UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
|X| Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended September 30, 2005
|_| Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from __________ to ___________.
---------
AAMPRO GROUP, INC.
(Exact name of registrant as specified in its charter)
NEVADA 87-0419231
(State or Other Jurisdiction of I.R.S. Employer Identification
Incorporation or Organization) Number
1120 Route 22 E, Bridgewater, New Jersey 08807
(Address of Principal Executive Offices and Zip Code)
Issuer's Telephone Number: (908) 252-0008
Former name, former address, and former fiscal year, if changed since last
report: No Changes.
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock, par
value $0.001 per share
Indicate by mark (X) whether the registrant (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 | |
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
YES |_| NO |X|
Indicate by mark (X) if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B is not contained herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. Number of shares outstanding of each of the registrant's
classes of common stock as of November 19, 2005: 53,102,860 Common Stock:
Item 1 - Financial Statements
AAMPRO Group, Inc. and Subsidiaries
Condensed Consolidated Balance Sheet
September 30, 2005
(Unaudited)
Assets
Current Assets
Cash $ 165,482
Accounts receivable, net of allowance of $185,236 370,086
Other current assets 40,968
-----------
Total Current Assets 576,536
Customer lists, net 166,400
Property and equipment, net 23,719
-----------
Total Assets 766,655
===========
Liabilities and Stockholders' Deficit
Current Liabilities
Accounts payable and accrued expenses 388,221
Health benefits payable 981,779
Payroll taxes payable 2,171,426
Current maturities of long-term debt 28,411
Client deposits 85,405
-----------
Total Current Liabilities 3,655,242
Long-term debt, excluding current maturities 6,994
-----------
Total Liabilities 3,662,236
-----------
Stockholders' Deficit
Preferred stock, Series A, convertible, no par value, 10,000,000 authorized, --
no shares issued and outstanding
Common stock, $.001 par value, 300,000,000 shares authorized, 53,103
53,102,860 issued and outstanding
Additional paid in capital 2,018,857
Accumulated deficit (4,967,541)
-----------
Total Stockholders' Equity (Deficit) (2,895,581)
-----------
Total Liabilities and Stockholders' Equity (Deficit) $ 766,655
===========
See notes to the condensed consolidated financial statements.
AAMPRO Group, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------ ------------ ------------ ------------
2005 2004 2005 2004
------------ ------------ ------------ ------------
Net Revenue $ 459,012 $ 783,702 $ 1,477,652 $ 2,067,759
Staffing Revenue 151,915 -- 399,054 --
Payroll Processing Revenue 49,149 -- 169,766 --
------------ ------------ ------------ ------------
Total Revenue 660,076 783,702 2,046,472 2,067,759
Cost of Revenues 488,478 527,202 1,549,889 1,710,567
------------ ------------ ------------ ------------
Gross Profit 171,598 256,500 496,583 357,192
------------ ------------ ------------ ------------
Operating Expenses
General and administrative expenses 371,496 512,983 1,023,254 1,153,932
Stock based compensation 56,500 -- 100,750 --
Depreciation 5,167 4,032 15,109 11,910
Amortization 3,900 7,800 13,000 41,925
Reserve for uncollectible note receivable -- 241,727 -- 241,727
------------ ------------ ------------ ------------
Total Operating Expenses 437,063 766,542 1,152,113 1,449,494
------------ ------------ ------------ ------------
Loss From Operations (265,465) (510,042) (655,530) (1,092,302)
------------ ------------ ------------ ------------
Other Income (Expense)
Interest income 588 203 620 1,640
Interest expense (31,893) (2,215) (39,605) (8,025)
------------ ------------ ------------ ------------
Total Other (Expense) (31,305) (2,012) (38,985) (6,385)
------------ ------------ ------------ ------------
Loss Before Income Taxes (296,770) (512,054) (694,515) (1,098,687)
Income Taxes -- -- (1,400) --
------------ ------------ ------------ ------------
Net Loss $ (296,770) $ (512,054) $ (695,915) $ (1,098,687)
============ ============ ============ ============
Loss Per Share $ (0.01) $ (0.01) $ (0.01) $ (0.02)
============ ============ ============ ============
Weighted Average Number of Common
Shares Outstanding 53,102,860 52,251,287 53,102,860 52,754,104
------------ ------------ ------------ ------------
See notes to the condensed consolidated financial statements.
AAMPRO Group, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended
September 30,
----------- -----------
2005 2004
----------- -----------
Cash Flows From Operating Activities
Net Loss $ (695,915) $(1,098,687)
Adjustments to Reconcile Net Loss to Net Cash
Used in Operations
Depreciation and amortization 28,109 53,835
Stock based compensation 100,750 --
Write off of investment -- 22,500
Reserve for uncollectible note receivable -- 241,939
Allowance for bad debt (6,941) --
Decrease (Increase) in Assets
Accounts receivable (12,830) (87,962)
Other current assets (9,295) (1,831)
Increase (Decrease) in Liabilities
Accounts payable and accrued expenses (48,184) 126,428
Health benefits payable (19,115) 57,211
Payroll taxes payable 714,542 707,553
Client deposits 9,346 (8,286)
----------- -----------
Net Cash Provided by Operating Activities 60,467 12,700
----------- -----------
Cash Flows From Investing Activities
Cash paid for equipment (3,171) (6,356)
----------- -----------
Cash Flows From Financing Activities
Repayments of long-term debt (18,673) (22,238)
Proceeds from long-term debt -- 50,000
----------- -----------
Net Cash Provided by (Used in) Financing Activities (18,673) 27,762
----------- -----------
Net Increase in Cash 38,623 34,106
Cash at Beginning of Period 126,859 146,412
----------- -----------
Cash at End of Period 165,482 180,518
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest 39,605 8,025
=========== ===========
Income Taxes 1,400 --
=========== ===========
SUPPLEMENTAL SCHEDULE OF NON CASH INVESTING ACTIVITIES
During 2004, the Company issued 2,000,000 shares of its common stock valued at
$72,500 for investments, and the Company received 2,637,387 shares of its common
stock back for its investment in Cross Capital.
See notes to the condensed consolidated financial statements.
AAMPRO Group, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
For the Nine Month Period Ended September 30, 2005
(Unaudited)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
- ---------------------
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Item 310 of Regulation S-B.
Accordingly, they do not include all of the information and footnotes required
by 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 nine months ended September 30, 2005 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 2005. The unaudited condensed consolidated financial statements
should be read in conjunction with the consolidated financial statements and
footnotes thereto included in the Company's annual report on Form 10-KSB for the
year ended December 31, 2004.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of AAMPRO Group, Inc.
and its wholly owned subsidiaries, AAMPRO, Inc., AAMPRO Pay, LLC, and AAMPRO
Staffing Concepts, Inc. All significant intercompany balances and transactions
have been eliminated.
REVENUE RECOGNITION
The Company has adopted a revenue recognition policy under which compensation of
worksite employees will be recognized as revenue components ("net method"). The
change in policy was made based in part on the collective weight of the
indicators included in Emerging Issues Task Force No. 99-19, Reporting Revenues
Gross as a Principal versus Net as an Agent ("EITF 99-19"). The policy has been
applied to the current consolidated statement of operations and retroactively
applied to the previous years' consolidated statement of operations. The policy
had no effect on the gross profit, net income (loss) or shareholders' equity
(deficit) amounts previously reported by the Company in its public filings.
Revenue is recognized as services are provided.
Gross billings for the three months ended September 30, 2005 and 2004 were $2.7
and $3.5 million, respectively, less worksite employee costs of $2.2 and $2.7,
respectively. Gross billings were recognized for the nine months ended September
30, 2005 and 2004 of $8.6 and $10.8 million, respectively, less worksite
employee costs of $7.1 and $8.7 million, respectively.
STOCK-BASED COMPENSATION
The Company has adopted Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" ("SFAS 123"). The provisions of SFAS
123 allow companies to either expense the estimated fair value of stock options
or to continue to follow the intrinsic value method set forth in Accounting
Principles Bulletin Opinion No. 25, "Accounting for Stock Issued to Employees"
("APB 25") but disclose the pro forma effects on net income (loss) had the fair
value of the options been expensed. The Company follows the provisions of FASB
123 in their accounting for stock based compensation.
AAMPRO Group, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
For the Nine Month Period Ended September 30, 2005
(Unaudited)
STOCK-BASED COMPENSATION (Continued)
2005 Second Quarter Activity
On April 10, 2003, the Company entered into an option agreement with two
officers and a consultant of the Company, whereby, the officers and consultant
were granted an annual aggregate of 8,850,000 options to purchase the Company's
common stock. The agreement between the Company and the officers and consultant
expires on March 31, 2008. On April 10, 2005, the Company granted 8,850,000
options at an exercise price of $0.01. The options have been valued at an
aggregate value of $44,250.The fair value was determined as of the date of grant
using the Black-Scholes pricing model, based on the following assumptions;
annual expected rate of return of 0%, annual volatility of 186% and a risk free
interest rate of 4.14%.
2005 Third Quarter Activity
On September 19, 2005, the Company entered into an agreement with a consultant
to issue to the consultant or its designee, 3 million common shares, warrants
exercisable over a five year period to acquire up to 5 million shares based on a
fair value exercise price on the date of issuance, and a stock right to purchase
up to 5 million common shares of the Company within the next year at the fair
value exercise price on the date of issuance. The securities issued have been
valued at an aggregate value of $56,500. The fair value was determined as of the
date of grant using the Black-Scholes pricing model, based on the following
assumptions; annual expected rate of return of 0%, annual volatility of 141% and
a risk free interest rate of 4.11%.
LITIGATION
In March 2005, there was a settlement reached in the litigation with the former
majority shareholder that is subject to formal approval by the Court. The
pending settlement will include the release of all claims by all parties, the
reverse of the prior acquisition transaction between the parties, and the spin
off of all assets and liabilities of the AAMPRO Group, Inc. and its related
subsidiaries to its shareholder into multiple publicly traded entities. The
settlement is subject to Court approval, and will not be effective until such
approval is received.
GOING CONCERN UNCERTAINTY
The accompanying consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of
America, which contemplates continuation of the Company as a going concern. The
Company has had recurring operating deficits in the past few years and
accumulated large deficits. This raises substantial doubt about the Company's
ability to continue as a going concern.
Management of the Company believes that its current cash and cash equivalents
along with cash to be generated by existing and new business operations in 2005
will be sufficient to meet its anticipated cash needs for working capital and
capital expenditures for the next fiscal year.
AAMPRO Group, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
For the Nine Month Period Ended September 30, 2005
(Unaudited)
GOING CONCERN UNCERTAINTY (Continued)
If cash generated from operations is insufficient to satisfy the Company's
liquidity requirements, management may seek to restructure the liabilities of
the Company and/or sell additional equity, debt securities and/or obtain a
credit facility. The sale of additional equity or convertible debt securities
could result in additional ownership dilution to our stockholders. The
incurrence of indebtedness would result in an increase in our fixed obligations
and could result in borrowing covenants that would restrict our operations.
There can be no assurance that financing will be available in amounts or on
terms acceptable to us, if at all. If financing is not available when required
or is not available on acceptable terms, we may be unable to develop or enhance
our products or services. In addition, we may be unable to take advantage of
business opportunities or respond to competitive pressures. Any of these events
could have a material and adverse effect on our business, results of operations
and financial condition.
In view of these matters, realization of the assets of the Company is dependent
upon the Company's ability to meet its financial requirements and the success of
future operations. These consolidated financial statements do not include
adjustments relating to the recoverability and classification of recorded asset
amounts and classification of liabilities that might be necessary should the
Company be unable to continue in existence.
Item 2: Management's Discussion and Analysis of Financial Condition and Results
of Operations
FORWARD - LOOKING STATEMENTS
This Quarterly Report contains forward-looking statements about our business,
financial condition, and prospects that reflect our assumptions and beliefs
based on information currently available. We can give no assurance that the
expectation s indicated by such forward-looking statements will be realized. If
any of our assumptions should prove incorrect, or if any of the risks and
uncertainties underlying such expectations should materialize, our actual
results may differ materially from those indicated by the forward-looking
statements. The key factors that are not within our control and that may have a
direct bearing on operating results include, but are not limited to, acceptance
of our services, our ability to expand our customer base, our ability to raise
capital in the future, the retention of key employees and changes in the
regulation of our industry. There may be other risks and circumstances that we
are unable to predict. When used in this Quarterly Report, words such as,
"believes," "expects," "intends," "plans," "anticipates," "estimates" and
similar expressions are intended to identify forward-looking statements,
although there may be certain forward-looking statements not accompanied by such
expressions. All forward-looking statements are intended to be covered by the
safe harbor created by Section 21E of the Securities Exchange Act of 1934.
OVERVIEW
AAMPRO Group, Inc., together with its consolidated subsidiaries, provides full
service staffing resources to its clients by providing permanent placement,
temporary staffing services, payroll administration, and professional services
(including outsourcing services of worksite employees). The Company expanded its
services beyond that of a professional services organization to that of a full
service staffing firm in the fourth quarter of 2004. The Company's services are
designed to improve the productivity and profitability of small and medium-sized
businesses by relieving business owners and key executives of many
employer-related administrative and regulatory burdens and enables them to focus
on the core competencies of their businesses.
The Company is organized in three basic operating segments--Staffing Services,
Payroll Administration, and Professional Services. Within the Staffing Services
Segment, the Company provides three primary services--permanent placement,
temporary staffing, and human resource consulting services. Payroll
administration services include the processing of the payrolls for clients along
with the administration of benefits, tax filings, and workman's compensation
programs. The Professional Services segment includes the outsourcing of the
employment and administration services performed for clients.
The Company provides its services on a national basis with a primary focus in
the New York, New Jersey and Pennsylvania area, and is currently executing a
long-term expansion strategy target both organic growth, and the acquisition of
smaller and like-sized competitors.
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the consolidated
financial statements and related notes included elsewhere herein. Historical
results and percentage relationships are not necessarily indicative of the
operating results for any future period.
REVENUES
Total revenues for the nine months ended September 30, 2005 decreased by $21,287
from $2,067,759 in 2004 to $2,046,472 in 2005, while total revenues for three
months ended September 30, decreased by $123,626 from $783,702 in 2004 to
$660,076 in 2005, as a result of the corresponding reductions in revenues
attributed to the cessation of providing services to certain clients, offset by
the increased revenues for the staffing and payroll administration services.
Overall, consolidated net revenues from contract worksite employees for the nine
months ended September 30, 2005, decreased $590,107, from $2,067,759 in 2004 to
$1,477.652 in 2005, as compared to a decrease of $324,690 for the three months
ended September 30, 2005, going from $783,702 in 2004 to $459,012 in 2005. The
net revenues for the nine months and three months of 2005 include revenues from
contract worksite employees along with staffing and payroll administration
services. All of the net revenues were from contract worksite employees.
Gross revenues for the contract worksite employees for the nine months ended
September 30, declined by approximately $2.2 million from $10.8 million in 2004
to $8.6 million in 2005, while gross revenues for the contract worksite
employees for the three months ended September 30, declined by approximately
$0.8 million from $3.5 million in 2004 to $2.7 million in 2005. The net
decreases for the nine months and the three months ended September 30, 2005,
were primarily attributable to ceasing to provide services for certain
customers.
Staffing revenues and payroll processing revenues for the nine months ended
September 30, 2005, were $399,054 and $169,766, respectively, as compared to the
three months ended September 30, 2005 of $151,915 and $49,149, respectively.
There were no revenues for staffing or payroll processing in the quarters
reported on in 2004.
COST OF REVENUES AND GROSS MARGIN
The Company's cost of revenue for the nine months ended decreased by $160,678
from $1,710,567 in 2004 to $1,549,889 in 2005, while the cost of revenues for
the three months ended decreased by $38,724 from $527,202 in 2004 to $488,478 in
2005 as a result of the corresponding reductions in revenues attributed to the
cessation of providing services to certain clients, offset by the increased
costs for the staffing and payroll administration services. The Company has
strategically evaluated the overall 2005 operations, and the profitability of
providing services to its clients, and has decided to cease doing business with
several unprofitable clients in order to streamline its client base, and better
focus its overall operations. Gross profit margins increased by $139,391 or 39%
for the nine months ended September 30, from $357,192 in 2004 to $496,583 in
2005, and decreased by $84,902 for the three months ended September 30, from
$256,500 in 2004 to $171,598 in 2005. Both the nine month and three month gross
margin amounts are as a result of the elimination of certain unprofitable
clients, and the inclusion of the higher margin staffing and payroll
administration services in 2005. The Company continues to expand its operations
with a focus on providing quality services with higher profitability.
OPERATING EXPENSES
Operating expenses for the nine months ended September 30, decreased $297,381
from $1,449,494 in 2004 to $1,152,113 in 2005, and for the three months ended
September 30, decreased by $329,479 from $766,542 in 2004 to $437,063 in 2005.
Variations for the comparative results for the nine months and the three months
ended September 30, 2005 were due to increased costs associated with the new
staffing and payroll administration services and stock based compensation,
partially offset by the continuation of the Company's overall cost containment
program and non-recurring charges for uncollectible accounts recognized in 2004.
NET LOSS
The net loss for the nine months ended September 30, decreased by $402,772, from
a loss of $1,098,687 in 2004 to $695,915 in 2005, as compared to a decrease of
$215,284 for the three months ended September 30, from a loss of $512,054 in
2004 to $296,770 in 2005.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 2005, the Company had cash and cash equivalents totaling
$165,482 compared to $180,518 at September 30, 2004. Net cash provided by
operating activities during the nine months ended September 30, 2005 was $60,467
as compared with $12,700 provided by operating activities in 2004, or an
increase in net cash by $47,767. Net cash from investing activities resulted in
net cash usage of $18,673 in 2005 compared to net cash provided by financing
activities of $27,762 in 2004. The overall net increase in cash for the nine
months ended September 30, 2005 was $38,623 as compared to $34,106 on 2004. The
resulting variations in cash flows represents increases in payroll related
liabilities and accrued expenses, offset by receivable collections and
reductions in payables and accrued expenses and health benefit liabilities. The
Company's capital requirements are dependent on several factors, including
marketing, acquisitions, and operating expenses.
Management of the Company believes that its current cash and cash equivalents
along with cash to be generated by existing and new business operations in 2005
and beyond will be sufficient to meet its anticipated cash needs for working
capital and capital expenditures for the next year.
If cash generated from operations is insufficient to satisfy the Company's
liquidity requirements, management may seek to restructure the liabilities of
the Company and/or sell additional equity, debt securities and/or obtain a
credit facility. The sale of additional equity or convertible debt securities
could result in additional ownership dilution to our stockholders. The
incurrence of indebtedness would result in an increase in our fixed obligations
and could result in borrowing covenants that would restrict our operations.
There can be no assurance that financing will be available in amounts or on
terms acceptable to us, if at all. If financing is not available when required
or is not available on acceptable terms, we may be unable to develop or enhance
our products or services. In addition, we may be unable to take advantage of
business opportunities or respond to competitive pressures. Any of these events
could have a material and adverse effect on our business, results of operations
and financial condition.
RISK AND UNCERTAINTY
AAMPRO's business is subject to the effects of general economic conditions and
in particular competition and government regulation. Other risks and
uncertainties for the Company include, but are not limited to:
- - Adverse changes in general economic conditions in any of the areas in
which we do business.
- - We might not be able to fund its working capital needs from cash flow or
we may not be able to raise capital
- - Increased competition
- - Litigation
We may experience material fluctuations in future revenues and operating results
on a quarterly or annual basis resulting from a number of factors, including but
not limited to the risks discussed above.
The preceding statements under "Management's Discussion and Analysis of
Financial Condition and Results of Operations" which are not historical facts
are forward-looking statements. These forward-looking statements involve risks
and uncertainties that could render them materially different, including, but
not limited to, the risk that new products and product upgrades may not be
available on a timely basis, the risk that such products and upgrades may not
achieve market acceptance, the risk that competitors will develop similar
products and reach the market first, and the risk that we would not be able to
fund its working capital needs from cash flow.
CRITICAL ACCOUNTING POLICIES
Revenue Recognition and Returns
Revenue is recognized as services are provided. The Company's revenues consist
of administrative fees paid by its clients under certain agreements, which are
based upon each worksite employee's gross pay and a markup, computed as a
percentage of the gross pay.
Revenues for services provided under staffing contracts are recognized as
services are provided by the temporary, contract or leased employees. Revenue
from direct placements or "fixed fee contracts" is recognized at the time the
candidate begins the first full day after the completion of a 30-day contingency
period. Revenue from permanent placements, which are also considered fixed fee
contracts, is recognized at the time the candidate begins the first full day
after the completion of a required amount of temporary hours as stipulated in
the Temp to Perm contract.
Revenues for payroll processing services are recognized when the service is
performed based on a fixed fee-processing period.
Item 3: Controls and Procedures
Under the supervision and with the participation of our management, including
our principal executive officer, we conducted an evaluation of our disclosure
controls and procedures, as such term is defined under Rule 13a-14(c)
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), within 90 days of the filing date of this report. In designing and
evaluating the Company's disclosure controls and procedures, management
recognized that any controls and procedures, no matter how well designed and
operated, can provide only reasonable assurance of achieving their objectives
and management necessarily applied its judgment in evaluating the cost-benefit
relationship of possible controls and procedures. Based on this evaluation, the
Company's chief executive officer concluded that as of September 30, 2005, the
Company's disclosure controls and procedures were (1) designed to ensure that
material information relating to the Company, including its consolidated
subsidiaries, is made known to the Company's chief executive officer by others
within those entities, particularly during the period in which this report was
being prepared and (2) effective, in that they provide reasonable assurance that
information required to be disclosed by the Company in the reports that it files
or submits under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the SEC's rules and forms.
Limitations on the Effectiveness of Internal Controls
Management does not expect that our disclosure controls and procedures or our
internal control over financial reporting will necessarily prevent all fraud and
material errors. An internal 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. Further, the design of a control
system must reflect the fact that there are resource constraints, and the
benefits of controls must be considered relative to their costs. Because of the
inherent limitations on all internal control systems, no evaluation of controls
can provide absolute assurance that all control issues and instances of fraud,
if any, within the Company have been detected. These inherent limitations
include the realities that judgments in decision-making can be faulty, and that
breakdowns can occur because of simple error or mistake. The design of any
system of internal control is also based in part upon certain assumptions about
the likelihood of future events, and there can be no assurance that any design
will succeed in achieving its stated goals under all potential future
conditions. Over time, controls may become inadequate because of changes in
circumstances, and/or the degree of compliance with the policies and procedures
may deteriorate. Because of the inherent limitations in a cost effective
internal control system, financial reporting misstatements due to error or fraud
may occur and not be detected on a timely basis.
There have been no significant changes (including corrective actions with regard
to significant deficiencies or material weaknesses) in our internal controls or
in other factors that could significantly affect these controls subsequent to
the date of the evaluation referenced in the above paragraph.
PART II
Item 1. Legal Proceedings
In August 2003, Alan Sporn and Corporate and Shareholder Solutions, Inc. filed a
suit against the Company in the Superior Court of New Jersey, Chancery Division,
Hunterdon County, alleging, among other things, breach of contract and the
issuance of certain shares of preferred stock which the plaintiffs claim are
allegedly due to them. The parties to this litigation have executed a settlement
agreement in March 2005, which is subject to final Court approval. Reference is
made to the Company's annual report on Form 10-KSB for the year ended December
31, 2004 for additional information relating to Litigation.
Item 5: Other Information
None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AAMPRO GROUP, INC.
(Registrant)
By /s/ Stephen Farkas
- ------------------------------
(Stephen Farkas, President, Chief Executive Officer,
Principal Accounting Officer and Director)