UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
(Mark one)
/X/ Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the quarterly period ended March 31, 2004
/ / Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from __________ to __________
Commission file number 000-50500
CONTINUUM GROUP A INC.
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(Exact Name of Small Business Issuer as Specified in Its Charter)
NEVADA 20-0443537
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
65 East 55th Street
New York, New York 10022
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(Address of Principal Executive Offices)
(212) 451-2300
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(Issuer's Telephone Number, Including Area Code)
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(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act 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 / /
As of May 14, 2004, 1,799,339 shares were outstanding.
Transitional Small Business Disclosure Format (check one): Yes / / No /X/
CONTINUUM GROUP A INC.
FORM 10-QSB
INDEX
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Page
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PART I - FINANCIAL INFORMATION
ITEM 1 - CONDENSED FINANCIAL STATEMENTS
Condensed Balance Sheet as of March 31, 2004(unaudited) 3
Condensed Statement of Operations for the three months ended
March 31, 2004 (unaudited) and March 31, 2003 (unaudited)
and cumulative from January 5, 2000 (Inception) to March 31,
2004 (unaudited) 4
Condensed Statement of Cash Flows for the three months ended
March 31, 2004 (unaudited) and March 31, 2003 (unaudited) and
cumulative from January 5, 2000 (Inception) to March 31, 2004
(unaudited) 5
NOTES TO CONDENSED FINANCIAL STATEMENTS 6-8
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION 9-10
ITEM 3 - CONTROLS AND PROCEDURES 10
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
ITEM 2 - CHANGES IN SECURITIES AND SMALL BUSINESS ISSUER PURCHASES
OF EQUITY SECURITIES
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 11
SIGNATURES 12
2
CONTINUUM GROUP A INC.
BALANCE SHEET
March 31, 2004
(Unaudited)
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ASSETS
------
TOTAL ASSETS $ --
LIABILIATIES AND STOCKHOLDERS' DEFICIENCY
-----------------------------------------
CURRENT LIABILITIES
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Accrued expenses $ 43,516
Total Current Liabilities 43,516
COMMITMENTS AND CONTINGENCIES
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STOCKHOLDERS' DEFICIENCY
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Preferred stock, par value $0.001; 5,000,000 shares authorized;
1,799,339 issued and outstanding at March 31, 2004 $ 1,799
Additional paid in capital 39,711
Deficit accumulated during development stage (85,026)
--------
Total Stockholders' Deficiency (43,516)
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TOTAL LIABILITIES AND STOCKHOLDERS'
DEFICIENCY $ --
=========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
3
CONTINUUM GROUP A INC.
STATEMENT OF OPERATIONS
March 31, 2004
(Unaudited)
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Cumulative From
January 2000
For the Three Months Ended (Inception)
---------------------------- Through March 31,
2004 2003 2004
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General and administrative expenses $ 4,000 $ 5,000 $ 75,126
Net loss (4,000) (5,000) (75,126)
Net loss per share $ -- $ --
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Weighted shares outstanding $1,799,339 749,339
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THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
4
CONTINUUM GROUP A INC.
STATEMENT OF CASH FLOWS
March 31, 2004
(Unaudited)
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Cumulative From
January 2000
For the Three Months Ended (Inception)
-------------------------- Through March 31,
2004 2003 2004
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CASH FLOWS FROM OPERATING
ACTIVITIES
Net loss $(4,000) $(5,000) $(75,126)
Adjustments to reconcile the net loss to net
cash Flows from operating activities:
Stock based compensation -- -- 31,610
Increase in accrued expenses 4,000 5,000 43,516
------- ------- --------
NET CASH FLOWS FROM OPERATING
ACTIVITIES -- -- --
CASH FLOWS FROM INVESTING
ACTIVITIES -- -- --
CASH FLOWS FROM FINANCING
ACTIVITIES -- -- --
NET INCREASE IN CASH -- -- --
CASH - Beginning -- -- --
CASH - Ending $ -- $ -- $ --
======= ======= ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
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CONTINUUM GROUP A INC.
NOTES TO FINANCIAL STATEMENT
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NOTE 1 - FORMATION, NATURE OF BUSINESS, AND MANAGEMENT PLANS
FORMATION, NATURE OF BUSINESS AND MANAGEMENT'S PLANS
Continuum Group A Inc. (the "Company") was formed on January 5, 2000 in
Nevada pursuant to the Reorganization Plan under Chapter 11 of the
United States Bankruptcy Code of The Continuum Group, Inc.
("Continuum"). The primary provision of the Plan provided for the
formation of the Company and the issuance of (a) 9,000,000 (453,035
post reverse split (see below) shares of the Company's common stock to
Hanover Capital Corporation, which funded Continuum's reorganization
plan; (b) 500,000 (25,169 post reverse split (see below) shares to
holders of Continuum's allowed unsecured claims, and (c) 400,000
(20,135 post reverse split (see below shares to Continuum's
pre-bankruptcy stockholders. The accumulated deficit at inception
resulted from the par value of these shares granted to stockholders
without any consideration.
The Company is considered a "blank check" company, whose sole purpose
is to locate and consummate a merger or acquisition with a private
entity. Since inception, the Company has not engaged in any business
operations other than organizational activities, and is actively
searching for acquisition targets. As of May 14, 2004, the Company had
not entered into any formal agreements.
Since the Company has no operations other than to search for a suitable
acquisition target, its only expenses are administrative. As such, the
Company does not intend to seek additional financing until an
acquisition is consummated.
On December 14, 2002 the Company's Board of Directors (the "Board")
approved an amendment to the charter to affect a 1-for-5.96 reverse
stock split of the Company's issued and outstanding common stock.
Accordingly, in the accompanying financial statements all common share
and per share amounts have been retroactively restated to show the
effect of the 1-for-5.96 reverse split.
NOTE 2 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
have been prepared by the Company in conformity with accounting
principles generally accepted in the United States of America and the
instructions of Form 10-QSB. It is management's opinion that these
statements include all adjustments, consisting of only normal recurring
adjustments necessary to make the financial position, results of
operations, and cash flows not misleading as of March 31, 2004 and for
all periods presented.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
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CONTINUUM GROUP A INC.
NOTES TO FINANCIAL STATEMENT
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NOTE 2 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,
continued
amounts of assets and liabilities and disclosures of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Certain information and footnote disclosures normally included in the
annual financial statements prepared in accordance with accounting
principles generally accepted in the United States of America have been
condensed or omitted. It is suggested that these condensed consolidated
financial statements be read in conjunction with the consolidated
financial statements and notes thereto as of December 31, 2002 and for
each of the two years ended December 31, 2002, which are included in
the Company's Annual Report on Form 10-SB for the year ended December
31, 2002 filed with the Securities and Exchange Commission.
USE OF ESTIMATES IN THE FINANCIAL STATEMENTS
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
the Company to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
INCOME TAXES
The Company accounts for income taxes using the liability method, which
requires the determination of deferred tax assets and liabilities based
on the differences between the financial and tax bases of assets and
liabilities using enacted tax rates in effect for the year in which
differences are expected to reverse. Deferred tax assets are adjusted
by a valuation allowance, if, based on the weight of available
evidence, it is more likely than not that some portion of the deferred
tax assets will not be realized.
At March 31, 2004, the Company has net operating loss carry forwards of
approximately $75,000, which expire through 2024. Pursuant to Section
382 of the Internal Revenue Code regarding substantial changes in
ownership, utilization of these losses may be limited. Based on this
and the fact that the Company has generated operating losses through
March 31, 2004, the deferred tax asset of approximately $30,000 has
been offset by a valuation allowance of $30,000.
STOCK BASED COMPENSATION
As permitted by Statement of Financial Accounting Standards ("SFAS")
No. 148,"Accounting for Stock-Based Compensation-Transition and
Disclosure", which amended SFAS No. 123 ("SFAS 123"), "Accounting for
Stock-Based Compensation", the Company has elected to continue to
follow the intrinsic value method in accounting for its stock-based
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CONTINUUM GROUP A INC.
NOTES TO FINANCIAL STATEMENT
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employee compensation arrangements as defined by Accounting Principles
Board Opinion ("APB") including "Financial Accounting Standards Board
Interpretation No. 44, Accounting for Certain Transactions Involving
Stock Compensation", and interpretation of APB No. 25. As of March 31,
2004, the Company has not formed a Stock Option Plan and has not issued
any options.
LOSS PER SHARE
The Company adopted the provisions of SPAS No. 128, "Earnings per
Share." SFAS No. 128 requires the presentation of basic and diluted
earnings per share ("EPS"). Basic EPS is computed by dividing loss
available to common stockholders by the weighted-average number of
common shares outstanding for the period. Diluted EPS includes the
potential dilution that could occur if options or other contracts to
issue common stock were exercised or converted. During the period
January 5, 2000 (Inception) through March 31, 2004 no options, or other
contracts to issue common stock were issued or entered into.
Accordingly, basic and diluted earnings per share are identical.
NOTE 3 - RELATED PARTIES
As discussed in Note 1, the Company was formed pursuant to the
reorganization plan of Continuum. In accordance with the reorganization
of Continuum three additional companies named Continuum Group B Inc.,
Continuum Group C Inc., and Continuum Group D Inc. were formed with
similar terms as the Company with common stock issuances consistent wit
those of the Company.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Forward-Looking Statements
This Report on Form 10-QSB contains "forward-looking statements" within the
meaning of Section 27A of the Securities Act and Section 21E of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). All statements other than
statements of historical facts included in this Report, including without
limitation, the statements under "General," and "Liquidity and Capital
Resources," are forward-looking statements. All subsequent written and oral
forward-looking statements attributable to the Company or persons acting on its
behalf are expressly qualified in their entirety by the Cautionary Statements.
You should read the following discussions in conjunction with our financial
statements and the related notes thereto and other financial information
appearing elsewhere in this report. The following discussion contains
forward-looking statements that involve risks and uncertainties. Our actual
results could differ materially from those anticipated in the forward-looking
statements as a result of various factors, including those discussed elsewhere
in this report.
The Plan provided for the formation of the Groups and the issuance of (a)
9,000,000 (453,035 post reverse split, as described below) shares of each of the
Groups' common stock to Hanover Capital Corporation ("Hanover"), which funded
the Plan; (b) 500,000 (25,169 post reverse split) shares of each of the Groups'
common stock to holders of CGI's allowed unsecured claims; and (c) 400,000
(20,135 post reverse split) shares of each of the Groups' common stock to CGI's
pre-bankruptcy stockholders. The aggregate number of authorized shares we have
authority to issue is 50,000,000; of which 45,000,000 is common stock, par value
$.001 per share ("Common Stock"), and 5,000,000 is preferred stock, par value
$.001 per share ("Preferred Stock"). On May 5, 2000, we affected a one for
19.866 reverse stock split. All references to shares are shown post reverse
split.
Plan of Operation
We intend to seek to acquire assets or shares of an entity actively engaged in
business that generates revenues, in exchange for its securities, although we
have no particular acquisitions in mind and have not entered into any
negotiations regarding such an acquisition. None of our officers, directors, or
affiliates have engaged in any preliminary contract or discussions with any
representative of any other company regarding the possibility of an acquisition
or merger between us and such other company as of the date of this 10QSB filing.
GENERAL
Continuum Group A Inc. ("Continuum A") was incorporated on January 5, 2000 under
the laws of the State of Nevada pursuant to a Joint Plan of Reorganization (the
"Plan") for the Continuum Group, Inc.("CGI") in Bankruptcy Case No. 95-B-44222
(Chapter 11) in the U. S. Bankruptcy Court, Southern District of New York (the
"Bankruptcy Court"). The Bankruptcy Court entered an Order on September 15, 1999
approving the Plan. We, along with three other companies, Continuum Group B
Inc., Continuum Group C Inc., and Continuum Group D Inc. (collectively, the
"Groups"), were specifically formed to affect the terms of the Plan.
9
On December 14, 2000, we issued 251,000 shares of Common Stock to 14 individuals
and entities for services rendered. On August 27, 2003, we issued 1,050,000
shares of Common Stock to eight individuals and entities for services rendered.
As of November 26, 2003, we had 1,799,339 shares of Common Stock issued and
outstanding. No shares of Preferred Stock are issued or outstanding.
We have not engaged in any business operations other than organizational
activities. Since inception, we have been in the developmental stage and have
had no operations. Other than issuing shares to our stockholders, we never
commenced any operational activities. As a result, we can be defined as a
"shell" or "blank check" company, whose sole purpose is to locate and consummate
a merger or acquisition with a private entity.
RESULTS OF OPERATIONS
We have not had any operating income from inception (January 5, 2000) through
March 31, 2004. As of March 31, 2004, we had an accumulated deficit of $85,026,
comprised of costs mainly associated with administrative expenses.
LIQUIDITY AND CAPITAL RESOURCES
The Company has not commenced principal operations as of March 31, 2004 and
there is no assurance that the Company will have the ability to carry out its
business plan without raising sufficient debt or equity financing. Although the
Company intends to secure funding through a private placement and, ultimately, a
public offering of its common stock, there can be no assurance that they will be
successful. These factors raise substantial doubt as to the Company's ability to
continue as a going concern.
ITEM 3. CONTROLS AND PROCEDURES
(a) The Company carried out an evaluation, under the supervision and with the
participation of the Company's management, including Robert L. Frome (acting
Chief Executive Officer and acting Chief Financial Officer), of the
effectiveness of the design and operation of the Company's "disclosure controls
and procedures", as such term is defined in Exchange Act Rule 15d-15e, as of the
end of the period covered by this report. Based upon that evaluation, Mr. Frome
has concluded that the Company's disclosure controls and procedures were
effective as of the end of the period covered by this report to provide
reasonable assurance that information required to be disclosed by the Company in
reports that it files or submits under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in SEC rules and
forms.
(b) There have been no significant changes in the Company's internal controls or
in other factors that could significantly affect the Company's internal controls
subsequent to the date the Company carried out this evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
A control system, no matter how well conceived and operated, can provide only
reasonable, not absolute assurance that the objectives of the control system are
met. Because of the inherent limitations in all control systems, no evaluation
of controls can provide absolute assurance that all control issues and instances
of fraud, if any, within a company have been detected.
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OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES AND SMALL BUSINESS ISSUER PURCHASER OF EQUITY
SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON 8-K
a. Exhibits
*31.1 Certification of Acting Chief Executive Officer and Acting Chief
Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
*32.1 Certification of the Acting Chief Executive Officer and Acting
Chief Financial Officer pursuant to 18 U.S.C. Section 1350 adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
*Filed herewith
b. Reports on Form 8-K
None.
11
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.
CONTINUUM GROUP A INC.
(Registrant)
DATE: May 19, 2004 By: /s/ Robert L. Frome
---------------------------------
Robert L. Frome
President and Chairman
(acting Chief Executive Officer
and acting Chief Financial
Officer)
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