<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10QSB/A
(AMENDMENT NO. 1)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the period ended March 31, 2000
Commission file number 000-27347
BENTLEY COMMUNICATIONS CORP.
(Name of Small Business Issuer in Its Charter)
Florida 58-2534003
(State of Incorporation) (IRS Employer Identification No.)
9800 South Sepulveda Blvd. Suite 625 Los Angeles, CA 90045
(Address of Principal Executive Offices)
(310) 342-0760
Issuer's Telephone Number
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [x] No [ ]
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 17,170,836 shares of Common Stock
($.0001 par value) as of July 23, 2000.
Transitional small business disclosure format: Yes [ ] No [x]
<PAGE>
BENTLEY COMMUNICATIONS CORP.
Quarterly Report on Form 10-QSB for the
Quarterly Period Ending March 31, 2000
Table of Contents
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Statements of Losses:
Three Months Ended March 31, 2000 and 1999
Consolidated Balance Sheets:
March 31, 2000 and December 31, 1999
Consolidated Statements of Cash Flows:
Three Months Ended March 31, 2000 and 1999
Notes to Consolidated Financial Statements:
March 31, 2000
Item 2. Plan of Operation
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
BENTLEY COMMUNICATIONS CORP.
CONSOLIDATED STATEMENTS OF LOSSES
UNAUDITED
Three months ended Three months ended
March 31, March 31,
2000 1999
------------- -------------
(Restated)
----------
Operating expenses:
General and administrative $ 926,422 $ 46,368
Organization costs 262,500 -
Depreciation and amortization 1,469 6
------------- -------------
Total operating expenses 1,190,391 46,374
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Net loss before taxes (1,190,391) (46,374)
Provision for income taxes - -
------------- -------------
Net loss (1,190,391) $ (46,374)
============= =============
Loss per common share $ (0.14) $ (0.02)
============= =============
(basic and assuming dilution)
Weighted average shares outstanding:
Basic and diluted 8,416,624 2,084,588
The accompanying notes are an integral part of these financial statements
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<TABLE>
BENTLEY COMMUNICATIONS CORP.
CONSOLIDATED BALANCE SHEETS
<CAPTION>
March 31, 2000 December 31, 1999
-------------- -----------------
(Unaudited)
ASSETS (Restated)
<S> <C> <C>
Current assets:
Cash and equivalents $ 14,919 $ 29,747
Accounts receivable 32,290 59,495
------------ ------------
Total current assets 47,209 89,242
Property and equipment, net 91,081 -
Other assets:
Investment 80,000 -
License agreement and other assets 40,001 401
Goodwill, net 52,500 -
------------ ------------
72,501 401
------------ ------------
$ 310,791 $ 89,643
============ ============
LIABILITIES AND DEFICIENCY IN STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses 37,935 5,614
Advance from shareholders 159,130 29,912
------------ ------------
197,065 35,526
Long-term debt less current maturities 500,000 500,000
Deficiency in stockholders' equity:
Preferred stock, par value, $.0001 per share,
20,000,000 authorized at March 31, 2000 and December
31, 1999; none issued - -
Common stock, par value, $.0001 per share;80,000,000
authorized; 9,437,503 issued at March 31, 2000 and
7,637,503 issued at December 31, 1999 1,028 848
Additional paid-in-capital 1,741,472 491,652
Accumulated deficit (2,128,774) (938,383)
------------ ------------
Deficiency in stockholders' equity (386,274) (445,883)
------------ ------------
$ 310,791 $ 89,643
============ ============
The accompanying notes are an integral part of these financial statements
</TABLE>
<PAGE>
<TABLE>
BENTLEY COMMUNICATIONS CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
<CAPTION>
For the three For the three
months ended months ended
March 31, 2000 March 31, 1999
-------------- --------------
(Restated)
----------
<S> <C> <C>
Cash flows from operating activities:
Net loss from operating activities $(1,190,391) $ (46,374)
Adjustments to reconcile net income to net cash:
Depreciation and amortization 1,469 6
Common stock issued in exchange for services 560,000 -
(Increase) decrease in:
Accounts receivable 27,205 -
Accounts payable and accrued expenses 31,253 4,578
------------ ------------
Net cash used in operating activities (570,464) (41,790)
Cash flows used in investing activities:
Investments (80,000) -
Capital expenditures (91,081) -
Acquisition of licenses and other assets (92,501) -
------------ ------------
Net cash used in investing activities (263,582)
Cash flows provided by financing activities:
Proceeds from sale of common stock, net 690,000 60,000
Proceeds from advances from stockholders 129,218 -
------------ ------------
Net cash provided in financing activities 819,218 60,000
Net decrease in cash and cash equivalents (14,828) 18,210
Cash and cash equivalents at beginning of period 29,747 -
------------ ------------
Cash and cash equivalents at end of period $ 14,919 $ 18,210
============ ============
Supplemental Disclosures of Cash Flow Information
Cash paid during the period for interest $ - $ -
Non-cash financing activities
Common stock issued for services $ 560,000 $ -
The accompanying notes are an integral part of these financial statements
</TABLE>
<PAGE>
BENTLEY COMMUNICATIONS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
(UNAUDITED)
NOTE A - SUMMARY OF ACCOUNTING POLICIES
---------------------------------------
General
The accompanying unaudited consolidated financial statements have been prepared
in accordance with the instructions to Form 10-QSB, and therefore, do not
include all the information necessary for a fair presentation of financial
position, results of operations and cash flows in conformity with generally
accepted accounting principles.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three-month period ended March 31, 2000 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 2000. The unaudited condensed consolidated financial statements
should be read in conjunction with the consolidated December 31, 1999 financial
statements and footnotes thereto included in the Company's SEC Form 8-K, as
amended.
Basis of Presentation
The consolidated financial statements include the accounts of the Company, and
its wholly owned subsidiary, Kyrenia Acquisition Corporation. Significant
intercompany transactions have been eliminated in consolidation.
NOTE B - BUSINESS COMBINATION
-----------------------------
On March 8, 2000, the Company acquired, in exchange for 10,000 shares of the
Company's common stock valued at $37,500 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 total purchase price and carrying value of 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, the
Company 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 the Company's consolidated
statement of losses.
<PAGE>
BENTLEY COMMUNICATIONS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
(UNAUDITED)
NOTE B - BUSINESS COMBINATION (Continued)
-----------------------------------------
In accordance with Statement of Position No. 98-5, the Company expensed, as
organization costs, in the three months ended March 31, 2000, $262,500, which
represents the excess of the purchase price of Kyrenia over the net assets
acquired.
NOTE C - CAPITAL STOCK AND STOCK-BASED COMPENSATION
---------------------------------------------------
During the three months ended March 31, 2000, the Company issued 1,000,000
shares of the Company's common stock in private placements and exempt offerings
to sophisticated investors in the United States for $690,000, net of costs and
fees.
The Company also issued 800,000 shares to consultants for $560,000 of services
during the three months ended March 31,2000. In accordance with statement of
Financial Accounting Standards No. 123, "Accounting for Stock Based
Compensation," the value of the shares issued to the consultants were based upon
the fair value of the price of the Company's common stock during the period the
services were rendered. The Company utilized a fair value of $.70 per share,
which was the price of the shares offered to the investors in private placements
of the Company's common stock during the periods the consultants' services were
rendered to the Company.
Item 2. Management's Plan of Operation
The following discussion should be read in conjunction with the Company's
Consolidated Financial Statements and Notes thereto, included elsewhere within
this Report.
Description of Company
----------------------
The Company is transitioning from a development stage company, which, from its
inception has incurred significant organizational and development costs, to that
of an active growth and acquisition stage company. The Company seeks to engage
in the business of creating an international business to business (B2B) and
wholesale sourcing network. The Company's immediate focus is on E-commerce based
retail and wholesale sales and distribution for consumer and industrial
product-oriented non-U.S. based companies, initially in Asia and the Pacific
Rim.
On March 8, 2000, the Company acquired Kyrenia Acquisition Corp., an inactive
publicly-held shell corporation with no significant assets or operations,
through a reverse acquisition. The Company exchanged 10,000 shares of its common
stock and cash consideration of $225,000 for all of the outstanding shares of
Kyrenia Acquisition Corp. As a result of the acquisition, there was a change in
control of the public entity.
<PAGE>
Forward Looking Statements
--------------------------
This Form 10-QSB contains certain forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. All statements included
herein that address activities, events or developments that the Company expects,
believes, estimates, plans, intends, projects or anticipates will or may occur
in the future, are forward-looking statements. Actual events may differ
materially from those anticipated in the forward-looking statements. Important
risks that may cause such a difference include: general domestic and
international economic business conditions, increased competition in the
Company's markets and products. Other factors may include, availability and
terms of capital, and/or increases in operating and supply costs. Market
acceptance of existing and new products, rapid technological changes,
availability of qualified personnel also could be factors. Changes in the
Corporation's business strategies and development plans and changes in
government regulation could adversely affect the Company. Although the Company
believes that the assumptions underlying the forward-looking statements
contained herein are reasonable, any of the assumptions could be inaccurate.
There can be no assurance that the forward-looking statements included in this
filing will prove to be accurate. In light of the significant uncertainties
inherent in the forward-looking statements included herein, the inclusion of
such information should not be regarded as a representation by the Corporation
that the objectives and expectations of the Company would be achieved.
Plan of Operation
-----------------
The Company is still in the development stage and is yet to earn revenues from
operations. The Company may experience fluctuations in operating results in
future periods due to a variety of factors including, but not limited to, market
acceptance of the Internet as a medium for consumers to purchase unique
electronic goods, the Company's ability to acquire and deliver high quality
products at a price lower than currently available to consumers, the Company's
ability to obtain additional financing in a timely manner and on terms favorable
to the Company, the Company's ability to successfully integrate prospective
asset acquisitions to its existing business operation, the level of traffic on
the Company's website, intense competition and increasing competition from
electronic stores online, delays or errors in the Company's ability to upgrade
and develop its systems and infrastructure in a timely and effective manner,
technical difficulties, system downtime or Internet brownouts, the Company's
ability to attract customers at a steady rate and maintain customer
satisfaction, seasonality of advertising sales, Company promotions and sales
programs, the amount and timing of operating costs and capital expenditures
relating to the expansion of the Company's business, operations and
infrastructure and the implementation of marketing programs, key agreements and
strategic alliances, the number of products offered by the Company, the number
of returns experienced by the Company, and general economic conditions specific
to the Internet, on-line commerce, and the electronics industry.
<PAGE>
Revenues
--------
The Company generated no revenues from operations form its inception. The
Company believes it will begin earning revenues from operations within the next
twelve months as it transitions from a development stage company to that of an
active growth and acquisition stage company.
Costs and expenses
------------------
During the three months ended March 31, 2000 and 1999, the Company did not
generate any revenues. The Company incurred expenses of $1,190,391 during the
first three months of 2000 as compared to $46,374 in 1999. The Company' general
administrative expenses were $926,422 during the three months ended March 31,
2000 as compared to $46,368 for the same period in 1999, in increase of
$880,054. The increase was due to the Company incurring $560,000 of consulting
expenses in connection with the issuance of the Company's common stock in
exchange for services during the three months ended March 31, 2000. The Company
incurred the following significant costs in connection with the Company's
operations during the three months ended March 31, 2000:
Compensation $ 169,156
Communications and website development $ 20,726
Occupancy $ 30,043
Travel $ 28,655
Professional fees $ 63,100
In addition, the Company incurred $262,500 in organization costs during the
quarter ended March 31, 2000 associated with the acquisition of Kyrenia
Acquisition Corp.
Liquidity and Capital Resources
-------------------------------
As of March 31, 2000, the Registrant had a deficiency in working capital of
$149,856 compared to working capital of $53,716 at December 31, 1999, a decrease
in working capital of $203,572. The decrease in working capital was due to
increases in accounts payable of $32,321 and advances from shareholders of
$129,218 during the quarter ended March 31, 2000.
As a result of the Company's operating losses during the three months ended
March 31, 2000, the Registrant generated a cash flow deficit of $570,464 from
operating activities. Cash flows used in investing activities was $263,582
during the three months ended March 31, 2000. The Company purchased office and
computer equipment in the amount of $91,081, acquired a license to market and
distribute feature length films in the amount of $40,000, acquired an internet
web site for $52,500 and acquired an equity interest in a privately held entity
in the amount of $80,000. The Company met its cash requirements during the
three months ended March 31, 2000 through proceeds of advances from shareholders
of $129,218 and $690,000 from the private placement of the Company's common
stock.
<PAGE>
While the Company has raised capital to meet its working capital and financing
needs in the past, additional financing is required in order to meet the
Company's current and projected cash flow deficits from operations and
development. The Company is seeking financing in the form of equity in order to
provide the necessary working capital. The Company currently has no commitments
for financing. There are no assurances the Company will be successful in raising
the funds required.
The Company believes that its existing capital resources will be sufficient to
fund its current level of operating activities, capital expenditures and other
obligations through the next 12 months. However, if during that period or
thereafter, the Company is not successful in generating sufficient liquidity
from operations or in raising sufficient capital resources, on terms acceptable
to the Company, this could have a material adverse effect on the Company's
business, results of operations liquidity and financial condition.
Product Research and Development
--------------------------------
The Company does not anticipate performing research and development for any
products during the next twelve months.
Acquisition or Disposition of Plant and Equipment
-------------------------------------------------
The Company does anticipate the sale of any significant property, plant or
equipment during the next twelve months. The Company does not anticipate the
acquisition of any significant property, plant or equipment during the next 12
months, other than computer equipment and peripherals used in the Company's
day-to-day operations. The Company believes it has sufficient resources
available to meet these acquisition needs.
Number of Employees
-------------------
During the period ended March 31, 2000, the Company had five (5) employees. In
order for the Company to attract and retain quality personnel, the Company
anticipates it will continue to offer competitive salaries to current and future
employees. The Company anticipates increasing its employment base to ten (10) to
fifteen (15) employees during the next 12 months. As the Company continues to
expand, the Company will incur additional costs for personnel. This projected
increase in personnel is dependent upon the Company generating revenues and
obtaining sources of financing. There are no assurances the Company will be
successful in raising the funds required or generating revenues sufficient to
fund the projected increase in the number of employees.
<PAGE>
Trends, Risks and Uncertainties
-------------------------------
The Company has sought to identify what it believes to be the most significant
risks to its business, but cannot predict whether or to what extent any of such
risks may be realized nor can there be any assurances that the Company has
identified all possible risks that might arise. Investors should carefully
consider all of such risk factors before making an investment decision with
respect to the Company's stock.
Limited operating history; anticipated losses; uncertainly of future results.
Bentley Communications Corp. has only a limited operating history upon which an
evaluation of the Company and its prospects can be based. The Company's
prospects must be evaluated with a view to the risks encountered by a company in
an early stage of development, particularly in light of the uncertainties
relating to the new and evolving distribution methods with which the Company
intends to operate and the acceptance of the Company's business model. The
Company will be incurring costs to develop, introduce and enhance its
interactive website, to establish marketing relationships, to acquire and
develop products that will compliment each other and to build an administrative
organization. To the extent that such expenses are not subsequently followed by
commensurate revenues, the Company's business, results of operations and
financial condition will be materially adversely affected. There can be no
assurance that the Company will be able to generate sufficient revenues from the
sale of their first product, the Smart Pen(TM), and other product candidates to
Company expects negative cash flow from operations to continue for the next 8
quarters as it continues to develop and market its business. If cash generated
by operations is insufficient to satisfy the Company's liquidity requirements,
the Company may be required to sell additional equity or debt securities. The
sale of additional equity or convertible debt securities would result in
additional dilution to the Company's stockholders.
Potential fluctuations in quarterly operating results
-----------------------------------------------------
The Company's quarterly operating results may fluctuate significantly in the
future as a result of a variety of factors, most of which are outside the
Company's control, including: the level of use of the Internet; the demand for
high-tech goods; seasonal trends in both Internet use, purchases of electronics,
and advertising placements; the addition or loss of advertisers; the level of
traffic on the Company's Internet sites; the amount and timing of capital
expenditures and other costs relating to the expansion of the Company's Internet
operations; the introduction of new sites and services by the Company or its
competitors; price competition or pricing changes in the industry; technical
difficulties or system downtime; general economic conditions, and economic
conditions specific to the Internet and Internet media. The Company's quarterly
results may also be significantly impacted by the impact of the accounting
treatment of acquisitions, financing transactions or other matters. Particularly
at the Company's early stage of development, such accounting treatment can have
a material impact on the results for any quarter. Due to the foregoing factors,
among others, it is likely that the Company's operating results will fall below
the expectations of the Company or investors in some future quarter.
<PAGE>
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 July 24, 2000, there were approximately
17,170,836 shares of Common Stock outstanding, of which approximately 7,945,003
were tradable without restriction under the Securities Act. There can be no
assurance that a trading market will be sustained in the future. Factors such
as, but not limited to, technological innovations, new products, acquisitions or
strategic alliances entered into by the Company or its competitors, failure to
meet security analysts' expectations, government regulatory action, patent or
proprietary rights developments, and market conditions for technology stocks in
general could have a material effect on the volatility of the Company's stock
price.
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
aspect of its efforts to attract and expand its Internet audience and that the
importance of brand name recognition will increase due to the growing number of
Internet sites and the relatively low barriers to entry in providing Internet
content. If the Company is unable to provide high quality content or otherwise
fails to promote and maintain its brand, or if the Company incurs excessive
expenses in an attempt to improve its content or promote and maintain its brand,
the Company's business, results of operations, and financial condition will be
materially adversely affected.
Management of Growth
--------------------
The Company expects to experience significant growth in the number of employees
and the scope of its operations. In particular, the Company intends to hire
additional engineering, sales, marketing, content acquisition and administrative
personnel. Additionally, acquisitions could result in an increase in employee
headcount and business activity. Such activities could result in increased
responsibilities for management. The Company believes that is ability to
increase its customer support capability and to attract, train, and retain
qualified technical, sales, marketing, and management personnel, will be a
critical factor to its future success. In particular, the availability of
qualified sales engineering and management personnel is quite limited, and
competition among companies to attract and retain such personnel is intense.
During strong business cycles, the Company expects to experience continued
difficulty in filling its needs for qualified sales, engineering, and other
personnel.
The Company's future success will be highly dependent upon its ability to
successfully manage the expansion of its operations. The Company's ability to
manage and support its growth effectively will be substantially dependent on its
ability to implement adequate improvements to financial and management controls,
reporting and order entry systems, and other procedures and hire sufficient
numbers of financial, accounting, administrative, and management personnel. The
Company's expansion and the resulting growth in the number of its employees has
resulted in increased responsibility for both existing and new management
personnel. The Company is in the process of establishing and upgrading its
financial accounting and procedures. There can be no assurance that the Company
will be able to identify, attract, and retain experienced accounting and
financial personnel. The Company's future operating results will depend on the
ability of its management and other key employees to implement and improve its
<PAGE>
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.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities and Use of Proceeds
(a) None
(b) None
(c) Sale of Securities
During the quarter, the Company issued 800,000 common
shares at $0.70 per share pursuant to Rule 701 and
4(2) of the Securities Act of 1933, as amended, for
consulting and professional services. The Company
also will issue 10,000 common shares at $0.38 per
share for the acquisition of the issued shares of
Kyrenia Acquisition Corporation pursuant to Section
4(2) of the Securities Act of 1933, as amended. The
Company issued a further 1,000,000 shares at $0.70
per share, of free trading common stock in two
separate private placements pursuant to Regulation D
of Rule 504.
<PAGE>
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 Financial Data Schedule
(b) Reports on Form 8-K filed during the three months
ended March 31, 2000.
On March 9, 2000, the Company filed a Form 8-K
describing the Company's acquisition of Bentley
Communications Corp., a Florida corporation, and the
Company's subsequent reverse acquisition.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Bentley Communications Corp.
Registrant
July 24, 2000 By: /S/ Gordon F. Lee
------------- ------------------------
Date Gordon F. Lee
President and
Chief Executive Officer
