UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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, 2003
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from __________ to _________
Commission file number: 333-47924
OPUS MEDIA GROUP, INC.
- -------------------------------------------------------------------------------
(Exact name of small business issuer as specified in it charter)
COLORADO 84-1506325
- ----------------------------------- ----------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
50 - 84TH AVENUE, TREASURE ISLAND, FLORIDA 33706
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(Address of principal executive offices)
(727) 360-5857
----------------------------------
(issuer's telephone number)
234 - 21ST AVE. N.E., ST. PETERSBURG, FLORIDA 33704
- -------------------------------------------------------------------------------
(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 such shorter
period that the issuer was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [ ] No [X]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the issuer 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 6, 2003, the issuer had
51,143,083 shares of $.001 par value common stock outstanding.
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
INDEX
<Table>
<Caption>
PAGE
----
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed balance sheet, March 31, 2003 (unaudited) 1
Condensed statements of operations, three months ended March 31, 2003 and 2002
(unaudited), and June 17, 1999 (inception) through March 31, 2003 (unaudited) 2
Condensed statements of cash flows, three months ended March 31, 2003 and 2002
(unaudited), and June 17, 1999 (inception) through March 31, 2003 (unaudited) 3
Notes to condensed financial statements (unaudited) 4
Item 2. Management's Plan of Operation 6
Item 3. Controls and Procedures 6
PART 2 - OTHER INFORMATION
Item 1. Legal Proceedings 7
Item 2. Changes in Securities and Use of Proceeds 7
Item 3. Defaults upon Senior Securities 7
Item 4. Submission of Matters to a Vote of Security Holders 7
Item 5. Other Information 7
Item 6. Exhibits and Reports on Form 8-K 8
Signatures and Certification 9
</Table>
i
OPUS MEDIA GROUP, INC.
(A Development Stage Company)
CONDENSED BALANCE SHEET
(Unaudited)
MARCH 31, 2003
<Table>
ASSETS
Current Assets:
Cash ......................................................... $ 67
-----------
Total current assets ........................... 67
Property and equipment, net of accumulated depreciation and
amortization of $42,725 ...................................... 9,098
-----------
$ 9,165
===========
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current Liabilities:
Accounts payable and accrued expenses ........................ $ 146,668
Indebtedness to related party (Note B) ....................... 3,500
Unearned revenue ............................................. 111
Due to former merger candidate ............................... 150,000
Accrued interest payable to shareholder ...................... 1,072
-----------
Total current liabilities ...................... 301,351
-----------
Shareholders' deficit (Note D):
Preferred stock .............................................. --
Common stock ................................................. 47,718
Outstanding common stock options ............................. 223,308
Outstanding common stock warrants ............................ 293,250
Additional paid-in capital ................................... 3,417,616
Deficit accumulated during development stage ................. (4,274,078)
-----------
Total shareholder's deficit .................... (292,186)
-----------
$ 9,165
===========
</Table>
See accompanying notes to condensed financial statements
1
OPUS MEDIA GROUP, INC.
(A Development Stage Company)
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<Table>
<Caption>
JUNE 17,
1999
FOR THE THREE MONTHS ENDED (INCEPTION)
MARCH 31, THROUGH
-------------------------------- MARCH 31,
2003 2002 2003
------------ ------------ ------------
Revenue, net .................................... $ 53 $ 183 $ 2,529
------------ ------------ ------------
Operating expenses:
Stock-based compensation .................... 132,000 1,046,670 1,872,802
Selling, general and administrative ......... 1,487 28,797 1,106,996
Marketing rights fees (Notes D and E) ....... 60,000 -- 60,000
Cost for rescission of Plan of
Reorganization ........................... -- -- 150,000
Record label inducement fee ................. -- -- 400,000
Contributed services ........................ -- -- 271,170
Depreciation and amortization ............... 3,498 3,539 173,109
Asset impairment charge ..................... -- -- 250,409
------------ ------------ ------------
Total operating expenses .... 196,985 1,079,006 4,284,486
------------ ------------ ------------
Operating loss .............. (196,932) (1,078,823) (4,281,957)
Non-operating income:
Interest income ............................. 20 -- 16,739
Interest expense ................................ -- (934) (8,860)
------------ ------------ ------------
Loss before income taxes .... (196,912) (1,079,757) (4,274,078)
Income tax provision (Note C) ................... -- -- --
------------ ------------ ------------
Net loss .................... $ (196,912) $ (1,079,757) $ (4,274,078)
============ ============ ============
Basic and diluted loss per share ................ $ (0.00) $ (0.06)
============ ============
Basic and diluted weighted average
common shares outstanding ................... 31,718,083 16,806,167
============ ============
</Table>
See accompanying notes to condensed financial statements
2
OPUS MEDIA GROUP, INC.
(A Development Stage Company)
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<Table>
<Caption>
JUNE 17,
1999
FOR THE THREE MONTHS ENDED (INCEPTION)
MARCH 31, THROUGH
---------------------------- MARCH 31,
2003 2002 2003
----------- ----------- -----------
Net cash used in
operating activities ...... (3,967) (69,601) (1,367,523)
----------- ----------- -----------
Cash flows from investing activities:
Equipment purchases ..................................... -- -- (19,054)
Payments for copyright .................................. -- -- (485)
Payments for trademark .................................. -- -- (2,460)
Payments for web site ................................... -- -- (345,935)
Payments for patent ..................................... -- -- (29,457)
Payments for leasehold improvements ..................... -- -- (2,802)
----------- ----------- -----------
Net cash used in
investing activities ...... -- -- (400,193)
----------- ----------- -----------
Cash flows from financing activities:
Proceeds from the sale of common stock
net of offering costs ............................... -- 120,000 1,778,150
Proceeds from exercise of stock options ................. -- -- 6,100
Payments on capital lease obligations ................... -- (13,100) (29,967)
Proceeds from director loans ............................ 3,500 -- 33,500
Repayment of director loans ............................. -- (30,000) (30,000)
Proceeds from shareholder loan .......................... -- -- 25,000
Repayment of shareholder loan ........................... -- -- (25,000)
Contributed capital ..................................... -- -- 10,000
Net cash provided by ----------- ----------- -----------
financing activities ...... 3,500 76,900 1,767,783
----------- ----------- -----------
Net change in cash ........ (467) 7,299 67
Cash, beginning of period .................................... 534 997 --
----------- ----------- -----------
Cash, end of period .......................................... $ 67 $ 8,296 $ 67
=========== =========== ===========
Supplemental disclosure of cash flow information:
Income taxes ............................................ $ -- $ -- $ --
=========== =========== ===========
Interest ................................................ $ -- $ 964 $ 8,860
=========== =========== ===========
Non-cash financing activities:
Equipment acquired under capital lease .................. $ -- $ -- $ 29,967
=========== =========== ===========
</Table>
See accompanying notes to condensed financial statements
3
OPUS MEDIA GROUP, INC.
(A Development Stage Company)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
NOTE A: BASIS OF PRESENTATION
The financial statements presented herein have been prepared by the Company in
accordance with the accounting policies in its Form 10-KSB dated December 31,
2002, and should be read in conjunction with the notes thereto.
In the opinion of management, all adjustments (consisting only of normal
recurring adjustments) which are necessary to provide a fair presentation of
operating results for the interim period presented have been made. The results
of operations for the periods presented are not necessarily indicative of the
results to be expected for the year.
The Company is in the development stage in accordance with Statements of
Financial Accounting Standards (SFAS) No. 7 "Accounting and Reporting by
Development Stage Enterprises". As of March 31, 2003, the Company has devoted
substantially all of its efforts to financial planning, raising capital and
developing markets.
Financial data presented herein are unaudited.
NOTE B: RELATED PARTY TRANSACTIONS
On March 25, 2003, the Company issued 3,000,000 shares of its common stock to a
director in exchange for consulting services. The market value of the common
stock on the transaction date was $.012 per share, resulting in stock-based
compensation expense of $36,000 (see Note D).
During the three months ended March 31, 2003, an officer paid expenses on behalf
of the Company totaling $3,500, which has been included in the accompanying
condensed financial statements as "indebtedness to related party".
NOTE C: INCOME TAXES
The Company records its income taxes in accordance with Statement of Financial
Accounting Standard No. 109, "Accounting for Income Taxes". The Company incurred
net operating losses during all periods presented resulting in a deferred tax
asset, which was fully allowed for; therefore, the net benefit and expense
resulted in $-0- income taxes.
NOTE D: SHAREHOLDERS' EQUITY
On March 25, 2003, the Company issued 8,000,000 shares of its common stock in
exchange for marketing and consulting services. The market value of the common
stock on the transaction date was $.012 per share. Stock-based compensation
expense of $96,000 was recognized in the accompanying condensed financial
statements for the three months ended March 31, 2003.
4
OPUS MEDIA GROUP, INC.
(A Development Stage Company)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
On March 25, 2003, the Company issued 5,000,000 shares of its common stock in
exchange for marketing rights (see Note E). The market value of the common stock
on the transaction date was $.012 per share. Marketing rights fees of $60,000
were recognized in the accompanying condensed financial statements for the three
months ended March 31, 2003.
Following is a statement of changes in shareholders' deficit for the three
months ended March 31, 2003:
<Table>
<Caption>
Deficit
Outstanding Outstanding Accumulated
Common stock Common Common Additional During the
----------------------- Stock Stock Paid-in Development
Shares Par Value Options Warrants Capital Stage Total
----------- ----------- ----------- ----------- ----------- ----------- -----------
Balance, January 1, 2002 ........... 31,718,083 $ 31,718 $ 223,308 $ 293,250 $ 3,241,616 $(4,077,166) $ (287,274)
March 2003, stock issued in
exchange for marketing rights
(Note E) .......................... 5,000,000 $ 5,000 $ -- $ -- $ 55,000 $ -- 60,000
March 2003, stock issued to
consultants in exchange for
services .......................... 8,000,000 8,000 -- -- 88,000 -- 96,000
March 2003, stock issued to
officers in exchange for services.. 3,000,000 3,000 -- -- 33,000 -- 36,000
Net loss for the nine months
ended September 30, 2002 .......... -- -- -- -- -- (196,912) (196,912)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Balance, September 30, 2002 ... 47,718,083 $ 47,718 $ 223,308 $ 293,250 $ 3,417,616 $(4,274,078) $ (292,186)
=========== =========== =========== =========== =========== =========== ===========
</Table>
NOTE E: LETTER OF INTENT
During the three months ended March 31, 2003, the Company entered into a Letter
of Intent with Blastgard, Inc., pursuant to which the Company issued five
million shares of its restricted common stock to Blastgard in exchange for the
right to distribute and sell Blastgard products in China. Blastgard develops,
designs and manufactures patented technology products that mitigate blasts and
suppress flash fires resulting from explosions.
5
ITEM 2. PLAN OF OPERATION
The following discussion should be read in conjunction with the Company's
financial statements and notes thereto included elsewhere in this Form 10-QSB.
Except for the historical information contained herein, the discussion in this
Form 10-QSB contains certain forward looking statements that involve risks and
uncertainties, such as statements of the Company's plans, objectives,
expectations and intentions. The cautionary statements made in this Form 10-QSB
should be read as being applicable to all related forward-looking statements
wherever they appear herein. The Company's actual results could differ
materially from those discussed here.
The financial information furnished herein has not been audited by an
independent accountant; however, in the opinion of management, all adjustments
(only consisting of normal recurring accruals) necessary for a fair presentation
of the results of operations for the period ended March 31, 2003, have been
included.
FINANCIAL RESULTS
From inception, the Company has only recorded nominal revenues. The Company
remains a development stage company for accounting purposes. From inception on
June 17, 1999 through March 31, 2003, the Company has incurred a cumulative net
loss of approximately $4,274,078. The Company is in immediate need of financing,
as discussed below.
BLASTGARD
In 2003, the Company entered into an agreement with Blastgard, Inc., pursuant to
which the Company issued five million shares of restricted stock to Blastgard in
exchange for the right to distribute and sell Blastgard products in China.
Blastgard develops, designs and manufactures patented technology products that
mitigate blasts and suppress flash fires resulting from explosions. The Company
also entered into an agreement with David Hsia, pursuant to which the Company
issued five million shares of restricted stock to Mr. Hsia in exchange for his
services for one year in connection with the business development of the Company
in China in connection with the distribution and sale of Blastgard products.
IMMEDIATE NEED OF FUNDING
The Company is in immediate need of funding. There can be no assurance that
financing will be available when needed or on terms acceptable to the Company.
There can be no assurance that the Company will be able to continue as a going
concern, or achieve material revenues and profitable operations.
ITEM 3. CONTROLS AND PROCEDURES.
Based on their most recent evaluation, which was completed within 90 days of the
filing of this Form 10-QSB, the Company's Chief Executive Officer and Chief
Financial Officer believe the Company's disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) are effective to ensure that
information required to be disclosed by the Company in this report is
accumulated and communicated to the Company's management, including its
principal executive officer and principal financial officer, as appropriate, to
allow timely decisions regarding required disclosure. There were no significant
changes in the Company's internal controls or other factors that could
significantly affect these controls subsequent to the date of their evaluation
and there were no corrective actions with regard to significant deficiencies and
material weaknesses.
6
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
On March 25, 2003, the Company issued 3,000,000 shares of its restricted common
stock to Joseph R. King, a director of the Company, for services rendered. The
market value of the common stock on the transaction date was $.012 per share,
resulting in stock-based compensation expense of $36,000. The Company believes
this transaction was exempt from registration under Section 4(2) of the
Securities Act of 1933. The transaction did not involve a public offering, no
sales commissions were paid, and a restrictive legend was placed on each
certificate evidencing the shares.
On March 25, 2003, the Company issued 8,000,000 shares of its restricted common
stock to three persons in exchange for services. The market value of the common
stock on the transaction date was $.012 per share. Stock-based compensation
expense of $96,000 was recognized in the accompanying condensed financial
statements for the three months ended March 31, 2003. The Company believes these
transactions were exempt from registration under Section 4(2) of the Securities
Act of 1933. The transactions did not involve a public offering, no sales
commissions were paid, and a restrictive legend was placed on each certificate
evidencing the shares.
On March 25, 2003, the Company issued 5,000,000 shares of its restricted common
stock to one entity in exchange for marketing rights. The market value of the
common stock on the transaction date was $.012 per share. Marketing rights fees
of $60,000 were recognized in the accompanying condensed financial statements
for the three months ended March 31, 2003. The Company believes this transaction
was exempt from registration under Section 4(2) of the Securities Act of 1933.
The transaction did not involve a public offering, no sales commissions were
paid, and a restrictive legend was placed on each certificate evidencing the
shares.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION.
During the three months ended March 31, 2003, the Company entered into an
agreement with Blastgard, Inc., pursuant to which the Company issued five
million shares of restricted stock to Blastgard in exchange for the right to
distribute and sell Blastgard products in China. Blastgard develops, designs and
manufactures patented technology products that mitigate blasts and suppress
flash fires resulting from explosions. The Company also entered into an
agreement with David Hsia, pursuant to which the Company issued five million
shares of restricted stock to Mr. Hsia in exchange for his services for one year
in connection with the business development of the Company in China in
connection with the distribution and sale of Blastgard products.
James Gordon is an officer and director of Blastgard and Michael Gordon is an
officer of Blastgard. James and Michael Gordon are brothers of Robert Gordon,
the Company's CEO. Robert Gordon disclaims beneficial ownership of the shares
owned by Blastgard.
7
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<Table>
<Caption>
Exhibit
Number Description
- ------- -----------
2.1 Agreement and Plan of Reorganization dated October 25, 2001 by
and among the Company, ToolTrust Corporation ("ToolTrust") and
certain shareholders of ToolTrust (Incorporated by reference
to Exhibit 2.1 to the Registrant's quarterly report on Form
10-QSB filed November 19, 2001).
2.2 Share Exchange Agreement dated May 9, 2002, by and among the
Company, ToolTrust Corporation, and certain former
shareholders of LocalToolbox Corporation (Incorporated by
reference to Exhibit 2.2 to the Registrant's quarterly report
on Form 10-QSB filed June 5, 2002).
2.3 Share Exchange Agreement dated May 9, 2002, by and among the
Company, ToolTrust and certain former shareholders of
ClearDialog Communications, Inc. (Incorporated by reference to
Exhibit 2.3 to the Registrant's quarterly report on Form
10-QSB filed June 5, 2002).
3.3 The Company's Articles of Incorporation, as amended and
currently in effect (Incorporated by reference to Exhibit 3.3
to the Registrant's quarterly report on Form 10-QSB for the
period ended September 30, 2002).
3.4 The Company's Bylaws, as amended and currently in effect
(Incorporated by reference to Exhibit 3.4 to the Registrant's
quarterly report on Form 10-QSB for the period ended September
30, 2002).
10.9 Agreement dated May 9, 2002, by and among the Company,
ToolTrust, LocalToolbox, ClearDialog, Robert P. Gordon, Robert
L. Evans, Garrett J. Girvan, and James K. Robbins
(Incorporated by reference to Exhibit 10.9 to the Registrant's
quarterly report on Form 10-QSB filed June 5, 2002).
10.10 Perpetual Software License Agreement dated May 9, 2002, by and
between LocalToolbox and the Company (Incorporated by
reference to Exhibit 10.10 to the Registrant's quarterly
report on Form 10-QSB filed June 5, 2002).
10.11 IDMedical.com, Inc. 2002 Stock Plan (Incorporated by reference
to Exhibit 10.11 of the Company's Registration Statement on
Form S-8 filed March 8, 2002).
</Table>
(b) Reports on Form 8-K
There were no reports on Form 8-K.
8
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
OPUS MEDIA GROUP, INC.
By: /s/ Robert P. Gordon
-------------------------------------------
Robert P. Gordon, Chief Executive Officer and
Chief Financial and Accounting Officer
Dated: June 9, 2003
CERTIFICATION PURSUANT TO
18 U.S.C. SS.1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Solely for the purposes of complying with, and the extent required by 18 U.S.C.
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the
undersigned certifies, in his capacity as an officer of Opus Media Group, Inc.
("Opus"), that, to his knowledge, the Quarterly Report of Opus on Form 10-QSB
for the period ended March 31, 2003, fully complies with the requirements of
Section 13(a) of the Securities Exchange Act of 1934 and that the information
contained in the report fairly presents, in all material respects, the company's
financial condition and results of operations.
/s/ Robert P. Gordon
------------------------------------------
Robert P. Gordon, Chief Executive Officer and
Chief Financial and Accounting Officer
DATE: June 9, 2003
CERTIFICATION PURSUANT TO
18 U.S.C. SS.1350, AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Robert P. Gordon, Chief Executive Officer and Chief Financial
Officer of Opus Media Group, Inc., certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Opus Media
Group, Inc.
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
9
a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing
date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability
to record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
June 9, 2003
/s/ Robert P. Gordon
- ------------------------------------------
Robert P. Gordon, Chief Executive Officer
and Chief Financial and Accounting Officer
10