<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark one)
/X/ Quarterly Report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the Quarterly Period Ended June 30, 1997
/ / Transition Report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the Transition Period from ---------- to -----------
Commission file number: 0-19503
BENTLEY INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
MEGACARDS, INC.
(Former name of registrant)
Missouri 43-1325291
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9719 Conway Road
St. Louis, Missouri 63124
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (314) 569-1659
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 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 / /.
On September 8, 1997, the registrant had 562,624 outstanding shares of Common
Stock, $.18 par value.
Transitional Small Business Disclosure Format (Mark one): Yes / / No /X/.
<PAGE> 2
BENTLEY INTERNATIONAL, INC.
FORM 10-QSB
<TABLE>
INDEX
<CAPTION>
Page
----
<S> <C>
PART I -- CONSOLIDATED FINANCIAL INFORMATION
ITEM 1. Consolidated Financial Statements 3
Consolidated Balance Sheets -- June 30, 1997 and December 31, 1996 3
Consolidated Income Statements -- Three Months Ended
June 30, 1997 and 1996 and Six Months Ended
June 30, 1997 and 1996 4
Consolidated Statements of Cash Flows -- Six Months Ended June 30,
1997 and 1996 5
Notes to Consolidated Financial Statements 6
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 9
PART II -- OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K 13
SIGNATURE 14
</TABLE>
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<PAGE> 3
PART I -- CONSOLIDATED FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
BENTLEY INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
<CAPTION>
June 30, December 31,
1997 1996
----------- ------------
(unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 383,478 $ 349,799
Accounts receivable (net of allowance for
returns and doubtful accounts of $240,000
and $300,120, respectively) 1,692,325 2,499,570
Note receivable 66,000 110,000
Inventories 1,702,164 1,407,144
Other current assets 139,927 130,168
----------- -----------
Total current assets 3,983,894 4,496,681
Equipment and leasehold improvements 227,551 196,392
Other assets 69,800 69,800
----------- -----------
TOTAL ASSETS $ 4,281,245 $ 4,762,873
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 2,378,959 $ 2,519,654
Notes payable 1,700,354 2,382,036
Current portion of long-term debt -- 30,232
----------- -----------
Total current liabilities 4,079,313 4,931,922
LONG-TERM DEBT -- 36,635
EXCESS ACQUIRED ASSETS OVER COST 460,743 623,358
SHAREHOLDERS' EQUITY (DEFICIT):
Preferred stock, $0.01 par value; 1,000,000 shares
authorized; none issued or outstanding -- --
Common stock, $0.18 par value; 10,000,000 shares
authorized; issued and outstanding, 562,624 101,272 101,272
Additional paid-in capital 1,905,297 1,905,297
Accumulated deficit (2,265,380) (2,835,611)
----------- -----------
Total shareholders' equity (deficit) (258,811) (829,042)
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 4,281,245 $ 4,762,873
=========== ===========
- -------------------------
See notes to financial statements.
</TABLE>
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<PAGE> 4
<TABLE>
BENTLEY INTERNATIONAL, INC.
CONSOLIDATED INCOME STATEMENTS (UNAUDITED)
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
1997 1996 1997 1996
------ ------ ------ ------
<S> <C> <C> <C> <C>
Net sales $3,034,546 $5,565,897 $6,139,907 $11,037,678
Cost of sales 1,944,906 4,688,685 4,018,174 9,258,397
---------- ---------- ---------- -----------
Gross margin 1,089,640 877,212 2,121,733 1,779,281
Selling, general and administrative expenses 869,528 1,259,227 1,664,192 2,804,997
---------- ---------- ---------- -----------
Income (loss) from operations 220,112 (382,015) 457,541 (1,025,716)
Interest expense 53,435 111,530 106,951 286,351
Other income (81,308) (133,827) (219,641) (136,832)
---------- ---------- ---------- -----------
Net income (loss) $ 247,985 $ (359,718) $ 570,231 $(1,175,235)
========== ========== ========== ===========
Net income (loss) per common share $ 0.44 $ (0.64) $ 1.01 $ (2.09)
Weighted-average number of
common shares outstanding 562,624 562,624 562,624 562,624
- --------------------------
See notes to financial statements.
</TABLE>
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<PAGE> 5
<TABLE>
BENTLEY INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<CAPTION>
Six Months Ended June 30,
----------------------------------
1997 1996
------ ------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 570,231 $(1,175,235)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization 28,410 380,206
Amortization of excess of acquired
assets over cost (162,615) (162,615)
Net gain on sale of assets -- (28,579)
Net changes in assets and liabilities:
Accounts receivable 807,245 30,294
Inventories (295,020) 2,585,551
Other assets (9,759) (259,043)
Accounts payable and other liabilities (140,695) (217,806)
---------- -----------
Net cash provided by operating activities 797,797 1,152,773
---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (59,569) (356,043)
Proceeds from sale of assets -- 2,000,816
Proceeds from note receivable 44,000 --
---------- -----------
Net cash provided by (used in) investing activities (15,569) 1,644,773
---------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net payments on lines of credit (627,200) (527,839)
Payments on long-term debt (66,867) (234,501)
Proceeds from (payments on) notes payable (54,482) 90,000
Repayment of capital lease obligation -- (1,889,007)
---------- -----------
Net cash used in financing activities (748,549) (2,561,347)
---------- -----------
NET INCREASE IN CASH 33,679 236,199
CASH, BEGINNING OF PERIOD 349,799 245,911
---------- -----------
CASH, END OF PERIOD $ 383,478 $ 482,710
========== ===========
Supplemental disclosure of cash flow information
Interest paid 30,992 165,048
- --------------------------
See notes to financial statements.
</TABLE>
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<PAGE> 6
BENTLEY INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1997 AND 1996
1. GOING CONCERN BASIS
The financial statements of Bentley International, Inc. (the "Company"
formerly known as Megacards, Inc.) for the year ended December 31, 1996 were
prepared on a going concern basis, which contemplates the realization of
assets and the satisfaction of liabilities in the normal course of business.
The bankruptcy of the Company's Janco Designs, Inc. ("Janco") subsidiary in
1997 may create a situation where the Company would experience difficulty in
generating sufficient cash to meet its obligations as they become due. As a
result of this factor, the Company may be unable to continue as a going
concern for a reasonable period of time.
The Company pursued a strategy of enhancing liquidity by reducing and
closely monitoring expenses, downsizing where feasible, and combining or
eliminating certain businesses. The operations of the unprofitable
subsidiaries and divisions have been terminated. Bentley's sole operating
subsidiary, Windsor Art, Inc. ("Windsor"), is currently operating profitably
and generating a positive cash flow.
The accompanying interim consolidated financial statements are
unaudited, but, in the opinion of management, reflect all adjustments
(consisting only of normal recurring accruals) necessary for a fair
presentation. Reference is hereby made to the consolidated financial
statements, including the notes thereto, contained in the Company's Annual
Report on Form 10-KSB for the year ended December 31, 1996. The results of
operations for the three-month and six-month periods ended June 30, 1997 are
not necessarily indicative of the results to be expected for the year ending
December 31, 1997.
2. BASIS OF CONSOLIDATION
The consolidated financial statements include the accounts of Bentley
and its wholly-owned subsidiaries, Windsor and Janco. All significant
intercompany transactions have been eliminated from the consolidated financial
statements.
3. OPERATIONS
NATURE OF OPERATIONS
Bentley designed, repackaged and marketed sports picture cards produced
by major sports picture card manufacturers and marketed sports picture card
accessories. Megacards, Inc. became Bentley in June 1996 as the Board of
Directors believed that the change of the corporate name would better reflect
the broadening of the scope of the Company's businesses. Windsor and Janco,
which prior to the Business Combination (as defined below) were affiliated
through common ownership, manufactured and distributed decorative mirrors and
framed prints to
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<PAGE> 7
furniture stores, mass merchants, hotels and designers throughout the United
States. During 1996, the Company discontinued its Janco product line and
its sports picture card business segment in order to reduce costs and to
improve its liquidity position (see Note 5).
BUSINESS COMBINATIONS
The Company's former Megacards operations utilized a facility leased
from an affiliated corporation Alnick Realty Co. ("Alnick") pursuant to a
capitalized lease. In connection with efforts to reduce overhead, the Company
arranged for the sale of such facility which eliminated the corresponding
liability. Pursuant to an agreement dated April 29, 1996, the Company acquired
all the outstanding shares of Alnick for $85,000 and sold Alnick's interest in
the property to an unrelated party. The acquisition was accounted for as a
purchase.
Pursuant to an agreement dated July 17, 1995, Bentley acquired all of
the outstanding common stock of Windsor in exchange for 423,500 shares of
Bentley's common stock and acquired all of the outstanding common stock of
Janco for a nominal amount of cash (the "Business Combination").
The Business Combination was accounted for as a reverse acquisition
under the purchase method of accounting. Under this approach, the accounting
for the transaction differs from the legal form of the transaction as
described above. Therefore, Bentley is not assumed to be the acquiror in the
Business Combination, but rather Windsor and Janco are. The historical
financial statements have been restated for all periods prior to the Business
Combination to include the combined results of operations and financial
position of both Windsor and Janco due to the common ownership of Windsor and
Janco prior to the Business Combination. Adjustments have been made to
eliminate the impact of intercompany transactions. The components of
shareholders' equity were stated in terms of Windsor's and Janco's
shareholders' equity on a combined basis prior to the Business Combination
with an adjustment to reflect the effects of the Business Combination on the
equity components.
4. REVERSE STOCK SPLIT
On July 8, 1996, the Company's Board of Directors authorized a
one-for-six reverse stock split of the Company's common shares, and an
increase in the par value, from $0.03 to $0.18. All share and per share
amounts have been restated to reflect retroactively the reverse stock split.
5. STOCK DIVIDEND
On September 3, 1997, the Company's Board of Directors authorized a
four-for-one stock split (effected in the form of a stock dividend) to be
distributed October 22, 1997 to shareholders of record September 24, 1997.
All share and per share amounts do not reflect the stock dividend.
-7-
<PAGE> 8
6. SALE OF BUSINESS SEGMENT AND DISCONTINUED LINE OF BUSINESS
SALE OF BUSINESS SEGMENT
In August 1996, the Board of Directors of the Company adopted a plan to
restructure the sports picture cards business segment (Megacards). In
September 1996, certain assets and liabilities, consisting primarily of
inventory and equipment, were transferred to Legends, L.P. ("Legends") for
a 30% limited partnership interest and a note in the principal amount of
$110,000, of which $44,000 has been repaid. Such transfer was partly a sale
and partly a contribution to capital. There was no gain or loss on disposal,
as net assets were either sold or transferred to Legends at their net book
value, which approximated fair value. Legends is in the sports picture card
business and since the Company has a 30% equity interest in the limited
partnership, the activity of the sports picture card business segment is part
of the continuing operations of the Company.
DISCONTINUED LINE OF BUSINESS
On December 27, 1996, Janco discontinued its operations due to
historical losses and in an effort to reduce costs and improve overall
corporate liquidity. Janco's line of business was within the decorative
mirrors and framed pictures segment, and as such, the termination of
operations is not considered discontinued operations of a business segment.
Certain assets consisting of inventory and equipment were sold to a third
party prior to December 31, 1996.
In February 1997, an involuntary bankruptcy petition was filed against
Janco by unsecured creditors.
7. NOTES PAYABLE AND LONG-TERM DEBT
<TABLE>
<CAPTION>
June 30, 1997 December 31, 1996
------------- -----------------
<S> <C> <C>
Notes payable and long-term debt consist of:
Borrowings under various lines of credit,
secured by inventories, accounts receivable,
equipment and personal guarantees of
officers/shareholders, due on demand,
bearing interest at prime plus 1.5%,
expiring December 1, 1998 $1,267,879 $1,134,903
Notes payable -- shareholders, secured by
collateral agreement subordinate to third
party debt, bearing interest at the prime
rate plus 2%, due July 1997 432,475 1,314,000
---------- ----------
$1,700,354 $2,448,903
========== ==========
</TABLE>
The Company's borrowings are collateralized by substantially all of the
Company's assets. Certain of the Company's shareholders have guaranteed a
portion of the Company's obligations. Windsor's assets have been pledged to
cross-collateralize Janco's debt to the principal shareholders of Bentley.
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<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Pursuant to an agreement dated July 17, 1995, Bentley International,
Inc. ("Bentley" or the "Company") acquired all of the outstanding common stock
of Windsor Art, Inc. ("Windsor") in exchange for 423,500 shares of Bentley's
Common Stock and acquired all of the outstanding common stock of Janco
Designs, Inc. ("Janco") for a nominal amount of cash (the acquisition by
Bentley of all of the outstanding capital stock of Windsor and Janco is
referred to as the "Business Combination"). The consolidated financial
statements include the accounts of Bentley, Windsor and Janco. All
significant intercompany transactions have been eliminated from the
consolidated financial statements.
In 1996, the Company consolidated operations by closing the Iowa sales
offices and the Erie, Pennsylvania facility, and moved all manufacturing and
administrative functions of Megacards into the Janco facility located in St.
Louis, Missouri. Efforts to reduce inventory continued through Megacards'
focus on selling products that used existing raw materials. The effort to
convert non-productive assets into cash resulted in a substantial reduction in
Megacards' debts.
In 1996, the Company purchased all of the outstanding common stock of
Alnick Realty, Co. ("Alnick"), the lessor of the Company's Erie facility.
Simultaneously with the acquisition of the Alnick common stock, the Company
terminated its lease of the Erie facility and sold the real estate owned by
Alnick to a third party.
During the summer of 1996 it became evident to Megacards' management
that overhead and inventories had been reduced to the extent practicable. For
the business to survive, investment in new product development, inventory and
sales personnel would be necessary. Due to Megacards' primary secured
lender's desire to have the loan repaid and the Company's commitment to the
home furnishings industry, additional investment in the sports picture card
business did not seem consistent with long-term Company goals. Therefore,
management began to explore opportunities to divest itself of Megacards. A
business combination was negotiated with Quality Baseball Cards, Inc., a New
York corporation ("Quality"), in which a limited partnership, Legends, L.P.
("Legends") was formed. Quality became the general partner, and owned 70% of
the partnership, while the Company became a limited partner, owning 30% of the
partnership. Substantially all of the assets of Megacards, other than
accounts receivable, and all of the assets of Quality were contributed to
Legends. The accounts receivable of Megacards were collected and applied
towards the repayment of the Megacards' secured debt. As of December 31,
1996, secured debt related to Megacards' operations and assets was $73,036.
As of April 16, 1997, the secured debt has been repaid.
Janco experienced operating difficulties in 1996, commencing with its
relocation to a new facility in St. Louis, Missouri. Delays in obtaining
occupancy permits in connection with improvements made to the manufacturing
facility resulted in Janco's inability to produce and ship merchandise during
the first two months of 1996. Due to the cost of the relocation and
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<PAGE> 10
lower than expected sales during the first quarter of 1996, Janco experienced
reduced cash flow in the second quarter of 1996. Personnel turnover at Janco
exacerbated the financial problems. Anticipated sales were repeatedly
delayed, postponing a recovery. Lower than expected sales and profit margins
resulted in operating losses throughout the year. In the third quarter of
1996, Janco's management recognized that a restructuring was necessary to save
the business. Suppliers of Janco were contacted in an attempt to negotiate
accommodations of debts. Certain of Janco's creditors accepted the proposal,
but the response was not sufficient to allow the restructuring to proceed. In
December 1996, Janco's management decided that financial resources were not
available to continue the operation of Janco. Management commenced
negotiations with Janco's secured lenders and its landlord to develop a plan
of liquidation that would maximize disposition proceeds and minimize losses to
Janco's creditors. Janco's secured creditors and its landlord agreed to a
plan of orderly liquidation of Janco's assets and all of the tangible assets
of Janco were sold to unrelated parties. Janco's accounts receivable were
collected through the first quarter of 1997 and the net proceeds applied to
the repayment of Janco's secured debt. On January 24, 1997, three unsecured
creditors of Janco filed a petition for involuntary bankruptcy. On February
18, 1997, Janco consented to the involuntary bankruptcy. Pursuant to certain
agreements entered into in connection with the financing of Janco by principal
shareholders of Bentley, Bentley and Windsor are liable for certain unpaid
secured debts of Janco. The bankruptcy trustee has informally indicated that
he may attempt to impose liability on Bentley for certain unsecured debts of
Janco.
Windsor continued to operate without substantial changes throughout the
first six months of 1997. During 1996, Windsor hired a new financial officer
and sales manager. It is believed that the new personnel will assist in
continuing to improve the operations of Windsor. During the fourth quarter of
1996, Windsor negotiated new financing with Norwest Business Credit, Inc.
("Norwest"). Norwest provided Windsor with an asset based lending facility of
up to $2.0 million. Management believes that this facility should provide
Windsor with the financial resources needed to facilitate a reasonable growth
in sales. In December 1996, Windsor's management decided to concentrate its
design and marketing efforts on its wall decor products and to suspend
introduction of new table top accessories under the Dolbi Cashier name.
As a result of substantial losses reported for 1996 and the filing of
the bankruptcy petition against Janco in January 1997, the opinion of the
Company's auditors indicates that the Company may not be able to continue to
operate as a going concern for a reasonable period of time. In the event the
Company is not able to negotiate extensions of certain debts of Janco, for
which Bentley and Windsor are liable, the Company may not be able to continue
to operate as a going concern for a reasonable period of time. It is not
possible to ascertain whether Bentley or Windsor may be liable for any
obligations of Janco, other than Janco's secured debts, as a result of the
Janco bankruptcy filing. In the event that Bentley is unable to retire the
Janco secured debt through the use of internally generated funds, Bentley
intends to seek to raise through a private offering of debt and/or equity, or
a sale of certain Company assets, funds sufficient to retire the maturing
Janco secured debt and necessary for other corporate purposes. The Company is
not pursuing any of these strategies at this time.
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<PAGE> 11
RESULTS OF OPERATIONS
The following table presents the results of operation for the six and
three months ended June 30, 1997 and 1996, respectively, by the Company's
business segments, sports picture cards (Megacards) and decorative
mirror/framed pictures (Windsor/Janco):
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
-------------------------------------------------------------------------------------------
1997 1996
------------------------------------------- -------------------------------------------
WINDSOR/ GENERAL WINDSOR/ GENERAL
JANCO<F1> MEGACARDS CORPORATE TOTAL JANCO MEGACARDS CORPORATE TOTAL
--------- --------- --------- ----- -------- --------- --------- -----
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales $6,140 $ -- $ -- $6,140 $8,340 $2,698 $ -- $11,038
Cost of sales 4,018 -- -- 4,018 6,812 2,447 -- 9,259
------ ---- ----- ------ ------ ------ ---- -------
Gross margin 2,122 -- -- 2,122 1,528 251 -- 1,779
Selling, general and
administrative expenses 1,467 10 187 1,664 1,903 902 -- 2,805
------ ---- ----- ------ ------ ------ ---- -------
Income (loss) from
operations 655 (10) (187) 458 (375) (651) -- $(1,026)
Interest expense 74 -- 33 107 154 132 -- 286
Other expenses (income) (162) (54) (3) (219) -- (137) -- (137)
------ ---- ----- ------ ------ ------ ---- -------
Net income $ 743 $ 44 $(217) $ 570 $ (529) (646) $ -- (1,175)
====== ==== ===== ====== ====== ====== ==== =======
Net income (loss) per common
share $ 1.01 $ (2.09)
</TABLE>
<TABLE>
THREE MONTHS ENDED JUNE 30,
-------------------------------------------------------------------------------------------
1997 1996
------------------------------------------- -------------------------------------------
WINDSOR/ GENERAL WINDSOR/ GENERAL
JANCO<F1> MEGACARDS CORPORATE TOTAL JANCO MEGACARDS CORPORATE TOTAL
--------- --------- --------- ----- -------- --------- --------- -----
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales $3,035 $ -- $ -- $3,035 $4,455 $1,111 $ -- $5,566
Cost of sales 1,945 -- -- 1,945 3,471 1,218 -- 4,689
------ ---- ----- ------ ------ ------ ---- ------
Gross margin (loss) 1,090 -- -- 1,090 984 (107) -- 877
Selling, general and
administrative expenses 710 10 150 870 861 $ 398 $ -- 1,259
------ ---- ----- ------ ------ ------ ----
Income (loss) from
operations 380 (10) (150) 220 123 (505) -- $ (382)
Interest expense 31 -- 22 53 71 40 -- 111
Other income (81) -- -- (81) -- (134) -- (134)
------ ---- ----- ------ ------ ------ ---- ------
Net income (loss) $ 430 $(10) $(172) $ 248 $ 52 (411) -- (359)
====== ==== ===== ====== ====== ====== ==== ------
Net income (loss) per common
share $ 0.44 $(0.64)
- -------------------
<FN>
<F1> Janco's operations were terminated in December 1996.
</TABLE>
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<PAGE> 12
Windsor's and Janco's combined net sales decreased from $8.3 million for
the first six months of 1996 to $6.1 million for the comparable period in
1997. Windsor's sales increased during the first six months of 1997 versus
1996 due to improved marketing and availability of products. The combined
sales of Windsor/Janco, however, decreased as a result of the discontinuance
of Janco's operations.
The cost of sales for the combined Windsor/Janco operations decreased
from $6.8 million for the first six months of 1996 to $4.0 million for the
comparable period in 1997. The reduction in cost of sales is a result of the
discontinuance of the operations of Janco. The increase in Windsor's cost of
sales in the first six months of 1997 over the same period in 1996 was
attributable to an increase in net sales. Gross margin for the combined
Windsor/Janco increased $594,000 to $2.1 million for the six months ended
June 30, 1997 from $1.5 million for the same period in 1996. As a percentage
of net sales, the gross margin increased to 35% in the first six months of
1997 from 18% for the comparable period in 1996.
Selling, general and administrative expenses for Windsor and Janco
decreased from $1.9 million for the first six months of 1996 to $1.4 million
for the same period in 1997. The decrease was the result of the
discontinuance of Janco's operations. The increase in Windsor's selling,
general and administrative expenses was due primarily to increased sales.
Interest expense for Windsor and Janco decreased from $154,000 for the
first six months of 1996 to $74,000 for the corresponding period in 1997. The
reduced interest expense was due to the repayment of a substantial part of
Janco's debts from the discontinuance of its operations, plus a reduction in
the outstanding balances on Windsor's line of credit.
As a result of the foregoing, Windsor and Janco reported net income of
$743,000 for the first six months of 1997, compared to a net loss of $529,000
for the same period of 1996.
Megacards reported no sales in the first six months of 1997 as a result
of the business combination with Legends. A profit of $44,000 was recorded
during the first six months of 1997 due to the collection of accounts
previously thought to be uncollectible. This compares to a net loss of
$646,000 in the first six months of 1996.
LIQUIDITY AND CAPITAL RESOURCES
During the first six months of 1997, the Company's operating, investing
and financing activities provided $33,679 of cash to the business. Cash was
generated through the collection of Janco's accounts receivable and used to
repay Janco's debts, reduce Windsor's debts and increase Windsor's
inventories.
Capital expenditures of $60,000 were made by Windsor in the first six
months of 1997.
As of June 30, 1997, the primary secured debt of Megacards and Janco was
repaid in full from collection of the accounts receivable. The secured debt
of Windsor was refinanced with Norwest in 1997. As of June 30, 1997, Windsor
had available borrowing capacity sufficient to operate its business for a
reasonable period of time.
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<PAGE> 13
Management is currently exploring courses of action to retire the Janco
debts for which Bentley and Windsor are liable. The Company is currently
engaged in negotiations to extend the maturity of the Janco debt. The Company
was released from any future liability on the Janco lease. The Company
anticipates that additional working capital of $400,000 to $700,000 will be
required during the remainder of 1997 to repay the Janco secured debt and
provide sufficient capital to fund its planned operations. The Company will
seek to attain such financing pursuant to the private placement of debt or
equity securities or the sale of certain assets of the Company, if required.
The Company is not considering any acquisition opportunities at this time.
There can be no assurance that such financing or asset sales will be available
to the Company on favorable terms or at all.
As of June 30, 1997, the Company reported an allowance for doubtful
accounts of $240,000. Management of the Company believes such amount was
appropriate in light of the amount and anticipated collectibility of the
Company's accounts receivable at that time. In order to maximize the payment
of its receivables, the Company employs a person, full-time, whose
responsibility is to seek payment of past due accounts. If such efforts are
unsuccessful, the Company engages a commercial collection agency to pursue
persons with past due accounts.
PART II -- OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K:
The Company filed no reports on Form 8-K during the quarter ended
June 30, 1997.
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<PAGE> 14
SIGNATURE
Pursuant to the requirements 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.
BENTLEY INTERNATIONAL, INC.
(Registrant)
September 8, 1997 By: /s/ Lloyd R. Abrams
---------------------------
Lloyd R. Abrams, President
Chief Executive Officer and
Chief Financial Officer
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE BENTLEY INTERNATIONAL, INC. QUARTERLY REPORT ON FORM
10-QSB FOR THE QUARTER ENDED JUNE 30, 1997, AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
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