U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: September 30, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OF 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to _____________
Commission file number 0-23871
BCS Investment Corporation
(Exact name of small business issuer as specified in its charter)
Colorado 84-1434323
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
14500 N. Northsight Blvd., Suite 213 Scottsdale, AZ 85260
(Address of principal executive offices)
(480) 556-0850
(Issuer's telephone number)
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2)has been subject to such filing requirements for the past 90 days. Yes X
No___
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the last practicable date:
100,000,000 shares of common stock, no par value, and 1,809,216 shares of
Series A Convertible Preferred as of November 7, 2000
Transitional Small Business Disclosure Format (check one); Yes___ No X
<PAGE>
Consolidated Financial Statements of
BCS Investment Corporation
(A Development Stage Enterprise)
September 30, 2000
2
<PAGE>
BCS INVESTMENT CORPORATION
(A Development Stage Enterprise)
Consolidated Balance Sheet
$ United States
September 30, 2000
(Unaudited - prepared by management)
<TABLE>
<CAPTION>
Assets
<S> <C>
Current assets
Cash $ 185,224
Accounts receivable 3,275
----------
188,499
Capital assets (note 4) 3,158
Website development (note 5) 6,223
----------
$ 197,880
==========
Liabilities and Stockholders' Deficiency
Current liabilities
Accounts payable and accrued liabilities $ 18,822
Note payable to stockholder (note 6) 195,000
Due to related party (note 7) 11,359
----------
225,181
Stockholders' deficiency
Capital stock (note 8):
Common stock 8,151
Preferred stock 1
Deficit accumulated during the development stage (35,453)
----------
(27,301)
----------
$ 197,880
==========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
BCS INVESTMENT CORPORATION
(A Development Stage Enterprise)
Consolidated Statements of Loss
$ United States
(Unaudited - prepared by management)
<TABLE>
<CAPTION>
From Inception Three month
(March 21, 2000) period ended
to September 30, September 30,
2000 2000
<S> <C> <C>
Revenue $ 5,775 $ 5,775
Expenses
Amortization of capital assets 707 299
Amortization of software development 1,252 1,252
Bank service charges 88 -
Consulting fees 5,000 5,000
Interest 4,355 4,355
Internet hosting 288 288
Licenses and permits 37 37
Payroll service 184 184
Payroll taxes 467 467
Rent 1,000 1,000
Salaries 2,197 2,197
------------ ------------
15,575 15,079
------------ ------------
Loss $ (9,800) $ (9,304)
============ ============
Weighted average number of common shares outstanding 86,390,586 86,869,969
Loss per share $ 0.00 $ 0.00
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
BCS INVESTMENT CORPORATION
(A Development Stage Enterprise)
Consolidated Statement of Stockholders' Deficiency and Comprehensive Income
$ United States
(Unaudited - prepared by management)
<TABLE>
<CAPTION>
Deficit
Accumulated
Number Additional During the Accumulated
of Capital Paid in Development Comprehensive
Shares Stock Capital Stage Income Total
------------ --------- ---------- ---------- ------ ---------
<S> <C> <C> <C> <C> <C> <C>
COMMON STOCK
Balance, March 21, 2000 of WFI 14,046,080 $ 58,133 $ 837,370 $(905,402) $(823) $(10,722)
Adjustment to book value of WFI's
stockholders' equity to
that of Autovenu (note 3) - (49,983) (837,370) 905,402 823 18,872
------------ --------- ---------- ---------- ------ ---------
14,046,080 8,150 - - - 8,150
Issued to Autovenu stockholders
(note 3) 85,953,920 1 - (25,653) - (25,652)
------------ --------- ---------- ---------- ------ ---------
Balance, September 30, 2000 100,000,000 $ 8,151 $ - $ (25,653) $ - $(25,652)
============ ========= ========== ========== ====== =========
PREFERRED STOCK
Balance, December 31, 1999 - $ - $ - $ - $ - $ -
Issued to Autovenu stockholders
(note 3) 1,809,216 1 - - - 1
------------ --------- ---------- ---------- ------ ---------
1,809,216 1 - - - 1
Comprehensive income:
Loss - - - (9,800) - (9,800)
------------ --------- ---------- ---------- ------ ---------
Balance, September 30, 2000 101,809,216 $ 8,152 $ - $ (35,453) $ - $(27,301)
============ ========= ========== ========== ====== =========
</TABLE>
Refer to notes 1 and 3 for basis of presentation.
5
See accompanying notes to consolidated financial statements.
<PAGE>
BCS INVESTMENT CORPORATION
(A Development Stage Enterprise)
Consolidated Statements of Cash Flows
$ United States
(Unaudited - prepared by management)
<TABLE>
<CAPTION>
From inception
(March 21, 2000) to
September 30,
2000
<S> <C>
Cash provided by (used in):
Operations
Loss $ (9,800)
Item not involving cash:
Amortization 1,959
Changes in non-cash working capital:
Accounts receivable (3,275)
Accounts payable and accrued liabilities 4,530
------------
(6,586)
Financing
Note payable to stockholder 195,000
Issue of common shares for cash 8,150
------------
203,150
Investments
Expenditures on capital assets (3,865)
Website development costs (7,475)
------------
(11,340)
------------
Increase in cash 185,224
Cash, beginning of period -
------------
Cash, end of period $ 185,224
============
See accompanying notes to consolidated financial statements.
Supplementary information
Interest paid -
Income taxes paid -
Non-cash financing activities
Common shares issued upon share exchange (note 3) 1
Preferred shares issued upon share exchange (note 3) 1
Liabilities assumed on business combination (note 3) (25,651)
</TABLE>
6
<PAGE>
BCS INVESTMENT CORPORATION
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements
$ United States
Period ended September 30, 2000
(Unaudited - prepared by management)
--------------------------------------------------------------------------------
1. Basis of presentation:
BCS Investment Corporation ("BCS" or the "Company") is a development stage
company and was incorporated under the name of Buffalo Capital VII, Ltd.
("BC7") on September 19, 1997 under the laws of the state of Colorado. The
Company adopted the name, Workfire.com, Inc. ("WFI") effective June 18,
1999 and formally changed its name from Buffalo Capital VII, Ltd. to
Workfire.com, Inc. on July 12, 1999. During 1999, the Company's principal
business activity, carried on through it's former subsidiary, Workfire.com
(formerly Workfire Technologies Inc.) ("WTI"), was the development of
software to deliver extended Internet services to Internet users. On
November 12, 1999, the Company distributed its shares of Workfire.com on a
prorata basis to its stockholders of record on that date and became a shell
company with no active operations. On February 7, 2000 the name of the
Company was changed to BCS Investment Corporation.
Effective September 25, 2000, the Company acquired 100% of the outstanding
common shares of Autovenu, Inc. ("Autovenu"). As Autovenu stockholders
obtained control of the Company through the exchange of their shares of
Autovenu for shares of the Company, the acquisition of Autovenu has been
accounted for in these consolidated financial statements as a capital
transaction, effectively as if Autovenu had issued shares for consideration
equal to the net monetary assets of BCS. Consequently, the consolidated
statements of loss, stockholders' deficiency and comprehensive income and
cash flows reflect the results of operations and changes in financial
position of Autovenu, for the period from incorporation of Autovenu on
March 21, 2000 to September 30, 2000, combined with those of the legal
parent, BCS, from the effective date of issuance, September 25, 2000, in
accordance with generally accepted accounting principles.
Autovenu's principle business activities include the development and
marketing of software applications targeted at specific
business-to-business e-commerce industries.
2. Significant accounting policies:
a) General
The information included in the accompanying consolidated interim financial
statements is unaudited. In the opinion of management, all adjustments,
consisting solely of normal recurring accruals, necessary for a fair
presentation for the interim periods presented, have been reflected herein.
The results of operations for the interim periods presented are not
necessarily indicative of the results to be expected for the entire fiscal
year.
7
<PAGE>
BCS INVESTMENT CORPORATION
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements (continued)
$ United States
Period ended September 30, 2000
(Unaudited - prepared by management)
--------------------------------------------------------------------------------
2. Significant accounting policies (continued):
b) Basis of consolidation
These financial statements have been prepared in accordance with
accounting principles generally accepted in the United States and
include the accounts of the Company and its wholly-owned subsidiary,
Autovenu, Inc. All material intercompany balances and transactions have
been eliminated.
c) 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 disclosures 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.
d) Financial instruments
The fair values of accounts receivable and accounts payable and accrued
liabilities approximate their carrying values due to the relatively
short periods to maturity of these instruments. The fair value of the
note payable to stockholder approximates its carrying value as the
instrument bears a market rate of interest. It is not possible to
determine the fair value of the amount due to related party as a
maturity date is not determinable. The maximum credit risk exposure for
all financial assets is the carrying amount of that asset.
e) Capital assets
Capital assets are stated at cost. Amortization is provided on a
straight-line basis using the following annual rates which are intended
to amortize the cost of assets over their estimated useful life:
<TABLE>
<CAPTION>
<S> <C>
Asset Rate
Computer equipment 33%
Organizational costs 20%
</TABLE>
f) Website development
Website development costs incurred in the planning stage are expensed
as incurred. The costs of application and infrastructure development
incurred subsequent to the preliminary project stage, and that have
received management approval for further development, are capitalized
and amortized on the straight-line method over their estimated useful
life (estimated to be two years). Once developed, operating costs are
expensed as incurred.
8
<PAGE>
BCS INVESTMENT CORPORATION
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements (continued)
$ United States
Period ended September 30, 2000
(Unaudited - prepared by management)
--------------------------------------------------------------------------------
3. Business Combination:
Effective September 25, 2000, Autovenu and BCS executed a share exchange
agreement. BCS issued 85,953,920 common shares and 1,809,216 preferred
shares to the stockholders of Autovenu in consideration for all of the
issued and outstanding common shares of Autovenu on the basis of 303.7241
common shares and 6.393 preferred shares of BCS for every common share of
Autovenu. As the former stockholders of Autovenu obtained control of the
Company through the share exchange, this transaction has been accounted for
in these financial statements as a recapitalization of Autovenu with the
net monetary assets of BCS. Under recapitalization accounting, Autovenu is
considered to have issued shares for consideration equal to the net
monetary assets of BCS with the results of BCS operations included in the
consolidated financial statements from the date of acquisition. The
acquisition details are as follows:
<TABLE>
<CAPTION>
<S> <C>
Net deficiency assumed
Accounts payable $(14,292)
Due to related party (11,359)
---------
(25,651)
=========
Consideration given for net deficiency assumed
85,953,920 Common shares issued 1
1,809,216 preferred shares issued 1
Charge to deficit (25,653)
---------
$(25,651)
=========
</TABLE>
4. Capital assets
<TABLE>
<CAPTION>
Accumulated Net book
Cost amortization value
<S> <C> <C> <C>
Computer equipment $ 3,496 $ 670 $ 2,826
Organizational costs 369 37 332
-------------- ----------------- --------------------
$ 3,865 $ 707 $ 3,158
============== ================= ====================
</TABLE>
9
<PAGE>
BCS INVESTMENT CORPORATION
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements (continued)
$ United States
Period ended September 30, 2000
(Unaudited - prepared by management)
--------------------------------------------------------------------------------
5. Website development
<TABLE>
<CAPTION>
<S> <C>
Capitalized costs $7,475
Accumulated amortization 1,252
------
$6,223
======
</TABLE>
6. Note payable to stockholder
The note is unsecured, due January 24, 2001 and bears interest at 12%.
Interest payable on the note aggregating $4,355, is included in accounts
payable and accrued liabilities in the accompanying balance sheet.
7. Due to related party:
The amount due to related party is unsecured, non-interest bearing and
without stated terms of repayment.
8. Capital stock:
Authorized:
100,000,000 voting common shares, without par value
10,000,000 non-voting preferred shares without par value, convertible
into 100 common shares per preferred share
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion should be read in conjunction with the consolidated
financial statements of the Company. This report includes certain
forward-looking statements, which reflect the Company's plans, estimates and
beliefs. The Company's actual results could differ materially from those
discussed in the forward-looking statements based upon, among other things, the
Company's ability to raise additional capital, its ability to identify suitable
target markets and execute its business plan to penetrate those markets. The
inability to obtain additional financing when needed would have a material
adverse effect on the Company's operating results.
GENERAL
The Company was incorporated under the laws of the State of Colorado on
September 19, 1997. From its inception to June 18, 1999, the Company operated as
a "shell" company and its business plan was to seek out and take advantage of
business opportunities that may have had the potential for profit, and to
acquire such businesses, or a controlling interest therein.
On September 25, 2000, a change in control of the Company occurred, in
conjunction with closing under a Reorganization and Stock Purchase Agreement
between the Company and Autovenu, Inc. a Delaware corporation ("Autovenu"). As
the result of a Reorganization and Stock Purchase Agreement, the Company
acquired 100% of the issued and outstanding shares of Autovenu and the former
shareholders of Autovenu obtained control over the Company.
Consequently, the acquisition of Autovenu has been accounted for in the
consolidated financial statements as a capital transaction. The consolidated
financial statements for the period from inception to September 30, 2000 reflect
the results of operations and changes in financial position of Autovenu, for the
period from incorporation of Autovenu on March 21, 2000 to September 30, 2000
combined with those of the legal parent, BCS, from acquisition on September 25,
2000.
Since Autovenu was incorporated in March 2000, no information is being presented
for the comparable period in 1999.
The Company intends to change the name of the Company to Crossnet
Communications, Inc. and to reverse the shares of the Company outstanding by 1
for 10 and has filed a preliminary disclosure document with the U.S. Securities
and Exchange Commission to this effect.
As of the date of this report the Company had limited sources of income and must
rely entirely upon loans and equity investments from affiliates to pay operating
expenses. The Company intends to actively seek additional funds for its business
development during the remainder of the fiscal year.
11
<PAGE>
PLAN OF OPERATION
AutoVenu Inc. is a software development company with a business plan focused on
specific business-to-business Internet applications and Internet infrastructure
software applications. One of the business-to-business markets, which the
Company is evaluating as a potential long-term development target, is the used
car wholesale and auction market. As part of its continuing evaluation of these
markets the Company has acquired software from a recognized leader in the
automotive Internet environment and the Company has developed a separate
software application for an initial target market. With the addition of capital,
the Company intends to further develop software initiatives that will target the
used automotive market.
The Company has developed certain software applications that are currently
integrated in the site www.publiccarauctions.com. The Company has developed this
initial Internet software product and has engaged its first client who is
utilizing the software on the Internet. Evaluation of this product and its
acceptance within its target market will be completed by the first quarter of
2001 at which time the Company will determine its long term strategy for this
product.
Additionally, the Company intends to joint venture the development of certain
Internet imaging and Internet infrastructure technologies. The outcome of these
projects is highly uncertain. The Company's business plan includes the direct
commercial exploitation of certain technologies and the Company intends to be a
passive early-stage investor with other technologies.
The Company currently has limited capital to fund operations or on-going
expenses. The Company must rely upon loans and investments from affiliates to
pay operating expenses. There are no assurances that such affiliates will
continue to advance funds to the Company or will continue to invest in the
Company's securities. In the event the Company is unable to obtain additional
financing it may be unable to proceed with the development of its business plan.
During the months following the filing of this report, management intends to
actively seek additional funds in exchange for the Company's securities in order
to allow the implementation of its business plan.
LIQUIDITY
The Company's operating activities during the three months ended September 30,
2000 reduced available cash by $6,586. The Company's cash flows from financing
activities were $153,000 for the three months ended September 30, 2000,
primarily due to notes advanced to the Company by a stockholder. The Company
invested $7,475 in development costs during the three-month period ended
September 30, 2000.
At September 30, 2000 the Company had a working capital deficiency of $36,682.
Since the Company has no significant source of revenue, the working capital
deficiency will continue to be increased by operating expenses. The Company
presently has limited external sources of cash and is dependent upon its
management, stockholders, and affiliates for funding.
12
<PAGE>
FINANCIAL CONDITION
At September 30, 2000, the Company had assets of $197,880, consisting primarily
of cash of $185,224. The cash was provided by the controlling shareholder of the
Company. The related unsecured promissory note is in the principal amount of
$195,000, is due January 24, 2001, and bears interest at 12% per annum.
RESULTS OF OPERATIONS
The Company has limited current operations and has not generated significant
revenues from its operations since its inception. The Company has relied upon
loans from a stockholder to pay operating expenses. For the three months ended
September 30, 2000, revenues of $5,775 were not sufficient to cover expenses of
$15,079, resulting in a loss of $9,304. The most significant expenditures were
consulting fees of $5,000 and interest expense of $4,355. The consulting fees
were paid to the controlling shareholder pursuant to a consulting agreement for
managerial and general consulting development services.
13
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not Applicable.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
During the three months ended September 30, 2000, the registrant
issued 83,953,920 shares of Common Stock and 1,809,216 shares of
Series A Convertible Preferred Stock to acquire all of the issued
and outstanding shares of Autovenu, Inc. The registrant relied upon
the exemption from registration contained in Section 4(2) of the
Securities Act of 1933. The three persons to whom the shares were
issued were deemed to be sophisticated with respect to the
investment in the securities due to their financial condition and
involvement in the registrant's business. Restrictive legends were
placed on the stock certificates evidencing the shares.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
ITEM 5. OTHER INFORMATION
Not Applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A) EXHIBITS
<TABLE>
<CAPTION>
Regulation Consecutive
S-B Number Exhibit Page Number
<S> <C> <C>
3.1 Articles of Incorporation, as amended (3)<F3> N/A
3.2 Bylaws (1))<F1> N/A
4.1 Warrant Agent Agreement (1))<F1> N/A
4.2 Specimen Class A Warrant Certificate (1)<F1> N/A
14
<PAGE>
4.3 Specimen Class B Warrant Certificate (1))<F1> N/A
4.4 Stock Option Plan (2)<F2> N/A
11 Statement Re: Computation of Per Share Earnings See Financial
Statements
27 Financial Data Schedule ___
99.1 Share Exchange Agreement between the registrant and the shareholders of N/A
AutoVenu, Inc., dated September 25, 2000 (3))<F3>
---------------------------
<FN>
(1))<F1> Incorporated by reference from the Registration Statement on Form 10-SB
filed with the Securities and Exchange Commission on March 4, 1998.
(2))<F2> Incorporated by reference from the Annual Report on Form 10-KSB for the
fiscal year ended December 31, 1999, filed with the Securities and
Exchange Commission.
(3))<F3> Incorporated by reference from the Current Report on Form 8-K filed
with the Securities and Exchange Commission dated September 25, 2000.
</FN>
</TABLE>
B) REPORTS ON FORM 8-K:
On October 5, 2000, the Company filed a current report on Form 8-K to disclose
the acquisition of Autovenu, Inc., reporting under Item 1. Changes in Control of
Registrant, Item 2. Acquisition or Disposition of Assets, and Item 5. Other
Events. The required financial statements will be filed by amendment.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
BCS Investment Corporation
Date: November 14, 2000 By: /S/ MARK MOLDENHAUER
------------------------------- -----------------------------------
Mark Moldenhauer
President and Director
(Principal Financial and
Accounting Officer)
15
<PAGE>
