UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB/A
Amendment No. 3
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2002
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ----------- to ------------------------
Commission File Number 000-26463
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MILITARY RESALE GROUP, INC.
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(Name of small business issuer as specified in its charter)
New York 11-2665282
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2180 Executive Circle
Colorado Springs, Colorado 80906
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(Address of principal executive offices)
(719) 391-4564
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(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.
Yes [X] No [ ]
As of June 30, 2002, there were 9,672,127 shares of the issuer's common stock
outstanding.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [ X ]
MILITARY RESALE GROUP, INC.
FORM 10-QSB/A
AMENDMENT NO. 3
INDEX
Page No.
INTRODUCTORY NOTE......................................................... .................. ii
PART I. Financial Information
Item 1. Financial Statements
Notes to Financial Statements.......................................................... ..... 1
Signatures ................................................................................................ 2
Certifications ................................................................................................ 3
i
INTRODUCTORY NOTE
We are filing this Form 10-QSB/A in order to add a new footnote to the
financial statements as required by paragraph 37 of Accounting Principles Board
Opinion No. 20. This Form 10-QSB/A does not necessarily reflect events occurring
after the filing of Amendment No. 2 to Form 10-QSB for the quarter ended June
30, 2002.
ii
ITEM 1. FINANCIAL INFORMATION
The notes to our financial statements are hereby amended to include the
following additional note.
NOTE 4 - RESTATEMENT
We restated our statement of operations, statement of cash flows, and statement
of stockholders' equity (deficit) for the three and six month periods ended June
30, 2002 to eliminate the recognition of certain interest expense for the
beneficial conversion feature of $150,000 aggregate principal amount of
convertible promissory notes issued in the first quarter of 2002 and which were
converted into shares of our common stock in the second quarter of 2002
We restated our statement of operations, statement of cash flows, and statement
of stockholders' equity (deficit) for the three and six month periods ended June
30, 2002 to properly disclose the beneficial conversion feature resulting from
the issuance of $20,000 and $225,000 aggregate principal amount of convertible
promissory notes in the three and six month periods ended June 30, 2002,
respectively. When convertible debt is issued with a beneficial conversion
feature, a portion of the proceeds should be allocated to the intrinsic value of
the conversion feature, and the resulting discount should be amortized as
additional interest expense. The discounts should be amortized from the date the
security issued to the date it first becomes convertible. The intrinsic value of
the conversion feature for the three and six month periods ended June 30, 2002
was $20,000 and $225,000, respectively, and have been allocated to additional
paid in capital. The expense associated with this beneficial conversion feature
is disclosed on the statement of cash flows as an adjustment in the
reconciliation of net loss and cash used in operations as well as the statement
of operations as interest expense.
We restated our statement of operations, statement of cash flows, and statement
of stockholders' equity (deficit) for the three and six month periods ended June
30, 2002 to properly disclose the issuance of shares of our common stock in the
three months ended June 30, 2002 to certain consultants of the Company,
including Edward T. Whelan, our Chief Executive Officer.
As a result of these restatements, net loss decreased by $119,935 for the three
month period ended June 30, 2002 and increased by $85,065 for the six month
period ended June 30, 2002. Net loss per common share decreased by $0.01 for the
three month period ended June 30, 2002 and was unchanged for six month period
ended June 30, 2002.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized, in Colorado Springs,
Colorado on June 9, 2003.
MILITARY RESALE GROUP, INC.
By: /s/ Ethan D. Hokit
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Name: Ethan D. Hokit
Title: President (Principal
Accounting Officer and
Principal Financial Officer)
2
Certification of Principal Executive Officer
Pursuant to 18 U.S.C. 1350
(SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002)
I, Edward T. Whelan, certify that:
1. I have reviewed this Amendment No. 3 to our quarterly report on Form 10-QSB/A
of Military Resale Group, Inc.;
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 the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we 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 us by others within those entities, particularly during the
period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
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 weaknesses in internal controls; and
3
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly 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 our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
By: /s/ Edward T. Whelan
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Name: Edward T. Whelan
Title: Chief Executive Officer
June 9, 2003
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Certification of Principal Financial Officer
Pursuant to 18 U.S.C. 1350
(SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002)
I, Ethan D. Hokit, certify that:
1. I have reviewed this Amendment No. 3 to our quarterly report on Form 10-QSB/A
of Military Resale Group, Inc.;
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 the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we 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 us by others within those entities, particularly during the
period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
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 weaknesses in internal controls; and
5
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly 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 our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
By: /s/ Ethan D. Hokit
------------------------------
Name: Ethan D. Hokit
Title: Chief Financial Officer
June 9, 2003
6