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SECURITIES AND EXCHANGE COMMISSION

FORM 10-K

Commission File No. 001-15034

NIMBUS GROUP, INC.

305-692-3732
(Registrant’s telephone number, including area code)

2999 Northeast 191st Street, Suite 805 Aventura, FL December 31, 2002
(Former name, former address and former fiscal year, if changed since last report)

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

SECURITIES REGISTERED PURSUANT TO SECTION 12 (G) OF THE ACT: NONE

     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  o  NO  x

     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K 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-K or any amendment to this Form 10-K.  YES  o  NO  x

     Aggregate market value of the voting stock held by non-affiliates (7,658,889 shares) of the registrant as of the close of business on October 31, 2003: $1,378,600.02.

     As of November 30, 2003, 7,688,889 of common stock, $.001 par value were outstanding.

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NIMBUS GROUP, INC.

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FORWARD-LOOKING STATEMENTS

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 2003 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. You should carefully consider the information set forth under the heading “Risk Factors.”

PART I.

ITEM 1. BUSINESS

Currently the Company is implementing its plan and is focusing its efforts to the development of fragrance and cosmetics brands, both proprietary and under license. This new focus capitalizes on current management’s expertise. Effective August 6, 2003 the Company determined to change its fiscal year end from that used in its most recent periodic report filing with the SEC (December 31, 2003). The date of the new fiscal year end is now June 30. This change was recommended by the Board for the purpose of starting a new slate reflecting the new objectives of the Company and providing the stockholders with a better fiscal understanding.

The Company acquired a portfolio of brands that enabled the Company to enter into licensing and distribution agreements that has generated income for the Company. Cara Mia is the first brand in the portfolio the Company acquired from Omniscient Corp. that began distribution through a licensing agreement with Victory International (USA) LLC. Cara Mia Skincare initially launched in Puerto Rico with four products created specifically as a skincare solutions. Victory intends to continue this brand roll-out in the continental United States starting in January 2004.

The Company distributes its product lines via licensed wholesale distributors that service specialty retail stores across the United States and to worldwide importers and exclusive distributors. The Company does not directly manufacture any product nor takes positions in inventory.

During January 2002, the Nimbus Group, Inc. board of directors adopted a formal plan of disposition of the assets of TaketoAuction.com (“TTA”), its wholly owned subsidiary in connection with our overall strategic program designed to focus our resources on Nimbus Jets and the development of a national air taxi service. All revenues generated during fiscal 2002 and prior years related solely to TTA. Due to the continuous declining market conditions of the air transportation industry, during January 2003, our Board resolved not to continue to pursue the development of a private air taxi service and to refocus its efforts on a plan to bring Nimbus Group to profitable levels

On January 15, 2003, Mr. Jonathan Geller tendered his resignation as Chief Technology Officer, effective immediately. Mr. Geller will continue to consult for us and will remain on our Board. On February 3, 2003, Mr. Mitchell Morgan tendered his resignation as Chief Financial Officer and Director and he was eventually replaced by Carlos De Miguel and Sandra Orr who assumed the interim title of the Chief Financial Officer from March 1, 2003 to May 2003 and June 2003 to August 2003 respectively. Dr. Michael Wellikoff assumed the role of Principal Financial Director on September 1, 2003. On May 22, 2003 Ilia Lekach tendered his resignation as Chief Executive Officer and Director and he was replaced on the same date by Lucien Lallouz effective April 1, 2003.

On February 19 2003, Watch Junction, Inc. purchased the technology and certain assets of TTA (the “Technology Sale”). Watch Junction is owned 100% by the former President of TTA, Mr. Albert Friedman. Mr. Friedman made a cash payment in the amount of $50,000 and returned 305,610 shares of our common stock back to us for the licensing rights of the technology and purchase of certain assets. The 305,610 shares were subsequently sold to Omniscent for $50,000 at $.016 per share, which is approximately 115% of the closing trading price of the Company’s common stock on September 1, 2003.

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TTA operated the Perfumania.com retail storefront until March 2003, which offered over 2,000 fragrance and fragrance-related products, including bath and aromatherapy products. As of December 31, 2002, we owed Perfumania.com approximately $2.1 million relating primarily to inventory purchased from a license agreement (the “License Agreement”). On January 28, 2003, we received a letter from E Com Ventures, Inc. (“ECMV”), the parent of Perfumania.com, indicating we were in default of our Website Operations Services Agreement (the “Agreement”) for non-payment of amounts due of approximately $1.9 million to Perfumania.com in connection with the Agreement. To settle the breach of contract claim, we agreed to terminate the Agreement in exchange for a release of the outstanding obligations owed to Perfumania.com. On February 28, 2003, we completed the process of returning the operations of Perfumania.com back to ECMV (the “P.com Return”). As part of the transition of the P.com Return, TTA has transferred to Perfumania.com assets which had a value of approximately $242,000. Furthermore, ECMV has: assumed certain liabilities of TTA, relating to the operations of Perfumania.com, of approximately $124,000; made a cash payment of approximately $40,000 to TTA; and extinguished a $1.7 million receivable due from TTA.

On March 1 2003, Nimbus Group management began devising a plan that would take the Company to profitable levels over the next 18 months by capitalizing on the Company’s experience in marketing, branding and licensing of health and beauty supplies.

The Company’s articles of incorporation authorize the issuance of up to 50,000,000 shares of common stock, par value $.001 and 10,000,000 shares of preferred stock, and its board of directors has the authority to fix the dividend, liquidation, conversion, redemption and other rights and preferences of such preferred shares without any vote or approval of the Company’s stockholders.

On May 19, 2003, we entered into an agreement with Omniscent Corp. to acquire certain rights to a portfolio of fragrance brands and Skincare line that include; The Cara Mia Swiss Formulated Skincare line, Phantom Women and Men Fragrances, as well as Ultra-E Fragrance for the Young Set in its developmental stage. The Cara Mia line will initially debut with four products created specifically to repair and rejuvenate the users skin. The other two brands are Phantom Parfum and Ultra-e fragrances. The Company has until January 31, 2004 to determine whether it will close on the acquisition. At its sole option it may terminate the agreement. The purchase price for these development and licensing rights is for up to 2,500,000 shares of preferred convertible stock or a cash payment of $500,000 at the Company’s option, for the design and development rights and 30% of all revenues and or sub-licensing fees. If issued, the preferred shares will be convertible into shares of common stock of our Company on a one to one basis at the option of the holder, but in no event may the preferred shares be converted into more than 19.9% of our issued and outstanding common stock. Sharon Lallouz is the principal shareholder of Omniscent Corp. and is also the spouse of Lucien Lallouz, Chief Executive Officer of the Company. Mr. Lallouz was appointed Chief Executive Officer and director of the Company subsequent to the acquisition. In addition, Mr. Lallouz disclaims any beneficial ownership in Omniscent Corp. As of this date no determination has been made as to whether this acquisition will be consummated.

Effective May 20, 2003, we entered into a sub-licensing agreement with Victory International (USA) LLC (Victory) to distribute its Cara Mia Cosmetics brand worldwide. Under the terms of the agreement, Victory is to advance the Company $200,000 against royalties of 12% on all sales made by Victory, of which 3.6% from these royalties is payable to Omniscent under its licensing agreement with Nimbus leaving Nimbus with a net of 8.4% of all sales made by Victory. As of November 2003 we have received the $200,000 advance in full from Victory. Ongoing royalties are payable quarterly. To date, no royalty payments have been made to Omniscent. On November 22, 2003 Victory launched the Cara Mia product line in Puerto Rico. Victory plans to continue the Cara Mia roll-out nationally by January 2004.

Effective May 21, 2003 we also entered into an assignment agreement with Omniscent, where we acquired the licensing rights of the Phantom Fragrances brand licensed to Moar International. Under the terms of the licensing agreement a royalty fee of 5% on net sales of the brand is payable to us by Moar International. Under the assignment agreement 1.5% from the 5% will revert to Omniscent leaving Nimbus with a net of 3.5% of all royalties collected from this licensing assignment. We anticipate the launch of the Phantom Fragrance line will commence in March 2004.

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RECENT EVENTS

We continue to seek licensing opportunities. On October 14, 2003 we engaged Jack Smith, founder and former chairman of The Sports Authority (NYSE: TSE) to serve as a consultant. We believe that his experience in retail and international licensing will help us develop new business opportunities.

EMPLOYEES

As of June 30, 2003, we had 6 employees/independent contractors, including Lucien Lallouz, our Chief Executive Officer and Michael Wellikoff, our Interim Chief Financial Officer. We have never had a work stoppage and no employees are represented under collective bargaining agreements. We consider our relations with our employees to be good.

OUR CORPORATE HISTORY

Nimbus Group, Inc. was incorporated in Florida in June 1999. The Company’s articles of incorporation authorize the issuance of up to 50,000,000 shares of common stock, par value, $.001. The Company is also authorized to issue up to 10,000,000 shares of preferred stock, par value $.001, and its board of directors has the authority to fix the dividend, liquidation, conversion, redemption and other rights and preferences of such preferred shares without any vote or approval of the Company’s stockholders.

Our principal executive offices are located at 2975 Northeast 191st Street, PH2, Aventura, Florida 33180. Our telephone number is (305) 692-3732.

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RISK FACTORS

OUR LIMITED OPERATING HISTORY MAKES IT DIFFICULT TO EVALUATE OUR BUSINESS

There are limited period-to-period comparisons of our operating results from which to evaluate our performance going forward. An investor in our common shares must consider the risks, uncertainties, expenses and difficulties frequently encountered by companies in their early stages of development, particularly companies in process of changing their business plan. These risks include depleting our cash reserves, lower than expected revenues and earnings and not being able to pay expenses as they come due, as well as the following:

•

we may not be able to establish commercial relationships with suppliers of merchandise to launch our new business plan;

•

we may not be able to implement a brand(s) and execute our business strategy;

•

we may not be able to secure adequate financing to fund growth;

•

we may not be able to respond effectively to competitive developments and a rapidly changing market; and

•

we may not be able to attract qualified personnel, and if attracted, we may not be able to integrate, retain and motivate such personnel.

Our failure to accomplish any of these objectives would harm our business, financial condition and results of operations.

WE HAVE AN ACCUMULATED DEFICIT AND WE ANTICIPATE THAT OUR LOSSES WILL CONTINUE

We have an accumulated deficit of approximately $11 million as of June 30, 2003 resulting primarily from the operations of TTA. Although we believe that our current business strategy will provide us with sufficient operating cash flow through June 30, 2004, there can be no assurance that such business strategy will be successfully implemented, that it will be completed in a timely manner or that our future cash flows will be sufficient to meet all of our obligations and commitments. The failure to generate such sufficient cash flow could significantly adversely affect the market value of our common stock and the operation of our business, results of operations and financial condition. Further, we may be unable to adjust spending in a timely manner to compensate for any unexpected revenue shortfall. Accordingly, any significant shortfall in revenues relative to our planned expenditures would have an immediate harmful effect on our business, financial condition and results of operations.

Our future operating results will depend upon numerous factors. We may not achieve profitability. Even if we do so, we may never sustain or increase profitability on a quarterly or annual basis in the future. If revenues grow slower than we anticipate, or if operating expenses exceed our expectations or cannot be adjusted accordingly, our business, financial condition and results of operations will be harmed.

WE RECEIVED A GOING CONCERN OPINION FROM OUR INDEPENDENT AUDITORS

We received an opinion from our independent auditors on our consolidated financial statements included in this report expressing substantial doubt as to our ability to continue as a going concern as a result of our operating losses since inception and our need for substantial amounts of additional funding to continue our operations.

OUR SUCCESS IN OUR NEW BUSINESS STRATEGY IS DEPENDENT UPON OUR MANAGEMENT.

Our success is dependent upon our management ability to execute the Company’s new business plan. Although our executive management team has some experience in operating businesses engaged in marketing, branding and licensing, due to the new focus of this business it is difficult to assess and evaluate management given the Company has no past operating history with regard to the new business model.

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OUR SUCCESS IN OUR NEW BUSINESS STRATEGY IS DEPENDENT ON LICENSE AGREEMENTS
WITH OMNISCENT CORP.

Our success is dependent upon license agreements we have entered into with Omniscent Corp. If any of these agreements are terminated, our business will be detrimentally affected.

WE MAY NOT BE ABLE TO MAINTAIN A LISTING ON THE AMERICAN STOCK EXCHANGE, SO YOU
MAY NOT BE ABLE TO SELL YOUR SHARES EASILY.

We obtained a waiver from the American Stock Exchange (“AMEX”) listing requirements in order to list our shares. If we are unable to maintain this listing in the future, we believe that our common shares may then trade on the over-the-counter market in the so-called “pink sheets” or the OTC Bulletin Board, which was established for securities that do not meet the AMEX’s and other exchanges’ listing requirements. In such event, our shares may be difficult or impossible to sell. Specifically, selling our common shares would be more difficult because smaller quantities of common shares could be bought and sold, transactions could be delayed, and coverage of us by securities analysts and news media may be reduced. As a result, shareholders may not be able to sell their shares, which illiquidity may cause a decreased trading price, cause larger spreads in the bid and ask price for our common shares and restrict our ability to issue additional securities or to secure additional financing. In order to maintain a listing, AMEX examines, typically on a quarterly basis, the financial condition and/or operating results for a listed Company, the public distribution or aggregate market value of a listed Company’s shares, as well as various other aspects of a listed Company’s compliance with AMEX’s requirements. Although AMEX has wide discretion regarding the enforcement of the requirements for maintaining a listing, there can be no assurance that we will be able to satisfy these requirements and maintain our listing.

On February 28, 2003, we received a letter from the AMEX stating that as of the filing of the Company’s last 8K on February 19, 2002 the Company was not in compliance with the Exchange’s continued listing standards as set forth in Part 10 of the AMEX Company Guide. On April 7, 2003, the Company submitted a plan to the AMEX detailing its business plan for the next 18 months and its projections for returning to compliance. The Company is currently permitted to trade under an 18 month extension subject to meeting certain milestones during said period.

On November 21, 2003, the AMEX suspended trading of our common stock due to our failure to file this transition report and our quarterly report on Form 10-Q on a timely basis. AMEX will recommence trading of our common stock upon the filing of and review of such reports by the staff of AMEX. AMEX has stated that if the filings are not made by December 12, 2003, de-listing proceedings will commence.

INVESTORS MAY BE UNABLE TO SELL OUR COMMON SHARES BECAUSE OF THE LOW PRICE

Although we are listed on the AMEX, we cannot assure you that we will be able to maintain this listing. In such event, our shares may trade only on the over-the-counter market in the so-called “pink sheets” or on the OTC Bulletin Board. The effects of not being eligible for trading on the AMEX include the limited release of the market prices of our stock and limited news coverage of us. Ineligibility may also restrict investors’ interest in our stock and materially adversely affect the trading market and prices for our stock and our ability to issue additional securities or to secure additional financing.

IF THE TRADING PRICE OF OUR COMMON STOCK DROPS BELOW A CERTAIN LEVEL WE MAY
BECOME SUBJECT TO THE PENNY STOCK RULE

If the trading price of our common stock is less than $5.00 per share, our common stock could become subject to Rule 15 (g) under the Securities and Exchange Act of 1934, as amended. That rule, otherwise known as the “Penny Stock Rule,” requires that broker-dealers satisfy special sales practice requirements, including making individualized written suitability determinations and receiving purchasers’ written consents, prior to any transaction. If our common stock is deemed to be a penny stock under the Securities Enforcement and Penny Stock Reform Act of 1990, this would require additional disclosure in connection with trades in our common stock, including the delivery of a disclosure schedule explaining the nature and risks of the penny stock market. Such requirements could severely limit the liquidity of our common stock, the ability of broker-dealers to sell our common shares and the

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ability of purchasers to sell their securities in the secondary market. As of the close of business on June 30, 2003, our share price was $0.14.

WE MAY BE UNABLE TO SELL SHARES IN SOME STATES IN FUTURE OFFERINGS DUE TO BLUE
SKY REGULATIONS

If we become unable to list our shares on the AMEX, we will attempt to register and trade on another national exchange. If that proves unsuccessful, we will have to register the common shares in any state where we desire to sell our common shares. We must also register our officers and directors as broker dealers in any state in which we seek to sell our common shares or seek an exemption to such registration. If a registration of the common shares in various states is not approved, it will not be possible for us to sell the common shares in those states. In such an event, we intend to use our best efforts to register in every state where we believe there is a significant market for our common shares. Should any or all common share registrations not be approved, this would prohibit us from selling the common shares offered for sale in such jurisdictions, would make it more difficult for you to sell your common shares generally and could adversely affect the overall success of those future offerings.

WE MAY NEED TO RAISE ADDITIONAL CAPITAL WHICH MAY AFFECT OUR SHAREHOLDERS, AND
OUR BUSINESS WILL BE HARMED IF WE ARE UNABLE TO OBTAIN ADDITIONAL CAPITAL

If we cannot generate substantial revenues during fiscal year 2004, we will need to raise funds in the near future. If additional funds are raised through the issuance of equity or convertible debt securities, our shareholders’ percentage ownership will be reduced, and these securities may have rights, preferences and privileges senior to those of the common shares. Additional financing may not be available on terms favorable to us or at all. If we are unable to maintain our listing of common stock on the AMEX, it may be more difficult to raise additional funds. If adequate funds are not available or are not available on acceptable terms, we may not be able to fund our current operations, take advantage of unanticipated acquisition opportunities, develop or enhance services or products or respond to competitive pressures. Our inability to raise additional capital on acceptable terms could harm our business, financial condition and results of operations. Please see “Management’s Discussion and Analysis of Financial Conditions and Results of Operations—Liquidity and Capital Resources.”

WHERE YOU CAN FIND MORE INFORMATION

We are subject to the informational requirements of the Exchange Act and, therefore, file reports, proxy statements and other information with the Securities and Exchange Commission (the “SEC”). You can inspect and copy all of this information at the Public Reference Room maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains a web site that contains reports, proxy statements and information statements and information regarding issuers, such as us, that file electronically with the SEC. The address of this web site is http:\\www.sec.gov.

ITEM 2. PROPERTIES

On March 1, 2003, the Company moved from our principal administrative, marketing and product development facilities located in Fort Lauderdale, Florida to 2999 NE 191st Street Suite 805 Aventura, FL. 33180 and entered into a 3 year lease. The monthly payments for the Company headquarters at the new address was $3,883. The Company subsequently moved on September 1, 2003 from Suite 805 to Suite 903 and reduced its monthly rent to approximately $1,700. per month.

ITEM 3. LEGAL PROCEEDINGS

We are not currently a party to any formal legal proceedings. A breach of contract lawsuit has been threatened by USinternetworking, Inc. (‘USi’), a developer of Web sites. We signed a contract, effective as of September 23, 1999, with USi for the development of our second generation user interface, as well as certain other services (the ‘USi Agreement’). During December 1999, we notified USi that we were terminating the USi Agreement (as per the terms of the USi Agreement) for USi’s material breach of its obligations thereunder. The parties discussed a resolution of the matter, although no discussions have occurred as of late. We believe that we have meritorious

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defenses, as well as counterclaims, to any claim which may be brought by USi, and if any such claim is brought, we will defend it vigorously. However, if USi successfully pursues its claim against us, it may have a material adverse effect on us and the operation of our 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.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

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PART II.

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

MARKET INFORMATION

Our common stock is traded on the AMEX under the symbol NMC. The stock is currently suspended from trading. The following table sets forth the high and low closing sales prices for our Common Stock for the periods indicated, as reported by the American Stock Exchange.

HOLDERS

As of June 30, 2003, there were approximately 44 holders of record, and we believe we have in excess of 400 holders of common stock held in street name. The closing sales price for the Common Stock on June 30, 2003 was $0.14 per share.

DIVIDEND POLICY

We have not declared or paid any dividends on our Common Stock and do not currently intend to declare or pay cash dividends in the foreseeable future. Payment of dividends, if any, will be at the discretion of the Board of Directors after taking into account various factors, including our financial condition, results of operations, current and anticipated cash needs and plans for expansion.

RELATED STOCKHOLDER MATTERS

Recent Issuance of Unregistered Securities

Effective April 1, 2003, the Company issued options exercisable to purchase an aggregate of 742,000 shares of common stock exercisable at $.08 per share to two individuals as an inducement for these individuals to enter into employment and/or consulting agreements with the Company. The options were issued under the exemption to registration provided by Section 4(2) of the Securities Act. The shares contain the appropriate legend restricting their transferability absent registration or applicable exemption. The individuals receiving the options had full access to information pertaining to the Company and had the ability to ask questions about the Company.

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On July 2, 2003, the Company issued an aggregate of 250,000 shares of common stock to two law firms in consideration for legal services performed for the Company and future services to be performed for the Company. The shares were valued at $.14 per share, equal to the closing bid price of the common stock of the Company on the date of grant. The shares were issued pursuant to the exemption from registration provided by Section 4(2) of the Securities Act. The shares contain the appropriate legend restricting their transferability absent registration or applicable exemption. The shareholders had access to current information on the Company and had the ability to ask questions about the Company

Securities Authorized for Issuance Under Equity Compensation Plans

The following table provides information as of June 30, 2003 about the Company’s common stock that may be issued upon the exercise of options granted to employees or members of the Board of Directors under all of the Company’s existing equity compensation plans.

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ITEM 6. SELECTED FINANCIAL DATA

The following selected consolidated financial data should be read in conjunction with, and are qualified by reference to, the consolidated financial statements and notes thereto and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” appearing elsewhere in this transition report. The consolidated financial statement data as of June 30, 2003 and 2002 and for the six month transition period ended June 30, 2003 and 2002 are derived from, and are qualified by reference to, the audited consolidated financial statements of Nimbus Group, Inc. Information for the six months period ended June 30, 2002 is derived from unaudited information

Selected Financial Data

Balance Sheet Data

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

COMPARISON OF JUNE 30, 2003 AND JUNE 30, 2002

Overview. As discussed above, we have recently changed our business strategy and discontinued prior operations. Results of operations for the six month transition periods ended June 30, 2003 and June 30, 2002 are not comparable due to this change. As such, any comparison of these periods is meaningless.

Revenues. Overall net revenues for the six month transition period ended June 30, 2003 were $100,000 relating exclusively to royalty payments under our licensing of the Cara Mia product line.

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 for the six month transition period ended June 30, 2003 were $184,491. The decrease in general and administrative expenses as compared to our discontinued operations was due to the reduction in administrative and executive personal associated with the change of our business and winding down of our prior operations. We anticipate that as our new business operations develop, our general and administrative expenses will increase.

Royalty Expenses. Royalty expense consists exclusively of royalties paid to Omniscent Corp. pursuant to our current licensing arrangement. Royalty expense for the six month transition period ended June 30, 2003 was $30,000. Our royalty expense will proportionally increase or decrease depending on future revenues derived under the Omniscent Corp. licensing arrangement.

Net income (loss). The net income totaled approximately $1,437,477 for the six month transition period ended June 30, 2003 as compared to a net loss of $(1,352,151) for the transition period ended June 30, 2002. The net gain for the 2003 transition period is due to the extinguishment of certain debt resulting from the P.com Return.

LIQUIDITY AND CAPITAL RESOURCES

Our principal capital requirements during the next 12 months will be to fund the operations of our future business plan. We have had negative cash flows since inception, resulting primarily from our wholly-owned subsidiary, TTA. Our working capital to date has been provided primarily by the proceeds from our initial capitalization of $1,000,000, other private placements, the issuance of promissory notes to affiliates, and our initial public offering consummated in June 2000.

Cash and cash equivalents at June 30, 2003 were approximately $354. Our working capital (deficit) totaled ($299,859) at June 30, 2003 and ($1,280,870) million at June 30, 2002.

We had net income of $1,437,477 for the transition period ended June 30, 2003 which resulted from theP.com Return. Approximately $0.5 million of cash was used in operating activities for the period ended June 30, 2002. This was primarily the result of an income of approximately $1.4 million, offset primarily by a decrease in our inventory of approximately $121,000 as well as a decrease in shareholders receivable of approximately $35,298.

We had no cash flows from financing activities for the transition ended June 30, 2003, nor same periods of 2002 and 2001.

During November 2000, the Company loaned its former Chairman of the Board approximately $100,000. The remaining amount outstanding as of June 30, 2003, approximately $20,123, was due on demand and accrued interest at the prime rate plus two percent.

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 future business plans. There can be no assurance that a new business strategy will be evaluated and completed in a

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timely manner, that it will be successfully implemented, or that private funding will be successfully completed, or that our future cash flows will be sufficient to meet all of our obligations and commitments. 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.

RECENT ACCOUNTING PRONOUNCEMENTS

In October 2001, the FASB issued SFAS No. 144, Accounting For The Impairment Or Disposal Of Long-Lived Assets. This Statement supersedes Statement No. 121 but retains many of its fundamental provisions. SFAS No. 144 also supersedes the accounting and reporting provisions of APB Opinion 30, Reporting the Results of Operations — Reporting the Effects of a Segment of a Business and Extraordinary, Unusual and Infrequently Occurring Events and Transactions, for the disposal of a segment of a business. Additionally, this Statement expands the scope of discontinued operations to include more disposal transactions. The adoption of SFAS No. 144 in fiscal year 2002 did not have a significant impact on our financial position and results of operations.

In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections. SFAS No. 145 which all but eliminates the presentation in income statements of debt extinguishments as extraordinary items. SFAS No. 145 will be effective for fiscal years beginning after May 15, 2002. SFAS No. 145 is not expected to have a significant effect on our financial position and results of operations.

In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities. SFAS No. 146 addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force (EITF) Issue 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity. The provisions of the Statement are effective for exit of disposal activities that are initiated after December 31, 2002, with early application encouraged. We do not expect a significant impact on our financial position and results of operations from the adoption of this Statement.

In December 2002, the FASB issued SFAS No 148, Accounting for Stock-Based Compensation Transition and Disclosure, an amendment of FASB Statement No. 123. This Statement amends FASB Statement No. 123, Accounting for Stock-Based Compensation, to provide alternative methods of transition for a voluntary change to the fair value method of accounting for stock-based employee compensation. In addition, this Statement amends the disclosure requirements of Statement No. 123 to require prominent disclosures in both annual and interim financial statements. Certain of the disclosure modifications are required for fiscal years ending after December 15, 2002 and are included in the notes to these consolidated financial statements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

Our market risk exposure with respect to financial instruments is to changes in the “prime rate” in the United States. As of June 30, 2003, we have a loan receivable, due on demand, from our former chairman and CEO in the amount of approximately $20,123 bearing interest at prime plus two percent. As of June 30, 2003, we had no short or long-term investments.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENT DATA

NIMBUS GROUP, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS.

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INDEPENDENT AUDITOR’S REPORT

To the Board of Directors of
     Nimbus Group, Inc.

We have audited the accompanying consolidated balance sheet of Nimbus Group, Inc. and subsidiaries (the “Company”) as of June 30, 2003, and the related consolidated statements of operations, changes in shareholders’ (deficiency) equity and cash flows for the six months ended June 30, 2003. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. The December 31, 2002 and 2001 financial statements were audited by other auditors whose reports dated February 21, 2003 and March 20, 2002, on those statements included an explanatory paragraph describing conditions that raised substantial doubt about the Company’s ability to continue as a going concern.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Nimbus Group, Inc. as of June 30, 2003, and the results of their operations and their cash flows for the six months then ended in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company’s dependence on outside financing, lack of sufficient working capital, recurring losses from operations and the discontinued operations raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.

De Meo, Young, McGrath of Fort Lauderdale, LLP
Certified Public Accountants

Fort Lauderdale, Florida
December 12, 2003

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INDEPENDENT AUDITORS’ REPORT

To the Board of Directors and
Shareholders of Nimbus Group, Inc.:

We have audited the consolidated balance sheet of Nimbus Group, Inc. (the “Company”) as of December 31, 2002 and the related consolidated statements of operations, changes in shareholders’ (deficiency) equity and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. The consolidated financial statements of Nimbus Group, Inc. for the years ended December 31, 2001 and 2000 were audited by other auditors whose report thereon, dated March 20, 2002 expressed a qualified opinion with respect to a going concern uncertainty.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material respects, the financial position of Nimbus Group, Inc. as of December 31, 2002, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company’s dependence on outside financing, lack of sufficient working capital, recurring losses from operations, and the discontinued operations raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.

BERKOVITS, LAGO AND COMPANY LLP

Plantation, Florida
February 21, 2003

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(DELOITTE & TOUCHE COMPANY LETTERHEAD)

INDEPENDENT AUDITORS’ REPORT

To the Board of Directors and
Shareholders of Nimbus Group, Inc.:

We have audited the accompanying consolidated balance sheet of Nimbus Group, Inc. (the “Company”) and subsidiaries as of December 31, 2001, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the two years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2001, and the results of their operations and their cash flows for each of the two years then ended, in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has a deficiency in working capital, incurred losses since inception, and its ability to ultimately develop profitable operations is dependent on future events, including obtaining financing adequate to support the Company’s cost structure and business plans. Such matters raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans concerning these matters are also describe in Note 2. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.

/s/ DELOITTE & TOUCHE LLP

March 20, 2002

(DELOITTE TOUCHE TOHMATSU FOOTER)

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Nimbus Group, Inc. and Subsidiaries
Consolidated Balance Sheets

The accompanying notes are an integral part of these consolidated balance sheets

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Nimbus Group, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets

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Nimbus Group, Inc. and Subsidiaries
Consolidated Statement of Operations

The accompanying notes are an integral part of these consolidated statements

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Nimbus Group, Inc. and Subsidiaries
Consolidated Statements of Operations

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Nimbus Group, Inc. and Subsidiaries
Consolidated Statements of Changes in Shareholders’ (Deficiency) Equity
For the six month period ended June 30, 2003, 2002 and 2001

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

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Nimbus Group, Inc. and Subsidiaries
Consolidated Statements of Changes in Shareholders’ (Deficiency) Equity
For the years ended December 31, 2002, 2001 and 2000

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Nimbus Group, Inc. and Subsidiaries
Consolidated Statements of Cash Flows

Supplemental cash flow information

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

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Nimbus Group, Inc. and Subsidiaries
Consolidated Statements of Cash Flows