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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
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)
9800 South Sepulveda Boulevard, Suite 625, Los Angeles, CA 90045
(Address of principal executive offices)
Issuer's telephone number, including area code: (310) 342-0760
Securities Registered pursuant to section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities 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
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Check if disclosure of delinquent filers pursuant to Item 405 of Regulation S-B
is not contained in this form, and no disclosure will be contained, to the best
of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB.
X
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State issuer's revenues for its most recent fiscal year. $17,691
Aggregate market value of the voting stock held by non-affiliates of the
registrant as of June 30, 2000. $12,264,306
Number of outstanding shares of the registrant's par value $0.0001 common stock,
as of June 30, 2000. 16,770,836
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BENTLEY COMMUNICATIONS CORP.
FORM 10-KSB
INDEX
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Page
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Part I
<S> <C> <C>
Item 1. Business....................................................................................4
Item 2. Properties..................................................................................9
Item 3. Legal Proceedings...........................................................................9
Item 4. Submission of Matters of a Vote of Security Holders.........................................10
Part II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.......................11
Item 6. Management's Discussion and Analysis of Financial
Condition and Results of Operation..........................................................11
Item 7. Financial Statements and Supplementary Data.................................................16
Item 8. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.........................................................17
Part III
Item 9. Directors and Executive Officers of the Registrant..........................................17
Item 10. Executive Compensation......................................................................19
Item 11. Security Ownership of Certain Beneficial Owners and Management..............................20
Item 12. Certain Relationships and Related Transactions..............................................21
Part IV
Item 13. Exhibits, Financial Statement Schedule and Reports on Form 8-K..............................22
Signatures ............................................................................................44
</TABLE>
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Part I
ITEM 1. BUSINESS
When used in this Form 10-KSB, the words "expects," "anticipates," "estimates"
and similar expressions are intended to identify forward-looking statements.
Such statements are subject to risks and uncertainties, including those set
forth below under "Risks and Uncertainties," that could cause actual results to
differ materially from those projected. These forward-looking statements speak
only as of the date hereof. The Company expressly disclaims any obligation or
undertaking to release publicly any updates or revisions to any forward-looking
statements contained herein to reflect any change in the Company's expectations
with regard thereto or any change in events, conditions or circumstances on
which any statement is based. This discussion should be read together with the
financial statements and other financial information included in this Form
10-KSB.
(a) General Description and Development of Business
HISTORY OF COMPANY
The Company was incorporated under the laws of the State of Florida on February
28, 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 engages 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.
On March 7, 2000, the Company purchased 100% interest in Twirlme.com, a Nevada
corporation with offices in San Francisco, CA.
BUSINESS
CORPORATE OVERVIEW
The Company structure and major subsidiaries is as follows, with the
jurisdiction of incorporation of each subsidiary included in parentheses:
BENTLEY COMMUNICATIONS CORP.
(Florida, USA)
Twirlme.com Inc.
(100% owned)
(Nevada, USA)
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Legends Surfboards Inc.
(100% owned)
(Nevada, USA)
Omnibomb Corp.
(100% owned)
(Nevada, USA)
The Company incorporated Legend Surfboards Inc. on May 19, 2000, and Omnibomb
Corp. on April 24, 2000, but to this date both corporations are non-operational.
GENERAL OPERATIONS
Bentley Communications Corp. is transitioning from a development stage company
to that of an active growth and acquisition stage company. The Company engages
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. The Company plans to develop products in-house that are technologically
unique or of an advanced nature, will seek to acquire Internet and
Communications service companies which are complementary and supplementary to
existing planned product offerings, and will seek to engage in partnership and
other agreements for product sourcing of business electronics and other
telecommunications products. The Company's long-term objective is to obtain
brand name recognition as the Internet's Unique Product Resource and a leader in
the development of Integrated B2B Internet Commerce.
THE INTERNET AND THE OPPORTUNITY
The Internet has rapidly emerged as a significant interactive medium for
worldwide communication, instant access to information and e-commerce.
International Data Corporation estimates that the number of Internet users
worldwide will increase from approximately 196 million at the end of 1999 to
more than 502 million by the end of 2003. The Company believes this rapid growth
is primarily attributable to the increasing number of personal computers in
homes and offices, technological advancements that provide easier, faster and
cheaper access to the Internet and the proliferation of products, content and
services available on the Internet at competitive prices.
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The Company believes increasing numbers of customers will engage in e-commerce
as online retailers take advantage of the recent technological improvements
associated with the Internet that allow the integration of one-click buying,
intelligent product recommendations and near real-time customer service.
International Data Corporation estimates that the number of customers making
purchases on the Internet will grow from approximately 48 million in 1999 to
approximately 183 million in 2003. In addition, International Data Corporation
predicts the total value of goods and services purchased annually over the
Internet will increase from approximately $111.4 billion in 1999 to
approximately $1.3 trillion in 2003.
The Company believes that an Internet-based retailer/wholesaler will have
advantages over traditional retail channels. The Company believes that
traditional retail/wholesale channels do not have the capability to track
individual customer purchases and demographic data for use in direct marketing
programs and in developing a one-to-one relationship with the individual retail
or wholesale consumer.
The Company believes that it can maximize the awareness and traffic of its
E-commerce website through the use of strategic alliances with other websites
having high user traffic, the use of pop-up advertising as well as email
solicitation. Through the use of embedded hyperlinks, higher traffic websites
can refer potential customers to the Company's E-commerce website for potential
purchases of goods or services. These agreements generally involve economic
arrangements including up-front payments or commissions on the dollar volume of
goods sold. Pop-up advertising and email solicitation will provide an additional
source for generating customer traffic.
BUSINESS STRATEGY
The Company's strategy is to focus on the growth of Internet-based retailing and
wholesaling, and on providing unique, proprietary, and low cost, high quality,
business electronics and telecommunications products.
The Company plans to use its website as the main conduit in promoting,
distributing and selling its products, and to provide products that are not
widely available online in order to distinguish itself from other Internet
shopping websites. The Company plans to develop and acquire new and innovative
products on an ongoing basis in order to maintain a position as a resource for
unique products over the Internet.
The Company plans to acquire Internet and Communications service companies which
are complementary and supplementary to existing and future product offerings.
As the Company continues to broaden its product offerings, it also plans to
accept certain products on consignment on its website. The Company believes the
advantage to this will be to eliminate the need to acquire products for resale
and/or maintain high inventory carrying costs.
In the past 12 months, the Company has focused on establishing it's various
websites and on product sourcing and acquisitions.
On March 7, 2000, the Company purchased 100% interest in Twirlme.com, a website
development hosting company, for it's online shopping mall. The Company is
located in San Francisco, California. The acquisition brought the Company an
immediate web design infrastructure and industry expertise in addition to a
source of revenue from an established client base.
On April 4, 2000 the Company signed a Letter of Intent with the Chengdu Foreign
Economic Relations and Trade Service and Chengdu International Trade Co. Ltd. in
which the Company will provide services and operations assistance, including
product sourcing and marketing to the People's Republic of China in the form of
creating a business ISP by featuring the various Chinese manufacturers products
on the Company's various websites. The Company believes this agreement
establishes a trade presence for it in China which will position the Company to
take advantage of the size of the Chinese and Asian markets.
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On April 18, 2000, the Company signed Letters of Intent with three Taiwanese
companies, to serve as a closeout conduit for select overstock and discontinued
items which include business electronics and telecommunications products in
addition to high-tech nuclear/biological/chemical and fire resistant cloth for
military, safety and related applications. The Company believes these agreements
will begin to establish it to Asian-based manufacturers as a vehicle to
effectively introduce their products to non-Asian markets, and will lead to
further product sourcing agreements in the future.
On April 29, 2000 the Company signed Letters of Intent with Jinjiang Electric
Industrial Co. Ltd. and Changhong Electronics Group Corp. for introduction of
their products to world wholesale and retail markets and for collaborative
future product development and marketing strategies. These products include
consumer electronics, appliances, telecommunication products, computers, and
accessories. The Company will coordinate marketing efforts, and help to create
increased acceptance of quality consumer and industrial products that are widely
used in Asia along with the Chinese brand names they represent.
On May 1, 2000, the Company entered into a Preliminary Agency Agreement with
Lick Hung Toys Limited, of Hong Kong, to include worldwide distribution of an
extensive variety of well-known toy products for children. Lick Hung Toys Ltd.
Has been designing, manufacturing and marketing a wide variety of toys
throughout China, Hong Kong, Taiwan and Africa for more than 20 years. Under
this agreement, the Company will become the exclusive agent of Lick Hung Toys
Ltd. to directly distribute products in the United States, in addition to
world-wide distribution rights over the Internet.
On June 8, 2000, in an expansion of the April 4 Agreement, the Company entered
into an agreement with the Chengdu Foreign Economic Relations and Trade Service
and the Chengdu Minjang International Trade Company to provide website hosting
and ISP services for the City of Chengdu and the surrounding region in the
People's Republic of China.
The Company plans to continue to actively seek acquisitions and partnerships and
anticipates continued growth and diversification in product offerings for the
foreseeable future. The Company also plans to continue to increase its Internet
presence as it develops online marketing and advertising partnerships to drive
web traffic to it's buynetonline.com website.
ORDERING, FULFILLMENT AND CUSTOMER SERVICE
The Company has developed the working version of its E-commerce Internet
website, buynetonline.com that will serve as an interactive shopping, supply,
and gateway resource on the Internet.
Wholesale business companies will be able to use the buynetonline.com gateway to
offer specific products, product lines or raw materials as well as closeouts or
discontinued items; either in a catalog or in an auction-type environment.
Individuals or companies with single products or barter goods will use a "Deals"
section if they so choose. The Company will charge a facilitation fee (based on
a percentage of the total transaction) for bringing together the business to
business buyer and seller and coordinating the transaction in a fiduciary
capacity.
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The E-commerce site is designed to manage, track and process tens of thousands
of secure and encrypted credit card sales and transactions to wholesale and
retail buyers on a daily basis. The Company's ordering system is designed to be
easy to use and simple to understand. In order to maintain high customer
satisfaction and price competitiveness, the Company plans to place an emphasis
on reliable product fulfillment and high levels of customer service. At any time
during a visit to the Company's website, a customer will be able to click on the
"order now" button to place an item in his or her personal shopping basket. The
customer can continue to shop the website, adding chosen items to his or her
shopping basket. If not previously registered with the Company, a customer is
prompted to register at the time of purchase and to enter his or her name,
address and password. The customer then has the option of securely submitting
credit card information on-line or calling or faxing the information to the
Company's Service Department. By assigning a password to every buyer, the
Company's ordering process will facilitate repeat purchases by eliminating the
need to re-submit credit card and shipping information for subsequent orders.
The Company will provide multilingual customer service representatives that can
be reached through Internet telephone, with or without cameras, conventional
telephone, email and fax.
SALES AND MARKETING
The Company's overall sales and marketing strategy is designed to merchandise
telecommunications and related high-tech products sold through the Company's
website to end-consumers, wholesalers and retailers, to build brand awareness of
the Company's buynetonline.com website, attract repeat users and drive traffic
to the buynetonline.com website.
The Company intends to utilize a combination of external advertising and
promotion, internal promotion and product merchandising and on-line partnering
programs to accomplish these objectives.
COMPETITION
The market for Internet product and service providers is highly competitive and
rapidly changing. Since the Internet's commercialization in the early 1990s, the
number of websites on the Internet competing for consumers' attention and
spending has proliferated. With no substantial barriers to entry, the Company
expects that competition will continue to intensify. With respect to competing
for consumers' attention, in addition to the increasing competition from
Internet product and service providers, the Company also faces competition from
traditional retailers and wholesalers of telecommunications and technologically
unique products.
The Company believes that the primary competitive factors in the online market
include brand recognition, price, product selection, ease of use, customer
service, available content and value added services. The Company believes that
its success in this market will rely upon its ability to meet these standards.
Other factors that will affect the Company's success include the Company's
ability to attract experienced marketing, sales and management talent.
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While the Company believes it can differentiate itself from its current and
potential competitors by offering products and services that are either unique
in nature or equivalent, but significantly less expensive than those currently
marketed by other companies, the Company also recognizes that many of its
current competitors will have longer operating histories, significantly greater
financial, technical and marketing resources, greater name recognition and
larger existing customer bases than the Company. These competitors may be able
to respond more quickly to new or emerging technologies and changes in customer
requirements and to devote greater resources to the development, promotion and
sale of their products or services than the Company. There can be no assurance
that the Company will be able to compete successfully against current or future
competitors.
EMPLOYEES
As of June 30, 2000, the Company has 6 full time employees and three part time
employees, including an Administrative Officer and Associate, two Account
Managers, an Accountant and a Vice President in charge of Asian Marketing. The
Company has also from time to time as needed, retained the services of a number
of outside consultants for planning mergers and acquisitions, providing
introductions to potential merger candidates and financiers, marketing programs,
and other product development.
The Company's employees are not represented by any collective bargaining
organization. The Company has never experienced a work stoppage and considers it
relations with its current employees to be good.
ITEM 2. PROPERTIES
The Company currently maintains its corporate headquarters at Suite 625 - 9800
South Sepulveda Boulevard, Los Angeles, CA, 90045. The Company's corporate
headquarters consists of 2,000 square feet at a lease rate of $2,300.00 per
month. The facilities are located near Los Angeles International Airport (LAX)
and the Port of Los Angeles, with its Free Trade Zone, which will facilitate
import and export activities. The Company believes these facilities will be
adequate for its current requirements.
As of June 30, 2000 The Registrant had the following tangible assets.
(a) Real Estate None
(b) Furniture, Equipment, and
Leasehold improvements $158,845
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ITEM 3. LEGAL PROCEEDINGS
In the ordinary course of business, the Company may be involved in legal
proceedings from time to time. As of the date hereof, the only material legal
proceeding commenced by or against the Company consists of the following:
The Company is named as a co-defendant in an action filed in Los Angeles
Superior Court on February 14, 2000. The Plaintiff, Har Adir, LLC, a California
Limited Liability Company is claiming action against Bentley Communications
Corp., and Gordon F. Lee individually. The Plaintiff seeks $2,000,000 in damages
for breach of contract. The Plaintiff had a finders fee agreement with the
Company with respect to an electronic pen product developed by an Israeli
company. The promised product never materialized and Har Adir, LLC, in
management's view, defrauded the Company of $50,000. The Plaintiff has offered
to settle all claims against the Company in exchange for two hundred thousand
(200,000) shares of the Company's common stock.
Management believes the Company will be successful in protecting its rights, and
will vigorously defend what it believes to be frivolous charges against the
Company. Management has instructed its legal counsel to file a counter-suit to
recover damages and legal fees. However, should the plaintiff be successful,
management believes there would be a negative material impact on the operations
of the Company.
The Company is named as a defendant in an action filed on May 16, 2000, in the
Circuit Court of the 17th Judicial circuit in and for Dade County, Florida for
issuance of worthless check and breach of contract. The Plaintiff, Access
America Financial Corp., a Delaware corporation, is claiming $150,000 USD,
alleged to be owed to the Plaintiff, $450,000 in statutory treble damages, costs
and attorney's fees.
The Company has filed an affirmative defense and will vigorously defend this
action. Management is confident that it will have a positive outcome in this
case.
The Company and the President of the Company are named as defendants in an
action filed on September 25, 2000, in Los Angeles County Superior Court. The
Plaintiff, Tara Givenrod is claiming a judgment against the Company for general
damages, special damages, punitive damages, attorney's fees, costs and interest.
The Plaintiff has charged The Company and the President of the Company with
sexual battery, sexual harassment, failure to prevent harassment, wrongful
termination, and intentional infliction of emotional distress. The Plaintiff has
refused to specify what her damages amount to at this time.
The Plaintiff alleges the President of the Company acted in a manner which
forced her to leave her position within the Company. The President of the
Company disputes the allegations.
The Company intends to disprove the Plaintiffs' allegations, and Management
believes the Company will be successful in protecting its rights, but does not
believe there would be a material impact on the operations of the Company should
the plaintiff be successful.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted during the fiscal year covered by this report to a
vote of security holders of the Company, through the solicitation of proxies or
otherwise.
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Part II
ITEM 5. MARKET FOR REGIGRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
(a) The Company's common stock is traded on the NASD Electronic Bulletin Board
under the symbol "BTLY". Prices reported represent prices between dealers, do
not include markups, markdowns or commissions and do not necessarily represent
actual transactions. The market for the Company's shares has been sporadic and
at times very limited.
The following table sets forth high and low bid quotations of the Company's
common stock for the fiscal years ended June 30, 1999 and 2000 as follows:
Bid
2000
High Low
First Quarter 5.90 0.56
Second Quarter 0.89 0.52
Third Quarter 0.68 0.95
Fourth Quarter 0.89 0.81
1999
High Low
First Quarter n/a n/a
Second Quarter 5.50 1.25
Third Quarter 2.75 1.00
Fourth Quarter 1.15 0.28
(b) As of June 30, 2000, the Company had approximately 631 shareholders of
record of the common stock
(c) No dividends on outstanding common stock have been paid within the last two
fiscal years, and interim periods. The Company does not anticipate or intend
upon paying dividends for the foreseeable future.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION
When used in this Form 10-KSB, the words "expects," "anticipates," "estimates"
and similar expressions are intended to identify forward-looking statements.
Such statements are subject to risks and uncertainties, including those set
forth below under "Risks and Uncertainties," that could cause actual results to
differ materially from those projected. These forward-looking statements speak
only as of the date hereof. The Company expressly disclaims any obligation or
undertaking to release publicly any updates or revisions to any forward-looking
statements contained herein to reflect any change in the Company's expectations
with regard thereto or any change in events, conditions or circumstances on
which any statement is based. This discussion should be read together with the
financial statements and accompanying notes included in this Form 10-KSB.
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General
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The Company engages 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-US based companies, initially in Asia and the
Pacific Rim.
Revenues
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For the year ended June 30, 2000, revenues from continuing operations, which are
comprised exclusively of web hosting and consulting fees, was $17,691 as
compared to no revenues during the year ended June 30, 1999. The Company has
transitioned from a development stage enterprise of prior years to operating
enterprise during the year ended June 30, 2000 and had no revenues in 1999. The
Company reported a net loss from operations before income taxes of $3,371,221 in
2000 compared to a net loss of $142,532 in 1999.
Costs and Expenses
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The Company's expenses from operations for the year ended June 30, 2000
increased $3,246,380 to $3,388,912 from $142,532 during the same period in 1999.
Selling, general and administrative expenses increased $3,237,533 to $3,380,040
in 2000 from $142,507 in 1999. The increase is due to the Company employing
additional employees during 2000 as compared to 1999, incurring additional
professional and organization costs associated with the acquisition of the
public company shell. In addition, the Company incurred costs of $1,782,000
associated with the value of common stock issued to employees and consultants
for services rendered during the year ended June 30, 2000. The Company also
incurred costs of $232,500 in connection with the acquisition of the shell
corporation in March, 2000 which was expensed in 2000.
As the Company transitions from a development stage to an operating company, the
Company has incurred significant operating deficits, which have decreased the
Company's working capital. Company management believes this trend will have a
material impact on the Company's short-term and long-term liquidity. Management
expects to fund this decrease in liquidity through the proceeds of loans from
significant shareholders and the private placement of its stock. Management
believes income from continuing operations may be materially impacted by the
transition from a development stage to an operating company.
Depreciation and amortization expense for 2000 was $8,872, an increase of $8,847
from $25 in 1999. The increase in depreciation expense is as a result of the
acquisition of office and related equipment during the year ended June 30, 2000.
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Liquidity and Capital Resources
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As of June 30, 2000, the Company had a working capital deficit of $136,117
compared to a deficit of $87,044 at June 30, 1999, an increase in the deficit of
$49,073. The decrease in working capital was substantially due to the Company's
losses from operations. In addition, the Company experienced an increase in
accounts payable and accrued expenses of $110,409 at June 30, 2000 as compared
to June 30, 1999.
While the Company has raised capital and borrowed funds to meet its current and
projected working capital needs, additional financing will be required in order
to meet its obligations. The Company is seeking financing in the form of equity
and debt for working capital. There are no assurances the Company will be
successful in raising the funds required.
The Company has borrowed funds from significant shareholders of the Company in
the past to satisfy certain obligations and anticipates continuing to borrow
funds to meet future working capital requirements.
The Company generated a cash flow deficit from operations of $1,659,365 for the
year ended June 30, 2000. Cash flow deficits from operating activities for the
year ended June 30, 2000 is primarily attributable to the Company's net loss
from operations of $3,371,221, adjusted for depreciation and amortization of
$8,872, and common stock issued for services of $1,782,000.
Cash flows used in investing activities was $158,345 during the year ended June
30, 2000 which represented the acquisition of property and equipment.
Cash flow provided from financing activities was $1,815,000 during the year
ended June 30, 2000. The principal source of financing in 2000 was the receipt
of $1,315,000 from the sale of the Company's common stock , whose proceeds were
utilized for acquisitions and working capital.
The effect of inflation on the Company's revenue and operating results was not
significant. The Company's operations are in the southeastern United States and
there are no seasonal aspects that would have a material effect on the Company's
financial condition or results of operations.
Recent Accounting Pronouncements
--------------------------------
The Company adopted Statement of Financial Accounting Standards No. 132,
Employers' Disclosures about Pension and Other Post Employment Benefits ("SFAS
132") in the year ended June 30, 2000. SFAS No. 132 establishes disclosure
requirements regarding pension and post employment obligations. SFAS No. 132
does not effect the Company as of June 30, 2000.
In March 1998, Statement of Position No. 98-1 was issued, which specifies the
appropriate accounting for costs incurred to develop or obtain computer software
for internal use. The new pronouncement provides guidance on which costs should
be capitalized, and over what period such costs should be amortized and what
disclosures should be made regarding such costs. This pronouncement is effective
for fiscal years beginning after December 15, 1998, but earlier application is
acceptable. Previously capitalized costs will not be adjusted. The Company
believes that it is already in substantial compliance with the accounting
requirements as set forth in this new pronouncement, and therefore believes that
adoption will not have a material effect on financial condition or operating
results.
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In April 1998, Statement of Position No. 98-5 was issued which requires that
companies expense defined previously capitalized start-up costs including
organization costs and expense future start-up costs as incurred. Adoption of
this statement does not have an effect on financial condition or operating
results.
The Company adopted Statement of Financial Standards No. 133, Accounting for
Derivative Instruments and for Hedging Activities ("SFAS No. 133") in the year
ended June 30, 2000. SFAS No. 133 requires that certain derivative instruments
be recognized in balance sheets at fair value and for changes in fair value to
be recognized in operations. Additional guidance is also provided to determine
when hedge accounting treatment is appropriate whereby hedging gains and losses
are offset by losses and gains related directly to the hedged item. SFAS No.
133's impact on the Company's consolidated financial statements is not expected
to be material as the Company has not historically used derivative and hedge
instruments.
In December, 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101 (" SAB 101"), Revenue Recognition in Financial
Statements, which will become effective December 31, 2000. The Company does not
expect the standard to have a material effect on its results.
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.
LIMITED OPERATING HISTORY; ANTICIPATED LOSSES; UNCERTAINTY 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 products. The Company expects negative cash flow from operations
to continue for the next eight 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.
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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 likely 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 June 30, 2000, there were approximately
16,770,836 shares of Common Stock outstanding, of which approximately 8,045,003
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.
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 brand name is a critical 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.
15
<PAGE>
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.
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.
16
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The response to this Item is included as a separate Exhibit to this report.
Please see pages 23 through 41.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Stefanou & Company, LLP, were dismissed as the independent auditors of the
Company as of June 2, 2000. The auditors' report on the financial statements for
the period February 28, 1999 (date of the Company's inception) through June
30,1999 did not contain an adverse opinion or disclaimer of opinion, and was not
qualified or modified as to uncertainty, audit scope or accounting principles,
except that his report for the fiscal year ended June 30, 1999 contained an
explanatory paragraph regarding the substantial doubt about the Company's
ability to continue as a going concern.
There has been no disagreement between the Company and Stefanou & Company, LLP
on matters of accounting principles or practices, financial statement disclosure
or auditing scope or procedure.
As of the June 2, 2000 the firm of Parker & Co., Chartered Accountants was
engaged as the independent accountants for the Company.
Parker & Co., Chartered Accountants were dismissed as independent auditors of
the Company as of June 21, 2000. The auditors' report on the financial
statements for the three month period ended March 31, 2000 did not contain an
adverse opinion or disclaimer of opinion, and was not qualified or modified as
to uncertainty, audit scope or accounting principles. The decision to dismiss
Parker was approved by the Company's Board of Directors.
During the three month period ended March 31,2000, the Company has not had any
disagreements with Parker on any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedure.
As of June 21, 2000, the Company has engaged Stefanou & Co., LLP as its
certifying accountant for the Company's fiscal year ending June 30, 2000.
17
<PAGE>
Part III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
a) The following table furnishes the information concerning the Company's
directors and officers as of June 30, 2000. The directors of the Company are
elected every year and serve until their successors are elected and qualify.
Name Age Title Term
------------------ --- ------------------ --------
Victor Nguyen 43 President Annual
Gordon F. Lee 49 CEO and Director Annual
On July 30, 2000 Eric Bauchmann resigned as Vice President (Operations) of the
Company.
On May 18, 2000 Tony Drescher resigned as Secretary of the Company
On August 9, 2000 Gordon F. Lee resigned as President of the Company and was
appointed CEO of the Company
On August 9, 2000 Victor Nguyen was appointed President of the Company.
The following table sets forth the portion of their time the Officers and
Directors devote to the Company:
Victor Nguyen 100%
Gordon F. Lee 50%
The term of office for each director is one (1) year, or until his/her successor
is elected at the Company's annual meeting and is qualified. The term of office
for each officer of the Company is at the pleasure of the board of directors.
The board of directors does not have a nominating committee. Therefore, the
selection of persons or election to the board of directors was neither
independently made nor negotiated at arm's length.
(b) Identification of Certain Significant Employees.
Strategic matters and critical decisions are handled by the directors and
executive officers of the Company, Gordon Lee and Victor Nguyen.
(c) Family Relationships. None
(d) Business Experience.
The following is a brief account of the business experience during the past five
years of each director and executive officer of the Company, including principal
occupations and employment during that period and the name and principal
business of any corporation or other organization in which such occupation and
employment were carried on.
18
<PAGE>
Victor Nguyen, age 43, has been President of the Company since March, 2000. Dr.
Nguyen received his Ph.D in Information Systems from Nova Southeastern
University in Fort Lauderdale, Florida in 1988. From February 1999 to February
2000, Dr. Nguyen served as an Information Technology Director for a Healthcare
Communications company, and as a Consultant with NationData Technologies and
Washington Mutual. From June 1998 to April 1999, he was the Senior Client/Server
Developer for Countrywide Home Loans, providing technical support and database
design and programming; from December 1997 to May 1998 he was the Senior
Software Developer for Commercial Underwriters Insurance; from January 1996 to
November 1997, he worked as the lead designer for Computer Sciences Corporation;
from July 1994 to December 1995 he was the Senior Software Engineer for User
Technology Associates, developing client/server system requirements and
providing system training to programmers; from February 1989 to June 1994 he was
the Computer Scientist and Senior Member of the Technical Staff for Cincinnati
Bell Information Systems (now Computer Sciences Corporation), developing
client/server system requirements and providing system training to programmers.
Gordon F. Lee, age 49, has been the CEO of the Company since March, 2000. From
March 1998 to March 1999, Mr. Lee served as the President of Glass Master
Industries, a company working on the development of a bullet resistant glass
coating technology which was eventually sold off to other companies for
commercial development. From 1991 to March 1998, Mr. Lee served as the President
of USA Video corporation, one of the first companies to offer video on demand
and high quality digitizing and compression services.
(e) Directors Compensation
Directors who are also officers of the Registrant receive no cash compensation
for services as a director. The Company may grant options to directors under the
Company's Stock Incentive Plan.
19
<PAGE>
ITEM 10. EXECUTIVE COMPENSATION
Section 16(a) of the Securities Exchange Act of 1934, as amended (The "Exchange
Act"), requires the Registrant's officers and directors, and persons who own
more than 10% of a registered class of the Registrant's equity securities, to
file reports of ownership and changes in ownership of equity securities of the
Registrant with the Securities and Exchange Commission. Officers, directors and
greater-than 10% shareholders are required by the Securities and Exchange
Commission regulation to furnish to Registrant with copies of all Section 16(a)
forms that they file.
Some of the officers and directors of the Company will not devote more than a
portion of their time to the affairs of the Company, although Victor Nguyen
devotes full time to the company. There will be occasions when the time
requirements of the Company's business conflict with the demands of their other
business and investment activities. Such conflict may require that the company
attempt to employ additional personnel. There is no assurance that the services
of such persons will be available or that they can be obtained upon terms
favorable to the Company.
There is no procedure in place which would allow officers or directors to
resolve potential conflicts in an arms - length fashion. Accordingly, they will
be required to use their discretion to resolve them in a manner in which they
consider appropriate.
19
<PAGE>
EXECUTIVE COMPENSATION
(a) Cash Compensation.
Compensation paid by the Company for all services provided up to December June
30, 2000 (1) to each of its executive officers and (2) to all officers as a
group.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE OF EXECUTIVES
Annual Compensation Long Term Compensation
(a) (b) (c) (d) (e) (f) (g)
Name and Year Salary Bonus Other Restricted Securities
Principal ($) ($) Annual Stock Underlying/
Position Compensation Awards Options
($) ($) (#)
<S> <C> <C> <C> <C> <C> <C>
Victor Nguyen 2000 30,000 0 0 $350,000* 500,000**
President and Director
Gordon F. Lee 2000 240,000 0 0 $350,000* 1,000,000**
CEO and Director
Eric Bauchmann 2000 30,000 0 0 $350,000* 500,000**
(resigned July 30, 2000)
Tony Drescher 2000 0 0 0 $210,000* 0
Secretary
(resigned May 18/00)
</TABLE>
(h) The Company has made no Long Term Compensation payouts (LTIP or other)
* On March 7, 2000, the Company issued 300,000 shares to Tony Drescher for
services rendered to the Company as Secretary of the Company. And on May 11,
2000, the Company issued 500,000 shares each to Victor Nguyen, Gordon Lee and
Eric Bauchmann for services rendered to the Company as officers of the Company.
These shares were all issued at a deemed value of $0.70 per share.
** On January 1, 2000, stock options to purchase a total of 2,000,000 shares at
$2.00 per share were granted to Victor Nguyen (500,000 shares), Eric Bauchmann
(500,000 shares) and Gordon Lee (1,000,000 shares) pursuant to Employment
Agreements signed on January 1, 2000. One eighth of the share options vest over
a period of two years at the end of each fiscal quarter. To date, no options
have been exercised. All options expire 30 days after termination of employment.
20
<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
a) Beneficial owners of five percent (5%) or greater, of the Company's common
stock: No preferred stock is outstanding at the date of this offering. The
following sets forth information with respect to ownership by holders of more
than five percent (5%) of the Registrant's common stock known by the Registrant
based upon 16,770,836 shares outstanding at June 30, 2000.
Title of Name and Address of Amount of Beneficial Percent
Class Beneficial Owner Interest of Class
Common Giovanni Rondoni 2,666,667 15.9%
Viavittorio #87A-64
Terni 8046 Italy
b) The following sets forth information with respect to the Company's common
stock beneficially owned by each Officer and Director, and by all Directors and
Officers as a group, at June 30, 2000.
Title of Name and Address of Amount of Percent
Class Beneficial Owner Beneficial Interest of Class
Common Victor Nguyen 500,000 3.0%
625 - 9800 S. Sepulveda Blvd
Los Angeles, CA 90045
Common Gordon F. Lee 2,500,000 14.9%
625 - 9800 S. Sepulveda Blvd
Los Angeles, CA 90045
Total as a group 3,000,000 17.9%
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On various dates in 1999, the Company entered into four agreements of
subordinated convertible promissory notes at 6% annual interest with various
conversion prices for a total of $500,000 cash. On April 12, 2000, the lenders
notified the Company of their intention to convert 100% of the principal to
common stock in accordance with the terms of the agreement. As a result, Gordon
F. Lee (CEO) was issued 2,000,000 shares of common stock.
21
<PAGE>
Part IV
ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
a) Financial Statements and Schedules. The following financial statements and
schedules for the Company as of June 30, 2000 are filed as part of this report.
(1) Financial statements of Bentley Communications Corp. and
subsidiaries.
Year ended June 30, 2000
Page
Cover Page....................................................................23
Index to Financial Statements.................................................24
Independent Auditor's Report for years ended June 30, 2000....................25
Consolidated Balance Sheet at end of June 30, 2000............................26
Consolidated Statement of Operations at end of June 30, 2000..................27
Consolidated Statement of Stockholders' Equity at end of June 30, 2000........29
Consolidated Statement of Cash Flows at end of June 30, 2000..................30
Notes to the Consolidated Financial Statements................................31
22
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FINANCIAL STATEMENTS AND SCHEDULES
JUNE 30, 2000 AND 1999
FORMING A PART OF ANNUAL REPORT
PURSUANT TO THE SECURITIES EXCHANGE ACT OF 1934
BENTLEY COMMUNICATIONS CORP.
23
<PAGE>
BENTLEY COMMUNICATIONS, INC
Index to Financial Statements
-----------------------------
--------------------------------------------------------------------------------
Page
----
Report of Independent Certified Public Accountants 4
Consolidated Balance Sheet at June 30, 2000 and 1999 5
Consolidated Statement of Losses for the Two Years ended
June 30, 2000 and 1999 6
Consolidated Statement of Deficiency in Stockholders' Equity for
the Two Years ended June 30, 2000 and 1999 7
Consolidated Statement of Cash Flows for the Two Years ended
June 30, 2000 and 1999 8
Notes Consolidated Financial Statements 9-16
24
<PAGE>
STEFANOU & COMPANY, LLP
CERTIFIED PUBLIC ACCOUNTANTS
1360 Beverly Road
Suite 305
McLean, VA 22101-3621
703-448-9200
703-448-3515 (fax)
Philadelphia, PA
--------------------------------------------------------------------------------
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
--------------------------------------------------
Board of Directors
Bentley Communications Corp.
Long Beach, CA
We have audited the accompanying consolidated balance sheets of Bentley
Communications Corp. and subsidiaries as of June 30, 2000 and 1999 and the
related consolidated statements of losses, stockholders' equity, and cash flows
for the two years then ended. These financial statements are the responsibility
of the company's management. Our responsibility is to express an opinion on
these financial statements based upon our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatements. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Bentley
Communications Corp. and subsidiaries as of June 30, 2000 and 1999, and the
results of its operations and its cash flows for the two years then ended, in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note L, the
Company is experiencing difficulty in generating sufficient cash flow to meet it
obligations and sustain its operations, which raises substantial doubt about its
ability to continue as a going concern. This raises substantial doubt about the
Company's ability to continue as a going concern. Management's plans in regard
to this matter are described in Note L. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
/s/ STEFANOU & COMPANY, LLP
-----------------------
Stefanou & Company, LLP
Certified Public Accountants
McLean, Virginia
October 10, 2000
4
25
<PAGE>
<TABLE>
BENTLEY COMMUNICATIONS CORP.
CONSOLIDATED BALANCE SHEET
JUNE 30, 2000 AND 1999
<CAPTION>
ASSETS
------
2000 1999
---- ----
<S> <C> <C>
CURRENT ASSETS:
Cash and equivalent $ 822 $ 3,533
------------ ------------
Total current assets 822 3,533
PROPERTY AND EQUIPMENT-AT COST:
Furniture, equipment and leasehold improvements 158,845 500
Less accumulated depreciation 8,972 100
------------ ------------
149,873 400
OTHER ASSETS
Deposits 8,000 -
Investment, at cost ( Note C ) 80,000 -
Advances to related parties (Note I ) 38,379 1,000
------------ ------------
Total other assets 126,379 1,000
TOTAL ASSETS $ 277,074 $ 4,933
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses 122,139 11,730
Due to Shareholders ( Note I ) 14,800 78,847
------------ ------------
Total current liabilities 136,939 90,577
STOCKHOLDERS' EQUITY (NOTE D) :
PREFERRED STOCK, PAR VALUE $.001 PER SHARE; 20,000,000 SHARES AUTHORIZED; NONE
ISSUED AT JUNE 30, 2000 OR JUNE 30, 1999 - -
COMMON STOCK, PAR VALUE $.001 PER SHARE; 80,000,000 SHARES AUTHORIZED;
16,770,836 ISSUED AT JUNE 30, 2000 AND 6,172,500 ISSUED AT JUNE 30, 1999 16,771 6,173
ADDITIONAL PAID IN CAPITAL 3,655,729 69,327
ACCUMULATED DEFICIT (3,532,365) (161,144)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY (DEFICIENCY) 140,135 (85,644)
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 277,074 $ 4,933
============ ============
</TABLE>
See accompanying notes to consolidated financial statements
5
26
<PAGE>
<TABLE>
BENTLEY COMMUNICATIONS CORP.
CONSOLIDATED STATEMENT OF LOSSES
FOR THE TWO YEARS ENDED JUNE 30, 2000 AND 1999
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Revenues:
Web hosting and consulting fees $ 17,691 $ -
------------- ------------
Total revenue 17,691 -
Cost and expenses:
General and administrative 3,380,040 142,507
Depreciation and amortization 8,872 25
------------- ------------
3,388,912 142,532
------------- ------------
Operating loss (3,371,221) (142,532)
Income (taxes) benefit - -
------------- ------------
Net loss $ (3,371,221) $ (142,532)
============= ============
Loss per common share (basic and assuming dilution) $ (.39) $ (.07)
============= ============
Weighted average common shares outstanding
(Note H) 8,655,178 2,072,425
</TABLE>
See accompanying notes to consolidated financial statements
6
27
<PAGE>
<TABLE>
BENTLEY COMMUNICATIONS CORP.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE TWO YEARS ENDED JUNE 30, 2000 AND 1999
<CAPTION>
COMMON STOCK ADDITIONAL ACCUMULATED
SHARES AMOUNT PAID-IN-CAPITAL DEFICIT TOTAL
<S> <C> <C> <C> <C> <C>
Balance at June 30, 1998 3,450,000 $ 101 $ 15,399 $ (18,612) $ (3,112)
Reverse stock split 1 for 20, 3,450,000
cancelled 172,500 issued (Note D) (3,277,500) 72 - - 72
Sale of stock issued pursuant to private
placement, net of costs 6,000,000 6,000 53,928 - 59,928
Net loss 0 0 0 (142,532) (142,532)
-------------- ------------ -------------- -------------- --------------
Balance at June 30, 1999 6,172,500 6,173 69,327 (161,144) (85,644)
Shares issued to consultants and employees in
exchange for services 3,940,000 3,940 1,778,060 - 1,782,000
Sale of stock issued pursuant to private
placement, net of costs 3,825,003 3,825 1,311,175 - 1,315,000
Shares issued in exchange for convertible debt 2,833,333 2,833 497,167 - 500,000
Net loss 0 0 0 (3,371,221) (3,371,221)
-------------- ------------ -------------- -------------- --------------
Balance at June 30, 2000 16,770,836 $ 16,771 $ 3,655,729 $ (3,532,365) $ 140,135
============== ============ ============== ============== ==============
</TABLE>
See accompanying notes to consolidated financial statements
7
29
<PAGE>
<TABLE>
BENTLEY COMMUNICATIONS CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE TWO YEARS ENDED JUNE 30, 2000 AND 1999
<CAPTION>
2000 1999
------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN CASH AND EQUIVALENTS
Cash flows from operating activities
Net loss for the year $(3,371,221) $ (142,532)
Adjustments to reconcile net earnings to net cash
used for operating activities:
Common stock issued in connection for services rendered 1,782,000 -
Depreciation and amortization 8,872 25
(Increase) decrease in:
Increase in marketable securities (80,000) -
Prepaid and other (45,379) (1,000)
Increase (decrease) in:
Accounts payable and accrued expenses, net 46,363 83,040
------------- -------------
Net cash used by operating activities (1,659,365) (60,467)
Cash flows used in investing activities:
Capital expenditures, net of disposals (158,345) -
------------- -------------
Net cash used in investing activities (158,345) -
Cash flows used in financing activities:
Proceeds from sale of common stock, net of costs 1,315,000 64,000
Proceeds from convertible debt 500,000 -
------------- -------------
Net cash, provided (used) in financing activities 1,815,000 64,000
------------- -------------
Net (decrease) increase in cash and equivalents (2,710) 3,533
Cash and equivalents at beginning of period 3,533 -
------------- -------------
Cash and equivalents at end of period $ 822 $ 3,533
============= =============
Supplemental Disclosures of Cash Flow Information
Cash paid during the period for interest $ - $ -
Income taxes paid - -
Acquisition:
Assets acquired $ 80,001 $ -
Accumulated deficit - -
Liabilities assumed - -
Common stock issued - -
------------- -------------
Net cash paid for acquisition $ 80,001 $ -
Non-cash financing activities:
Common stock issued for services $ 1,782,000 $ -
See accompanying notes to consolidated financial statements
</TABLE>
8
30
<PAGE>
BENTLEY COMMUNICATIONS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000 AND 1999
NOTE A-SUMMARY OF ACCOUNTING POLICIES
A summary of the significant accounting policies applied in the preparation of
the accompanying consolidated financial statements follows.
Business and Basis of Presentation
----------------------------------
On March 8, 2000, Bentley Communications Corp., a Florida corporation,
hereinafter referred to as "Bentley" or "Company", acquired, Kyrenia Acquisition
Corp. ("Kyrenia"), an inactive publicly held shell corporation with no
significant assets or operations through a reverse acquisition.. As a result of
the acquisition, there was a change in control of the public entity. The Company
has transitioned from a development stage enterprise prior years to operating
enterprise during the year ended June 30, 2000.
The Company engages 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-US based companies, initially in Asia and the
Pacific Rim.
The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiaries, Kyrenia Acquisition Corp., Twirlme.com, Inc.,
Legends Surfboards, Inc. and Omnibomb Corp. Significant intercompany
transactions have been eliminated.
Revenue Recognition
-------------------
The Company follows a policy of recognizing revenues as services are rendered.
Advertising
-----------
The Company follows a policy of charging the costs of advertising to expenses
incurred. For the years ended June 30, 2000 and 1999, advertising costs were
$6,856 and $0, respectively.
Property and Equipment
----------------------
For financial statement purposes, property and equipment are depreciated using
the straight-line method over their estimated useful lives ( three years for
computer equipment and five years for furniture, fixtures and equipment). The
straight-line method of depreciation is also used for tax purposes.
Marketable Securities
---------------------
Marketable securities consist primarily of corporate equity securities. The
Company's marketable securities are considered to be "available for sale" and
accordingly, are carried on the balance sheet at fair market value, which
approximates cost. Gains and losses from securities have not been material.
Goodwill
--------
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 on a straight-line basis over its estimated economic life of
three years. If it became probable the projected future undiscounted cash flows
of the acquired assets were less than the carrying value of the goodwill, the
Company would recognize an impairment loss in accordance with the provisions of
Statements of Financial Standards No. 121
9
31
<PAGE>
BENTLEY COMMUNICATIONS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000 AND 1999
NOTE A-SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
Income Taxes
------------
Income taxes are provided based on the liability method for financial reporting
purposes in accordance with the provisions of Statements of Financial Standards
No. 109, "Accounting for Income Taxes". Under this method deferred tax assets
and liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to
be removed or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in the consolidated statements of operations
in the period that includes the enactment date.
Cash Equivalents
----------------
For purposes of the Statements of Cash Flows, the Company considers all highly
liquid debt instruments purchased with a maturity date of three months or less
to be cash equivalents.
Impairment of Long-Lived Assets
-------------------------------
The Company has adopted Statement of Financial Accounting Standards No. 121
(SFAS 121). The Statement requires that long-lived assets and certain
identifiable intangibles held and used by the Company be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. SFAS No.121 also requires assets to be disposed
of be reported at the lower of the carrying amount or the fair value less costs
to sell.
Use of Estimates
----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect certain reported amounts and disclosures. Accordingly actual results
could differ from those estimates.
Research and Development
------------------------
Company-sponsored research and development costs related to both present and
future products are expended in the period incurred. Total expenditures on
research and product development for the years ended June 30, 2000 and 1999 were
$77,500 and $0, respectively.
CONCENTRATIONS OF CREDIT RISK
-----------------------------
Financial instruments and related items which potentially subject the Company to
concentrations of credit risk consist primarily of cash, cash equivalents and
trade receivables. The Company places its cash and temporary cash investments
with credit quality institutions. At times, such investments may be in excess of
the FDIC insurance limit. The Company's customers are concentrated primarily in
the state of California and it periodically reviews its trade receivables in
determining its allowance for doubtful accounts. The allowances for doubtful
accounts were $0 at June 30, 2000 and 1999, respectively.
STOCK BASED COMPENSATION
The Company accounts for stock transactions in accordance with APB Opinion 25,
"Accounting for Stock Issued to Employees." In accordance with statement of
Financial Accounting Standards No. 123, "Accounting for Stock Based
Compensation," the Company has adopted the proforma disclosure requirements.
10
32
<PAGE>
BENTLEY COMMUNICATIONS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000 AND 1999
NOTE A-SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
Liquidity
---------
As shown in the accompanying financial statements, the Company incurred a net
loss of $3,371,221 during the year ended June 30, 2000 and $142,532 during the
year ended June 30, 1999. The Company's current liabilities exceeded its current
assets by $136,118 as of June 30, 2000. At June 30, 2000 a substantial portion
of all of the Company's assets are illiquid.
Comprehensive Income
--------------------
The Company does not have any items of comprehensive income in any of the
periods presented.
Segment Information
-------------------
The Company adopted Statement of Financial Accounting Standards No. 131,
Disclosures about Segments of an Enterprise and Related Information ("SFAS 131")
in the year ended June 30, 1999. SAFAS establishes standards for reporting
information regarding operating segments in annual financial statements and
requires selected information for those segments to be presented in interim
financial reports issued to stockholders. SFAS 131 also establishes standards
for related disclosures about products and services and geographic areas.
Operating segments are identified as components of an enterprise about which
separate discrete financial information is available for evaluation by the chief
operating decision maker, or decision making group, in making decisions how to
allocate resources and assess performance. The information disclosed herein,
materially represents all of the financial information related to the Company's
principal operating segment.
New Accounting Pronouncements
-----------------------------
The Company adopted Statement of Financial Accounting Standards No. 132,
Employers' Disclosures about Pension and Other Post Employment Benefits ("SFAS
132") in the year ended June 30, 2000. SFAS No. 132 establishes disclosure
requirements regarding pension and post employment obligations. SFAS No. 132
does not effect the Company as of June 30, 2000.
In March 1998, Statement of Position No. 98-1 was issued, which specifies the
appropriate accounting for costs incurred to develop or obtain computer software
for internal use. The new pronouncement provides guidance on which costs should
be capitalized, and over what period such costs should be amortized and what
disclosures should be made regarding such costs. This pronouncement is effective
for fiscal years beginning after December 15, 1998, but earlier application is
acceptable. Previously capitalized costs will not be adjusted. The Company
believes that it is already in substantial compliance with the accounting
requirements as set forth in this new pronouncement, and therefore believes that
adoption will not have a material effect on financial condition or operating
results.
In April 1998, Statement of Position No. 98-5 was issued which requires that
companies expense defined previously capitalized start-up costs including
organization costs and expense future start-up costs as incurred. Adoption of
this statement does not have an effect on financial condition or operating
results.
The Company adopted Statement of Financial Standards No. 133, Accounting for
Derivative Instruments and for Hedging Activities ("SFAS No. 133") in the year
ended June 30, 2000. SFAS No. 133 requires that certain derivative instruments
be recognized in balance sheets at fair value and for changes in fair value to
be recognized in operations. Additional guidance is also provided to determine
when hedge accounting treatment is appropriate whereby hedging gains and losses
are offset by losses and gains related directly to the hedged item. SFAS No.
133's impact on the Company's consolidated financial statements is not expected
to be material as the Company has not historically used derivative and hedge
instruments.
11
33
<PAGE>
BENTLEY COMMUNICATIONS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000 AND 1999
NOTE A-SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
In December, 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101 (" SAB 101"), Revenue Recognition in Financial
Statements, which will become effective December 31, 2000. The Company does not
expect the standard to have a material effect on its results.
NOTE B- ACQUISITIONS
On March 8, 2000, the Company acquired , in exchange for 10,000 shares of the
Company's common stock valued at $7,500 and cash consideration of $ 225,000,
Kyrenia Acquisition Corp. ("Kyrenia"), an inactive publicly held shell
corporation with no significant assets or operations through a reverse
acquisition.. As a result of the acquisition, there was a change in control of
the public entity.
The acquisition was accounted for using the purchase method of accounting. The
total purchase price and carrying value of the net assets acquired of Kyrenia
was $1. The net assets acquired were as follows:
Net assets $ 1
Accumulated deficit -
Net liabilities -
-----
$ 1
=====
As Kyrenia was an inactive corporation with no significant operations, Bentley
recorded the carryover historical basis of net tangible assets acquired, which
did not differ materially from their fair value. The results of operations
subsequent to the date of acquisition are included in Bentley's consolidated
statement of losses.
In accordance with Statement of Position 98-5, the Company expensed, as
organization costs, the year ended June 30, 2000, $232,500, which represents
the excess of the purchase price of Kyrenia over the net assets acquired. In
accordance with APB Opinion 16, the consolidated financial statements include
the accounts of Bentley as the acquiring entity and Kyrenia as the wholly owned
subsidiary. Significant intercompany transactions have been eliminated in
consolidation.
In April, 2000 the Company acquired in exchange for $80,000 the assets of
Twirlme.com, an e-commerce business development website in a transaction
accounted for using the purchase method of accounting. The total purchase price
and carrying value of the net assets acquired of Twirlme.com were as follows:
Office equipment and computers $ 27,500
Website and related software 52,500
Liabilities assumed -
------------
$ 80,000
============
The Company has recorded the carryover basis of the net assets acquired, which
did not differ martially from their fair value. The operating results of the
business have been included in the Company's consolidated financial statements
since the date of purchase. The Company expensed in 2000 $52,500 which
represents the cost of the website and related software.
NOTE C- INVESTMENTS
The Company holds an investment in the stock of QuadXSports.com, Inc., which is
recorded at its historical cost of $80,000. Although the market value of the
investment is not readily determinable, management believes the fair market
value of this investment exceeds its carrying value.
12
34
<PAGE>
BENTLEY COMMUNICATIONS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000 AND 1999
NOTE D - CAPITAL STOCK
The Company was incorporated under the laws of the state of Florida in February,
1992 under the name of Fogilstone Development, Inc. In January, 1997, the
Company changed its name to Premier Mining Ventures, Inc. In February, 1998, the
Company was renamed Pure Air Technology, Inc. In February, 1999, the Company
changed its name to Startek.com, Inc. In November, 1999, the Company was
renamed Bentley Communications Corp.
In December, 1998, the Company's shareholders approved a one-(1) share for
twenty-(20) share reverse stock split. The accompanying financial statements
have been restated to give effect for the reverse split.
The Company has authorized 80,000,000 shares of common stock , with a par value
of $.0001 per share .and 20,000,000 shares of preferred stock, with a par value
of $.0001 per share. The Company has 16,770,836 shares of common stock
outstanding at June 30, 2000 and no shares of preferred stock outstanding at
June 30, 2000.
In 1999, the Company issued a total of 6,825,003 shares of common stock in
private placements and exempt offerings to sophisticated investors, primarily in
the United States and Canada, in exchange for $285,000, net of costs and fees.
In 1999, the Company issued 640,000 shares of common stock to a consultant for
services rendered on behalf of the Company. The shares issued to the consultants
and employees were based upon the value of the services rendered or the fair
value of the Company's common stock during the period the services were
rendered.
In 2000, the Company issued a total of 3,000,000 shares of common stock in
private placements and exempt offerings to sophisticated investors, primarily in
the United States and Canada, in exchange for $1,087,000, net of costs and
fees.
In 2000, the Company issued 2,833,333 shares of common stock in exchange for $
500,000 of convertible debt previously advanced to the Company.
In 2000, the Company issued 3,300,000 shares of common stock to consultants and
employees for services rendered on behalf of the Company. The shares issued to
the consultants and employees were based upon the value of the services rendered
or the fair value of the Company's common stock during the period the services
were rendered.
On March 8, 2000 the Company completed an acquisition of Kyrenia Acquisition
Corp. (Kyrenia), a Delaware corporation with no material operations (see Note
B). In connection with the acquisition, the Company agreed to issue 10,000
shares of its common stock.
Share amounts presented in the consolidated balance sheets and consolidated
statements of stockholders' equity reflect the actual share amounts outstanding
for each period presented.
NOTE E-INCOME TAXES
The Company has adopted Financial Accounting Standard number 109 which requires
the recognition of deferred tax liabilities and assets for the expected future
tax consequences of events that have been included in the financial statement or
tax returns. Under this method, deferred tax liabilities and assets are
determined based on the difference between financial statements and tax basis of
assets and liabilities using enacted tax rates in effect for the year in which
the differences are expected to reverse. Temporary differences between taxable
income reported for financial reporting purposes and income tax purposes are
insignificant.
For income tax reporting purposes, the Company's aggregate unused net operating
losses approximate $3,532,366, which expire through 2020, subject to
limitations of Section 382 of the Internal Revenue Code, as amended. The
deferred tax asset related to the carryforward is approximately $1,059,709. The
Company has provided a valuation reserve against the full amount of the net
operating loss benefit, since in the opinion of management based upon the
earning history of the Company, it is more likely than not that the benefits
will be realized.
13
35
<PAGE>
BENTLEY COMMUNICATIONS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000 AND 1999
NOTE E-INCOME TAXES (CONTINUED)
Components of deferred tax assets as of June 30, 2000 are as follows:
Non Current:
Net operating loss carryforward $ 1,059,709
Valuation allowance 1,059,709
------------
Net deferred tax asset $ -
============
NOTE F-MAJOR CUSTOMERS
Revenue from three (3) major customers approximated $17,691 or 100% of sales
for the year ended June 30, 2000. The Company had no sales during the year ended
June 30, 1999.
NOTE G-COMMITMENTS AND CONTINGENCIES
Lease Commitments
-----------------
The Company leases office space on a month-to-month basis in Los Angeles,
California and Vancouver British Columbia for its Corporate offices. Rental
expense for the years ended June 30, 2000 and 1999 were $78,919 and $2,912,
respectively.
Employment and Consulting Agreements
------------------------------------
The Company has employment agreements with the Company's President and Vice
Presidents. In addition to salary and benefit provisions, the agreements include
defined commitments should the employee terminate the employment with or without
cause. The agreements are for the period from January 1, 2000 through December
31, 2001.
The Company has consulting agreements with outside contractors, certain of whom
are also Company stockholders. The Agreements are generally for a term of 12
months from inception and renewable automatically from year to year unless
either the Company or Consultant terminates such engagement by written notice.
LICENSE AGREEMENT
-----------------
IN MARCH, 2000, THE COMPANY ENTERED INTO A NON-EXCLUSIVE LICENSE AGREEMENT WITH
THE OWNERS OF CERTAIN FEATURE LENGTH FILMS TO MARKET AND DISTRIBUTE THE FILMS
UTILIZING THE INTERNET. AS CONSIDERATION THE COMPANY PAID AN ADVANCED ROYALTY OF
$40,000 WHICH IS CHARGED TO OPERATIONS. THE LICENSE AGREEMENT EXPIRES JUNE 1,
2010.
Litigation
----------
In February 2000, Har Adir, LLC filed a complaint against the Company and its
Chief Executive Officer in Los Angeles Superior Court, County of Los Angeles,
California. The complaint alleges breach of contract and seeks payment for
damages in the amount of $2,000,000, plus costs and fees. . The Company believes
that it has meritorious defenses to the Plaintiff's claims and intends to
vigorously defend itself against the complaint. The Company believes it has
affirmative claims against Har Adir, LLC. In addition, the Company believes that
the outcome of the litigation will not in any event have a material adverse
effect on the Company' consolidated financial position or results of operations.
In May 2000, Access America Financial Corp. filed a complaint against the
Company in the Circuit Court for Broward County and Dade County, Florida. The
complaint alleges breach of contract and seeks payment for damages of $ 150,000,
plus $ 450,000 in statutory damages, costs and attorneys fees. The Company
believes that it has meritorious defenses to the Plaintiff's claims and intends
to vigorously defend itself against the complaint. The Company believes that the
outcome of the litigation will not in any event have a material adverse effect
on the Company' consolidated financial position or results of operations.
14
36
<PAGE>
BENTLEY COMMUNICATIONS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000 and 1999
NOTE G-COMMITMENTS AND CONTINGENCIES (CONTINUED)
IN SEPTEMBER 2000, A FORMER EMPLOYEE FILED A COMPLAINT AGAINST THE COMPANY AND
ITS PRESIDENT IN LOS ANGELES SUPERIOR COURT, COUNTY OF LOS ANGELES, CALIFORNIA.
THE COMPLAINT ALLEGES WRONGFUL TERMINATION AND SEXUAL HARASSMENT. THE PLAINTIFF
HAS NOT SPECIFIED THE AMOUNT OF THE CLAIM. ACCORDINGLY, AN ESTIMATE OF THE
ULTIMATE LOSS, OR RANGE OF LOSS, CANNOT NOW BE DETERMINED. THE COMPANY BELIEVES
IT HAS MERITORIOUS DEFENSES TO THE PLAINTIFF'S CLAIMS AND INTENDS TO VIGOROUSLY
DEFEND ITSELF AGAINST ITS CLAIMS.
NOTE H-LOSSES PER COMMON SHARE
The following table presents the computation of basic and diluted loss per
share:
2000 1999
---- ----
Net loss available for common shareholders $(3,371,221) $ (142,532)
Basic and fully diluted loss per share $ (0.39) $ (0.07)
Weighted average common shares outstanding 8,655,178 2,072,425
Net loss per share is based upon the weighted average of shares of common stock
outstanding. In December 1998, a one (1) for twenty (20) reverse stock split of
the Company's common stock was effected (See Note D). Accordingly, all
historical weighted average share and per share amounts have been restated to
reflect the reverse stock split.
NOTE I-RELATED PARTY TRANSACTIONS
The Company's officers and significant shareholders have advanced funds to the
Company for working capital purposes. The amount of the advances at June 30,
2000 and 1999 are $14,800 and $78,847, respectively. No formal agreements or
repayment terms exist.
The Company has periodically advanced funds to an entity that is controlled by
the President of the Company. The advances to the entity as of June 30, 2000 and
1999, were $38,379 and $1,000, respectively. No formal agreements or repayment
terms exist.
NOTE J-STOCK OPTIONS AND WARRANTS
---------------------------------
<TABLE>
The following table summarizes the changes in options outstanding and the
related prices for the shares of the Company's common stock issued to a key
employees of the Company .
<CAPTION>
Number Number of
of shares Exercise Price Shares Exercisable
<S> <C> <C> <C>
Outstanding at June 30, 1998 - $ - -
==============
Granted - - -
Exercised- - - -
Cancelled - -
------------ --------------
Outstanding at June 30, 1999 - - -
============ ============== ==============
Granted 2,000,000 2.00 -
Exercised - - -
Cancelled - - -
------------ --------------- --------------
Outstanding at June 30, 2000 2,000,000 $ 2.00 500,000
============ ==============
</TABLE>
15
37
<PAGE>
BENTLEY COMMUNICATIONS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000 and 1999
NOTE J-STOCK OPTIONS AND WARRANTS (CONTINUED)
For disclosure purposes the fair value of each stock option grant is estimated
on the date of the grant using the Black-Scholes option pricing model with the
following weighted-average assumptions used for stock options granted during the
years ended June 30, 2000 and 1999, respectively: annual dividends of $0.00 for
both years, expected volatility of 50%, risk free interest rate of 6.0% an
expected life of two years for all grants. The weighted-average fair values of
the stock options granted during the years ended June 30, 2000 and 1999 were
$.03 and $.00, respectively.
If the Company recognized compensation cost for the employee stock option plan
in accordance with SFAS No. 123, the Company's pro forma net loss and net loss
per share would have been $(3,371,221) and $(.39) in 2000 and $(142,532) and
$(.07) in 1999, respectively.
NOTE K-SUBSEQUENT EVENTS
On July 2000 , the Company issued stock of 400,000 shares of restricted common
stock to Micron Mining Company, through a private placement in exchange for $
105,000.
In August 2000, the Company acquired BuynetPlaza.com, an online shopping mall,
in exchange for 100,000 shares of restricted common stock valued at $72,000.
NOTE L-GOING CONCERN MATTERS
The accompanying statements have been prepared on a going concern basis, which
contemplates the realization of assets and the satisfaction of liabilities in
the normal course of business. As shown in the financial statements during the
years ended June 30, 2000 and 1999, the Company incurred loses from operations
of $3,371,221 and $ 142,532, respectively. These factors among others may
indicate that the Company will be unable to continue as a going concern for a
reasonable period of time.
The Company's existence is dependent upon management's ability to develop
profitable operations and resolve it's liquidity problems. Management
anticipates the Company will attain profitable status and improve it liquidity
through the continued developing, marketing and selling of its products and
additional equity investment in the Company. The accompanying financial
statements do not include any adjustments that might result should the Company
be unable to continue as a going concern.
In order to improve the Company's liquidity, the Company is actively pursing
additional equity financing through discussions with investment bankers and
private investors. There can be no assurance the Company will be successful in
its effort to secure additional equity financing
If operations and cash flows continue to improve through these efforts,
management believes that the Company can continue to operate. However, no
assurance can be given that management's actions will result in profitable
operations or the resolution of its liquidity problems.
16
38
<PAGE>
EXHIBITS
<PAGE>
EXHIBIT INDEX
-------------
Number Description of Exhibit Page
------ ---------------------- ----
(11) Computation of Losses per Common and Common Share Equivalents E-1
(2) Financial Statement Schedules:
All schedules are omitted because they are not applicable or the required
information is shown in the financial statements or notes thereto.
(3) Exhibits
The exhibits listed below are required by Item 601 of Regulation S-K. Each
management contract or compensatory plan or arrangement required to be filed as
an exhibit to this Form 10-K has been identified.
Exhibit
Number Description of Document
------ -----------------------
2(a) Reorganization Agreement between the Registrant and Kyrenia
Acquisition Corp.
3.1(a) Articles of Incorporation of the Registrant
3.2(a) By-laws of the Registrant
10.1(a) Advisory Agreement between Bentley Communications Corp. and
Trade-Wins Inc., dated January 5, 2000
10.2(a)* Employee Agreement between Bentley Communications Corp. and
Gordon F. Lee, dated January 1, 2000
10.3(a)* Employee Agreement between Bentley Communications Corp. and
Eric Bauchman, dated January 1, 2000
10.4(a)* Employee Agreement between Bentley Communications Corp. and
Victor Nguyen, dated January 1, 2000
10.5(a) Acquisition Agreement between Bentley Communications Corp. and
Margot Winters and Mathew Brown for the purchase of Twirlme, a
California Company.
10.6(a) License Agreement between Bentley Communications Corp. and HCV
Inc., dated March 10, 2000
10.7 Letter of Intent between Bentley Communications Corp. and
Chengdu Foreign Economic Relations and Trade Service and
Chengdu Minjang International Trade Co., Ltd. for product
sourcing and marketing.
10.8 Letter of Intent between Bentley Communications Corp. and
China National Electronics Imp. & Exp. Sichuan Co.
10.9 Commitment Letter from Semdicar Technology Corp. of Taipei,
Taiwan for purchase of overstocked and discontinued business
electronics and telecommunications products.
10.10 Commitment Letter from Tai Chiun Developing Co. Ltd. of
Taipei, Taiwan for purchase of overstocked and discontinued
business electronics and telecommunications products.
10.11 Commitment Letter from Vector Safety Technology Corp. of
Taipei, Taiwan for purchase of overstocked fire resistant
fabric.
10.12 Letter of Intent between Bentley Communication Corp. and
Jinjiang electrical Industrial Co. Ltd. for product sourcing
and development.
10.13 Letter of Intent between Bentley Communications Corp. and
Sichuan Changhong Electronics Corp. for product sourcing.
10.14 Preliminary Agency Agreement between Bentley Communications
Corp. and Lick Hung Toys Limited
23 Consent of Stefanou and Company, LLP
27 Financial Data Schedule (electronic filing only)
99.1 April 4, 2000 Press Release: Bentley Communications Corp.
Chosen By China Province And Commercial Interests to Provide
Products and Services.
42
<PAGE>
99.2 April 18, 2000 Press Release: Bentley Communications Corp.
Sign Sales and Marketing Contracts With Taiwanese Firms.
99.3 April 26, 2000 Press Release: Bentley Communications Corp. to
`Westernize' China E-Commerce.
99.4 June 8, 2000 Press Release: Los Angeles Firm to Play
Significant Role in China Trade.
----------------------
* Indicates management contract or compensatory plan or arrangement.
(a) Previously filed as an exhibit to the Company's Form 10-QSB dated June 1,
2000
b) Reports on Form 8-K
On May 9, 2000, the Company filed an amended report on Form 8-K pursuant to
Items 2 and 7 of such Form, which included the supplementary consolidated
financial statements as required by the Form.
On June 5, 2000, the Company filed an amended report on Form 8-K pursuant to
Items 4 and 7 of such Form, regarding the Company's change in certifying
accountant.
On June 23, 2000, the Company filed a report on Form 8-K, pursuant to Items 4
and 7 of such Form, regarding the Company's change in certifying accountant.
43
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Date: October 12, 2000 BENTLEY COMMUNICATIONS CORP.
By: /s/ Victor Nguyen
-------------------------------
Victor Nguyen
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
/s/ Victor Nguyen President October 12, 2000
---------------------------
Victor Nguyen
/s/ Gordon F. Lee Chief Executive Officer October 12, 2000
---------------------------
Gordon F. Lee
44
