7
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2003
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _______________ to
_______________.
COMMISSION FILE NUMBER 000-32635
GROUP MANAGEMENT CORP.
(Exact name of registrant as specified in its
charter)
DELAWARE 59-
2919648
(State or other jurisdiction of (I.R.S.
employer incorporation or organization)
Identification No.)
101 Marietta St., Suite 1070
Atlanta, GA
30303
(Address of principal executive offices)
(Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(404) 522-1202
Check whether the issuer (1) filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the past 12 months (or for such shorter period
that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90
days. Yes X No.
----
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE
PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Exchange
Act after the distribution of securities under a plan
confirmed by a court. Yes No._____
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the
issuer's classes of common equity, as of the latest
practicable date. As of March 31, 2003 there were 64,455,000
shares of common stock issued and outstanding.
TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT
(check one):
Yes No X .
----- -----
GROUP MANAGEMENT CORP
TABLE OF CONTENTS
-----------------
PART I
Item 1 Financial Statements
Item 2 Management's Discussion and Analysis or
Plan of Operations
PART II
Item 1 Legal Proceedings
Item 2 Changes in Securities and Use of Proceeds
Item 3 Defaults Upon Senior Securities
Item 4 Submission of Matters to a Vote of
Security Holders
Item 5 Other Information
Item 6 Exhibits and Reports on Form 8-K
PART I
EXPLANATORY NOTE
Included in this Quarterly Report on Form 10-QSB is a
consolidated balance sheet
of Group Management Corp as of March 31, 2003, and the
related consolidated statements of operations for the three month
period ended March 31, 2003 and 2002, and statements of cash
flows for the three month periods ended March 31, 2003 and
2002.
This Quarterly Report includes forward-looking statements within
the meaning of the securities Exchange Act of 1934 (the "Exchange
Act"). These statements are based on management's beliefs and
assumptions, and on information currently available to
management. Forward-looking statements include the information
concerning possible or assumed future results of operations of
the Company set forth under the heading "Management's
Discussion and Analysis of Financial Condition or Plan of
operation." Forward-looking statements also include statements
in which words such as "expect," "anticipate," "intend,"
"plan," "believe," "estimate," "consider" or similar
expressions are used.
Forward-looking statements are not guarantees of future
performance. They involve risks, uncertainties and assumptions.
The Company's future results and shareholder values may differ
materially from those expressed in these forward-looking
statements. Readers are cautioned not to put undue reliance on
any forward-looking statements.
GROUP MANAGEMENT CORP
Consolidated Balance Sheet (UNAUDITED)
As of March 31, 2003
ASSETS
Current Assets
Cash $ 0.0
Accounts receivable-net 0.0
Inventory 0.0
Total Current Assets 0.0
Property and Equipment, Net 0.0
Other Assets, Net 0.0
0.0
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued expenses 0.0
Notes payable and capital lease obligations 1,100,000
Total Current Liabilities 1,100,000
Stockholders' Equity and Accumulated Deficit
Common stock: par value $.002, 300,000,000
shares
authorized, 64,455,000 issued and 128,910
outstanding
Additional paid in capital
40,192,245
Accumulated deficit
(39,121,155)
Total Stockholders' deficit
(1,100,000)
See accompanying summary of accounting policies and notes to
financial statements.
GROUP MANAGEMENT CORP
Consolidated Statements of Operations (UNAUDITED)
For the Three Months
Ended
March 31
2003 2002
Revenues:
Sales 0 $
44,342
Cost of Goods Sold 0
25,472
Gross Profit 0
(8,602)
Operating Expenses
General and
administrative 200,000 1,344,508
Depreciation expense
37,500
Interest expense
10,000
Research and
development - -
Loss on investment in
ITVR - -
200,000 1,417,480
Other Income
Interest income
- -
Minority interest
-
Net Income $ $
(200,000) (1,373,138
)
Basic and fully diluted
net loss per
share (.00)
(0.01)
Weighted average number
of shares
outstanding for basic
and diluted net
loss per share 64,455,000 60952059
See accompanying summary of accounting policies and notes to
financial statements.
GROUP MANAGEMENT CORP
Consolidated Statements of Changes in Stockholders' Equity
(UNAUDITED)
For the Period from January 1, 2003 to March 31, 2003
Common Stock
Additional
Number of Paid in
Accumulate
d
Shares Amount Capital Deficit Total
Balance, $ $ $ $
December 14,455,000 28,910 37,792,245 (38,921,15 1,128,910
31, 2002 5)
Shares
issued for 50,000,000 100,000 2,400,000 - 2,500,000
services
Net loss
- - - (200,000) (200,000)
Balance, $ $ $ $
March 31, 64,455,000 128,910 40,192,245 (39,121,15 (1,071,090
2003 5)
See accompanying summary of accounting policies and notes to
financial statements.
GROUP MANAGEMENT CORP
Consolidated Statements of Cash Flows (UNAUDITED)
For the Three Months
Ended
March 31,
2003 2002
(UNAUDITED (UNAUDITE
) D)
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net (Loss) $ $
(200,000) (1,373,13
8)
Adjustments to reconcile net
(loss)
to net cash provided by (used in)
operating activities:
Minority interest
-
Depreciation amortization
0.0 37,500
Stock based compensation
200,000 1,044,362
Purchased in-process
technology - -
Loss on investment in iTVr
- -
Beneficial interest on
convertible debt - -
Changes on operating assets and
liabilities:
Accounts receivable
0.0 5,267
Inventory
0.0 384
Other assets
0.0
Accounts payable and accrued
expenses - 32,017
NET CASH PROVIDED BY
(USED IN) OPERATING ACTIVITIES
200,000 (253,608)
CASH FLOWS FROM INVESTING
ACTIVITIES:
Cash acquired through purchase of
subsidiary 0.0
Investment in iTVr
0.0 0.0
Purchase of equipment
0.0 (100)
Notes receivable
0.0 0.0
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES
- (100)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from issuance of stock
0.0 250,000
Net change in notes payable
0.0 13,622
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES
(200,000) 263,622
Increase (decrease) in cash and
cash equivalents (9,914) 9,914
Cash and cash equivalents at
beginning of period 0.0 97,911
Cash and cash equivalents at end $ $
of period 0.0 107,825
See accompanying summary of accounting policies and notes to
financial statements.
NOTE A - BASIS OF PRESENTATION
The accompanying un-audited condensed financial statements have
been prepared in accordance with generally accepted accounting
principles for interim financial information and with the
instructions to Form 10 and Item 310 of Regulation S-B.
Accordingly, they do not include all of the information and
footnotes required for 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- and three-month
periods ended March 31, 2003 are not necessarily indicative of
the results that may be expected for the year ended December 31,
2002. These financial statements should be read in conjunction
with the Company's audited financial statements for the year
ended December 31, 2002.
ITEM 2MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Our independent accountant included an explanatory paragraph in
their report, stating that the audited financial statements of
Group Management Corp. for the year ending December 31, 2002 have
been prepared assuming the company will continue as a going
concern. They note that the Company's continued existence is
dependent upon its ability to generate sufficient cash flows from
operations to support its daily operations as well as provide
sufficient resources to retire existing liabilities and
obligations on a timely basis. We have continued losses from
operations, negative cash flow and liquidity problems. These
conditions raise substantial doubt about our ability to continue
as a going concern. The accompanying financial statements do not
include any adjustments relating to the recoverability of
reported assets or liabilities should we be unable to continue as
a going concern.
We have been able to continue based upon our service providers
accepting shares of our common stock as compensation. However,
there can be no assurances our services will continue to accept
our common stock as compensation. If the services providers
refuse to accept out common stock as compensation, this could
have a negative affect on the company's ability to continue as a
going concern. Management believes that actions presently being
taken to revise our operating and financial requirements provide
the opportunity for us to continue as a going concern.
Management is presently investigating acquisitions that
management believes can rebuild operations that can be profitable
in the long-term. Although management believes that these
efforts will enable us to meet our liquidity needs in the future,
there can be no assurance that these efforts will be successful.
Management is currently attempting to restructure the operations
of Group Management Corp. However, there can be no assurances
that the restructuring will be successful, management is of the
opinion and of the business judgment, that a restructuring will
fundamentally assists the operations of Group Management Corp.
During the quarter management substantially deceased operations
of Group Management Corp. to attempt to restructure the company.
In the restructuring, management moved the principal place of
business from 12503 EXCHANGE BOULEVARD, SUITE 554 STAFFORD,
TEXAS, to 101 Marietta St., Suite 1070, Atlanta, GA 30303.
Management in its business judgment, settled outstanding
obligations of the company for equipment, office furniture and
the leasehold improvement was terminated in agreement with its
landlord.
Management currently is of the opinion that its restructuring
activities will have a net positive affect on the company. The
restructuring activities are currently ongoing during the period.
Management in its restructuring and in its business judgment
reduced the deferred revenue of $2,500,000 in a note receivable
from Lumar Worldwide to zero on the balance sheet.
RESULTS OF OPERATIONS
Revenue
Total revenues for the three months ended March 31, 2003
were $0.0 as compared to $49,013 for the three months ended
March 31, 2001. This decrease was due to primarily to the
restructuring of the company's operations and as a result of
management's decision to restructure Group Management Corp.'s
operation and seek acquisition candidates.
Costs and Expenses
Cost of goods sold was $0.0, or approximately 0.0% of
sales, for the three months ended March 31, 2003, as compared
to $23,412 or approximately 91.83% of sales, for the three
months ended March 31, 2002. The decrease in cost of goods
sold reflects lower sales for the period, and is a
direct result of the company's restructuring of its
operations.
General and administrative expenses were $200,000 for the
three months ended March 31, 2003, a decrease of
approximately 86% as compared to $1,344,508 for the period
ending on the three months ended March 31, 2002. This
decrease is attributable to a decrease of over $7,310,952
in stock based compensation, and our overall decreased
sales activity and the restructuring activities of the
company.
Total costs and expenses were $200,000 for the three months
ended March 31, 2003, as compared to $1,417,480 for the three
months ended March 31, 2002. This decrease of over 86%
reflects a decreased in general and administrative expenses
and cost of goods sold, as discussed above.
Net Losses
The net loss for the three months ended March 31, 2003
was $200,000 as compared to $1,373,138 for the three months
ended March 31, 2002. The primary cause of this
approximately 99% decrease is the decrease in total costs
and expenses, discussed above and the restructuring
activities of the company.
LIQUIDITY AND CAPITAL REQUIREMENTS
Net cash provided in operating activities was ($200,000) for the
three months ended March 31, 2003, as compared to net cash used
of ($253,608) for the three months ended March 31, 2002, a
decrease of over 5%. We had $0.0 in cash at March 31, 2003, a
decrease of $0.0 during the quarter.
Our net cash used by financing activities was $0.0 for the three
months ended March 31, 2003 as compared to net cash provided of
$263,622 for the period ending March 31, 2002.
At March 31, 2003, our current assets were $0.0, while our
current liabilities were $1,100,000. Total current liabilities
consists of $1,100,000 in notes payable.
If we are not able to obtain alternative financing and the note
holders are successful in their action to collect on the notes,
we would be unable to make payment in full on the notes and would
consider all strategic alternatives available to us, possibly
including a bankruptcy, insolvency, reorganization or liquidation
proceeding or other proceeding under bankruptcy law or laws
providing for relief of debtors. It is also possible that one of
these types of proceedings could be instituted against us.
Management has taken steps to revise our operating and financial
requirements to accommodate our available cash flow, including
the temporary suspension of management and certain employee
salaries. As a result of these efforts, management believes
funds on hand, cash flow from operations and additional
issuance of common equity will enable us to meet our
liquidity needs for at least the short-term foreseeable
future.
We need to raise additional cash, however, in order to
satisfy our proposed restructuring plan, to meet obligations, and
expand our operations. Management is presently investigating
transactions and mergers and acquisitions that management
believes can provide additional cash for our operations and be
profitable long-term. In the future management also intends to
attempt to raise funds through private sales of our common
stock. Although management believes that these efforts will
enable us to meet our liquidity needs in the future, there can be
no assurance that these efforts will be successful.
In the opinion of the Company's management, lawsuits currently
pending or threatened against the Company, unless dismissed
or settled within a short period of time, will have a material
adverse effect on the financial position and results of
operations of the Company because the Company does not have the
cash flow to continue to fund defense costs. Such strategies
may include acquiring one or more businesses with positive cash
flow, or filing for bankruptcy protection. No decisions have
been made as of this time.
PART II
ITEM 1 LEGAL PROCEEDINGS
There have been the following material developments to the legal
proceedings described in our Form 10-QSB for the quarter
ended September 30, 2002, filed with the Commission on
December 13, 2002. The company filed a Chapter 11 reorganization
on March 18, 2003 in the Northern District of Georgia, Atlanta
division. The Chapter 11 case was officially dismissed on May
11, 2003.
In the ordinary course of business, the Company is from
time to time involved in various pending or threatened legal
actions. The litigation process is inherently uncertain and it
is possible that the resolution of such matters might have a
material adverse effect upon the financial condition and/or
results of operations of the Company.
In the opinion of the Company's management, matters currently
pending or threatened against the Company, unless dismissed
or settled within a short period of time, will have a material
adverse effect on the financial position and results of
operations of the Company because the Company does not have the
cash flow to continue to fund defense costs. Management is
currently reviewing several strategies for continuing to fund
defense costs while at the same time funding the development
of the Company. No decisions have been made as of this
time.
ITEM 2 CHANGES IN SECURITIES AND USE OF PROCEEDS
There have been no events which are required to be
reported under this Item.
ITEM 3 DEFAULTS UPON SENIOR SECURITIES
There have been no events which are required to be
reported under this Item.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
There have been no events which are required to be
reported under this Item.
ITEM 5 OTHER INFORMATION
Effective July 15, 2002, the Company changed its principal
business address to: 101 Marietta St., Suite 1070, Atlanta, GA
30303, telephone number (404) 522-1202.
The company filed form N-54-A on April 14, 2003, officially
becoming a business development company. The company intends to
take several companies public during its fiscal year.
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: May 13, 2003
Group Management Corp
/s/ Lamar Sinkfield
------------------------------
By: Lamar Sinkfield
Its: Chief Executive Officer
(a) Exhibits
99.1 Certification as Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K:
The company hereby incorporates by reference the current reports
filed on:
Form Filed On
8-k January 13, 2003
8-k January 14, 2003
8-k January 17, 2003
8-k February 3, 2003
8-k March 18, 2003
8-k March 31,2003
Exhibit 99.1
CERTIFICATION PURSUANT TO
18 USC, SECTION 1350, AS ADOPTED PURSUANT TO
SECTIONS 302 AND 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Group
Management Corp. (the "Company") on Form 10-QSB for the quarter
ended March 31, 2003 (the "Report"), as filed with the Securities
and Exchange Commission on the date hereof, I, Elorian Lander,
Chief Executive Officer and Chief Financial Officer of the
Company, certify to the best of my knowledge, pursuant to
18 USC 1350, as adopted pursuant to Sec.302 and promulgated as
18 USC 1350 pursuant to Sec.906 of the Sarbanes-Oxley Act of
2002, that:
1. The Report referenced above has been read and
reviewed by the undersigned.
2. The Report fully complies with the requirements of Section
13(a) or 15(d) of the Securities Exchange Act of 1934.
3. The information contained in the Report fairly presents,
in all material respects, the financial condition and result
of operations of the Company.
4. Based upon my knowledge, the Report referenced above does
not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to makes the statements
made, in light of the circumstances under which such statements
were made, not misleading.
5. Based upon my knowledge, the financial statements,
and other such financial information included in the Report,
fairly present in all material respects the financial condition
and results of operations of the Company as of, and for, the
periods presented in the Report.
6. I acknowledge that the Chief Executive Officer and
:
A. are responsible for establishing and maintaining
"disclosure controls and procedures" for the Company;
B. have designed such disclosure controls and procedures
to ensure that material information is made known to us,
particularly during the period in which the Report was being
prepared;
C. have evaulated the effectiveness of the Company's
disclosure controls and procedures within 90 days of the
date of the Report; and
D. have presented in the Report our conclusions about the
effectiveness of the disclosure controls and procedures
based on the required evaluation.
E. have disclosed to the issuer's auditors and to the
audit committee of the Board of Directors of the Company (or
persons fulfilling the equivalent function):
(i) all significant deficiencies in the design or
operation of internal controls which could adversely affect the
Company's ability to record, process, summarize, and report
financial data and have identified for the Company's auditors
any material weaknesses in internal controls; and (ii)
any fraud, whether or not material, that involves management or
other employees who have a significant role in the issuer's
internal controls; and
F. have indicated in the Report whether or not there
were significant changes in internal controls or in other factors
that could significantly affect internal controls subsequent
to the date of their evaluation, including any corrective
actions with regard to significant deficiencies and
material weaknesses.
/s/ Lamar Sinkfield
---------------------------------------
Lamar Sinkfield
Chief Executive Officer
Dated: May 13, 2003