not extend the useful life of the related
assets are expensed as incurred.
F-7
Global Concepts, Ltd. and Subsidiaries
Notes to the Consolidated Financial Statements
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
Cash and Equivalents
For purposes of the statement of cash flows, cash equivalents include
time deposits, certificates of deposit and all highly liquid debt
instruments with original maturities of three months or less.
Income Taxes
The Company and its wholly owned subsidiaries file a consolidated Federal
income tax return. Transportation Logistics Int'l, Inc. uses the asset
and liability method in providing income taxes on all transactions that
have been recognized in the consolidated financial statements. The asset
and liability method requires that deferred taxes be adjusted to reflect
the tax rates at which future taxable amounts will be settled or realized.
The effects of tax rate changes on future deferred tax liabilities and
deferred tax assets, as well as other changes in income tax laws, are
recognized in net earnings in the period such changes are enacted.
Valuation allowances are established when necessary to reduce deferred
tax assets to amounts expected to be realized.
Financial Instruments
The following methods and assumptions were used by the Company to estimate
the fair values of financial instruments as disclosed herein:
Cash and Equivalents: The carrying amount approximates fair value because
of the short period to maturity of the instruments.
Accounts Receivable/Payable: The carrying amount approximated fair value.
Revenue Recognition
Revenue from freight brokerage is recognized upon delivery of goods, and
direct expenses associated with the cost of transportation are accrued
concurrently.
Revenue from driver temporary services and leasing is recognized when
earned based upon standard billing rates charged by the hours worked.
Factoring revenue is recognized when the service is provided. Direct
expenses associated with the cost of driver leasing are accrued
concurrently. Revenue from subcontracted transportation services is
recognized upon completion of each trip. Direct expenses associated
with the cost of transportation are accrued concurrently.
Monthly provision is made for doubtful receivables, discounts, returns
and allowances.
Long-lived Assets
In March, 1995 the Financial Accounting Standards Board issued SFAS No.
121 "Accounting for the Impairment of Long-Lived Assets for Long-Lived
Assets to be Disposed of". SFAS 121 required that long-lived assets and
certain identifiable intangibles to be held and used by an entity be
reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable and
long-lived assets and certain identifiable intangibles to be disposed of
to be reported at the lower of carrying amount or fair value less cost
to sell. SFAS No. 121 also establishes the procedures for review of
recover ability and measurement of impairment, if necessary, of long-
lived assets and certain identifiable intangibles to be held and used by
an entity. Management has determined that no impairment of the respective
carrying value has occurred as of December 31, 2003.
F-8
Global Concepts, Ltd. and Subsidiaries
Notes to the Consolidated Financial Statements
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
Foreign Currency Transactions
In the normal course of business the Company has accounts receivable and
accounts payable that are transacted in foreign currencies. The Company
accounts for transaction differences, in accordance with Statement of
Financial Standard No. 52, "Foreign Currency Translation", and accounts
for the gains and losses in operations.
Comprehensive Income
For foreign operations outside the United States that prepare financial
statements in currencies other than the U.S. dollar, results of operations
and cash flows are translated at average exchange rates. Translation
adjustments are included as a separate component of accumulated other
comprehensive income (loss) in shareholders' equity. The foreign currency
translation at December 31, 2003 and 2002 was $0 and $54,706,
respectively.
Earnings Per Share
The Company computes earnings per share in accordance with Statements
of Financial Accounting Standard ("SFAS") No. 128. Basic EPS excludes
dilution and is computed by dividing income available to common
stockholders by the weighted average number of common shares outstanding
for the period. Diluted EPS reflects the potential dilution that could
occur if securities or other contracts to issue common stock were
exercised or converted into common stock or resulted in the issuance of
common stock that then shared in the earnings of the entity. Common
equivalent shares have been excluded from the computation of diluted EPS
since their affect is antidilutive.
NOTE 2 - INCOME TAXES
Deferred income taxes arise from temporary differences resulting from
income and expense items reported for financial accounting and tax
purposes in different periods. Deferred taxes are classified as current
or noncurrent, depending on the classification of the assets and
liabilities to which they relate. Deferred taxes arising from temporary
differences that are not related to an asset or liability are
classified as current or noncurrent depending on the periods in which
the temporary differences are expected to reverse. In addition deferred
taxes are also recognized from operating losses that are available to
offset future federal and state income taxes.
The deferred tax assets are attributable to net operating losses.
Deferred taxes consist of the following:
Total deferred tax assets, non current $ 1,920,000
Total valuation allowance (1,920,000)
----------
Net deferred tax assets $ -
==========
During 2003 and 2002 the valuation allowance increased $920,000 and
$400,000, respectively.
F-9
Global Concepts, Ltd. and Subsidiaries
Notes to the Consolidated Financial Statements
NOTE 2 - INCOME TAXES, Continued
The reconciliation of income tax computed at the U.S. Federal statutory
rates to income tax expense is as follows:
December 31,
2003 2002
------------------
Tax at US statutory rate 34 % 34 %
State income taxes, net of
federal benefit 6 % 6 %
Foreign taxes - (21)%
Other reconciling items and
valuation allowance (40)% (19)%
--- ---
Income tax provision 0 % 0 %
=== ===
As of December 31, 2003, the Company has approximately $4,800,000
available net operating loss carryforwards which may be used to reduce
Federal and State taxable income and tax liabilities in future years.
The net operating loss carryforward expires in 2022.
NOTE 3 - STOCKHOLDERS' EQUITY
Stock and Stock Option Plan
On November 15, 2000, the Company adopted its 2000 Stock and Stock Option
Plan (the "Plan"). The Plan provides that certain options to purchase the
Company's common stock granted thereunder are intended to qualify as
"incentive stock options" within the meaning of Section 422A of the
United States Internal Revenue Code of 1986, while non-qualified options
may also be granted under the Plan. The initial plan provides for
authorization of up to 2,000,000 shares. The option price per share of
stock purchasable under an Incentive Stock Option shall be determined at
the time of grant but shall not be less than 100% of the Fair Market Value
of the stock on such date, or, in the case of a 10% Stockholder, the
option price per share shall be no less than 110% of the Fair Market Value
of the stock on the date an Incentive Stock Option is granted to such 10%
Stockholder.
Qualified and Non-Qualified Shares Under Option as of December 31, 2003
Weighted
Average
Option
Options Price
--------------------------------
Outstanding, January 1, 2003 $ - $ 1.75
Granted during the year - -
Canceled during the year - 1.75
Exercised during the year - -
------- ------
Outstanding, December 31, 2003 $ - $ -
------- ------
Eligible for exercise, end of
year $ - $ -
======= ======
At December 31, 2003, there were 812,500 shares reserved for future grants.
The Company follows Accounting Principles Board Opinion 25, Accounting for
Stock Issued to Employees, to account for its stock option plan. An
alternative method of accounting for stock options is SFAS 123, Accounting
for Stock-Based Compensation. Under SFAS 123, employee stock options are
valued at grant date using the Black-Scholes valuation model, and this
compensation cost is recognized ratably over the vesting period. Had
compensation cost for the Company's stock option plan been determined as
prescribed by SFAS 123, there would have been no effect on the pro forma
income statements for 2003 and 2002.
F-10
Global Concepts, Ltd. and Subsidiaries
Notes to the Consolidated Financial Statements
NOTE 3 - STOCKHOLDERS' EQUITY, Continued
For stock transactions with other than employees, the Company adopted the
provisions of Statement of Financial Accounting Standards (SFAS) No. 123,
"Accounting for Stock Based Compensation". Accordingly, compensation
expense of $0 has been recognized for stock options and warrants during
2003 and 2002.
NOTE 4 - DISCONTINUED OPERATIONS
Effective April 19, 2002 the Company sold Transportation Logistic Int'l to
four individuals, including James Thorpe, who had been a Member of the
Board of Directors and President of the Company. The purchase price
consisted of (a) $35,000 to be paid between November 2002 and April 2003
and (b) 940,867 shares of its common stock which were surrendered by Mr.
Thorpe. As part of the transaction TLI (UK) and its purchasers agreed that
if within the next two years they participated in the Translogistics
Network or any similar cooperative global network of logistics provided,
then 50% of the profits they derive from the network during the next five
years will be paid to the Company. Net sales during 2002 was $858,842.
In September 2002, the Company ceased providing employee leasing options
through its 51% subsidiary Human Force Logistics, LLC and Subsidiaries.
Net sales of Human Force Logistics, LLC was $3,857,071 in 2002.
In December 2002, the Company ceased its operations of student
transportation services through its subsidiary Pupil Transportation, Inc.
Net sales of Pupil Transportation, Inc. was $2,328,074 in 2002.
In 2002 the Company ceased its financial services (factoring) division.
Net sales of the financial services division was $686,129 in 2002.
In 2003 the Company ceased its intermodal trucking operations. Net sales
of this division was $1,693,203 and $3,620,807 in 2003 and 2002,
respectively.
The 2002 income statement has been restated to reflect these changes.
NOTE 5 - EMPLOYMENT AND CONSULTANT AGREEMENTS
The Company has an employment agreement with its principal officer expiring
April 2007. This agreement provides for minimum compensation levels and
for incentive bonuses which are payable if specified management goals are
attained. The Company did not meet its goals in 2003.
NOTE 6 - CONCENTRATIONS OF CREDIT RISK
Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of non-interest
bearing cash deposit and accounts receivable.
At times throughout the year, the Company may maintain certain bank
accounts in excess of FDIC insured limits.
The Company provides credit in the normal course of business. The
Company performs ongoing credit evaluations of its customers and
maintains allowances for doubtful accounts based on factors surrounding
the credit risk of specific customers, historical trends, and other
information.
F-11
Global Concepts, Ltd. and Subsidiaries
Notes to the Consolidated Financial Statements
NOTE 7 - CONSULTING SERVICES TO BE PROVIDED
Consulting services to be provided are recorded in connection with
common stock issued to consultants for future services and are amortized
over the period of the agreement, ranging from one to five years.
NOTE 8 - LOAN PAYABLE
The loan payable of $1,020,210 is from a family trust, of which the wife
of the chairman of the Company is the trustee. The loan is unsecured
with no specific repayment terms and will not be repaid until after 2004.
NOTE 9 - LITIGATION
The Company, several related companies, its chairman and certain employees
are defendants in a lawsuit filed by an alleged acquisition candidate for
alleged breach of contract. The complaint does not specify an amount for
damages. The Company believes the suit is completely without merit and
intends to vigorously defend its position.
The Company, several related companies, its chairman and its subsidiaries
are defendants in a lawsuit filed by one of its former vendors. At this
stage in the proceedings, the probable outcome is unknown. The Company
has a counter claim based upon defective services provided by the vendor.
The Company believes the settlement of the lawsuit will not exceed amounts
already recorded in the financial statements.
The Company and its subsidiaries are defendants in lawsuits filed by its
former vendors. The Company has judgements filed against them. These
judgements that amounted to $178,728 are included in net liabilities of
discontinued operations.
NOTE 10 - CONVERTIBLE DEBENTURES
On June 14, 2001, the Company issued a convertible debenture for
$200,000 which bears interest at the rate of 20% per annum and is due
one year from the date of issue. In accordance with the agreement the
debenture is convertible into common stock of the Company at a conversion
rate of $.75 from the date of issuance through September 30, 2001. The
conversion period has been extended. In addition, the debenture includes
warrants to purchase 20,000 shares of common stock at $1.50 that expired
on June 30, 2003. Included in accounts payable is $40,000 of accrued
interest and accrued expenses on these debentures. The convertible
debentures are in default.
NOTE 11 - NEW ACCOUNTING PRONOUNCEMENTS
In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements
No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical
Corrections. This statement rescinds SFAS No. 4, Reporting Gains and
Losses from Extinguishment of Debt, and an amendment of that statement,
SFAS No. 44, Accounting for Intangible Assets of Motor Carriers, and SFAS
No. 64, Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements.
This statement amends SFAS No. 13, Accounting for Leases, to eliminate
inconsistencies between the required accounting for sales-leaseback
transactions and the required accounting for certain lease modifications
that have economic effects that are similar to sales-leaseback
transactions. Also, this statement amends other existing authoritative
pronouncements to make various technical corrections, clarify meanings, or
describe their applicability under changed conditions. Provisions of SFAS
No. 145 related to the rescissions of SFAS No. 4 were effective for the
Company on November 1, 2002 and provisions affecting SFAS No. 13 were
effective for transactions occurring after May 15, 2002. The adoption of
SFAS No. 145 did not have a significant impact on the Company's results of
operations or financial position.
F-12
Global Concepts, Ltd. and Subsidiaries
Notes to the Consolidated Financial Statements
NOTE 11 - NEW ACCOUNTING PRONOUNCEMENTS, Continued
In June 2003, the FASB issued SFAS No. 146, Accounting for Costs
Associated with Exit or Disposal Activities. This statement covers
restructuring type activities beginning with plans initiated after
December 31, 2002. Activities covered by this standard that are entered
into after that date will be recorded in accordance with provisions of
SFAS No. 146. The adoption of SFAS No. 146 did not have a significant
impact on the Company's results of operations or financial position.
In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-
Based Compensation-Transition and Disclosure, which provides alternative
methods of transition for a voluntary change to fair value based method
of accounting for stock-based employee compensation as prescribed in
SFAS 123, Accounting for Stock-Based Compensation. Additionally, SFAS
No. 148 required more prominent and more frequent disclosures in
financial statements about the effects of stock-based compensation. The
provisions of this Statement are effective for fiscal years ending after
December 15, 2002. The adoption of this statement did not have a
significant impact on the Company's results of operations of financial
position.
In April 2003, the FASB issued SFAS Statement No. 149, "Amendment of
Statement 133 on Derivative Instruments and Hedging Activities", which
amends and clarifies financial accounting and reporting for derivative
instruments, including certain derivative instruments embedded in other
contracts (collectively referred to as derivatives) and for hedging
activities under FASB Statement No. 133, Accounting for Derivative
Instruments and Hedging Activities. This Statement is effective for
contracts entered into or modified after June 30, 2003, except for
certain hedging relationships designated after June 30, 2003. Most
provisions of this Statement should be applied prospectively. The
adoption of this statement did not have a significant impact on the
Company's results of operations or financial position.
In May 2003, the FASB issued SFAS Statement No. 150, "Accounting for
Certain Financial Instruments with Characteristics of both Liabilities
and Equity". This Statement establishes standards for how an issuer
classifies and measures certain financial instruments with
characteristics of both liabilities and equity. It requires that an
issuer classify a financial instrument that is within its scope as
a liability (or an asset in some circumstances). This statement is
effective for financial instruments entered into or modified after May
31, 2003, and otherwise is effective at the beginning of the first
interim period beginning after June 15, 2003, except for mandatorily
redeemable financial instruments of nonpublic entities, if applicable.
It is to be implemented by reporting the cumulative effect of a
change in an accounting principle for financial instruments created
before the issuance date of the Statement and still existing at the
beginning of the interim period of adoption. The adoption of this
statement is did not have a significant impact on the Company's results
of operations or financial position.
In November 2002, the FASB issued Interpretation No. 45 ("FIN 45"),
Guarantor's Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness of Others. FIN 45
requires a company, at the time it issues a guarantee, to recognize an
initial liability for the fair value of obligations assumed under the
guarantees and elaborates on existing disclosure requirements related to
guarantees and warranties. The recognition requirements are effective
for guarantees issued or modified after December 31, 2002 for initial
recognition and initial measurement provisions. The adoption of FIN 45
did not have a significant impact on the Company's results of operations
or financial position.
In January 2003, the FASB issued FASB Interpretation No. 46 ("FIN 46"),
Consolidation of Variable Interest Entities, an Interpretation of ARB
No. 51. FIN 46 requires certain variable interest entities to be
consolidated by the primary beneficiary of the entity if the equity
investors in the entity do not have the characteristics of a controlling
financial interest or do not have sufficient equity at risk for the
entity to finance its activities without additional subordinated
financial support from other parties. FIN 46 is effective for all new
variable interest entities created or acquired after January 31, 2003.
For variable interest entities created or acquired prior to February 1,
2003, the provisions of FIN 46 must be applied for the first interim or
annual period beginning after June 15, 2003. The adoption of FIN 46
did not have a significant impact on the Company's results of operations
or financial position.
F-13
Global Concepts, Ltd. and Subsidiaries
Notes to the Consolidated Financial Statements
NOTE 12 - RESTRICTED STOCK GRANT PROGRAM
On May 28, 2002 the Company granted 10,000,000 shares of its common
stock to Michael Margolies, its Chief Executive Officer, pursuant to the
Company's Restricted Stock Grant Program (the "Program"). The grant
represented the entirety of the 10,000,000 shares included in the
Program. The shares issued under the Program are subject to the
following restrictions:
1. After this fiscal year and each of the following four fiscal years
(2002 through 2006) one-fifth of the shares granted (the "At-Risk Shares")
will be forfeited if the Company's revenue during the year does not exceed
the following thresholds:
2003 - $ 6,000,000
2004 - $ 8,000,000
2005 - $10,000,000
2006 - $12,000,000
2. All of the restricted shares shall be forfeited if Mr. Margolies'
employment by the Company terminates prior to the date the restrictions
lapse.
3. The shares granted under the Program cannot be sold, assigned, pledged,
transferred or hypothecated in any manner, by operation of law or
otherwise, other than by writ or the laws of descent and distribution,
and shall not be subject to execution, attachment or similar process.
These restrictions will lapse with respect to any At-Risk Shares that
are not forfeited as described above. In addition, the restrictions
will lapse with respect to all unforfeited shares if in any year the
Company's revenue exceeds $12,000,000.
4. The restrictions shall also lapse as to all restricted shares on the
first to occur of (i) the termination of Mr. Margolies' employment with
the Company by reason of his disability, (ii) Mr. Margolies' death,
(iii) termination of Mr. Margolies' employment by the Company without
good reason, or (iv) a change of control of the Company. The Program
defines "Change of Control" as an acquisition by a person or group of
more than 50% of the Company's outstanding shares, a transfer of the
Company's property to an entity of which the Company does not own at
least 50%, or the election of directors constituting a majority of the
Board who have not been approved by the existing Board.
F-14
GLOBAL CONCEPTS LTD AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET
SEPTEMBER 30, 2004
ASSETS
2004
---------
CURRENT ASSETS
Cash $ 227
---------
Total current assets 227
---------
OTHER ASSETS
Deposit on acquisition 250,000
Goodwill 23,524
---------
Total other assets 273,524
---------
TOTAL ASSETS $ 273,751
=========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 135,509
Notes payable 350,000
Convertible debentures 200,000
Net liabilities of discontinued operations 1,265,927
---------
Total current liabilities 1,951,436
Loan payable 1,076,619
---------
Total liabilities 3,028,055
STOCKHOLDERS' DEFICIT
Preferred stock, $ no par value,;
5,000,000 shares authorized,
and 1,000,000 shares issued
and outstanding 10,000
Common stock, no par value,
50,000,000 shares authorized,
47,000,000 shares issued and
47,000,000 outstanding 4,405,644
Additional paid-in capital 36,748
Deficit (5,807,780)
Consulting services to be provided (1,398,916)
---------
Total stockholders' deficit (2,754,304)
---------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 273,751
=========
The accompanying notes are an integral part of these consolidated condensed
financial statements.
F-15
GLOBAL CONCEPTS LTD. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003
Three Months Ended Nine Months Ended
2004 2003 2004 2003
---------------------------------------------
Revenues $ - $ - $ 10,350 $ -
Operating expenses - - - -
--------------------- --------------------
Gross profit - - 10,350 -
Operating expenses
Selling, general and
administrative 36,861 - 86,382 -
Stock issued for consulting
services 33,501 - 301,084 123,550
--------------------- --------------------
Total operating expenses 70,362 - 387,466 123,550
--------------------- --------------------
Loss before discontinued
operations (70,362) - (377,116) (123,550)
Income (loss) from discontinued
operations - - - (357,046)
--------------------- --------------------
Net (loss) (70,362) - (377,116) (480,596)
===================== ====================
Earnings per share
(Loss) from continuing operations (0.01) - (0.01) -
(Loss) from discontinued
operations - - - (0.01)
Basic and diluted earnings per
share (0.01) - (0.01) (0.02)
Weighted average number of common
shares outstanding basic
and diluted 46,412,721 40,396,338 42,522,254 40,396,338
The accompanying notes are an integral part of these consolidated condensed
financial statements.
F-16
GLOBAL CONCEPTS LTD AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003
Nine Months Ended
September 30,
2004 2003
----------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Continued $ (377,116) $ -
Discontinued - (2,757)
Amortization of stock based compensation 301,084 -
Adjustments to reconcile net (loss) to
net cash used in operating activities
(Increase) in investment (250,000) -
Increase in accounts payable and accrued
expenses 3,121 -
--------- --------
Net cash (used in) operating activities (322,911) (2,757)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from loan payable-net 321,574 -
Payment of net liabilites of discountinued
operations (100,000) -
Proceeds from note payable 100,000 -
--------- --------
Net cash provided by financing activites 321,574 -
--------- --------
NET INCREASE (DECREASE) IN CASH AND
EQUIVALENTS (1,337) (2,757)
CASH AND CASH EQUIVALENTS - BEGINNING OF
PERIOD 1,564 2,757
--------- --------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 227 $ -
========= ========
The accompanying notes are an integral part of these consolidated condensed
financial statements.
F-17
Global Concepts, Ltd. and Subsidiaries
Notes to the Consolidated Condensed Interim Financial Statements
BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Item 310 of Regulation S-B.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
DISCONTINUATION OF OPERATIONS
As of June 30, 2003 the Company had discontinued all of its operations that
existed prior to that date. Historical results for periods prior to June 30,
2003 have been restated, therefore, to reflect the discontinuation.
ACQUISITION OF ADVANCED MEDICAL DIAGNOSTICS, LLC
On June 1, 2004 the Company acquired the entire membership interest in
Advanced Medical Diagnostics LLC ("AMD"). AMD is engaged in the business of
manufacturing and distributing the "Advanced Medical Diagnostics HIV (1 & 2)
Rapid Test." The membership interests in AMD were acquired by the Company in
exchange for 100,000 shares of the Company's common stock. The Company also
agreed to issue 500,000 shares of its common stock to the management of AMD as
employment incentives.
DEPOSIT TOWARD ACQUISITION OF CLTA
In September 2004 the Company entered into an agreement to acquire sixty
percent (60%) of the capital stock of Compagnie Logistique de Transports
Automobiles ("CLTA"). CLTA is a French corporation located in Nugent sur
Oise, France. Its principal business is warehousing automobiles for Peugeot
and Citroen, then completing the final dealer preparation work before the
automobiles are delivered. The Company paid a deposit of $250,000 pursuant to
the agreement, which is recorded on the Company's balance sheet as "Deposit on
acquisition."
The Company borrowed the funds used to pay the deposit from Kevin Waltzer, a
shareholder of the Company. The terms on which the Company will repay Mr.
Waltzer have not been determined.
F-18
SUBSEQUENT EVENT - ACQUISITION OF CLTA
On October 1, 2004 the Company completed its acquisition of 60% of CLTA by
paying $250,000 in addition to the deposit of $250,000 previously paid. The
Company also agreed to loan up to $500,000 to CLTA if requested by the Board
of Directors of CLTA prior to December 31, 2004. The Company also agreed to
guarantee a lease of ten trucks/trailers needed to fulfill CLTA's new
contract with CAT/Peugeot.
The Company borrowed the additional $250,000 used to purchase CLTA from Kevin
Waltzer, bringing to $500,000 the Company's total debt to Mr. Waltzer. The
terms on which the Company will repay Mr. Waltzer have not been determined.
SUBSEQUENT EVENT - ACQUISITION OF J&J MARKETING
On October 1, 2004 the Company acquired an eighty percent (80%) ownership
interest in J&J Marketing, LLC. J&J Marketing LLC is a New York limited
liability company that is engaged in the business of producing and
distributing non-medicated pharmaceutical personal care products under the
trademark "Savage Beauty ." The Company acquired the interest in J&J
Marketing in exchange for 100,000 shares of the Company's common stock.
F-19
Advanced Medical Diagnostics, LLC
A Development Stage Company
Financial Statements
December 31, 2003
Independent Auditors' Report
To the Members of
Advanced Medical Diagnostics, LLC
We have audited the accompanying balance sheet of Advanced Medical
Diagnostics, LLC as of December 31, 2003 and the related statements
of income and members' equity and cash flows for the period October
30, 2003 (date of inception) through December 31, 2003. These
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards
generally accepted in the United States of America. Those standards
require that we 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. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Advanced
Medical Diagnostics, LLC as of December 31, 2003, and results of
their operations and cash flows for the period October 30, 2003 (date
of inception) through December 31, 2003 in conformity with accounting
principles generally accepted in the United States of America.
Rosenberg Rich Baker Berman & Company
Bridgewater, New Jersey
August 31, 2004
F-20
Advanced Medical Diagnostics, LLC
A Development Stage Company
Balance Sheet
December 31, 2003
Assets $ -
=========
Liabilities and Members' Equity (Deficit)
Short-term loan payable 5,280
---------
Total Current Liabilities 5,280
Commitments and contingencies -
Members' deficit accumulated during
the development stage (5,280)
---------
Total Liabilities and Members' Equity
(Deficit) $ -
=========
See notes to the financial statements
F-21
Advanced Medical Diagnostics, LLC
A Development Stage Company
Statement of Income and Members' Equity (Deficit)
October 30, 2003
(date of inception)
to December 31, 2003
--------------------
Sales $ -
Operating Expenses
General and administrative expenses 3,810
Research and development costs 3,665
-------
Total Operating Expenses 7,475
-------
Net Loss Before Benefit From Income Taxes $ (7,475)
Benefit From Income Taxes -
-------
Net Loss $ (7,475)
=======
Members' Equity (Deficit)
Beginning of Period -
Net Loss, Above (7,475)
Members' Contributions 2,195
-------
End of Period $ (5,280)
=======
See notes to the financial statements
F-22
Advanced Medical Diagnostics, LLC
A Development Stage Company
Statement of Cash Flows
October 30, 2003
(date of inception)
to December 31, 2003
--------------------
Cash Flows From Operating Activities
Net Loss $ (7,475)
------
Net Cash Used by Operating Activities (7,475)
------
Cash Flows From Financing Activities
Short-term loan payable 5,280
Member contributions 2,195
------
Net Cash Provided by Financing Activities 7,475
------
Net Increase (Decrease) in Cash -
Cash at Beginning of Period -
------
Cash at End of Period $ -
======
See notes to financial statements
F-23
Advanced Medical Diagnostics, LLC
A Development Stage Company
Notes to the Financial Statements
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Organization
Advanced Medical Diagnostics, LLC (the "Company") was formed on October 30,
2003, for the purpose of developing, manufacturing and marketing "Advanced
Medical Diagnostics HIV (1 & 2) Rapid Test", a HIV diagnostic kit. The Company
has operated as a development stage enterprise since its inception by devoting
substantially all of its efforts to research and development, developing
markets for its product and raising capital to support these efforts. The
Company shall be dissolved and its affairs wound up in accordance with the Act
and the Agreement on November 1, 2023 unless the term shall be extended by
amendment to the Agreement and the Articles.
Research and Development Costs
Research and development costs are charged to operations as incurred and
amounted to $3,665 for the period October 30, 2003 (date of inception) to
December 31, 2003.
Income Taxes
The Company is a limited liability company taxed as a partnership in which
all elements of income and deductions are included in the tax returns of the
members of the Company. Therefore, no income tax provision is recorded by the
Company.
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 the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
SHORT-TERM LOAN PAYABLE
Short-term loan payable represents advances by Transportation Logistics
International, Inc. The advances are due on demand and bear no interest.
COMMITMENTS AND CONTINGENCIES
The Company entered into a compensation agreement with its President for
$75,000 per year commencing upon the Company receiving its first bona fide
order of a minimum of 25,000 HIV test kits. As of December 31, 2003, no bona
fide order was received.
On June 3, 2004, the Company entered into an agreement with (Sourcing
Specialists II LLC (SSII) an entity owned by the officers of the Company. The
agreement states that the principles of SSII will provide services to the
Company through December 31, 2006, in exchange for SSII receiving a royalty
equal to $0.235 per diagnostic kit sold by the Company, and a commission equal
to 12% of gross sales prices of any product sold, where the officer introduces
the purchase to the company.
F-24
Advanced Medical Diagnostics, LLC
A Development Stage Company
Notes to the Financial Statements
SUBSEQUENT EVENTS
Subsequent to December 31, 2003, the Company began leasing office space
from a related party on a month to month basis. The monthly rent is $1,912.
On June 1, 2004, the members of the Company sold all of their membership
interests to Transportation Logistics International, Inc., a publicly traded
corporation.
F-25
Advanced Medical Diagnostics, LLC
A Development Stage Company
Balance Sheet
March 31, 2003
(Unaudited)
Assets $ -
========
Liabilities and Members' Equity
Short-term loan payable 14,524
--------
Total Current Liabilities 14,524
--------
Members' Equity (Deficit) (14,524)
--------
Total Liabilities and Members' Equity $ -
========
See notes to financial statements
F-26
Advanced Medical Diagnostics, LLC
A Development Stage Company
Statement of Income and Members' Equity (Deficit)
Three Months Ended October 30, 2003
March 31, 2004 (date of inception)
(Unaudited) to March 31, 2004
(Unaudited)
------------------ ------------------
Sales $ - $ -
Operating Expenses
General and administrative expenses 16,479 20,289
Research and development costs - 3,665
-------- --------
Total Operating Expenses 16,479 23,954
-------- --------
Net Loss Before Benefit From Income
Taxes (16,479) (23,954)
Benefit From Income Taxes - -
-------- --------
Net Loss $ (16,479) $ (23,954)
======== ========
Members' Equity (Deficit)
Beginning of Period $ (5,280) $ -
Net Loss, Above (16,479) (23,954)
Members' Contributions 7,235 9,430
-------- --------
End of Period $ (14,524) $ (14,524)
======== ========
See notes to financial statements
F-27
Advanced Medical Diagnostics, LLC
A Development Stage Company
Statement of Income and Members' Equity
Three Months Ended October 30, 2003
March 31, 2004 (date of inception)
to March 31, 2004
------------------ ------------------
Cash Flows From Operating
Activities
Net Loss $ (16,479) $ (23,954)
-------- --------
Net Cash (Used) by Operating
Activities (16,479) (23,954)
-------- --------
Cash Flows From Financing Activities
Short-term loan payable 9,244 14,524
Member contributions 7,235 9,430
-------- --------
Net Cash Provided by Financing
Activities 16,479 23,954
-------- --------
Net Increase (Decrease) in Cash - -
Cash at Beginning of Period - -
-------- --------
Cash at End of Period $ - $ -
======== ========
See notes to financial statements
F-28
Advanced Medical Diagnostics, LLC
A Development Stage Company
Notes to the Financial Statements
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Organization
Advanced Medical Diagnostics, LLC (the "Company") was formed on October 30,
2003, for the purpose of developing, manufacturing and marketing "Advanced
Medical Diagnostics HIV (1 & 2) Rapid Test", a HIV diagnostic kit. The Company
has operated as a development stage enterprise since its inception by devoting
substantially all of its efforts to research and development, developing
markets for its product and raising capital to support these efforts.
Research and Development Costs
Research and development costs are charged to operations as incurred.
Income Taxes
The Company has elected to file as a Limited Liability Corporation for Federal
and State income tax purposes, thus income is taxed to the shareholders
personally.
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
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
SHORT-TERM LOAN PAYABLE
Short-term loan payable represents advances by Transportation Logistics
International, Inc. The advances are due on demand and bear no interest.
COMMITMENTS AND CONTINGENCIES
The Company entered into a compensation agreement with its President for
$75,000 per year commencing upon the Company receiving its first bona fide
order of a minimum of 25,000 HIV test kits. As of March 31, 2004, no bona
fide order was received.
On June 3, 2004, the Company entered into an agreement with (Sourcing
Specialists II LLC (SSII) an entity owned by the officers of the Company.
The agreement states that the principles of SSII will provide services to the
Company through December 31, 2006, in exchange for SSII receiving a royalty
equal to $0.235 per diagnostic kit sold by the Company, and a commission
equal to 12% of gross sales prices of any product sold, where the officer
introduces the purchase to the company.
In March 2004, the Company began leasing office space from a related party
on a month to month basis. The monthly rent is $1,912.
SUBSEQUENT EVENTS
On June 1, 2004, the members of the Company sold all of their membership
interests to Transportation Logistics International, Inc., a publicly traded
corporation.
F-29
INDEPENDENT ACCOUNTANT'S REPORT
To the Members
J & J Marketing, LLC
Garrison, New York
I have audited the accompanying combined balance sheets of J&J Marketing, LLC
as of June 30, 2004, December 31, 2003 & December 31, 2002 and the related
statements of operations, member's equity and retained earnings for the six
months and years then ended with generally accepted auditing standards issued
by the American Institute of Certified Public Accountants. All information
included in these financial statements is the representation of the management
of J & J Marketing, LLC. My responsibility is to express an opinion on
these financial statements based on my audit.
An audit includes assessing the accounting principles used and significant
estimates made by management, as well as evalutating the overall financial
statement presentation. I believe my audit provides a reasonable basis for my
opinion.
In my opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of J&J Marketing, LLC in
accordance with generally accepted accounting principles applies on a
consistent basis.
Thomas J. Kellermann
Westbury, New York
November 17, 2004
F-30
J & J MARKETING, LLC
BALANCE SHEET
AS AT JUNE 30, 2004, DECEMBER 31, 2003 & 2002
ASSETS 6/30/04 12/31/03 12/31/02
Current Assets ------- -------- --------
Cash $ 848 $ 1,366 $ 3,117
Accounts receivable, net 3,527 2,076 1,901
Inventories 8,583 6,382 1,753
------- ------- -------
Total Current Assets 12,958 9,824 6,771
TOTAL ASSETS $ 12,958 $ 9,824 $ 6,771
======= ======= =======
LIABILITIES, MEMBERS' AND
STOCKHOLDER'S EQUITY 6/30/04 12/31/03 12/31/02
------- -------- --------
Current Liabilities
Accounts payable and accrued
expenses $ 27,640 $ 16,175 $ 633
Members' Equity
Member's Equity (deficit) (14,683) (6,351) 6,138
------- ------- -------
Total Member's and Stockholder's
Equity (14,683) (6,351) 6,138
------- ------- -------
TOTAL LIABILITIES, MEMBER'S AND
STOCKHOLDER'S EQUITY $ 12,958 $ 9,824 $ 6,771
======= ======= =======
See accompanying Notes and Accountants' Report.
F-31
J & J MARKETING, LLC
COMBINED STATEMENT OF OPERATIONS, MEMBER'S EQUITY AND RETAINED EARNINGS
FOR THE SIX MONTHS ENDED JUNE 30, 2004
AND FOR THE YEARS ENDED DECEMBER 31, 2003 & 2002
2004 2003 2002
(thru June 30)
-----------------------------------------
Sales $ 20,518 $ 45,966 $ 23,250
Cost of sales 9,443 9,515 7,760
-------- -------- --------
Gross profit 11,075 36,450 15,490
Operating expenses:
Selling 5,516 27,798 13,111
General and administrative 18,891 27,174 6,333
-------- -------- --------
Total Operating Expenses 24,407 54,971 19,444
-------- -------- --------
Net Operating income (13,332) (18,521) (3,954)
Member's Equity and Retained
Earnings, beginning of period (6,351) 6,138 -
Contributions from Members 5,000 6,032 10,092
-------- -------- --------
Member's Equity and Retained
Earnings, end of period $ (14,683) $ (6,351) $ 6,138
======== ======== ========
See Accompanying Notes and Accountants' Report.
F-32
J & J MARKETING, LLC
COMBINED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2004
AND FOR THE YEARS ENDED DECEMBER 31, 2003 & 2002
2004 2003 2002
(thru June 30)
-------------------------------------------
Net income $ (13,332) $ (18,521) $ (3,954)
Adjustments to reconcile
net income to net cash
used for operating activities:
Increase (decrease) in
accounts receivable 11,451 175 1,901
Increase (decrease) in
inventory 2,201 (11,139) 1,753
Increase in accounts
payable and accrued expenses 11,465 15,542 633
-------- -------- -------
CASH FLOWS PROVIDED BY
OPERATING ACTIVITIES 11,785 (13,944) 333
-------- -------- -------
CASH FLOWS (USED IN)
INVESTING ACTIVITIES - - -
-------- -------- -------
CASH FLOWS FROM FINANCING
ACTIVITIES
Loans from (to) members (12,303) 12,193 2,784
-------- -------- -------
CASH FLOWS USED IN FINANCING
ACTIVITIES (12,303) 12,193 2,784
-------- -------- -------
INCREASE IN CASH (518) (1,751) 3,117
CASH - BEGINNING OF PERIOD 1,366 3,117 -
-------- -------- -------
CASH - END OF PERIOD $ 848 $ 1,366 $ 3,117
======== ======== =======
See accompanying Notes and Accountants' Report.
F-33
J & J MARKETING, LLC
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2004
AND FOR THE YEARS ENDED DECEMBER 31, 2003 & 2002
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant account policies of J&J Marketing, LLC and
Affiliates (The Company) is presented to assist in understanding the
Company's financial statements. The financial statements and notes are
representations of the Company's management who is responsible for
their integrity and objectivity. These accounting policies conform to
generally accepted accounting principles and have been consistently applied
in the preparation of the financial statements.
Business Operations
J&J Marketing, LLC is a limited liability company organized on June 24, 2002
(the company.) From June 24, 2002 until May 2003, the company produced and
marketed the Jules & Jane skin care products under license from J Group
Holdings, Inc. Subsequent to May 2003, the Company developed and currently
produces and markets the Savage Beauty line of skin care products. Through a
network of independent sales representatives, the company has commercial
distribution of its products within the United States and abroad. Savage
Beauty is currently sold in more than 75 retail stores, including more than
20 Whole Foods Markets across the United States. Savage Beauty is designed
to take advantage of the skyrocketing interest in natural and organic
personal care products both within and outside the category's traditional
customer base, through a combination of strict adherence to the highest
organic and natural standards with upscale, sophisticated packaging.
Accounts Receivbles
Accounts receivable are considered by management to be fully collectible.
Accordingly, an allowance for doubtful accounts has not been provided.
Inventories
Inventories are valued at the lower of cost or market (first-in, first-out
method).
Advertising Costs
The Company's policy is to expense advertising costs as incurred. Advertising
expense for the six months ended June 30, 2004 and the years ended December
31, 2003 & 2002, was $805, $1,371, and $428, respectively.
F-34
J & J MARKETING, LLC
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2004
AND FOR THE YEARS ENDED DECEMBER 31, 2003 & 2002
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Income Taxes
The Company has elected to be taxed as a limited liability company, for
federal and New York State income tax purposes. In lieu of corporate income
taxes, the Company's taxable income is reported by the members on their
personal tax returns.
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 liabilites and disclosure of
contingent assets and liabilities, at the date of the financial statements
and the reported amount of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
F-35
Part II. INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers
Sections 7-109-102 and 7-109-107 of the Colorado Business
Corporation Act authorize a corporation to provide indemnification
to a director, officer, employee, fiduciary or agent of the corporation
against expenses reasonably incurred by him in connection with such
action, suit or proceeding, if such party acted in good faith and in
a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was
unlawful, except that with respect to any action which results in a
judgment against the person and in favor of the corporation or with
respect to an action in which it is determined that the person derived an
improper personal benefit, the corporation may not indemnify unless a
court determines that the person is fairly and reasonably entitled to the
indemnification. Section 7-109-103 of the Act further provides that
indemnification shall be provided if the party in question is successful on
the merits.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors,
officers and controlling persons of Global Concepts pursuant to
the foregoing provisions, or otherwise, the small business issuer
has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than payment by Global Concepts of expenses incurred or
paid by a Director, officer or controlling person of Global
Concepts in the successful defense of any action, suit or
proceeding) is asserted by such Director, officer or controlling
person in connection with the securities being registered, Global
Concepts will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
Item 25. Other Expenses of Issuance and Distributions
The following are the expenses that Global Concepts expects
to incur in connection with the registration and distribution of
the shares being registered. All of these expenses (other than
the filing fee) are estimated, and will not be certain until
after the registration statement is declared effective. Global
Concepts will pay all of these expenses; the selling shareholders
will pay none of them.
Filing Fee.................. $ 1,063
Accounting fees............. 4,000
Transfer Agent ............. 1,000
Legal fees.................. 15,000
Printing expenses........... 500
------
TOTAL.................... $ 21,563
======
I
Item 26. Recent Sales of Unregistered Securities.
In May 2002 Global Concepts issued 10,000,000 shares of
common stock to Michael Margolies. The securities were issued in
consideration for services to be valued at the market price on
the date the shares were issued. The sale was exempt pursuant to
Section 4(2) of the Act since the sale was not made in a public
offering and was made to an individual who had access to detailed
information about Global Concepts and was acquiring the shares
for his own account. There were no underwriters.
In September 2002 Global Concepts issued 1,000,000 shares
of common stock to Michael Gluck. The securities were issued in
consideration for a loan of $125,000 made to Global Concepts.
The shares were valued at the market price on the date the shares
were issued. The sale was exempt pursuant to Section 4(2) of the
Act since the sale was not made in a public offering and was made
to an individual who had access to detailed information about
Global Concepts and was acquiring the shares for his own account.
There were no underwriters.
In September 2002 Global Concepts issued 250,000 shares of
common stock to Rick Kelly. The securities were issued in
consideration for the transfer of shares in Xcalibur Xpress, Inc.
The shares were valued at the market price on the date the shares
were issued. The sale was exempt pursuant to Section 4(2) of the
Act since the sale was not made in a public offering and was made
to an individual who had access to detailed information about
Global Concepts and was acquiring the shares for his own account.
There were no underwriters.
In December 2002 Global Concepts issued 80,000 shares of
common stock to Steven Frisone. The securities were issued in
consideration for services to be valued at the market price on
the date on which the shares were issued. The sale was exempt
pursuant to Section 4(2) of the Act since the sale was not made
in a public offering and was made to an individual who had access
to detailed information about Global Concepts and was acquiring
the shares for his own account. There were no underwriters.
In June 2004 Global Concepts issued a total of 100,000
shares of common stock to the owners of Advanced Medical
Diagnostics LLC. The securities were issued in consideration for
their transfer to Global Concepts of ownership of Advanced
Medical Diagnostics LLC. The shares were valued at the market
price on the date on which the shares were issued. The sales were
exempt pursuant to Section 4(2) of the Act since the sales were
not made in a public offering and were made to individuals who
had access to detailed information about Global Concepts and who
were acquiring the shares for their own accounts. There were no
underwriters.
In October 2004 Global Concepts issued a total of 100,000
shares of common stock to the owners of J&J Marketing, LLC. The
securities were issued in consideration for their transfer to
Global Concepts of ownership of J&J Marketing LLC. The shares
were valued at the market price on the date on which the shares
were issued. The sales were exempt pursuant to Section 4(2) of
the Act since the sales were not made in a public offering and
were made to individuals who had access to detailed information
about Global Concepts and who were acquiring the shares for their
own accounts. There were no underwriters.
II
In November 2004 Global Concepts sold two 5% Secured
Convertible Debentures in the principal amount of $200,000 each.
The sale was made to Cornell Capital Partners, LP in
consideration of $360,000. The issuance was exempt pursuant to
Section 4(2) of the Act since the issuance was not made in a
public offering and was made to an entity whose principals had
access to detailed information about Global Concepts and which
was acquiring the shares for its own account. There were no
underwriters.
In November 2004 Global Concepts issued a total of
4,545,454 shares of common stock to Cornell Capital Partners, LP
and Newbridge Securities Corporation. The shares were issued to
Cornell Capital Partners, LP in consideration of its execution of
the Standby Equity Distribution Agreement. The shares were
issued to Newbridge Securities Corporation in consideration of
services rendered in assisting Global Concepts in negotiating the
Standby Equity Distribution Agreement. The issuance was exempt
pursuant to Section 4(2) of the Act since the issuance was not
made in a public offering and was made to entities whose
principals had access to detailed information about Global
Concepts and which were acquiring the shares for their own
accounts. There were no underwriters.
Item 27. Exhibits and Financial Statement Schedules
Exhibits
3-a Articles of Amendment and Restatement of the Articles of
Incorporation - filed as an exhibit to the Annual Report
on Form 8-K for the year ended December 31, 2000 and
incorporated herein by reference.
3-a(1) Articles of Amendment of Articles of Incorporation -
filed as an exhibit to the Quarterly Report on Form 10-
QSB for the quarter ended September 30, 2004 and
incorporated herein by reference.
3-b Restated By-laws - filed as an exhibit to the Current
Report on Form 8-K dated November 17, 2000 and
incorporated herein by reference.
5 Opinion of Robert Brantl, Esq,
10-a Purchase Agreement dated September 15, 2004 among
Compagnie Logistique de Transports Automobiles,
Transportation Logistics Int'l, Inc., Mr. M. Marstal, Mr.
S. Taleb, Mr. D. DeMaio and Mr. Jean-Claude Corre - filed
as an exhibit to the Current Report on Form 8-K dated
October 1, 2004 and incorporated herein by reference.
10-b Option Agreement dated October 1, 2004 among
Transportation Logistics Int'l, Inc., J&J Marketing LLC,
and Jane and Michael Schub - filed as an exhibit to the
Current Report on Form 8-K dated October 1, 2004 and
incorporated herein by reference
10-c Standby Equity Distribution Agreement with Cornell Capital
Partners dated November 16, 2004.
III
10-d Form of 5% Secured Convertible Debenture issued November
16, 2004.
21 Subsidiaries - Transportation Logistics Int'l, Inc., a
New York corporation
Xcalibur Express, Inc.
Advanced Medical Diagnostics LLC
J&J Marketing LLC
Compagnie Logistique de Transports Automobiles
23-a. Consent of Rosenberg Rich Baker Berman & Company, PA
23-b Consent of Thomas J. Kellerman, CPA
23-c Consent of
23-d Consent of Robert Brantl, Esq. is contained in his
opinion.
Item 28. Undertakings
See Item 24 for the undertaking regarding the indemnification of
officers, directors and controlling persons.
The Company hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, post-effective amendments to this registration
statement to:
(i) Include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) Reflect in the prospectus any facts or events
which, individually or together, represent a
fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities
offered (if the total dollar value of securities
offered would not exceed that which was registered) and
any deviation from the low or high end of estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement.
(iii) Include any additional or changed material information
on the plan of distribution.
IV
(2) For determining liability under the Securities Act,
treat each post-effective amendment as a new registration statement of
the securities offered, and the offering of the securities at that time
to be the initial bona fide offering.
(3) File a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the offering.
SIGNATURES
In accordance with the requirements of the Securities Act of 1933,
Global Concepts, Ltd. certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form SB-2 and
authorized this registration statement to be signed on its behalf by the
undersigned in the Town of Garrison and the State of New York on
the 6th day of December, 2004.
GLOBAL CONCEPTS, LTD.
By:/s/Michael Margolies
------------------------------
Michael Margolies, Chairman
In accordance with to the requirements of the Securities Act
of 1933, this registration statement has been signed below by the following
persons in the capacities stated on December 6, 2004.
/s/ Michael Margolies
----------------------------
Michael Margolies, Director,
Chief Executive Officer,
Chief Financial Officer,
Chief Accounting Officer
/s/ Stanley Chason
----------------------------
Stanley Chason, Director