<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d) of The Securities Act of 1934
For the quarterly period ended March 31, 2000
Commission file number: 000-27347
BENTLEY COMMUNICATIONS CORP.
----------------------------
(Exact name of small business issuer as specified in its charter)
Florida 58-2534003
------- ----------
(State or other jurisdiction of (IRS Employee Identification No.)
incorporation or organization)
100 Oceangate, Suite 1200, Long Beach, CA 90802-4322
----------------------------------------------------
(Address of principal executive offices)
(562) 628-5534
--------------
(Issuer's telephone number)
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 and 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 X No
-------- --------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Common Stock, $0.0001 par value 13,270,836
(Class) (Outstanding as of April 18, 2000)
<PAGE>
BENTLEY COMMUNICATIONS CORP.
FORM 10-QSB
INDEX
PAGE
----
Part I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Independent Review Engagement Report.................................3
Interim Consolidated Balance Sheet at March 31, 2000.................4
Interim Consolidated Statement of (Loss) and (Deficit)
for the three months ended March 31, 2000.......................5
Interim Consolidated Statements of Cash Flows
for the three months ended March 31, 2000.......................6
Interim Consolidated Statement of Changes in Stockholders
equity for the three months ended March 31, 2000................7
Notes to Financial Statements........................................8
Item 2 Management's Discussion and Analysis or Plan of Operation............10
Part II OTHER INFORMATION
Item 2 Changes in Securities................................................16
Item 6 Exhibits and Reports on Form 8-K.....................................16
Signatures....................................................................17
2
<PAGE>
PART I: FINANCIAL INFORMATION
ITEM 1.
P A R K E R & C O.
CHARTERED ACCOUNTANTS
200 - 2560 Simpson Road, Richmond, B.C. V6X 2P9
Tel: (604) 276-9920 Fax: (604) 276-4577
INDEPENDENT REVIEW ENGAGEMENT REPORT
We have reviewed the interim consolidated statement of financial position of
Bentley Communications Corp. and its wholly owned subsidiary as at 31 March 2000
and the interim consolidated statements of loss and deficit, cash flow and
changes in stockholders' equity for the three months then ended. Our review was
made in accordance with generally accepted standards for review engagements in
the United States, and accordingly consists primary of inquiry, analytical
procedures and discussion related to information supplied to us by the Company.
A review does not constitute an audit and consequently, we do not express an
audit opinion on these financial statements.
Based on our review, nothing has come to our attention that causes us to believe
that these interim consolidated financial statements are not, in all material
respect, in accordance with generally accepted accounting principles in the
United States of America.
These interim consolidated financial statements have been prepared assuming the
Company and its subsidiary will continue as a going concern. As stated in Note 2
to the interim consolidated financial statements, the Company and its subsidiary
will require and infusion of capital to sustain themselves. This requirement for
additional capital raises substantial doubt about the Company's ability to
continue as a going concern. The interim consolidated financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
Richmond, British Columbia, Canada
31 May 2000
/s/ Parker & Co.
----------------
PARKER & Co.
CHARTERED ACCOUNTANTS
3
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<TABLE>
INTERIM FINANCIAL STATEMENTS
BENTLEY COMMUNICATIONS CORP.
(AND ITS WHOLLY OWN SUBSIDIARY)
INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(Stated in US Dollars)
Unaudited, See Independent Review Engagement Report
(Prepared by Management)
<CAPTION>
ASSETS
AS AT 31 MARCH 2000 1999
--------------- ---------------
<S> <C> <C>
Current
Cash $ 14,919 $ 18,210
Accounts receivable 32,290 ---
Marketable securities - Note 3 80,000 ---
--------------- ---------------
127,209 18,210
Investment Advances - Note 4 1 ---
Video Distribution License - Note 5 40,000 ---
Capital Assets
Net of accumulated amortisation - Note 6 91,475 419
Goodwill - Note 7/9 314,833 ---
--------------- ---------------
$ 573,518 $ 18,629
=============== ===============
LIABILITIES
Current
Accounts payable $ 37,935 $ 3,975
Due to shareholders 159,130 4,140
--------------- ---------------
197,065 8,115
--------------- ---------------
LONG TERM LIABILITIES
Loans payable - Note 8 500,000 ---
SHAREHOLDERS' EQUITY (DEFICIENCY IN ASSETS)
Capital stock - Note 9 Issued:
Share capital 1,028 600
Additional paid-in capital 1,421,472 74,900
Common shares subscribed 7,500 ---
Deficit (1,553,547) (64,986)
--------------- ---------------
(123,547) 10,514
--------------- ---------------
$ 573,518 $ 18,629
=============== ===============
</TABLE>
4
<PAGE>
BENTLEY COMMUNICATIONS CORP.
(AND ITS WHOLLY OWN SUBSIDIARY)
INTERIM CONSOLIDATED STATEMENT OF (LOSS) AND (DEFICIT)
(Stated in US Dollars)
Unaudited, See Independent Review Engagement Report
(Prepared by Management)
FOR THE THREE MONTHS ENDED 31 MARCH 2000 1999
--------------- ---------------
Expenses
Amortisation $ 1,475 $ 6
Automobile 5,770 ---
Advertising 1,814 ---
Consulting 344,685 22,140
Management fees 43,500 12,000
Office 26,100 58
Professional fees 63,100 6,443
Public relations 3,775 5,000
Rent 30,043 727
Salary 20,971 ---
Telephone 2,750 ---
Transfer agent fee 550 ---
Travel and accommodation 28,655 ---
Web site costs 17,976 ---
--------------- ---------------
591,164 46,374
--------------- ---------------
Net loss for the period (591,164) (46,374)
Other
Write off of investment advance (24,000) ---
--------------- ---------------
Net loss for the period (615,164) (46,374)
Deficit, beginning of the period (938,383) (18,612)
--------------- ---------------
Deficit, end of the period $ (1,553,547) $ (64,986)
=============== ===============
Earnings (loss) per share, - Note 10
Basic loss per share ($0.06) ($0.01)
--------------- ---------------
Diluted loss per share ($0.04) ($0.01)
=============== ===============
5
<PAGE>
<TABLE>
BENTLEY COMMUNICATIONS CORP.
(AND ITS WHOLLY OWN SUBSIDIARY)
INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
(Stated in US Dollars)
Unaudited, See Independent Review Engagement Report
(Prepared by Management)
<CAPTION>
FOR THE THREE MONTHS ENDED 31 MARCH 2000 1999
-------------- --------------
<S> <C> <C>
Cash provided by (used in):
Operations:
Net (loss) $ (615,164) $ (46,374)
Items not involving cash:
Amortization 1,475 6
Changes in non-cash working capital items 188,743 4,578
-------------- --------------
(424,946) (41,790)
-------------- --------------
Financing
Capital stock 930,000 60,000
Capital stock subscribed 7,500 ---
-------------- --------------
937,500 60,000
-------------- --------------
Investing
Marketable securities (80,000) ---
Video distribution license (40,000) ---
Goodwill (314,833) ---
Capital assets acquired (92,549) ---
-------------- --------------
(527,382) ---
-------------- --------------
Increase (Decrease) in cash (14,828) 18,210
Cash, beginning of the period 29,747 ---
-------------- --------------
Cash, end of the period $ 14,919 $ 18,210
============== ==============
</TABLE>
6
<PAGE>
<TABLE>
BENTLEY COMMUNICATIONS CORP.
(AND ITS WHOLLY OWN SUBSIDIARY)
INTERIM CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the three months ended March 31, 2000
(Stated in US Dollars)
Unaudited, See Independent Review Engagement Report
(Prepared by Management)
<CAPTION>
RETAINED
PREFERRED STOCK COMMON STOCK COMMON STOCK ADDITIONAL PAID EARNINGS
ISSUED ISSUED AMOUNT IN CAPITAL (DEFICIT)
------ ------ ------ ---------- ---------
<S> <C> <C> <C> <C> <C>
Beginning balances, 31
December 1999 --- 7,637,503 $ 848 $ 491,652 $ (938,383)
Private placement for services
06 January 2000
Issued --- 100,000 10 29,990 ---
Private placement for cash
31 January 2000
Issued --- 500,000 50 349,950 ---
Less commission --- --- --- (5,000) ---
Private placement for services
31 January 2000
Issued --- 100,000 10 29,990 ---
Private placement for cash
08 March 2000
Issued --- 500,000 50 349,950
Less commission --- --- --- (5,000) ---
Private placement for services
08 March 2000
Issued --- 600,000 60 179,940 ---
Net (loss) for the three
months ended 31 March 2000 --- --- --- --- (615,164)
----------- ------------- ------------- -------------- ------------
Ending balances, 31 March
2000 --- 9,437,503 $ 1,028 $ 1,421,472 $(1,553,547)
=========== ============= ============= ============== ============
</TABLE>
7
<PAGE>
BENTLEY COMMUNICATIONS CORP.
(AND ITS WHOLLY OWN SUBSIDIARY)
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended March 31, 2000
(Stated in US Dollars)
Unaudited, See Independent Review Engagement Report
(Prepared by Management)
NOTE 1 THE CORPORATION AND ITS BUSINESS
Bentley Communications Corp. was incorporated in the State of Florida on 28
February 1992 under the name Fogilstone Development, Inc. On 28 January 1997 the
Company changed its name to Premier Mining Ventures, Inc. On 28 February 1998
the name of the Company was changed to Pure Air Technology, Inc. On 22 February
1999 the name was changed to Startek.com., Inc. On 29 November 1999 the Company
name was changed to Bentley Communications Corp.
On 08 March 2000 the Bentley Communications Corp. acquired all of the issued and
outstanding shares of Kyrenia Acquisition Corporation.
The Company has offices in Long Beach, California, USA. The Company has been
reorganized to engage in the internet sales market or 'e' commerce. As the
Company is just started in this new business it has not established itself as a
going concern. The fiscal year end of the Company is 31 December.
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
These consolidated financial statements have been prepared in United States of
America dollars, which have been rounded to the nearest whole dollar except for
the net earnings (loss) per share which has been rounded to the nearest cent,
using United States of America Generally Accepted Accounting Principles. These
accounting principles are applicable to a going concern, which contemplates the
realization and liquidation of liabilities in the normal course of business.
Current business activity has just begun and insufficient revenue has been
generated to sustain the Company as a going concern without the infusion of
additional capital.
The subsidiary Company, Kyrenia Acquisition Corporation , was consolidated using
the purchase method, as Bentley Communications Corp. was the predominant
acquirer. Under the purchase method of accounting only the earnings (losses)
from the date of acquisition are included in the interim consolidated financial
statements.
Revenue is recorded as a sale at the time the products are shipped from the
Company's warehouse or services are provided. Costs are recorded at the time an
obligation to pay occurs and are expensed at the time the benefit to the Company
is matched to revenue or, if there is no matching revenue, to the period in
which the benefit is realized.
Capital asset are recorded at cost and amortized at the following rates:
Computer equipment - 30%
Office furniture - 20%
Organization cost - 5%
Goodwill is recorded at the excess of the purchase price over the fair market
value of the underlining assets purchased. The resulting cost of the goodwill
will be amortized over its estimated economic life which is presently estimated
to be four years. Within two years or before 31 December 2001, the cost of the
goodwill will be compared to the present value of its future cash flow to
determine if the value of the goodwill has been impaired. If the value has been
impaired consideration will be given to writing the remaining unamortized cost
off as an expense. No amortization is recorded on these statements as the
goodwill was just purchased.
Stock option compensation to employees is recorded as compensation expense at
the time the option is exercised and the stock is issued. The amount of
compensation expense is equal to the difference between the stock price and the
exercise price at the issue date.
8
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NOTE 3 MARKETABLE SECURITIES
Marketable Securities March 31, 2000
Cost
Quad x Sports.com Inc. $80,000
560,000 common shares
NOTE 4 INVESTMENT ADVANCES
Under the terms of a letter of intent, the Company advanced $250,000 as the
first condition of a proposed merger with Angellcom Communications, Inc.
Angellcom Communications, Inc. has not proceeded with any of the remaining
conditions of the letter of intent. Legal action has been initiated to recover
the funds advanced.
NOTE 5 VIDEO DISTRIBUTION LICENSE
On 10 March 2000 the Company entered into a non-exclusive license agreement with
HCV Inc. to market and distribute various feature length films from the HCV
library utilizing the Internet. As consideration the Company paid an advanced
royalty of $40,000. The license agreement expires 01 June 2010.
NOTE 6 CAPITAL ASSETS
<TABLE>
<CAPTION>
ACCUMULATED
COST AMORTIZATION UNAMORTIZED UNAMORTIZED
2000 2000 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
COMPUTER EQUIPMENT $ 86,285 $ 1,444 $ 84,841 $ ---
OFFICE FURNITURE 6,265 25 6,240 ---
ORGANIZATION COST 500 106 394 419
---------- ---------- ---------- ----------
$ 93,050 $ 1,575 $ 91,475 $ 419
========== ========== ========== ==========
</TABLE>
NOTE 7 GOODWILL
On 08 March 2000 the Company acquired all the issued and outstanding shares of
Kyrenia Acquisition Corporation for $255,000 and 10,000 common shares with a par
value of $0.0001 for $0.75 per share $7,500. As at 31 March 2000 these shares
were not issued.
The Company entered into an agreement for the acquisition of Twirlme.com, a
website and e-commerce development entity for a total cost of $80,000. The
consideration consisted of Fixed Assets of $27,500 and Goodwill of $52,500.
NOTE 8 LOANS PAYABLE
The loans payable are subordinated convertible promissory notes at 6% annual
interest of various dates in 1999, with various conversion prices. The loan is
repayable on 5 October 2001. Subsequent to March 31, 2000 all of the notes were
converted into 2,833,333 common shares with a par value of $0.0001, issued under
Section 4(2) of the Securities Act of 1933, as amended.
NOTE 9 CAPITAL STOCK
On 06 January 2000 the Company issued 100,000 common shares with a par value of
$0.0001 and an issued price of $0.30 or $30,000, pursuant to Rule 701 of the
Securities Act of 1933, as amended, as consideration for an advisory agreement
for future services over a twelve-month period. This advisory agreement was
entered into on 05 January 2000.
On 31 January 2000 the Company issued by private placement 500,000 common shares
with a par value of $0.0001 for $0.70 per share for $350,000 cash, pursuant to
Regulation D, Rule 504. A finder' fee of $5,000 was paid to an investment
banker.
9
<PAGE>
On 31 January 2000 the Company issued 100,000 common shares with a par value of
$0.0001 and an issued price of $0.30 or $30,000, pursuant to Rule 701 of the
Securities Act of 1933, as amended, as consideration for an advisory agreement
for future services over a twelve-month period. This advisory agreement was
entered into on 14 December 1999.
On 08 March 2000 the Company issued an aggregate of 600,000 common share with a
par value of $0.0001 and an issued price of $0.30 or $180,000, pursuant to Rule
701 of the Securities Act of 1933, as amended, as consideration for three
advisory agreements for future services over a twelve-month period. These
advisory agreements were entered into on 14 December 1999.
On 08 March 2000 the Company issued by private placement 500,000 common shares
with par value of $0.0001 for $0.70 per share for $350,000 cash, pursuant to
Regulation D, Rule 504. A finder's fee of $5,000 was paid to an investment
banker.
On 08 March 2000 the Company acquired all the issued and outstanding shares of
Kyrenia Acquisition Corporation for $255,000 and 10,000 common shares with a par
value of $0.0001 for $0.75 per share or $7,500, pursuant to Section 4(2) of the
Securities Act of 1933, as amended. As at 31 March 2000 these shares were not
issued.
NOTE 10 LOSS PER SHARE
Basic loss per share is computed by dividing losses available to common
stockholders by the weighted-average number of common shares during the end
period. Diluted loss per share is calculated on the weighted average number of
common shares that would have resulted if dilutive common stock equivalents or
potential dilutive common stock equivalents had been converted to common stock.
NOTE 11 COMMITMENTS AND SUBSEQUENT EVENTS
a) On 08 December 1999 the Company entered into a consulting agreement with
Roctech H.K. Limited who are to act as the Company's Asian representative
in the sourcing of new products to be sold over the internet. The agreement
required the Company to issue on 12 April 2000 1,000,000 common shared with
a par value of $0.001 for an issue price of $0.30 or $300,000, pursant to
Section 4(2) of the Securities Act of 1933, as amended. In addition, the
Company is required to fund on a best efforts basis by 30 June 2000
$2,000,000. to Roctech H.K. Limited for working capital.
b) Employment agreements. On 01 January 2000 the Company entered into
employment agreements with three of its employees for the two years ended
31 December 2001. Under the terms of these agreements, the Company
committed to salaries of $30,000 per month, the issue of 1,500,000 common
shares with a par value of $0.0001 at an estimated price of $0.30 per
share, or $450,000 and 1,800,000 stock options which are earned and vested
quarterly with an exercise price of $2.00 per share.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Company was incorporated under the laws of the State of Florida on February
29, 1992 under the name Fogilstone Development, Inc. On January 28, 1997, the
Company changed its name to Premier Mining Ventures, Inc. On February 28, 1998,
the Company changed its name to Pure Air Technology. On February 22, 1999, the
Company changed its name to Startek.com, Inc. On November 29, 1999, the Company
changed its name to Bentley Communications Corp.
The Company is transitioning from a development stage company to that of an
active growth and acquisition stage company. The Company seeks to engage in the
business of creating an international business to business (B2B) and wholesale
sourcing network. The Company's immediate focus is on E-commerce based retail
and wholesale sales and distribution for consumer and industrial product
oriented non-U.S. based companies, initially in Asia and the Pacific Rim.
10
<PAGE>
In addition to historical statements, this Quarterly Report on Form 10-QSB
contains certain forward-looking statements that are subject to certain risks
and uncertainties, which could cause actual results to differ materially from
those stated or implied. Forward-looking statements are those that use the words
"expects", "estimates", "will", "may", "anticipates", "believes" or similar
expressions. These forward-looking statements reflects management's opinions
only as of the date hereof, and the Company assumes no obligation to update this
information. Risks and uncertainties include, but are not limited to, those
discussed below and in the section entitled "Trends, Risks, and Uncertainties".
The following discussion should be read in conjunction with the Company's
Interim Consolidated Financial Statements and Notes thereto, included elsewhere
in this report.
OVERVIEW
On January 31, 2000, the Company issued 500,000 common shares, by private
placement, for $0.70 per share. The stock was issued to a Colorado investor
pursuant to Rule 504 of Regulation D and applicable state exemptions. A finders
fee of $5,000 was paid to an investment banker.
During the period ended March 31, 2000, the Company issued 800,000 common shares
for a deemed value of $0.30 per share, under Rule 701 of the Securities Act of
1933, as amended, for consulting and professional services pursuant to five
advisory agreements.
On March 8, 2000, the Company issued 500,000 common shares, by private
placement, for $0.70 per share. The stock was issued to a Colorado investor
pursuant to Rule 504 of Regulation D and applicable state exemptions. A finders
fee of $5,000 was paid to an investment banker.
On March 8, 2000, the Company acquired all the issued and outstanding shares of
Kyrenia Acquisition Corp. through a reorganization agreement. The total purchase
price of consisted of 10,000 shares of common stock of Bentley Communications
Corp. at $0.75 per share and cash consideration $255,000.
RESULTS OF OPERATIONS
The Company was incorporated as a development stage enterprise that has incurred
organization and development costs.
On March 8, 2000, the Company acquired Kyrenia Acquisition Corp. through a
reorganization agreement, or reverse acquisition. The Company exchanged all of
the outstanding shares of Kyrenia Acquisition Corp. for 10,000 common shares of
Bentley Communications Corp. at $0.75 per share, and cash consideration of
$255,000. The Company then became fully reporting under the Securities and
Exchange Act, and filed a Form 8-K with the SEC to reflect this reorganization.
The Company is still in the development stage and is yet to earn revenues from
operations. The Company may experience fluctuations in operating results in
future periods due to a variety of factors including, but not limited to, market
acceptance of the Internet as a medium for consumers to purchase unique
electronic goods, the Company's ability to acquire and deliver high quality
products at a price lower than currently available to consumers, the Company's
ability to obtain additional financing in a timely manner and on terms favorable
to the Company, the Company's ability to successfully integrate prospective
asset acquisitions to its existing business operation, the level of traffic on
the Company's website, intense competition and increasing competition from
electronic stores online, delays or errors in the Company's ability to upgrade
and develop its systems and infrastructure in a timely and effective manner,
technical difficulties, system downtime or Internet brownouts, the Company's
ability to attract customers at a steady rate and maintain customer
satisfaction, seasonality of advertising sales, Company promotions and sales
programs, the amount and timing of operating costs and capital expenditures
relating to the expansion of the Company's business, operations and
infrastructure and the implementation of marketing programs, key agreements and
strategic alliances, the number of products offered by the Company, the number
of returns experienced by the Company, and general economic conditions specific
to the Internet, on-line commerce, and the electronics industry.
NET REVENUES/LOSSES
-------------------
The Company is in the development stage and has earned no revenues since
inception. For the quarter ended March 31, 2000, the Company incurred net losses
of $615,164 in expenses relating to the organization and development of the
Company. The Company believes it will begin earning revenues from operations
within the next twelve months as it transitions from a development stage company
to that of an active growth and acquisition stage company.
11
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CONSULTING EXPENSES
-------------------
For the three months ended March 31, 2000, Company incurred consulting expenses
of $344,685 consisting mainly of the issuance of 800,000 shares of common stock
at a value of $240,000 ($0.30 per share). The remaining $104,685 was cash
consideration paid to outside business and marketing consultants. The Company
believes consulting expenses will likely be maintained or increased in the
future as the Company grows and acquires new businesses and products and
requires the engagement of businesses and marketing consultants in relation to
these expected acquisitions and growth
MANAGEMENT AND PROFESSIONAL FEES
--------------------------------
The Company paid out management fees of $43,500 to Gordon Lee, the President of
the Company for services during the period ended March 31, 2000. Professional
fees for the quarter consisted of $63,100 relating to legal and accounting costs
incurred through the Company's development and organization. The Company
believes as it expands its management to manage it's growth and increases the
scope of its operations management and professional fees will increase
proportionally.
ADVERTISING EXPENSES AND PUBLIC RELATIONS EXPENSES
--------------------------------------------------
The Company incurred insignificant advertising and public relations related
expenses in the quarter. As the Company moves forward in implementing certain
sales and marketing activities designed to promote its website storefront
through strategic alliances, targeted advertising, direct promotion, trade shows
and other such activities designed specifically to attract new customers, the
Company expects these expenses to increase significantly in the future.
TRAVEL AND ACCOMMODATION EXPENSES
---------------------------------
The Company incurred travel and accommodation expenses of $28,655 during the
period ended March 31, 2000. These costs related to management's travel to Asia
to seek and develop relationships with manufacturers and product developers who
will be providing the Company with its products. The Company believes this
expense will remain constant in the future as the Company establishes an
increasing number of strategic alliances with manufactures in China and
elsewhere in Asia.
WEBSITE DEVELOPMENT EXPENSES
----------------------------
During the period ended March 31, 2000, the Company incurred website development
expenses of $17,976. This incurred this cost to develop a working model of the
Company's interactive e-commerce website, buynetonline.com, through which
revenues will be generated in the future. The Company expects this expense to
increase in the immediate future as the website is tested and becomes fully
functional, and then expects this expense to decrease and remain constant as the
site is maintained.
12
<PAGE>
GENERAL AND ADMINISTRATIVE EXPENSES
-----------------------------------
General and administrative expenses consisted primarily of office expenses,
rent, employee salary, and a finance fee. The Company incurred costs of $87,659
for the period ended March 31, 2000 related to general and administrative
expenses. Of these costs, the most significant include $56,143 which is
attributed to office and rent expenses and $20,971 relating to employee salary
expenses. The Company expects general and administrative expenses to continue to
increase as the Company expands its staff and incurs additional costs related to
the growth of its business.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 2000, the Company had a cash balance of $14,919. Net cash of
$14,828 was used for operating activities.
During the quarter, Company issued 810,000 shares of common stock valued at
$247,500, the proceeds of which went towards management and consulting fees and
the acquisition of Kyrenia Acquisition Corp. by Bentley Communications Corp. The
800,000 shares of common stock relating to the management and consulting fees
were issued pursuant to various consulting agreements for services including
legal, financial consulting, marketing and development and executive employment
agreements. The 10,000 shares of common stock relating to the acquisition of
Kyrenia Acquisition Corp will be issued pursuant to a reorganization agreement
between the two Companies.
The Company issued a further 1,000,000 shares of common stock at $0.70 per share
in a private placement, raising $700,000. These proceeds went mainly towards
pursuing investments in Companies engaged in business practices that are
complementary to the Company. The Company expects an increase in investment
expenditures in the future as it transitions from a development stage company to
an active growth and acquisition stage company.
The Company believes that its existing capital resources will be sufficient to
fund its current level of operating activities, capital expenditures and other
obligations through the next 12 months. However, if during that period or
thereafter, the Company is not successful in generating sufficient liquidity
from operations or in raising sufficient capital resources, on terms acceptable
to the Company, this could have a material adverse effect on the Company's
business, results of operations liquidity and financial condition.
TRENDS, RISKS AND UNCERTAINTIES
The Company has sought to identify what it believes to be the most significant
risks to its business, but cannot predict whether or to what extent any of such
risks may be realized nor can there be any assurances that the Company has
identified all possible risks that might arise. Investors should carefully
consider all of such risk factors before making an investment decision with
respect to the Company's stock.
13
<PAGE>
LIMITED OPERATING HISTORY; ANTICIPATED LOSSES; UNCERTAINLY OF FUTURE RESULTS.
Bentley Communications Corp. has only a limited operating history upon which an
evaluation of the Company and its prospects can be based. The Company's
prospects must be evaluated with a view to the risks encountered by a company in
an early stage of development, particularly in light of the uncertainties
relating to the new and evolving distribution methods with which the Company
intends to operate and the acceptance of the Company's business model. The
Company will be incurring costs to develop, introduce and enhance its
interactive website, to establish marketing relationships, to acquire and
develop products that will compliment each other and to build an administrative
organization. To the extent that such expenses are not subsequently followed by
commensurate revenues, the Company's business, results of operations and
financial condition will be materially adversely affected. There can be no
assurance that the Company will be able to generate sufficient revenues from the
sale of their first product, the Smart Pen(TM), and other product candidates to
Company expects negative cash flow from operations to continue for the next 8
quarters as it continues to develop and market its business. If cash generated
by operations is insufficient to satisfy the Company's liquidity requirements,
the Company may be required to sell additional equity or debt securities. The
sale of additional equity or convertible debt securities would result in
additional dilution to the Company's stockholders.
POTENTIAL FLUCTUATIONS IN QUARTERLY OPERATING RESULTS.
The Company's quarterly operating results may fluctuate significantly in the
future as a result of a variety of factors, most of which are outside the
Company's control, including: the level of use of the Internet; the demand for
high-tech goods; seasonal trends in both Internet use, purchases of electronics,
and advertising placements; the addition or loss of advertisers; the level of
traffic on the Company's Internet sites; the amount and timing of capital
expenditures and other costs relating to the expansion of the Company's Internet
operations; the introduction of new sites and services by the Company or its
competitors; price competition or pricing changes in the industry; technical
difficulties or system downtime; general economic conditions, and economic
conditions specific to the Internet and Internet media. The Company's quarterly
results may also be significantly impacted by the impact of the accounting
treatment of acquisitions, financing transactions or other matters. Particularly
at the Company's early stage of development, such accounting treatment can have
a material impact on the results for any quarter. Due to the foregoing factors,
among others, it is possible that the Company's operating results will fall
below the expectations of the Company or investors in some future quarter.
LIMITED PUBLIC MARKET, POSSIBLE VOLATILITY OF SHARE PRICE.
The Company's Common Stock is currently quoted on the NASD OTC Bulletin Board
under the ticker symbol BTLY. As of April 18, 2000, there were approximately
13,270,836 shares of Common Stock outstanding, of which approximately 7,945,003
were tradable without restriction under the Securities Act. There can be no
assurance that a trading market will be sustained in the future. Factors such
as, but not limited to, technological innovations, new products, acquisitions or
strategic alliances entered into by the Company or its competitors, failure to
meet security analysts' expectations, government regulatory action, patent or
proprietary rights developments, and market conditions for technology stocks in
general could have a material effect on the volatility of the Company's stock
price.
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UNCERTAIN ACCEPTANCE AND MAINTENANCE OF THE COMPANY'S BRAND NAME.
The Company believes that establishing and maintaining the Company's
buynetonline.com E-commerce website brandname is a critical aspect of its aspect
of its efforts to attract and expand its Internet audience and that the
importance of brand name recognition will increase due to the growing number of
Internet sites and the relatively low barriers to entry in providing Internet
content. If the Company is unable to provide high quality content or otherwise
fails to promote and maintain its brand, or if the Company incurs excessive
expenses in an attempt to improve its content or promote and maintain its brand,
the Company's business, results of operations, and financial condition will be
materially adversely affected.
MANAGEMENT OF GROWTH
The Company expects to experience significant growth in the number of employees
and the scope of its operations. In particular, the Company intends to hire
additional engineering, sales, marketing, content acquisition and administrative
personnel. Additionally, acquisitions could result in an increase in employee
headcount and business activity. Such activities could result in increased
responsibilities for management. The Company believes that is ability to
increase its customer support capability and to attract, train, and retain
qualified technical, sales, marketing, and management personnel, will be a
critical factor to its future success. In particular, the availability of
qualified sales engineering and management personnel is quite limited, and
competition among companies to attract and retain such personnel is intense.
During strong business cycles, the Company expects to experience continued
difficulty in filling its needs for qualified sales, engineering, and other
personnel.
The Company's future success will be highly dependent upon its ability to
successfully manage the expansion of its operations. The Company's ability to
manage and support its growth effectively will be substantially dependent on its
ability to implement adequate improvements to financial and management controls,
reporting and order entry systems, and other procedures and hire sufficient
numbers of financial, accounting, administrative, and management personnel. The
Company's expansion and the resulting growth in the number of its employees has
resulted in increased responsibility for both existing and new management
personnel. The Company is in the process of establishing and upgrading its
financial accounting and procedures. There can be no assurance that the Company
will be able to identify, attract, and retain experienced accounting and
financial personnel. The Company's future operating results will depend on the
ability of its management and other key employees to implement and improve its
systems for operations, financial control, and information management, and to
recruit, train, and manage its employee base. There can be no assurance that the
Company will be able to achieve or manage any such growth successfully or to
implement and maintain adequate financial and management controls and
procedures, and any inability to do so would have a material adverse effect on
the Company's business, results of operations, and financial condition.
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The Company's future success depends upon its ability to address potential
market opportunities while managing its expenses to match its ability to finance
its operations. This need to manage its expenses will place a significant strain
on the Company's management and operational resources. If the Company is unable
to manage its expenses effectively, the Company's business, results of
operations, and financial condition will be materially adversely affected.
RISKS ASSOCIATED WITH ACQUISITIONS.
As part of its business strategy, the Company expects to acquire assets and
businesses relating to or complementary to its operations. These acquisitions by
the Company will involve risks commonly encountered in acquisitions of
companies. These risks include, among other things, the following: the Company
may be exposed to unknown liabilities of the acquired companies; the Company may
incur acquisition costs and expenses higher than it anticipated; fluctuations in
the Company's quarterly and annual operating results may occur due to the costs
and expenses of acquiring and integrating new businesses or technologies; the
Company may experience difficulties and expenses in assimilating the operations
and personnel of the acquired businesses; the Company's ongoing business may be
disrupted and its management's time and attention diverted; the Company may be
unable to integrate successfully.
PART II OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
During the quarter, the Company issued 800,000 common shares at $0.30 per share
pursuant to Rule 701 of the Securities Act of 1933, as amended, for consulting
and professional services. The Company also will issue 10,000 common shares at
$0.75 per share for the acquisition of the issued shares of Kyrenia Acquisition
corporation pursuant to Section 4(2) of the Securities Act of 1933, as amended.
The Company issued a further 1,000,000 shares at $0.70 per share, of free
trading common stock in two separate private placements pursuant to Regulation
D, Rule 504.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
2 Reorganization Agreement between the Registrant and Kyrenia
Acquisition Corp.
3.1 Articles of Incorporation of the Registrant
3.2 By-laws of the Registrant
10.1 Advisory Agreement between Bentley Communications Corp. and
Trade-Wins Inc., dated January 5, 2000
10.2 Employee Agreement between Bentley Communications Corp. and
Gordon F. Lee, dated January 1, 2000
10.3 Employee Agreement between Bentley Communications Corp. and
Eric Bauchman, dated January 1, 2000
10.4 Employee Agreement between Bentley Communications Corp. and
Victor Nguyen, dated January 1, 2000
10.5 Acquisition Agreement between Bentley Communications Corp. and
Margot Winters and Mathew Brown for the purchase of Twirlme, a
California Company
10.7 License Agreement between Bentley Communications Corp. and HCV
Inc., dated March 10, 2000
27.1 Financial Data Schedule for the three months ended March 31,
2000 (electronic filing only)
(b) Reports on Form 8-K filed during the three months ended March 31, 2000.
On March 9, 2000, the Company filed a Form 8-K describing the Company's
acquisition by Bentley Communications Corp., a Florida Company, and the
Company's subsequent reorganization.
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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.
Date: June 1, 2000 Bentley Communications Corp.
/S/ Gordon F. Lee
----------------------------
Gordon F. Lee
President
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