UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB/A
(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 000-50502
CONTINUUM GROUP A INC.
----------------------
(EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS DECLARATION OF TRUST)
NEVADA 20-0443537
- ------------------------------- ----------
(State or Other (I.R.S. Employer Identification No.)
Jurisdiction of
Incorporation or
Organization)
65 EAST 55TH STREET
NEW YORK, NEW YORK 10022
- --------------------------------------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(212) 451-2300
- --------------------------------------------------------------------------------
(ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE)
- ----------------------------------------------------------------------------------
(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 / /
No /X/
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/A
INDEX
- --------------------------------------------------------------------------------
Page
----
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
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 11
ITEM 2 - CHANGES IN SECURITIES AND SMALL BUSINESS ISSUER PURCHASES
OF EQUITY SECURITIES 11
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES 11
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 11
ITEM 5 - OTHER INFORMATION 11
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 11
SIGNATURES 12
CERTIFICATIONS
CONTINUUM GROUP A INC.
BALANCE SHEET
March 31, 2004
(Unaudited)
- --------------------------------------------------------------------------------
ASSETS
TOTAL ASSETS $ -
=======
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current Liabilities:
Accrued Expenses $43,516
-------
Total Current Liabilities 43,516
Commitments and Contingencies
Stockholders' Deficiency
Preferred Stock, par value $0.001; 5,000,000
shares authorized, none issued and outstanding --
Common Stock, par value $0.001; 45,000,000 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)
--------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY $0
========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
3
CONTINUUM GROUP A INC.
(A Development Stage Company)
CONDENSED STATEMENT OF OPERATIONS
(Unaudited)
- --------------------------------------------------------------------------------
Cumulative
from January 5,
2000 (Inception)
For the three months ended March 31, through March 31,
2004 2003 2004
------------------------------------------------------
General and Administrative Expenses $4,000 $5,000 $85,206
--------- ------- -------
Net Loss ($4,000) ($5,000) ($85,206)
========= ======= =======
Net loss per share $0.00 $0.00
========= =======
Weighted shares outstanding 1,799,339 749,339
========= =======
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
4
CONTINUUM GROUP A INC.
(A Development Stage Company)
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited)
- --------------------------------------------------------------------------------
Cumulative
from January 5,
2000 (Inception)
For the three months ended March 31, through March 31,
2004 2003 2004
------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss ($4,000) ($5,000) ($85,206)
Adjustments to reconcile the net
loss to net cash flows from
operating activities:
Stock based compensation - - $41,510
Change in operating liabilities
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 OF PERIOD - - -
------------------------------------------------------
CASH-END OF PERIOD $ - $ - $ -
======================================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
5
CONTINUUM GROUP A INC.
NOTES TO FINANCIAL STATEMENT
- --------------------------------------------------------------------------------
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, 2000 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.
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
6
CONTINUUM GROUP A INC.
NOTES TO FINANCIAL STATEMENT
- --------------------------------------------------------------------------------
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
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
7
CONTINUUM GROUP A INC.
NOTES TO FINANCIAL STATEMENT
- --------------------------------------------------------------------------------
contracts to issue common stock were issued or entered into.
Accordingly, basic and diluted earnings per share are identical.
NEW ACCOUNTING PRONOUNCEMENTS
In January 2003, Financial Accounting Standards Board ("FASB") issued
FASB Interpretation No. 46, "Consolidation of Variable Interest
Entities" ("FIN 46"), an interpretation of Accounting Research Bulletin
No. 51. FIN 46 expands upon and strengthens existing accounting
guidance that addresses when a company should include in its financial
statements the assets, liabilities and activities of another entity. A
variable interest entity is any legal structure used for business
purposes that either does not have equity investors with voting rights
or has equity investors that do not provide sufficient financial
resources for the entity to support its activities. FIN 46 requires a
variable interest entity to be consolidated by a company if that
company is subject to a majority of the risk of loss from the variable
interest entity's activities or entitled to receive a majority of the
FIN 46 apply immediately to variable interest entities created after
January 31, 2003. The consolidation requirements apply to older
entities in the first fiscal year or interim period beginning after
June 15, 2003. However, on October 8, 2003, FASB deferred the latest
date by which all public entities must apply FIN 46 to the first
reporting period ended after December 15, 2003. The effect of the
adoption of this new accounting pronouncement on the Company financial
statements has not been significant.
In May 2003, FASB issued SFAS No. 150, "Accounting for Certain
Instruments with Characteristics of Both Liabilities and Equity" ("SFAS
150"), which is effective for financial instruments entered into or
modified after May 31, 2003, and otherwise is effective at the
beginning of the first interim period beginning after June 15, 2003,
SFAS 150 establishes standards for how an issuer classifies and
measures certain financial instruments with characteristics of both
liabilities and equity. It requires that an issuer classify a financial
instrument that is within its scope as a liability. The adoption of
SFAS 150 did not have a material effect on the Company's financial
statements.
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
with those of the Company.
8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Forward-Looking Statements
This Report on Form 10-QSB/A 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.
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.
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.
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 May 17, 2004, 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.
9
RESULTS OF OPERATIONS
We have not had any operating income from January 5, 2000 (inception)
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 experienced no significant change in liquidity, capital
resources or stockholders' equity. Since the Company has no operations
other than to search for a suitable acquisition target, its sole
expenses are administrative. As such, the Company does not intend to
raise additional financing until an acquisition is consummated.
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.
10
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: July 9, 2004 By: /s/ Robert L. Frome
-------------------------------------
Robert L. Frome
President and Chairman
(acting Chief Executive Officer
and Acting Chief Financial Officer)
12
