UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED December 31, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
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COMMISSION FILE NUMBER
0-27323
THE BAUER PARTNERSHIP, INC.
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(Exact name of registrant as specified in its charter)
Nevada 88-0429812
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(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
(Registrant's address and telephone number of principal executive offices
and principal place of business)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.001
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 [ ] No [ X ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not 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-K or any amendment to this
Form 10-K. [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Title Shares Outstanding as of April 8, 2002
Common Stock, par value $.001 40,559,727
As of April 9, 2002, the aggregate market value of the voting stock held by
non-affiliates of the registrant, based on the closing price on that date, was
approximately $33,181,260.
THE BAUER PARTNERSHIP, INC.
FORM 10-KSB
FOR THE YEAR ENDED DECEMBER 31, 2001
Table of Contents
PART I
Item 1. BUSINESS 4
Item 2. PROPERTIES 6
Item 3. LEGAL PROCEEDINGS 7
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 7
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS 7
Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 9
Item 7. FINANCIAL STATEMENTS 11
Item 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE 12
PART III
Item 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT 13
Item 10. EXECUTIVE COMPENSATION 15
Item 11. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT 16
Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 17
Item 13. EXHIBITS AND REPORTS ON FORM 8-K 18
PART I
CAUTIONARY STATEMENT. Statements contained herein that are not based on
historical fact, including without limitation, statements containing the words
"believes," "may," "will," "estimate," "continue," "anticipates," "intends,"
"expects" and words of similar import, constitute "forward-looking statements."
Such forward-looking statements involve known and unknown risks, uncertainties
and other factors that may cause actual results, events or developments to be
materially different from any future results, events or developments expressed
or implied by such forward-looking statements. Such factors include, among
others, the following: general economic and business conditions, both nationally
and in the regions in which The Bauer Partnership, Inc. ("us" or "Bauer")
operates; competition; changes in our business strategy or development plans;
our ability to attract capital for development; the ability to attract and
retain qualified personnel; existing governmental regulations and changes in, or
the failure to comply with, governmental regulations; liability and other claims
asserted against us; and other factors referenced in our filings with the
Securities and Exchange Commission.
GIVEN THESE UNCERTAINTIES, READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON
SUCH FORWARD-LOOKING STATEMENTS.
We disclaim any obligation to update information concerning any such factors or
to publicly announce the result of any revisions to any of the forward-looking
statements contained in this report to reflect future results, events or
developments.
ITEM 1: BUSINESS
GENERAL
Overview and History
The Bauer Partnership, Inc. ("Bauer" or the "Company"), a Nevada corporation
incorporated on May 28, 1999, as Finders Keepers, Inc. ("Finders Keepers") with
a principal business objective to provide unclaimed property location services
to the public and to leading corporations. Finders Keepers sought to assist
clients in obtaining information regarding lost or forgotten estates, unclaimed
assets and/or financial belongings anywhere within the United States. Finders
Keepers attempted to locate assets that escheated to the state or to the federal
government or governmental agencies. These assets included monies derived from
uncashed checks, dormant savings and checking accounts, lost or forgotten stocks
and dividends, unclaimed certificates of deposit ("CDs"), forgotten safe deposit
boxes and various other unclaimed assets. Finders Keepers then tried to locate
the rightful owners or an entitled beneficiary. Upon locating the entitled
person or entity, Finders Keepers completed the necessary paperwork to have
these assets released for a "finders fee".
In December 2001, The Bauer Partnership, Inc., a Delaware corporation ("Bauer
Delaware") entered into a reverse merger with Finders Keepers whereby Finders
Keepers issued 31,030,800 shares of its common stock for 100% of the issued and
outstanding shares of Bauer Delaware. Bauer Delaware became a wholly-owned
subsidiary of Finders Keepers which changed its name to The Bauer Partnership,
Inc.
From March 2001 through December 2001, Bauer Delaware was engaged in providing
investment banking services to United States publicly traded companies seeking
financing in the range of $5 million to $20 million who were unable to secure
large underwriters or who wished to attract a global span of investors to their
corporations. Bauer introduced and evaluated the potential success and placement
of these corporations and their securities. Bauer Delaware introduced its client
companies to small to medium brokerage firms who had a wide client base, fund
managers, private pension funds, small to mid-sized banks and insurance
companies. In connection with the introduction of its client companies to
various financing sources, Bauer Delaware and/or the Company or one of its
subsidiaries received warrants to purchase shares of the client companies as
well as a percentage of any fees raised by the client companies through an
introduction by Bauer Delaware.
Our operations have resulted in limited revenues to date. During fiscal year
2001, the Company entered into investment banking agreements with several NASDAQ
listed companies and with several OTC Bulletin Board companies to introduce
these companies to possible financing sources. In connection with these
agreements the Company received warrants to purchase shares of stock in such
companies as well as a percentage of any funds raised through an introduction of
the Company. In connection with the investment banking agreements, the Company
typically facilitated a road show whereby the client companies met with
potential financing sources in Europe, Asia and the Middle East. Some of the
client companies are still in discussions with financing sources introduced by
the Company and the Company may receive cash compensation in the future from
such introductions.
In December 2001, Bauer Delaware changed its business strategy to specialize in
acquiring cash flow positive commercial real estate assets on a global basis.
The Company's strategy is to utilize its listed equity to acquire existing hotel
and commercial real estate assets to add significant increases in revenue and
net asset value to its financial position. Bauer Delaware believes it fills a
unique position in the market place by offering the ability to structure and
finance sophisticated transactions in various geographies worldwide.
Subsequent Events
Windjammer Resort & Spa
In January 2002, the Company and one of its wholly-owned subsidiaries entered
into a Share and Asset Purchase Agreement to acquire the Windjammer Resort & Spa
in St. Lucia, British West Indies. The acquisition price is $30,000,000 and is
comprised of $18 million in cash and $12,000,000 in the form of a convertible
debenture bearing interest at 8% per year which is convertible into Company
common stock at $1.80 per share based on specified criteria in the agreement. In
connection with this agreement, the Company has made non-refundable payments of
$200,000 towards the purchase price and owes $17.8 million by May 1, 2002,
unless the Company is granted an extension. The Company is working to obtain
bank financing to close this transaction and is also trying to get an extension
in the event it is unable to obtain financing by May 1, 2002. In the event the
Company closes this transaction by obtaining the required financing, the Company
will receive a net profits interest of 39% starting at January 31, 2002 through
the closing date. See the Share and Asset Purchase Agreement attached to this
report as an exhibit.
Loan Agreement with Ocean Strategica Holdings Ltd. and Turbo International Ltd.
In March 2002, the Company entered into a loan agreement with Ocean Strategic
Holdings Ltd. and Turbo International Ltd. whereby the Company receives a 90 day
loan of $500,000 based on the following: (1) $150,000 upon execution and
delivery of the loan agreement, less $10,000 to be paid to the lenders'
attorneys; (2) $50,000 upon the lenders' and/or the Company's receipt of all of
the transaction documents duly executed and delivered pursuant to the loan
agreement, less $5,000 to be paid to the lenders' attorneys; (3) 100,000 upon
the Company's filing of its annual report on Form 10-K for the year ended
December 31, 2001 and amendment to its current report on Form 8-K dated December
5, 2001 containing all of the financial statements to be filed in connection
there with, less any expenses to be paid to lenders' attorneys; and (4) $200,000
upon the lenders receipt of a copy of a written loan commitment to the Company
from a reputable lending institution approved by the lenders, which approval
shall not be unreasonably withheld, for no less than $18,000,000, less $5,000 to
be paid to lenders' attorneys. The Company has received $185,000 in connection
with the loan as of the date of this report, of which a non-refundable payment
of $100,000 was made in connection with the Share and Asset Purchase Agreement
involving the Windjammer Resort & Spa.
In connection with the loan agreement, the lenders received a 10% interest in
the outstanding stock of The Bauer Windjammer Resort and Spa (Bahamas) Ltd., a
wholly-owned subsidiary of Bauer Capital Management, Limited which is a
wholly-owned subsidiary of the Company. In addition, the lenders received an
aggregate of three year redeemable warrants to purchase 3,000,000 shares,
subject to adjustment as provided in the agreement, at an exercise price of $.20
per share. Ronald J. Bauer, our chief executive officer, pledged 17,312,500
shares of Company common stock held in the name of Fleming Financial Holdings,
Ltd. pursuant to a pledge and security agreement. In the event the loan is not
repaid in its entirety within 120 days from the date the loan agreement was
executed, the loans shall automatically convert into 50,000,000 shares of
Company common stock resulting in a change of control of the Company. The
lenders have the right to loan up to $500,000 in four separate transactions
under substantially the same terms and conditions as the loan agreement. In
addition, the lenders have a first right of refusal to provide financing to the
Company in future financings.
ITEM 2. PROPERTIES
We have use of an office at 300 Park Avenue, Suite 1700, New York,
New York for $600.00 per month. Our lease expires at the end of February 2003.
In addition, we maintain office space at 8 Queen Street, Mayfair, London where
we occupy approximately 2,500 square feet. We lease such space at $10,000 per
month which we believe to be at or near market value and our lease terminates in
May 2002 and the Company has an option renewal for an additional six months.
ITEM 3. LEGAL PROCEEDINGS
We are not involved in any material pending legal proceedings, other
than routine litigation incidental to our business, to which we are a party or
of which any of our property is subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
a. The Company held an annual meeting on July 2, 2001.
b. The Company's shareholders re-elected Devorah Zirkind to serve as the
Company's director.
c. The Company's majority shareholders re-elected Devorah Zirkind.
d. None
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Our common stock is traded in the Over-the-counter market and is
quoted on the electronic Bulletin Board under the symbol "BUER" and traded under
the symbol "FDKP" until the last quarter of 2001. Our common stock was cleared
for trading on the OTCBB on March 3, 2000 and began formal trading on March 7,
2000. The following table sets forth the high and low price for our common stock
on the OTCBB. The following table represents the range of the high and low bid
prices of our stock as reported by the NASDAQ Trading and Market Services for
each fiscal quarter for the last two fiscal years ending December 31, 2000 and
2001, respectively. These quotations represent prices between dealers, may not
include retail markups, markdowns, or commissions, and may not necessarily
represent actual transactions.
Year 2000 High Low
For the period (Mar 7, 2000 to Dec 31, 2000) 1.00 .01
Year Quarter High Low
2001 First Quarter $5.00 $1.649
Second Quarter $5.997 $1.4999
Third Quarter $3.00 $1.0649
Fourth Quarter $3.00 $1.10
HOLDERS
As of April 8, 2002 there were 69 stockholders of record of our common stock.
DIVIDEND POLICY
We have not paid cash dividends on our common stock and do not intend to pay any
cash dividends in the foreseeable future.
We have authorized a total of 200,000,000 shares of our common stock, $0.001 par
value per share. As of April 8, 2002, we had a total of 40,559,727 shares of our
common stock issued and outstanding. We have also authorized 25,000,000 shares
of preferred stock, $.001 par value, but none of them are issued and
outstanding. Management controls approximately 63% of our outstanding shares.
Dividends
We have not declared dividends on our common stock and do not
anticipate paying dividends on our common stock in the foreseeable future.
Private Equity Transactions.
On May 31, 1999, the Company issued 70,000,000 shares of its $0.001 par
value common stock for cash of $8,510 to its one director.
On September 2, 1999, the Company completed an offering that was
registered with the State of Nevada pursuant to NRS 90.490 and was exempt from
federal registration pursuant to a Regulation D, Rule 504 of the Securities Act
of 1933, as amended. The Company sold 8,908,200 shares of its $0.001 par value
common stock at a price of $0.10 per share for total cash of $63,630. In
addition, the Company issued 1,972,712 shares of its $0.001 par value common
stock for services valued at $0.10 per share for a total of $14,091.
On March 24, 2000, the Company effected a 2-for-1 stock split of its
$0.001 par value common stock, increasing the number of shares issued and
outstanding from 5,777,208 shares to 11,554,416 shares.
On July 27, 2000 the Company's Board of Directors approved a 7 for 1
forward stock split of its common shares. The Company's Certificate of
Incorporation has been amended to increase the authorized capital stock of the
Company to 200,000,000 shares, all of which will be common stock. The record
date for the forward split was Monday, August 7, 2000 with a distribution date
of August 9, 2000.
In December 2001, the Company issued 31,030,800 shares of its common stock for
100% of the common stock of The Bauer Partnership, Inc., a Delaware corporation.
We believe the transaction was exempt from registration pursuant to Section 4(2)
of the Securities Act as the transaction was non-recurring and all of the United
States shareholders were accredited investors.
In December 2001, the Company issued 750,000 shares of its common stock to
several individuals and an entity in consideration for services rendered in
connection with the Company's reorganization. We believe the transaction was
exempt from registration pursuant to Section 4(2) of the Securities Act, as the
recipients had sufficient knowledge and experience in financial and business
matters, and since the transactions were non-recurring and privately negotiated.
In December 2001, the Company issued 5,000,000 shares of its common stock to
several entities in consideration for consulting services rendered. We believe
the transactions were exempt from registration pursuant to Section 4(2) of the
Securities Act, as the recipients had sufficient knowledge and experience in
financial and business matters, and since the transactions were non-recurring
and privately negotiated.
In April 2002, the Company issued 200,000 shares of its common stock to two
entities in consideration for consulting services rendered. We believe the
transactions were exempt from registration pursuant to Section 4(2) of the
Securities Act, as the recipients had sufficient knowledge and experience in
financial and business matters, and since the transactions were non-recurring
and privately negotiated.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
CAUTIONARY STATEMENT. Statements contained or incorporated by reference in this
document that are not based on historical fact are "forward-looking statements".
Forward-looking statements may be identified by use of forward-looking
terminology such as "believe", "intends", "may", "will", "expects", "estimate",
"anticipate", "continue", or similar terms, variations of those terms or the
negative of those terms.
Overview
The Company's business strategy is to utilize its common stock to acquire
existing hotel and commercial real estate assets. The Company did not implement
this business strategy until December 31, 2001. Prior thereto, the Company was
engaged in providing investment banking services to United States publicly
traded companies seeking financing in the range of $5 million to $20 million.
Revenues
For the period from March 23, 2001 (inception) through December 31, 2001, the
Company had revenues of $148,164 from the receipt of warrants in connection with
investment banking services.
Costs and Expenses
For the period from March 23, 2001 (inception) through December 31, 2001, the
Company's salaries and benefits were $764,258 and its other general and
administrative expenses were $3,719,824. Other general and administrative
expenses includes payment of professional fees, issuance of stock to
consultants, rent, travel and entertainment and printing costs. The issuance of
stock to consultants resulted in more than $2,100,000 of the total.
Loss from Operations
The Company had a loss from operations of $4,573,907 for the period from March
23, 2001 (inception) through December 31, 2001.
Net Loss Per Share
The Company had a net loss per share of $.15 per share.
Liquidity and Capital Resources
For the year ended December 31, 2001, the Company did not generate cash flow
from its operations which exceeding operating costs. As a result, the Company
will require additional working capital to develop its business until the
Company either achieves a level of revenues adequate to generate sufficient cash
flows from operations or obtains additional financing necessary to support its
working capital requirements.
Between July and November 2001, the Company raised $669,100 from the sale of
1,098,800 shares of common stock. The Company borrowed $1,006,500 from various
individuals, an entity and a financial institution. These loans bear interest
ranging from 3.875% to 12% and all of these amounts remain outstanding. The
Company also received an advance from Ronald J. Bauer, the Company's Chief
Executive Officer, in the amount of $27,135.
As of December 31, 2001, the Company had cash of $3,882, accounts receivable of
$5,845, a VAT refund of $168,823 and a working capital deficit of $1,835,519.
The Company is taking steps to raise equity capital or to borrow additional
funds. There can be no assurance that any new capital willl be available to the
Company or that adequate funds for the Company's operations, whether from the
Company's revenues, financial markets, or other arrangements will be available
when needed or on terms satisfactory to the Company. The Company has no further
commitments from officers, directors or affiliates to provide funding. The
failure of the Company to obtain adequate additional financing may require the
Company to delay, curtail or scale back some or all of its operations. Any
additional financing may involve dilution to the Company's then-existing
shareholders.
Risk Factors.
Failure to Repay Loan Will Result in Change of Control. If we are
unable to repay the loan due to Ocean Strategic Holdings Ltd. and Turbo
International Ltd. by the prescribed due date, the loans are automatically
converted into 50,000,000 shares of our common stock resulting in a change of
control. If we do not repay these loans, the operations of the Company will
likely be discontinued and current management will likely be removed from
office.
Dependence Upon External Financing. It is imperative that we raise
capital to stay in business. If we are unable to obtain debt and/or equity
financing upon terms that our management deems sufficiently favorable, or at
all, it would have a materially adverse impact upon our ability to pursue our
business strategy and maintain our current operations.
Failure to Obtain Financing in Connection with the Purchase of the
Windjammer Resort & Spa will Result in Our Loss of $200,000. In the event we do
not obtain the requisite financing to close the purchase of the Windjammer
Resort & Spa, we will have received no value and have no asset to show for our
$200,000 non-refundable payments.
Terms of Future Loans or Financing May Not Be Optimal and Result in
Dilution to Shareholders. The terms of future loans and/or financing may not be
at the best terms available. Ocean Strategic Holdings Ltd. and Turbo
International Ltd. have the right to loan up to $500,000 in four separate
transactions under substantially the same terms and conditions as the loan
agreement. In the event Ocean Strategic and Turbo International lend the Company
money in the future, these entities receive warrants at a substantial discount
to our current market price. The exercise of these warrants and the issuance of
shares underlying the warrants is likely to result in dilution to our
shareholders.
Exclusive Agency Agreement May Result in Payment of Additional Fees.
We entered into an exclusive agency agreement with Wilkerson Consulting Inc.
which provides that Wilkerson Consulting will act as the Company's exclusive
agent with respect to the acquisitions of hotels, motels and resorts by the
Company on a worldwide basis. In the event the Company does not utilize the
services of Wilkerson Consulting in connection with an acquisition, the Company
may still be liable to Wilkerson Consulting. If the Company closes a
transaction, Wilkerson Consulting is due both a cash and stock fee. The Company
is attempting to modify this agreement or reach a settlement agreement, but no
assurance can be provided that such an agreement will be reached.
Reliance on Key Management. Our success is highly dependent upon the
continued services of Ronald J. Bauer, our CEO, who has been the primary person
responsible for the direction of the Company. If Mr. Bauer were to leave us, it
could have a materially adverse effect upon our business and operations.
ITEM 7: FINANCIAL STATEMENTS
The audited financial statements, together with the independent
accountants report thereon of Malone & Bailey, PLLC appears herein. See
financial statements beginning on pages F-1 of this report.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
On February 12, 2002, the client-auditor relationship between The
Bauer Partnership, Inc., formerly Finders Keepers (the "Company") and Bierwolf,
Nilson & Associates ("Bierwolf") ceased as Bierwolf was dismissed as the
Company's auditor.
To the knowledge of the Company's current Board of Directors, Bierwolf's
report of the financial statements of the Registrant for the period from April
2001 through June 2001 and any related interim period did not contain any
adverse opinion or disclaimer of opinion and was not qualified or modified as to
uncertainty, audit scope or accounting principles.
During the review of the Company's financial statements for the period
from April 2001 through June 2001 and any subsequent interim period through the
date of dismissal, Bierwolf did not have any disagreements with the Company on
any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure.
On August 13, 2001, the Registrant changed accountants from Stark Tinter
Associates LLC to Bierwolf, Nilson & Associates.
The Company decided not to reappoint Stark Tinter & Associates, LLC as its
independent accountant.
The financial statements reported on by Stark Tinter & Associates LLC were not
subject to an adverse or qualified opinion, or a disclaimer of opinion and were
not modified as to uncertainty, audit scope or accounting principles during the
past two fiscal years, and the interim periods through August 13, 2001 except
that the opinion for the year ended December 31, 2000 contained a going concern
paragraph;
The decision to change accountants was approved by the Registrant's Board of
Directors; and
There were no disagreements related to accounting principles or practices
auditing scope or procedure during the past two fiscal years and the interim
period through August 13, 2001.
On February 6, 2002, the Registrant engaged Malone & Bailey PLLC as its
independent accountants for the fiscal year ended December 31, 2001. During the
most recent fiscal year and any subsequent interim period prior to engaging
Malone & Bailey, the Company did not consult with Malone & Bailey regarding
either (i) the application of accounting principals to a specified transaction,
either completed or proposed; or the type of audit opinion that might be
rendered on the Company's financial statements; or (ii) any matter that was
either the subject matter of a disagreement (as defined in Item 304(a)(1)(iv) of
Regulation S-K and the related instructions) or a reportable event (as defined
in Item 304(a)(1)(v) of Regulation S-K). Malone & Bailey, PLLC has reviewed the
disclosure required by Item 304(a) before it was filed with the Commission and
has been provided an opportunity to furnish the Company with a letter addresssed
to the Commission containing any new information, clarification of the Company's
expression of its views, or the respects in which it does not agree with the
statements made by the Company in response to Item 304(a). Malone & Bailey PLLC
did not furnish a letter to the Commission.
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The names, ages and positions of the directors and executive
officers of Bauer are set forth below. Biographical information for each of
these persons is also presented below. Our executive officers are appointed by
our Board of Directors and serve at its discretion.
Directors and Officers.
Name Age Position Held
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F. Bryson Farrill 74 Chairman
Ronald J. Bauer 27 Chief Executive Officer and Director
Kevin J. Wallace 51 President
Carmine F. Adimando 57 Chief Financial Advisor
Dr. Jacques Fischer 61 Chief Operating Officer and Director
Joseph T. Bauer 63 Director
Geoffrey Button 53 Director
Ed Tobin 45 Director
F. Bryson Farrill, Executive Chairman - Mr. Farrill brings over 40 years of
Investment Banking and Brokerage experience to The Bauer Partnership with a
wealth of industry knowledge that few attain. Mr. Farrill served as Chairman of
the Board for Scotia McLeod, Inc., one of Canada's largest brokerage houses,
President and Partner of McLeod, Young & Weir and was an active member of the
New York Stock Exchange for over 10 years. He is responsible for overseeing the
board's activities and acts as a senior advisor to CEO Ronald J. Bauer.
Ronald J. Bauer, Chief Executive Officer, Founder and Director - Mr. Bauer
is the Chief Executive Officer and founder of The Bauer Partnership, and is
responsible for deal flow, acquisitions and contract negotiations. Mr. Bauer has
over 6 years experience in offshore financial services and asset management,
ranging from institutional brokerage, sales to accredited investors, and fund
management throughout Europe. He has been involved aggressively in the
structuring of sophisticated financial transactions. He has planned creative
debt and equity structures for private and public companies. He oversees the
Company's corporate finance and capital raises. Mr Bauer has studied at the
State University of New York (S.U.N.Y) for a Bachelor of Science degree in
business administration and accounting.
Kevin J. Wallace, President - Mr. Wallace is President of The Bauer
Partnership, Inc. Mr. Wallace has over 25 years of investment banking and
commercial real estate experience with an emphasis on the hospitality sector. He
was a senior investment banker at Citibank, Lloyds Bank International and
Salomon Brothers with broad experience in the international capital markets. He
was later President of Mirage Resorts, Inc., which he left to found and be
president of Los Nomadas Resorts and Hotels,both integrated resort owning
companies with operations around the globe including the United States, Europe,
Australia, the Caribbean and Central America. Mr. Wallace holds a BA from
Harvard University, Cambridge, MA. and an MBA from Harvard Business School,
Boston, MA.
Carmine F. Adimando, Chief Financial Advisor - Mr. Adimando serves as Chief
Financial Advisor and is responsible for overseeing all financial activity of
the BAUER Group companies. He is based out of Bauer's New York office. Mr.
Adimando was employed for 17 years with Pitney Bowes, Inc. (NYSE: PBI), with a
market capitalization of US $9.6 Billion. Mr. Adimando last held the positions
of Vice President of Finance, Treasurer and Chief Financial Officer of Pitney
Bowes, Inc. He was also President of Pitney Bowes International Holdings, Inc.
and a member of the Board of Directors and Executive Committee of Pitney Bowes
Leasing Co. Prior to joining Pitney Bowes Mr. Adimando held positions with
American Airlines, Inc., Burndy Corp., Deloitte & Touche, Haskins & Sells and
Morgan Guaranty Trust. Carmine graduated from St. John's University and Stanford
University's Graduate School of Business Senior Financial Management Program.
Mr. Adimando is a Certified Public Accountant.
Dr. Jacques L. Fischer, Chief Operating Officer and Director - Dr. Fischer
has been employed for over 30 years as a Senior Executive of Rohm and Haas,
Inc., one of the world's largest specialty chemical companies, which is publicly
traded on the New York Stock Exchange (NYSE: ROH) with a US $7.8 Billion Market
Cap. Recently retired as Rohm and Haas' President and General Manager in Italy,
he brings a wealth of management knowledge and experience that spans Europe,
South America and North America. Dr. Fischer is a founding shareholder and
investor in the Company.
Joseph T. Bauer, Non Executive Director - Mr. Joseph T. Bauer is a Senior
Executive with Canary Wharf Group plc, a developer of Canary Wharf, by far
London's largest commercial development. Mr. Bauer is a 25-year veteran of
Olympia and York Developments Ltd., at one time North America's largest private
real estate developer with total group assets in excess of US $30 billion at its
peak. His last position with O&Y was as Senior Vice-President and Chief
Engineer. He developed and managed the construction at World Financial Center,
Battery Park, New York; First Canadian Place, Toronto, and Canary Wharf. Mr.
Bauer has been involved in the development of over 100 commercial large-scale
projects spanning North America, Europe and Latin America. Mr. Bauer holds a
Bachelor of Science degree in Mechanical Engineering (MBA) from York University
in Toronto. Mr. Bauer is CEO Ronald Joseph Bauer's father and acts as a
non-executive Director and a senior advisor to the Company.
Ed Tobin, Non-Executive Director- Mr. Tobin has served as one of our
directors since March 2002. Mr. Tobin has served as a director of GEM Ventures
Ltd since 1996. Previously, Mr. Tobin worked for Nordberg Capital and Neuberger
and Berman. Mr. Tobin received his MBA from The Wharton School and his Master's
in Engineering and a Bachelors of Science in Economics from the University of
Pennsylvania.
Section 16(a) of the Securities Exchange Act of 1934 requires the Company'
directors and executive officers, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file with the SEC
initial reports of ownership and reports of changes in ownership of Common Stock
and other equity securities of the Company. Officers, directors and greater than
ten-percent stockholders are required by SEC regulations to furnish the Company
with copies of all Section 16(a) forms they file. To the Company's knowledge,
based soley on review of the copies of such reports furnished to the Company and
written representations that no other reports were required during the fiscal
year ended December 31, 2001, its officers, directors and greater then ten
percent beneficial owners complied with all Section 16(a) filing requirements.
ITEM 10. EXECUTIVE COMPENSATION
The following table is a summary of annual compensation paid to the
Company's executives during the two fiscal years ended December 31, 2001 and
December 31, 2000.
Name and Principal Other Annual
Position at 12/31/01 Year Salary Bonus Allowance
-------------------- ------ ------ ------- ------------
Ronald J. Bauer 2001 $139,715 None $55,000
Chief Executive Officer
Devorah Zirkind 2000 $55,000 None -
President and Chief Executive Officer
Our directors are reimbursed for reasonable expenses incurred in connection
with attendance at meetings of the Board and of Committees of the Board;
however, they do not receive any additional compensation for their services as
directors. Accordingly, it may be necessary for us to compensate newly appointed
directors in order to attract a quality governance team. At this time the
Company has not identified any specific individuals or candidates nor has it
entered into any negotiations or activities in this regard.
EMPLOYMENT AGREEMENTS
Effective April 2, 2001, the Company entered into an employment agreement with
Ronald J. Bauer, Chief Executive Officer, for two years at an annual salary of
$171,600 per year. In addition, Mr. Bauer receives $5,075 per month for a
residence in London as well as $5,075 per month for a car allowance, car
insurance and gas. The agreement contains a severance clause for early
termination in which case Mr. Bauer is entitled to receive all remaining amounts
due Mr. Bauer under the employment agreement at such time as the employment
agreement is terminated.
Effective February 1, 2002, the Company entered into an employment contract with
Robert Wallace, our President, for a period of three months. Pursuant to the
agreement, Mr. Wallace receives monthly compensation of $5,000 and options to
purchase an aggregate of 75,000 shares at an exercise price of $1.00 per share
vesting 1/3 at the end of each of the three months covered by the agreement. The
agreement states that Mr. Wallace or his designee will receive 2% of the
financing received net of commissions and expenses associated with financing
received for the following properties: Windjammer, Mosquito Blue and Coral
Sands. The parties intend to enter into a definitive agreement covering periods
after April 30, 2002.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of April 8, 2002, information regarding the
beneficial ownership of shares of Common Stock by each person known by us to own
five percent or more of the outstanding shares of Common Stock, by each of our
Officers, by each of our Directors, and by our Officers and Directors as a
group. On April 8, 2002 there were 40,559,727 shares issued and outstanding of
record.
Name and Address of Shares of Percentage as of
Beneficial Owners Common Stock April 8, 2002
----------------- ------------ ------------------
Ronald J. Bauer (1)(2) 17,312,500 42.7%
F. Bryson Farrill(1) 800,000 *
Dr. Jacques Fischer(1) 4,250,000 10.5%
Gregory Samuel(1)(4) 3,000,000 7.4%
Joseph T. Bauer(1) 300,000 *
Geoffrey Button - *
Kevin Wallace(5) 75,000 *
Carmine Adimando - *
Ed Tobin - *
Ocean Strategic Holdings Ltd. (6) 15,581,250 39.1%
All Executive Officers and Directors
As a group (9 persons) 25,737,500 63.3%
* Less than one percent
(1) The business address of each individual is the same as the address of the
Company's principal executive offices. (2) Held of record by Fleming
Financial Holdings Ltd., of which Ronald J. Bauer is the beneficial owner.
(3) Held of record by Rothman Holdings Ltd., of which F. Bryson Farrill is
the beneficial owner.
(4) Held of record by Flying Dutchman Corp., of which Gregory Samuel is the
beneficial owner.
(5) Includes options to purchase 50,000 shares at an exercise price of $1.00
per share and options to purchase 25,000 shares at an exercise price of
$1.00 per share which vest as of April 30,2002.
(6) Has a security interest covering 90% of the shares held of record by
Fleming Financial Holdings, Ltd. Turbo International Ltd. has a security
interest on the remaining 10% of the shares held of record by Fleming
Financial Holdings, Ltd.
ITEM 12. CERTAIN PARTIES AND RELATED TRANSACTIONS.
In January 2001, Ronald J. Bauer, the Company's Chief Executive Officer,
loaned the Company $180,000 bearing interest at 8% which is due upon demand.
In April 2001, Ronald J. Bauer, our Chief Executive Officer, loaned the
Company $140,000 through Fleming Financial, a company of which Ronald J. Bauer
is the beneficial owner. The loan bears interest at 8% and is due upon demand.
In May and June 2001, Dr. Jacques Fischer, our Chief Operating Officer,
loaned the Company an aggregate of $250,000 which loans bear interest at rates
ranging from 10-12%. These loans are due upon demand.
In December 2001 and January 2002, one of our employees and shareholders
loaned the Company an aggregate of $144,000. One of the loans was due in
February 2002 and provides for a penalty payment of up to $50,000. The other
loan is secured by 300,000 shares of Company common stock.
During the year ended December 31, 2001, Ronald J. Bauer, the Company's
Chief Executive Officer, advanced the Company $27,135.
During the year ended December 31, 2001, the Company received a note
payable from a financial institution in the amount of $300,000 secured by assets
of officers and directors of the Company bearing interest at 3.875%.
In January 2002, Dr. Jacques Fischer, our Chief Operating Officer, loaned
the Company $160,000 bearing interest at 8%. The loan is due upon demand.
Joseph T. Bauer is the father of Ronald J. Bauer.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit No. Description
----------- ---------------
3.1(1) Amended and Restated Articles of Incorporation
3.2(1) Amended Bylaws
10.1* Employment Agreement with Ronald J. Bauer
10.2* Employment Agreement with Kevin Wallace
10.3* Share and Asset Purchase Agreement with Windjammer Bahamas (1992)
Limited
10.4* Schedule 2.8 to Share and Asset Purchase Agreement
10.5* Loan Agreement with Ocean Strategic Holdings Ltd., and Turbo
International Ltd.
21.1* Subsidiaries of the registrant
* Filed herein
(1) Previously filed with Form 8-K filed on December 13, 2001.
A. Financial Statements
INDEPENDENT AUDITORS' REPORT F-1
BALANCE SHEET AS OF DECEMBER 31, 2001 F-2
STATEMENTS OF OPERATIONS FOR THE PERIOD FROM MARCH 23, 2001
(INCEPTION) THROUGH DECEMBER 31, 2001 F-3
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM MARCH 23, 2001
(INCEPTION) THROUGH DECEMBER 31, 2001 F-4
STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED
FOR THE PERIOD FROM MARCH 23, 2001
(INCEPTION) THROUGH DECEMBER 31, 2001 F-5
NOTES TO FINANCIAL STATEMENTS F-6
B. Reports on Form 8-K
We filed a current report on Form 8-K on December 13, 2001, relating to a change
in control of the Company, the acquisition of The Bauer Partnership, Inc., a
Delaware corporation, and a change in the Company's business, name, stock symbol
and officers and directors.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
THE BAUER PARTNERSHIP, INC.
By: /s/ Ronald J. Bauer
------------------------
Ronald J. Bauer
Chief Executive Officer
Dated: April 10, 2002
In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and
or the duties indicated.
Signature Title Date
---------- ------- --------
/s/ F. Bryson Farrill Chairman
---------------------
F. Bryson Farrill April 10, 2002
/s/ Ronald J. Bauer Chief Executive Officer
-------------------
Ronald J. Bauer and Director April 10, 2002
/s/ Kevin J. Wallace President
--------------------
Kevin J. Wallace April 10, 2002
/s/ Dr. Jacques Fischer Chief Operating Officer
-----------------------
Dr. Jacques Fischer and Director April 10, 2002
/s/ Carmine Adimando Chief Financial Advisor
Carmine Adimando April 10, 2002
/s/ Joseph T. Bauer Director
-------------------
Joseph T. Bauer April 10, 2002
/s/ Geoffrey Button Director
Geoffrey Button April 10, 2002
/s/ Ed Tobin Director
-------------------
Ed Tobin April 10, 2002
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
The Bauer Partnership, Inc.
New York, New York
We have audited the accompanying consolidate balance sheet of The Bauer
Partnership, Inc. as of December 31, 2001, and the related consolidated
statements of operations, stockholders' equity (deficit), and cash flows for the
period from March 23, 2001 (inception) through December 31, 2001. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. 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 that our audit provides a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of The Bauer
Partnership, Inc. as of December 31, 2001, and the results of its operations and
its cash flows from March 23, 2001 through December 31, 2001, in conformity with
accounting principles generally accepted in the United States.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, the Company has incurred losses from March
23, 2001 (inception) through December 31, 2001 totaling $4,620,874 and at
December 31, 2001 had a capital deficit of $1,835,519. The Company will require
additional working capital to develop its business until the Company either (1)
achieves a level of revenues adequate to generate sufficient cash flows from
operations; or (2) obtains additional financing necessary to support its working
capital requirements. These conditions raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans in regard
to this matter are also described in Note 2. The accompanying consolidated
financial statements do not include any adjustments that might result from the
outcome of these uncertainties.
Malone & Bailey, PLLC
Houston, Texas
www.malone-bailey.com
April 4, 2002
THE BAUER PARTNERSHIP, INC.
CONSOLIDATED BALANCE SHEET
December 31, 2001
ASSETS
Current assets
Cash $ 3,882
Accounts receivable 5,845
Investments 33,806
Foreign tax refund claims 168,823
-------------
Total current assets 212,356
Property and equipment, net 21,345
-------------
$ 233,701
=============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Bank overdraft $ 45,900
Accounts payable 919,371
Accrued interest 46,967
Shareholders advances 27,135
Note payable 302,002
Notes payable - related parties 706,500
-------------
Total current liabilities 2,047,875
-------------
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock, $.001 par value, 25,000,000 shares
authorized, no shares issued and outstanding -
Common stock, $.001 par value, 200,000,000 shares
authorized, 40,159,727 shares issued and outstanding 40,160
Additional paid in capital 2,766,540
Accumulated deficit (deficit) (4,620,874)
-------------
Total Stockholders' Equity (Deficit) (1,814,174)
-------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 233,701
=============
THE BAUER PARTNERSHIP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Period March 23, 2001 (Inception) Through December 31, 2001
2001
-----------------
Revenues $ 148,164
Cost and Expenses:
Salaries and benefits 764,258
Rent 227,316
Other general and administrative 3,719,824
Depreciation and amortization 10,673
-------------
4,722,071
-------------
Loss from operations (4,573,907)
Interest expense 46,967
-------------
Net loss $(4,620,874)
=============
Net loss per share:
-------------
Net loss basic and diluted $ (0.15)
=============
Weighted average shares outstanding:
Basic and diluted 31,560,347
=============
See accompanying summary of accounting policies and notes to
consolidated financial statements.
THE BAUER PARTNERSHIP, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the Period from March 23, 2001 (Inception) Through December 31, 2001
Additional paid
Common stock in capital Accumulated
deficit Total
------------------------------- ----------------- ---------------- -----------------
Shares Amount
----------------- ------------ ----------------- ---------------- -----------------
Issuance of common to founders
28,600,000 $ 28,600 $ - $ - $ 28,600
Issuance of common stock for legal
and consulting services
900,000 900 8,100 - 9,000
Issuance of common stock for cash
1,595,521 1,596 667,504 - 669,100
Issuance of common stock for
Finder's Keepers, Inc. and
recapitalization
4,064,206 4,064 (4,064) - -
Issuance of common stock for
consulting services
5,000,000 5,000 2,095,000 - 2,100,000
Net loss - - - (4,620,874) (4,620,874)
----------------- ------------ ----------------- ---------------- -----------------
----------------
Balance,
December 31, 2001 40,159,727 $ 40,160 $ 2,766,540 $ (4,620,874)$ (1,814,174)
================= ============ ================= ================ =================
See accompanying summary of accounting policies and notes to
consolidated financial statements.
THE BAUER PARTNERSHIP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Period from March 23, 2001 (Inception) Through December 31, 2001
2001
----------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(4,620,874)
Adjustments to reconcile net deficit to cash used by
operating activities:
Depreciation and amortization 10,673
Common stock for services 2,137,600
Net change in:
Accounts receivable (5,845)
Investments (33,806)
Foreign tax refund claims (168,823)
Bank overdraft 45,900
Accounts payable and accrued expenses 966,338
----------------
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES (1,668,837)
----------------
CASH FLOWS FROM INVESTING ACTIVITIES
----------------
Capital expenditures (32,018)
----------------
CASH FLOWS FROM FINANCING ACTIVITIES
Sale of common stock 669,100
Shareholder advances 27,135
Proceeds from notes payable 1,008,502
----------------
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES 1,704,737
----------------
NET INCREASE (DECREASE) IN CASH 3,882
Cash, beg. of period -
----------------
Cash, end of period $ 3,882
================
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid $ -
Income taxes paid $ -
See accompanying summary of accounting policies and notes to
consolidated financial statements.
THE BAUER PARTNERSHIP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF ACCOUNTING POLICIES
Nature of business
The Bauer Partnership, Inc. ("Bauer") was incorporated in March 2001 under the
laws of the state of Delaware. In October 2001, Bauer entered into an Exchange
Agreement that was accounted for as a reverse merger with Finder's Keepers, Inc.
("Finder's), a Nevada corporation. For accounting purposes this has been treated
as an acquisition of Finder's and as a recapitalization of Bauer. In connection
with the transaction Finder's changed its name to Bauer.
From March 2001 through December 2001, Bauer was engaged in providing investment
banking services to United States publicly traded companies seeking financing in
the range of $5 million to $20 million who were unable to secure large
underwriters or who wished to attract a global span of investors to their
corporations. In December 2001, Bauer changed its business strategy to
specialize in acquiring cash flow positive commercial real estate assets on a
global basis. Bauer's strategy is to utilize its listed equity to acquire
existing hotel and commercial real estate assets to add significant increases in
revenue and net asset value to its financial position.
Principles Of Consolidation
The consolidated financial statements include the accounts of Bauer and its
wholly owned subsidiaries. All significant intercompany transactions and
balances have been eliminated.
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the balance sheet. Actual results could differ from those estimates.
Cash Equivalents
Cash equivalents include highly liquid, temporary cash investments having
original maturity dates of three months or less. For reporting purposes, such
cash equivalents are stated at cost plus accrued interest which approximates
fair value.
Investments
Bauer holds minority equity investments in companies. Bauer accounts for these
minority investments under the cost method. Certain investments carry
restrictions on immediate disposition. Investments in public companies with
restrictions of less than one year are classified as available-for-sale and are
adjusted to their fair market value with unrealized gains and losses, net of
tax, recorded as a component of accumulated other comprehensive income. Upon
disposition of these investments, the specific identification method is used to
determine the cost basis in computing realized gains or losses, which are
reported in other income and expense. Declines in value that are judged to be
other than temporary are reported in other income and expense.
Revenue Recognition
Revenues are recorded as services are performed. Investment banking revenue
includes gains, losses, and fees, net of syndicate expenses, arising from
offerings in which Bauer acts as an agent. Revenues from investment banking
services include warrants that are received upon the execution of an agreement.
Bauer receives additional compensation in cash and warrants upon the sale of the
company stock.
Foreign Currency
Bauer's foreign subsidiaries have the U.S. dollar designated as their functional
currency. Financial statements of these foreign subsidiaries are remeasured to
U.S. dollars for consolidation purposes using current rates of exchange for
monetary assets and liabilities and historical rates of exchange for nonmonetary
assets and related elements of expense. Revenue and other expense elements are
remeasured at rates that approximate the rates in effect on the transaction
dates. Remeasurement gains and losses are included in other income and expense.
Long-lived Assets
Property and equipment are stated at cost less accumulated depreciation. Major
renewals and improvements are capitalized; minor replacements, maintenance and
repairs are charged to current operations. Depreciation is computed by applying
the straight-line method over the estimated useful lives of each asset. Bauer
performs reviews for the impairment of long-lived assets whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable.
Income Taxes
The asset and liability approach is used to account for income taxes by
recognizing deferred tax assets and liabilities for the expected future tax
consequences of temporary differences between the carrying amounts and the tax
bases of assets and liabilities. Bauer records a valuation allowance to reduce
the deferred tax assets to the amount that is more likely than not to be
realized.
Earnings Per Common Share
Basic and diluted net loss per share excludes dilution and is computed by
dividing net loss by the weighted average number of common shares outstanding
for the period presented
Recent Accounting Pronouncements
Bauer does not expect the adoption of recently issued accounting pronouncements
to have a significant impact on the Bauer's results of operations, financial
position or cash flows.
Note 2 - REVERSE MERGER
On October 5, 2001, Bauer entered into an Exchange Agreement with Finder's.
In December 2001, the Exchange Agreement became effective (the Exchange). Under
the Exchange, Bauer became a wholly owned subsidiary of Finder's, with Finder's
changing its name to Bauer. Pursuant to the Exchange, all of the outstanding
common shares of Finder's were exchanged for 4,064,206 shares of Bauer. The
transaction was regarded as a reverse merger whereby Bauer was considered to be
the accounting acquirer as it retained control of Finder's after the Exchange.
Certain shareholders of Finder's agreed to cancel 10,000 shares of redeemable
preferred stock in connection with the Exchange. Bauer also paid $300,000 in
connection with this transaction. The fee is included in other general and
administrative expense.
Since Finder's balance sheet is insignificant, a pro-forma consolidated balance
sheet is not presented here.
NOTE 3 - FOREIGN TAX REFUND CLAIMS
Bauer has recorded a claim for amounts paid for value added taxes on goods and
services due to its current losses.
NOTE 4 - PROPERTY AND EQUIPMENT
Property and equipment consisted of the following at December 31:
2000
------------
Office equipment $ 32,018
Less: Accumulated depreciation 10,673
------------
$ 21,345
============
Depreciation expense totaled $10,673 for the period ended December 31, 2001.
NOTE 5 - INCOME TAXES
For the period from inception through December 31, 2001, Bauer has incurred a
net loss and, therefore, has no tax liability. The net deferred tax asset
generated by the loss carry-forward has been fully reserved. The cumulative net
operating loss carry-forward is approximately $3,500,000 at December 31, 2001,
and will expire in the year 2021.
Deferred income taxes consist of the following at December 31,:
2001
----------------
Long-term:
Deferred tax assets $ 1,190,000
Valuation allowance (1,190,000)
----------------
$ -
================
NOTE 6 - SHAREHOLDER ADVANCES
Bauer has received advances from its majority shareholder totaling $27,135 as of
December 31, 2001. The advances are payable upon demand.
NOTE 7 - NOTE PAYABLE
Bauer has a note payable with a financial institution for $300,000. The note is
secured by private assets of officers and directors. Principal and interest are
due upon demand and bear interest at 3.875%.
NOTE 8 - NOTES PAYABLE - RELATED PARTIES
Notes payable - related parties consists of the following at December 31:
2001
-----------
Promissory note to an officer and majority shareholder, unsecured, principal and
interest due upon demand, bearing interest at 8%
$ 180,000
Promissory note to an entity of an officer and majority shareholder, unsecured,
principal and interest due upon demand, bearing interest at 8%
140,000
Promissory note to a Director and shareholder, unsecured, principal and interest
due upon demand, bearing interest at 12%
150,000
Promissory note to a Director and shareholder, unsecured, principal and interest
due upon demand, bearing interest at 10%
100,000
Promissory note to a Director and shareholder, unsecured, principal and interest
due upon demand, bearing interest at 10%
55,500
Promissory note to a Director and shareholder, unsecured, principal and interest
due upon demand, bearing interest at 10%
37,000
Promissory note to an officer and shareholder, secured by 300,000 shares of
Bauer common stock, principal due February 4, 2002, including a fixed interest
payment of $4,000
44,000
-----------
$ 706,500
===========
NOTE 9 - SHAREHOLDERS EQUITY
Common Stock:
Bauer is authorized to issue 200,000,000 common shares of stock at a par value
of $0.001 per share and 25,000,000 shares of $.001 par value preferred stock.
In March 2001, Bauer issued 28,600,000 shares of common stock to its founders
for services valued at $28,600 or the fair value of the services provided.
In April 2000, Bauer issued 900,000 shares for legal and consulting services
valued at $9,000 or the fair value of the services provided.
Between July and November 2001, Bauer issued 1,098,800 shares of common stock
for cash of $669,100.
In connection with the reverse merger (see Note 2), Bauer issued 4,064,206
shares of common stock.
In December 2001, Bauer issued 5,000,000 shares for consulting services valued
at $2,100,000 or the fair value of the services provided.
NOTE 10 - COMMITMENTS
Bauer leases office facilities under non-cancelable operating leases with terms
up to two years. Rent expense was $227,316 for the period ended December 31,
2001.
Bauer's minimum rental commitments under non-cancelable operating leases at
December 31, 2001 were approximately $57,200 in 2002, and $1,200 in 2003.
Effective April 2, 2001, Bauer entered into an employment agreement with Ronald
J. Bauer, its Chief Executive Officer, for two years at an annual salary of
$174,000 per year. In addition, Mr. Bauer receives $4,900 per month for a
residence in London as well as $4,900 per month for a car allowance, insurance
and gas. The agreement contains a severance clause for early termination in
which case Mr. Bauer will receive all remaining amounts due under the employment
agreement. Minimum amounts due under this employment agreement as $291,600 in
2002 and $72,900 in 2003.
NOTE 11 - SUBSEQUENT EVENT
In January 2002, Bauer and one of its wholly-owned subsidiaries entered into a
Share and Asset Purchase Agreement to acquire the Windjammer Resort & Spa in St.
Lucia, British West Indies. The acquisition price is $30,000,000 and is
comprised of $18 million in cash and $12,000,000 in the form of a convertible
debenture bearing interest at 8% per year which is convertible into Bauer's
common stock at $1.80 per share based on specified criteria in the agreement. In
connection with this agreement, Bauer has made non-refundable payments of
$200,000 towards the purchase price and owes $17.8 million by May 1, 2002,
unless Bauer is granted an extension. Bauer is working to obtain bank financing
to close this transaction and is also trying to get an extension in the event it
is unable to obtain financing by May 1, 2002. In the event Bauer closes this
transaction by obtaining the required financing, Bauer will receive a 39%
interest in net profits commencing January 31, 2002 through the closing date.
In March 2002, Bauer entered into a loan agreement with Ocean Strategic Holdings
Ltd. and Turbo International Ltd. whereby Bauer receives a 90 day loan of
$500,000 based on the following: (1) $150,000 upon execution and delivery of the
loan agreement, less $10,000 to be paid to the lenders' attorneys; (2) $50,000
upon the lenders' and/or Bauer's receipt of all of the transaction documents
duly executed and delivered pursuant to the loan agreement, less $5,000 to be
paid to the lenders' attorneys; (3) $100,000 upon Bauer's filing of its annual
report on Form 10-K for the year ended December 31, 2001 and amendment to its
current report on Form 8-K dated December 5, 2001 containing all of the
financial statements to be filed in connection there with, less any expenses to
be paid to lenders' attorneys; and (4) $200,000 upon the lenders receipt of a
copy of a written loan commitment to the Company from a reputable lending
institution approved by the lenders, which approval shall not be unreasonably
withheld, for no less than $18,000,000, less $5,000 to be paid to lenders'
attorneys. Bauer has received $185,000 in connection with the loan as of the
date of this report, of which a non-refundable payment of $100,000 was made in
connection with the Share and Asset Purchase Agreement involving the Windjammer
Resort & Spa. In connection with the loan agreement, the lenders received a 10%
interest in the outstanding stock of The Bauer Windjammer Resort and Spa
(Bahamas) Ltd., a wholly-owned subsidiary of Bauer Capital Management, Limited
which is a wholly-owned subsidiary of Bauer. In addition, the lenders received
an aggregate of three-year redeemable warrants to purchase 3,000,000 shares,
subject to adjustment as provided in the agreement, at an exercise price of $.20
per share. Ronald J. Bauer, chief executive officer, pledged 17,312,500 shares
of Bauer common stock held in the name of Fleming Financial Holdings, Ltd.
pursuant to a pledge and security agreement. In the event the loan is not repaid
in its entirety within 120 days from the date the loan agreement was executed,
the loans shall automatically convert into 50,000,000 shares of Bauer common
stock resulting in a change of control of Bauer. The lenders have the right to
loan up to $500,000 in four separate transactions under substantially the same
terms and conditions as the loan agreement. In addition, the lenders have a
first right of refusal to provide future financing to Bauer.