10QSB/A 1 point10qsba112002woex.txt U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB/A (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2003 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ______________ TO ______________ COMMISSION FILE NUMBER: 0-29113 POINT GROUP HOLDINGS, INCORPORATED (Exact name of registrant as specified in its charter) Nevada 54-1838089 (State or jurisdiction of incorporation (I.R.S. Employer or organization) Identification No.) 3744 Poe Street, San Diego, California 92107 (Address of principal executive offices) (Zip Code) Registrant's telephone number: (619) 269-8692 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.001 Par Value Indicate by check mark 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) been subject to such filing requirements for the past 90 days. Yes X No . As of September 30, 2003, the Registrant had 329,071,449 shares of common stock issued and outstanding. Transitional Small Business Disclosure Format (check one): Yes No X . The Registrant, by this Form 10-QSB/A, hereby amends and restates Part I, Item 2 to revise an inadvertent and incorrect reference to another company in subparagraph (g) thereof. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The following discussion should be read in conjunction with the financial statements and accompanying notes included in this Form 10-QSB. Overview. The Registrant is a holding company that through its subsidiaries provides management services to businesses that have an operating history and can substantiate future performance in their respective industries. The Registrant participates in companies in various field of business by providing executive level management assistance as well as arranging for and contributing capital investment. Potential ventures are evaluated based on the ability of the business to be viable and reach significant milestones set forth in their business plans through strong intellectual property rights and experienced management. The Company also continually seeks out and evaluates investment opportunities that have the potential of earning reasonable returns. The Company also plans to raise capital for the purposes of permitting it to state new ventures and make investments in portfolio companies that it believes are attractive based upon its investment criterion. Results of Operations. (a) Revenues. The Registrant reported $121,270 in gross income for the nine months ended September 30, 2003, and $42,540 for the three-month period ended September 30, 2003. For the nine months and three months ended September 30, 2002, the Registrant generated revenues of $0. These 100% increases in revenues was due to the consulting services provided to various businesses. (b) Selling, General and Administrative Expenses. Selling, general and administrative expenses for the nine months ended September 30, 2003 totaled $40,061, while the same expenses for the same period ended June 30, 2002 totaled $50,076. This represents a decrease of approximately 2% for this period over the same period last year. For the three months ended September 30, 2003, selling, general and administrative expenses totaled $42,788, compared to $25,559 for the three months ended September 30, 2002. This reflects a increase of approximately 67%. The increase in these expenses is due primarily to incurring operating costs for various legal, accounting, marketing services and interest on loans in the subsidiaries. (c) Consulting Fees Expense. Consulting fees expense for the nine months ended September 30, 2003 totaled $92,575, while the same expenses for the same period ended September 30, 2002 totaled $0. For the three months ended September 30, 2003, consulting fees expenses totaled $25,000, compared to $0 for the three months ended June 30, 2002. These 100% increases in these expenses is due payment of various consultants working for the company. (d) Professional Fees Expense. The Registrant incurred professional fees expense charges of $13,771 in the nine months ended September 30, 2003, compared with charges of $0 in the same period ended September 30, 2002; $12,286 for the three months ended September 30, 2003 compared to $0 for the three months ended September 30, 2002. This represents an increase of 100% for this period over the same period last year. The increase in these expenses is due to legal fees and on-going fees required of the Registrant being a fully reporting on the Over the Counter Bulletin Board. (e) Income Tax Benefit. For the six months ended June 30, 2003, the Registrant had available net operating loss carryforward of approximately $8,300,000, which may provide future tax benefits. Because of ownership changes nearly all of this net operating loss carryforward may be limited for use by the Registrant by Internal Revenue Code Section 381. The Registrant has not recognized any of this limited tax benefit as an asset due to the uncertainty of future income. (f) Net Profit (Loss). The Registrant reported a net profit of $217,409.00 for the nine months ended September 30, 2003, which was due primarily to the forgiveness of debt by shareholders. This is compared to a net loss of $53,131 for the same period ended September 30, 2002. Operations for the three months ended September 30, 2003 resulted in a net loss of $76,499 compared to a net loss of $27,595.00 for the same period in 2002. The loss for the three months ended September 30, 2003 is due to increased use of various consultants to forward the subsidiary Veegeez.com, interest expense and legal fees. (g) Liquidity and Capital Resources. The Registrant currently has total current assets of $152,612 and total current liabilities of $1,398,306 resulting in net working capital deficit of $1,245,694. The Registrant will require significant additional working capital to continue as a going concern. Without additional working capital or a viable debt restructuring, the Registrant may find it difficult to continue in business. The Registrant believes that it will generate sufficient cash flow and financing to meet its operating requirements through 2003, but there can be no assurance the Registrant will continue to meet its cash requirements. However, the current funds available to the Registrant, and the revenues generated by the Registrant, will not be adequate for it to be competitive in the areas in which it intends to operate. Therefore, the Registrant will need to raise additional funds in order to fully implement its business plan. The Registrant's continued operations therefore will depend upon its ability to raise additional funds through bank borrowings, equity or debt financing. The Registrant estimates that it will need to raise approximately $500,000 over the next twelve months for such purposes. However, adequate funds may not be available when needed or may not be available on favorable terms to the company. Regardless of whether the Registrant's cash assets prove to be inadequate to meet the company's operational needs, the company might seek to compensate providers of services by issuance of stock in lieu of cash. The notes to the financial statements contained in this reports, as well as the last audit report on the Registrant, include a substantial doubt paragraph regarding the company's ability to continue as a going concern. If funding is insufficient at any time in the future, the Registrant may not be able to take advantage of business opportunities or respond to competitive pressures, any of which could have a negative impact on the business, operating results and financial condition. In addition, insufficient funding may have a material adverse effect on our financial condition, which could require the company to: curtail operations significantly; sell significant assets; seek arrangements with strategic partners or other parties that may require the company to relinquish significant rights to products, technologies or markets; or explore other strategic alternatives including a merger or sale of the company. In addition, if additional shares were issued to obtain financing, or compensate service providers, existing shareholders may suffer a dilutive effect on their percentage of stock ownership in the Registrant. (h) Operating Results Can Vary. The operating results of the Registrant can vary significantly depending upon a number of factors, many of which are outside the company's control. Factors that may affect the company's operating results include: market acceptance of and changes in demand for products and services; gain or loss of clients or strategic relationships; announcement or introduction of new services and products by the company or by its competitors; timing of sales to customers; price competition; the ability to attract and integrate new personnel in a timely and effective manner; the ability to introduce and market products and services in accordance with market demand; changes in governmental regulation; and general economic conditions. Inflation. The Registrant's management does not believe that inflation has had or is likely to have any significant impact on the company's operations. Other. The Registrant does not provide post-retirement or post- employment benefits requiring charges under Statement of Financial Accounting Standards Nos. 106 and 112. Critical Accounting Policies. The Securities and Exchange Commission has issued Financial Reporting Release No. 60, "Cautionary Advice Regarding Disclosure About Critical Accounting Policies" ("FRR 60"), suggesting companies provide additional disclosure and commentary on their most critical accounting policies. In FRR 60, the SEC defined the most critical accounting policies as the ones that are most important to the portrayal of a company's financial condition and operating results, and require management to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Based on this definition, the Registrant's most critical accounting policies include: the use of estimates in the preparation of financial statements and non-cash compensation valuation that affects the total expenses reported in the current period. The methods, estimates and judgments the Registrant uses in applying these most critical accounting policies have a significant impact on the results the company reports in its financial statements. (a) Use of Estimates. The foregoing discussion and analysis of the Registrant's financial condition and results of operations is based upon its consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires the company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, the company evaluates these estimates, including those related to revenue recognition and concentration of credit risk. The Registrant bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions (b) Stock-Based Compensation Arrangements. The Registrant issues shares of common stock to various individuals and entities for management, legal, consulting and marketing services. These issuances are valued at the fair market value of the service provided and the number of shares issued is determined, based upon the open market closing price of common stock as of the date of each respective transaction. These transactions are reflected as a component of consulting expenses or selling, general and administrative expenses in the accompanying statement of operations. Acquisition of Veegeez.com, LLC. On September 24, 2003, the Company acquired Veegeez.com, LLC, a California limited liability company ("VC") (see Exhibit 2.4 to this Form 10-QSB). The companies agreed to exchange 14,000,000 shares of their common stock on a 1-for-1 basis, with the total market value of $39,000. As of September 30, 2003, the Company recorded stock payable in the amount of $39,200 and compensation expense of $38,965. The agreement is contingent upon the Company raising working capital in the amount of $500,000 within six months immediately following the closing date and $2,000,000 in total during the 12 months following the closing date. Should this not occur, the parties may choose to cancel this agreement. According to the acquisition agreement, the Company assumed VC's continued operations effective October 1, 2003 by retaining the two original founders under a five-year consulting agreement to operate VC. Each of the consultants agreed to receive $5,000 monthly for the first six months of this agreement. Each of the consultants will receive monthly 2,500,000 shares of the Company's Form S-8 common stock until VC's earnings before income taxes is greater than $18,000. Once operating EBIT income is greater than $18,000, each of the consultants will receive the monthly consulting fees in the form of cash totaling $9,000. Forward Looking Statements. The foregoing management's discussion and analysis of financial condition and results of operations contains "forward looking statements" within the meaning of Rule 175 of the Securities Act of 1933, as amended, and Rule 3b-6 of the Securities Act of 1934, as amended, including statements regarding, among other items, the Registrant's business strategies, continued growth in the Registrant's markets, projections, and anticipated trends in the Registrant's business and the industry in which it operates. The words "believe," "expect," "anticipate," "intends," "forecast," "project," and similar expressions identify forward-looking statements. These forward- looking statements are based largely on the Registrant's expectations and are subject to a number of risks and uncertainties, certain of which are beyond the Registrant's control. The Registrant cautions that these statements are further qualified by important factors that could cause actual results to differ materially from those in the forward looking statements, including, among others, the following: reduced or lack of increase in demand for the Registrant's products, competitive pricing pressures, changes in the market price of ingredients used in the Registrant's products and the level of expenses incurred in the Registrant's operations. In light of these risks and uncertainties, there can be no assurance that the forward- looking information contained herein will in fact transpire or prove to be accurate. The Registrant disclaims any intent or obligation to update "forward looking statements." SIGNATURE Pursuant to the requirements of Section 13 or 15(d) 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. Point Group Holdings, Incorporated Dated: November 19, 2003 By: /s/ John Fleming John Fleming, President