United States
Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
[X] QUARTERLY REPORT PURSUANT SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934 FOR THE QUARTERLY PERIOD ENDED APRIL, 30 2002
OR
[ ] TRANSITION REPORT PURSUANT SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE TRANSITION PERIOD .
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COMMISSION FILE NO. 33-26616
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GUMP & COMPANY, INC.
(Exact Name of Small Business Issuer in its Charter)
Delaware 75-2256798
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1001 Corbett Canyon
Arroyo Grande, CA 93420
- --------------------------------------- --------
(Address of principal executive office) Zip Code
192 Searidge Court, Shell Beach, CA 93449
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Issuer's telephone number: (805) 489-6688
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Check whether the Issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
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 [ ].
Although our common stock has been eligible for quotation on the OTC
Bulletin Board under the symbol "GMPP" since February 1, 2001, there have been
no trades in our common stock and there currently exists no public market for
our stock. As of May 20, 2002 nonaffiliates had 216,729 shares of which there is
either a nominal or zero market value.
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 2,633,201 as of May 20, 2002.
Transitional Small Business Disclosure Format: YES [ ] NO [X]
Form 10-QSB
PART I
Item 1 - Financial Statements
GUMP & COMPANY, INC.
Index to Financial Statements
For the Six Months Ended April 30, 2002 and
the Years Ended October 31, 2001, 2000 and 1999
-------------------------------------------------------
Financial Statements:
Balance Sheets. . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Statements of Operations . . . . . . . . . . . . . . . . . . . . . . .4
Statements of Stockholders' Equity. . . . . . . . . . . . . . . . . .5
Statements of Cash Flows. . . . . . . . . . . . . . . . . . . . . . .6
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . .7-9
GUMP & COMPANY, INC.
(A development stage company)
Balance Sheets
ASSETS
------
April 30, 2002 October 31, 2001
(Unaudited) (Audited)
---------------- ----------------
Current Assets:
Cash $ 16,333 $ 17,692
---------------- ----------------
Total Current Assets and Assets 16,333 17,692
---------------- ----------------
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities
Due to Stockholder 1,581 714
---------------- ----------------
Total Current Liabilities 1,581 714
Stockholders' Equity
Preferred Stock - $.01 par value,
Authorized - 2,000,000 shares
Issued - None
Common Stock - $.01 par value,
Authorized - 20,000,000 shares
Issued - 2,033,201 shares at April 30, 2002
and October 31, 2001 20,332 20,332
Additional paid-in-capital 36,605 36,605
Accumulated deficit during
development stage (42,185) (39,959)
---------------- ----------------
Total Stockholders' Equity 14,752 16,978
---------------- ----------------
Total Liabilities and Stockholders' Equity $ 16,333 $ 17,692
---------------- ----------------
The accompanying notes are an integral part of the financial statements.
3
GUMP & COMPANY, INC.
(A development stage company)
Statements of Operations
For the Three and Six Months Ended April 30, 2002
and 2001 and for the period September 28, 1988 (date of inception)
to April 30, 2002
(Unaudited)
-----------
Three Months Six Months
-------------------------- -------------------------- Since
2002 2001 2002 2001 Inception
----------- ----------- ----------- ----------- -----------
Revenues $ 0 $ 0 $ 0 $ 0 $ 0
Expenses 1,359 163 2,226 163 42,185
----------- ----------- ----------- ----------- -----------
Net Income (loss) $ (1,359) $ 163 $ (2,226) $ (163) $ (42,185)
----------- ----------- ----------- ----------- -----------
Net Income (loss) per share nil nil nil nil nil
----------- ----------- ----------- ----------- -----------
Weighted average number of
outstanding shares 2,033,201 2,033,201 2,033,201 2,033,201 2,033,201
----------- ----------- ----------- ----------- -----------
The accompanying notes are an integral part of the financial statements.
4
GUMP & COMPANY, INC.
(A development stage company)
Statements of Stockholders' Equity
April 30, 2002
(Unaudited)
-----------
Total
Additional Stockholders'
Common Stock Paid-In- Accumulated Equity
Shares Amount Capital Deficit (Deficit)
----------- ----------- ----------- ----------- -----------
Balance October 31, 2000 33,201 $ 332 $ 36,605 $ (36,937) $ 0
Issuance of common stock for cash 2,000,000 20,000 20,000
Net loss (3,022) (3,022)
----------- ----------- ----------- ----------- -----------
Balance October 31, 2001 2,033,201 $ 20,332 $ 36,605 $ (39,959) $ 16,978
Net loss (2,226) (2,226)
----------- ----------- ----------- ----------- -----------
Balance April 30, 2002 2,033,201 $ 20,332 $ 36,605 ($ 42,185) $ 14,752
=========== =========== =========== =========== ===========
The accompanying notes are an integral part of the financial statements.
5
GUMP & COMPANY, INC.
(A development stage company)
Statements of Cash Flows
For the Three and Six Months Ended April 30, 2002
and 2001 and for the period September 28, 1988
(date of inception)
to April 30, 2002
(Unaudited)
-----------
Three Months Six Months
Since
2002 2001 2002 2001 Inception
--------- --------- --------- --------- ---------
Cash Flows from operating activities:
Net income (loss) $ (1,359) $ (163) $ (2,226) $ (163) $ (42,185)
Adjustments to reconcile net income (loss) to
net cash provided (used in) operating activities
Issuance of stock for bonus and legal services 0 0 0 0 4,250
Increase in due to stockholder 0 0 867 0 1,581
--------- --------- --------- --------- ---------
Cash provided by (used in) operating activities (1,359) (163) (1,359) (163) (36,354)
--------- --------- --------- --------- ---------
Cash Flows from Investing Activities:
None 0 0 0 0 0
--------- --------- --------- --------- ---------
Cash Flows from Financing Activities:
Proceeds from capital contributions 0 0 0 0 21,937
Proceeds from issuance of common stock 0 20,000 0 20,000 30,750
--------- --------- --------- --------- ---------
Net Cash provided by Financing Activities 0 20,000 0 20,000 52,687
--------- --------- --------- --------- ---------
Net Increase (Decrease) in cash (1,359) 19,837 (1,359) 19,837 16,333
Cash at beginning of periods 17,692 0 17,692 0 0
--------- --------- --------- --------- ---------
Cash at end of year $ 16,333 $ 19,837 $ 16,333 $ 19,837 $ 16,333
--------- --------- --------- --------- ---------
The accompanying notes are an integral part of the financial statements.
6
GUMP & COMPANY, INC.
(A development stage company)
Notes to Financial Statements
April 30, 2002, and 2001
and for the Period September 28, 1988 (date of inception)
to April 30, 2002
-----------------
1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
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A. Organization and Business
-------------------------
The Company was incorporated on September 28, 1988 under the laws of
the State of Delaware under the name of Brian Capital, Inc. On
September 15, 1993, the Company changed its name to Sea Pride
Industries, Inc. On August 18, 1997, the Company changed its name to
GUMP & COMPANY, INC. The Company is registered with the Securities and
Exchange Commission.
The Company was organized as a publicly held corporation to pursue a
business combination with a privately held entity believed to have
growth and profit potential, irrespective of the industry in which it
is engaged.
On September 10, 1993, stockholders of the Company exchanged 2,498,601
shares or approximately 75 percent of the issued and outstanding
capital stock of the Company for 126,192 shares of common stock of Sea
Pride Industries, Inc. In addition, the Company executed a one (1) for
ten (10) reverse stock split and increased the par value of the
authorized shares of common and preferred stock from $.001 per share
to $.01 per share. Consequently, the number of common shares issued
and outstanding decreased from 3,300,000 shares to 330,000 shares.
On June 7, 2000 the then principal stockholder, sole officer and
director of the Company sold all of his shares, totaling 249,792
shares, of the common stock of the Company. The new majority
shareholder became the sole officer and a director of the Company.
Effective on April 16, 2001 the Company executed a one (1) for ten
(10) reverse stock split. Consequently, the number of common shares
issued and outstanding decreased from 330,000 shares to 33,201 shares,
after rounding. The financial statements have been restated to reflect
the reverse stock split as if it had occurred during the period ended
October 31, 1998.
On April 25, 2001 the principal shareholder purchased 2,000,000 shares
of the Company's common stock at the stated par value.
The Company has no business operations or identifiable sources of
additional capital to develop independent business operations.
However, the Company has plans to seek and acquire one or more
properties or businesses and to pursue other related activities
intended to enhance the stockholders' value for their investments in
the Company.
7
GUMP & COMPANY, INC.
(A development stage company)
Notes to Financial Statements continued
April 30, 2002, and 2001
and for the Period September 28, 1988 (date of inception)
to April 30, 2002
-----------------
B. Loss Per Share
--------------
Loss per share of common stock is computed using the weighted number
of common shares outstanding during the period shown. Common stock
equivalents are not included in the determination of the weighted
average number of shares outstanding, as they would be antidilutive.
C. Development Stage Company
-------------------------
The Company is an enterprise in the development stage as defined by
Statement No. 7 of the Financial Accounting Standards Board and has
not engaged in any significant business other than organizational
efforts.
D. Impairments of Long Lived Assets
--------------------------------
The Company evaluates its long-lived assets by measuring the carrying
amount of the assets against the estimated undiscounted future cash
flows associated with them. If such evaluations indicate the future
undiscounted cash flows of certain long-lived assets are not
sufficient to recover the carrying value of such assets; the assets
are adjusted to their fair values. No adjustment to the carrying
values of the assets has been made.
E. Statement of Cash Flows
-----------------------
Supplemental disclosure of cash flow information is as follows:
Cash paid during the period September 28, 1988 to April 30, 2002.
Interest 0
Income taxes 0
F. Use of Estimates
----------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that effect reported amounts of assets and liabilities
at the date of the financial statements, and revenues and expenses
during the reporting period. Actual results could differ from
estimates and assumptions made.
G. Management Representation
-------------------------
The financial statements and notes are representations of the
Company's management, which is responsible for their integrity and
objectivity. They include all adjustments deemed necessary in order to
make the financial statements not misleading. Management represents
that these financial statements conform to generally accepted
accounting principles and have been consistently applied in the
preparation of the financial statements.
8
GUMP & COMPANY, INC.
(A development stage company)
Notes to Financial Statements continued
April 30, 2002, and 2001
and for the Period September 28, 1988 (date of inception)
to April 30, 2002
-----------------
2. FAIR VALUE OF FINANCIAL INSTRUMENTS
-----------------------------------
The Company has used market information for similar instruments and applied
judgment to estimate fair value of financial instruments. At April 30, 2002
the fair value of cash, and due to stockholder approximated carrying values
because of the short-term nature of these instruments.
3. COMMITMENTS AND CONTINGENCIES
-----------------------------
The Company is not presently involved in any litigation.
4. INCOME TAXES
------------
The Company presently owes no income taxes.
5. CONSULTING AND/OR SERVICE AGREEMENTS
------------------------------------
During the period April 17, 2002 through April 26, 2002, the company
entered into three consulting and/or service agreements. The compensation of
these agreements, for services rendered, will be the issuance of 600,000 shares
of common stock at its par value for a total of $6,000. The terms of the
agreements range from 30 days to six months.
6. REGISTRATION STATEMENT
----------------------
On April 24, 2002, the Company filed Form S-8 with the Securities and
Exchange Commission to register 600,000 shares of common stock, pursuant to an
Employee/Consultant Stock Plan 2002, to be issued for employee and consulting
services. No stock was issued prior to April 30, 2002.
7. SUBSEQUENT EVENTS
-----------------
On May 15, 2002, in accordance with a Board of Directors resolution dated
April 26, 2002, 600,000 shares of the common stock of the Company were issued to
three individuals in accordance with the terms of the stock option agreements in
exchange for services rendered.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the Company's Form
10-KSB and the consolidated financial statements for the years ended October 31,
2001, 2000, 1999, 1998, 1997, 1996, 1995, 1994, and 1993. The statements in this
Quarterly Report on Form 10-QSB relating to matters that are not historical
facts, including but not limited to statements found in this "Management's
Discussion and Analysis of Financial Condition and Results of Operations", are
forward-looking statements that involve a number of risks and uncertainties.
9
Plan of Operation
From our inception in 1988 through April 30, 2002, as a development stage
company, we have generated no revenues and had an accumulated deficit during our
development stage of $42,105. Accordingly, our financial results, from inception
to April 30, 2002, are not meaningful as an indication of future operations. We
do not anticipate a significant change in our results of operation until such
time as an acquisition or business combination is consummated.
Our present plan of operations for the next twelve months is to continue to
attempt to implement our plan of business. These activities include seeking to
complete a merger or acquisition transaction with a small- or medium-sized
operating enterprise which may allow our stockholders an opportunity to achieve
appreciative value for their investment in our common stock. In selecting a
potential merger or acquisition candidate, our management will consider many
factors, including, but not limited to, potential for growth and profitability,
quality and experience of management, capital requirements, and the ability of
the acquired company to qualify its shares for trading on NASDAQ SmallCap Market
or on a national exchange.
The types of business enterprises that we believe might find a business
combination with us to be attractive include (1) candidates desiring to create a
public market for their shares to enhance liquidity for current stockholders,
(2) acquisition candidates which have long-term plans for raising capital
through the public sale of securities and believe that the possible prior
existence of a public market for their securities would be beneficial, (3)
foreign companies desiring to obtain access to U.S. customers and U.S. capital
markets, and (4) acquisition candidates which plan to acquire additional assets
through issuance of securities rather than for cash.
We have in the past engaged in preliminary negotiations with principals of
small business enterprises but have been unable to obtain any agreements or
commitments from such parties. We recently attempted to develop a website that
would critique and rank Internet sites based on a variety of criteria. However,
management abandoned this project because of our lack of capital and technical
expertise and because of the current negative perception of Internet related
businesses. We incurred nominal expenses in pursuing this business prospect.
We are not presently in discussions with any prospective acquisition or
merger candidates. We are also unable to predict when we may effect a business
opportunity. We have not established any deadline for completion of a
transaction, and anticipate that the process could continue throughout the next
twelve months.
Our balance sheet at April 30, 2002 reflects current assets of $16,333 and
current liabilities in the amount of $1,581. Accordingly, we may be required to
raise additional funds from private investors, or our principal stockholder may
be required to advance funds, in order to pay our current liabilities and to
satisfy our cash requirements for the next twelve months.
10
Our Liquidity and Capital Resources
As of April 30, 2002, we had $16,333 in cash and cash equivalents. To date,
we have had negative cash flows. We expect losses from operations and negative
cash flow to continue for the foreseeable future. Until an acquisition or merger
transaction is completed, we do not expect to generate any revenues. Even if we
consummate an acquisition, we may not sustain or increase revenues on a
quarterly or annual basis in the future. We may need to raise up to $100,000 to
cover expenses associated with maintaining our reporting status under the
Exchange Act, including legal and accounting expenses, general corporate
maintenance and evaluating business opportunities, including the retention of
consultants to help evaluate such prospects. We anticipate that capital will be
raised through the sale of our debt or equity securities or from loans to us by
our sole officer and director. We cannot be certain that any required financing
will be available on terms favorable to us or that our sole officer and director
will fund our additional operations expenses. If funds are raised by the
issuance of our equity securities, then existing stockholders may experience
dilution of their ownership interest and such securities may have rights senior
to those of the then existing holders of our common stock. If additional funds
are raised by our issuance of debt instruments, we may be subject to certain
limitations on our operations. If adequate funds are not available or not
available on acceptable terms, we may be unable to fund our operations or ever
implement our business plan.
Gump & Company, Inc. (the "Company") was incorporated on September 28, 1988
under the laws of the State of Delaware. The Company had been delinquent in its
filings to the Securities and Exchange Commission since it failed to file Form
10-KSB for the fiscal year ended October 31, 1993. As a result of a change in
control on June 7, 2000, management of the Company filed Form 10-QSB to cover
the six months ended April 30, 2000. The Company also filed Form 10-KSB to cover
the fiscal periods ended October 31, 1993 through October 31, 1999.
To date the Company's primary activities have been organizational ones,
directed at developing its business plan and raising its initial capital. The
Company has no commercial operations. The Company has no employees and owns no
real estate. The Company has no operating income and as of April 30, 2001, its
only asset is cash in the amount of $16,333.
The Company's business plan is to seek, investigate, and, if warranted,
acquire one or more properties or businesses, and to pursue other related
activities intended to enhance shareholder value. The acquisition of a business
opportunity may be made by purchase, merger, exchange of stock, or otherwise,
and may encompass assets or a business entity, such as a corporation, joint
venture, or partnership. The Company has very limited capital, and it is
unlikely that the Company will be able to take advantage of more than one such
business opportunity. The Company intends to seek opportunities demonstrating
the potential of long-term growth as opposed to short-term earnings.
Current Assets
Current assets of $16,333 at April 30, 2002 was $1,359 less than the January 31,
2002 amount. This decrease reflects funds used for operations during the
quarter.
Expenses
Expenses of $1,359 for the quarter ended April 30, 2002 exceeded the January 31,
2002 Amount by $492. This increase reflects increased funds used for operations
during the quarter.
Net Loss
Net Loss of $1,359 for the quarter ended April 30, 2002 exceeded the January 31,
2002 Amount by $492. This increase reflects increased funds used for operations
during the quarter.
11
PART II - OTHER INFORMATION
Item 5. Other Information
On April 20, 2002, the Board of Directors approved a resolution to enter into a
consulting agreement with Kevin B. Halter for 100,000 shares of the Company's
stock. The stock was registered in the Form S-8 referenced above and is
incorporated by reference to this Form 10-QSB and made a part hereof.
On April 26, 2002, the Board of Directors approved a resolution to issue Mark A.
DiSalvo 400,000 shares of the Company's stock as compensation for services as
President and CEO of the Company. The stock was registered in a Form S-8 filed
on April 24 2002, and is incorporated by reference to this Form 10-QSB and made
a part hereof.
On April 26, 2002, the Board of Directors approved a resolution to enter into a
consulting agreement with Robert M. Kern for 100,000 shares of the Company's
stock. The stock was registered in the Form S-8 referenced above and is
incorporated by reference to this Form 10-QSB and made a part hereof.
Item 6. Exhibits and Reports on Form 8-K
See Exhibits and Exhibit Index below.
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934,
the registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
GUMP & COMPANY, INC.
Date: May 21, 2002
By: /s/ Mark A. DiSalvo
- --------------------------
Mark A. DiSalvo
President, Chief Executive Officer and Chief Financial Officer
12
INDEX TO EXHIBITS
The Exhibits listed below are filed as part of this Report on Form 10-QSB.
Exhibit
No. Document
- ------- ---------------------------------------------
2.1 Articles of Incorporation (incorporated by reference to Form S-1 filed
with the Securities and Exchange Commission on behalf of the Company on
January 26, 1989)
2.2 Bylaws (incorporated by reference to Form S-1 filed with the Securities
and Exchange Commission on behalf of the Company on January 26, 1989)
2.3 Certificate of Amendment of Certificate of Incorporation filed
September 2, 1997. (incorporated by reference to Form 10-KSB filed with
the Securities and Exchange Commission on behalf of the Company on July
3, 2000)
2.4 Certificate of Amendment of Certificate of Incorporation filed
September 27, 1993. (incorporated by reference to Form 10-KSB filed
with the Securities and Exchange Commission on behalf of the Company on
July 3, 2000)
3.1 Specimen Stock Certificate (incorporated by reference to Form 10-KSB
filed with the Securities and Exchange Commission on behalf of the
Company on July 3, 2000)
10.1 Employee/Consultant Stock Plan 2002 to (4/24/02) (incorporated by
reference to Form S-8 filed with the Securities and Exchange Commission
on behalf of the Company on April 24, 2002)
10.2 Consulting Agreement dated April 26, 2002 by and between Robert M. Kern
and the Company.
10.3 Services Agreement dated April 26, 2002, by and between Mark A. DiSalvo
and the Company
10.4 Consulting Agreement April 17, 2002, by and between Kevin B. Halter,
Jr. and the Company.
13