NIMBUS GROUP INC - 10-Q Quarterly Report

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

Quarterly Report pursuant to Section 13 or 15(d) of the
[X] Securities Exchange Act of 1934
For the Quarterly Period Ended June 30, 2002

OR

Transition Report Pursuant to Section 13 or 15(d) of
[ ] the Securities Exchange Act of 1934

Commission File No. 000-15034

NIMBUS GROUP, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)

Florida 01-0656115
(State of Incorporation) (I.R.S. Employer
Identification Number)

5555 Anglers Avenue, Suite 16
Fort Lauderdale, FL 33312
(Address of principal executive offices) (Zip Code)

954-987-0654
(Registrant's telephone number, including area code)

N/A
(Former name, former address and former fiscal year,
if changed since last report)

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) has been subject to such
filing requirements for the past 90 days. YES [X] NO [ ]

Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.

As of August 14, 2002, 7,438,889 shares of Common Stock, $.001 par
value were outstanding.

NIMBUS GROUP, INC.

TABLE OF CONTENTS

1

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

Nimbus Group, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(unaudited)

June 30, December 31,
2002 2001
------------ ------------

ASSETS
Current assets:
Cash and cash equivalents $ 30,552 $ 379,775
Accounts receivable 99,622 51,641
Shareholder receivable 53,790 59,051
Inventory, net 814,194 709,329
Prepaid expenses and other current assets 79,251 159,184
------------ ------------
Total current assets 1,077,409 1,358,980

Property and equipment, net 541,771 755,057
Other 4,786 8,810
------------ ------------
Total assets $ 1,623,966 $ 2,122,847
============ ============

LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)

Current liabilities:
Accounts payable $ 973,257 $ 673,527
Accrued expenses 218,672 346,341
Amounts due to related party 1,689,847 965,057
Deferred revenue 23,060 66,641
------------ ------------
Total current liabilities 2,904,836 2,051,566

Commitments and Contingencies

Shareholders' equity (deficiency):
Preferred shares, $0.001 par value, 10 million shares
authorized, no shares issued and outstanding -- --
Common shares, $0.001 par value, 50 million shares
authorized, 7,438,889 and 7,438,889 shares
issued and outstanding, respectively 7,439 7,439
Additional paid-in capital 10,988,796 10,988,796
Accumulated deficit (12,277,105) (10,924,954)
------------ ------------
Total shareholders' equity (deficiency) (1,280,870) 71,281
------------ ------------

Total liabilities and shareholders' equity (deficiency) $ 1,623,966 $ 2,122,847
============ ============

The accompanying notes are an integral part of these condensed
consolidated financial statements.

2

Nimbus Group, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(unaudited)

For the three-months For the six-months
ended June 30, ended June 30,
------------------------------- -------------------------------
2002 2001 2002 2001
----------- ----------- ----------- -----------

Net revenues $ 2,935,726 $ 2,989,407 $ 6,040,877 $ 5,824,293
Cost of net revenues 2,225,779 2,638,474 4,688,567 5,342,045
----------- ----------- ----------- -----------

Gross margin 709,947 350,933 1,352,310 482,248
----------- ----------- ----------- -----------

Operating expenses:
General and administrative expenses 659,477 821,829 1,406,194 1,761,748
Auction fees 130,563 350,243 264,737 642,589
Sales and marketing 240,318 7,316 511,567 15,639
Fulfillment 150,383 154,963 374,099 293,708
Web site development expenses 73,131 79,545 147,543 145,377
----------- ----------- ----------- -----------

Total operating expenses 1,253,872 1,413,896 2,704,140 2,859,061
----------- ----------- ----------- -----------

Net loss from operations (543,925) (1,062,963) (1,351,830) (2,376,813)

Interest (expense) income, net (352) 6,543 (321) 21,132
----------- ----------- ----------- -----------

Net loss $ (544,277) $(1,056,420) $(1,352,151) $(2,355,681)
=========== =========== =========== ===========

Basic and diluted loss per common share $ (0.07) $ (0.14) $ (0.18) $ (0.32)
=========== =========== =========== ===========

Weighted average number of common
shares outstanding 7,438,889 7,438,889 7,438,889 7,438,889
=========== =========== =========== ===========

The accompanying notes are an integral part of these condensed
consolidated financial statements.

3

Nimbus Group, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(unaudited)

For the six-months
ended June 30,
---------------------------------
2002 2001
----------- -----------

Cash flows from operating activities:
Net loss $(1,352,151) $(2,355,681)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 252,734 224,146
Change in operating assets and liabilities:
Accounts receivable (47,981) 28,029
Shareholder receivables 5,261 38,395
Inventory (104,865) 1,040,336
Prepaid expenses and other current assets 79,933 200,785
Other assets 4,024 531
Accounts payable 299,730 (228,430)
Accrued expenses (127,669) 319,162
Amounts due to related party 724,790 --
Deferred revenue (43,581) (201,607)
----------- -----------
Net cash used in operating activities (309,775) (934,334)
----------- -----------

Cash flows from investing activities:
Purchase of property and equipment (39,448) (82,901)
----------- -----------
Net cash used in investing activities (39,448) (82,901)
----------- -----------

Net decrease in cash and cash equivalents (349,223) (1,017,235)

Cash and cash equivalents at beginning of period 379,775 1,086,149
----------- -----------
Cash and cash equivalents at end of period $ 30,552 $ 68,914
=========== ===========

The accompanying notes are an integral part of these condensed
consolidated financial statements.

4

NIMBUS GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
- --------------------------------------------------------------------------------

1. Basis of Presentation:

The accompanying unaudited financial statements of Nimbus Group, Inc.
(formerly known as Take to Auction.com, Inc.) (the "Company" or "Nimbus")
for the periods indicated herein have been prepared pursuant to the rules
and regulations of the Securities and Exchange Commission and in accordance
with accounting principles generally accepted in the United States of
America ("Generally Accepted Accounting Principles") for interim financial
information. Accordingly, they do not include all of the information and
notes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting of normal recurring adjustments) considered necessary for a
fair presentation have been included. Operating results for the three and
six-month periods ended June 30, 2002 are not necessarily indicative of the
results that may be expected for the year ending December 31, 2002. For
further information, refer to the Company's 2001 financial statements and
notes thereto.

The accompanying condensed consolidated financial statements have been
prepared on a going concern basis, which contemplates the realization of
assets and the satisfaction of liabilities in the normal course of
business. However, the Company has incurred net losses since inception in
the amount of approximately $12.3 million and has a deficiency in working
capital of approximately $1.8 million. This factor, among others, may
indicate that the Company will be unable to continue as a going concern for
a reasonable period of time. The condensed consolidated financial
statements do not include any adjustments that might result from the
outcome of this uncertainty. The Company's continuation as a going concern
is dependent upon future events, including obtaining financing adequate to
support the Company's cost structure and business plans. The Company is
trying to raise additional funds through private offerings of its common
shares, the proceeds of which will be used toward its working capital.
However, there can be no assurance that such financings will be successful
or that the ultimate proceeds will prove to be adequate.

During January 2002, our Board adopted a formal plan of disposal of its
wholly-owned subsidiary, Take to Auction.com, Inc. ("TTA"), in connection
with an overall strategic program designed to focus the Company's resources
on Nimbus Jets and the development of a national air taxi service.

The Company is in negotiations and has signed a letter of intent to acquire
100% of the outstanding shares of a third party company (the "Target") that
currently operates in the aviation industry and has a fixed based operation
in Florida. The operations of the Target will be merged into the operations
of Nimbus Jets. The merged company will continue to pursue the goal of
becoming an air taxi service, and will provide vertically integrated
operations, which are focused in maintenance and repair overhaul services,
fixed based operations and regional fractional aircraft ownership.

The letter of intent requires certain conditions to be met prior to or
simultaneous with closing, including, but not limited to, the operations of
TTA shall be transferred to a third party, members of the Company's Board
of Directors shall resign and the Target shall have a minimum of $10
million in equity, $5 million in cash and not less than two FAA licenses.
Completion of the purchase will be contingent upon the successful
negotiation of a formal agreement and successful completion of due
diligence procedures by both parties.

The Company anticipates that TTA will be disposed of by December 31, 2002.
The disposition will be accounted for in accordance with SFAS No. 144,
which among other provisions, requires the plan of disposal to be carried
out within one year. No provisions for estimated losses on disposal have
been recorded during fiscal 2002, as the Company cannot reasonably
determine whether a loss on disposal will be incurred. Primarily all
assets, liabilities, revenues and expenses reflected in the accompanying
condensed consolidated financial statements relate to TTA.

5

NIMBUS GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued
- --------------------------------------------------------------------------------

1. Basis of Presentation, Continued:

Certain reclassifications to the Company's 2001 financial statements were
made to conform them to classifications used in 2002.

2. Recent Accounting Pronouncements:

In July 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS No. 143"), "Accounting
for Obligations associated with the Retirement of Long-Lived Assets". SFAS
No. 143 provides accounting guidance for retirement obligations associated
with tangible long-lived assets. SFAS No. 143 is effective for fiscal years
beginning after June 15, 2002. The impact of the transition to SFAS No. 143
was not material to the condensed consolidated financial statements.

In October 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long Lived Assets". This statement replaces FASB
Statement No. 121, Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed Of. This statement also replaces APB
Opinion No. 30, Reporting Results of Operations-Reporting the Effects of
Disposal of a Segment of a Business. This statement requires that those
long-lived assets be valued at the lower of carrying amount or fair value
less costs to sell, whether reported in continuing operations or in
discontinued operations. Accordingly, discontinued operations will no
longer be measured at net realizable value or include amounts for operating
losses that have net yet occurred. The provisions of SFAS No. 144 are
effective for fiscal years beginning after December 15, 2001. The impact of
the transition to SFAS No. 144 was not material to the condensed
consolidated financial statements.

In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." The standard requires
companies to recognize costs associated with exit or disposal activities
when they are incurred rather than at the date of a commitment to an exit
or disposal plan. SFAS No. 146 is to be applied prospectively to exit or
disposal activities initiated after December 31, 2002. Management has not
yet determined the impact of the transition to SFAS No. 146 to the
condensed consolidated financial statements.

6

NIMBUS GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued
- --------------------------------------------------------------------------------

3. Property and Equipment:

Property and equipment include the following:

Estimated
useful lives
(in years) June 30, 2002 December 31, 2001
---------- ------------- -----------------

Computer equipment 3 $ 501,215 $ 500,607
Computer software 3 791,480 752,640
Furniture and fixtures 5 86,001 86,001
Telecommunication equipment 5 39,485 39,485
Leasehold improvements 5 130,231 130,231
----------- ----------
1,548,412 1,508,964
Less: accumulated depreciation
and amortization (1,006,641) (753,907)
----------- ----------

Property and equipment, net $ 541,771 $ 755,057
=========== ==========

As of June 30, 2002, all amounts capitalized relating to internal use
software have been placed into service and are being amortized over its
estimated useful life.

4. Related Party Transactions:

During November 2000, the Company loaned its Chairman of the Board
approximately $100,000. During fiscal 2001 and during the six-month period
ended June 30, 2002, principal payments of approximately $44,000 and
$6,000, respectively, were received. The remaining amount is due on demand
and accrues interest at the prime rate plus two percent. This loan is
classified as shareholder receivables in the accompanying condensed
consolidated balance sheet.

On October 1, 2000, the Company entered into a six-month service agreement
with Perfumania.com, Inc., a subsidiary of E Com Ventures, Inc., a related
party, ("ECMV"), to outsource the Company's warehouse and distribution
functions. This agreement automatically renewed for successive one-year
terms. This service agreement included order processing, inventory
management, warehousing, fulfillment and shipping of product. This
agreement was variable, based on volume of sales, however, the agreement
included monthly minimum fees if such volume levels were not obtained.
Effective September 1, 2001, this service agreement was terminated.

Effective September 1, 2001, the Company entered into a licensing agreement
with Perfumania.com to license its retail fragrance Web site. Under the
terms of the agreement, the Company pays royalties to Perfumania.com of 5%
of defined product sales for sales up to $8 million per annum, decreasing
to 3% on sales exceeding $11 million per annum. Royalty expense under this
agreement for the three and six month periods ended June 30, 2002 were
approximately $47,000 and $88,000, respectively. In addition, the Company
rents approximately 20,000 square feet of warehouse facilities from
Perfumania.com for approximately $15,000 per month. Approximately $1.7
million and $1.0 million was accrued and classified as amounts due to
related party in the accompanying condensed consolidated balance sheets as
of June 30, 2002 and December 31, 2001, respectively. Of the approximately
$1.7 million and $1.0 million accrued for in the accompanying condensed
consolidated

7

NIMBUS GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued
- --------------------------------------------------------------------------------

4. Related Party Transactions:

balance sheets, approximately $1.0 and $0.2 related to the purchase of
inventory as of June 30, 2002 and December 31, 2001, respectively.

5. Commitments and Contingencies:

Effective September 23, 1999, the Company entered into a 60 month service
agreement ('the USi Agreement') with USinternetworking, Inc. ('USi'), a
software and network provider, to develop and host the Company's Web site.
The Company paid an initial fee of $40,000 and the USi Agreement was for 60
equal monthly service fee payments of $41,000 commencing on December 15,
1999 through December 14, 2004 (the 'Initial Period'). During December
1999, the Company notified USi that it was terminating the USi Agreement
(as per the terms of the USi Agreement) for USi's material breach of its
obligations hereunder. A breach of contract lawsuit has been threatened by
USi. The Company and USi discussed a resolution of the matter, although no
discussions have occurred as of late. The Company believes that it has
meritorious defenses, as well as counterclaims, to any claim which may be
brought by USi, and if any such claim is brought, the Company will defend
it vigorously. However, if USi successfully pursues its claim against the
Company, it may have a material adverse effect on the Company and the
operation of its business. During January 2002, USi filed voluntary
petitions for relief under Chapter 11 of the U.S. Bankruptcy Code in the
United States Bankruptcy Court.

On December 9, 2001, we entered into an agreement with Eclipse Aviation
Corp. ("Eclipse"), which is a start up company, to purchase 1,000 Eclipse
500 aircraft (the "Aircraft") to be delivered over a five-year period
beginning in 2004. The price to be paid for each Aircraft was to be
$837,500 in June 2000 dollars and was subject to pricing adjustments of up
to five percent (5%) per year.

Under the terms of the Eclipse agreement, we were to make non-escrowed
deposits (the "Deposits") to Eclipse in the amount of 20% of the estimated
delivery price for the first two-year delivery commitment of 70 Aircraft,
or $11.7 million ($167,500 per Aircraft) by June 30, 2002. Eclipse was not
required to deliver the Aircraft until the Deposits were received. The
subsequent years' 930 Aircraft delivery commitment were not to become a
firm Eclipse delivery commitment until the full $11.7 million Deposit was
received.

During January 2002, the Company issued 1,532,846 shares of its common
stock, valued at $2 million, to Eclipse in satisfaction of the Deposit on
the first 10 Aircraft. On March 12, 2002, Eclipse filed with the Securities
and Exchange Commission on Form 3 - Initial Statement of Beneficial
Ownership of Securities, upon its acceptance of our common stock. Eclipse
subsequently returned the common stock to the Company, stating its
anticipated difficulty in liquidating its ownership position in the
Company. On July 3, 2002, the Company received notice from Eclipse that its
agreement to purchase the Aircraft was terminated due to the Company's
failure to make the Deposit payment by June 30, 2002. The Company did not
agree to the return of the common stock and therefore, management believes
that rights to the first 10 Aircraft are still vested in the Company. The
Company is currently contemplating its response to the contract termination
by Eclipse and how such termination and potential response will affect the
Company's ability to realize its business objectives going forward

On February 8, 2002, we entered into a non-binding agreement with DAFIN
Asset Finance Limited to provide the financing for the Aircraft. Terms of
the agreement call for the financing of each Aircraft over a 10-year
period, at a maximum interest rate of LIBOR plus four percent (4%), secured
by the Aircraft.

8

NIMBUS GROUP, INC.

ITEM 2: Management's Discussion and Analysis of Financial condition and Results
of Operations
- --------------------------------------------------------------------------------

This report contains "forward-looking statements" within the meaning of Section
21E of the Securities Exchange Act of 1934, as amended. These forward-looking
statements include, among others, statements concerning the Company's outlook
for 2002 and beyond, the Company's expectations, beliefs, future plans and
strategies, anticipated events or trends, and similar expressions concerning
matters that are not historical facts. Although we believe that the expectations
reflected in the forward-looking statements are reasonable, we cannot guarantee
future results, levels of activity, performance or achievements. The
forward-looking statements in this report are subject to risks and uncertainties
that could cause actual results to differ materially from those expressed in or
implied by the forward-looking statements. These risks and uncertainties are
described in more detail in our Annual Report on Form 10-K filed with the
Securities and Exchange Commission on April 1, 2002.

Overview- Nimbus Jets

Nimbus Jets, a start-up air taxi service, plans to offer a convenient and
cost-effective private jet solution for business travelers and individuals
alike. Unlike current alternative methods of flying, primarily commercial,
charter or fractional ownership, Nimbus Jets would be a fly on-demand private
air taxi service. The heart of our strategy was the acquisition of an extremely
cost-efficient fleet of jet aircraft, such as the one developed by Eclipse.

The Company is in negotiations and has signed a letter of intent to acquire 100%
of the outstanding shares of a third party company (the "Target") that currently
operates in the aviation industry and has a fixed based operation in Florida.
The operations of the Target will be merged into the operations of Nimbus Jets.
The merged company will continue to pursue the goal of becoming an air taxi
service, and will provide vertically integrated operations, which are focused in
maintenance and repair overhaul services, fixed based operations and regional
fractional aircraft ownership.

The letter of intent requires certain conditions to be met prior to or
simultaneous with closing, including, but not limited to, the operations of TTA
shall be transferred to a third party, members of the Company's Board of
Directors shall resign and the Target shall have a minimum of $10 million in
equity, $5 million in cash and not less than two FAA licenses. Completion of the
purchase will be contingent upon the successful negotiation of a formal
agreement and successful completion of due diligence procedures by both parties.

On December 9, 2001, we entered into an agreement with Eclipse Aviation Corp.
("Eclipse"), which is a start-up company, to purchase 1,000 Eclipse 500 aircraft
(the "Aircraft") to be delivered over a five-year period beginning in 2004. The
price to be paid for each Aircraft was to be $837,500 in June 2000 dollars and
was subject to pricing adjustments of up to five percent (5%) per year.

Under the terms of the Eclipse agreement, we were to make non-escrowed deposits
(the "Deposits") to Eclipse in the amount of 20% of the estimated delivery price
for the first two-year delivery commitment of 70 Aircraft, or $11.7 million
($167,500 per Aircraft) by June 30, 2002. Eclipse was not required to deliver
the Aircraft until the Deposits were received. The subsequent years' 930
Aircraft delivery commitment were not to become a firm Eclipse delivery
commitment until the full $11.7 million Deposit was received.

During January 2002, the Company issued 1,532,846 shares of its common stock,
valued at $2 million, to Eclipse in satisfaction of the Deposit on the first 10
Aircraft. On March 12, 2002, Eclipse filed with the Securities and Exchange
Commission on Form 3 - Initial Statement of Beneficial Ownership of Securities,
upon its acceptance of our common stock. Eclipse subsequently returned the
common stock to the Company, stating its anticipated difficulty in liquidating
its ownership position in us. On July 3, 2002, the Company received notice from
Eclipse that its agreement to purchase the Aircraft was terminated due to the
Company's failure to make the Deposit payment by June 30, 2002. The Company did
not agree to the

9

NIMBUS GROUP, INC.

Management's Discussion and Analysis of Results of Operations and Financial
Condition (Continued)
- --------------------------------------------------------------------------------

return of the common stock and therefore, management believes that rights to the
first 10 Aircraft are still vested in the Company.

As of August 1, 2002, Nimbus Jets has not yet commenced any operational
activities.

Overview- Take to Auction

Today, all of our revenues are generated by our wholly owned subsidiary, Take to
Auction.com, Inc. (TTA). TTA commenced operations on the World Wide Web during
July 1999. During its operating history, TTA has evolved from being solely a
membership community, where its members would list and profit from selling
merchandise at online auction sites, to selling items directly in multiple
wholesale and retail distribution channels. These selling channels consist
primarily of online auction sites (TTA Auctions), a retail Web site (TTA
Direct), a retail Web site we operate through a license agreement
(Perfumania.com), and our users' virtual storefronts (TTA Superstores)
(collectively the "TTA Network"). The TTA Network utilizes a common
infrastructure, including our inventory selection, order processing, payment
processing, customer service and fulfillment of the products.

TTA Auctions lists and sells merchandise at online auction sites. Currently, we
sell at eBay, Yahoo! Auctions and uBid. Online auction sites like eBay pioneered
person-to-person trading of a wide range of goods over the Internet using an
efficient and entertaining auction format and has grown into the largest and
most popular person-to-person trading community on the Internet.

TTA also operates TTA Direct, our virtual retail storefront, which sells
products to the general public, and the Perfumania.com retail storefront, which
offers over 2,000 fragrance and fragrance-related products, including bath and
aromatherapy products.

TTA Superstores is a virtual storefront platform providing individuals or
existing Web sites an expanded distribution channel by offering the tools that
allow them to sell merchandise online. Our solution eliminates the traditional
barriers faced by individuals and small Web sites. TTA handles order processing,
payment processing, customer service and fulfillment on behalf of our TTA
Superstore users. Our users profit from the difference between the selling price
and the price we charge them for the item that sold.

Results of Operations

The results of operations for the three and six month periods ended June 30,
2002 and 2001 reflect the results of operations for our wholly owned subsidiary
TTA. Nimbus Jets has not yet commenced any operational activities. Start-up
costs for Nimbus Jets are expensed to operations as incurred and are discussed
further in general and administrative expenses below.

During January 2002, our Board adopted a formal plan of disposition of TTA, in
connection with an overall strategic program designed to focus our resources on
Nimbus Jets and the development of a national air taxi service.

NET REVENUES. TTA's revenues are derived from membership fees paid by our users
for TTA Auctions, set-up fees paid by users to open their own virtual storefront
through TTA Superstores, sales of product at auction and through storefronts,
sales of product through Perfumania.com and TTA Direct and shipping and handling
fees.

10

NIMBUS GROUP, INC.

Management's Discussion and Analysis of Results of Operations and Financial
Condition (Continued)
- --------------------------------------------------------------------------------

Overall net revenues increased 4% or approximately $0.2 million to approximately
$6.0 million for the six-month period ended June 30, 2002, compared to
approximately $5.8 million for the six-month period ended June 30, 2001.

Auction revenues decreased by approximately $2.0 million to $2.0 million for the
six-month period ended June 30, 2002 compared to $4.0 million for the six-month
period ended June 30, 2001. We continue to make a concerted effort to decrease
the number of auction listings at auction sites that charge listing fees due to
the high variable costs associated with selling items at these auction sites
verses selling items through our other sales outlets. Accordingly, we believe
auction revenues will continue to decrease in the future.

For the six-month period ended June 30, 2002, revenues from TTA Direct increased
approximately $0.8 million to approximately $1.2 million compared to
approximately $0.4 million for the six-month period ended June 30, 2001
(excludes sales during the six-month period ended June 30, 2001 of approximately
$350,000 to a company owned 100% by one of our shareholders. We do not
anticipate these sales to recur in the future). Sales from TTA Direct increased
due to our continued focus on marketing. See "Results of Operations - Sales and
Marketing."

During April 2001, we launched TTA Superstores. For the six-month period ended
June 30, 2002, revenues from TTA Superstores increased approximately $0.2
million to approximately $0.3 million compared to approximately $0.1 million for
the six-month period ended June 30, 2001. The increase in revenue from TTA
Superstores is primarily attributable to the increase in the number of
Superstores from approximately 700 as of June 30, 2001 to approximately 2,300 as
of June 30, 2002.

TTA began operating Perfumania.com in September 2001, and accordingly we did not
generate comparable revenues for the six-month period ended June 30, 2001. For
the six-month period ended June 31, 2002, net revenues generated from
Perfumania.com were approximately $1.8 million. We expect to grow our "affiliate
marketing" programs, resulting in an increase in future net revenue. See
"Results of Operations -- Sales and Marketing."

For the six-month period ended June 30, 2002, membership revenues decreased
approximately $470,000 to approximately $30,000, compared to approximately $0.5
million for the six-month period ended June 30, 2001. Effective June 2001, we
suspended acceptance of new TTA Auction members, and accordingly, membership
revenues continued to decrease during 2002 as membership terms expired in June
2002. Membership revenue recognized during the six-month period ended June 30,
2001 resulted primarily from the recognition of membership fees from fiscal 2000
earned over the annual membership term. For the six-month periods ended June 30,
2002 and 2001, we generated approximately $66,000 and $22,000, respectively,
from TTA Superstore setup fees resulting primarily from the increase in the
number of stores discussed above. For the six-month period ended June 30, 2002,
shipping and handling fees increased approximately $0.2 million to approximately
$0.7 million compared to approximately $0.5 million for the six-month period
ended June 30, 2001, primarily due to the additional transactional volume
generated from the Perfumania.com sales discussed above.

Auction revenues were approximately $0.9 million for the three-month period
ended June 30, 2002 and approximately $2.1 million for the three-month period
ended June 30, 2001. During 2002, we made a concerted effort to decrease the
number of auction listings at auction sites that charge listing fees due to the
high variable costs associated with selling items at these auction sites verses
selling items through our other sales outlets. Accordingly, auction revenues
decreased by $1.2 million when compared to the comparable period in 2001.

11

NIMBUS GROUP, INC.

Management's Discussion and Analysis of Results of Operations and Financial
Condition (Continued)
- --------------------------------------------------------------------------------

For the three-month period ended June 30, 2002, revenues from TTA Direct
increased approximately $0.3 million to approximately $0.6 million compared to
approximately $0.3 million for the three-month period ended June 30, 2001. Sales
increased due to our continued focus on marketing. See "Results of Operations -
Sales and Marketing."

During April 2001, we launched TTA Superstores. For the three-month period ended
June 30, 2002, revenues from TTA Superstores increased approximately $56,000 to
approximately $124,000 compared to approximately $68,000 for the three-month
period ended June 30, 2001. The increase in revenue from TTA Superstores is
primarily attributable to the increase in the number of Superstores from
approximately 700 as of June 30, 2001 to approximately 2,300 as of June 30,
2002.

TTA began operating Perfumania.com in September 2001, and accordingly we did not
generate comparable revenues for the three-month period ended June 30, 2001. For
the three-month period ended June 30, 2002, net revenues generated from
Perfumania.com were approximately $0.9 million. We expect to grow our "affiliate
marketing" programs, resulting in an increase in future net revenue. See
"Results of Operations -- Sales and Marketing."

For the three-month period ended June 30, 2002, membership revenues decreased
approximately $247,000 to approximately $4,000, compared to approximately
$251,000 for the three-month period ended June 30, 2001. Effective June 2001, we
suspended acceptance of new TTA Auction members, and accordingly, membership
revenues continued to decrease during 2002 as membership terms expired in June
2002. Membership revenue recognized during the three-month period ended June 30,
2001 resulted primarily from the recognition of membership fees from fiscal 2000
earned over the annual membership term. For the three-month periods ended June
30, 2002 and 2001, we generated approximately $28,000 and $22,000, respectively,
from TTA Superstore setup fees resulting primarily from the increase in the
number of stores discussed above. For the three-month period ended June 30,
2002, shipping and handling fees remained relatively flat at $0.3 million due to
net revenues remaining relatively flat during the comparable period.

COST OF NET REVENUES. Cost of net revenues consist primarily of the cost of the
merchandise sold and outbound shipping costs related to those items. Cost of net
revenues decreased approximately $0.7 million to approximately $4.7 million for
the six-month period ended June 30, 2002, compared to approximately $5.4 million
for the six-month period ended June 30, 2001. Cost of net revenues as a
percentage of revenues were approximately 78% for the six-month period ended
June 30, 2002, and 92% for the six-month period ended June 30, 2001. Cost of net
revenues decreased approximately $0.4 million to approximately $2.2 million for
the three-month period ended June 30, 2002, compared to approximately $2.6
million for the three-month period ended June 30, 2001. Cost of net revenues as
a percentage of revenues were approximately 76% for the three-month period ended
June 30, 2002, and 88% for the three-month period ended June 30, 2001. We
believe that our cost of net revenues will continue to decrease as a percentage
of net revenues as we continue to sell more products through our retail outlets,
including Perfumania.com, TTA Superstores, and TTA Direct. Effective September
1, 2001, we entered into a licensing agreement with Perfumania.com to operate
the Perfumania.com retail Web site. Products sold through Perfumania.com average
higher gross margins than products sold through TTA Auctions, TTA Direct, and
TTA Superstores.

12

NIMBUS GROUP, INC.

Management's Discussion and Analysis of Results of Operations and Financial
Condition (Continued)
- --------------------------------------------------------------------------------

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses consist
of payroll and related expenses for executive, accounting and administrative
personnel, professional fees and other general corporate expenses. General and
administrative expenses decreased approximately $0.2 million to approximately
$0.6 million for the three-month period ended June 30, 2002 compared to
approximately $0.8 million for the three-month period ended June 30, 2001.
General and administrative expenses as a percentage of net revenues were 22% for
the three-month period ended June 30, 2002 and 28% for the three-month period
ended June 30, 2001. General and administrative expenses decreased approximately
$0.4 million to approximately $1.4 million for the six-month period ended June
30, 2002 compared to approximately $1.8 million for the six-month period ended
June 30, 2001. General and administrative expenses as a percentage of net
revenues were 23% for the six-month period ended June 30, 2002 and 30% for the
six-month period ended June 30, 2001. We continued to improve our operating
efficiencies throughout the three and six-month periods ended June 30, 2002 by
implementing certain cost containment initiatives. Also included in general and
administrative expenses during the three and six-month periods ended June 30,
2002 are costs of approximately $17,000 and $58,000, respectively, relating to
Nimbus Group, including start up costs incurred in connection with our
development stage enterprise, Nimbus Jets.

AUCTION FEES. Auction fees consist of fees incurred by us for posting and
selling items at online auction sites. Auction fees decreased approximately $0.2
million to approximately $0.1 million for the three-month period ended June 30,
2002, compared to approximately $0.3 million for the three-month period ended
June 30, 2001. Auction fees decreased approximately $0.3 million to
approximately $0.3 million for the six-month period ended June 30, 2002,
compared to approximately $0.6 million for the six-month period ended June 30,
2001. The decreased completed transaction volume from auctions described above
contributed to the decline in auction fees.

We intend to improve auctions fees, as a percentage of net revenues by using
leverage to negotiate favorable fees with other online auction companies. We
signed a letter of intent with Yahoo! Auctions to provide custom online auction
functionality for us. As a Featured Seller of Yahoo! Auctions, they have agreed
to promote our auction listings throughout their Web site. On November 20, 2001,
we entered into a "Preferred Merchant" agreement with uBid to list products to
be offered at uBid. During the term of this agreement, uBid will promote TTA
Auctions online. Both Yahoo! Auctions and uBid offer fees that are more
advantageous than fees charged by other online auction sites, and thus, we
believe increasing the number of items listed at these auction sites will reduce
auction fees, as a percentage of net revenues, in the future.

SALES AND MARKETING. Sales and marketing expenses consist of fees incurred for
advertising and promotion of our brand. Sales and marketing increased
approximately $233,000 to approximately $240,000 for the three-month period
ended June 30, 2002 compared to approximately $7,000 for the three-month period
ended June 30, 2001. Sales and marketing increased approximately $496,000 to
approximately $512,000 for the six-month period ended June 30, 2002 compared to
approximately $16,000 for the six-month period ended June 30, 2001. We use
e-mail promotions to targeted buyers of our merchandise. In addition, we employ
"affiliate marketing", whereby we pay an affiliate for a successful referral to
one of our Web sites. We also employ search engine keyword sponsorship on a
"pay-for-performance" basis, meaning that the search engines are paid upon a
successful referral to our Web site only. Finally, we submit our products
through a data-feed to several high trafficked price comparison Web sites. We
feel that this traffic is very targeted and converts into buyers of our
merchandise. We anticipate these last three types of marketing expenses to
increase in the future as our affiliate network continues to grow. Effective
September 1, 2001, we entered into a licensing agreement with Perfumania.com to
operate the Perfumania.com retail Web site. Under the terms of the agreement, we
pay royalties to Perfumania.com of 5% of defined product sales for sales up to
$8 million per annum, decreasing to 3% on sales exceeding $11 million per annum.
Sales and marketing

13

NIMBUS GROUP, INC.

Management's Discussion and Analysis of Results of Operations and Financial
Condition (Continued)
- --------------------------------------------------------------------------------

expenses will continue to increase in the future as we continue to promote the
Perfumania.com website. Royalty expense under this agreement for the three and
six-month period ended June 30, 2002 were approximately $47,000 and $88,000,
respectively.

FULFILLMENT FEES. Fulfillment fees consist of payroll expenses for our warehouse
personnel and fees incurred by us to warehouse and fulfill products shipped to
our customers as well as fees incurred by us for payment processing. Fulfillment
fees decreased approximately $5,000 to approximately $150,000 for the
three-month period ended June 30, 2002 compared to approximately $155,000 for
the three-month period ended June 30, 2001. Fulfillment fees increased
approximately $80,000 to approximately $374,000 for the six-month period ended
June 30, 2002 compared to approximately $294,000 for the six-month period ended
June 30, 2001. Fulfillment fees as a percentage of net revenues increased to 6%
for the six -month period ended June 30, 2002 compared to 5% for the six-month
period ended June 30, 2001, due primarily to costs incurred for securing
additional warehousing space and personnel needed to operate the Perfumania.com
retail Web site and to allow for future growth within the TTA Network.

WEB SITE DEVELOPMENT EXPENSES. Web site development expenses consist principally
of expenses incurred to develop and maintain our network operations and systems
and telecommunications infrastructure. Web site development expenses decreased
approximately $6,000 to $73,000 for the three-month period ended June 30, 2002
compared to approximately $79,000 for the three-month period ended June 30,
2001. Web site development expenses increased approximately $2,000 to $147,000
for the six-month period ended June 30, 2002 compared to approximately $145,000
for the six-month period ended June 30, 2001. Although we believe that the
majority of our Web site development is currently completed, our development
costs should increase slightly in the future in order to increase our network
infrastructure to facilitate and maintain our operations. Web site development
costs, as a percentage of net revenues, are expected to continue to decrease in
the future.

INCOME TAXES. We provided a valuation allowance of approximately $0.2 million
and $0.5 million for the three and six-month periods ended June 30, 2002,
respectively and $0.4 million and $0.9 million for the three and six month
periods ended June 30, 2001, respectively, to provide fully for the net deferred
tax assets since management believes that it is more likely than not that these
amounts will not be realized due to our recurring losses.

NET LOSS. As a result of the factors discussed above, the net loss totaled
approximately $0.5 million and $1.1 million for the three-month periods ended
June 30, 2002 and 2001, respectively, and $1.4 million and $2.4 million for the
six-month periods ended June 30, 2002 and 2001, respectively.

LIQUIDITY AND CAPITAL RESOURCES

We have had negative cash flows since inception, resulting primarily from our
wholly owned subsidiary, TTA. During January 2002, our Board adopted a formal
plan of disposition of TTA, in connection with an overall strategic program
designed to focus our resources on Nimbus Jets and the development of a national
air taxi service. Our working capital to date has been provided primarily by the
proceeds from our initial capitalization of $1 million, other private
placements, the issuance of the Notes (see below), and our initial public
offering consummated in June 2000.

14

NIMBUS GROUP, INC.

Management's Discussion and Analysis of Results of Operations and Financial
Condition (Continued)
- --------------------------------------------------------------------------------

Cash and cash equivalents at June 30, 2002 and December 31, 2001 were
approximately $31,000 and $380,000, respectively. Our working capital deficit
totaled $1.8 million and $0.7 million at June 30, 2002 and December 31, 2001,
respectively.

We used cash of approximately $0.3 million in operating activities for the
six-month period ended June 30, 2002. This was primarily the result of a loss of
approximately $1.4 million, as well as an increase in inventory of $0.1 million,
offset primarily by increases in accounts payable of approximately $0.3 million
and in amounts due to related party of $0.7 million. The increase in amounts due
to related party resulted primarily from the cost of inventory sold through
Perfumania.com. We used cash of approximately $0.9 million in operating
activities for the six-month period ended June 30, 2001. This was primarily the
result of a loss of approximately $2.4 million, as well as decreases in accounts
payable of $0.2 million, and in deferred revenue of $0.2 million, all of which
were offset in part by an increase in accrued expenses of $0.3 million and
decreases in our inventory of $1.0 million and prepaid expenses and other
current assets of $0.2 million. During the six-month period ended June 30, 2001,
inventory levels were decreased in an effort to liquidate some of our slower
moving inventory items and provide the necessary cash flows to fund our current
operations.

We used cash in investing activities of approximately $40,000 and $83,000 for
the six-month periods ended June 30, 2002 and 2001 respectively, primarily
related to certain costs capitalized in connection with internal use software.

We had no cash flows from financing activities for the three and six-month
periods ended June 30, 2002 and 2001, respectively.

During November 2000, the Company loaned its Chairman of the Board approximately
$100,000. During 2001 and during the six-month period ended June 30, 2002,
principal payments of approximately $44,000 and $6,000, respectively, were made.
The remaining amount is due on demand and accrues interest at the prime rate
plus two percent.

On February 8, 2002, we entered into a non-binding agreement with DAFIN Asset
Finance Limited to provide the financing for the Aircraft. Terms of the
agreement call for the financing of each Aircraft, upon delivery, over a 10-year
period, at a maximum interest rate of LIBOR plus four percent (4%), secured by
the Aircraft.

We have incurred net losses since inception, and our ability to ultimately
obtain profitable operations is dependent upon future events, including without
limitation, obtaining financing adequate to support our cost structure and
business plans. We are trying to raise additional funds through the private
offering of our Common Shares and we have adopted a formal plan to divest TTA.
Although we believe that our current business strategy, a private offering of
our Common Shares, and/or the proceeds received from the sale of TTA will
provide us with sufficient operating cash flow through fiscal 2002, there can be
no assurance that such business strategy will be successfully implemented, that
it will be completed in a timely manner, that funding on a private offering will
be successfully completed, that the sale of TTA will be successfully completed,
or that our future cash flows will be sufficient to meet all of our obligations
and commitments. We anticipate that we may need to raise additional funds
subsequent to fiscal 2002 and through the commencement of operations of Nimbus
Jets, currently anticipated in the beginning of 2004. The failure to generate
such sufficient cash flows could significantly adversely affect the market value
of our common stock and the operation of our business, results of operations and
financial condition.

15

ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

During the quarter ended June 30, 2002, there have been no material changes in
the information about our market risk as of December 31, 2001 as set forth in
item 7A. of the 2001 Form 10-K.

PART II - OTHER INFORMATION
- --------------------------------------------------------------------------------

Item 1. Legal Proceedings

See Note 5 to the Condensed Consolidated Financial Statements included in Part
I, Item 1 of this quarterly report for certain other information relevant to
ongoing legal matters, which is incorporated herein by this reference.

Item 2. Change in Securities and Use of Proceeds

The Company did not issue or sell any unregistered securities during the quarter
ended June 30, 2002.

Item 6. Exhibits and Reports on Form 8-K

(b) Reports on Form 8-K.

No reports on Form 8-K were filed by the Company during the
quarter ended June 30, 2002

16

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 duly authorized officer.

Take to Auction.com

By: /s/ Ilia Lekach
-------------------------------------
Ilia Lekach
Chairman of the Board and
interim Chief Executive Officer

By: /s/ Mitchell Morgan
-------------------------------------
Mitchell Morgan
Chief Financial Officer

Date: August 14, 2002

17