6
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 June 30, 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 June 30, 2003 there were 67,788,000
shares of common stock issued and outstanding.
TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT
(check one):
Yes No X .
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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 June 30, 2003, and the
related consolidated statements of operations for the three month
period ended June 30, 2003 and 2002, and statements of cash
flows for the three month periods ended June 30, 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 June 30, 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, 67,788,000 issued and 135,576
outstanding
Additional paid in capital
40,251,645
Accumulated deficit
(40,116,069)
Total Stockholders' deficit
(1,235,576)
See accompanying summary of accounting policies and
notes to financial statements.
GROUP MANAGEMENT CORP
Consolidated Statements of Operations (UNAUDITED)
For the Three Months
Ended
June 30
2003 2002
Revenues:
Sales 0 $
76,421
Cost of Goods Sold 0 34,398
Gross Profit 0 42,023
Operating Expenses
General and 209,059
administrative 0
Depreciation expense 37,500
Interest expense 10,669
Research and
development - -
Loss on investment in
ITVR - -
0 257,228
Other Income
Interest income
- -
Minority interest
-
Net Income $ $
0 (215,205)
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 67,788,000 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 March31, 2003 to June 30, 2003
Common Stock
Additional
Number of Paid in
Accumulate
d
Shares Amount Capital Deficit Total
Balance, $ $ $ $
March 31, 64,455,000 128,910 40,192,245 (40,251,64 1,128,910
2003 5)
Shares
issued for 3,330,000 20,000 59,400 - 20,000
services
Net loss (0) (0)
- - -
Balance, $ $ $ $
June 30, 67,788,000 148,910 40,251,645 (40,116,06 (1,148,910
2003 9)
See accompanying summary of accounting policies and
notes to financial statements.
GROUP MANAGEMENT CORP
Consolidated Statements of Cash Flows (UNAUDITED)
2003 2002
(UNAUDITED (UNAUDITE
) D)
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net (Loss) $ $
(0) (215,205)
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 0
56,400
Purchased in-process
technology - -
Loss on investment in iTVr
- -
Beneficial interest on
convertible debt - -
Changes on operating assets and
liabilities:
Accounts receivable (2,723)
0.0
Inventory
0.0 28,167
Other assets
0.0
Accounts payable and accrued
expenses - 32,017
NET CASH PROVIDED BY
(USED IN) OPERATING ACTIVITIES
0 (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 0
Net change in notes payable
0.0 56,554
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES (0)
56,554
Increase (decrease) in cash and
cash equivalents (0) (4,303)
Cash and cash equivalents at
beginning of period 0.0 107,825
Cash and cash equivalents at end $ $
of period 0.0 103,522
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 June
30, 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.
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.
..
RESULTS OF OPERATIONS
Revenue
Total revenues for the three months ended June
30, 2003 were $0.0 as compared to $76,421 for the
three months ended June 30, 2002. 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 June 30,
2003, as compared to $34,398 or approximately 45.01%
of sales, for the three months ended June 30,
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 $0 for
the three months ended June 30, 2003, a decrease of
approximately 86% as compared to $209,059 for the
period ending on the three months ended June 30,
2002. This decrease is attributable to a decrease
of over $200,000 in stock based compensation,
and our overall decreased sales activity and the
restructuring activities of the company.
Total costs and expenses were $0 for the three
months ended June 30, 2003, as compared to $291,626
for the three months ended June 30, 2002. This
decrease of over 99% 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 June
30, 2003 was $0 as compared to $215,205 for the
three months ended June 30, 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 ($0) for
the three months ended June 30, 2003, as compared to
net cash used of ($60,857) for the three months ended
June 30, 2002, a decrease of over 99%. We had $0.0 in
cash at June 30, 2003, a decrease of $0.0 during the
quarter.
Our net cash used by financing activities was $0.0 for
the three months ended June 30, 2003 as compared to net
cash provided of $56,554 for the period ending June 30,
2002.
At June 30, 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.
The company issued 1,500,000 of its restricted shares
for the purchase of an option on the treatment, The
Partners.
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.
The company received from Kadalak Entertainment Group,
Inc. 3.33 million shares of its 144(k) stock for the
foreign distribution rights to The Partners. The
company is currently assigning a value of $0.0 until
such time as the shares trade in the market.
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: August 14, 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 June 30,2003
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 June 30, 2003 (the "Report"), as
filed with the Securities and Exchange Commission on
the date hereof, I, Lamar Sinkfield, 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: August 14, 2003