##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


FORM 10-K

o
    
    Annual Report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934ORx
    
    Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934For the period January 1, 2003 to June 30, 2003


Commission File No. 001-15034

NIMBUS GROUP, INC.




(Exact name of registrant as specified in its charter)


Florida
(State of Incorporation)
    
    65-0924433
(I.R.S. Employer
Identification Number)2975 Northeast 191st Street, PH2 Aventura, FL
(Address of principal executive offices)
    
    33180
(Zip Code)


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

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

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

Title of Each Class
    
    Name of Each Exchange on Which RegisteredCommon Stock, par value $.001 per share
    
    American Stock Exchange


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

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.  YES  o  NO  x

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrants knowledge, in
definitive proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K.  YES  o  NO  x

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

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





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TABLE OF CONTENTS



|                                                                                              |  |  |  |  |  |  |  | 
|--------------------------------------------------------------------------------------------- |  |  |  |  |  |  |  | 
|PART I.                                                                                      
|ITEM 1. BUSINESS                                                                             
|ITEM 2. PROPERTIES                                                                           
|ITEM 3. LEGAL PROCEEDINGS                                                                    
|ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                  
|PART II.                                                                                     
|ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS                
|ITEM 6. SELECTED FINANCIAL DATA                                                              
|ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS                         
|ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENT DATA                                             
|PART III.                                                                                    
|ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 
|ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                                  
|ITEM 11. EXECUTIVE COMPENSATION                                                              
|ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT                      
|ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                      
|ITEM 14. CONTROLS AND PROCEDURES                                                             
|PART IV.                                                                                     
|ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.                    
|SIGNATURES                                                                                   
|EMPLOYMENT AGREEMENT/ LUCIEN LALLOUZ                                                         
|LICENSE ACQUISTION AGREEMENT                                                                 
|ASSIGMENT OF PHANTON LICENSE                                                                 
|LICENSE AGREEMENT                                                                            
|CERTIFICATION OF CEO PURSUANT SECTION 302                                                    
|CERTIFICATION OF CFO PURSUANT SECTION 302                                                    
|SECTION 906 CERTIFICATION BY PEO                                                             
|SECTION 906 CERTIFICATION BY PFO                                                             



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NIMBUS GROUP, INC.

TABLE OF CONTENTS

PAGEPART I.
    
    
    
    1Item 1. Business
    
    
    
    1Item 2. Properties
    
    
    
    6Item 3. Legal Proceedings
    
    
    
    6Item 4. Submission of Matters to a Vote of Security Holders
    
    
    
    7PART II.
    
    
    
    8Item 5. Market for Registrants Common Equity and Related Stockholder Matters
    
    
    
    8Item 6. Selected Financial Data
    
    
    
    10Item 7. Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    
    11Item 7A. Quantitative and Qualitative Disclosures About Market Risks
    
    
    
    12Item 8. Financial Statements and Supplementary Data
    
    
    
    13PART III.
    
    
    
    35Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
    
    
    
    35Item 10. Directors and Executive Officers of the Registrant
    
    
    
    36Item 11. Executive Compensation
    
    
    
    38Item 12. Security Ownership of Certain Beneficial Owners and Management
    
    
    
    42Item 13. Certain Relationships and Related Transactions
    
    
    
    43Item 14. Controls and Procedures
    
    
    
    43PART IV.
    
    
    
    44Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K
    
    
    
    44






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FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements within the meaning of Section
21E of the Securities Exchange Act of 1934, as amended. These forward-looking
statements include, among others, statements concerning the Companys outlook
for 2003 and beyond, the Companys expectations, beliefs, future plans and
strategies, anticipated events or trends, and similar expressions concerning
matters that are not historical facts. Although we believe that the
expectations reflected in the forward-looking statements are reasonable, we
cannot guarantee future results, levels of activity, performance or
achievements. The forward-looking statements in this report are subject to
risks and uncertainties that could cause actual results to differ materially
from those expressed in or implied by the forward-looking statements. You
should carefully consider the information set forth under the heading Risk
Factors.




PART I.




ITEM 1. BUSINESS

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

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

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

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

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

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

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

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

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

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

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

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

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RECENT EVENTS

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

EMPLOYEES

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

OUR CORPORATE HISTORY

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

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

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RISK FACTORS

OUR LIMITED OPERATING HISTORY MAKES IT DIFFICULT TO EVALUATE OUR BUSINESS

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



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



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



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



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



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

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

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

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

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

WE RECEIVED A GOING CONCERN OPINION FROM OUR INDEPENDENT AUDITORS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

WHERE YOU CAN FIND MORE INFORMATION

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




ITEM 2. PROPERTIES

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




ITEM 3. LEGAL PROCEEDINGS

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

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defenses, as well as counterclaims, to any claim which may be brought by USi,
and if any such claim is brought, we will defend it vigorously. However, if USi
successfully pursues its claim against us, it may have a material adverse
effect on us and the operation of our business. During January 2002, USi filed
voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code in
the United States Bankruptcy Court.




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

None.

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PART II.




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

MARKET INFORMATION

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

CALENDAR YEAR 2003
    
    HIGH
    
    LOWJanuary 1, 2003  March 31, 2003
    
    $
    0.32
    
    
    $
    0.16April 1, 2003  June 30, 2003
    
    $
    0.32
    
    
    $
    0.07


CALENDAR YEAR 2002
    
    HIGH
    
    LOWFirst Quarter
    
    $
    1.80
    
    
    $
    1.10Second Quarter
    
    $
    1.45
    
    
    $
    0.35Third Quarter
    
    $
    0.40
    
    
    $
    0.11Fourth Quarter
    
    $
    0.35
    
    
    $
    0.10


CALENDAR YEAR 2001
    
    HIGH
    
    LOWFirst Quarter
    
    $
    1.44
    
    
    $
    0.35Second Quarter
    
    $
    0.70
    
    
    $
    0.25Third Quarter
    
    $
    2.20
    
    
    $
    0.16Fourth Quarter
    
    $
    2.00
    
    
    $
    0.55


HOLDERS

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

DIVIDEND POLICY

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

RELATED STOCKHOLDER MATTERS

Recent Issuance of Unregistered Securities

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

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

Securities Authorized for Issuance Under Equity Compensation Plans

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

Number of securitiesremaining availableNumber of
    
    
    
    
    
    for future issuancesecurities to be
    
    Weighted-average
    
    under equity compensationissued upon exercise of
    
    exercise price of
    
    plans [excluding securitiesPlan Category
    
    outstanding options
    
    outstanding options
    
    reflected in 1st column]Equity compensation
plans approved by
security holders
    
    
    742,000
    
    
    
    .08
    
    
    
    3,700,857Equity compensation
plans not approved
by security holders
    
    None
    
    
    N/A
    
    
    NoneTotal
    
    
    742,000
    
    
    
    
    
    
    
    3,700,857


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ITEM 6. SELECTED FINANCIAL DATA

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

Selected Financial Data

UnauditedFor the
    
    For theSix Month Ended
    
    Six Month EndedJune 30, 2003
    
    June 30, 2002Statement of Operations Data:Results from continuing operations
    
    $
    (112,427
    )
    
    $
    Discontinued operationLoss from discontinued operations
    
    
    1,549,904
    
    
    
    (1,352,151
    )Net income (loss)
    
    
    1,437,477
    
    
    
    (1,352,151
    )Basic earnings (loss) per common share
from continuing operations
    
    
    (0.02
    )
    
    
    Basic earnings (loss) per common
share from discontinued operations
    
    
    0.21
    
    
    
    (0.18
    )Diluted earnings (loss) per common
share from discontinued operations
    
    
    0.19
    
    
    
    (0.18
    )Weighted average number of common
shares outstanding:Basic
    
    
    7,438,889
    
    
    
    7,438,889Diluted
    
    
    742,000
    
    
    
    8,180,889
    
    
    
    7,438,889


Balance Sheet Data

June 30, 2003
    
    June 30, 2002Cash and cash equivalents
    
    $
    354
    
    
    $
    30,522Working capital (deficit)
    
    
    (299,859
    )
    
    
    (1,827,427
    )Total assets
    
    
    177,777
    
    
    
    1,623,966Shareholders equity (deficiency)
    
    
    (299,859
    )
    
    
    (1,280,870
    )


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

COMPARISON OF JUNE 30, 2003 AND JUNE 30, 2002

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

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

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

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

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

LIQUIDITY AND CAPITAL RESOURCES

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

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

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

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

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

We have incurred net losses since inception, and our ability to ultimately
obtain profitable operations is dependent upon future events, including without
limitation, obtaining financing adequate to support our cost structure and
future business plans. There can be no assurance that a new business strategy
will be evaluated and completed in a

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timely manner, that it will be successfully implemented, or that private
funding will be successfully completed, or that our future cash flows will be
sufficient to meet all of our obligations and commitments. The failure to
generate such sufficient cash flows could significantly adversely affect the
market value of our common stock and the operation of our business, results of
operations and financial condition.

RECENT ACCOUNTING PRONOUNCEMENTS

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

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

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

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




ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

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

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##### Table of Contents






ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENT DATA

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

PAGEIndependent Auditors Report
    
    
    
    14Independent Auditors ReportIndependent Auditors ReportConsolidated Balance Sheets as of June 30, 2003 and June 30, 2002
    
    
    
    15Consolidated Balance Sheets as of December 31, 2002 and 2001
    
    
    
    16Consolidated Statements of Operations for the Periods ended
June 30, 2003, June 30, 2002 and 2001
    
    
    
    17Consolidated Statements of Operations for the Years ended December 31, 2002,
2001 and 2000
    
    
    
    18Consolidated Statements of Changes in Shareholders (Deficiency) Equity for
the Six Month Period ended June 30, 2003, 3002 and 2001
    
    
    
    19Consolidated Statements of Changes in Shareholders (Deficiency) Equity for
the Years ended December 31, 2002, 2001 and 2000
    
    
    
    20Consolidated Statements of Cash Flows for the Period ended June 30, 2003,
2002 and 2001
    
    
    
    21Consolidated Statements of Cash Flows for the Years ended December 31, 2002,
2001 and 2000
    
    
    
    22


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##### Table of Contents



INDEPENDENT AUDITORS REPORT

To the Board of Directors of
     Nimbus Group, Inc.

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

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

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

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

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

Fort Lauderdale, Florida
December 12, 2003



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INDEPENDENT AUDITORS REPORT

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

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

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

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

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

BERKOVITS, LAGO AND COMPANY LLP

Plantation, Florida
February 21, 2003

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##### Table of Contents



(DELOITTE & TOUCHE COMPANY LETTERHEAD)

INDEPENDENT AUDITORS REPORT

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

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

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

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

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

/s/ DELOITTE & TOUCHE LLP

March 20, 2002

(DELOITTE TOUCHE TOHMATSU FOOTER)

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Nimbus Group, Inc. and Subsidiaries
Consolidated Balance Sheets

June 30,
    
    June 30,Unaudited2003
    
    2002ASSETSCurrent assets:Cash and cash equivalents
    
    $
    354
    
    
    $
    30,552Accounts receivable
    
    
    150,000
    
    
    
    99,622Shareholder receivable
    
    
    20,123
    
    
    
    53,790Inventory, net
    
    
    
    
    
    
    814,194Prepaid expenses and other current assets
    
    
    7,300
    
    
    
    79,251Total current assets
    
    
    177,777
    
    
    
    1,077,409Property and equipment, net
    
    
    
    
    
    
    541,771Other
    
    
    
    
    
    
    4,786Total assets
    
    $
    177,777
    
    
    $
    1,623,966LIABILITIES AND SHAREHOLDERS EQUITY (DEFICIENCY)Current liabilities:Accounts payable
    
    $
    277,418
    
    
    $
    973,257Accrued expenses
    
    
    100,218
    
    
    
    218,672Amounts due to related party
    
    
    
    
    
    
    1,689,847Deferred revenue
    
    
    100,000
    
    
    
    23,060Total current liabilities
    
    
    477,636
    
    
    
    2,904,836Commitments and ContingenciesShareholders equity (deficiency):Preferred shares, $0.001 par value, 10 million shares
authorized, no shares issued and outstanding
    
    
    
    
    
    
    Common shares, $0.001 par value, 50 million shares
authorized, 7,438,889 and 7,438,889 shares
issued and outstanding, respectively
    
    
    7,439
    
    
    
    7,439Additional paid-in capital
    
    
    10,988,796
    
    
    
    10,988,796Accumulated deficit
    
    
    (11,296,094
    )
    
    
    (12,277,105
    )Total shareholders equity (deficiency)
    
    
    (299,859
    )
    
    
    (1,280,870
    )Total liabilities and shareholders
equity (deficiency)
    
    $
    177,777
    
    
    $
    1,623,966


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

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##### Table of Contents



Nimbus Group, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets

December 31,
    
    December 31,2002
    
    2001ASSETSCurrent assets:Cash and cash equivalents
    
    $
    500,408
    
    
    $
    379,775Accounts receivable
    
    
    49,454
    
    
    
    51,641Shareholder receivable
    
    
    55,421
    
    
    
    59,051Inventory, net
    
    
    121,236
    
    
    
    709,329Prepaid expenses and other current assets
    
    
    62,502
    
    
    
    159,184Total current assets
    
    
    789,021
    
    
    
    1,358,980Property and equipment, net
    
    
    519,614
    
    
    
    755,057Other
    
    
    6,854
    
    
    
    8,810Total assets
    
    $
    1,315,489
    
    
    $
    2,122,847LIABILITIES AND SHAREHOLDERS (DEFICIENCY) EQUITYCurrent liabilities:Accounts payable
    
    $
    708,152
    
    
    $
    673,527Accrued expenses
    
    
    230,239
    
    
    
    346,341Amounts due to related party
    
    
    2,105,301
    
    
    
    965,057Deferred revenue
    
    
    9,103
    
    
    
    66,641Total current liabilities
    
    
    3,052,795
    
    
    
    2,051,566Commitments and ContingenciesShareholders (deficiency) equity :Preferred shares, $0.001 par value, 10 million shares
authorized, no shares issued and outstanding
    
    
    
    
    
    
    Common shares, $0.001 par value, 50 million shares
authorized, 7,438,889 and 7,438,889 shares
issued and outstanding, respectively
    
    
    7,439
    
    
    
    7,439Additional paid-in capital
    
    
    10,988,796
    
    
    
    10,988,796Accumulated deficit
    
    
    (12,733,541
    )
    
    
    (10,924,954
    )Total shareholders (deficiency) equity
    
    
    (1,737,306
    )
    
    
    71,281Total liabilities and shareholders (deficiency) equity
    
    $
    1,315,489
    
    
    $
    2,122,847


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##### Table of Contents



Nimbus Group, Inc. and Subsidiaries
Consolidated Statement of Operations

For the six-monthsended June 30,Unaudited
    
    Unaudited2003
    
    2002
    
    2001Net royalty revenues
    
    $
    100,000
    
    
    $
    
    
    
    $
    Cost of net revenues
    
    
    
    
    
    
    
    
    
    
    Gross margin
    
    
    100,000
    
    
    
    
    
    
    
    Operating expenses:General and administrative expenses
    
    
    184,491
    
    
    
    
    
    
    
    Royalties
    
    
    30,000
    
    
    
    
    
    
    
    Total operating expenses
    
    
    214,491
    
    
    
    
    
    
    
    Net loss from operations
    
    
    (114,491
    )
    
    
    
    
    
    
    Other income:Interest income, net
    
    
    30
    
    
    
    
    
    
    
    Other income
    
    
    2,034
    
    
    
    
    
    
    
    Net loss from continuing operations
    
    
    (112,427
    )
    
   
    
    
    
    
    Discontinued Operations:Gain (loss) from discontinued operations
    
    
    1,549,904
    
    
    
    (1,352,151
    )
    
    
    (2,355,681
    )Net income (loss)
    
    
    1,437,477
    
    
    
    (1,352,151
    )
    
    
    (2,355,681
    )Basic earnings (loss) per common share from continuing operations
    
    
    (0.02
    )
    
    
    
    
    
    
    Basic earnings (loss) per common share from discontinued operations
    
    
    0.21
    
    
    
    (0.18
    )
    
    
    (0.32
    )Diluted earnings (loss) per common share from discontinued operations
    
    
    0.19
    
    
    
    (0.18
    )
    
    
    (0.32
    )Weighted average number of common shares outstanding:Basic
    
    
    7,438,889
    
    
    
    7,438,889
    
    
    
    7,438,889Diluted
    
    
    742,000
    
    
    
    
    
    
    
    8,180,889
    
    
    
    7,438,889
    
    
    
    7,438,889


The accompanying notes are an integral part of these consolidated statements

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##### Table of Contents



Nimbus Group, Inc. and Subsidiaries
Consolidated Statements of Operations

For the
    
    For the
    
    For theyear ended
    
    year ended
    
    year endedDecember 31, 2002
    
    December 31, 2001
    
    December 31, 2000Net loss from discontinued operations
    
    $
    (1,808,587
    )
    
    $
    (4,050,306
    )
    
    $
    (6,324,986
    )Basic and diluted loss per common share
    
    $
    (0.24
    )
    
    $
    (0.54
    )
    
    $
    (0.93
    )Weighted average number of common shares outstanding
    
    
    7,438,889
    
    
    
    7,438,889
    
    
    
    6,793,002


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##### Table of Contents



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

Common Shares
    
    AdditionalPaid-in
    
    AccumulatedShares
    
    Amount
    
    Capital
    
    Deficit
    
    TotalBalance at June 30, 2000
    
    
    7,438,889
    
    
    $
    7,439
    
    
    $
    10,988,796
    
    
    $
    (2,941,987
    )
    
    $
    8,046,809Net loss for the six month period ending December 31, 2000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,896,017
    )
    
    
    (3,896,017
    )Net loss for the six month period ending June 30,
2001
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,392,325
    )
    
    
    (2,392,325
    )Balance at June 30, 2001
    
    
    7,438,889
    
    
    
    7,439
    
    
    
    10,988,796
    
    
    
    (9,230,329
    )
    
    
    1,758,467Net loss for the six month period ending December 31, 2001
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,694,625
    )
    
    
    (1,694,625
    )Net loss for the six month period ending June 30,
2002
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,352,151
    )
    
    
    (1,352,151
    )Balance at June 30, 2002
    
    
    7,438,889
    
    
    
    7,439
    
    
    
    10,988,796
    
    
    
    (12,277,105
    )
    
    
    (1,288,309
    )Stock issued for services
    
    
    250,000
    
    
    
    50,000
    
    
    
    
    
    
    
    
    
    
    
    50,000Net loss for the six month period ending
December 31, 2002
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (456,466
    )
    
    
    (456,466
    )Net income for the six month period ending June
30, 2003
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,437,477
    
    
    
    1,437,477Balance at June 30, 2003
    
    
    7,688,889
    
    
    $
    57,439
    
    
    $
    10,988,796
    
    
    $
    (11,296,094
    )
    
    $
    (257,298
    )


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

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

Common Shares
    
    AdditionalPaid-in
    
    AccumulatedShares
    
    Amount
    
    Capital
    
    Deficit
    
    TotalBalance at December 31, 1999
    
    
    6,000,000
    
    
    $
    6,000
    
    
    $
    1,694,000
    
    
    $
    (549,662
    )
    
    $
    1,150,338Issuance of common shares, net of offering costs
    
    
    1,300,000
    
    
    
    1,300
    
    
    
    7,907,574
    
    
    
    
    
    
    
    7,908,874Issuance of warrants
    
    
    
    
    
    
    
    
    
    
    630,200
    
    
    
    
    
    
    
    630,200Note payable converted to
common shares
    
    
    138,889
    
    
    
    139
    
    
    
    757,022
    
    
    
    
    
    
    
    757,161Net loss for the year ended December 31, 2000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,324,986
    )
    
    
    (6,324,986
    )Balance at December 31, 2000
    
    
    7,438,889
    
    
    
    7,439
    
    
    
    10,988,796
    
    
    
    (6,874,648
    )
    
    
    4,121,587Net loss for the year ended December 31, 2001
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,050,306
    )
    
    
    (4,050,306
    )Balance at December 31, 2001
    
    
    7,438,889
    
    
    
    7,439
    
    
    
    10,988,796
    
    
    
    (10,924,954
    )
    
    
    71,281Net loss for the year ended December 31, 2002
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,808,587
    )
    
    
    (1,808,587
    )Balance at December 31, 2002
    
    
    7,438,889
    
    
    $
    7,439
    
    
    $
    10,988,796
    
    
    $
    (12,733,541
    )
    
    $
    (1,737,306
    )


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

For the six-monthsended June 30,Unaudited
    
    Unaudited2003
    
    2002
    
    2001Cash flows from operating activities:Net income (loss)
    
    $
    1,437,477
    
    
    $
    (1,352,151
    )
    
    $
    (2,355,681
    )Adjustments to reconcile net income (loss) to net cash used in
operating activities:Depreciation and amortization
    
    
    
    
    
    
    252,734
    
    
    
    224,146Loss on exchange of assets and liabilities
    
    
    920,393Gain on extinguishment of debt
    
    
    (2,506,110
    )Change in operating assets and liabilities:Accounts receivable
    
    
    (100,546
    )
    
    
    (47,981
    )
    
    
    28,029Shareholder receivables
    
    
    35,298
    
    
    
    5,261
    
    
    
    38,395Inventory
    
    
    121,236
    
    
    
    (104,865
    )
    
    
    1,040,336Prepaid expenses and other current assets
    
    
    55,202
    
    
    
    79,933
    
    
    
    200,785Other assets
    
    
    6,854
    
    
    
    4,024
    
    
    
    531Accounts payable
    
    
    (430,734
    )
    
    
    299,730
    
    
    
    (228,430
    )Accrued expenses
    
    
    (130,021
    )
    
    
    (127,669
    )
    
    
    319,162Amounts due to related party
    
    
    
    
    
    
    724,790
    
    
    
    Deferred revenue
    
    
    90,897
    
    
    
    (43,581
    )
    
    
    (201,607
    )Net cash used in operating activities
    
    
    (500,054
    )
    
    
    (309,775
    )
    
    
    (934,334
    )Cash flows from investing activities:Purchase of property and equipment
    
    
    
    
    
    
    (39,448
    )
    
    
    (82,901
    )Net cash used in investing activities
    
    
    
    
    
    
    (39,448
    )
    
    
    (82,901
    )Net decrease in cash and cash equivalents
    
    
    (500,054
    )
    
    
    (349,223
    )
    
    
    (1,017,235
    )Cash and cash equivalents at beginning of period
    
    
    500,408
    
    
    
    379,775
    
    
    
    1,086,149Cash and cash equivalents at end of period
    
    $
    354
    
    
    $
    30,552
    
    
    $
    68,914


Supplemental cash flow information

No amounts were paid for income taxes of the six months period ended
June 30, 2003, 2002, and 2001.


During the six months period ended June 30, 2003 a loan payable
and accounts payable totaling $2,506,110 were extinguished in a non
cash transaction.


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

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##### Table of Contents



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

For the
    
    For the
    
    For theyear ended
    
    year ended
    
    year endedDecember 31, 2002
    
    December 31, 2001
    
    December 31, 2000Cash flows from operating activities:Net loss
    
    $
    (1,808,587
    )
    
    $
    (4,050,306
    )
    
    $
    (6,324,986
    )Adjustments to reconcile net loss to net cash
used in operating activities:Depreciation and amortization
    
    
    
    
    
    
    463,349
    
    
    
    287,060Provision for impairment of long lived assets
    
    
    278,983
    
    
    
    41,510
    
    
    
    Amortization of stock purchase warrants
    
    
    
    
    
    
    
    
    
    
    319,161Inventory writedown
    
    
    
    
    
    
    
    
    
    
    291,127Fair value of warrants issued to consultants
    
    
    
    
    
    
    
    
    
    
    68,200Change in operating assets and liabilities:Accounts receivable
    
    
    2,187
    
    
    
    48,482
    
    
    
    (94,159
    )Shareholder receivables
    
    
    3,630
    
    
    
    115,122
    
    
    
    (174,173
    )Inventory
    
    
    588,093
    
    
    
    2,226,426
    
    
    
    (3,026,453
    )Prepaid expenses and other current assets
    
    
    96,682
    
    
    
    333,091
    
    
    
    (473,650
    )Other assets
    
    
    1,955
    
    
    
    1,713
    
    
    
    (2,100
    )Accounts payable
    
    
    34,625
    
    
    
    34,196
    
    
    
    349,611Accrued expenses
    
    
    (116,114
    )
    
    
    (31,563
    )
    
    
    268,543Amounts due related party
    
    
    1,140,256
    
    
    
    754,362
    
    
    
    210,695Deferred revenue
    
    
    (57,538
    )
    
    
    (474,095
    )
    
    
    510,416Net cash provided by (used in) operating activities
    
    
    164,172
    
    
    
    (537,713
    )
    
    
    (7,790,708
    )Cash flows from investing activities:Purchase of property and equipment
    
    
    (43,539
    )
    
    
    (168,661
    )
    
    
    (1,192,274
    )Net cash used in investing activities
    
    
    (43,539
    )
    
    
    (168,661
    )
    
    
    (1,192,274
    )Cash flows from financing activities:Proceeds from issuance of common stock
    
    
    
    
    
    
    
    
    
    
    10,045,596Borrowings from affiliate
    
    
    
    
    
    
    
    
    
    
    1,500,000Payments on borrowings to affiliate
    
    
    
    
    
    
    
    
    
    
    (1,500,000
    )Payments for offering costs
    
    
    
    
    
    
    
    
    
    
    (833,414
    )Net cash provided by financing activities
    
    
    
    
    
    
    
    
    
    
    9,212,182Net increase (decrease) in cash and cash equivalents
    
    
    120,633
    
    
    
    (706,374
    )
    
    
    229,200Cash and cash equivalents at beginning of year
    
    
    379,775
    
    
    
    1,086,149
    
    
    
    856,949Cash and cash equivalents at end of year
    
    $
    500,408
    
    
    $
    379,775
    
    
    $
    1,086,149


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

NOTE 1. NATURE OF OPERATIONS AND DISCONTINUED OPERATIONS:

Currently the Company is implementing its plan and changing its focus to the
development and wholesale distribution of fragrances and skincare products,
both proprietary and under license. This new focus capitalizes on current
managements expertise. The Company acquired brands that enabled
the Company to enter into licensing and distribution agreements that has
generated income for the Company.

Cara Mia is the first brand the Company acquired from Omniscient Corp. that
began distribution through a licensing agreement with Victory International
(USA) LLC. Cara Mia Skincare initially launched in Puerto Rico with four
products created specifically as skincare solutions. The Company distributes its
product lines via licensed wholesale distributors that service specialty retail
stores across the United States and to worldwide importers and exclusive
distributors. The Company does not directly manufacture any product or take
positions in inventory.

During fiscal 2001 (January 1 to December 31, 2001), Take to Auction.com, Inc.
(TTA), a Company which sold products online through multiple distribution
channels, reorganized its corporate structure and changed its primary business
focus. On September 26, 2001, TTA, Nimbus Group Inc., a Florida corporation and
wholly-owned subsidiary of TTA (Nimbus), and TTA Solutions, Inc., a Florida
corporation and wholly-owned subsidiary of Nimbus (TTA Solutions), entered
into an Agreement and Plan of Merger (the Merger Agreement). Additionally,
another wholly-owned subsidiary of Nimbus, Nimbus Jets, Inc., (Nimbus Jets)
was formed. As a result of the Merger, Nimbus (the Company) became the parent
Company of two wholly-owned subsidiaries, TTA and Nimbus Jets under the Merger
Agreement. All revenues generated in fiscal 2002 and prior related solely to
TTA.

During January 2002, our board of directors adopted a formal plan of disposal
of TTA in connection with an overall strategic program designed to focus the
Companys resources on Nimbus Jets and the development of a national air taxi
service. Revenues included in discontinued operations amounted to $977,788.,
$6,040,877 and 5,824,293 for the six months ending June 30, 2003, 2002 and 2001
respectively for TTA only.

Assets and Liabilities to be disposed of were comprised of the following at
December 31, 2002:

Inventory, net
    
    
    
    
    
    $
    121,236Prepaid expenses and other current assets
    
    
    
    
    62,502Property and equipment, net
    
    
    
    
    
    
    519,613Other
    
    
    
    
    
    
    6,854$
    710,205Accounts payable
    
    
    
    
    
    $
    708,152Deferred revenues
    
    
    
    
    
    
    9,103$717,255


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On February 19, 2003, Watch Junction, Inc. (Watch) purchased the technology
and certain assets of Take to Auction (the Technology Sale). Watch Junction
is owned 100% by the former President of TTA, Mr. Albert Friedman. Mr.
Friedman made a cash payment in the amount of $50,000 and returned 305,610
shares of our common stock back to us for the purchase of the technology and
assets.

TTA operated the Perfumania.com retail storefront prior to January 2003, which
offered over 2,000 fragrance and fragrance-related products, including bath and
aromatherapy products. As of December 31, 2002, we owed Perfumania.com
approximately $2.1 million relating primarily to inventory purchased pursuant
to a license agreement (the License Agreement). On January 28, 2003, we
received a letter from E Com Ventures, Inc. (ECMV), the parent of
Perfumania.com, indicating we were in default of our Website Operations
Services Agreement (the Agreement) for non-payment of amounts due of
approximately $1.9 million to Perfumania.com in connection with the Agreement.
To settle the breach of contract claim, we agreed to terminate the Agreement in
exchange for a release of the outstanding obligations owed to Perfumania.com.
On February 28, 2003, The Company completed the process of returning the
operations of Perfumania.com back to ECMV (the P.com Return). In the
condensed statement of operations for the period ending June 30, 2003 we
reflect a gain on the extinguishment of approximately $2.6 million dollars.

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES:

Significant accounting policies and practices used by the Company in the
preparation of the accompanying consolidated financial statements are as
follows:

BASIS OF PRESENTATION

The accompanying consolidated financial statements have been prepared on a
going concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. However, the
Company has incurred net losses since inception in the amount of approximately
$11.3 million and has a deficiency in working capital of approximately $300,000
at June 30, 2003. These factors, among others, indicate that the Company may be
unable to continue as a going concern. The consolidated financial statements do
not include any adjustments that might result from the outcome of this
uncertainty. The Companys continuation as a going concern is dependent upon
future events, including obtaining financing adequate to support the Companys
cost structure and business plans.

MANAGEMENT ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles 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 those estimates.

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##### Table of Contents



CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments purchased with an original
maturity of three months or less to be cash equivalents.

BASIC AND DILUTED NET INCOME (LOSS) PER SHARE

Basic and diluted net income (loss) per share is computed by dividing the net
income (loss) available to common shareholders for the period by the weighted
average number of Common Shares outstanding for the period.

INVENTORY

Inventory, consisting of finished goods, is stated at the lower of cost or
market, cost being determined based on a moving weighted average cost basis,
which approximates the first-in, first-out method. The cost of inventory
includes product cost and freight charges. Provisions for potentially slow
moving or damaged inventory is recorded based on managements analysis of
inventory levels, turnover ratios and through specific identification of slow
moving merchandise. No provisions were made for the six months ending June 30,
2003, 2002 and 2001 respectively. The Company had no inventory at June 30,
2003. See Note 1 discontinued operations.

PROPERTY AND EQUIPMENT

Property and equipment is carried at cost, less accumulated depreciation and
amortization. Depreciation and amortization is calculated using the
straight-line method over the estimated useful lives of the related assets.
Costs of major additions and improvements are capitalized and expenditures for
maintenance and repairs which do not extend the useful life of the asset are
expensed when incurred. Gains or losses arising from sales or retirements are
included in income currently. The Company reviews its long-lived assets for
impairment on a periodic basis and records an impairment loss to operations if
the sum of the expected future undiscounted cash flows is less than the
carrying amount of the asset. An impairment loss would be recognized to reduce
the carrying amount of the impaired asset to its fair value. During fiscal
2002, based on the plan of disposal of TTA, the Company recorded a non-cash
impairment charge of approximately $279,000 on December 31, 2002 to write-down
certain assets to their net realizable value. Fair value of these impaired
assets was determined based on prices for similar assets. The impairment
losses are included in loss from discontinued operations.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiaries, Take to Auction.com, Inc. and Nimbus Jets Inc.
All significant intercompany balances and transactions have been eliminated in
consolidation.

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##### Table of Contents



SOFTWARE DEVELOPMENT COSTS

In accordance with Statement of Position 98-1, Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use and Emerging Issues
Task Force 00-2, Accounting For Web Site Development Costs, the Company
capitalizes acquired and internally developed or modified software solely to
meet the Companys internal needs integral to the Companys Web site. The
Company capitalizes certain internal and external costs directly associated
with developing or modifying the internal use software, which begins with the
application development stage and ends when the project is substantially
complete and ready for its intended use. The ongoing assessment of
recoverability of capitalized software development costs require considerable
judgment by management with respect to certain external factors, including, but
not limited to, estimated economic life and changes in software and hardware
technologies. No software development cost was expended in the period end June
30, 2003. All above referenced software has been disposed off and no further
development is anticipated.

REVENUE RECOGNITION

Revenues from membership fees are deferred at the time of billing and are
recognized ratably over the term of annual membership. Membership fees relate
to the fees paid by members for permitting them to sell merchandise on auction
sites. Revenues from superstore setup fees are deferred at the time of billing
and are recognized ratably over the first six months of store ownership.
Revenues related to sales of products are recorded at the sales price and
recognized at the time that the product is shipped. Revenues related to
shipping and handling fees are recognized at the time that the product is
shipped. In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101, Revenue Recognition in Financial Statements,
providing guidance with respect to revenue recognition issues and disclosures.
The Company believes that its existing accounting policies comply with the
requirements of this published guidance. We no longer generate income from
membership fees nor superstore setup fees.

SALES AND MARKETING EXPENSES

Marketing and sales expenses, which consist primarily of advertising and
promotional costs, are charged to operations as incurred.

START UP COSTS

The Company expensed all start up costs as incurred.

INCOME TAXES

The Company utilizes the asset and liability method of accounting for deferred
income taxes. Under this method, deferred tax assets and liabilities are
determined based on the difference between the financial statement and tax
bases of assets and liabilities using tax rates in effect for
the year in which the differences are expected to reverse. A valuation
allowance is established

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##### Table of Contents



when it is more likely than not that some or all of
the deferred tax assets will not be realized. At June 30, 2003 a 100% valuation
allowance was made.

SIMPLE IRA PLAN

The Company sponsored the Nimbus Group, Inc. SIMPLE IRA Plan (the Plan), a
defined contribution plan provided pursuant to the requirements of the Internal
Revenue Code of 1986, as amended. All employees were eligible to participate in
the Plan as of the first day of any month. Participants made pre-tax
contributions to the Plan subject to a statutorily prescribed annual limit. The
Company was required to make matching contributions, not to exceed 3% of a
participants annual compensation, to the Plan. Each participant was fully
vested in their account, including the participants contributions, the
Companys matching contribution and the investment earnings thereon.
Contributions by the participants or by the Company to the Plan, and the income
earned on such contributions, are generally not taxable to the participants
until withdrawn. Contributions by the Company are generally deductible by the
Company when made. The participants and the Companys contributions are held
in an IRA. The Company had accrued a matching contribution to the Plan at
December 31, 2002 of approximately $28,000. At June 30, 2003 the Company owed
the Plan $28,000.

WARRANTS

As required by Statement of Financial Position No. 123, (SFAS No. 123) the
Company accounts for warrants issued to non-employees not issued in conjunction
with debt by amortizing the fair value of such warrants over the vesting
period. No warrants were issued during fiscal transition period June 30,2003,
2002 or 2001.

COMPREHENSIVE INCOME

Statement of Financial Accounting Standards No. 130, Reporting Comprehensive
Income (SFAS No. 130), establishes standards for recording and displaying
comprehensive income and its components. SFAS No. 130 requires certain
components of equity to be recorded as other comprehensive income. The Company
has no other comprehensive income during the fiscal transition six months
period ended June 30, 2003, 2002, and 2001.

SEGMENT REPORTING

Statement of Financial Accounting Standards No. 131, Disclosures about
Segments of an Enterprise and Related Information (SFAS No. 131),
establishes standards for public business enterprises to report information
about operating segments in annual financial statements and requires that those
enterprises report selected information about operating segments in interim
financial reports. It also establishes standards for related disclosures about
products and services, geographic areas and major customers. The Company
operated in only one segment during 2003, 2002 and 2001. On February 27, 2003
the Company completed its return of P.com to Ecomv and started its transition
into the development and licensing of cosmetics and fragrances.

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##### Table of Contents



RECLASSIFICATIONS

Certain reclassifications to the Companys 2002 and 2001 consolidated financial
statements were made to conform them to classifications used in June 30, 2003
statements.

RECENT ACCOUNTING PRONOUNCEMENTS

In July 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated
with Exit or Disposal Activities. The standard requires companies to
recognize costs associated with exit or disposal activities when they are
incurred rather than at the date of a commitment to an exit or disposal plan.
SFAS No. 146 is to be applied prospectively to exit or disposal activities
initiated after December 31, 2002.

In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based
Compensation  Transition and Disclosure an amendment of FASB Statement No.
123. This Statement amends SFAS No. 123, Accounting for Stock-Based
Compensation, to provide alternative methods of transition for an entity that
voluntarily changes to the fair value based method of accounting for
stock-based employee compensation. It also amends the disclosure provisions of
that Statement to require prominent disclosure about the effects on reported
net income of an entitys accounting policy decisions with respect to
stock-based employee compensation. Finally, this Statement amends APB Opinion
No. 28, Interim Financial Reporting, to require disclosure about those effects
in interim financial information. We intend to continue to account for
stock-based compensation based on the provisions of APB Opinion No. 25. SFAS
148s amendment of the transition and annual disclosure provisions of SFAS 123
are effective for fiscal years ending after December 15, 2002, and the
disclosure requirements for interim financial statements are effective for
interim periods beginning after December 15, 2002. We have adopted the
disclosure provisions of SFAS 148 beginning in the quarter ending March 31,
2003.

Year Ended June 302003
    
    2002Net income, as reported
    
    $
    1,437,477
    
    
    $
    Stock-based employee
compensation expense determined
under fair-value based method,
net of related tax effects
    
    
    (71,732
    )
    
    
    Pro forma net income
    
    $
    1,365,745
    
    
    $
    Earnings per share:Basic  as reported
    
    $
    0.19
    
    
    $
    Basic  pro forma
    
    $
    0.18
    
    
    $
    Diluted  as reported
    
    $
    0.18
    
    
    $
    Diluted  pro forma
    
    $
    0.17
    
    
    $
    


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NOTE 3. INITIAL PUBLIC OFFERING:

Effective June 12, 2000 the Company completed an equity offering of 1.3 million
common shares at an offering price of $8.00 per share. Net proceeds to the
Company, after deducting approximately $2.5 million in costs, fees, underwriter
discounts and other expenses associated with the offering, were approximately
$7.9 million and were used primarily for inventory expansion, other capital
expenditures necessary to support the Companys growth, working capital, and
other general corporate purposes.

NOTE 4. PROPERTY AND EQUIPMENT:

Property and equipment include the following:

EstimatedUseful lives(in years)
    
    June 30, 2003
    
    June 30, 2002Computer equipment
    
    
    3
    
    
    $
    
    
    
    $
    501,215Computer software
    
    
    3
    
    
    
    
    
    
    
    791,480Furniture and fixtures
    
    
    5
    
    
    
    
    
    
    
    86,001Telecommunication equipment
    
    
    5
    
    
    
    
    
    
    
    39,485Leasehold improvements
    
    
    5
    
    
    
    
    
    
    
    130,231
    
    
    
    1,548,412Less:accumulated depreciation
and amortization
    
    
    
    
    
    
    
    
    
    
    (1,006,641
    )Property and equipment, net
    
    
    
    
    
    $
    
    
    
    $
    541,771


As of December 31, 2002, all property and equipment were classified as assets
held for sale in accordance to the Companys plan of disposal of TTA (See Note
1). In effect, the assets were disposed of in accordance with the plan. The
assets were disposed of during the period ending June 30, 2003.

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NOTE 5. INCOME TAXES:

The primary components of temporary differences, which give rise to the
Companys net deferred tax assets at June 30, 2003 and 2002, respectively, are
as follows.

June 30,Unaudited2003
    
    2002Deferred tax assets:Net operating loss carryforwards
    
    $
    4,250,720
    
    
    $
    4,619,875Valuation allowance
    
    
    (4,250,720
    )
    
    
    (4,619,875
    )$
    
    
    
    $
    


The Company provides a valuation allowance against deferred tax assets if,
based on the weight of available evidence, it is more likely than not that some
or all of the deferred tax assets will not be realized.

For the six months ended June 30,Unaudited
    
    Unaudited2003
    
    2002
    
    2001Benefit (Provision), at Federal statutory rates
    
    $
    (488,742
    )
    
    $
    459,731
    
    
    $
    800,932State income taxes, net of Federal benefit
    
    
    (52,180
    )
    
    
    49,083
    
    
    
    85,511(540,922
    )
    
    
    508,814
    
    
    
    886,443Valuation allowance
    
    $
    540,922
    
    
    
    (508,814
    )
    
    
    (886,443
    )
    
    
    $
    
    
    
    $
    


The Company has federal and state net operating loss carry forwards of
approximately $11.3 million at June 30, 2003, both of which will begin to
expire in the year 2019.

NOTE 6. RELATED PARTY TRANSACTIONS:

During November 2000, the Company loaned its former Chairman of the Board
approximately $100,000. During 2002, principal payments of approximately $7,000
were made. This loan is classified as shareholder receivables in the
accompanying consolidated balance sheet. As of June 30, 2003 the balance was
$20,123.

Effective September 1, 2001, the Company entered into a licensing agreement
(the License Agreement) with Perfumania.com to license its retail fragrance
Web site. Under the terms of
the agreement, the Company paid royalties to Perfumania.com in the amount of 5%
of defined

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product sales for sales up to $8 million per annum, decreasing to 3%
on sales exceeding $11 million per annum. Royalty expense under this agreement
for the years ended December 31, 2002 and 2001 were approximately $277,000 and
$75,000, respectively.

As of December 31, 2002, we owed Perfumania.com approximately $2.1 million
relating primarily to inventory purchased from the License Agreement. On
January 28, 2003, we received a letter from ECMV stating that we were in
default of the License Agreement for non-payment of amounts due and based on
recent public filings that showed that we continue to report losses, have
negative working capital and equity, ECMV was terminating the License
Agreement. The Company is in the process of returning the operations of
Perfumania.com back to ECMV. As part of the transition of the P.com return,
ECMV assumed certain liabilities of TTA, relating to the operations of
Perfumania.com. The debt was extinguished during the six month period ended
June 30,2003 and is reflected in the statement of operations through
discontinued operations.

On February 19, 2003, Watch Junction, Inc. (Watch) purchased the technology
and certain assets of Take to Auction (the Technology Sale). Watch Junction
is owned 100% by the former President of TTA, Mr. Albert Friedman. Mr.
Friedman made a cash payment in the amount of $50,000 and returned 305,610
shares of our common stock back to us for the licensing rights of the
technology and the purchase of certain assets. The Company believes that this
transaction was made at fair market value. The returned stock was sold to
Omniscent on September 1, 2003.

On May 1, 2003 the Company entered a trademark license agreement with Omniscent
Corp., a Company which is 100% owned by Sharon Lallouz, the wife of Nimbus
Group Inc.s chief executive officer. This agreement calls for royalty
payments based on net sales of licensed products. The agreement calls for the
issuance to Omniscent Corp. of 2.5 million shares of the Companys preferred
convertible stock. Nimbus Group Inc. receives an option in the agreement to
buy out the Cara Mia Skin Care line at any time during the term of the
agreement for a cash payment of $1,500,000 (One million Five Hundred Thousand
Dollars).

NOTE 7. LITIGATION

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

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its business. During January 2002, USi filed voluntary petitions for relief
under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy
Court.

NOTE 8. LEASE AGREEMENT

On December 28,1999, the Company entered into a five year operating lease
agreement for its corporate headquarters. The monthly rent payments under this
lease were approximately $ 14,500 from the period January 1, 2000 to April 1,
2003. On April 1, 2003 the Company moved to another office building in
Aventura, Florida and leased facilities at that office building at 2999 N.E.
191st Street for the period from April 1, 2003 to December 15, 2003 for
initially $3,883 and then for $1,702 for suites 805 and 903, respectively. The
Company entered a new lease in the building next door on October 7, 2003 with
occupancy effective on December 14, 2003, The following is a schedule by year
of the minimum future lease commitments:

Fiscal Year Ended
    
    AmountJune 30, 2004
    
    $
    18,179June 30, 2005
    
    
    15,820June 30, 2006
    
    
    16,479June 30, 2007
    
    
    7,062Thereafter
    
    
    Total operating lease commitments
    
    $
    57,540


NOTE 9. STOCK OPTION PLAN:

Effective August 26, 1999, the Company declared a share dividend of an
aggregate of 6,993,000 common shares, $0.001 par value (Common Shares),
immediately payable to its shareholders of record in order to affect the
equivalent of a 1,000-for-1 stock split to increase the number of Common Shares
outstanding from 7,000 shares to 7,000,000 shares. On November 3, 1999, the
Company declared a share dividend of an aggregate of 10,263,158 Common Shares,
$0.001 par value, immediately payable to its shareholders of record in order to
affect the equivalent of a 2.326530644-for-1 stock split to increase the number
of Common Shares outstanding from 7,736,842 shares to 18,000,000 shares. On May
4, 2000, the Company declared a 1-for-3 reverse stock split to decrease the
number of Common Shares outstanding from 18,000,000 to 6,000,000 shares.
Shareholders equity gives retroactive recognition to the stock splits as of
June 2, 1999.

The Company amended its 1999 Stock Option Plan and adopted the 2001 Amended and
Restated Stock Option Plan (the Amended Option Plan). Officers, key
employees, and non-employee consultants may be granted stock options, stock
appreciation rights, stock awards, performance shares and performance units
under the Amended Option Plan. The Company has reserved 4,442,857 Common Shares
for issuance under the Amended Option Plan, subject to further anti dilution
adjustments.

The Company may, based on provision of the Companys Director Compensation
Plan, grant on an annual basis 5,000 non-qualified stock options to each
non-employee director nominee of the Company. The options allow such directors
to purchase the common shares at the market value at the time the options are
granted. These options have a term of seven years and vest on the date of
grant.

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The Amended Option Plan is administered by the Board of Directors of the
Company (the Board). The Board is authorized to determine, among other
things, the key employees to whom, and the time at which, options and other
benefits are to be granted, the number of shares subject to each option, the
applicable vesting schedule and the exercise price. The Board also determines
the treatment to be afforded to a participant in the Amended Option Plan in the
event of termination of employment for any reason, including death, disability
or retirement. Under the Amended Option Plan, the maximum term of both
incentive stock options and non-qualified stock options is seven years.

The Board has the power to amend the Amended Option Plan from time to time.
Shareholder approval of an amendment is only required to the extent that it is
necessary to maintain the Amended Option Plans status as a protected plan
under applicable securities laws or the Amended Option Plans status as a
qualified plan under applicable tax laws. The Amended Option Plan was approved
by the shareholders at the 2001 Annual Meeting of Shareholders during November
2001. In April 2003, the Board cancelled all unexercised options granted prior
to April 1, 2003.

A summary of the status of the Companys Amended Option Plan as of June 30,
2003 is presented below.

Original
    
    
    
    
    
    
    
    
    
    WeightedGeneric
    
    
    
    Expiration
    
    Strike
    
    6/30/2003
    
    Weighted
    
    Avg Ex PriceName, Vesting Schedule
    
    Level
    
    Grant Date
    
    Date
    
    Price
    
    Balance
    
    Avg Ex Price
    
    Per shareLucien Lallouz
    
    Officer
    
    5/22/2003
    
    5/4/2007
    
    
    $0.08
    
    
    
    371,000
    
    
    
    29,680.00Michael Wellikoff
    
    Officer
    
    4/1/2003
    
    8/26/2006
    
    
    $0.08
    
    
    
    371,000
    
    
    
    29,680.00
    
    
    0.08742,000
    
    
    
    59,360Weighted avg
exercise price
    
    
    
    
    
    
    
    
    
    
    
    
    0.08Options approved
in Plan
    
    
    
    
    
    
    
    
    4,442,857Options available
in Plan
    
    
    
    
    
    
    
    
    3,700,857


Statement of Financial Accounting Standards No. 123, Accounting for Stock Based
Compensation (SFAS No. 123), encourages, but does not require, companies to
record compensation cost for stock-based employee compensation plans at fair
value. The Company will measure compensation expense for the stock plan using
the intrinsic value method prescribed by Accounting Principles Board Opinion
No. 25, Accounting for Stock Issued to Employees (APB No. 25). Accordingly,
compensation expense for qualified and non-qualified employee stock options
granted under the Amended Option Plan is equal to the difference between the
fair market value of the stock at the date of grant and the amount an employee
must pay to acquire the stock.

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The fair value of each option granted under the Companys Amended Option Plan
is estimated on the date of grant using the Black-Scholes option-pricing model
with the following weighted average assumptions used for grants in 2003, 2002
and 2001:

2003
    
    2002
    
    2001Expected volatility
    
    N/A
    
    N/A
    
    
    226.3
    %Risk-free interest rate
    
    N/A
    
    N/A
    
    
    3.5
    %Dividend yield
    
    N/A
    
    N/A
    
    
    0.0
    %Expected life
    
    N/A
    
    N/A
    
    
    5 years


Had compensation cost for the Companys Stock Plans been determined based on
the fair value at the grant dates for awards under the Stock Plans consistent
with the method prescribed by SFAS 123, the Companys net loss and net loss per
share (diluted) would have changed to the proforma amounts indicated below:

Unaudited
    
    UnauditedFor period ended
    
    For period ended
    
    For period endedJune 30,2003
    
    June 30,2002
    
    June 30,2001Net Income/Loss
As reported
    
    $
    1,437,477
    
    
    $
    (1,352,151
    )
    
    $
    (2,356,681
    )Proforma
    
    $
    1,348,437Diluted net Income/LossAs reported
    
    $
    0.18
    
    
    $
    (0.18
    )
    
    $
    (0.32
    )


The effects of applying SFAS 123 in this proforma disclosure are not indicative
of future amounts. The Company anticipates that additional awards will be
granted in future years.

NOTE 10. CAPITAL STOCK:

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

Effective May 19, 2003, the Company entered into an agreement to acquire
certain development and licensing rights from Omniscent Corp. The Company has
until January 31, 2004 to determine whether it will close on the acquisition.
At its sole option it may terminate the agreement without any liability except
for the payment of royalties, if any, with respect to the Cara Mia product.
The purchase price of the development and license rights will be payable at the
option of the Company by either (1) up to 2,500,000 shares of preferred
convertible stock or (2) a cash payment of $500,000. The Company has not
determined whether to issue Omniscent Corp. preferred stock or make the cash
payment. If the Company determines to issue the preferred shares, such
designation for the preferred shares shall include the right of the holder to
convert the shares on a one to one basis for shares of common stock, but in no
event may the

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preferred shares be converted into more than 19.9% of the
Companys issued and outstanding common stock.

NOTE 11. SUBSEQUENT EVENT:

On September 1, 2003 Omniscent Corp. loaned the Company $30,000, which is an
interest free loan due on demand. The Company also sold Omniscent Corp.,
305,610 shares of the common stock of the corporation for $50,000 at $.16 per
share which is approximately 115% of the closing trading price of the Companys
common stock on September 1, 2003.

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




PART III.




ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

During November 2002, the Board dismissed Deloitte & Touche LLP (D&T) as the
independent certified public accountants of the Company. D&T has previously
audited our consolidated financial statements for the fiscal years ended
December 31, 2001, 2000 and 1999 (Prior Fiscal Years). Their reports on such
consolidated financial statements did not contain an adverse opinion or a
disclaimer of opinion and were not qualified or modified as to audit scope or
accounting principles, but included uncertainty paragraphs for the Prior Fiscal
Years relating to our ability to continue as a going concern.

In connection with its audits of our financial statements for the Prior Fiscal
Years and through November 21, 2002, we had no disagreements with D&T on any
matter of accounting principles or practices, financial statement disclosure,
or auditing scope or procedure, which disagreements, if not resolved to the
satisfaction of D&T, would have caused D&T to make a reference to the subject
matter of the disagreements in connection with its reports on the consolidated
financial statements of the Prior Fiscal Years and through November 21, 2002.
Further, in connection with the audits of our financial statements of the Prior
Fiscal Years and through November 21, 2002, there were no reportable events
within the meaning of Item 304(a)(1)(v) of the Securities and Exchange
Commissions Regulation S-K.

Our Board met and reviewed the qualifications of several potential applicants
and chose Berkovits, Lago & Company, LLP (BLC) as the successor independent
certified public accounting firm to be engaged effective November 21, 2002, and
was approved by our shareholders on December 3, 2002.

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On August 6, 2003, the Board dismissed BLC as the independent certified public
accountants of the Company. BLC has previously audited our consolidated
financial statements for the fiscal year ended December 31, 2002. Their
reports on such consolidated financial statements did not contain an adverse
opinion or a disclaimer of opinion and were not qualified or modified as to
audit scope or accounting principles, but included uncertainty paragraphs for
the fiscal year ended December 31, 2002 relating to our ability to continue as
a going concern. In connection with its audit of our financial statements
for the fiscal year ended December 31, 2002 and through August 6, 2003, we had
no disagreements with BLC on any matter of accounting principles or practices,
final statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of BLC, would have caused
BLC to make a reference to the subject matter of the disagreements in
connection with its report on the consolidated financial statements of the
fiscal year ended December 31, 2002 through August 6, 2003. Further, in
connection with the audits of our financial statements of the fiscal year ended
December 31, 2002 and through August 6, 2003, there were no reportable events
within the meaning of Item 304(a)(1)(v) of the Securities and Exchange
Commissions Regulation S-K.

Effective August 6, 2003, our Board engaged Rachlin, Cohen & Holtz LLP (RCH)
as the successor independent certified public accounting firm to be engaged
effective August 6, 2003. However, on October 15, 2003, our Board met and
decided to dismiss RCH as the independent certified public accountants of the
Company. RCH, from its date of engagement through its dismissal, did not
provide any report on the financial statements of our Company. From August 6,
2003 and through the date of dismissal, there were no disagreements with RCH on
any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements, if not
resolved to the satisfaction of RCH would have caused them to make reference
thereto in their report on the financial statements for such period. From
August 6, 2003 through the date of dismissal, the Company had no reportable
events as defined in Item 304(a)(1)(v) of Regulation S-K.

On November 12, 2003, the Board chose to appoint DeMeo, Young, McGrath as the
successor independent certified public accounting firm to be engaged to serve
as the Companys independent certified public accountants.




ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information regarding our current
executive officers and directors:

NAME
    
    AGE
    
    POSITIONLucien Lallouz
    
    
    59
    
    
    Chief Executive Officer and Class III DirectorDr. Michael Wellikoff
    
    
    61
    
    
    Chairman and Interim Financial OfficerJonathan Geller
    
    
    28
    
    
    Class I Director




|* |  | Kenneth A. Glenn resigned from the board of
directors in August 2003.
|- |  | ---------------------------------------------------------------------

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Dr. Michael Wellikoffwas appointed Chairman March 31, 2003 and Interim
Financial Officer on September 1, 2003. He had been engaged in private dental
practice for 32 years with an emphasis on cosmetic restorative dentistry.
Prior to his private practice, Dr. Wellikoff was a Captain in the United States
Air Force having served with the 6550th USAF Hospital in support of Manned
Space Flight Operations for Apollo flights VIII through XIII. Dr. Wellikoff
holds a Bachelor of Science in Biology from the State University of New York at
Binghamton and a Doctor of Dental Medicine from Tufts University. Dr.
Wellikoff is a member of the American Dental Association and the Florida Dental
Association.

Lucien Lallouz, has been a Class III director since May 22, 2003 and was named
president and interim Chief Executive Officer on May 22, 2003, effective April
1, 2003 Mr. Lallouz previously served as the Companys Sr. Vice President from
June 1999 to June 2001. From June 2001 to April 2003, Mr. Lallouz was Sr. Vice
President of Business Development for ECOMV, the parent Company of
Perfumania.com. He has been involved in the fragrance and cosmetics industry
for more than 30 years. He has created consumer products for major brands
worldwide. From 1988 to 1992 he served as President and CEO of Creative
Fragrances, Inc., a Canadian Company that created and marketed worldwide
celebrity fragrances.

Jonathan Gellerhas been a Class I director since October 1999. From October
1999 through January 2003, Mr. Geller was our Vice-President and Chief
Technology Officer. Mr. Geller remains active on the Board and is presently
pursuing a new venture within the agriculture sector in Peru. Mr. Geller was
co-founder of Jackpot S.A, Lima Peru, a privately owned Company specializing in
the development of Web pages, providing high bandwidth Internet connections and
custom Web applications. From January 1998 until September 1999, Mr. Geller
served as Jackpots Chief Executive Officer. From January 1994 until December
1997, Mr. Geller attended college at North Carolina State University where he
graduated with a degree in Industrial Engineering.

CLASSIFIED BOARD OF DIRECTORS

Our Board is divided into three classes of directors serving staggered
three-year terms. As a result, one-third of the Board will be elected each
year. These provisions, together with provisions of our articles of
incorporation and by-laws, allow the Board to fill vacancies or increase its
size, and may deter or hinder a shareholder from removing incumbent directors
and filling such vacancies with its own nominees in order to gain control of
the Board.

Jonathan Geller is the only Class I director. His term expires at the 2003
annual meeting of our shareholders. Dr. Wellikoff currently serves as a Class
II director whose term expires at the 2004 annual meeting of shareholders. Mr.
Lallouz serves as Class III director whose term expires at the 2005 annual
meeting of shareholders.

BOARD COMMITTEES

The audit committee of our Board consists of Dr. Wellikoff. The audit committee
reviews our financial statements and accounting practices, makes
recommendations to the Board regarding

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the selection of independent auditors and reviews the results and scope of the
audit and other services provided by our independent auditors.

We do not have a compensation committee. Our Board currently performs all
functions of the compensation committee.

DIRECTOR COMPENSATION

Independent directors receive options to purchase 5,000 Common Shares per year
for their services as directors, and are reimbursed for their reasonable
expenses for attending our Board and Board committee meetings. Directors
compensation is paid at the end of each year. The exercise price of the options
which form part of the compensation paid to directors will be based on the
market value at the time the options are granted.




ITEM 11. EXECUTIVE COMPENSATION

SUMMARY COMPENSATION

The following table sets forth information with respect to all compensation
paid or earned for services rendered to the Company during the transition
period by our Chief Executive Officer and our three other most highly
compensated executive officers whose aggregate annual compensation exceeded
$100,000 and who were executive officers of the Company at June 30, 2003 (all
of the individuals named in the following table are collectively defined as the
Named Executive Officers). We do not have a pension plan or a long-term
incentive plan, have not issued any restricted stock awards and have not
granted any stock appreciation rights as of this date. We have granted stock
options. See Option Grants and Holdings and Employee Benefit Plan.

SUMMARY COMPENSATION TABLE

SECURITIESNAME AND PRINCIPAL
    
    
    
    
    
    COMPENSATION
    
    
    
    
    
    UNDERLYING
    
    ALL OTHERPOSITION
    
    TRANSITION PERIOD
    
    SALARY ($)
    
    BONUS ($)
    
    OPTIONS(#) (1)
    
    COMPENSATION ($)Lucien Lallouz
    
    
    2003
    
    
    $
    75,000
    (2)
    
    $
    25,970
    (3)
    
    
    371,000
    (3)
    
    
    Chief Executive Officer




|(1) |  | See Option Grants and Holdings below for a description of such
executive officers options.
|--- |  | ---------------------------------------------------------------------------------------------



|(2) |  | $30,000 is deferred.
|--- |  | --------------------



|(3) |  | Received options as an inducement for entering into employment
contract with the Company. Options are exercisable at $.08 per share
which is approximately 114% of the closing trading price of the
Companys common stock on April 1, 2003 ($.07). Value of bonus
determined by market value of common stock as of April 1, 2003 closing
trading price.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

OPTION GRANTS AND HOLDINGS

During the transition period ended June 30, 2003 and effective April 1, 2003
the Company issued options to purchase 371,000 shares of common stock
exercisable at $.08 per share (approximately 114% of the closing price of the
Companys common stock on April 1, 2003) to Lucien Lallouz, Chief Executive
Officer and director as an inducement to serve in those capacities.

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During the transition period ended June 30, 2003 and effective April 1, 2003
the Company issued options to purchase 371,000 shares of common stock
exercisable at $.08 per share (approximately 114% of the closing price of the
Companys common stock on April 1, 2003) to Michael B. Wellikoff, Chairman, as
an inducement to serve in that capacity.

AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUE TABLE.

The following table provides certain summary information concerning stock
options held as of June 30, 2003 by our three most highly compensated executive
officers. No options have been exercised as of June 30, 2003 by any of the
officers. The value of unexercised in-the-money options at June 30, 2003 is
based on the value of our common shares on June 30, 2003 ($.14 per share).

Number of Securities Underlying
    
    Value of Unexercised in-the-moneyUnexercised Options at June 30, 2003
    
    Options at June 30, 2003NAME
    
    EXERCISABLE
    
    UNEXERCISABLE
    
    EXERCISABLE
    
    UNEXERCISABLELucien Lallouz
    
    
    371,000
    
    
    
    
    
    
    $
    51,940
    
    
    
    


OPTION GRANTS IN LAST FISCAL YEAR

The following table sets forth information regarding the grant of stock options
to the Named Executives during the transition period ended June 30, 2003:

% of Total# of Securities
    
    Options GrantedSecurities Underlying
    
    to Employees in
    
    ExerciseName
    
    Options Granted
    
    Transition Period
    
    Price
    
    Expiration DateLucien Lallouz
    
    
    371,000
    
    
    
    50
    %
    
    $
    .08
    
    
    April 1, 2008


EMPLOYEE BENEFIT PLANS

Stock Option Plan

In November 2001, the shareholders approved an amendment to the Option Plan, to
(1) increase the number of shares reserved for issuance under the Option Plan
from 2,442,857 shares of Common Stock to 4,442,857 shares of Common Stock and
(2) effect various additional modifications to the Option Plan, including (a)
the removal in its entirety of Section 13 of the Option Plan, entitled
Redemption of Shares by the Company, (b) the removal in its entirety of
Section 18 of the Option Plan, entitled Information for Optionees, (c) the
addition to Section 17 of the Option Plan, entitled Amendment and Termination
of the Plan of a fixed date of termination for the Option Plan, (d) the
replacement of language in Section 3 of the Option Plan, entitled Number of
Shares Available For Options, to change the current pool of stock available
for issuance as options under the Option Plan from fifteen percent (15%) of the
issued and outstanding shares to 4,442,857 shares, and (e) approval and
adoption of the Nimbus Group, Inc. 2001 Amended and Restated Stock Option Plan
(the Amended Option Plan). Shares covered by any option granted under the
Option Plan, which expires unexercised, become available again for grant under
the Amended Option Plan. As of June 30, 2003, options to purchase 742,000
common shares were outstanding.

Simple IRA Plan

In February 2003, the Company cancelled its SIMPLE IRA Plan.

EXECUTIVE EMPLOYMENT AGREEMENTS AND CONSULTING AGREEMENTS

Lucien Lallouz, Chief Executive Officer. On May 22, 2003 the Company entered
into a five year employment agreement, effective April 1, 2003, with Lucien
Lallouz, under which Mr. Lallouz shall serve as Chief Executive

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Officer of the Company. Under the terms of the agreement Mr. Lallouz shall
receive an annual base salary of $280,000, subject to annual 10% increase at
the discretion of the board of directors. In addition, the Company issued
options to purchase 371,000 shares of common stock exercisable at $.08 per
share (approximately 114% of the closing price of the Companys common stock on
April 1, 2003) to Lucien Lallouz, as an inducement for Mr. Lallouz to enter
into the employment agreement. The agreement is automatically renewable for
successive 2 year terms. Under the agreement, Mr. Lallouz is entitled to
health benefits and coverage and is entitled to participate in any Company
incentive plan. The agreement also entitles Mr. Lallouz to reimbursement for
all reasonably incurred business expenses, including travel. Under the
agreement Mr. Lallouz is entitled to 6 weeks of vacation, including federal
holidays. In the instance that Mr. Lallouz is terminated without cause, he
shall be entitled to 2.5 years base salary, payable over the 12 months
immediately following the date of termination. In the event of change of
control in the Company, Mr. Lallouz shall be entitled to a lump sum payment of
250% of his prevailing base salary.

Dr. Michael Wellikoff, Chairman and Interim Chief Financial Officer . On
September 1, 2003, effective July 1, 2003, the Company entered into a three
year employment agreement with Dr. Michael Wellikoff, under which Dr. Wellikoff
shall serve as Chief Financial Officer of the Company. Under the terms of the
agreement Dr. Wellikoff shall receive an annual salary of $180,000, subject to
annual 10% increase at the discretion of the board of directors. Under the
agreement, Dr. Wellikoff is entitled to health benefits and coverage and is
entitled to participate in any Company incentive plan. The agreement also
entitles Dr. Wellikoff to reimbursement for all reasonably incurred business
expenses, including travel. In addition, on March 31, 2003 (under a separate
agreement) the Company issued options to purchase 371,000 shares of common
stock exercisable at $.08 per share (approximately 114% of the closing price of
the Companys common stock on April 1, 2003) to Dr. Wellikoff, as an inducement
for Dr. Wellikoff to serve as Chairman of the Company. The agreement also
entitles Dr. Wellikoff to reimbursement for all reasonably incurred business
expenses, including travel. Under the agreement Dr. Wellikoff is entitled to 6
weeks of vacation, including federal holidays. In the instance that Dr.
Wellikoff is terminated without cause, he shall be entitled to 2.5 years base
salary, payable over the 12 months immediately following the date of
termination. In the event of change of control in the Company, Dr. Wellikoff
shall be entitled to a lump sum payment of 250% of his prevailing base salary.

Jack A. Smith, Consultant. During October 2003, the Company entered into a
three year business consulting agreement with Jack Smith, under which Mr. Smith
shall act as a business consultant for the Company and provide advice on
licensing, retail, marketing and general business issues. The Company issued
options to purchase 371,000 shares of common stock exercisable at $.18 per
share (approximately 113% of the closing price of the Companys common stock on
October 27, 2003) to Jack Smith, as an inducement for Mr. Smith to enter into a
consulting agreement with the Company.

INDEMNIFICATION OF OFFICERS AND DIRECTORS

Section 607.0850 of the Florida Business Corporation Act (FBCA) permits, in
general, a Florida corporation to indemnify any person who was or is a party to
any action or proceeding by reason of the fact that he or she was a director or
officer of the corporation, or served another entity in any capacity at the
request of the corporation, against liability incurred in connection with such
proceeding including the estimated expenses of litigating the proceeding to
conclusion and the expenses actually and reasonably incurred in connection with
the defense or settlement of such proceeding, including any appeal thereof, if
such person acted in good faith for a purpose he or she reasonably believed to
be in, or not opposed to, the best interest of the corporation and, in criminal
actions or proceedings, additionally had no reasonable cause to believe that
his or her conduct was unlawful. Section 607.0850(6) of the FBCA permits the
corporation to pay such costs or expenses in advance of a final disposition of
such action or proceeding upon receipt of an undertaking by or on behalf of the
director or officer to repay such amount as and to the extent required by
statute. Section 607.0850 of the FBCA provides that the indemnification and
advancement of expense provisions contained in the FBCA shall not be deemed
exclusive of any rights to which a director or officer seeking indemnification
or advancement of expenses may be entitled.

Our articles of incorporation provide, in general, that we shall indemnify, to
the fullest extent permitted by Section 607.0850 of the FBCA, any and all
persons whom it shall have the power to indemnify under that section from and
against any and all of the expenses, liabilities or other matters referred to
in or covered by said section. Our articles of incorporation also provide that
the indemnification provided for therein shall not be deemed exclusive of any
other rights to which those indemnified may be entitled under any by-law,
agreement, vote of shareholders or

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disinterested directors or otherwise, both as to actions taken in his or her
official capacity and as to acts in another capacity while holding such office.

In accordance with that provision of our articles of incorporation, we shall
indemnify any officer or director (including officers and directors serving
another corporation, partnership, joint venture, trust, or other enterprise in
any capacity at our request) made, or threatened to be made, a party to an
action or proceeding (whether civil, criminal, administrative or investigative)
by reason of the fact that he or she was serving in any of those capacities
against judgments, fines, amounts paid in settlement and reasonable expenses
(including attorneys fees) incurred as a result of such action or proceeding.
Indemnification would not be available if a judgment or other final
adjudication adverse to such director or officer establishes that (i) his or
her acts were committed in bad faith or were the result of active and
deliberate dishonesty or (ii) he or she personally gained in fact a financial
profit or other advantage to which he or she was not legally entitled.

We entered into indemnification agreements with each of our current directors
and officers to give these directors and officers additional contractual
assurances regarding the scope of the indemnification set forth in our articles
of incorporation and bylaws and to provide additional procedural protections.
At present, there is no pending litigation or proceeding involving a director,
officer or employee of Nimbus Group regarding which indemnification is sought,
nor are we aware of any threatened litigation that may result in claims for
indemnification.

We do not maintain directors and officers liability insurance.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information known to us with respect to
the beneficial ownership of our Common Shares as of October 30, 2003 by (i)
each shareholder known by us to be the beneficial owner of more than 5% of our
Common Shares, (ii) each director of Nimbus Group and (iii) all executive
officers and directors as a group. Percentage of ownership is based on
7,688,889 shares outstanding as of October 30, 2003. Common Shares subject to
options currently exercisable or exercisable within 60 days of October 30, 2003
are deemed outstanding for the purpose of computing the percentage ownership of
the person holding such options, but are not deemed outstanding for computing
the percentage ownership of any other person. Unless otherwise indicated
below, the persons and entities named in the table have sole voting and sole
investment power with respect to all shares beneficially owned, subject to
community property laws where applicable. Unless otherwise noted, the address
of each shareholder is our address, which is 2999 Northeast 191st Street, Suite
805, Aventura, Florida 33180.

COMMON SHARESBENEFICIALLY OWNEDNAME OF BENEFICIAL OWNER
    
    NUMBER
    
    PERCENTAGELucien Lallouz (1)
    
    
    371,000
    
    
    
    4.9
    %Michael Wellikoff (2)
    
    
    401,000
    
    
    
    5.0
    %Jonathan Geller
    
    
    2,000
    
    
    
    *Executive officers and directors as a group (3 persons)
    
    
    774,000
    
    
    
    9.9
    %




|(1) |  | Represents 371,000 shares of common stock underlying options exercisable
at $.08 per share.
|--- |  | -------------------------------------------------------------------------------------------



|(2) |  | Includes 371,000 shares of common stock underlying options exercisable at
$.08 per share.
|--- |  | -----------------------------------------------------------------------------------------



|* |  | Represents less than 1% of the outstanding shares of the Company.
|- |  | -----------------------------------------------------------------

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Effective May 19, 2003, the Company acquired certain development and licensing
rights from Omniscent Corp. The purchase price of the development and license
rights is payable at the option of the Company by either (1) up to 2,500,000
shares of preferred convertible stock or (2) a cash payment of $500,000. The
Company has not determined whether to issue Omniscent Corp. preferred stock or
make the cash payment. If the Company determines to issue the preferred
shares, such designation for the preferred shares shall include the right of
the holder to convert the shares on a one to one basis for shares of common
stock, but in no event may the preferred shares be converted into more than
19.9% of the Companys issued and outstanding common stock.

Effective May 20, 2003, we entered into a licensing agreement with Victory
International USA LLC to distribute its Cara Mia Cosmetics brand worldwide.
Anil Monga is the principal shareholder of Victory International and is also a
shareholder of the Company.

On September 1,2003 Omniscent Corp. loaned the Company $30,000, which is an
interest free loan due on demand. The Company also sold Omniscent Corp.,
305,610 shares of the common stock of the corporation for $50,000 at $.16 per
share which is approximately 115% of the closing trading price of the Companys
common stock on September 1, 2003.




ITEM 14. CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Within the 90 days prior to the filing date of this report, the Company carried
out an evaluation of the effectiveness of the design and operation of its
disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. This
evaluation was done under the supervision and with the participation of the
Companys Principal Executive Officer and Principal Financial Officer. Based
upon that evaluation, they concluded that the Companys disclosure controls and
procedures are effective in gathering, analyzing and disclosing information
needed to satisfy the Companys disclosure obligations under the Exchange Act.

CHANGES IN INTERNAL CONTROLS

There were no significant changes in the Companys internal controls or in
other factors that could significantly affect those controls since the most
recent evaluation of such controls.

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PART IV.




ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.



|(a) |  | The following exhibits are filed herewith or incorporated herein by
reference:
|--- |  | ------------------------------------------------------------------------------

ExhibitNumber
    
    Description of Exhibit3.01
    
    Articles of Incorporation.*3.02
    
    Bylaws.*10.1
    
    Employment Agreement with Lucien Lallouz dated May 22, 2003 (filed herein)10.2
    
    License Acquisition Agreement with Omniscent Corp. dated May 19, 2003 (filed herein)10.3
    
    Assignment of Phantom License with Omniscent Corp. effective May 21, 2003 (filed herein)10.4
    
    Moar International and Omniscent Corp. Phantom Brand License Agreement (filed herein)10.06
    
    Form of Indemnification Agreement to be entered into by Registrant with each of its
directors and executive officers.*10.07
    
    2001 Amended Stock Option Plan and related documents. (previously filed on Definitive
Proxy Statement, dated November 8, 2001.16.1
    
    Letter from Former Auditor (previously filed on Form 8-K, dated November 18, 2003)31.1
    
    Certification by Chief Executive Officer pursuant to Section 302.31.2
    
    Certification by Chief Financial Officer pursuant to Section 302.32.1
    
    Section 906 Certification by principal executive officer.32.2
    
    Section 906 Certification by principal financial officer.




|* |  | Previously filed and incorporated by reference to exhibit in the
Companys Registration Statement on Form S-1, as amended (File No.
333-91177), initially filed on November 17, 1999 (Form S-1).
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(b) |  | Financial statement schedules:
|--- |  | ------------------------------



| |  | None.
| |  | -----



|(c) |  | Reports on Form 8-K:
|--- |  | --------------------



| |  | During the period covered by this transition report the following reports
on Form 8-K were filed:
| |  | -------------------------------------------------------------------------------------------------



| |  | On January 28, 2003 the Company filed a Current Report on Form 8-K to
disclose under Item 5 that on January 28, 2003 it received a letter from
E Com Ventures, Inc., the parent of Perfumania.com, indicated that it was
in default of its website operations services agreement.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | On February 5, 2003 the Company filed a Current Report on Form 8-K to
disclose under Item 5 that on February 3, 2003 Jonathan Geller and
Mitchell Morgan resigned as officers of the Company. In addition, the
report also disclosed that Mr. Morgan resigned as a director of the
Company.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | On February 24, 2003 the Company filed a Current Report on Form 8-K to
disclose under Item 5 that on February 18, 2003 that Watch Junction, Inc.
purchased certain technology and assets of the Companys subsidiary,
TaketoAuction.com, Inc.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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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 on December 11, 2003.

Nimbus Group, Inc.By:
    
    /s/Lucien LallouzLucien Lallouz
Chief Executive Officer


Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

By:
    
    /s/ Michael Wellikoff
    
    December 11, 2003Michael Wellikoff, Chairman, Interim Chief Financial Officer
and DirectorBy:
    
    /s/ Lucien Lallouz
    
    December 11, 2003Lucien Lallouz, Chief Executive Officer and DirectorBy:
    
    /s/ Jonathan Geller
    
    December 11, 2003Jonathan Geller, Director


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