UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2005
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 000-50956
LAWRENCE CONSULTING GROUP, INC.
(Name of small business issuer as specified in its charter)
20-0653570
Delaware (I.R.S. Employer
Identification No.)
(State of Incorporation)
373 Mendez Vigo
Suite 110
Dorado, Puerto Rico 00646
(Address of principal executive offices)
787-278-2709
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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.
[ X ] yes [ ] no
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act).
[ ] yes [ X ] no
The number of shares outstanding of the registrant's Common Stock as of
February 10, 2006 was 2,301,800. All share and per share information reflects
the two-for-one stock distribution on January 24, 2006.
1
LAWRENCE CONSULTING GROUP, INC.
FORM 10-QSB
FOR THE QUARTER ENDED DECEMBER 31, 2005
TABLE OF CONTENTS
Page
Numbers
PART I -FINANCIAL INFORMATION
Item 1 Financial Statements
Consolidated Balance Sheets as of December 31, 2005
(unaudited) and June 30, 2005 3
Consolidated Statements of Operations for the three and six
months ended December 31, 2004 and 2005 (unaudited) 4
Consolidated Statements of Cash Flows for the six
months ended December 31, 2004 and 2005 (unaudited) 5
Notes to Financial Statements (unaudited) 6
Item 2 - Management's Discussion and Analysis or Plan of Operation 9
Item 3 - Controls and Procedures 12
PART II OTHER INFORMATION
Item 6 - Exhibits 13
Signatures 14
2
Lawrence Consulting Group, Inc.
Consolidated Balance Sheets
December 31, 2005 June 30, 2005
(unaudited)
------------------ ---------------
ASSETS
CURRENT ASSETS
CASH $ 4,397 $ 46,423
ACCOUNTS RECEIVABLE 5,900 2,800
---------------- ---------------
TOTAL CURRENT ASSETS $ 10,297 $ 49,223
================ ===============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
CURRENT LIABILITIES
ACCRUED LIABILITIES $ 35,392 $ 4,450
--------------- ---------------
STOCKHOLDERS' EQUITY (DEFICIENCY)
PREFERRED STOCK, $0.0001 PAR VALUE,
AUTHORIZED 2,000,000 SHARES, ISSUED-NONE - -
COMMON STOCK, $0.0001 PAR VALUE,
AUTHORIZED 10,000,000 SHARES,
ISSUED AND OUTSTANDING 551,800 SHARES
AS OF DECEMBER 31, 2005, AND 55 55
JUNE 30, 2005
ADDITIONAL PAID IN CAPITAL 76,845 76,845
ACCUMULATED DEFICIT (101,995) (32,127)
---------------- -------------
TOTAL STOCKHOLDERS' EQUITY (DEFICIENCY) (25,095) 44,773
---------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' $ 10,297 $ 49,223
EQUITY ================ =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL
PART OF THESE FINANCIAL STATEMENTS
3
Lawrence Consulting Group, Inc.
Consolidated Statements of Operations
(unaudited)
Three months ended Six months ended
------------------- ----------------
December 31, 2005 December 31, 2004 December 31, 2005 December 31, 2004
---------------- ------------------ ----------------- ----------------
Revenues:
CONSULTING INCOME $ 9,900 $ 3,000 $ 18,900 $ 4,000
OTHER INCOME - (100) - 15
---------- ------------ ----------- ------------
TOTAL REVENUES $ 9,900 $ 2,900 $ 18,900 $ 4,015
General and Administrative
Expenses 63,610 15,391 88,768 17,046
---------- ------------ ----------- ------------
NET LOSS $ (53,710) $(12,491) $(69,868) $(13,301)
---------- ------------ ----------- ------------
---------- ------------ ----------- ------------
LOSS PER COMMON SHARE
BASIC AND DILUTED $ (0.10) $ (0.02) $ (0.13) $ (0.02)
---------- ------------ ----------- ------------
---------- ------------ ----------- ------------
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES
OUTSTANDING AND DILUTED 551,800 551,800 551,800 517,498
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL
PART OF THESE FINANCIAL STATEMENTS
4
Lawrence Consulting Group, Inc.
Consolidated Statements of Cash Flow
(UNAUDITED)
SIX MONTHS ENDED
------------------
December 31, 2005 December 31, 2004
------------------ ------------------
CASH FLOWS FROM OPERATING ACTIVITIES
NET LOSS $ (69,868) $ (13,031)
Adjustments to reconcile net loss to
net cash used in operating activities:
Changes in asset and liability balances:
Accounts receivable (3,100) (2,000)
Accrued Liabilities 30,942 (5,917)
-------------- -------------
NET CASH USED IN OPERATING ACTIVITIES $ (42,026) $ (20,948)
-------------- -------------
NET CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock - 50,900
Proceeds from Common Stock
subscription receivable - 25,000
-------------- --------------
NET CASH PROVIDED BY FINANCING ACTIVITIES - 75,900
-------------- --------------
NET INCREASE (DECREASE) IN CASH $ (42,026) $ 54,952
CASH - beginning of period 46,423 942
------------- ---------------
CASH - end of period $ 4,397 $ 55,894
-------------- ---------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL
PART OF THESE FINANCIAL STATEMENTS
5
Lawrence Consulting Group, Inc.
Notes to Financial Statements
DECEMBER 31, 2005
(Unaudited)
NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited consolidated financial statements and footnotes
have been condensed and therefore do not contain all disclosures required by
accounting principles generally accepted in the United States of America. In the
opinion of management, the information furnished reflects all adjustments,
consisting of normal recurring adjustments, necessary to present fairly the
financial position, results of operations and cash flows for the interim
periods. Interim periods are not necessarily indicative of results for a full
year.
These financial statements should be read in conjunction with the audited
financial statements of the Company for the year ended June 30, 2005 and the
notes thereto contained in the Company's Annual Report on Form 10-KSB, as filed
with the Securities and Exchange Commission on September 28, 2005, as amended on
December 14, 2005 and December 19, 2005.
Organization and Operations
Lawrence Consulting Group, Inc. ("Lawrence") was organized under the laws
of the State of Delaware on January 14, 2004. Lawrence offers consulting and
business advisory services. As of December 31, 2005, Lawrence had entered into
consulting agreements with three clients. Lawrence's clients are currently
located in New York and Florida.
On September 26, 2005, Plaza Acquisition Corp. ("Acquisition Company") was
formed in the Commonwealth of Puerto Rico and became a wholly-owned subsidiary
of Lawrence in October 2005. Acquisition Company was formed as a vehicle to
acquire Plaza.
Basis of Consolidation
The accompanying financial statements present the accounts of Lawrence and
Acquisition Company (collectively, the "Company"). All intercompany transactions
and balances have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from these
estimates. Significant estimates made by management include the valuation of the
deferred tax asset allowance.
Fair Value of Financial Instruments
The amounts at which current assets and current liabilities are presented
approximate their fair value due to their short-term nature.
Revenue Recognition
The Company's consulting agreements require monthly fees and/or hourly
fees. These fees are recognized as revenue as services are rendered.
Accounts Receivable
Accounts receivable are recorded at their estimated realizable value. An
allowance for doubtful accounts is estimated by management through evaluation of
significant past due accounts. Accounts are deemed past due when payment has not
been received within the stated time period. The Company's policy is to review
individual past due amounts periodically and write off amounts for which all
collection efforts are deemed to have been exhausted.
6
Income Taxes
The Company follows the provisions of Statement of Financial Accounting
Standards Board No. 109, "Accounting for Income Taxes," which requires the use
of the liability method of accounting for income taxes. The liability method
measures deferred income taxes by applying enacted statutory rates in effect at
the balance sheet date to the differences between the tax basis of assets and
liabilities and their reported amounts on the financial statements. The
resulting deferred tax assets or liabilities are adjusted to reflect changes in
tax laws as they occur. A valuation allowance is provided when it is more likely
than not that a deferred tax asset will not be realized.
Loss Per Common Share
Basic loss per common share is calculated by dividing net loss by the
weighted average number of shares of common stock outstanding. Diluted loss per
share includes the dilution of common stock equivalents. Stock warrants have not
been included in the calculation of diluted loss per share, as the effect would
have been antidilutive and the warrants were not exercisable during the period
covered by these financial statements as the Company's common stock was not
trading at or above $0.50 per share. Accordingly, basic and dilutive loss per
share are the same for the Company. All share and per share data give
retroactive effect to the stock distribution discussed in Note G.
Three months ended Six months ended
------------------- ----------------
December 31, 2005 December 31, 2004 December 31, 2005 December 31, 2004
---------------- ------------------ ----------------- ----------------
Basic $ (0.10) $ (0.02) $ (0.13) $ (0.02)
Diluted $ (0.10) $ (0.02) $ (0.13) $ (0.02)
NOTE B - CAPITAL TRANSACTIONS
On January 15, 2004, the Company sold 2,000,000 shares of common stock
to its founders for a total of $1,000, or ($0.0005 per share). The Company
was recapitalized as of January 16, 2004, and the Company issued to the
founders 400,000 shares of Common Stock and warrants to purchase 1,600,000
shares of common stock at $0.06 per share. The Company allocated the $1,000
purchase price 80% to the warrants and 20% to the common stock. The
warrants are exercisable at $0.06 per share and expire on January 16, 2014.
The warrants are not exercisable until the earlier of (i) September 1, 2007
or (ii) the date on which the closing price of the shares of the Company's
common stock has equaled or exceeded $0.50 per share on the NASDAQ Bulletin
Board, NASDAQ National Market System or on the American or New York Stock
Exchange for at least ten (10) consecutive trading days.
On March 1, 2004, the Company sold 50,000 shares for $0.50 per share for a
$25,000 promissory note which was paid on August 20, 2004.
On August 31, 2004, the Company sold 111,800 shares of common stock at
$0.50 per share in a private placement.
7
NOTE C - INCOME TAXES
Deferred tax assets and liabilities are determined using enacted tax rates
for the effects of net operating losses and temporary differences between the
book and tax bases of assets and liabilities. The Company records a valuation
allowance on deferred tax assets to reflect the expected future tax benefits to
be realized. In determining the appropriate valuation allowance, certain
judgments are made relating to recoverability of deferred tax assets, uses of
tax loss carry forwards, level of expected taxable income and available tax
planning strategies. These judgments are routinely reviewed by management. At
December 31, 2005 and December 31, 2004, the Company had net operating loss
carryforwards of $101,995 and $ 23,806, respectively, available to reduce future
taxable income expiring through 2024. These losses are subject to limitations
imposed under the Internal Revenue Code pursuant to Sections 382 and 383
regarding changes in ownership. Management has determined that it is more likely
than not that these carryforwards cannot be utilized in the future, and,
accordingly, the tax asset of $ 42,838 and $9,998 has been fully reserved as of
December 31, 2005 and December 31, 2004, respectively. A reconciliation of the
statutory income tax effective rate to the actual provision shown in the
financial statements is as follows:
For the six months ended
---------------------------------------------
December 31, 2005 December 31, 2004
-------------------- -------------------
Loss before income taxes ($69,868) ($13,301)
--------- ---------
--------- ---------
Computed tax benefit at
statutory rate:
Federal ($23,755) (34%) ($4,522) (34%)
State (5,589) (8%) (1,064) (8%)
Net Operating Loss
Valuation reserve 29,344 42% 5,586 (42%)
-------- ------ -------- ---------
Total tax benefit $ -- -% $ -- $ --%
-------- ------- --------- ---------
-------- ------- --------- ---------
8
NOTE D - RELATED PARTY TRANSACTIONS
During 2004 and through September 30, 2005, the Company utilized the office
space provided by its president at no cost to the Company. No rent was paid
during these periods because the Company had very limited use of the space and
no specific office space was allocated to the Company. Beginning October 1,
2005, the Company began to sublease space at fair value from an entity
affiliated with its president. The sublease was month-to-month through January,
2006. Also beginning October 1, 2005, the Company began to reimburse an
affiliate of its president the cost of certain office expenses incurred by the
Company.
In March 2004, the Company entered into an agreement with Krovim, LLC
("Krovim"), a principal stockholder of the Company, whereby Krovim agreed to
lend the Company up to a maximum of $25,000 at prime plus 2% per annum. No
drawdowns have been made to date and there are no formal repayment terms. The
agreement has been terminated.
The president of Rivkalex Corp., a client of the Company, owns 18.8% of the
Company's common stock. Revenue from Rivkalex were not significant.
NOTE E - COMMITMENTS
On August 20, 2004, the Company entered into a three year employment
agreement with its president, which shall be extended from year to year after
the initial term. The president, who was, until the reverse acquisition, the
Company's only officer, does not receive any cash compensation from the Company
for his services until the Company's annualized revenues exceed $500,000 on a
quarterly basis. At such time, the president shall be entitled to receive a
salary of $50,000 per annum.
In October 2005, the Company's board of directors adopted the 2005
Long-Term Incentive Plan, covering 2,500,000 shares of common stock. The 2005
plan provides for the grant of incentive and non-qualified options, stock
grants, stock appreciation rights and other equity-based incentives to
employees, including officers, and consultants. The 2005 Plan is to be
administered by a committee of independent directors. In the absence of a
committee, the plan is administered by the board of directors. Independent
directors are not eligible for discretionary options. However, each newly
elected independent director receives at the time of his or her election, a
five-year option to purchase 25,000 shares of common stock at the market price
on the date of his or her election. In addition, the plan provides for the
annual grant of an option to purchase 5,000 shares of common stock on the first
trading day of January in each year, commencing January 2007. The options to
directors have a term of five years and become exercisable cumulatively as to
50% of the shares subject to the option six months from the date of grant and as
to the remaining 50% 18 months from the date of grant. Options intended to be
incentive stock options must be granted at an exercise price per share which is
not less than the fair market value of the common stock on the date of grant and
may have a term which is not longer than ten years. If the option holder holds
10% of our common stock, the exercise price must be at least 110% of the fair
market value on the date of grant and the term of the option cannot exceed five
years.
NOTE F - CONCENTRATION OF RISKS
The Company's cash balances are maintained in a high quality bank checking
account. Management deems all its accounts receivables to be fully collectible,
and, as such, does not maintain any allowances for uncollectable receivables.
9
NOTE G - SUBSEQUENT EVENTS
1. On January 24, 2006, the Company effected a two-for-one share
distribution with respect to its common stock pursuant to which the Company
issued one share of common stock for each share outstanding on the record date,
January 24, 2006.
2. On January 25, 2006, the Company acquired Plaza as a result of the
merger of Acquisition Company into Plaza. The acquisition of Plaza was completed
in a transaction accounted for as a reverse acquisition. As a result of the
reverse acquisition, the business conducted by Plaza became the Company's sole
business activity. Plaza provides consulting services to the pharmaceutical and
related industries in Puerto Rice. Plaza assists clients to comply with
government regulations by offering a full range of consulting services in the
areas of: validation and qualification, technology transfer and post-approval
changes, technical documentation, environmental safety and occupational health,
microbiology/bio-control, process support and project management, compliance and
regulatory, training services and computer systems.
Pursuant to the agreement, Elizabeth Plaza, as the sole stockholder, of
Plaza, received:
- $10,000,000 cash at the closing;
- 1,150,000 shares of the Company's common stock at the closing; and
- The right to receive three payments, each in the amount of $2,750,000,
payable on the first, second and third anniversaries of the closing
date.
As a condition to closing, Plaza was required to have a net tangible book
value of not less than $5,500,000, of which at least $2,000,000 was in cash, as
of November 30, 2005.
The Company raised the funds necessary to make the $10,000,000 payment due
to Ms. Plaza through the private placement of units consisting of shares of a
newly-created series of Series A convertible preferred stock and warrants to
purchase common stock (the "Private Placement").
At the closing, all of the present officers and directors of the Company
resigned from their respective positions, except that Mr. Dov Perlysky, who was
president and a director of the Company, resigned as an officer, but continued
as a director. At the closing, the Company elected four directors, including Ms.
Plaza. The other three are independent directors.
Pursuant to the Plaza Agreement, all outstanding options issued by Plaza
were terminated, and the Company granted incentive stock options to purchase an
aggregate of 1,400,000 shares of common stock at an exercise price of $0.7344
per share to the holders of such terminated Plaza options, pursuant to the
Company's 2005 Long-Tern Incentive Plan (described below). These options are
subject to stockholder approval of the 2005 Long Term Incentive Plan.
Pursuant to the Plaza Agreement, at the closing, the Company issued 600,000
shares of common stock and warrants to purchase 2,500,000 shares of common stock
with an exercise price of $.06 per share to San Juan Holdings, Inc., the
investment banker for Plaza and Ms. Plaza. The Company provided certain demand
and piggyback registration rights to Ms. Plaza and San Juan Holdings covering
the shares of common stock issued to them at the closing and the shares issuable
upon exercise of the warrants issued to San Juan Holdings.
Valuing the common stock issued to Plaza and San Juan Holdings, Inc.
("SJH") at $0.7344 per share and imputing a 7% interest rate on the three future
payments due Ms. Plaza ("the Future Payments") yields a value of the
consideration issued by the Company pursuant to the Plaza Agreement as follows:
$18,069,560 ($10 million cash plus $844,560 worth of common stock plus
$7,225,000 present value of the Future Payments at 7%) and $2,126,640 paid to
SJH ($440,640 worth of common stock plus $1,686,000 for the warrant to purchase
2,500,000 shares of common stock at $0.06/share).
10
The following condensed balance sheet summarizes the assets, liabilities
and shareholders' equity of Plaza as of November 30, 2005. The actual balance
sheet of Plaza as of the closing (January 25, 2006) differs from the balance
sheet shown below because under the terms of the Plaza Agreement (i) at closing
Plaza must have a tangible net worth of no less than $5.5 million, of which at
least $2 million must be cash, and (ii) the Economic Effective Date (as such
term is defined in the Plaza Agreement) of the merger is November 30, 2005 which
means no income or loss of Plaza is allocated to Ms. Plaza for any period
subsequent to November 30, 2005. Thus, Plaza will have a tangible net worth as
of January 25, 2006 equal to $5.5 million (of which at least $2 million will be
cash) plus an amount equal to the income or loss earned by Plaza during the
period December 1, 2005 through January 25, 2006.
Plaza Consulting Group, Inc.
Condensed Balance Sheet as of November 30, 2005
(unaudited) ($ thousands)
Assets
Cash $1,819
Accounts Receivable 5,275
Other assets 478
-------
Total Assets $7,572
-------
-------
Liabilities and Stockholders' Equity
Accounts Payable $648
Other liabilities 238
Total liabilities $886
Stockholders' Equity $6,686
------
Total liabilities and Stockholders' Equity $7,572
------
------
As a result of the reverse acquisition accounting treatment, Plaza is
deemed to be the acquiring company for accounting purposes. As a result,
commencing with the quarter ending March 31, 2006, the Company's historical
financial statements will be those of Plaza.
Each share of series A preferred stock sold in the Private Placement
automatically converts into 13.616 shares of common stock upon the filing of a
certificate of amendment to our certificate of incorporation which increases the
authorized capital stock to 10,000,000 shares of preferred stock and 50,000,000
shares of common stock. The board of directors has approved such an amendment,
subject to stockholder approval.
The holders of the series A preferred stock have no dividend rights, except
that, if a dividend is declared with respect to the common stock, the holders of
the series A preferred stock shall be entitled to dividends on the preferred
stock on an "as if converted" basis.
11
In connection with the Private Placement, the Company issued warrants to
purchase 3,999,700 shares of common stock at an exercise price of $1.10 per
share and warrants to purchase an additional 3,999,700 shares of common stock at
an exercise price of $1.65 per shares. These warrants expire five years from the
closing date and are callable by the Company if the closing price of the common
stock is at least twice the exercise price of the warrants for twenty (20)
consecutive trading days. The warrants are not exercisable until the amendment
to the Company's certificate of incorporation increasing the number of
authorized shares of the Company's common stock has been approved by the
Company's stockholders and filed with the Secretary of State of the State of
Delaware.
At the closing of the Plaza Agreement, the Company issued to broker-dealers
who assisted the Company in the Private Placement, three-year warrants to
purchase an aggregate of 1,439,892 shares of common stock at an exercise price
of $0.7344 per shares. The holders of the warrants have piggyback registration
rights for the common stock issuable upon exercise of the warrants, which will
include a standard underwriters' right to exclude shares, commencing six months
after the effective date of the registration statement relating to the shares
issuable upon conversion of the series A preferred stock issued to the investors
in the Private Placement.
On January 25, 2006, the Company entered into employment agreements with
Elizabeth Plaza and Nelida Plaza. The agreement with Elizabeth Plaza provides
that Ms. Plaza will serve as president and chief executive officer of the
Company for a period of 18 months, for which she will receive a salary at the
annual rate of $250,000. For 18 months thereafter, Ms. Plaza will serve as a
consultant for which she will receive compensation at the annual rate of
$75,000. During the term of her employment, the Company will also provide Ms.
Plaza with an automobile allowance at the annual rate of $24,828, discretionary
bonuses and stock options or other equity-based incentives as shall be
determined by the compensation committee's board of directors, except that her
bonus shall not be less than 4% nor more than 50% of her salary. If the Company
terminates Ms. Plaza's employment other than for cause or as a result of her
death or disability, we are required to pay Ms. Plaza the balance of her
compensation for her employment terms and her consulting term and other
benefits, including a pro rata portion of the bonus that would have been paid to
her, and her obligations under her non-competition provision terminate.
The Company's agreement with Nelida Plaza provides that Ms. Plaza will
serve as vice president for a term of three years for which she will receive
annual compensation at the annual rate of $150,000. She is also entitled to such
bonus compensation as is determined by the compensation committee, not to exceed
50% of her salary. The Company also agreed to make the lease payments on the
automobile she currently leases. Such payment are at the annual rate of
approximately $11,600. If the Company terminates Ms. Plaza's employment other
than for cause or as a result of her death or disability, the Company is
required to pay Ms. Plaza the balance of her compensation for her employment
terms and her consulting term and other benefits, including a pro rata portion
of the bonus that would have been paid to her, and her obligations under her
non-competition provision, terminate.
On January 26, 2006, the Company entered into a one-year consulting
agreement with Dov Perlysky, pursuant to which the Company agreed to pay Mr.
Perlysky a 5% commission on business generated by Mr. Perlysky's efforts. This
agreement replaced his employment agreement.
Pursuant to the Company's Long Term Incentive Plan, on January 25, 2006,
options to purchase 25,000 shares at $.7344 per share, being the fair market
value on the date of grant, were automatically granted to Messrs. Kirk Michel,
Howard Spindel and Irving Wiesen. These option grants are subject to stockholder
approval of the 2005 Plan.
12
For more information on the Plaza Agreement and a description of the
business and financial statements of Plaze, reference is made to a Form 8-K
filed by the Company with the SEC on January 31, 2006. For more information on
the share distribution, reference is made to a Form 8-K filed by the Company
with the SEC on January 31, 2006.
Item 2. Management's Discussion and Analysis or Plan of Operation
Plan of Operation
As of December 31, 2005, the Company had generated only $ 32,215 of
revenues, had cash on hand of $ 4,397 and had net working capital deficiency of
($25,095).
Except for assets acquired in connection with the Plaza Agreement, the
Company has no agreements to make any material purchases of plant or equipment
or any material research and development expenditures during the next twelve
months.
Significant estimates and accounting policies are as follows:
Revenue Recognition and Accounts Receivable
The Company's consulting agreements require monthly fees and/or hourly
fees. These fees are recognized as revenue as services are rendered. Accounts
receivable are recorded at their estimated realizable value. An allowance for
doubtful accounts is estimated by management through evaluation of significant
past due accounts. Accounts are deemed past due when payment has not been
received within the stated time period. The Company's policy is to review
individual past due amounts periodically and write off amounts for which all
collection efforts are deemed to have been exhausted.
Income Taxes
The Company follows the provisions of Statement of Financial Accounting
Standards Board No. 109, "Accounting for Income Taxes," which requires the use
of the liability method of accounting for income taxes. The liability method
measures deferred income taxes by applying enacted statutory rates in effect at
the balance sheet date to the differences between the tax basis of assets and
liabilities and their reported amounts on the financial statements. The
resulting deferred tax assets or liabilities are adjusted to reflect changes in
tax laws as they occur. A valuation allowance is provided when it is more likely
than not that a deferred tax asset will not be realized.
On January 25, 2006, the Company effected its plan and agreement of merger
(the "Plaza Agreement"), among the Company, Plaza Acquisition Corp., a
wholly-owned subsidiary of the Company (which became a wholly-owned subsidiary
of the Company in October, 2005), Plaza Consulting Group, Inc. ("Plaza") and
Elizabeth Plaza, the sole stockholder of Plaza. Pursuant to the Plaza Agreement,
Plaza Acquisition Corp. merged into Plaza, with the result that Plaza became a
wholly-owned subsidiary of the Company, and Ms. Plaza, as the sole stockholder
of Plaza, received:
- $10,000,000 cash at the closing;
- 1,150,000 shares of the Company's common stock at the closing.
- The right to receive three payments, each in the amount of $2,750,000,
payable on the first, second and third anniversaries of the closing
date; and
As a condition to closing, Plaza was required to have a net tangible book
value of not less than $5,500,000, of which at least $2,000,000 was in cash, as
of November 30, 2005.
13
The Company raised the cash necessary to provide it with the funds to make
the $10,000,000 payment due to Ms. Plaza through the sale of a new series of
convertible preferred stock.
As a result of the acquisition of Plaza, our business became the business
of Plaza. Information relating to the Plaza's operations and its liquidity and
capital resources are discussed in "Management's Discussion and Analysis of
Financial Conditions and Results of Operations" in Item 2 under Part I of Item
2.01 in the Company's Form 8-K filed on January 31, 2006.
For more information on the Plaza Agreement and the business of Plaza,
reference is made to a Form 8-K filed by the Company with the SEC on January 31,
2006. For more information on the share distribution, reference is made to a
Form 8-K filed by the Company with the SEC on January 31, 2006.
Forward Looking Statements
This Report on Form 10-QSB contains certain forward-looking statements that
are based on current expectations. In light of the important factors that can
materially affect results, including those set forth in this paragraph and
below, the inclusion of forward-looking information herein should not be
regarded as a representation by the Company or any other person that the
objectives or plans of the Company will be achieved. The Company may encounter
competitive, technological, financial and business challenges making it more
difficult than expected to continue to develop and market its services; the
market may not accept the Company's existing and future services; the Company
may be unable to retain existing key management personnel; and there may be
other material adverse changes in the Company's operations or business.
Assumptions relating to budgeting, marketing, and other management decisions are
subjective in many respects and thus susceptible to interpretations and periodic
revisions based on actual experience and business developments, the impact of
which may cause the Company to alter its marketing, or other budgets, which may
in turn affect the Company's financial position and results of operations. The
reader is therefore cautioned not to place undue reliance on forward-looking
statements contained herein, which speak solely as of the date of this Form
10-QSB. The Company assumes no responsibility to update any forward-looking
statements as a result of new information, future events, or otherwise.
Item 3. Controls and Procedures
The Company's Chief Executive Officer and Chief Financial Officer evaluated
the Company's disclosure controls and procedures as of the end of the period
covered by this quarterly report. Based upon the evaluation, the Company's Chief
Executive Officer and Chief Financial Officer concluded that the Company's
disclosure controls and procedures are effective.
During the quarterly period covered by this report, there were no changes
in the Company's internal controls over financial reporting that materially
affected, or are reasonably likely to materially affect, the Company's internal
controls over financial reporting.
PART II. OTHER INFORMATION
14
Item 6. Exhibits
(a) Exhibits:
31.1 Certification of chief executive officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002
31.2 Certification of chief financial officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002
32.1 Certification of the chief executive officer and chief financial
officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
EXHIBIT 31.1
CERTIFICATION
Elizabeth Plaza, certifies that:
1. I have reviewed this quarterly report on Form 10-QSB of Lawrence Consulting
Group, Inc. ("Lawrence Consulting Group");
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary 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 quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of Lawrence Consulting Group as of and for, the periods presented in
this quarterly report;
4. Lawrence Consulting Group's other certifying officer and I are responsible
for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15(d)-15(e) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15(d) - 15(f)) for Lawrence Consulting Group and have:
a. Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to Lawrence Consulting Group,
including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this quarterly report is
being prepared;
b. Evaluated the effectiveness of Lawrence Consulting Group's disclosure
controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and
c. Disclosed in this report any change in Lawrence Consulting Group's
internal control over financial reporting that occured during its most recent
fiscal quarter (Lawrence Consulting Group's fourth fiscal quarter in the case of
an annual report) that has materially affected, or is reasonably likely to
materially affect, Lawrence Consulting Group's internal control over financial
reporting.
5. Lawrence Consulting Group's other certifying officers and I have disclosed,
based on our most recent evaluation of internal control over financial
reportings to Lawrence Consulting Group's auditors and the audit committee
of Lawrence Consulting Group's board of directors (or persons performing
the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect Lawrence Consulting Group's ability to record,
process, summarize and report financial information; and
15
b. Any fraud, whether or not material, that involves management or other
employees who have a significant role in Lawrence Consulting Group's internal
controls over financial reporting.
/s/ Elizabeth Plaza
--------------------------------------
Elizabeth Plaza
Chief Executive Officer
Exhibit 31.2
CERTIFICATION
Antonio Martinez, certifies that:
1. I have reviewed this quarterly report on Form 10-QSB of Lawrence Consulting
Group, Inc. ("Lawrence Consulting Group");
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary 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 quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of Lawrence Consulting Group as of and for, the periods presented in
this quarterly report;
4. Lawrence Consulting Group's other certifying officer and I are responsible
for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15(d)-15(e) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15(d) - 15(f)) for Lawrence Consulting Group and have:
a. Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to Lawrence Consulting Group,
including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this quarterly report is
being prepared;
b. Evaluated the effectiveness of Lawrence Consulting Group's disclosure
controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and
c. Disclosed in this report any change in Lawrence Consulting Group's
internal control over financial reporting that occured during its most recent
fiscal quarter (Lawrence Consulting Group's fourth fiscal quarter in the case of
an annual report) that has materially affected, or is reasonably likely to
materially affect, Lawrence Consulting Group's internal control over financial
reporting.
5. Lawrence Consulting Group's other certifying officer and I have disclosed,
based on our most recent evaluation of internal control over financial
reportings to Lawrence Consulting Group's auditors and the audit committee
of Lawrence Consulting Group's board of directors (or persons performing
the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect Lawrence Consulting Group's ability to record,
process, summarize and report financial information; and
16
b. Any fraud, whether or not material, that involves management or other
employees who have a significant role in Lawrence Consulting Group's internal
controls over financial reporting.
/s/ Antonio Martinez
--------------------------------------
Antonio Martinez
Chief Financial Officer
Dated: February 16, 2006
EXHIBIT 32.1
LAWRENCE CONSULTING GROUP, INC.
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Lawrence Consulting Group,
Inc. (the "Company") on Form 10-QSB for the period ending December 31, 2005
as filed with the Securities and Exchange Commission on the date hereof
(the Report), Elizabeth Plaza, Chief Executive Officer of the Company, and
Antonio Martinez, Chief Financial Officer of the Company, certify, pursuant
to 18 U.S.C. ss. 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that to my knowledge:
1. The Report fully complies with the requirements of section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material
respects, the financial condition and result of operations of the Company.
/s/ Elizabeth Plaza /s/ Antonio Martinez
______________________ ______________________
Elizabeth Plaza Antonio Martinez
Chief Executive Officer Chief Financial Officer
February 16, 2006
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LAWRENCE CONSULTING GROUP, INC.
/s/ Elizabeth Plaza
--------------------------------------
Elizabeth Plaza
Chief Executive Officer
/s/ Antonio Martinez
--------------------------------------
Antonio Martinez
Chief Financial Officer
Dated: February 16, 2006
17