0001144204-07-059590.txt : 20071109 0001144204-07-059590.hdr.sgml : 20071109 20071109110712 ACCESSION NUMBER: 0001144204-07-059590 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20070930 FILED AS OF DATE: 20071109 DATE AS OF CHANGE: 20071109 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KINGTHOMASON GROUP INC CENTRAL INDEX KEY: 0001133116 STANDARD INDUSTRIAL CLASSIFICATION: INSURANCE AGENTS BROKERS & SERVICES [6411] IRS NUMBER: 731602395 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 333-60880 FILM NUMBER: 071228975 BUSINESS ADDRESS: STREET 1: 309 AVENUE H, SUITE C CITY: REDONDO BEACH STATE: CA ZIP: 90277 BUSINESS PHONE: 4058481581 MAIL ADDRESS: STREET 1: 21702 EVALYN AVENUE CITY: TORRANCE STATE: CA ZIP: 90503 10QSB 1 v093133_10qsb.htm

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-QSB

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2007

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

The KingThomason Group, Inc.

(Exact name of registrant as specified in its charter)

Nevada
(state of
incorporation)

333-60880

(Commission File Number)

73-1602395
(IRS Employer
I.D. Number)

	21702 Evalyn Avenue Torrance, CA 90503 (310) 540-1960
	(Address and telephone number of registrant's principal executive offices and principal place of business)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past twelve months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

As of October 24, 2007, there were 25,115,020 shares of the Registrant's Common Stock, par value $0.001 per share, outstanding.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.) Yes x No o

Transitional Small Business Disclosure Format (check one): Yes o No x

TABLE OF CONTENTS

	Page

PART I - FINANCIAL INFORMATION	3

Item 1. Financial Statements	3

Item 2. Management’s Discussion and Analysis or Plan of Operation	16

Item 3. Controls and Procedures	17

PART II - OTHER INFORMATION	18

Item 6. Exhibits	18

SIGNATURES	20

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

		Page

Consolidated Balance Sheet September 30, 2007 (Unaudited)		4
Consolidated Statements of Operations (Unaudited) for the Three-Month and Nine-Month Periods Ended September 30, 2007 and 2006		5
Consolidated Statements of Cash Flows for the Nine-Month Periods Ended September 30, 2007 and 2006 (Unaudited)		6
Notes to Unaudited Consolidated Financial Statements		7

KINGTHOMASON GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

SEPTEMBER 30, 2007

(UNAUDITED)

ASSETS
CURRENT ASSETS:
Cash & cash equivalent	$	378

		378

PROPERTY AND EQUIPMENT, NET		2,087

	$	2,465


LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	92,976
Accrued interest		0
Note payable - officers		0
Note payable - related parties		0
Note payable - others		0

Total current liabilities		92,976

STOCKHOLDERS' DEFICIT
Preferred stock, $100 par value; 10,000,000 shares authorized; 3,647 shares issued and outstanding		304,600
Common stock, $0.001 par value; 100,000,000 shares authorized; 23,771,636 shares issued and outstanding		23,772
Additional paid in capital		309,358
Less: Unamortized prepaid expenses		(67,827	)
Accumulated deficit		(660,414	)
Total stockholders' deficit		(90,512	)

	$	2,465

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

KINGTHOMASON GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTH AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 2007 & 2006

(UNAUDITED)

	Three month periods ended						Nine month periods ended
	September 30,						September 30,
	2007			2006			2007			2006
Revenues
Commission income	$	0		$	9,793			11,286			21,196
Net revenues		0			9,793		$	11,286		$	21,196

Operating Expenses
Consulting Expense					5,238			4287			5,238
General & Administrative Expense		7,337			71,187			496			160,735
Total operating expenses		2,433			76,425			4,783			165,973

Loss from operations		(2,433	)		(66,632	)		6,503			(144,777	)

Non-operating income (expense):
Gain on extinguishment of debt								(609,111	)
Interest expense		(6,585	)		(6,773	)		(17,506	)		(12,899	)
Total non-operating income (expense)		(6,585	)		(6,773	)		(626,617	)		(25,798	)

Loss before income taxes		(9,018	)		(73,405	)		(11,003	)		(157,676	)

Provision for income taxes		-			800						3,200

Net loss	$	(9,018	)	$	(74,205	)		(11,003	)	$	(160,876	)


Basic & diluted net loss per share	$	(0.000	)	$	(0.004	)		(0.025	)	$	(0.01	)

Basic & diluted weighted average shares outstanding		25,115,020			20,808,965			25,115,020			20,059,078

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

KINGTHOMASON GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 2007 & 2006

(UNAUDITED)

	2007			2006

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(11,003	)	$	(152,875	)
Adjustments to reconcile net loss to net cash used in operating activities:
Shares issued for services					29,400
Depreciation and amortization		36,560			103,178
(Increase) / decrease in current assets:					255
Prepaid expenses		-
Increase in current liabilities:
Accrued expenses		(34,038	)		19,557
Net cash used in operating activities		(8,481	)		(485	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock		-
Net cash provided by financing activities		-

NET INCREASE (DECREASE) IN CASH & CASH EQUIVALENTS		(8,481	)		(485	)

CASH & CASH EQUIVALENTS, BEGINNING BALANCE		5,616			4,790

CASH & CASH EQUIVALENTS, ENDING BALANCE	$	(2,865	)	$	4,305

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

KINGTHOMASON GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

THESE FINANCIALS HAVE NOT BEEN REVIEWED BY OUR AUDITOR

1.	DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

The KingThomason Group, Inc. (KTGI) was organized in accordance with the General Corporation Act of the State of Nevada on November 8, 2000, for the purpose of merging with KingThomason, Inc. (KT), a Nevada corporation and subsidiaries. KTGI had no business operation through December 31, 2001 and was a development-stage company through December 7, 2001, organized for the merger. KTGI effected a merger on December 7, 2001 with KingThomason, Inc. pursuant to approving votes of the shareholders of both corporations.

King Thomason, Inc. (KT) was incorporated in the state of Nevada on July 21, 2000. KT’s activities from inception until December 31, 2000 consisted primarily of reviewing possible business opportunities and developing the business model.

Pursuant to reorganization agreement dated December 31, 2000, the Company acquired one hundred percent (100%) of the common shares of following subsidiaries:

(1) King Thomason, Inc. CA (KTI):

KTI was incorporated in the state of California on September 11, 1998 to market and sell the cash security retirement plan and personal lines of insurance including homeowners and automobile. KTI’s activities consisted primarily of acting as a broker for insurance companies working on commission.

(2) King Thomason Financial Services, Inc. (KTFS):

KTFS was incorporated in the state of California on April 7, 1999, to market and sell the financial and estate planning service, assets management services and the sell of stocks, bond and mutual funds.

The Company did not have any activity since end of 2004.

(3) King Thomason Insurance Marketing, Inc. (KTIM):

KTIM was incorporated in the state of California on January 28, 2000 to market and sell insurance policies. The Company began its operations in the period ended June 30, 2001. KTIM’s activities consisted primarily of acting as a broker for dental insurance companies working on commission.

(4) King Thomason Credit Card Services, Inc. (KTCC):

KTCC was incorporated in the state of California on January 28, 2000 to underwrite and issue a private label credit card for use with its medical and dental insurance products.

To date the Company has realized no revenues from this business.

(5) King Thomason Franchising, Inc. (KTFI):

KTFI was incorporated in the state of California on August 17, 2000 to franchise a “Financial Center” to offer and sell various financial and insurance products. The Company did not have any activity since its inception.

KINGTHOMASON GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Principles of Consolidation & Recapitalization

The accompanying consolidated financial statements for the year ended December 31, 2006 and 2005 include the accounts of KTGI and its wholly owned subsidiaries, KTI, KTFS, KTFI, KTCC & KTIM. (collectively the “Company”). All significant inter-company accounts and transactions have been eliminated in consolidation.

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash and cash equivalents

The Company considers all liquid investments with a maturity of three months or less from the date of purchase that are readily convertible into cash to be cash equivalents.

Use of 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.

Property & equipment

Property and equipment are recorded at cost. Depreciation is computed using the straight-line method over useful lives of 1.5 to 7 years. The cost of assets sold or retired and the related amounts of accumulated depreciation are removed from the accounts in the year of disposal. Any resulting gain or loss is reflected in current operations. Assets held under capital leases are recorded at the lesser of the present value of the future minimum lease payments or the fair value of the leased property. Expenditures for maintenance and repairs are charged to operations as incurred.

Impairment of long-lived assets

Effective January 1, 2002, the Company adopted Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS 144"), which addresses financial accounting and reporting for the impairment or disposal of long-lived assets and supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," and the accounting and reporting provisions of APB Opinion No. 30, "Reporting the Results of Operations for a Disposal of a Segment of a Business." The Company periodically evaluates the carrying value of long-lived assets to be held and used in accordance with SFAS 144. SFAS 144 requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair market value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair market values are reduced for the cost of disposal.

KINGTHOMASON GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Basic and diluted net loss per share

Net loss per share is calculated in accordance with the Statement of financial accounting standards No. 128 (SFAS No. 128), “Earnings per share”. SFAS No. 128 superseded Accounting Principles Board Opinion No.15 (APB 15). Net loss per share for all periods presented has been restated to reflect the adoption of SFAS No. 128. Basic net loss per share is based upon the weighted average number of common shares outstanding. Diluted net loss per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.

Stock-based compensation

The Company has adopted the disclosure provisions only of SFAS 123 and continues to account for stock based compensation using the intrinsic value method prescribed in accordance with the provisions of APB No. 25, Accounting for Stock Issued to Employees, and related interpretations. Common stock issued to employees for compensation is accounted for based on the market price of the underlying stock, generally the average low bid price.

The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of SFAS 123 and the Emerging Issues Task Force consensus in Issue No. 96-18 ("EITF 96-18"), "Accounting for Equity Instruments that are Issued to Other Than Employees for Acquiring or in Conjunction with Selling, Goods or Services". Common stock issued to non-employees in exchange for services is accounted for based on the fair value of the services received.

Fair value of financial instruments

Statement of financial accounting standard No. 107, Disclosures about fair value of financial instruments, requires that the Company disclose estimated fair values of financial instruments. The carrying amounts reported in the statements of financial position for current assets and current liabilities qualifying as financial instruments are a reasonable estimate of fair value.

Revenue recognition

The Company's revenue recognition policies are in compliance with Staff accounting bulletin (SAB) 104. Revenue, including consulting income is recognized when earned. Commission income is recognized as of the effective date of the policy. Any adjustments to commissions are recognized in the year in which they occur.

Allowance for doubtful accounts

In determining the allowance to be maintained, management evaluates many factors including industry and historical loss experience. The allowance for doubtful accounts is maintained at an amount management deems adequate to cover estimated losses. The Company considers accounts receivable to be fully collectible; accordingly, no allowance for doubtful accounts is required.

KINGTHOMASON GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Income taxes

Deferred income tax assets and liabilities are computed annually for differences between the financial statements and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted laws and rates applicable to the periods in which the differences are expected to affect taxable income (loss). Valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized.

Shares issued to acquire goods and services from non-employees

The Company accounts for the issuance of equity instruments to acquire goods and services based on the fair value of the goods and services or the fair value of the equity instrument at the time of issuance, whichever is more reliably measurable.

Research and development costs

Expenditures for research & development are expensed as incurred. Such costs are required to be expensed until the point that technological feasibility is established. The period between achieving technological feasibility and the general availability of such development is short. Consequently, costs otherwise capitalizable after technological feasibility is achieved are generally expensed because they are insignificant. The Company did not incur any research and development cost during the year ended December 31, 2005 and 2004.

Reclassifications

Certain items in the prior year financial statements have been reclassified for comparative purposes to conform to the presentation in the current period’s presentation. These reclassifications have no effect on the previously reported income (loss).

3.	RECENT PRONOUNCEMENTS

In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error Corrections." This statement applies to all voluntary changes in accounting principle and requires retrospective application to prior periods' financial statements of changes in accounting principle, unless this would be impracticable. This statement also makes a distinction between "retrospective application" of an accounting principle and the "restatement" of financial statements to reflect the correction of an error. This statement is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005.

In February 2006, FASB issued SFAS No. 155, “Accounting for Certain Hybrid Financial Instruments”. SFAS No. 155 amends SFAS No 133, “Accounting for Derivative Instruments and Hedging Activities”, and SFAF No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities”. SFAS No. 155, permits fair value remeasurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation, clarifies which interest-only strips and principal-only strips are not subject to the requirements of SFAS No. 133, establishes a requirement to evaluate interest in securitized financial assets to identify interests that are freestanding derivatives or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation, clarifies that concentrations of credit risk in the form of subordination are not embedded derivatives, and amends SFAS No. 140 to eliminate the prohibition on the qualifying special-purpose entity from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument. This statement is effective for all financial instruments acquired or issued after the beginning of the Company’s first fiscal year that begins after September 15, 2006.

KINGTHOMASON GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

In December 2004, the FASB issued FASB Statement No. 123R, "Share-Based Payment, an Amendment of FASB Statement No. 123" ("FAS No. 123R"). FAS No. 123R requires companies to recognize in the statement of operations the grant- date fair value of stock options and other equity-based compensation issued to employees. FAS No. 123R is effective beginning in the Company's first quarter of fiscal 2006.

In June 2005, the EITF reached consensus on Issue No. 05-6, Determining the Amortization Period for Leasehold Improvements ("EITF 05-6.") EITF 05-6 provides guidance on determining the amortization period for leasehold improvements acquired in a business combination or acquired subsequent to lease inception. The guidance in EITF 05-6 will be applied prospectively and is effective for periods beginning after June 29, 2005. EITF 05-6 is not expected to have a material effect on its consolidated financial position or results of operations.

The Company believes that the adoption of these standards will have no material impact on its financial statements.

4.	PROPERTY AND EQUIPMENT

Property and equipment consisted of following on September 30, 2007:

Furniture, fixtures and equipment	$	2,087
Less: accumulated depreciation		1,917
	$	170

5.	ACCOUNTS PAYABLE & ACCRUED EXPENSES

Accounts payable and accrued expenses consisted of the following on September 30, 2007:

Accounts payable	$	88,481
Accrued taxes		800
	$	89,281

6.	GAIN ON SETTLEMENT OF DEBT

On July 15, 2002, the Company issued $90,000 worth of 12%, 18-month term, Convertible Debentures (the “Debentures”), on July 18, 2002, the Company issued an additional $100,000 worth of the Debentures with 12%, 18 month term and on October 30, 2002, the Company issued an additional $20,000 worth of the Debentures with 12%, 18 month term.

The holder may extend the term for an additional 18 months with a written notice at least 30 days before the end of the term. The extended note will bear 12.5% interest rate per year. When the note is extended, two additional extension options may be made by the holder with a written notice. Each extension of the note will increase its interest rate by 0.5%. Therefore, effective interest rate will be as follows; Term one-12%, Term two-12.5%, Term three-13%, and Term four-13.5%. The interests are payable quarterly starting October 2002. Interest for the year ended December 31, 2005 and 2004 amounted to $28,350 and $26,250 respectively.

KINGTHOMASON GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Attached to the Debentures, the Company granted non-transferable Warrants to purchase, at a purchase price of $0.25 a share, four shares of common stock of the Company for each dollar of the principal amount of the note. The warrants expire on the due dates of the notes. The fair value of the warrants, which was calculated using the Black Scholes module, was zero at the date of issuance using the following assumptions:

Volatility 0

Interest rate: 5%

Expected life: 18 months

Dividend: zero

Accordingly no proceeds were allocated to the warrants.

The above mentioned $210,000 convertible debentures were converted to 3,046 shares of preferred stock on December 31, 2005. Each share of preferred stock has par value of $100 and each share would be eligible to be converted into 1,000 shares of common stock. A gain of $250,395 for the conversion was recorded.

Note payable of $39,000 was settled by issuing 601 shares of preferred stock on December 31, 2005. Each share of preferred stock has a par value of $100 and each share would be eligible to be converted into 1,000 shares of common stock. A gain of $45,135 for the settlement of debt was recorded.

7.	STOCKHOLDERS’ DEFICIT

On May 17, 2005, the Company issued 37,500 shares of common stock to an officer in lieu of interest accrued on a note payable of $3,000. The shares were valued at $7,500 based on the market price of $0.20 per share at the date of issuance. Interest expense of $7,500 was booked accordingly.

On July 7, 2005, the Company issued 25,000 shares of common stock to a consulting company in lieu of consulting service provided from January 1, 2005 to June 30, 2005. The shares were valued at $7,250 based on the average market price of $0.29 per share during the period when the service was provided.

On August 16, 2005, the Company issued 60,000 shares of common stock to a consulting company according to a Forbearance Agreement. The consulting company provided service to the Company in 2002. Disputes arose between the two parties with respect to the exchange for consideration. Per the Forbearance Agreement, the consulting company will dismiss and forbear from re-filing for a period of six months from and including the date of execution of the Forbearance Agreement. The shares were valued at $6,000 based on the market price of $0.10 per share at the date of issuance.

On January 23, 2004, the company entered into a Media Transfer and Stock Purchase agreement with Digital Alliance Group, LLC (Media Provider) and Millennium Capital Quest Corp. (Agent). On the closing date, the Media Provide conveyed, assigned and transferred all right, title and interest without encumbrance of any kind Media Credits representing Fifty Million Dollars in retail rate card media credits, per the agreement, to the company. The company issued 809,242 shares of its common stock valued at $80,924 for the acquisition of the Media rights. According to the agreement, the common stock will be redeemable by the Company for an aggregate price of One Dollar ($1.00) provided that certain terms are not met. On May 23, 2005 the Company purchased back the 809,242 shares issued to Millennium Capital Quest by paying $1. The shares were retuned for non-performance and was officially cancelled on December 31, 2005.

KINGTHOMASON GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

On December 31, 2005 the Company cancelled 500,000 shares issued to a consultant for non performance (Note 14).

During the year ended December 31, 2004, the company issued 1,000,000 shares of common stock for prepaid consulting service amounting $184,500. Through December 31, 2005, the Company has amortized prepaid services amounting to $7,089.

On October 14, 2004, the Company entered into a common stock purchase agreement to sell Fusion Capital Fund II, LLC (FCF) up to $6 million of newly issued Company’s common stock over a period of up to 30 months. Specifically, after the Securities & Exchange Commission has declared effective a registration statement, each month the Company has the right to sell to FCF $200,000 of its common stock at a purchase price based upon the market price of its common stock on the date of each sale without any fixed discount to the market price. At the Company’s sole option, Fusion Capital can be required to purchase lesser or greater amounts of common stock each month up to $6.0 million in the aggregate. The Company has the right to control the timing and the amount of stock sold to FCF. The Company also has the right to terminate the agreement at any time without any additional cost. In connection with this, the Company issued 1,204,013 shares of common stock to FCF as commitment shares. This was valued at $313,043 based on the market price at the date of issuance. The prepaid funding is being amortized over the terms of the agreement. The Company has amortized prepaid funding amounting to $151,304 through December 31, 2005.

8.	UNAMORTIZED PREPAID EXPENSES

Unamortized Prepaid Expenses consisted of following on September 30, 2007:

Prepaid Consulting Expenses	$	7,089
Prepaid Funding Expenses		161,739
	$	168,828

9.	COMMITMENTS

On March 15, 2004, the company entered into a consulting agreement for six month period with Newport Capital Consultants, Inc. to provide financial management of the Company’s business including but not limited to investor relations. The company issued 700,000 shares of its common stock. When issued, will be duly authorized, validly issued, fully paid and non-assessable, and shall be free from any liens, encumbrances of restrictions.

On March 22, 2004, the company entered into a consulting agreement for one year period with Venture Street Capital Partners, LLC (VS) to provide telephone consultation, strategic advisement and referral services. The Company issued the company’s common stock for 150,000 shares by Rule 144. In addition, The Company shall pay to VS a nonrefundable retainer fee of Commission of ten percent (10%) cash USD of all transactions of financing’s from any referral made by VS. In regards to 144 securities the corporation will furnish a restriction-lifting opinion letter from corporate counsel with the restriction to be lifted after 1 year for sales made in compliance with Rule 144.

KINGTHOMASON GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

On October 14, 2004, the Company entered into a common stock purchase agreement to sell Fusion Capital Fund II, LLC (FCF) up to $6 million of newly issued Company’s common stock over a period of up to 30 months. Specifically, after the Securities & Exchange Commission has declared effective a registration statement, each month the Company has the right to sell to FCF $200,000 of its common stock at a purchase price based upon the market price of its common stock on the date of each sale without any fixed discount to the market price. At the Company’s sole option, Fusion Capital can be required to purchase lesser or greater amounts of common stock each month up to $6.0 million in the aggregate. The Company has the right to control the timing and the amount of stock sold to FCF. The Company also has the right to terminate the agreement at any time without any additional cost. In connection with this, the Company issued 1,204,013 shares of common stock to FCF as commitment shares. This was valued at $313,043 based on the market price at the date of issuance. The Company has amortized prepaid funding amounting to $26,087 through December 31, 2004.

10.

EARNINGS PER SHARE

Earnings per share for the nine-month periods ended September 30, 2007 and 2006 were determined by dividing net income for the periods by the weighted average number of both basic and diluted shares of common stock and common stock equivalents outstanding. Stocks to be issued are regarded as common stock equivalents and are considered in diluted earnings per share calculations.

11.

EXTRAORDINARY ITEM - GAIN ON EXTINGUISHMENT OF DEBT

On February 1, 2002 the Company entered into a consulting agreement for 36-month period with a consultant to provide debt management, collections, capital markets, financial and related advice. The Company paid $75,000 pursuant to the consulting agreement in 2002 and accrued $825,002 through July 31, 2004. In August 25, 2004, the Company amended the consulting agreement with the consultant. The amended agreement provides for the waiver of all accrued consulting fees. This amount had been carried on the balance sheet as part of accrued liabilities. The waiver of the accrued liabilities has been reflected in the accompanying financial statements as “Extra ordinary item - Gain (loss) on extinguishment of debt” amounting to $825,002 for the year ended 2004. The amended agreement also provides for payment of $30,000 payable by August 25, 2004 followed by payments equal to $5,000 per month beginning on October 1, 2004 and continuing each month through June 31, 2011, and issuance of 500,000 shares of common stock of the Company to be issued no later than October 1, 2004. The Company paid $30,000 to the consultant and issued 500,000 shares of common stock of the Company valued at $130,000, as agreed under the amended agreement. As of December 31, 2006, accrued consulting fees for this consultant amounts to $15,000. The company stops paying the consultant from March 2005 and cancelled the 500,000 shares issued to the consultant. According to the debt restoration agreement, once the payment is past due, the debt that has been forgiven will be restored immediately. Accordingly, the Company has incurred “Extra ordinary item - Gain (loss) on extinguishment of debt” amounting to $825,002 for the year ended 2005.

12.

SUPPLEMENTAL DISCLOSURE OF CASH FLOWS

The Company prepares its statements of cash flows using the indirect method as defined under the Financial Accounting Standard No. 95.

The Company paid $0 for income tax and $137,240 for interest by issuing preferred stock during the year ended December 31, 2005 and $1,347 for income tax and $106 interest for the year ended December 31, 2004.

KINGTHOMASON GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

13.

GOING CONCERN

The accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles which contemplate continuation of the company as a going concern. However, the Company has an accumulated deficit of $660,414 as of September 30, 2007. The Company’s total liabilities exceed its total assets by $90,512. In view of the matters described above, recoverability of a major portion of the recorded asset amounts shown in the accompanying consolidated balance sheet is dependent upon continued operations of the company, which in turn is dependent upon the Company’s ability to raise additional capital, obtain financing and succeed in its future operations, The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Management has taken the following steps to revise its operating and financial requirements, which it believes are sufficient to provide the Company with the ability to continue as a going concern. The Company is actively pursuing additional funding and potential merger or acquisition candidates and strategic partners, which would enhance stockholders’ investment. Management believes that the above actions will allow the Company to continue operations through the next fiscal year.

Item 2. Management's Discussion and Analysis or Plan of Operation

The following discussion and analysis should be read in conjunction with the financial statements and the accompanying notes thereto for the period ended September 30, 2007 are qualified in its entirety by the foregoing and by more detailed financial information appearing elsewhere. See "Item 1. Financial Statements." The discussion includes management’s expectations for the future.

Results of Operations – Third Quarter of 2007 Compared to Third Quarter of 2006

Our revenues of $0 for the third quarter (Q3) of FY 2007 were 100 percent less than those of $9,793 in the third quarter (Q3) of FY 2006. The principal reason for the decrease was that all of the operating subsidiaries have been spun off to the shareholders in preparation for a business combination.

Against this 100 percent decrease in revenues, we experienced $2,433 in operating expenses during Q3. The reason for these operating expenses was the Company’s incurring ordinary operating expenses as a shell corporation.

Our net loss of $9,018 during Q3 of FY 2007 represents a very considerable decrease from our net loss of $48,167 in Q3 of FY 2006.

Interim Results of Operations - First Nine Months of FY 2007 Compared to First Nine Months of FY 2006

Our revenues of $11,286 for the first nine months of FY 2007 were 47 percent less than those of $21,196 in the first nine months of FY 2006. The principal reason for the decrease was that the operating subsidiaries were spun off to shareholders in preparation for a business combination.

Against this 47 percent decrease in revenues, we experienced a $161,190 or 97 percent decrease in operating expenses during this nine-month period as compared to the first nine months in FY 2006 - $4,783 in the first nine months of FY 2007 compared with $165,973 in the same period in FY 2006. The reason for this decrease in operating expenses was lower costs associated with operations.

Our net loss of $11,003 during the first nine months of FY 2007 represents decrease in net loss from $160,876 in the first nine months of FY 2006. The reason for this was that the Company had a non-recurring extraordinary expense of $609,111 realized on the extinguishment of debt.

Liquidity and Capital Resources

The Company’s cash balance was $378 as of September 30, 2007 as compared to $4,821 on September 30, 2006. Net cash provided by operating activities was $11,286 as compared to net cash used of $4,783 in the corresponding period last year.

We are not liquid with $378 cash on hand at September 30, 2007 and current liabilities of $92,976.

OUTLOOK

KingThomason Group, Inc. has not been successful in raising capital in an amount necessary to fund the execution of the business plan including its most prospective subsidiary KingThomason Credit Cards, Inc. Furthermore, the Company’s only currently operating subsidiary, KingThomason, Inc., similarly hampered by a lack of operating capital, is producing revenues insufficient to pay the operating expenses associated with being a U.S. publicly held company. Consequently, KingThomason’s Board of Directors has determined that the Company’s most prudent course of action is to seek a business combination. To that end in June of 2007 the Board resolved that it would sell to KingThomason, Inc. its non-active, dormant subsidiaries and divest itself of KingThomason, Inc. by spinning it off to its shareholders in the form of a stock dividend. The effect of this action, together with the settlement of a lawsuit, is that KingThomason Group, Inc. has insubstantial assets, no business operations and a balance sheet with less than $93,000 in debt and is a shell corporation.

Item 3. Controls and Procedures

Evaluation of disclosure controls and procedures. The Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective and provide reasonable assurances that the information the Company is required to disclose in the reports it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time period required by the Commission's rules and forms. Further, the Company’s officers concluded that its disclosure controls and procedures are also effective to ensure that information required to be disclosed in the reports that it files or submits under the Exchange Act is accumulated and communicated to its management, including its chief executive officer and chief financial officer, to allow timely decisions regarding required disclosure. There were no significant changes in the Company's internal control over financial reporting during the period covered by this report that have materially affected, or are reasonably likely to materially affect our internal controls over financial reporting.

PART II - OTHER INFORMATION

Item 6. Exhibits

The following exhibits are filed, by incorporation by reference, as part of this Form 10-QSB:

Exhibit		Item

3.1		Articles of Incorporation of The KingThomason Group, Inc.*

3.1.1		Certificate of Amendment to Articles of Incorporation pursuant to NRS 78.385 and 78.390 (increasing the authorized capital and designating Series A Convertible, Voting Preferred Stock)*+

3.2		Bylaws of The KingThomason Group, Inc.*

10.3		Royalty Agreement for Association Program between KingThomason Financial Services, Inc., a California corporation, and California Restaurant Association, a California not-for-profit corporation.*

10.4		Payor Agreement between KingThomason, Inc., a California corporation, and California Foundation for Medical Care.*

10.5		Executive General Agent Agreement between KingThomason Insurance Company, Inc. and Jefferson Pilot Life Insurance Company.*

10.6		Payor Agreement between KingThomason, Inc. (National Limo Group) and California Foundation for Medical Care.*

10.7		2001 Stock Option Plan adopted by The KingThomason Group, Inc.**

10.8		Strategic Marketing Agreement of January 1, 2003, between KingThomason Credit Card Services, Inc. and Debt Alliance Services, LLC.***

10.9		Common Stock Purchase Agreement between registrant and Fusion Capital Fund II, LLC dated October 14, 2004.+

10.10		Registration Rights Agreement between registrant and Fusion Capital Fund II, LLC dated October 14, 2004.+

14		Code of Ethics for the Chief Executive Officer and Senior Financial Officers.++

19		Letter to the Shareholders.++


20.1		Audit Committee Charter.++

20.2		Compensation Committee Charter.++

20.3		Governance and Nominating Committee Charter.++

20.4		Corporate Governance Principles.++

31		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.1		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

99.1		Registrant’s press release dated October 18, 2004.+

*		Previously filed with Amendment No. 1 on Form S-4 to Form SB-2, Commission File #333-60980, EDGAR Accession #0001060830-01-500046 on May 22, 2001; incorporated herein.

**		Previously filed with Form 10-QSB 09-30-01, Commission File #333-60880, EDGAR Accession #0001060830-01-500136 on November 13, 2001; incorporated herein.

***		Previously filed with Form 10-KSB 12-31-02, Commission File #333-60880, EDGAR Accession #0001060830-03-000065 on March 31, 2003; incorporated herein.

+		Previously filed with Form 8-K 10-14-04, Commission File #333-60880, EDGAR Accession #0001060830-04-000344 on October 20, 2004; incorporated herein.

*+		Previously filed with Form 8-K 11-16-04, Commission File #333-60880, EDGAR Accession #0001060830-04-000405 on December 01, 2004; incorporated herein.

++		Previously filed with Form 8-K 02-14-05, Commission File #333-60880, EDGAR Accession #0001060830-05-000090- on February 24, 2005; incorporated herein.

SIGNATURES

Pursuant to the requirements of the Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: November 8, 2007	The KingThomason Group, Inc.

	By	/s/ Thomas E. King III
		T.E. King III, President

EX-31 2 v093133_ex31.htm

Exhibit 31

CERTIFICATION BY THE CHIEF EXECUTIVE OFFICER PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Thomas E. King III, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of The KingThomason Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an quarterly report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 8, 2007

/s/ Thomas E. King III

Thomas E. King III

Chief Executive Officer

EX-31.1 3 v093133_ex31-1.htm

Exhibit 31.1

CERTIFICATION BY THE CHIEF FINANCIAL OFFICER PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Thomas E. King III, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of The KingThomason Group, Inc.;

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 8, 2007

/s/ Thomas E. King III

Thomas E. King III

Chief Financial Officer

EX-32 4 v093133_ex32.htm

Exhibit 32

CERTIFICATION PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(18 U.S.C. SECTION 1350)

In connection with the accompanying Quarterly Report of The KingThomason Group, Inc. (the “Company”) on Form 10-QSB for the quarter ended September 30, 2007 (the “Report”), I, Thomas E. King III, Chief Executive Officer of the Company, hereby certify that to my knowledge:

(1) The Report fully complies with the requirements of Section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §78o(d)); and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: November 8, 2007

/s/ Thomas E. King III

Thomas E. King III

Chairman and Chief Executive Officer

The above certification is furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. §1350) and is not being filed as part of the Form 10-QSB or as a separate disclosure document.

EX-32.1 5 v093133_ex32-1.htm

Exhibit 32.1

CERTIFICATION PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(18 U.S.C. SECTION 1350)

In connection with the accompanying Quarterly Report of The KingThomason Group, Inc. (the “Company”) on Form 10-QSB for the quarter ended September 30, 2007 (the “Report”), I, Thomas E. King III, Chief Financial Officer of the Company, hereby certify that to my knowledge:

(1) The Report fully complies with the requirements of Section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §78o(d)); and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: November 8, 2007

/s/ Thomas E. King III

Thomas E. King III

Chief Financial Officer