As filed with the Securities and Exchange Commission on August 15, 2005
Registration Number:
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM SB-2
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
Global Concepts, Ltd.
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(Name of Small Business Issuer in its Charter)
Colorado 4231 84-1191355
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(State or other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification No.)
EDUARDO RODRIGUEZ, CHAIRMAN
Global Concepts, Ltd.
501 Bloomfield Avenue
Montclair, NJ 07042
(973) 233-1233
(Address and telephone number of Registrant's principal executive offices,
principal place of business, and agent for service of process.)
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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
Proposed Proposed
Title of Each Maximum Maximum
Class of Amount Offering Aggregate Amount of
Securities To Be To Be Price Per Offering Registration
Registered Registered Share (4) Price (4) Fee
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Common Stock, no
par value 39,572,615 (1) $0.133 $ 5,263,158 $ 619.48
Common Stock, no
par value 36,289,473 (2) $0.133 $ 4,826,500 $ 568.08
Common Stock, no
par value 33,266,429 (3) $0.133 $ 4,424,435 $ 520.76
--------
Total Fee: $ 1,708.32
========
(1) The amount registered represents the shares that would be
issued to Cornell Capital Partners, LP and resold by it 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 August 11, 2005.
(2) The amount registered is the sum of (a) 12,500,000 shares that
may be issued to Cornell Capital Partners, LP upon conversion
of the Secured Convertible Debenture dated August 1, 2005; (b)
5,000,000 shares that may be issued to Cornell Capital
Partners, LP upon its exercise of the Warrant to Purchase
Common Stock; and (c) 18,789,473 shares that would be issued to
The Margolies Family Trust if it converted the Convertible Debenture
dated March 7, 2005 based on the closing price on August 11, 2005.
(3) The amount registered represents shares now owned and offered by G&H
Management, LLC, Stanley Chason, Cornell Capital Partners, LP,
Shazamstocks Inc., Michael Seeley, Benjamin Perrone, Rosenberg Rich
Baker Berman & Co., and Newbridge Securities Corp.
(4) 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 $.133, the closing price of the
Common Stock reported on the OTC Bulletin Board on August 11,
2005.
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
109,128,517 SHARES
NINE 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 5 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 AUGUST , 2005
TABLE OF CONTENTS
PROSPECTUS SUMMARY . . . . . . . . . . . . . . . . . . -3-
Summary Financial Information . . . . . . . . . . -4-
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . -5-
YOU SHOULD NOT RELY ON FORWARD LOOKING STATEMENTS. . . -9-
DIVIDEND POLICY. . . . . . . . . . . . . . . . . . . .-10-
CAPITALIZATION . . . . . . . . . . . . . . . . . . . .-10-
Market for the Common Stock . . . . . . . . . . .-10-
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS. . . . . . . . . .-11-
BUSINESS . . . . . . . . . . . . . . . . . . . . . . .-18-
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . .-23-
Executive Compensation. . . . . . . . . . . . . .-24-
Related Party Transactions. . . . . . . . . . . .-26-
Limitation of Liability and Indemnification . . .-27-
PRINCIPAL SHAREHOLDERS . . . . . . . . . . . . . . . .-27-
SELLING SHAREHOLDER. . . . . . . . . . . . . . . . . .-29-
Plan of Distribution. . . . . . . . . . . . . . .-33-
LEGAL MATTERS. . . . . . . . . . . . . . . . . . . . .-35-
EXPERTS. . . . . . . . . . . . . . . . . . . . . . . .-35-
ADDITIONAL INFORMATION . . . . . . . . . . . . . . . .-35-
INDEX TO FINANCIAL STATEMENTS. . . . . . . . . . . . .-37-
-2-
PROSPECTUS SUMMARY
GLOBAL CONCEPTS, LTD.
Global Concepts, Ltd. is a holding company. Two subsidiaries
of Global Concepts generate over 99% of its revenue. They are
Compagnie Logistique de Transports Automobiles ("CLTA") and Societe
Lyonnaise d'Affretement et de Transports Europeans ("SLATE"). CLTA
and SLATE are engaged in the business of warehousing and transporting
new automobiles in France. CLTA is also engaged in the business of
providing intermodal ground transportation to companies engaged in
the air freight business. Global Concepts also has a subsidiary
(Advanced Medical Diagnostics, LLC) that is engaged in the business
of manufacturing and distributing a low-cost, self-administered test
for the HIV virus, and a subsidiary (J&J Marketing LLC) that 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 501
Bloomfield Avenue, Montclair, NJ 07042. Our telephone number is 973-
233-1233.
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. It may also acquire
Global Concepts shares in three 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 Secured Con-
vertible Debenture issued to it by Global Concepts.
The Debenture, which is in the principal amount of
$2,500,000, is convertible by Cornell into Global
Concepts common stock at $.20 per share, for a total of
12,500,000 shares if Cornell Capital Partners converts
the entire Debenture.
- Cornell Capital Partners may use this prospectus to
reoffer to the public up to 5,000,000 shares that it is
entitled to purchase by exercising a Warrant to purchase
shares at $.25 per share.
- Cornell Capital Partners may also use the prospectus to
reoffer to the public up to 39,572,615 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. The Agreement permits Global
Concepts to demand a maximum of $250,000 from Cornell
Capital Partners every six trading days until August ___,
2007. At the market price of $.133 on August 11, 2005, a
drawdown of $250,000 would entail the sale of over
2,000,000 shares by Global Concepts to Cornell Capital
Partners.
-3-
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.
G&H Management, L.L.C. is using this prospectus to resell to
the public up to 20,000,000 shares of Global Concepts common stock
that G&H currently owns. The managers of G&H Management, L.L.C. are
the two members of Global Concepts' Board of Directors, and the owners
of G&H Management are the families of those board members.
The Margolies Family Trust is using this prospectus to resell
to the public up to 18,789,473 shares of Global Concepts common stock
that the Trust may acquire by converting a Convertible Debenture
issued to it by Global Concepts in March 2005. The Debenture is in
the principal amount of $2,499,000, which was the amount of debt that
the Margolies Family Trust surrendered in exchange for the Debenture.
The Debenture is convertible at the public market price at the time
of conversion.
Michael Seeley is using this prospectus to offer to the public
1,000,000 shares of common stock that he acquired in settlement of a
litigation with Global Concepts.
Stanley Chason, Shazamstocks Inc., Benjamin Perrone, Rosenberg Rich
Baker Berman & Co., and Newbridge Securities Corp. are using this prospectus
to offer to the public an aggregate of 6,703,005 shares of common stock
that Global Concepts issued to them in compensation for consulting or
employment services.
OUTSTANDING SHARES
Global Concepts has only one class of stock outstanding. On
the date of this prospectus there were 98,116,429 shares of common
stock outstanding. Other than the convertible securities and
warrants held by the Selling Shareholders, 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.
-4-
Six Months Year Ended Year Ended
STATEMENT OF OPERATIONS Ended 6/30/05 12/31/04 12/31/03
------------- ------------ ------------
Revenue $ 21,282,000 $ 5,286,000 $ 66,000
Direct Expenses 17,514,000 4,208,000 0
---------- ---------- ----------
Gross Profit 3,768,000 1,078,000 66,000
Operating Expenses 2,478,000 5,129,000 774,000
---------- ---------- ----------
Income/(Loss) Before
Discontinued Operations 466,000 (4,122,000) (708,000)
Gain/(Loss) From
Discontinued Operations 0 167,000 (1,620,000)
---------- ---------- ----------
Net Income/(Loss) 466,000 (3,955,000) (2,328,000)
========== ========== ==========
Net Income/(Loss) Per Share $ 0.01 $ (0.08) $ (0.06)
========== ========== ==========
Weighted Average Number
of Shares Outstanding 87,280,199 48,322.141 40,396,338
BALANCE SHEET DATA At 6/30/05 At 12/31/04
---------- -----------
Working Capital/(Deficit) $ (2,269,000) $ (2,232,000)
Total Assets 9,865,000 4,270,000
Shareholders' (Deficit) (2,169,000) (2,912,000)
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.
I. RISKS RELATING TO OUR BUSINESS
WE MAY BE UNABLE TO SATISFY OUR CURRENT DEBTS.
On June 30, 2005 we had $5,425,000 in liquid assets and
$5,736,000 in accounts payable and accrued expenses. In addition, we
had over $2 million in notes and debentures payable within the
following year. Since that time we have sold an additional $1
million in short-term debt to Cornell Capital Partners, and used most
of the proceeds to purchase rolling stock. Since our debts exceed
our assets, there is a risk that we will be unable to satisfy the
debts when necessary. We are engaged in efforts to negotiate
compromises and extensions with major creditors. If those
negotiations are unsuccessful, however, our business will fail.
-5-
WE LACK CAPITAL TO FUND OUR OPERATIONS.
At the beginning of 2004 Global Concepts had no operating
businesses. Since June 2004 we have acquired four business operations.
All four 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.
NONE OF OUR SUBSIDIARIES HAS SUFFICIENT BUSINESS HISTORY TO
PERMIT A RELIABLE ESTIMATE OF ITS FUTURE PROSPECTS.
Our business operations are carried out by four subsidiaries.
CLTA has a considerable business history, but only recently emerged
from legal proceedings in France that substantially reorganized it.
SLATE has a relatively poor business history as a stand-alone
company, but has only operated as an affiliate of CLTA since July.
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. 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.
Over 99% of our revenues are produced by CLTA and SLATE. CLTA
and SLATE are each French companies with all of its business operations
located in France. Their 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 these
subsidiaries.
OUR LARGEST SUBSIDIARIES HAVE ONE PRIMARY CUSTOMER, AND WOULD
BE SERIOUSLY AFFECTED BY ANY INTERRUPTION OF ITS BUSINESS WITH THAT
CUSTOMER.
CLTA and SLATE are the subsidiaries of Global Concepts that
generates over 99% of our revenues. Approximately 85% of SLATE's
business and 37% of CLTA's business consists of warehousing,
servicing and delivering automobiles for two related companies that
distribute Peugeot and Citroen automobiles in Europe. If that
business relationship were damaged, or if those customers suffered a
serious business reverse, the adverse effect on our business could be
dramatic.
-6-
A DOWNTURN IN THE FRENCH ECONOMY WOULD BE LIKELY TO REDUCE DEMAND FOR
THE SERVICES OFFERED BY CLTA AND SLATE.
The business of CLTA and of SLATE primarily 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 and SLATE will likewise be
reduced.
INCREASED FUEL PRICES WILL REDUCE THE PROFITS OF OUR TRANSPORTATION
SUBSIDIARIES, CLTA AND SLATE.
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. SLATE, likewise, obtains most
of its revenues from the transportation of automobiles. Currently
fuel oil represents over 17% of the expenses of these companies.
When fuel oil prices are high, as they are now relative to historical
prices, our subsidiaries' profit margins are reduced. If fuel oil
prices remain high or climb even higher, it will have an adverse
effect on our 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. Because we lack capital resources to devote to
competition, it is likely that significant competition would defeat
our efforts to develop this business.
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 SUBSIDIARY, J&J MARKETING, IS ENTERING A HIGHLY COMPETITIVE
MARKET, AND MAY LACK THE RESOURCES NECESSARY TO COMPETE EFFECTIVELY.
J&J Marketing is in the early stages of entering the market for
non-medicated pharmaceutical personal care products. This market is
highly competitive, with some well-established companies and many new
entries into the market each year. There is very little that a
company can do to distinguish its products from competitors' personal
-7-
care products. So competitive success depends on advertising and
marketing skill. Because J&J Marketing has very little capital
resources available, it will be difficult for it to compete
effectively.
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 Eduardo Rodriguez, who was appointed to the
Board in 2005 by Mr. Margolies and by Mr. Rodriguez' predecessor on
the Board. 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.
II. RISKS RELATING TO THE MARKET FOR OUR COMMON STOCK
THE VOLATILITY OF THE MARKET FOR GLOBAL CONCEPTS COMMON STOCK
MAY PREVENT A SHAREHOLDER FROM OBTAINING 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 THE SELLING SHAREHOLDERS FROM
GLOBAL CONCEPTS IS LIKELY TO REDUCE THE MARKET PRICE OF GLOBAL
CONCEPTS' SHARES.
Two of the Selling Shareholders (Cornell Capital Partners and
The Margolies Family Trust) hold debentures that they may convert
into a total of 31,289,473 Global Concepts shares, based on current
market prices for our shares. Cornell Capital Partners also holds a
warrant to purchase up to 5 million shares at $.25 per share.
Finally, Global Concepts and Cornell Capital Partners are parties to
a Standby Equity Distribution Agreement that permits Global Concepts
to sell shares to Cornell Capital Partners for up to $5,000,000. We
have included 39,572,615 shares in this prospectus for that purpose.
We expect that each of these Selling Shareholders will promptly
resell into the public market any shares it acquires under any of
these arrangements. The total of 75,862,088 shares that may be sold
into the market in this way would nearly double the number of
outstanding shares of Global Concepts common stock. Future resales
of that quantity of shares by the Selling Shareholders would be
likely to reduce the market price of Global Concepts' common stock.
-8-
SALES OF OUR COMMON STOCK BY CORNELL CAPITAL PARTNERS DURING THE
PRICING PERIOD COULD REDUCE THE MARKET PRICE AND THE PRICE THAT CORNELL
PAYS FOR ITS SHARES.
When Global Concepts notifies Cornell Capital Partners that it
intends to sell shares to Cornell Capital Partners pursuant to the Standby
Equity Distribution Agreement, Cornell Capital Partners will usually
promptly commence to sell shares into the public market. The price that
Cornell Capital Partners pays Global Concepts for the shares will be based
on the lowest daily market price during the five trading days after Global
Concepts gives that notice. Since the sales by Cornell Capital Partners
may reduce the market price, they may have the effect of reducing the price
that Cornell Capital Partners pays to Global Concepts for the shares.
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.
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 and SLATE 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.
-9-
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
98,116,429 shares of our common stock outstanding and no shares of
preferred stock outstanding.
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 ten calendar quarters.
-10-
Bid
---
Period: High Low
---- ---
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
Oct. 1, 2004 - Dec. 31, 2004 $ .14 $ .04
Jan. 1, 2005 - Mar. 31, 2005 $ .07 $ .03
Apr. 1, 2005 - June 30, 2005 $ .19 $ .04
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
CLTA and SLATE carry on their business operations in Euros. In
the following discussion, the financial results realized by CLTA and
SLATE have been expressed in U.S. Dollars at the conversion rate in
effect during the relevant period. The conversion rate during the
past twelve months has been approximately 0.8 U.S. Dollars to 1 Euro.
Any gain or loss realized by reason of the exchange of Euros into
Dollars for accounting purposes is recorded in the equity section of
the balance sheet as "other comprehensive income."
-11-
Six Months Ended June 30, 2005 compared to
Six Months Ended June 30, 2004
In the second half of 2004 Global Concepts acquired its first
three operating subsidiaries: Advanced Medical Diagnostics LLC,
Compagnie Logistique de Transports Automobiles ("CLTA"), and J&J
Marketing, LLC. Its fourth, Societe Lyonnaise d'Affretement et de
Transports European ("SLATE") was not acquired until July 2005, and
so has not affected our reported financial results. Advanced Medical
Diagnostics has not generated any revenue to date. The revenue and
expenses of J&J Marketing are negligible. Accordingly, the results
of operations reported for the first six months of 2005 effectively
represent the results of CLTA. The results of operations for the
first six months of 2004 represented consulting services provided by
Global Concepts' management, and are not comparable to the 2005
operations.
During the six months ended June 30, 2005, the Company reported
gross revenue of $21,282,000, almost entirely from CLTA. It incurred
$17,514,000 in direct costs in producing those revenues, yielding a
gross profit of $3,768,000. The gross margin of 17.7% realized in
the period was typical of the margin that can be expected from the
services performed by CLTA for Peugeot and Citroen, since those
revenues are primarily realized from a fixed price contract, as well
as from those performed for CLTA's air freight delivery customers,
since those too are under contract. In July, however, the Company
acquired SLATE and is engaged in integrating SLATE with its existing
French operations. SLATE's operations have some overlap with CLTA's
auto distribution services, but under different contracts. The
effect that SLATE will have on the Company's gross margin, therefore,
cannot be predicted at this time.
The operations of CLTA yielded a net profit of $1,633,000. However,
because Global Concepts owned only 82% of the capital stock of CLTA on
June 30, 2005 (increased from 60% at December 31, 2004), a reduction of
$294,000 attributable to the "minority interest" was recorded on Global
Concepts' statements of operations.
-12-
Global Concepts incurred an "interest expense" of $530,000 during
the first quarter of 2005. Approximately $150,000 was attributable to
the value of the beneficial conversion feature in the $1,500,000 note
issued to Cornell Capital Partners during the quarter. In addition,
$200,000 of the interest expense was attributable to amortization of
the discount given to Cornell Capital Partners when it purchased the
note from Global Concepts for $900,000. The remaining $400,000 of the
discount will be similarly expensed over the life of the note. The
note was scheduled to terminates on January 26, 2006. In August,
however, Global Concepts and Cornell Capital Partners refinanced the
note, replacing it with a note that terminates on February 1, 2007.
During the first half of 2005 the Company issued 23,571,000
shares of its common stock to employees and consultants. The market
value of those shares represent expenses of the Company. A portion
of the expense was incurred in the sixth months ended June 30, 2005,
including $234,000 attributable to shares issued to consultants, as
well as a portion of the $2,244,000 "selling, general & administrative"
expense incurred in the six months ended June 30, 2005. After taking
those expenses into account, Global Concepts realized a net income of
$466,000 for the six months ended June 30, 2005.
A portion of the common stock issued to consultants during the
first six months of 2005 was compensation under two year contracts.
The market value of those shares has been recorded as a reduction to
equity identified as "prepaid consulting." In addition, a portion of
the shares issued to employees has been recorded as a reduction to
equity identified as "deferred compensation." The aggregate of
$1,030,000 in deferred compensation and prepaid consulting on Global
Concepts' balance sheet at June 30, 2005 will be expensed in future
periods when Global Concepts expects to realize the benefit of the
consulting or employment services.
Year Ended December 31, 2004 compared to
Year Ended December 31, 2003
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 for the fourth quarter
of 2004 are reflected in the Company's consolidated financial statements
for 2004.
-13-
The financial results from J&J Marketing for the fourth quarter
of 2004 were negligible: it obtained $8,000 in revenue and generated
$3,000 in net pre-tax income. Therefore, the results of operations
reported for 2004 effectively represent the results of CLTA.
During the three months ended December 31, 2004, CLTA obtained
gross revenue of $5,278,000. It incurred $4,208,000 in direct costs
in producing those revenues, yielding a gross profit of $1,070,000.
CLTA's operating expenses exceeded its gross profit, however, which
led to an operating loss of $92,000 from CLTA for the quarter. The
loss was incurred primarily because CLTA's gross profit for the
period barely exceeded its labor costs, which currently represent
over 47% of CLTA's expenses. 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 new contract that CLTA
signed with its primary customer for 2005 provides for a sizeable
increase in revenue. The profits realized by CLTA in the first half
of 2005 indicate that it has begun to achieve an efficient level of
operations. We do not know yet, however, whether these efficient
operations can be continued for the long-term.
Although CLTA realized a net loss of only $123,000 for the
fourth quarter, Global Concepts realized a net loss of $3,955,000 for
the year. This occurred, for the most part, as a result of Global
Concepts' practice of issuing its common stock for services and to
settle debt. Because it had little cash for most of 2004, Global
Concepts settled some of its larger debts by issuing stock. This
resulted in an expense of $3,662,000 attributable to stock-based
compensation. Because of that expense, Global Concepts incurred a
net loss of $3,955,000 for 2004.
Other Subsidiaries
Societe Lyonnaise d'Affretement et de Transports European
---------------------------------------------------------
In July 2005 Global Concepts acquired ownership of SLATE, which
is engaged in a business similar to CLTA's business. Because SLATE
was not owned by Global Concepts during the first half of 2005, its
financial results are not consolidated with those of Global Concepts,
and will not be until results for the third quarter of 2005 are
reported. Management of SLATE have provided us with financial
statements indicating that during the first three months of 2005
SLATE obtained $3,209,000 in revenue, on which it realized $32,336 in
pre-tax income. SLATE's results for the three months ended December
31, 2004 were similar. Accordingly, we expect that SLATE will
initially add approximately those amounts to our quarterly revenue
and income. However, we have already initiated a program to
streamline SLATE's operations and consolidate its management with
CLTA's management, thus reducing expenses. Our expectation for the
long-term is that a similar level of revenues in SLATE can be made to
produce substantially greater income.
-14-
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.
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
Global Concepts at June 30, 2005 had a working capital deficit
of $2,269,000, in part due to liabilities in excess of $1.2 million
continuing from the period prior to its acquisition of CLTA. CLTA
itself has adequate working capital to carry on its operations,
primarily because Global Concepts has incurred debt in the past
several months to fund contributions to the capital of CLTA.
-15-
In November, 2004, and January and August 2005 Global Concepts
borrowed $1,800,000 from Cornell Capital Partners, primarily to fund
our acquisition of CLTA, the purchase of a fleet of vehicles for use
by CLTA, and our acquisition of SLATE. Because Global Concepts is
unable to borrow on conventional terms, it was forced to give Cornell
Capital Partners a note in the principal amount of $2,500,000 in
exchange for the $1,800,000 loan. The note bears interest at 12% per
annum. Monthly payments will be due on that note commencing no later
than January 1, 2006 and ending on February 1, 2007. The monthly
payments will be equal in amount. The amount of the monthly payment
will be determined by dividing the aggregate amount payable during
the term of the debenture by the number of months from the first
payment date to February 2007.
The note purchased in January 2005 required Global Concepts to
pay $1,500,000 to Cornell Capital Partners along with interest at a
rate of 12% per annum. However, the note was recorded on our balance
sheet at the purchase price paid for it by Cornell Capital Partners -
$900,000 included in the liability labeled "Promissory note."
Because Global Concepts sold the note to Cornell Capital Partners at
a substantial discount from the principal amounts of the notes, a
portion of the note is accounted for as a "discount" and does not
appear on the balance sheet. At June 30, 2005 the aggregate amount
of unamortized discounts on the two notes was $350,000. This amount
would be amortized over the term of the note, and would be recognized
as interest expense when it is amortized. Accordingly, the interest
rate on the notes, while stated to be 12%, actually exceeded 78%.
The January note was exchanged as partial consideration for the
$2,500,000 note issued in August 2005. The aggregate discount on the
new note was $700,000, yielding an effective interest rate of
approximately 36%.
In order to satisfy our debt to Cornell Capital Partners we
have entered into a "Standby Equity Distribution Agreement" with
Cornell Capital Partners. The Standby Equity Distribution Agreement
becomes effective when we provide Cornell Capital Partners with a
prospectus that will permit it to resell to the public any shares it
acquires from Global Concepts. During the two years after the
Securities and Exchange Commission declares that prospectus effective,
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 five trading days. The maximum
purchase price on each demand is $250,000. The Standby Equity
Distribution Agreement recites that Global Concepts may demand from
Cornell Capital Partners up to $5,000,000 during its term. 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.
Our plan is to sell common stock to Cornell Capital Partners in
order to meet our debt service obligations. This will result in a
significant increase in our outstanding common stock. At the closing
-16-
market price of $.133 per share on August 11, 2005, satisfaction of our
entire debt to Cornell Capital Partners would require that we issue
over 20 million shares. However, the influx of shares in that quantity into
the market is likely to result in a reduction in the market price for
our common stock. Therefore it is likely that considerably more
shares will have to be sold in order to satisfy our obligations to
Cornell Capital Partners.
Global Concepts also owes $2,499,000 to the family of its founder,
resulting from loans made to fund the operations of Global Concepts
during the past five years. That debt is now represented by a debenture
bearing interest at 6% that is convertible into common stock at the
market price. The principal and interest on the debenture are payable
on January 1, 2009.
Global Concepts realized net cash flow of $751,000 during the
first six months of 2005, entirely from the operations of CLTA.
However, because CLTA is currently expanding its operations, it has
significant working capital requirements. Therefore, to date CLTA
has made no cash distributions to Global Concepts other than a
monthly management fee of $10,000. This situation severely limits
the ability of Global Concepts to settle the obligations that remain
from prior years. Because of these liabilities, the financial
condition of Global Concepts will remain unstable until it is able to
leverage its ownership of CLTA into a source of significant liquidity,
either through enhanced cash flow from CLTA or financing based on its
interest in CLTA.
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.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
In preparing our financial statements we are required to
formulate working policies regarding valuation of our assets and
liabilities and to develop estimates of those values. In our
preparation of the financial statements for 2004, there were three
estimates made which were (a) subject to a high degree of uncertainty
and (b) material to our results:
* Our determination, detailed in Note 3 to the Consolidated
Financial Statements for 2004, that we should record a
valuation allowance for the full value of the deferred
tax asset created by our net operating loss carryforward.
The primary reason for the determination was our lack of
certainty as to if and when Global Concepts would commence
profitable operations.
* Our determination, referred to in Note 9 to the
Consolidated Financial Statements for 2004, concerning
the allowance for doubtful accounts that we maintain. As
needed based on each customer's circumstances, we reserve
an allowance for losses we may incur as a result of the
customer's inability to make required payments. Any
increase in the allowance results in a corresponding
-17-
increase in our general and administrative expenses. In
establishing this allowance, and then evaluating the
adequacy of the allowance for doubtful accounts each
quarter, we analyze historical bad debts, customer
concentrations, customer credit-worthiness, current
economic trends and changes in our customer payment
terms. If the financial condition of one or more of our
customers deteriorates, resulting in their inability to
make payments, or if we otherwise underestimate the
losses we incur as a result of our customers' inability
to pay us, we could be required to increase our allowance
for doubtful accounts which could adversely affect our
operating results.
* Our determination, described in Note 6 to the
Consolidated Financial Statements for 2004, regarding the
allocation of the purchase price of CLTA among liquid
assets, fixed assets and goodwill. We made a preliminary
allocation based on results to date, but will finalize
the allocation as we accumulate more historical information
on which to base a determination as to the fair value of
the assets acquired. If our final determination results
in an increased allocation to goodwill, and we determine
that the goodwill is impaired, we could incur a write-down
of the book value in 2005 (depending on our determination
of the fair value of the goodwill), which would adversely
affect our operating results.
We have made no material changes to our critical accounting
policies in connection with the preparation of financial statements
for 2004.
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 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 four
businesses, each of which is now a subsidiary of Global Concepts.
These four are now the business operations of Global Concepts.
Our parent company, Global Concepts, has only three employees:
our Chairman, our Secretary, and his administrative assistant. The
executive offices of Global Concepts are leased from the family of
our Secretary, Michael Margolies, for a fee of $1,000 per month.
COMPAGNIE LOGISTIQUE DE TRANSPORTS AUTOMOBILES
On October 1, 2004 Global Concepts acquired sixty percent (60%)
of the capital stock of Compagnie Logistique de Transports
Automobiles ("CLTA"). Since that time Global Concepts has increased
its interest in CLTA to 82% by making capital contributions of
$800,000 to CLTA. The remaining 18% 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. Pursuant to a shareholders agreement made in
October 2004, the five person board of directors of CLTA consists of
three individuals appointed by Global Concepts and two appointed by
the other owners of CLTA.
-18-
Since mid-2003 CLTA has been engaged in the business of
warehousing, finishing, and distributing new automobiles in France.
Over 42% of CLTA's auto distribution 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. Another 32% of its revenue arises from a
contract with Jefco, a subsidiary of Peugeot. Under these
arrangements, CLTA warehouses the newly-manufactured Peugeots and
Citroens, 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 currently performs about 4% of the
distribution work required by CAT. Because CLTA has increased its
fleet of trucks during 2005 and has obtained an affiliation with
SLATE that will make other trucks available, CLTA believes that its
share of CAT's distribution business can increase in coming months.
The 26% of CLTA's auto distribution revenues that are not
attributable to CAT or Jefco are obtained though auto distribution
contracts with approximately 20 other customers. CLTA is actively
pursuing expansion of its customer base, in order to reduce its
dependence on the CAT/Jefco relationship.
In February 2005, CLTA entered into a second line of business:
intermodal ground transportation of freight for companies engaged in
the air freight business. CLTA purchased a fleet of 247 tractor-
trailers in February, and solicited intermodal transportation
business from the customers of a disbanded transporter named Trans
Cuisinier. As a result, CLTA now provides delivery services in
France for customers such as DHL, Federal Express and UPS. Most of
the business involves making bulk deliveries from the port where the
air service unloads to the distribution centers where the freight is
dispatched for local delivery. In recent months, this intermodal
delivery business has generated approximately half of CLTA's revenues.
CLTA currently owns or leases a fleet of 93 car-carriers and
276 tractor-trailers 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 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, labor and fuel oil, is
insurance. CLTA is currently maintaining policies with three
insurers, and pays over 288,000 Euros (@ $346,000) in premiums.
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 pays a monthly rental of 14,000 Euros, plus a
rental tax of 2,744 Euros (approximately $20,400 total). CLTA also
has long-term leases for two parking facilities in Nantouil. The
leases expire in 2010, and require a monthly payment of 7,654 Euros
(@ $9,200).
-19-
CLTA currently has 128 full-time employees. None of them is
represented by a union. They are, however, protected by French labor
laws, which provide labor protections from termination of benefits
and discharge that are not generally available under U.S. law.
SOCIETE LYONNAISE D'AFFRETEMENT ET DE TRANSPORTS EUROPEANS
On July 1, 2005 Global Concepts purchased 80% of the capital
stock of Societe Financiere Hauville. The remaining 20% were
acquired by Dominique DeMaio, the President and part-owner of CLTA.
Societe Financiere Hauville owns 99.9% of Societe Lyonnaise
d'Affretement et de Transports Europeans ("SLATE"). The purchase
price was 700,000 Euros (approximately $840,000), payable in
installments, the last installment being due on June 30, 2006.
Global Concepts also agreed to repay loans of $120,000 made to SLATE
by its prior owner.
SLATE operates a fleet of 78 car-carriers from nine terminals
throughout France. The fleet is utilized in the distribution of
newly-manufactured vehicles. 85% of SLATE's revenues are obtained
under contracts with CAT and Jefco, the same entities that provide
74% of CLTA's revenues. SLATE earns the remaining 15% of its
revenues by acting as a sub-contractor to other auto distributors.
Although SLATE realized approximately $12 million in annual
revenue, it was unprofitable in 2004 and only marginally profitable
during the first five months of 2005. Global Concepts intends to
improve its profitability by reducing its expenses. Already
management of SLATE and CLTA have been consolidated, substantially
reducing SLATE's overhead. CLTA management has begun to introduce at
SLATE new purchasing and contract pricing policies, designed to assure
that the business SLATE contracts to accomplish will be profitable
business. Our goal is to make the combination of CLTA and SLATE
greater than the sum of its parts.
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.
-20-
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 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. Late in 2004 both China and Peru
approved the kit for sale in their countries. Others are expected to
follow. To date, however, we have received only preliminary orders
for testing quantities of the kits, which do not produce significant
revenues.
-21-
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 four individuals, none 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.
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.
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.
-22-
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 on Long Island. We have not incurred any
research and development expense, since product formulation was
carried out by our previous manufacturer under our direction. We
presently carry a $2 million product liability policy, which we
consider sufficient for our current level of operations.
The operations of J&J Marketing are 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, as well as the
President of our principal subsidiary are identified in the following
table. Directors serve until the next annual meeting of shareholders
and until their successors are elected and qualify. Officers serve
at the pleasure of the Board of Directors.
Director
Name Age Position with the Company Since
------------------ ---- ------------------------- --------
Eduardo Rodriguez 43 Chairman, Chief Executive 2005
Officer, Chief Financial
Officer
Michael Margolies 77 Secretary, Director 2000
Dominique DiMaio 44 President of CLTA --
Eduardo Rodriguez has served as Chief Executive Officer of
Global Concepts since March 2005. Mr. Rodriguez also serves as Chief
Executive Officer of Headliners Entertainment Group, Inc. (OTCBB:
HLEG), which is engaged in the business of operating comedy clubs and
-23-
dance clubs throughout the United States. Mr. Rodriguez has been the
Chief Executive Officer and a member of the Board of Directors of
Headliners since 1999.
Michael Margolies organized our first business operations in
1998. Mr. Margolies served as our Chief Executive Officer from 1998
until March 2005. 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. Mr. Margolies currently also serves
as a member of the Board of Directors of Headliners Entertainment
Group, Inc. (OTCBB: HLEG).
Dominique DiMaio has been the President and Chief Executive
Officer of CLTA since it emerged from reorganiztion proceedings in
2004. From 2002 to 2004 Mr. DiMaio was the Director of Administration
and Finance of ISO Services, a construction company in Boulogne France.
In that position he was responsible for internal management as well as
relations with financial institutions. From 1996 to 2002 Mr. DiMaio
served as Director of Finance for A.C.M.M., a company engaged in
metallic constructions in Saint Maurice, France.
AUDIT COMMITTEE; COMPENSATION COMMITTEE
The Board of Directors of Global Concepts does not have an
audit or a compensation committee. The Board of Directors also does
not have an audit committee financial expert. The Board of Directors
has not been able to recruit an audit committee financial expert to
join the Board of Directors because the Company has only in 2005
appeared to have financial viability.
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.
EXECUTIVE COMPENSATION
This table itemizes the compensation we paid to Michael Margolies,
who served as our Chief Executive Officer during 2004. There was no
other officer whose salary and bonus for services rendered during the
year ended December 31, 2004 exceeded $100,000.
Compensation
Year Salary Stock Grant
---- ------ -----------
Michael Margolies....... 2004 $ 0
2003 0
2002 0 (1)
-24-
________________________
(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
On March 7, 2005 Global Concepts entered into a "Joint Management
Agreement" with Headliners Entertainment Group, Inc., Eduardo Rodriguez,
Michael Margolies, The Rodriguez Family Trust and The Margolies Family
Trust. The Joint Management Agreement contained the following provisions
relevant to Global Concepts:
- The Rodriguez Family Trust and The Margolies Family Trust
agreed to organize a limited liability company - G&H
Management, L.L.C.. The Trusts, as well as Rodriguez and
Margolies, will contribute their Global Concepts shares
to G&H Management on August 15, 2005. Global Concepts
will pay a fee of $5,000 per month to G&H Management in
compensation for the services of Rodriguez and Margolies.
- Global Concepts entered into a five year Employment
Agreement with Rodriguez.
- Margolies resigned from his position as Chairman of
Global Concepts.
- Global Concepts entered into a five year advisory
agreement with Margolies.
- Rodriguez and Margolies agreed that they would each serve
as members of Global Concepts' Board of Directors. They
also agreed to elect a third member, to be nominated by
Rodriguez. The third board member has not yet been chosen.
- Global Concepts, Rodriguez and Margolies agrees that
until the death of Rodriguez or Margolies, the
compensation and benefits paid by Global Concepts to
Rodriguez will equal the compensation and benefits paid
by Global Concepts to Margolies.
Global Concepts' Employment Agreement with Rodriguez provides
that he will serve as President. His compensation will be $100,000
per annum. The fee payable to Rodriguez will continue for the term
of the agreement, notwithstanding Rodriguez' death or disability.
The agreement terminates on January 31, 2010, except that Rodriguez
covenanted that for one year after termination he will not engage in
activities that are competitive with Global Concepts.
Global Concepts' Advisory Agreement with Margolies provides
that he will consult with the Board of Directors and the President on
matters of business development, investor relations public relations
and finance. Global Concepts will pay Margolies a fee of $100,000
per annum and provide him the same benefits as are provided to Global
Concepts' executive officers. The fee payable to Margolies will
continue for the term of the agreement, notwithstanding Margolies'
death or disability. The agreement terminates on January 31, 2010,
except that Margolies covenanted that for one year after termination
he will not engage in activities that are competitive with Global
Concepts.
Stock Purchase Warrants
In April 2005 Global Concepts granted to Eduardo Rodriguez
and Michael Margolies a three-year warrant to purchase 40,000,000
shares of common stock at $.05 per share. The warrant was issued
in consideration of past services by Messrs. Rodriguez and Margolies.
They immediately assigned the warrant to G&H Management LLC. In August
2005 Global Concepts and G&H Management agreed to terminate the warrant.
In August 2005 Global Concepts issued a warrant to Eduardo
Rodriguez and Michael Margolies, which they assigned to G&H
Management, LLC. The warrant was issued in consideration of past
services by Messrs. Rodriguez and Margolies. The warrant gives G&H
Management the right to purchase 25 million shares of Global
Concepts common stock at $.12 per share, which was the market price
on the day of grant. The warrant will terminate on July 31, 2008.
-25-
Compensation of Directors
Our directors are reimbursed for out-of-pocket expenses incurred
on our behalf, but receive no additional compensation for service as
directors.
Equity Grants
The following tables set forth certain information regarding
the stock options acquired by the Company's Chief Executive Officer
during the year ended December 31, 2004 and those options held by him
on December 31, 2004.
Option Grants in the Last Fiscal Year
Percent
of total Potential realizable
Number of options value at assumed
securities granted to annual rates of
underlying employees Exercise appreciation of
option in fiscal Price Expiration for option term
Name granted year ($/share) Date 5% 10%
-----------------------------------------------------------------------------
M. Margolies 0 N.A. N.A. N.A. 0 0
Aggregated Fiscal Year-End Option Values
Number of securities underlying Value of unexercised in-the-money
unexercised options at fiscal options at fiscal year-end ($)
Name year-end (#) (All exercisable) (All exercisable)
--------------------------------------------------------------------------------
Michael Margolies 0 0
RELATED PARTY TRANSACTIONS
In March 2005 Global Concepts borrowed $400,000 from Headliners
Entertainment Group, Inc., and used the proceeds primarily to make
additional capital contributions to CLTA. Global Concepts gave a
promissory note in the principal amount of $400,000 to Headliners.
The note calls for interest at 10% per annum to be paid on the first
day of each month, commencing in April 2005, and for the principal to
be paid in eleven monthly installments of $33,333 and a final
installment of $33,337. Payment of the principal is scheduled to
commence on June 1, 2006. Eduardo Rodriguez and Michael Margolies,
the members of Global Concepts' Board of Directors, are also members
of the Board of Directors of Headliners Entertainment Group, Inc.
Eduardo Rodriguez is the Chief Executive Officer of both Global
Concept and Headliners.
-26-
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;
* Eduardo Rodriguez;
* each of our directors; and
* all directors and executive officers as a group.
There are 98,116,429 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.
-27-
Amount and
Nature of
Name and Address Beneficial Percentage
of Beneficial Owner(1) Ownership of Class
---------------------------------------------------------
Eduardo Rodriguez 47,997,439 (2) 39.0%
Michael Margolies 66,789,912 (2) (3) 54.2%
All officers and
directors as a
group (2 persons) 66,789,912 (2) (3) 54.2%
Kevin Waltzer 8,439,000 (4) 8.6%
14 Larkspur Lane
Newtown, PA 18904
(1) Except as otherwise noted, the address of each of these
shareholders is c/o Global Concepts, Ltd., 501 Bloomfield Avenue,
Montclair, NJ 07042.
(2) Includes 25,000,000 shares that may be purchased by G&H Management
L.L.C. upon exercise of the Warrant to Purchase Common Stock issued
to it in April 2005. Also includes 22,997,439 other shares owned by
G&H Management LLC. Messrs. Rodriguez and Margolies are the managers
of G&H Management, and their families own the equity in G&H Management.
(3) Includes 18,789,473 shares that may be acquired by The Margolies
Family Trust upon conversion of the Convertible Debenture issued
to it in March 2005. The Trustee of the Margolies Family Trust
is Mr. Margolies' spouse, and the beneficiaries of the Trust are
his spouse and children.
(4) Includes 2,455,000 shares held by Lisa Waltzer, Mr. Waltzer's spouse.
-28-
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 December 31, 2004.
Number of Number of
securities securities
to be issued Weighted remaining
upon average available
exercise of exercise for future
outstanding price of issunce
options, outstanding under equity
warrants and optons, warrants compensation
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
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 Owned
----------------------------------
Shares Acquired
Shares Put by on Conversion of Shares Owned
Global Concepts Debenture or Shares After Offering
Name Per SEDA Exercise of Warrant Other Offered Is Complete
---------------------------------------------------------------------------------------------------------------
Cornell Capital Partners 39,572,615(1) 17,500,000(2) 4,242,424 4,242,424 0
G&H Management LLC - - 22,997,439 20,000,000 2,997,439
The Margolies Family Trust - 18,789,473(3) 2,180,850 0 2,180,850
Michael Seeley - - 1,000,000 1,000,000 0
Shazamstocks Inc. - - 1,321,000 1,321,000 0
Stanley Chason - - 5,000,000 5,000,000 0
Benjamin Perrone - - 1,000,000 1,000,000 0
Rosenberg Rich Baker Berman - - 350,000 350,000 0
Newbridge Securities Corp. - - 353,005 353,005 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 $.133.
-29-
(2) Represents (a) 12,500,000 shares that may be acquired on conversion
of the Secured Convertible Debenture and (b) 5,000,000 shares that
may be purchased for $.25 per share on exercise of the Warrant to
Purchase Common Stock.
(3) Represents shares that may be acquired on conversion of Convertible
Debenture if the market price of Global Concepts stock is $.133.
None of the Selling Shareholders had any relationship with
Global Concepts within the past three years, except as follows:
Cornell Capital Partners, LP
----------------------------
a. Standby Equity Distribution Agreement - 2004
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. On August 1,
2005 Cornell Capital Partners and Global Concepts terminated the
Standby Equity Distribution Agreement signed in 2004.
b. Standby Equity Distribution Agreement - 2005
On August 4, 2005 Cornell Capital Partners and Global Concepts
signed a new Standby Equity Distribution Agreement dated August 1,
2005. The Agreement provides that during the two years commencing
when the Securities and Exchange Commission declares this prospectus
effective, 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 five 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.
-30-
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.
c. Convertible Debentures
On November 16, 2004 Global Concepts sold to Cornell Capital
Partners two 5% Secured Convertible Debentures. Each Debenture was 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.
On January 26, 2005 Global Concepts sold to Cornell Capital Partners
a Promissory Note. The Promissory Note was in the principal amount of
$1,500,000 and bore interest at 12% per annum. In exchange for the
Promissory Note, Cornell Capital Partners paid $500,000 and surrendered
the $400,000 convertible debentures it acquired in November 2004.
On August 1, 2005 Global Concepts sold to Cornell Capital
Partners a Secured Convertible Debenture. The Debenture is in the
principal amount of $2,500,000. In exchange for the Debenture,
Cornell Capital Partners surrendered the $1.5 million Promissory Note
issued to it in January 2005 and paid $900,000, from which it deducted
a $10,000 fee for Cornell Capital Partner's legal counsel.
Global Concepts is required to commence payments on the Secured
Convertible Debenture on the first day of the month following the
earlier of (a) the date when the Securities and Exchange Commission
declares this prospectus effective or (b) January 1, 2006. Payments
will be made in equal monthly installments through February 1, 2007.
Cornell Capital Partners is entitled to convert the debenture into
common stock at a price of $.20 per share. However, in the event
that Global Concepts commits a material default in its obligations
under the Debenture and related documents, the conversion price will
be reduced to $.06 per share. Cornell Capital Partners' right to
convert the Debenture is limited, however, to the extent that it
cannot convert the Debenture into an amount of shares that would
cause it to own more than 4.9% of Global Concepts' outstanding
shares. Global Concepts' obligations under the Debenture are secured
by a pledge of all of Global Concepts' assets.
-31-
The Secured Convertible Debenture has a stated interest of 12%.
However, since Cornell Capital Partners paid only $1,800,000 in
aggregate cash to acquire the note, the actual interest rate will
exceed 36%.
d. Warrant to Purchase Common Stock
In consideration for Cornell Capital Partner's purchase of the
Secured Convertible Debenture, Global Concepts issued to Cornell
Capital Partners a Warrant to purchase up to 5,000,000 shares of
common stock at $.25 per share. The Warrant has a term of three
years. The Warrant cannot be exercised to purchase shares which
would cause Cornell Capital Partners to own in excess of 4.99% of
Global Concepts' outstanding shares.
G&H Management, L.L.C.
----------------------
G&H Management was organized in March 2005 by the two members
of our Board of Directors and their families. Pursuant to the Joint
Management Agreement made at that time, Global Concepts pays G&H
Management a monthly fee of $5,000 in compensation for the services
of Eduardo Rodriguez and Michael Margolies.
In April 2005 Global Concepts granted to Eduardo Rodriguez
and Michael Margolies a three-year warrant to purchase 40,000,000
shares of common stock at $.05 per share. The warrant was issued
in consideration of past services by Messrs. Rodriguez and Margolies.
They immediately assigned the warrant to G&H Management LLC. In August
2005 Global Concepts and G&H Management agreed to terminate the warrant.
In August 2005 Global Concepts issued a warrant to Eduardo
Rodriguez and Michael Margolies, which they assigned to G&H
Management, LLC. The warrant was issued in consideration of past
services by Messrs. Rodriguez and Margolies. The warrant gives G&H
Management the right to purchase 25 million shares of Global
Concepts common stock at $.12 per share, which was the market price
on the day of grant. The warrant will terminate on July 31, 2008.
The Margolies Family Trust
--------------------------
The Margolies Family Trust is managed by the spouse of Michael
Margolies, the founder of our company. The beneficiaries of The
Margolies Family Trust are the members of his family. Throughout the
history of Global Concepts, The Margolies Family Trust has loaned
money for Global Concepts to use as working capital. At December 31,
2004 the balance of the loan was $2,499,000.
In March 2005 Global Concepts and The Margolies Family Trust
agreed to exchange the debt for a convertible debenture in the
principal amount of $2,499,000. The debenture bears interest at 6%
per annum. Principal and interest are payable on January 1, 2009.
In the meantime, however, the Trust may convert the debenture into
Global Concepts common stock at the market price on the date of
conversion. However, the Trust may not convert more than $69,417 in
any single month.
Michael Seeley
--------------
Mr. Seeley purchased a $200,000 debenture from Global Concepts
in 2001. Global Concepts defaulted in paying the debenture, and Mr.
Seeley commenced litigation. Global Concepts also commenced a
related litigation against the broker who had introduced Mr. Seeley
to Global Concepts. In May 2005 the litigations were settled.
Global Concepts agreed to issue to Mr. Seeley 1,000,000 shares of its
common stock and to include the shares in this prospectus for resale
by Mr. Seeley.
-32-
Stanley Chason
--------------
Mr. Chason was a member of Global Concepts Board of Directors
from 2001 until April 2005. In June 2004 Global Concepts issued
1,000,000 common shares to Mr. Chason in compensation for his
services. In July 2005 Global Concepts entered into a consulting
agreement pursuant to which Mr. Chason will advise management
regarding its business plans and financial requirements, and will
assist Global Concepts in finding and securing new business
opportunities. In compensation for those services, Global Concepts
issued 5,000,000 common shares to Mr. Chason and agreed to include
the shares in this prospectus for resale by Mr. Chason.
Shazamstocks Inc.
-----------------
Global Concepts entered into a consulting agreement with Shazamstocks
Inc. dated May 25, 2005. The agreement provides that for a one year period
Shazamstocks will post information concerning Global Concepts on its website
and will distribute information to its subscribers. In payment for the
services, Global Concepts issued 1,321,000 common shares to Shazamstocks and
agreed to include them in this prospectus.
Benjamin Perrone
----------------
In August 2005, Benjamin Perrone entered into a three year
management consulting services agreement with Global Concepts, which
issued 1,000,000 shares in consideration for his services.
Rosenberg Rich Baker Berman & Co.
---------------------------------
Rosenberg Rich Baker Berman & Co. was the independent auditor
for Global Concepts from 2001 until December 2004. Upon being
replaced as Global Concepts' independent auditor, Rosenberg Rich has
performed bookkeeping and accounting services for Global Concepts.
In August 2005 Global Concepts issued 350,000 shares to Rosenberg
Rich in compensation for its services during 2005.
Newbridge Securities Corp.
--------------------------
Newbridge Securities Corp. acted as advisor to Global Concepts
in connection with the Standby Equity Distribution Agreement that
Global Concepts made with Cornell Capital Partners in November 2004.
In compensation, Global Concepts issued 303,030 shares to Newbridge
Securities Corp. Newbridge Securities Corp. also acted as advisor to
Global Concepts in connection with the Standby Equity Distribution
Agreement that Global Concepts made with Cornell Capital Partners in
August 2004. In compensation, Global Concepts issued 49,975 shares
to Newbridge Securities Corp.
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:
-33-
* ordinary brokers' transactions;
* transactions involving cross or block trades
* 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
-34-
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 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. for the year
ended December 31, 2004 included in this prospectus and in the
registration statement have been audited by Bagell, Josephs &
Company, L.L.C., independent registered 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 Global Concepts, Ltd. for the year
ended December 31, 2003 included in this prospectus and in the
registration statement have been audited by Rosenberg Rich Baker
Berman & Company, independent registered 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.
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.
-35-
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.
-36-
INDEX TO FINANCIAL STATEMENTS
I. GLOBAL CONCEPTS, LTD.
1. Audited Financial Statements for the Years
Ended December 31, 2004 and 2003
Pages
Report of Independent Registered Public Accounting Firm F-1
Report of Independent Registered Public Accounting Firm F-2
Consolidated Balance Sheet F-3
Consolidated Statements of Operations F-4
Consolidated Statements of Comprehensive Income/(Loss) F-5
Consolidated Statements of Shareholders' Equity/(Deficit) F-6
Consolidated Statements of Cash Flows F-7
Notes to Consolidated Financial Statements F-9
2. Unaudited Financial Statements for the Six
Months Ended June 30, 2005 and 2004
Condensed Consolidated Balance Sheet F-19
Condensed Consolidated Statements of Operations F-20
Condensed Consolidated Statements of Cash Flows F-21
Notes to Condensed Consolidated Financial Statements F-22
BAGELL, JOSEPHS & COMPANY, L.L.C.
200 Haddonfield Berlin Road
Gibbsboro, New Jersey 08026
(856) 346-2828 Fax (856) 346-2882
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Directors and Stockholders of
Global Concepts, Ltd. and Subsidiaries
We have audited the accompanying consolidated balance sheet of Global Concept,
Ltd. and Subsidiaries (the "Company") as of December 31, 2004 and the related
consolidated statements of operations, stockholders' equity (deficiency) and
cash flows for the year ended December 31, 2004. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audit.
We conducted our audit in accordance with standards established by the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audits to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall consolidated financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Global Concepts,
Ltd. and Subsidiaries as of December 31, 2004, and the results of its operations
and its cash flows for the year ended December 31, 2004 in conformity with
accounting principles generally accepted in the United States of America.
The accompanying consolidated financial statements for December 31, 2004 have
been prepared assuming that the Company will continue as a going concern. As
discussed in the notes to the consolidated financial statements, the Company has
sustained operating losses and accumulated deficit that raise substantial doubt
about its ability to continue as a going concern. Management's operating and
financing plans in regard to these matters are also discussed in the notes. The
consolidated financial statements do not include any adjustments that might
result from the outcome of these uncertainties.
/s/ BAGELL, JOSEPHS & COMPANY, L.L.C.
-------------------------------------
BAGELL, JOSEPHS & COMPANY, L.L.C.
Gibbsboro, New Jersey
May 17, 2005
F-1
Independent Auditors' Report
To the Board of Directors and Stockholders of
Transportation Logistics Int'l Inc. and Subsidiaries
We have audited the accompanying consolidated balance sheet of Transportation
Logistics Int'l Inc. 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 Transportation Logistics Int'l
Inc. 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.
Bridgewater, New Jersey
April 9, 2004
/s/ Rosenberg Rich Baker Berman & Company
-----------------------------------------
Rosenberg Rich Baker Berman & Company
F-2
Global Concepts, Ltd. and Subsidiaries
(Formerly Known as Transportation Logistics Int'l Inc. and Subsidiaries)
Consolidated Balance Sheet
December 31, 2004
Assets
Current Assets
Cash $ 1,000
Accounts receivable 2,317,000
Prepaid expenses 2,451,000
-----------
Total Current Assets 2,451,000
Fixed assets 146,000
Deposits 241,000
Goodwill 1,432,000
-----------
Total Assets 4,270,000
===========
Liabilities and Stockholders' Equity (Deficit)
Current Liabilities
Accounts payable 1,880,000
Accrued expenses 1,870,000
Note payable 428,000
Convertible debenture 444,000
Net liabilities of discontinued operations 61,000
-----------
Total Current Liabilities 4,683,000
Officer loans 2,499,000
-----------
Total Liabilities 7,182,000
-----------
Commitments and Contingencies --
Stockholders' Equity (Deficit)
Preferred stock, $.01 par value; 5,000,000 shares
authorized, and 0 shares issued and outstanding --
Common stock, no par value; 500,000,000 shares
authorized, 67,645,454 shares issued and
67,409,802 shares outstanding 6,877,000
Additional paid-in capital 193,000
Retained earnings (deficit) (9,386,000)
Other comprehensive loss (73,000)
Less: treasury stock, 235,652 shares at cost (523,000)
-----------
Total Stockholders' Equity (Deficit) (2,912,000)
-----------
Total Liabilities and Stockholders' Equity (Deficit) $ 4,270,000
===========
See notes to the consolidated financial statements.
F-3
Global Concepts, Ltd. and Subsidiaries
(Formerly Known as Transportation Logistics Int'l Inc. and Subsidiaries)
Consolidated Statements of Operations
Year Ended December 31,
----------------------------
2004 2003
------------ ------------
Operating Revenues $ 5,286,000 $ 66,000
Direct Operating Expenses 4,208,000 --
------------ ------------
Gross Profit 1,078,000 66,000
------------ ------------
Operating Expenses
Selling, general and administrative 1,467,000 138,000
Stock based compensation 3,662,000 636,000
------------ ------------
Total Operating Expenses 5,129,000 774,000
------------ ------------
Loss From Operations (4,051,000) (708,000)
Other expense (71,000) --
Minority interest (151,000) --
------------ ------------
(Loss) Before Income Taxes (4,122,000) (708,000)
(Provision) Benefit for Income Taxes -- --
------------ ------------
(Loss) Before Discontinued Operations (4,122,000) (708,000)
Discontinued Operations
Gain/(Loss)from discontinued operations
of subsidiary (net of tax effect of $0) 167,000 (1,620,000)
------------ ------------
Net (Loss) $ (3,955,000) $ (2,328,000)
============ ============
Earnings (Loss) Per Share
(Loss) from continuing operations $ (0.08) $ (0.02)
(Loss) from discontinued operations -- (0.04)
------------ ------------
Basic and diluted earnings (loss) per share $ (0.08) $ (0.06)
============ ============
Weighted Average Number of Common Shares
Outstanding 48,322,141 40,396,338
============ ============
See notes to the consolidated financial statements.
F-4
Global Concepts, Ltd. and Subsidiaries
Formerly Known as Transportation Logistics Int'l Inc. and Subsidiaries)
Consolidated Statements of Comprehensive Income (Loss)
Year Ended December 31,
--------------------------
2004 2003
----------- -----------
Net (Loss) $(3,955,000) $(2,329,000)
----------- -----------
Other Comprehensive Loss
Foreign Currency Translation Adjustment (73,000) --
----------- -----------
Other Comprehensive (Loss) Income Before Tax (73,000) --
Income Tax Expense Related to Other
Comprehensive Income -- --
----------- -----------
(73,000) --
Other Comprehensive (Loss) Income Net of Tax
----------- -----------
Comprehensive (Loss) $(4,021,000) $(2,329,000)
=========== ===========
See notes to the consolidated financial statements.
F-5
Global Concepts, Ltd. and Subsidiaries
(Formerly Known as Transportation Logistics Int'l Inc. and Subsidiaries)
Consolidated Statement of Shareholders' Equity (Deficit)
Years Ended December 31, 2004 and 2003
Accumulated
Common Stock Other
------------------------- Retained Comprehensive Treasury
Shares Amount Earnings Income Stock
----------- ----------- ----------- ----------- -----------
Balance December 31, 2002 40,396,338 $ 3,660,000 $(3,102,000) $ -- $ (523,000)
----------- ----------- ----------- ----------- -----------
Net loss for the year ended December 31, 2003 -- -- (2,329,000) -- --
Amortization of prepaid consulting services -- -- -- -- --
----------- ----------- ----------- ----------- -----------
Balance December 31, 2003 40,396,338 3,660,000 (5,431,000) -- (523,000)
=========== =========== =========== =========== ===========
Amortization of prepaid consulting services -- -- -- -- --
Net loss for the year ended December 31, 2004 -- -- (3,955,000) -- --
Foreign currency transaction -- -- -- (73,000) --
Stock issued for acquisitions of J&J Marketing
and AMD 200,000 15,000 -- -- --
Stock issued for consulting services 26,813,464 3,202,000 -- -- --
Value of beneficial conversion feature on
convertible debt -- -- -- -- --
----------- ----------- ----------- ----------- -----------
Balance December 31, 2004 67,409,802 $ 6,877,000 $(9,386,000) $ (73,000) $ (523,000)
=========== =========== =========== =========== ===========
Additional Consulting
Paid-in Services to
Capital be Provided Total
----------- ----------- -----------
Balance December 31, 2002 $ 37,000 $(1,096,000) (1,024,000)
----------- ----------- -----------
Net loss for the year ended December 31, 2003 -- -- (2,329,000)
Amortization of prepaid consulting services -- 636,000 636,000
----------- ----------- -----------
Balance December 31, 2003 37,000 (460,000) (2,717,000)
=========== =========== ===========
Amortization of prepaid consulting services -- 460,000 460,000
Net loss for the year ended December 31, 2004 -- -- (3,955,000)
Foreign currency transaction -- -- (73,000)
Stock issued for acquisitions of J&J Marketing
and AMD -- -- 15,000
Stock issued for consulting services -- -- 3,202,000
Value of beneficial conversion feature on
convertible debt 156,000 -- 156,000
----------- ----------- -----------
Balance December 31, 2004 $ 193,000 $ -- $(2,912,000)
=========== =========== ===========
See notes to the consolidated financial statements.
F-6
Global Concepts, Ltd. and Subsidiaries
(Formerly Known as Transportation Logistics Int'l Inc. and Subsidiaries)
Consolidated Statements of Cash Flows
Year Ended December 31,
--------------------------
2004 2003
----------- -----------
Cash Flows From Operating Activities
Continuing Operations
Loss before income taxes $(4,122,000) $ (708,000)
Foreign currency translation (73,000) --
Stock based compensation 3,662,000 635,000
Adjustments to Reconcile Net Income to Net Cash
Used n Operating Activities
(Increase) decrease in accounts receivable 556,000 --
(Increase) decrease in inventory 6,000 --
(Increase) in prepaid expenses (4,000) --
Decrease in other assets 186,000 --
Increase in accounts payable and accrued expenses (931,000) 38,000
----------- -----------
Cash Used in Continuing Operations (720,000) (35,000)
----------- -----------
Discontinued Operations
Loss before income taxes 167,000 (1,620,000)
Adjustments to reconcile net loss to net cash Provided by (Used in)
discontinued operations
(Increase) decrease in net assets of discontinued operations (1,305,000) 1,663,000
----------- -----------
Cash Provided by (Used in) Discontinued Operations (1,138,000) 43,000
----------- -----------
Net Cash Provided by (Used in) Operating Activities (1,858,000) 8,000
----------- -----------
Cash Flows From Investing Activities
Purchases of fixed assets (15,000) --
Cash paid for deposit (241,000) --
Cash paid for CLTA acquisition (500,000) --
Cash acquired from acquisition 307,000 --
----------- -----------
Net Cash Used in Investing Activities (449,000) --
----------- -----------
Cash From Financing Activities
Proceeds from officer loans 1,479,000 112,000
Proceeds from debt 828,000 (121,000)
----------- -----------
Net Cash Provided by (Used in) Financing Activities 2,307,000 (9,000)
----------- -----------
Net Increase (Decrease) in Cash and Equivalents 3,000 (1,000)
Cash and Equivalents at Beginning of Year 2,000 3,000
----------- -----------
Cash and Equivalents at End of Year $ 1,000 $ 2,000
=========== ===========
See notes to the consolidated financial statements.
F-7
Global Concepts, Ltd. and Subsidiaries
(Formerly Known as Transportation Logistics Int'l Inc. and Subsidiaries)
Consolidated Statements of Cash Flows, Continued
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest $ -- $ --
==== ====
Income taxes $ -- $ --
==== ====
SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
On June 1, 2004, the Company issued 100,000 common shares in exchange for
a 100% interest in a limited liability company.
On October 1, 2004, the Company issued 100,000 common shares in exchange
for an 80% interest in a limited liability company.
See notes to the consolidated financial statements.
F-8
Global Concepts, Ltd. and Subsidiaries
(Formerly Known as Transportation Logistics Int'l Inc. and Subsidiaries)
Notes to the Consolidated Financial Statements
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Organization
Global Concepts, Ltd. 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. 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, 2004. 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.
On June 1, 2004 the Company acquired the entire membership interest
in Advanced Medical Diagnostics LLC ("AMD"). AMD is a development
stage enterprise, engaged in the business of manufacturing and
distributing the "Advanced Medical Diagnostics HIV (1&2) Rapid
Test", a diagnostic kit which permits an individual to test himself
for the HIV virus and obtain a result in 15 minutes with a 99.4%
accuracy. The membership interests in AMD were acquired by the
Company in exchange for 100,000 shares of the Company's common
stock.
On October 1, 2004 the Company completed its acquisition of 60% of
CLTA for $500,000. CLTA is a corporation located in Nugent sur Oise,
France. CLTA's principal business is the warehousing and final
dealer preparation work for automobile manufacturers, Pugeot and
Citroen. CLTA also performs brake installation and testing of new
vehicles for Peugeot.
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."
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, 2004
includes the accounts of the Company and its wholly owned and
majority owned subsidiaries. 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-9
Global Concepts, Ltd. and Subsidiaries
(Formerly Known as Transportation Logistics Int'l Inc. 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. The Company 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.
Fair Value of Financial Instruments
The carrying amounts reported in the consolidated balance sheet for
cash, accounts receivable, prepaid expenses, accounts payable, and
accrued expenses approximate their fair values due to the short
maturities of these financial instruments.
The carrying amounts reported in the consolidated balance sheet for
officers loans, notes payable and convertible debentures approximate
their fair values based on current rates at which the Company could
borrow funds with similar maturities.
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.
Goodwill
Goodwill is recognized for the excess of the purchase price over the
fair value of tangible and identifiable intangible net assets of
businesses acquired. The Company adopted SFAS No. 142, "GOODWILL AND
OTHER INTANGIBLE ASSETS" in which goodwill is no longer amortized
but tested for impairment on at least an annual basis. The carrying
value is reviewed if the facts and circumstances, such as
significant declines in sales, earnings or cash flows or material
adverse changes in the business climate, suggest that it may be
impaired. If this review indicates that goodwill will not be
recoverable, the impairment is determined by comparing the carrying
value of goodwill to fair value. Fair value is determined based on
quoted market values, discounted cash flows or appraisals.
Long-lived Assets
The Company assesses long-lived asset for impairment is required
under SFAS No. 144, "ACCOUNTING FOR THE IMPAIRMENT OF DISPOSAL OF
LONG-LIVED ASSETS". The Company reviews for impairment whenever
events or circumstances indicate that the carrying amount of these
assets may not be recoverable. The Company assesses these assets for
impairment based on estimated future cash flow from these assets.
F-10
Global Concepts, Ltd. and Subsidiaries
(Formerly Known as Transportation Logistics Int'l Inc. and Subsidiaries)
Notes to the Consolidated Financial Statements
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
Foreign Currency Transactions
Operations of one of the Company's majority owned subsidiaries are
conducted in France and the financial statements of that subsidiary
are translated from the Euro, Frances' functional currency, into U.
S. Dollars in accordance with SFAS No. 52, "Foreign Currency
Translation". Accordingly, all foreign currency assets and
liabilities are translated at the period-end exchange rate and all
revenues and expenses are translated at the average exchange rate
for the period. The effects of translating the financial statements
of foreign subsidiaries into U. S. Dollars are reported as a
cumulative translation adjustment, a separate component of
comprehensive income in stockholders' equity. Foreign currency
transaction gains and losses are reported in earnings and consisted
of $73,000 of losses in 2004, $0 of losses in 2003.
Earnings (Loss) Per Share
Earnings (Loss) per common share represents the amount of earnings
(loss) for the period available to each share of common stock
outstanding during the reporting period. Diluted earnings (loss per
share reflects the amount of earnings (loss) for the period
available to each share of common stock outstanding during the
reporting period, while giving effect to all dilutive potential
common shares that were outstanding during the period, such as
common shares that could result from the potential exercise or
conversion of securities into common stock. The computation of
diluted earnings (loss) per share does not assume conversion,
exercise, or contingent issuance of securities that would have an
antidilutive effect on earnings (loss) per share.
NOTE 2 - COMMITMENTS AND CONTINGENCIES
The accompanying balance sheets includes assets of $3,435,000 relating to
the Company's majority owned subsidiary in Nugent sue Oise, France.
Although France is politically and economically stable, it is always
possible that unanticipated events in foreign countries could disrupt the
Company's operations.
NOTE 3- 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 $ 3,420,000
Total valuation allowance (3,420,000)
-----------
Net deferred tax assets $ --
===========
During 2004 and 2003 the valuation allowance increased $1,500,000 and
$920,000, respectively.
F-11
Global Concepts, Ltd. and Subsidiaries
(Formerly Known as Transportation Logistics Int'l Inc. and Subsidiaries)
Notes to the Consolidated Financial Statements
NOTE 3 - 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,
---------------
2002 2000
---- ---
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, 2004, the Company has approximately $8,700,000
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 2023.
NOTE 4 - DEPOSIT
The deposit at December 31, 2004 represent a downpayment towards the
acquisition of a fleet of tractor-trailers. The transaction closed on
February 1, 2005 and required an additional $800,000 to be paid and the
assumption of capital leases.
NOTE 5 - 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, 2004
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, 2004, there were 812,500 shares reserved for future
grants.
F-12
Global Concepts, Ltd and Subsidiaries
(Formerly Known as Transportation Logistics Int'l Inc. and Subsidiaries)
Notes to the Consolidated Financial Statements
NOTE 5 - STOCKHOLDERS' EQUITY, Continued
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 2004 and 2003.
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
2004 and 2003.
NOTE 6 - ACQUISITIONS
During 2004, the Company acquired three businesses for stock, cash and the
assumption of liabilities aggregating $5,064,000. The businesses acquired
were (1) a 100% interest in Advanced Medical Diagnostics, LLC, ("AMD"), a
development stage enterprise which is developing and marketing the
"Advanced Medical Diagnostics HIV (1 & 2) Rapit Test", a diagnostic kit,
which permits an individual to test himself for the HIV virus and obtain a
result in 15 minutes with a 99.4% accuracy. (2) An 80% interest in J&J
Marketing, LLC, ("J&J"), a producer and marketer of a line of skin care
products under the trademark "Savage Beauty," and (3) a 60% interest in
Compagnie Logistique de Transports Automobiles ("CLTA"), a French
corporation in the business of warehousing and completing the final dealer
preparation work for automobile manufactures, Peugeot and Citroen. CLTA
also performs brake installation and testing of new vehicles for Peugeot.
All of the acquisitions have been accounted for using the purchase method
of accounting for business combinations and, accordingly, their results of
operations have been included in the consolidated financial statements
since their respective dates of acquisition.
The acquisition of AMD occurred on June 1, 2004. Under the terms of the
acquisition agreement, the Company issued 100,000 shares of its common
stock in exchange for 100% of the interest in AMD. The shares were valued
at $9,000, their fair market value on the date of the agreement. 76.5% of
the membership interest in AMD was acquired from the three officers of
AMD. The remaining 23.5% was acquired from the Margolies Family Trust. The
trustee of the Margolies Family Trust is the wife of Michael Margolies.
Michael Margolies was the Chairman and Chief Executive Officer of the
Company as of the date of the acquisition. Additionally, pursuant to the
acquisition agreement, the Company issued 50,000 common shares under the
Company's 2004 Equity Incentive Plan to the officers of AMD.
The acquisition of J&J occurred on October 1, 2004. Under the terms of the
acquisition agreement, the Company issued 100,000 common shares to the
members of J&J in exchange for an 80% ownership interest in J&J. The
shares were valued at $6,000, which represents their fair market value on
the date of the agreement. In connection with the acquisition, the Company
granted to the sellers an option to purchase the Company's interest in
J&J. The option may be exercised only in the event of a liquidity event. A
liquidity event is defined in the acquisition agreement as a liquidation,
dissolution or winding up of the Company, a merger or acquisition
involving the Company in which it is not the surviving entity, a sale of
substantially all of its assets, certain bankruptcy or insolvency
proceedings, or the delisting of the common stock of the Company by the
OTC Bulletin Board. The exercise price of the option will be the market
value of 250,000 shares of the Company's common stock or, if prices are
not quoted for the common stock, $12,500. The option expired on May 15,
2005.
F-13
Global Concepts, Ltd and Subsidiaries
Formerly Known as Transportation Logistics Int'l Inc. and Subsidiaries)
Notes to the Consolidated Financial Statements
NOTE 6 - ACQUISITIONS, Continued
The acquisition of CLTA occurred on October 1, 2004. The Company paid
$500,000 for 60% of the outstanding shares of CLTA. This acquisition was
primarily financed through a loan from a shareholder, which bears no
interest and is due on demand. Pursuant to the acquisition agreement, the
Company is required to loan $500,000 to CLTA if needed and agreed upon by
the Board of Directors by December 31, 2004. As of December 31, 2004, no
such loans was made. Further, the Company has agreed to serve as guarantor
on the lease of ten trucks/trailers needed by CLTA to fulfill a contract
with one of its customers. As a result of the execution of the agreement,
a new Board of Directors of CLTA was elected, consisting of five persons,
three of which were appointed by the Company and the remaining two seats
being occupied by the two minority shareholders of CLTA.
The preliminary allocation of the purchase prices resulted in goodwill of
$1,432,000. The Company has not yet obtained all information required to
complete the purchase price allocation related to these acquisitions. The
final allocation will be completed in 2005.
The following is an allocation showing the estimated fair values of the
assets acquired and the liabilities assumed as of the dates of the
acquisitions:
AMD J&J CLTA
----------- ----------- -----------
Cash $ -- $ 1,000 $ 306,000
Accounts receivable -- 4,000 2,869,000
Inventory -- 9,000 --
Other assets -- -- 312,000
Fixed assets -- -- 131,000
Goodwill arising from the acquisition 23,000 17,000 1,392,000
Accounts payable and accrued expenses (14,000) (25,000) (4,510,000)
----------- ----------- -----------
Consideration paid $ 9,000 $ 6,000 $ 500,000
=========== =========== ===========
The following pro forma information is based on the assumption that the
acquisition took place as of January 1, 2003:
For the Year Ended December 31,
---------------------------
2004 2003
------------ ------------
Net Sales $ 16,785,000 $ 5,743,000
============ ============
Loss Before Discontinued Operations $ (4,832,000) $ (3,082,000)
============ ============
Net Loss $ (4,832,000) $ (3,082,000)
============ ============
Loss Per Share From Continuing Operations $ (0.09) $ (0.08)
============ ============
NOTE 7 - DISCONTINUED OPERATIONS
In 2003 the Company ceased its intermodal trucking operations. Net sales
of this division was $1,693,203 in 2003.
F-14
Global Concepts, Ltd. and Subsidiaries
Formerly Known as Transportation Logistics Int'l Inc. and Subsidiaries)
Notes to the Consolidated Financial Statements
NOTE 8 - 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 2004. Subsequent
to December 31, 2004, this employment agreement has been terminated. See
Subsequent Event Note.
NOTE 9 - 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.
NOTE 10 - STANDBY EQUITY DISTRIBUTION AGREEMENT
During 2004, the Company was party to a Standby Equity Distribution
Agreement ("SEDA") with Cornell Capital Partners, LP. Pursuant to the
SEDA, the Company was entitled to "put" shares of its common stock to
Cornell Capital Partners at 98% of the market price, defined in the SEDA
as the lowest daily volume weighted average price during the five
consecutive trading days after an advance is made by the Company. Cornell
Capital Partners was required by the SEDA to pay each advance demanded by
the Company, unless (a) there is no prospectus available for Cornell
Capital Partners to use in re-selling the shares, (b) the purchase would
result in Cornell Capital Partners owning over 9.9% of the Company's
outstanding shares or (c) the representations made by the Company in the
SEDA proved to be untrue. No advances were made under the SEDA during
2004. Subsequent to December 31, 2004, the SEDA agreement was terminated.
NOTE 11 - NOTE PAYABLE
During 2004, a shareholder loaned the Company $428,000. The proceeds from
the loan were used to partially finance the acquisition of Compagnie
Logistique de Transports Automobiles made by the Company on October 1,
2005. The loan is due on demand and bears no interest.
NOTE 12 - LOAN PAYABLE
The loan payable of $2,499,000 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. Subsequent to the year ended December 31, 2004,
the Company converted this loan into a convertible debenture. See
Subsequent Event Note.
F-15
Global Concepts, Ltd. and Subsidiaries
Formerly Known as Transportation Logistics Int'l Inc. and Subsidiaries)
Notes to the Consolidated Financial Statements
NOTE 13 - 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 $61,000 are included in net liabilities of
discontinued operations.
NOTE 14 - CONVERTIBLE DEBENTURES
On November 16, 2004, the Company issued two $200,000 convertible
debentures to Cornell Capital Partners, LP in exchange for $400,000. The
debentures bear interest at the rate of 5% per annum with the principal
and interest due November 16, 2006. At the Company's option, the entire
principal amount and all accrued interest may be converted on the due
date. Cornell Capital Partners has the option to convert all or any part
of the principal and accrued interest at any time. The debenture may be
converted into shares of the Company's common stock at the price per share
equal to the lesser of (a) and amount equal to 120% of the closing bid
price of the common stock on November 16, 2004, or (b) an amount equal to
80% of the lowest closing bid price of the Company's common stock for the
five trading days immediately preceding the date of conversion. As the
convertible debentures may be converted into common stock at the lower of
a fixed rate at the commitment date or a fixed discount to the market
price of the underlying common stock at the conversion date, the Company
has recognized a beneficial conversion feature. The Company recorded a
charge due to the beneficial conversion feature of $156,000 in accordance
with EITF Issue No. 98-5, "Accounting for Convertible Securities with
Beneficial Conversion Features or Contingently Adjustable Conversion
Instruments". The value of the beneficial conversion feature was measured
using the intrinsic value and was being amortized to interest expense over
the life of the convertible debenture. On January 6, 2005, the Company
converted the debenture into a promissory note. Consequently, on that
date, the remaining amount of the unamortized discount has been charged to
interest expense.
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 $80,000 of accrued interest on this
debenture. The convertible debenture are in default and were settled in
April 2005.
F-16
Global Concepts, Ltd. and Subsidiaries
(Formerly Known as Transportation Logistics Int'l Inc. and Subsidiaries)
Notes to the Consolidated Financial Statements
NOTE 15 - 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:
2004 - $ 8,000,000
2005 - $10,000,000
2006 - $12,000,000
During the year ended December 31, 2004, the Company lifted the
restrictions on stock grant.
NOTE 16 - SUBSEQUENT EVENTS
Joint Management Agreement
On March 7, 2005 the Company entered into a joint management
agreement with Headliners Entertainment Group, Inc., Eduardo
Rodriguez, Michael Margolies, the Rodriguez Family Trust and the
Margolies Family Trust. Headliners Entertainment Group, Inc. is a
publicly traded company of which Eduardo Rodriguez is the Chief
Executive Officer. The joint management agreement terminated the
consulting agreements previously entered into with the Rodriguez
Family Trust and Eduardo Rodriguez.
Per the joint management agreement, the Rodriguez Family Trust and
the Margolies Family Trust organized a limited liability company.
The trusts, as well as Rodriguez and Margolies, will contribute
their shares of the Company to the trust on August 15, 2005. The
Company will pay a fee of $5,000 per month to the limited liability
company in compensation for the services of Rodriguez and Margolies.
Also, the Company entered into a ten year employment agreement with
Rodriguez, a ten year advisory agreement with Margolies, Margolies
resigned from his position as Chairman and Chief Executive Officer
and Margolies and Rodriguez agreed to serve as members of the
Company's Board of Directors.
The Company's employment agreement with Rodriguez provides that he
will serve as Chairman and Chief Executive Officer for an annual
compensation of $100,000. The employment agreement terminates on
January 31, 2015.
The Company's advisory agreement with Margolies provides that he
will consult with the Board of Directors and the Chief Executive
Officer on matters of business development, investor relations,
public relations and finance. The Company will pay Margolies and
annual fee of $100,000 for his services. The advisory agreement
terminates on January 31, 2015.
Also, pursuant to the agreement, the Company issued a $2,499,000
convertible debenture to the Margolies Family Trust to satisfy the
Company's debt to the Margolies Family Trust as of December 31,
2004. The debenture is convertible into common stock at the average
of the closing bid prices for the five trading days preceding the
conversion, except that the conversion will be limited to 2.77% of
the principal amount of the debenture per month. The debenture will
bear interest at 6% per month.
F-17
Global Concepts, Ltd. and Subsidiaries
(Formerly Known as Transportation Logistics Int'l Inc. and Subsidiaries)
Notes to the Consolidated Financial Statements
NOTE 16 - SUBSEQUENT EVENTS (Continued)
Promissory Note
On January 26, 2005 the Company issued a $1,500,000 promissory note
to Cornell Capital Partners in exchange for $500,000 cash and
retirement of $400,000 in prior debt. The promissory note bears
interest at the rate of 12% per annum with monthly principal
payments of $250,000 plus accrued interest to be paid commencing
August 26, 2005 through January 26, 2006.
Note Payable
In March of 2005, the Company borrowed $400,000 from another
publicly traded entity whose Chief Executive Officer is also the
Chief Executive Officer of Global Concepts, LTD. The note bears
interest at the rate of 10% per annum. The interest is to be paid on
the first day of each month, commencing April 1, 2005. The note is
to be repaid in eleven monthly installments of $33,000 commencing
June 1, 2006.
F-18
Global Concepts, LTD and Subsidiaries
(Formerly Known as Transportation Logistics Int'l Inc. and Subsidiaries)
Condensed Consolidated Balance Sheet
June 30, 2005
(Unaudited)
Assets
Current Assets
Cash $ 929,000
Accounts receivable 4,496,000
Prepaid expenses 287,000
----------
Total Current Assets 5,712,000
Fixed assets 2,511,000
Other assets 210,000
Goodwill 1,432,000
----------
Total Assets 9,865,000
==========
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable 4,664,000
Accrued expenses 1,072,000
Note payable 934,000
Convertible debenture 100,000
Promissory note (net of discount
of $350,000) 1,150,000
Net liabilities of discontinued
operations 61,000
----------
Total Current Liabilities 7,981,000
Convertible debenture 2,499,000
Notes payable 1,260,000
----------
Total Liabilities 11,740,000
----------
Minority Interest 294,000
Commitments and Contingencies -
Stockholders' Equity
Preferred stock, $.01 par value;
5,000,000 shares authorized, and
0 shares issued and outstanding -
Common stock, no par value;
500,000,000 shares authorized,
91,216,454 shares issued and
90,980,802 shares outstanding 8,166,000
Additional paid-in capital 193,000
Retained earnings (deficit) (8,920,000)
Other comprehensive loss (55,000)
Less: treasury stock, 235,652
shares at cost (523,000)
Deferred compensation (598,000)
Prepaid consulting (432,000)
----------
Total Stockholders' Equity (2,169,000)
----------
Total Liabilities and Stockholders'
Equity $ 9,865,000
==========
See notes to the condensed financial statements.
F-19
Global Concepts, LTD
(Formerly Known as Transportation Logistics Int'l Inc. and Subsidiaries)
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- -------------------------
2005 2004 2005 2004
---------- --------- ----------- ---------
Operating Revenues $ 11,328,000 $ 10,000 $ 21,282,000 $ 10,000
Direct Operating Expenses 9,173,000 - 17,514,000 -
----------- --------- ----------- ---------
Gross Profit 2,155,000 10,000 3,768,000 10,000
----------- --------- ----------- ---------
Operating Expenses
Selling, general and
administrative 1,079,000 36,000 2,244,000 37,000
Stock issued for
consulting services 143,000 23,000 234,000 268,000
----------- --------- ----------- ---------
Total Operating Expenses 1,222,000 59,000 2,478,000 305,000
----------- --------- ----------- ---------
Income (Loss) From
Operations 933,000 (49,000) 1,290,000 (294,000)
Interest expense (264,000) - (530,000) -
Minority interest (186,000) - (294,000) -
----------- --------- ----------- ---------
Income (Loss) Before
Income Taxes 483,000 (49,000) 466,000 (294,000)
Provision Benefit for
Income Taxes - - - -
----------- --------- ----------- ---------
Net Income (Loss) $ 483,000 $ (49,000) $ 466,000 $ (294,000)
=========== ========= =========== =========
Earnings Per Share
Basic earnings (loss)
per share $ 0.01 $ 0.00 $ 0.01 $ (0.01)
=========== ========= =========== =========
Diluted earnings per
share $ - $ - $ - $ -
=========== ========= =========== =========
Weighted Average Number of
Common Shares Outstanding
Basic 90,040,619 46,496,338 87,280,199 40,396,338
=========== ========== =========== ==========
Fully Diluted 130,026,102 46,496,338 107,390,697 40,396,338
=========== ========== =========== ==========
See notes to the condensed consolidated financial statements.
F-20
Global Concepts, LTD
(Formerly Known as Transportation Logistics Int'l Inc. and Subsidiaries)
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Six Months Ended
June 30,
---------------------
2005 2004
----------- ----------
Cash Used in Operating Activities
Net Cash Provided by (Used in)
Operating Activities $ 751,000 $ (36,000)
--------- ---------
Cash Flows From Financing Activities
Proceeds from debt 1,151,000 37,000
--------- ---------
Net Cash Provided by Financing Activities 1,151,000 37,000
--------- ---------
Cash Flows From Investing Activities
Cash paid purchase of fixed assets (974,000) -
--------- ---------
Net Cash Used in Investing Activities (974,000) -
--------- ---------
Net Increase in Cash and Equivalents 928,000 1,000
Cash and Equivalents at Beginning of Period 1,000 2,000
--------- ---------
Cash and Equivalents at End of Period $ 929,000 $ 3,000
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION
Cash paid during the year for:
Interest $ 435,000 $ -
========= =========
Income taxes $ - $ -
========= =========
Supplemental schedule of Non Cash Investing and Financing Activities
During the six months ended June 30, 2005, the Company issued a
$1,500,000 promissory note in exchange for $500,000 cash and the
extinguishment of an outstanding obligation of $400,000. Additionally,
a discount of $600,000 was recorded.
During the six months ended June 30, 2005, the Company issued
23,571,000 shares to consultants valued at $234,000.
See notes to the condensed consolidated financial statements.
F-21
Global Concepts, LTD
(Formerly Known as Transportation Logistics Int'l Inc. and Subsidiaries)
Notes to the Condensed Consolidated Financial Statements
For the Six Month Period Ended June 30, 2005
(Unaudited)
NOTE 1 - 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 disclosures 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. Operating results for the six months ended
June 30, 2005 are not necessarily indicative of the results that may be
expected for the year ended December 31, 2005. The unaudited condensed
financial statements should be read in conjunction with the consolidated
financial statements and disclosures thereto included in the Company's
annual report on Form 10-KSB for the year ended December 31, 2004.
NOTE 2 - GOING CONCERN
The accompanying condensed consolidated financial statements have been
prepared on a going concern basis, which contemplates the realization of
assets and the satisfaction of liabilities and commitments in the normal
course of business. As reflected in the condensed consolidated financial
statements, the Company has incurred an accumulated deficit. Further, at
June 30, 2005, current liabilities exceed current assets by $2,269,000 and
total liabilities exceed total assets by $1,875,000. These factors all
raise substantial doubt about the ability of the Company to continue as a
going concern.
Management's plan in regard to the going concern issue is to increase
revenues and profitability through acquisitions and internal growth as well
as raising capital.
NOTE 3 - NOTE PAYABLE
In March of 2005, the Company borrowed $400,000 from another publicly
traded entity whose Chief Executive Officer is also the Chief Executive
Officer of Global Concepts, Inc. The loan bears interest at the rate of 10%
per annum. The interest is to be paid on the first day of each month,
commencing April 2005. The note is to be repaid in eleven monthly installments
of $33,333 commencing on June 1, 2006. A final payment in the amount of
$33,337 is due on May 1, 2007.
NOTE 4 - PROMISSORY NOTE
On January 26, 2005 the Company issued a $1,500,000 promissory note to
Cornell Capital Partners in exchange for $500,000 cash and retirement of
$400,000 in prior debt. The difference of $600,000 was treated as a discount.
This discount on the note is being amortized on a straight line basis with
the amortization being recognized as interest expense. The unamortized
discount on the note at June 30, 2005 was $350,000. The promissory note
bears interest at the rate of 12% per annum with monthly principal payments
of $250,000 plus accrued interest to be paid commencing August 26, 2005
through January 26, 2006. See: Note 12 (Subsequent Events) regarding the
refinancing in August of the promissory note.
F-22
Global Concepts, LTD
(Formerly Known as Transportation Logistics Int'l Inc. and Subsidiaries)
Notes to the Condensed Consolidated Financial Statements
For the Six Month Period Ended June 30, 2005
(Unaudited)
NOTE 5 - NOTE PAYABLE
During the quarter ending on June 30, 2005, the Company borrowed $165,000
from a third party, due on demand. The company repaid $100,000 of the loan
during the quarter leaving a balance of $65,000 due at June 30, 2005.
NOTE 6 - JOINT MANAGEMENT AGREEMENT
On March 7, 2005 the Company entered into a joint management agreement
with Headliners Entertainment Group, Inc., Eduardo Rodriguez, Michael
Margolies, the Rodriguez Family Trust and the Margolies Family Trust.
Headliners Entertainment Group, Inc. is a publicly traded company of which
Eduardo Rodriguez is the Chief Executive Officer. The joint management
agreement terminated the consulting agreements previously entered into with
the Rodriguez Family Trust and Eduardo Rodriguez.
Per the joint management agreement, the Rodriguez Family Trust and the
Margolies Family Trust organized a limited liability company. The trusts, as
well as Rodriguez and Margolies, will contribute their shares of the Company
to the trust on August 15, 2005. The Company will pay a fee of $5,000 per
month to the limited liability company in compensation for the services of
Rodriguez and Margolies. Also, the Company entered into a ten year employment
agreement with Rodriguez, a ten year advisory agreement with Margolies,
Margolies resigned from his position as Chairman and Chief Executive Officer
and Margolies and Rodriguez agreed to serve as members of the Company's Board
of Directors.
The Company's employment agreement with Rodriguez provides that he will
serve as Chairman and Chief Executive Officer for an annual compensation of
$100,000. The employment agreement terminates on January 31, 2015.
The Company's advisory agreement with Margolies provides that he will
consult with the Board of Directors and the Chief Executive Officer on matters
of business development, investor relations, public relations and finance.
The Company will pay Margolies and annual fee of $100,000 for his services.
The advisory agreement terminates on January 31, 2015.
Also, pursuant to the agreement, the Company issued a $2,499,000
convertible debenture to the Margolies Family Trust to satisfy the Company's
debt to the Margolies Family Trust as of December 31, 2004. The debenture is
convertible into common stock at the average of the closing bid prices for the
five trading days preceding the conversion, except that the conversion will be
limited to 2.77% of the principal amount of the debenture per month. The
debenture will bear interest at 6% per annum.
NOTE 7 - FIXED ASSETS
The Company purchased trucks at a estimated value of $10,575,000 in
exchange for $1,041,000 and the assumption of notes payable of $1,285,000
from a company that was in bankruptcy.
F-23
Global Concepts, LTD
(Formerly Known as Transportation Logistics Int'l Inc. and Subsidiaries)
Notes to the Condensed Consolidated Financial Statements
For the Six Month Period Ended June 30, 2005
(Unaudited)
NOTE 8 - PROFORMA INFORMATION
The following proforma information is based on the assumption that the
acquisition of CLTA took place as of January 1, 2004:
Three Months Ended Six Months Ended
June 30, 2005 June 30, 2005
------------------ ------------------
Net Sales $ 4,062,000 $ 8,134,000
Loss From Operations $ (434,000) $ (676,000)
Loss Per Share From Operations $ - $ (.01)
NOTE 9 - EARNINGS PER SHARE
The following data show the amounts used in computing earnings per share
and the weighted average number of shares of dilutive potential common stock.
Three Months Ended Six Months Ended
June 30, June 30,
----------------------- ---------------------
2005 2004 2005 2004
----------- ---------- ----------- ----------
Weighted average number of common
shares used in basic EPS 90,040,619 46,496,338 87,280,199 40,396,338
Effect of dilutive securities:
Warrants 39,985,483 - 20,110,498 -
----------- ---------- ----------- ----------
Weighted average number of common
shares and dilutive potential
common stock used in diluted EPS 130,026,102 46,496,338 107,390,697 40,396,338
=========== ========== =========== ==========
NOTE 10 - SETTLEMENT OF CONVERTIBLE DEBENTURE
On May 17, 2005, the Company entered into an agreement to settle its
obligation on a $200,000 convertible debenture through issuance of $100,000
of its common stock by September 17, 2005.
F-24
Global Concepts, LTD
(Formerly Known as Transportation Logistics Int'l Inc. and Subsidiaries)
Notes to the Condensed Consolidated Financial Statements
For the Six Month Period Ended June 30, 2005
(Unaudited)
NOTE 11 - EMPLOYEE STOCK OPTIONS
On April 4, 2005, the Company granted options to purchase up to
40,000,000 shares of common stock at an exercise price of $0.05 per share.
The options were granted to the Company's current and former chairman and
chief executive officers for services rendered. The options expire on
March 31, 2008. The Company applies the recognition and measurement
provisions of APB Opinion 25 to account for employee stock compensation
costs. Accordingly, no compensation cost has been recognized for these
plans.
Had compensation cost for the stock options been determined based on the
fair value at the grant date consistent with FASB Statement No. 123, the
Company's net earnings and earnings per share are estimated below:
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- -------------------------
2005 2004 2005 2004
---------- --------- ----------- ---------
Net income (loss) as
reported $ 483,000 $ (49,000) $ 466,000 $ (294,000)
Compensation cost based on
fair value method (1,920,000) - (1,920,000) -
---------- -------- ---------- ---------
Proforma net income (loss) $(1,437,000) $ (49,000) $(1,454,000) $ (294,000)
Basic Earnings Per Share
As Reported $ 0.01 $ 0.00 $ 0.01 $ (0.01)
========== ======== ========== =========
Proforma $ (0.02) $ 0.00 $ (0.02) $ (0.01)
========== ======== ========== =========
Diluted Earnings Per Share
As Reported $130,026,102 $40,396,338 $107,390,697 $46,496,338
=========== ========== =========== ==========
Proforma $ (0.01) $ - $ (0.01) $ -
========== ======== ========== =========
The fair value of the option grant was estimated at the date of grant
using the Black-Scholes option pricing model with the following assumptions:
Risk free interest 3.79%
Dividend yield 0.00%
Volatility 233.00%
Expected term 3 years
Fair value of options
granted $ 0.048
F-25
Global Concepts, LTD
(Formerly Known as Transportation Logistics Int'l Inc. and Subsidiaries)
Notes to the Condensed Consolidated Financial Statements
For the Six Month Period Ended June 30, 2005
(Unaudited)
NOTE 11 - EMPLOYEE STOCK OPTIONS, Continued
Employee stock options outstanding and exercisable at June 30, 2005 were:
Weighted
Number of Average
Shares Exercise Price
------------ --------------
Outstanding at January 1, 2005 - $ -
Granted 40,000,000 0.05
Exercised - -
Forfeited - -
---------- -----
Outstanding at June 30, 2005 40,000,000 $ 0.05
========== =====
Exercisable at June 30, 2005 40,000,000 $ 0.05
========== =====
NOTE 12 - SUBSEQUENT EVENTS
Acquisition of SLATE
Effective July 1, 2005, the Company purchased 80% of the capital stock of
Societe Lyonnaise Altrementet de Transports Europeans (SLATE). The purchase
price was $840,000 payable in installments through June 30, 2006.
Issuance of Convertible Debenture
On August 1, 2005 Global Concepts sold to Cornell Capital Partners a
Secured Convertible Debenture. The Debenture is in the principal amount of
$2,500,000. In exchange for the Debenture Cornell Capital Partners surrendered
the $1.5 million Promissory Note issued to it in January 2005 and paid $900,000
from which it deducted a $20,000 fee for Cornell Capital Partner's legal
counsel. The difference of $100,000 was treated as a discount.
Global Concepts is required to commence payments on the Secured Convertible
Debenture on the first day of the month following the earlier of (a) the date
when the Securities and Exchange Commission declares effective a prospectus
that will permit Cornell Capital Partners to resell to the public the shares
issued on conversion of the Debenture or (b) January 1, 2006. Payments will
be made in equal monthly installments through February 1, 2007. Cornell
Capital Partners is entitled to convert the debenture into common stock at a
price of $.20 per share. However, in the event that Global Concepts commits
a material default in its obligations under the Debenture and related documents,
the conversion price will be reduced to $.06 per share. Cornell Capital
Partners' right to convert the Debenture is limited, however, to the extent
that it cannot convert the Debenture into an amount of shares that would
cause it to own more than 4.9% of Global Concepts' outstanding shares.
Global Concepts' obligations under the Debenture are secured by a pledge of
all of Global Concepts assets.
Issuance of Stock
In July 2005, the Company issued 6,350,000 shares of its common stock to
consultants.
F-26
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....................... $ 1,708
Accounting fees.................. 5,000
Transfer Agent .................. 1,000
Legal fees....................... 15,000
Printing expenses................ 500
------
TOTAL............................ $ 23,208
======
Item 26. Recent Sales of Unregistered Securities.
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.
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.
In February 2005 Global Concepts issued 1,750,000 shares of
common stock to two employees of its French subsidiary. The shares
were issued in consideration for their employment services, and were
valued at the market value on the date of grant. 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 were acquiring the
shares for their own accounts. There were no underwriters.
In July 2005 Global Concepts issued 1,000,000 shares of
common stock to Nicholas Olivieri. 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 July 2005 Global Concepts issued 5,000,000 shares of
common stock to Stanley Chason. 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 August 2005 Global Concepts issued 1,000,000 shares of
common stock to Michael Seeley. The securities were issued in
settlement of a claim for $240,000. 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 August 2005 Global Concepts issued 49,975 shares of common
stock to Newbridge Securities Corporation. 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 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 August 2005 Global Concepts issued 350,000 shares of
common stock to Rosenberg Rich Baker Berman & Co. The shares were
issued in consideration of bookkeeping and accounting services
rendered to Global Concepts. 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 August 2005 Global Concepts issued 1,000,000 shares of
common stock to Benjamin Perrone. 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.
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 Convertible Debenture dated March 7, 2005 issued to The
Margolies Family Trust
10-c Stock Purchase Warrant dated August 14, 2005 issued to G&H
Management L.L.C. - filed as an exhibit to the Current Report
on Form 8-K dated August 14, 2005 and incorporated herein by
reference.
10-d Securities Purchase Agreement dated August 1, 2005 between
Global Concepts and Cornell Capital Partners, LP - filed as
an exhibit to the Current Report on Form 8-K dated August 4,
2005 and incorporated herein by reference.
10-e Secured Convertible Debenture dated August 1, 2005 issued to
Cornell Capital Partners LP - filed as an exhibit to the
Current Report on Form 8-K dated August 4, 2005 and
incorporated herein by reference.
10-f Security Agreement dated August 1, 2005 between Global
Concepts and Cornell Capital Partners, LP - filed as an
exhibit to the Current Report on Form 8-K dated August 4,
2005 and incorporated herein by reference.
10-g Warrant to Purchase Common Stock dated August 1, 2005 issued
to Cornell Capital Partners LP - filed as an exhibit to the
Current Report on Form 8-K dated August 4, 2005 and
incorporated herein by reference.
10-h Standby Equity Distribution Agreement dated August 1, 2005
between Global Concepts and Cornell Capital Partners, LP -
filed as an exhibit to the Current Report on Form 8-K dated
August 4, 2005 and incorporated herein by reference.
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
Societe Financiere Hauville
Societe Boullevillaise de Transports
Societe Lyonnaise d'Affretement et de Transports
Europeans
23-a. Consent of Bagell, Josephs & Company, LLC
23-b Rosenberg Rich Baker Berman & Company, PA
23-c 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.
(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 15th day of
August, 2005.
GLOBAL CONCEPTS, LTD.
By: /s/Eduardo Rodriguez
---------------------------
Eduardo Rodriguez, 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 August 15, 2005.
/s/ Eduardo Rodriguez
---------------------------
Eduardo Rodriguez, Director,
Chief Executive Officer,
Chief Financial Officer,
Chief Accounting Officer
/s/ Michael Margolies
----------------------------
Michael Margolies, Director