SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-KSB
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(Mark One)
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
[ ] Transitional Report Under Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the fiscal year ended December 31, 2002
Commission File No. 0-25562
GENESIS COMPANIES GROUP, INC.
-----------------------------
(Name of small business issuer in its charter)
Delaware 72-1175963
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
830 S. Kline Way
Lakewood, Colorado 80226
(303) 985-3972
--------------
(Address, including zip code and telephone number, including area code,
of registrant's executive offices)
Securities registered under Section 12(b) of the Exchange Act:
none
Securities registered under to Section 12(g) of the Exchange Act:
Common Stock
------------
(Title of class)
Check whether the issuer (1) 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 Company was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes X No
--- ---
Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure will be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB.
---
Issuer's revenues for its most recent fiscal year: $ -0-
(Continued on Following Page)
State the aggregate market value of the voting stock held by non-affiliates,
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of a specified date within the past 60
days: As of March 28, 2003: $0.
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of March 28, 2003, there were
4,500,000 shares of the Company's common stock issued and outstanding.
Documents Incorporated by Reference: None
This Form 10-KSB consists of Twenty Five Pages.
Exhibit Index is Located at Page Twenty Four.
2
TABLE OF CONTENTS
FORM 10-KSB ANNUAL REPORT
GENESIS COMPANIES GROUP, INC.
PAGE
----
Facing Page
Index
PART I
Item 1. Description of Business..........................................4
Item 2. Description of Property..........................................5
Item 3. Legal Proceedings................................................5
Item 4. Submission of Matters to a Vote of Security Holders..............5
PART II
Item 5. Market for the Registrant's Common Equity and
Related Stockholder Matters..................................5
Item 6. Management's Discussion and Analysis of Financial Condition
and Results of Operations....................................5
Item 7. Financial Statements.............................................6
Item 8. Changes in and Disagreements on Accounting
and Financial Disclosure....................................16
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act...........16
Item 10. Executive Compensation..........................................17
Item 11. Security Ownership of Certain Beneficial Owners and Management..18
Item 12. Certain Relationships and Related Transactions..................19
PART IV
Item 13. Exhibits and Reports of Form 8-K................................20
Item 14. Controls and Procedures.........................................20
SIGNATURES....................................................................22
EXHIBIT INDEX.................................................................24
3
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
Genesis Companies Group, Inc. ("we," "our," "us," or the "Company"), was
incorporated under the laws of the State of Delaware on December 22, 1988, for
the purpose of engaging in any lawful activity. On or about March 29, 1990, we
filed a registration statement on Form S-18 with the Securities and Exchange
Commission, wherein we attempted to register 20,000 Units, each Unit consisting
of 100 shares of our Common Stock and 100 Class A, Class B and Class C Common
Stock Purchase Warrants. This registration statement was subsequently
voluntarily abandoned by us prior to effectiveness due to adverse market
conditions. Other than filing and abandoning of the aforesaid registration
statement, the only activities undertaken by us since our inception has been the
issuing of 4,500,000 shares of our common stock to our original shareholders,
which stock was issued in exchange for aggregate cash consideration of $13,500
(average price of $0.003 per share) and which shares are presently held by 8
persons. As such, we can be defined as a "shell" company, whose sole purpose at
this time is to locate and consummate a merger or acquisition with a private
entity.
The proposed business activities described herein classify us as a "blank
check" company. Many states have enacted statutes, rules and regulations
limiting the sale of securities of "blank check" companies in their respective
jurisdictions. Management does not intend to undertake any efforts to cause a
market to develop in our securities until such time as we have successfully
implemented our business plan described herein. Relevant thereto, each
shareholder of the Company has executed and delivered a "lock-up" letter
agreement, affirming that they shall not sell their respective shares of our
common stock until such time as we have successfully consummated a merger or
acquisition and we are no longer classified as a "blank check" company. In order
to provide further assurances that no trading will occur in our securities until
a merger or acquisition has been consummated, each shareholder has agreed to
place their respective stock certificate with our legal counsel, who will not
release these respective certificates until such time as legal counsel has
confirmed that a merger or acquisition has been successfully consummated.
However, while management believes that the procedures established to preclude
any sale of our securities prior to closing of a merger or acquisition will be
sufficient, there can be no assurances that the procedures established relevant
herein will unequivocally limit any shareholder's ability to sell their
respective securities before such closing.
Management is of the opinion that our business objectives remain viable,
despite our failure to merge with or acquire another business entity to date.
Our management continues to review potential merger candidates and acquisition
opportunities.
Employees
We have no full time employees. Our officers and directors have agreed to
allocate a portion of their time to our activities, without compensation. These
officers and directors anticipate that our business plan can be implemented by
their devoting an aggregate of approximately 20 hours per month to our business
affairs and, consequently, conflicts of interest may arise with respect to the
limited time commitment by such officers. See "PART III, ITEM 9, DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS."
4
ITEM 2. DESCRIPTION OF PROPERTY
We have no properties and at this time have no agreements to acquire any
properties. We intend to attempt to acquire assets or a business in exchange for
our securities, which assets or business is determined to be desirable for our
objectives.
Our principal place of business is located at 830 S. Kline Way, Lakewood,
Colorado 80226, which offices are provided by Wm. Ernest Simmons, an officer,
director and shareholder of our Company, on a rent free basis pursuant to an
oral agreement. Mr. Simmons has advised us that he is agreeable to maintaining
this situation until we successfully consummate an acquisition or merger. It is
anticipated that this arrangement will be suitable for the our needs for the
foreseeable future.
ITEM 3. LEGAL PROCEEDINGS
There are no material legal proceedings which are pending or have been
threatened against us of which management is aware.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
(a) Market Information. There is presently no trading market for our common
or preferred equity.
(b) Holders. There are eight (8) holders of our Common Stock.
(c) Dividends.
(1) We have not paid any dividends on our Common Stock. We do not
foresee that we will have the ability to pay a dividend on our Common Stock in
the fiscal year ending December 31, 2003, unless we successfully consummate a
merger or acquisition. There can be no assurances that a dividend will be issued
even if a merger or acquisition is so consummated.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with our audited
financial statements and notes thereto included herein. In connection with, and
because we desire to take advantage of, the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995, we caution readers regarding
certain forward looking statements in the following discussion and elsewhere in
this report and in any other statement made by us, or on our behalf, whether or
not in future filings with the Securities and Exchange Commission. Forward
looking statements are statements not based on historical information and which
relate to future operations, strategies, financial results or other
developments. Forward looking statements are necessarily based upon estimates
and assumptions that are inherently subject to significant business, economic
and competitive uncertainties and contingencies,
5
many of which are beyond our control and many of which, with respect to future
business decisions, are subject to change. These uncertainties and contingencies
can affect actual results and could cause actual results to differ materially
from those expressed in any forward looking statements made by us, or on our
behalf. We disclaim any obligation to update forward looking statements.
(a) Plan of Operation.
We intend to seek to acquire assets or shares of an entity actively engaged
in business which generates revenues, in exchange for our securities. We have no
particular acquisitions in mind and have not entered into any negotiations
regarding such an acquisition. None of our officers, directors, promoters or
affiliates have engaged in any preliminary contact or discussions with any
representative of any other company regarding the possibility of an acquisition
or merger between us and such other company as of the date of this report.
Our Board of Directors intends to provide our shareholders with complete
disclosure documentation concerning a potential business opportunity and the
structure of the proposed business combination prior to consummation of the
same, which disclosure is intended to be in the form of a proxy statement. While
such disclosure may include audited financial statements of such a target
entity, there is no assurance that such audited financial statements will be
available. The Board of Directors does intend to obtain certain assurances of
value of the target entity's assets prior to consummating such a transaction,
with further assurances that an audited statement would be provided within sixty
days after closing of such a transaction. Closing documents relative thereto
will include representations that the value of the assets conveyed to or
otherwise so transferred will not materially differ from the representations
included in such closing documents, or the transaction will be voidable.
We have no full time employees. Our President and Treasurer and Secretary
have agreed to allocate a portion of their time to our activities, without
compensation. These officers anticipate that our business plan can be
implemented by their devoting approximately 20 hours per month to our business
affairs and, consequently, conflicts of interest may arise with respect to the
limited time commitment by such officers. See "PART III, ITEM 9 - DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS - Resumes."
Because we presently have nominal overhead and do not have any other
material financial obligations, management believes that our short term cash
requirements can be satisfied by management injecting whatever nominal amounts
of cash into our Company to cover these incidental expenses. There are no
assurances whatsoever that any additional cash will be made available us through
any means.
ITEM 7. FINANCIAL STATEMENTS
6
GENESIS COMPANIES GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2002 AND 2001
7
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Genesis Companies Group, Inc.
Lakewood, Colorado
We have audited the accompanying balance sheets of Genesis Companies Group, Inc.
(A Development Stage Company) as of December 31, 2002 and 2001, and the related
statements of operations, cash flows, and changes in stockholders' equity for
the years then ended, and for the period December 22, 1988 (inception) to
December 31, 2002. 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. Those standards require that we plan and perform the
audits 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, the financial statements referred to above present fairly, in
all material respects, the financial position of Genesis Companies Group, Inc.
at December 31, 2002 and 2001, and the results of its operations and its cash
flows for the years then ended, and for the period, December 22, 1988
(inception) to December 31, 2002 in conformity with accounting principles
generally accepted in the United States.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As described in Note 1 to the
financial statements, the Company is in the development stage, conditions exist
which raise substantial doubt about the Company's ability to continue as a going
concern unless it is able to generate sufficient cash flows to meet its
obligations and sustain its operations. . Management's plans in regard to these
matters are described in Note 5. The financial statements do no include any
adjustments that might result from the outcome of this uncertainty.
Denver, Colorado
March 20, 2003
8
GENESIS COMPANIES GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
DECEMBER 31,
2002 2001
-------- --------
ASSETS:
Current Assets:
Cash $ -- $ --
-------- --------
TOTAL ASSETS $ -- $ --
======== ========
LIABILITIES AND STOCKHOLDERS' DEFICIT:
Liabilities:
Accounts payable $ 48,873 $ 38,930
Short-term borrowings from shareholders 19,302 16,302
-------- --------
TOTAL LIABILITIES 68,175 55,232
-------- --------
Stockholders' Equity (Deficit):
Preferred stock, $.00001 par value, 10,000,000
shares authorized -- --
Common stock, $.00001 par value, 100,000,000
shares authorized, 4,500,000 shares issued and
outstanding 45 45
Additional paid-in capital 13,455 13,455
Deficit accumulated during the development stage (81,675) (68,732)
-------- --------
Total Stockholders' Deficit (68,175) (55,232)
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ -- $ --
======== ========
The accompanying notes are an integral part of these financial statements.
9
GENESIS COMPANIES GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
Year Ended December 22, 1988
December 31, (Inception to
------------------------ December 31,
2002 2001 2002
--------- --------- ----------------
INCOME $ -- $ -- $ --
OPERATING EXPENSES:
Professional Fees 4,707 6,547 47,935
Registration Fees -- -- 3,668
Administrative Expenses 8,236 5,316 30,072
--------- --------- ----------------
Total Operating Expenses 12,943 11,863 81,675
--------- --------- ----------------
Net Loss from Operations $ (12,943) $ (11,863) $ (81,675)
========= ========= =================
Weighted average number of
shares outstanding 4,500,000 4,500,000 4,500,000
========= ========= =================
Net Loss Per Share $ (*) $ (*) $ (*)
========= ========= =================
* Less than $0.01 per share
The accompanying notes are an integral part of these financial statements.
10
GENESIS COMPANIES GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
(Indirect Method)
Year Ended December 22, 1988
December 31, (Inception to
------------------ December 31,
2002 2001 2002
-------- -------- -----------------
Cash Flows From Operating Activities:
Adjustments to reconcile net loss to net cash
used in operating activities:
Net (Loss) $(12,943) $(11,863) $ (81,675)
Changes in assets and liabilities:
Increase in accounts payables 9,943 11,863 48,873
-------- -------- -----------------
9,943 11,863 48,873
-------- -------- -----------------
Net Cash Used in Operating Activities (3,000) -- (32,802)
-------- -------- -----------------
Cash Flow From Financing Activities:
Short-term borrowings from shareholders 3,000 -- 19,302
Issuance of common stock -- -- 13,500
-------- -------- -----------------
Net Cash Provided By Financing Activities 3,000 -- 32,802
-------- -------- -----------------
Increase (Decrease) in Cash -- -- --
Cash and Cash Equivalents - Beginning of period -- -- --
-------- -------- -----------------
Cash and Cash Equivalents - End of period $ -- -- $ --
======== ======== =================
Supplemental Cash Flow Information:
Interest paid $ -- $ -- $ --
======== ======== =================
Taxes paid $ -- $ -- $ --
======== ======== =================
The accompanying notes are an integral part of these financial statements.
11
GENESIS COMPANIES GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CHANGES IN STOCKHOLKDERS' EQUITY
Deficit
Accumulated
Common Stock Additional During the
------------------ Paid-In Development
Shares Amount Capital Stage Totals
---------- ------ ---------- ----------- ----------
Balance - December 22, 1988 -- $ -- $ -- $ -- $ --
Stock issued for cash - April 14, 1989 113,000 1 149 -- 150
Stock issued for cash - May 12, 1989 1,315,000 13 3,987 -- 4,000
Stock issued for cash - November 10, 1989 2,622,000 26 7,974 -- 8,000
Stock issued for cash - December 5, 1989 450,000 5 1,345 -- 1,350
---------- ------ ---------- ----------- ----------
Balance - December 31, 1989 4,500,000 45 13,455 -- 13,500
---------- ------ ---------- ----------- ----------
Write-off deferred offering costs -- -- -- (10,661) (10,661)
---------- ------ ---------- ----------- ----------
Balance - December 31, 1990 4,500,000 45 13,455 (10,661) 2,839
---------- ------ ---------- ----------- ----------
Net loss for year -- -- -- (1,309) (1,309)
---------- ------ ---------- ----------- ----------
Balance - December 31, 1991 4,500,000 45 13,455 (11,970) 1,530
---------- ------ ---------- ----------- ----------
Net loss for year -- -- -- (10) (10)
---------- ------ ---------- ----------- ----------
Balance - December 31, 1992 4,500,000 45 13,455 (11,980) 1,520
---------- ------ ---------- ----------- ----------
Net loss for year -- -- -- (9) (9)
---------- ------ ---------- ----------- ----------
Balance - December 31, 1993 4,500,000 45 13,455 (11,989) 1,511
---------- ------ ---------- ----------- ----------
Net loss for year -- -- -- (859) (859)
---------- ------ ---------- ----------- ----------
Balance - December 31, 1994 4,500,000 45 13,455 (12,848) 652
---------- ------ ---------- ----------- ----------
Net loss for year -- -- -- (192) (192)
---------- ------ ---------- ----------- ----------
Balance - December 31, 1995 4,500,000 45 13,455 (13,040) 460
---------- ------ ---------- ----------- ----------
Net loss for year -- -- -- (4,988) (4,988)
---------- ------ ---------- ----------- ----------
Balance - December 31, 1996 4,500,000 45 13,455 (18,028) (4,528)
---------- ------ ---------- ----------- ----------
Net loss for year -- -- -- (12,270) (12,270)
---------- ------ ---------- ----------- ----------
Balance - December 31, 1997 4,500,000 45 13,455 (30,298) (16,798)
---------- ------ ---------- ----------- ----------
Net loss for year -- -- -- (6,059) (6,059)
---------- ------ ---------- ----------- ----------
Balance - December 31, 1998 4,500,000 45 13,455 (36,357) (22,857)
---------- ------ ---------- ----------- ----------
Net loss for year -- -- -- (9,901) (9,901)
---------- ------ ---------- ----------- ----------
Balance - December 31, 1999 4,500,000 45 13,455 (46,258) (32,758)
---------- ------ ---------- ----------- ----------
Net loss for year -- -- -- (10,611) (10,611)
---------- ------ ---------- ----------- ----------
Balance - December 31, 2000 4,500,000 45 13,455 (56,869) (43,369)
---------- ------ ---------- ----------- ----------
Net loss for year -- -- -- (11,863) (11,863)
---------- ------ ---------- ----------- ----------
Balance - December 31, 2001 4,500,000 45 13,455 (68,732) (55,232)
---------- ------ ---------- ----------- ----------
Net loss for year -- -- -- (12,943) (12,943)
---------- ------ ---------- ----------- ----------
Balance - December 31, 2002 4,500,000 $ 45 $ 13,455 $ (81,675) $ (68,175)
========== ====== ========== ========== ==========
The accompanying notes are an integral part of these financial statements.
12
GENESIS COMPANIES GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002
NOTE 1 -General
--------
The Company
Genesis Companies Group, Inc. (the Company) was organized as a
Delaware corporation on December 22, 1988, and is primarily engaged in
raising capital.
On or about March 29, 1990, the Company filed a registration statement
on Form S-18 with the Securities and exchange commission, wherein the
company attempted to register 20,000 Units, each Unit consisting of 100
shares of the Company's Common Stock and 100 Class A, Class B, and
Class C Common Stock Purchase Warrants. The company prior to
effectiveness subsequently voluntarily abandoned this registration
statement. Other than filing of the aforesaid registration statements,
the only activities undertaken by the Company since its inception has
been the issuing of 4,500,000 shares of the Company's Common Stock to
its original shareholders, which stock was issued in exchange for
aggregate cash consideration of $13,500. Each shareholder of the
Company has executed and delivered a "lock-up" letter agreement,
affirming that they shall not sell their respective shares of the
Company's Common Stock until such time as the Company has successfully
consummated a merger or acquisition has been consummated. Also, each
shareholder has agreed to place their respective stock certificates
with the Company's legal counsel who will not release these respective
certificates until such time as legal counsel has confirmed that a
merger or acquisition has been successfully consummated.
The Company's fiscal year end is December 31.
NOTE 2 -Summary of Significant Accounting Policies:
-------------------------------------------
Basis of Presentation
Development Stage Company
The Company has not earned significant revenue from planned principal
operations. Accordingly, the Company's activities have been accounted
for as those of a "Development Stage Enterprise" as set forth in
Financial Accounting Standards Board Statement No. 7 ("SFAS 7"). Among
the disclosures required by SFAS 7 are that the Company's financial
statements be identified as those of a development stage company, and
that the statements of operations, stockholders' equity (deficit) and
cash flows disclose activity since the date of the Company's inception.
Estimates:
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management
to make estimates and assumptions that affect certain reported amounts
and disclosures. Accordingly, actual results could differ from those
estimates.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considered
all cash and other highly liquid investments with initial maturities
of three months or less to be cash equivalents.
13
GENESIS COMPANIES GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002
NOTE 2 -Summary of Significant Accounting Policies: (Continued)
--------------------------------------------------------
Income Taxes
The Company accounts for income taxes under SFAS No. 109, which
requires the asset and liability approach to accounting for income
taxes. Under this method, deferred tax assets and liabilities are
measured based on differences between financial reporting and tax bases
of assets and liabilities measured using enacted tax rates and laws
that are expected to be in effect when differences are expected to
reverse.
Net (Loss) Per Common Share:
The net (loss) per common share of the Series A Common Stock is
computed based on the weighted average number of shares outstanding.
Other Comprehensive Income
The Company has no material components of other comprehensive income
(loss) and accordingly, net loss is equal to comprehensive loss in all
periods.
NOTE 3 - Income Taxes:
--------------
The Financial Accounting Standards Board (FASB) has issued Statement of
Financial Accounting Standards Number 109 ("SFAS 109"), "Accounting for
Income Taxes", which requires a change from the deferred method to the
asset and liability method of accounting for income taxes. Under the
asset and liability method, deferred income taxes are recognized for
the tax consequences of "temporary differences" by applying enacted
statutory tax rates applicable to future years to differences between
the financial statement carrying amounts and the tax basis of existing
assets and liabilities.
The Company has deferred income tax assets, which have been fully
reserved as follows:
Deferred tax assets
Net operating loss carryforwards $81,675
Valuation allowance for deferred tax assets (81,675)
-------
Net deferred tax assets $ -
=======
At December 31, 2002, the Company had net operating loss carryforwards
of approximately $81,675 for federal income tax purposes. These
carryforwards, if not utilized to offset taxable income will expire at
the end of the December 31, 2003.
14
GENESIS COMPANIES GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002
NOTE 4 - Related Party Transactions:
-----------------------------
Short term borrowing from shareholders
The Chairman and other executive officers of the Company provided
services and advanced cash to the Company for operations. Certain of
these transactions resulted in notes being issued to the Chairman and
certain executive officers, which were still outstanding at December
31, 2002. Notes payable to officers are unsecured and bare interest at
8%.
NOTE 5 - Going Concern
---------------
The accompanying financial statements have been prepared in conformity
with accounting principles generally accepted in the United States,
which contemplates continuation of the Company as a going concern. The
Company has no cash and its current liabilities exceed current assets
by $68,175.
The future success of the Company is likely dependent on its ability to
attain additional capital, or to find an acquisition to add value to
its present shareholders and ultimately, upon its ability to attain
future profitable operations. There can be no assurance that the
Company will be successful in obtaining such financing, or that it will
attain positive cash flow from operations. Management believes that
actions presently being taken to revise the Company's operating and
financial requirements provide the opportunity for the Company to
continue as a going concern.
15
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT.
Directors are elected for one-year terms or until the next annual meeting
of shareholders and until their successors are duly elected and qualified.
Officers continue in office at the pleasure of the Board of Directors.
Our Directors and Officers as of the date of this report are as follows:
Name Age Position
---- --- --------
Wm. Ernest Simmons 64 President, Treasurer and
Director
Frances I. Simmons 64 Secretary and Director
All Directors of our Company will hold office until the next annual meeting
of the shareholders and until successors have been elected and qualified. Our
Officers are elected by the Board of Directors and hold office until their death
or until they resign or are removed from office.
Frances I. Simmons is the wife of Wm. Ernest Simmons. There is no
arrangement or understanding between us (or any of our directors or officers)
and any other person pursuant to which such person was or is to be selected as a
director or officer.
(b) Resumes:
Wm. Ernest Simmons currently is, and has been since inception of our
Company in 1988, the President and a Director of our Company. He was appointed
to the position of Treasurer on December 31, 2000, to fill the vacancy created
by the resignation of Harry G. Titcombe, Jr. From December 1991 through December
1999, he was also the President and director of Yaak River Resources, Inc., a
publicly traded company engaged in the mining business. In addition to his
service to us, Mr. Simmons is also currently a consultant for the ER-SHI-JU
Company, Ltd., Mongolia and the "Bornuur" Company, both of which have common
interests in a large agricultural project in north central Mongolia. From
December 1997 until March 1999, Mr. Simmons was a consultant/operations manager
to Itec Minerals, a Canadian firm employing advanced technology to purge mined
sites and waste disposal areas of their contaminants. From January 1995 through
May 1998, Mr. Simmons was Director-General of the "Bumbat" Company Ltd., Zaamar
Sum, Mongolia, a Mongolian-Canadian joint venture mining operation where his
responsibilities included acquisitions and mobilization of all equipment and
supplies, preparation and construction of mill sites and mining site operations
and other managerial matters associated with the exploration and development of
hard rock gold mines. From February 1991 through July 1994, Mr. Simmons was a
life and health insurance agent in Denver, Colorado with New York Life Insurance
Company. From 1978 to 1990, Mr. Simmons served as
16
Manager of U.S. Operations for Mining Corporation, Inc., of Lakewood, Colorado.
From February 1987 through December 1989, Mr. Simmons was president and a
director of Bluestone Capital, Inc., a publicly held "blind pool" Colorado
corporation. From March, 1986 through July, 1994, Mr. Simmons was president and
a director of Yaak River Mines, Ltd., a Colorado corporation also defined as a
public "shell" company. Mr. Simmons received a Bachelor's of Science Degree in
Business Administration from Regis University, Denver, Colorado, in 1987 and
received the Degree of Mining Technologist from Haileybury School of Mines in
1973. Mr. Simmons devotes approximately 20 hours per month to our business.
Frances I. Simmons has been Secretary and a director of our Company since
December 31, 2000, at which time she was appointed to fill the vacancies created
in those positions by the resignation of Harry G. Titcombe, Jr. Mrs. Simmons has
been a retired registered nurse in excess of five years. For the twenty years
prior to her retirement, she held administrative positions in accounting and
payroll departments of hospitals in Canada and for Minina Corporation, Inc.,
Noranda Exploration, Breast Imaging and an allergy clinic in the United States.
Mrs. Simmons obtained her registered nursing certification from St. Mary's
Hospital, Timmins, Ontario, Canada, in 1960. Mrs. Simmons devotes approximately
20 hours per month to our business.
Section 16(a) of the Securities Exchange Act of 1934 requires our officers,
directors and persons who own more than 10% of our Common Stock to file reports
of ownership and changes in ownership with the Securities and Exchange
Commission. All of the aforesaid persons are required by SEC regulation to
furnish us with copies of all Section 16(a) forms they file. There were no
changes in the securities holdings of any person during the fiscal year ended
December 31, 2002, as all issued and outstanding share certificates issued by us
are presently held in escrow with our legal counsel until such time as we
successfully consummate a merger or acquisition.
ITEM 10. EXECUTIVE COMPENSATION.
Remuneration
The following table reflects all forms of compensation for services to us
for the fiscal years ended December 31, 2002 and 2001 of our chief executive
officer.
SUMMARY COMPENSATION TABLE
Long Term Compensation
---------------------------------
Annual Compensation Awards Payouts
---------------------- ------------------------ -------
Other
Annual Restricted Securities All Other
Name and Compen- Stock Underlying LTIP Compen-
Principal Salary Bonus sation Award(s) Options/SARs Payouts sation
Position Year ($) ($) ($) ($) (#) ($) ($)
- ---------- ---- ------ ----- ------- ---------- ------------ ------- ---------
Wm. Ernest 2002 $ 0 $ 0 $ 0 $ 0 0 $ 0 $ 0
Simmons, 2001 $ 0 $ 0 $ 0 $ 0 0 $ 0 $ 0
President,
Treasurer &
Director
17
It is not anticipated that any executive officer will receive compensation
exceeding $100,000 during the fiscal year ending December 31, 2003, except in
the event we successfully consummate a business combination, of which there is
no assurance.
We maintain a policy whereby our directors may be compensated for out of
pocket expenses incurred by each of them in the performance of their relevant
duties. We did not reimburse any director for such expenses during fiscal years
2002 or 2001.
In addition to the cash compensation set forth above, we reimburse each
executive officer for expenses incurred on our behalf on an out-of-pocket basis.
We cannot determine, without undue expense, the exact amount of such expense
reimbursement. However, we believe that such reimbursements did not exceed, in
the aggregate, $1,000 during the fiscal year ended December 31, 2002.
Incentive Stock Option Plan
We have adopted an incentive stock option plan for key employees, including
officers and directors (the "Plan"). We have reserved a maximum of 2,500,000
Common Shares to be issued upon the exercise of options granted under the Plan.
The Plan is intended to qualify as an "incentive stock option plan" under
Section 422A of the Internal Revenue Code of 1986, as amended. Accordingly,
options will be granted under the Plan at exercise prices at least equal to the
fair market value per share of the Common Stock on the respective dates of grant
and will be subject to the limitations provided by the Code. However, options
may be granted to officers and/or directors or others who own more than 10% of
the outstanding Common Stock only at an option price which, on the date granted,
is at least 110% of the fair market value of the Common Stock. With respect to
options granted pursuant to Section 422A, employees will not recognize taxable
income upon either the grant or exercise of such options. We will not be
entitled to any compensating deduction with respect to such options unless
disqualifying dispositions, as defined by such law, are made. The Plan is
administered by the Board of Directors. No options have been granted under the
Plan as of the date of this report and no options will be granted until such
time as we have successfully consummated a business combination.
No other retirement, pension, profit sharing, stock option or insurance
programs or other similar programs have been adopted by us for the benefit of
our employees.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
(a) and (b) Security Ownership of Certain Beneficial Owners and Management.
The table below lists the beneficial ownership of our voting securities by
each person known by us to be the beneficial owner of more than 5% of such
securities, as well as by all of our directors and officers. Unless otherwise
indicated, the shareholders listed possess sole voting and investment power with
respect to the shares shown.
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Amount and Nature of
Name and Address Beneficial Percent
Title of Class of Beneficial Owner Ownership of Class
- -------------- ------------------- --------- --------
Common Wm. Ernest Simmons (1) 1,206,000 26.8%
830 S. Kline Way
Lakewood, Colorado 80226
Common Frances I. Simmons (1) 0 *
830 S. Kline Way
Lakewood, Colorado 80226
Common Harry G. Titcombe, Jr. 1,206,000 26.8%
3932 South Atchison Way #E
Aurora, Colorado 80014
Common Susan K. Sunsvold 1,000,000 22.2%
5121 S. Ironton Way
Englewood, Colorado 80111
Common Heather E. Nutting 315,000 7.0%
9035 W. 5th Place
Lakewood, Colorado 80226
Common John D. Brasher, Jr. 283,500 6.3%
3773 Cherry Creek Drive No.
Suite 615
Denver, Colorado 80209
Common All Officers and Directors
as a Group 1,206,000 28.8%
(2 persons)
- ---------------------
* Less than 1%
(1) Officer and director as of the date of this report.
The balance of our outstanding Common Shares are held by 3 persons.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Wm. Ernest Simmons, the President, Treasurer and a director of our Company,
has loaned us an aggregate of $19,302 to cover general and administrative costs
incurred by us. This loan is expected to be repaid when we successfully
consummate a merger or acquisition, if such funds are available. The loan
accrues interest at the rate of 8% per annum and is due upon demand.
19
Mr. Simmons also provides us with our principal office space, which space
is provided to us on a rent free basis.
There were no other related party transactions which occurred during the
past two years and which are required to be disclosed pursuant to the
requirements included under Item 404 of Regulation SB.
PART IV
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
--------
3.1* Certificate and Articles of Incorporation and Amendments thereto.
3.2* Bylaws
4.1* Copies of All Lock-up Agreements by the Company's Shareholders
99.2 Certification of Financial Statements in Accordance With Sarbanes-
Oxley Act of 2002
- -----------------------
* Filed with the Securities and Exchange Commission in the Exhibits to Form
10-SB, filed on February 15, 1995, and are incorporated by reference herein.
(b) Reports on Form 8-K
We did not file any reports on Form 8-K during the last calendar quarter of
the fiscal year ended December 31, 2002.
ITEM 14. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
- ------------------------------------------------
Disclosure controls and procedures are designed to ensure that information
required to be disclosed in the reports filed or submitted under the Exchange
Act of 1934 is recorded, processed, summarized and reported, within the time
periods specified in the rules and forms of the Securities and Exchange
Commission. Disclosure controls and procedures include, without limitation,
controls and procedures designed to ensure that information required to be
disclosed in the reports filed under the Securities Exchange Act of 1934 is
accumulated and communicated to management, including our Chief Executive
Officer and Chief Financial Officer, as appropriate, to allow timely decisions
regarding required disclosure.
Within the 90 days prior to the filing date of this report, we carried
out an evaluation of the effectiveness of the design and operation of our
disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. This
evaluation was done under the supervision and with the participation
20
of our Principal Executive Officer, who is also our Principal Financial Officer.
Based upon that evaluation, they concluded that our disclosure controls and
procedures are effective in gathering, analyzing and disclosing information
needed to satisfy our disclosure obligations under the Exchange Act.
Changes in Internal Controls
- ----------------------------
There were no significant changes in our internal controls or in other
factors that could significantly affect those controls since the most recent
evaluation of such controls.
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SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act
of 1934, the Company caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, on March 31, 2003
GENESIS COMPANIES GROUP, INC.
(Registrant)
By: s/Wm. Ernest Simmons
--------------------------------------
Wm. Ernest Simmons,
President and Treasurer
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities
indicated on March 31, 2003.
s/Wm. Ernest Simmons
- ----------------------------------
Wm. Ernest Simmons,
President, Treasurer and Director
s/Frances I. Simmons
- ----------------------------------
Frances I. Simmons
Secretary and Director
CERTIFICATIONS
I, Wm. Ernest Simmons, certify that:
1. I have reviewed this annual report on Form 10-KSB of Genesis Companies
Group, Inc.;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements made, in light of the
circumstances under which such statements were made, not misleading
with respect to the period covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all
material respects the financial
22
condition, results of operations and cash flows of the Registrant as
of, and for, the periods presented in this annual report;
4. I am responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14)
for the Registrant and have:
a. designed such disclosure controls and procedures to ensure that
material information relating to the Registrant, including its
consolidated subsidiaries, is made known to me/us by others
within those entities, particularly during the period in which
this annual report is being prepared;
b. evaluated the effectiveness of the Registrant's disclosure
controls and procedures as of a date within ninety (90) days of
the filing date of this annual report (the "Evaluation Date");
and
c. presented in this annual report my conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. I have disclosed, based on my most recent evaluation, to the
Registrant's auditors and the Audit Committee of the Registrant's
Board of Directors (or persons performing the equivalent function):
a. all significant deficiencies in the design or operation of
internal controls which could adversely affect the Registrant's
ability to record, process, summarize and report financial data
and have identified for the Registrant's auditors any material
weakness in internal controls; and
b. any fraud, whether or not material, that involves management or
other employees who have a significant role in the Company's
internal controls; and
6. I have indicated in this annual report whether or not there were
significant changes in internal controls or in other factors that
could significantly affect internal controls subsequent to the date of
my most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Dated: March 31, 2003 s/Wm. Ernest Simmons
-----------------------------------------
Wm. Ernest Simmons,
Chief Executive Officer and
Chief Financial Officer
23
GENESIS COMPANIES GROUP, INC.
EXHIBIT INDEX TO ANNUAL REPORT ON FORM 10-KSB
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002
EXHIBITS Page No.
- -------- --------
99.2 Certification of Financial Statements in Accordance with
Sarbanes-Oxley Act of 2002 25
24