SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[ X ]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2002
OR
[ ]TRANSITION REPORT UNDER SECTION 13 OF 15(d) OF THE EXCHANGE ACT OF 1934
From the transition period from ___________ to ____________.
Commission File Number 0-27323
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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 or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
300 Park Avenue, Suite 1700, New York, New York 10022
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(Address of principal executive offices)
(212) 572-6276
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(Issuer's telephone number)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) filed all reports
required to be filed by Section 13 or 15(d) of the Exchange Act during the past
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days:
Yes X No
As of November 14, 2002, 53,001,394 shares of Common Stock of the issuer were
outstanding.
THE BAUER PARTNERSHIP, INC.
FORM 10-QSB
INDEX
PART I
Item 1. Financial Statements F-3
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations F-7
Item 3. Evaluation of Disclosure Controls and Procedures
PART II
Item 1. Legal Proceedings F-8
Item 2. Changes in Securities and Use of Proceeds F-8
Item 5. Other Information F-8
Item 6. Exhibits and Reports on Form 8-K F-8
Signatures F-8
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
THE BAUER PARTNERSHIP, INC.
CONDENSED BALANCE SHEET
September 30,
2002
----------------
(Unaudited)
ASSETS
----------------
$ -
================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 21,213
Accrued interest 85,202
Convertible notes payable 474,908
Notes payable - related parties 698,000
----------------
----------------
Total current liabilities 1,279,323
----------------
Stockholders' equity (deficit):
Preferred stock, $.001 par value, 25,000,000 shares
authorized, none issued and outstanding -
Common stock, $.001 par value, 80,000,000 shares
authorized: 47,801,394 shares issued and outstanding: 47,801
Additional paid in capital 2,848,799
Accumulated deficit (4,175,923)
----------------
Total stockholders' equity (deficit) (1,279,323)
----------------
$ -
================
See accompanying notes to interim condensed
financial statements.
THE BAUER PARTNERSHIP, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2002 2001 2002 2001
--------------- ----------- ------------ -------------
Revenue, net $ - $ - $ - $ 127,323
General and Administrative Expenses:
Salaries and benefits 48,500 - 169,500 -
General and administrative 170,539 - 283,789 88,876
--------------- ------------ ------------ -------------
161,250 - 453,289 88,876
--------------- ------------ ------------ -------------
Income (loss) from operations (161,250) - (453,289) 38,447
Other (income) and expense
Interest and other expense, net 43,778 - 111,784 -
Gain on sale of subsidiary - - (159,924) -
--------------- ------------ ------------ -------------
43,778 - (48,140) -
--------------- ------------ ------------ -------------
--------------- ------------ ------------ -------------
Net loss $ (205,028) $ - $ (405,149) $ 38,447
=============== ============ ============ =============
Basic and diluted net loss per common
share $(0.005) $0.00 $(0.01) $0.00
=============== ============ ============ =============
Weighted average shares outstanding 42,282,713 30,278,878 43,195,787 20,702,550
=============== ============ ============ =============
See accompanying notes to interim condensed
financial statements.
THE BAUER PARTNERSHIP, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine months ended
September 30,
------------------------------
2002 2001
------------------------------
Cash flows from operating activities:
Net loss $ (405,149) $ -
Adjustments to reconcile net income to net cash
used in operating activities:
Gain on sale of subsidiary (159,924) -
Changes in operating assets and liabilities
Accounts receivable 5,845 -
Investments 33,806 (6,622)
Accounts payable and accrued expenses (582,866) -
--------------- ------------
Net cash used in operating activities (1,108,288) (6,622)
--------------- ------------
Cash flows from financing activities:
Sale of common stock 417,500 -
Proceeds from notes payable 686,906 -
--------------- ------------
1,104,406 -
--------------- ------------
Effect of exchange rate changes on cash - -
Net increase (decrease) in cash and cash equivalents (3,882) (6,622)
Cash and cash equivalents at beginning of period 3,882 6,662
--------------- ------------
Cash and cash equivalents at end of period $ - $ -
=============== ============
Cash paid for:
Interest $ - $ -
Non-cash Disclosure:
Conversion of notes payable to common stock $ 522,500 $ -
See accompanying notes to interim condensed
financial statements.
THE BAUER PARTNERSHIP, INC.
NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS
September 30, 2002
Note 1: PRESENTATION
The condensed consolidated balance sheet of the Company as of September 30,
2002, the related condensed consolidated statements of operations for the three
and nine months ended September 30, 2002 and 2001 and the statements of cash
flows for the nine months ended September 30, 2002 and 2001 included in the
condensed financial statements have been prepared by the Company without audit.
In the opinion of management, the accompanying condensed financial statements
include all adjustments (consisting of normal, recurring adjustments) necessary
to summarize fairly the Company's financial position and results of operations.
The results of operations for the three and nine months ended September 30, 2002
are not necessarily indicative of the results of operations for the full year or
any other interim period. The information included in this Form 10-QSB should be
read in conjunction with Management's Discussion and Analysis and Financial
Statements and notes thereto included in The Bauer Partnership, Inc.'s December
31, 2001 Form 10-KSB.
Note 2
In September 2002, the Company entered into a Settlement Agreement with Ocean
Strategic Holdings Ltd., and Turbo International Ltd. See Item 5 for more
information.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
This report contains forward looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended and Section 21E of the Securities
Exchange Act of 1934, as amended. The Company's actual results could differ
materially from those set forth on the forward looking statements as a result of
the risks set forth in the Company's filings with the Securities and Exchange
Commission, general economic conditions, and changes in the assumptions used in
making such forward looking statements.
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.
The Company is seeking development and acquisition opportunities in promising
industries where it may utilize its securities to acquire emerging businesses
and/or companies with growth potential.
The Company's management has worked diligently this past year in reorganizing
and restructuring its debt in an effort to reduce general and administrative
expenses by reducing its staff as well as its office space in an effort to
increase its potential for success in its business model.
Revenues
The Company had no revenues for the three months ended September 30, 2001 and
had revenues of $127,323 for the nine months ended September 30, 2001. Revenues
were from investment banking services. There were no revenues for the three and
nine months ended September 30, 2002.
General and Administrative Expenses
For the three months ended September 30, 2002, the Company's salaries and
benefits were $48,500 and its other general and administrative expenses were
$170,539. General and administrative expenses include payment of professional
fees, rent, travel and entertainment. The Company was formed in March 2001 and
had no operations for the corresponding periods in the prior year.
For the nine months ended September 30, 2002, the Company's salaries and
benefits were $169,500 and its other general and administrative expenses were
$283,789. General and administrative expenses include payment of professional
fees, issuance of stock to consultants, rent, travel and entertainment. For the
nine months ended September 30, 2001, the Company's general and administrative
expenses were $88,876 for professional fees and consulting fees.
Loss from Operations
The Company had a loss from operations of $161,250 for the three months ended
September 30, 2002. The Company had no income/loss from operations for the three
months ended September 30, 2001.
The Company had a loss from operations of $453,289 for the nine months ended
September 30, 2002 compared to net income of $38,447 for the corresponding
period in the prior year.
Net Income (Loss) Per Share
The Company had a net loss of $(205,028) and $(0.005) per share for the three
months ended September 30, 2002. The Company had no results per share for the
corresponding period in the prior year.
The Company had a net loss of $(405,149) and $(0.01) per share for the nine
months ended September 30, 2002. The Company had net income of $38,447 for the
nine months ended September 30, 2001 and $0.00 per share for the corresponding
period in the prior year.
Liquidity and Capital Resources
For the nine months ended September 30, 2002, the Company did not generate cash
flow from its operations which exceeded 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. During the first quarter of 2002, the Company
entered into an agreement to raise $500,000 based on certain conditions. The
Company sold 100,000 shares of common stock for proceeds of $50,000 in
connection with this agreement and another $200,000 came due for 400,000 shares
on May 15, 2002, which proceeds have not been received as of the date of this
report and are not expected to be received. In March 2002, the Company converted
$522,500 of notes payable into 1,741,667 shares of common stock. The Company
sold 800,000 shares of common stock for $130,000 during the 2nd quarter 2002.
The Company has outstanding loans of $1,172,908 from various individuals
including officers of the Company, an entity and a financial institution, which
amount includes interest. These loans bear interest ranging from 3.875% to 12%
and all of these amounts remain outstanding. In July 2002, the Company sold
5,000,000 shares of common stock for net proceeds of $237,500.
As of September 30, 2002, the Company had no cash and a working capital deficit
of $1,279,323.
The Company is taking steps to raise equity capital or to borrow additional
funds. The Company is currently in discussions with various groups regarding
financing. There can be no assurance that any new capital will 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.
ITEM 3. EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Based on the evaluation by Mr. Ronald J. Bauer, both the chief executive officer
and chief accounting officer of the Company, of the effectiveness of the
Company's disclosure controls and procedures conducted as of a date within 90
days of the filing date of this quarterly report, Mr. Bauer concluded that, as
of the evaluation date, (i) there were no significant deficiencies or material
weaknesses of the Company's disclosure controls and procedures, (ii) there were
no significant changes in the internal controls or in other factors that could
significantly affect internal controls subsequent to the evaluation date, and
(iii) no corrective actions were required to be taken.
PART II - OTHER INFORMATION
ITEM 1: Legal Proceedings
None
Item 2. Changes in Securities and Use of Proceeds
During the quarter ended September 30, 2002 we sold an aggregate of
5,000,000 shares to an individual in consideration for $237,500. We believe that
this transaction was exempt from registration pursuant to Section 4(2) of the
Securities Act as the recipient had sufficient knowledge and experience in
financial and business matters that it was able to evaluate the merits and risks
of an investment in the Company, and since the transaction was non-recurring and
privately negotiated.
Item 5. Other Information
In November 2002, the Company entered into an agreement with Tropical Resources
SA of Panama to develop and market a reforestation project. The Company has
formed a wholly-owned subsidiary, Bauer Panama Reforestation Corporation, to
manage the new development project and to market the forest land. Bauer Panama
is entitled to 20% of all sales originated through its introduction. The
reforestation project is expected to begin its marketing program in January
2003.
Management has discontinued its negotiations with lenders and the owners of the
Windjammer Resort & Spa.
The Company borrowed an aggregate of $240,000 from Ocean Strategic Holdings
Ltd., and Turbo International Ltd., of which $80,000 has been paid as set forth
below.
On September 6, 2002, the Company entered into a settlement agreement with Ocean
and Turbo which provided that the Company would pay $80,000 on or before August
30, 2002, $100,000 on or before September 30, 2002, and $70,000 on or before
October 30, 2002. The Company made the first payment of $80,000 and has failed
to make any additional payments. The settlement agreement provided for a seven
day cure period without penalty for the second payment with an additional seven
day cure period with a penalty in the amount of $10,000. The settlement
agreement provides that if the first and second payments are made and the third
payment is not made when due, then a penalty in the amount of $10,000 shall be
added to the principal of the third payment for each month, on a pro rata basis,
that the third payment is not paid in full. The unpaid principal sum and any
penalties due bear interest at a rate of twelve percent (12%) per annum. As the
Company has breached the settlement agreement due to its failure to make
payments, Ocean Strategic Holdings and Turbo International have the right to
declare the loan in default and then convert the loans into 50,000,000 shares of
common stock which would result in a change of control of the Company. Ocean and
Turbo have verbally agreed to accept a payment by the end of this month and that
they will continue to operate under the settlement agreement without declaring
the loan in default. If the Company fails to make a payment at the end of this
month satisfactory to Ocean and Turbo, it is likely that Ocean and Turbo will
declare the loan in default and that the Company's operations would be
discontinued and the Company's current management would be removed.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
10.1 Settlement Agreement with Ocean Strategic Holdings Ltd. and Turbo
International Ltd.
99.1 Certification of Financial Statements
b) Reports on Form 8-K
No reports were filed on Form 8-K during the quarter for which this
report is filed.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
THE BAUER PARTNERSHIP, INC.
Date: November 14, 2002 By: /s/ Ronald J. Bauer
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Ronald J. Bauer
CEO and Director
FORM OF CERTIFICATION
PURSUANT TO RULE 13a-14 AND 15d-14
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
CERTIFICATION
I, Ronald J. Bauer, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of The Bauer
Partnership, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. As the registrant's certifying officer, I am responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules
13a-14 and 15d-14) for the registrant and I have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to me by others within those entities, particularly
during the period in which this quarterly report is being prepared;
(b)evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days of the filing date of this quarterly
report (the "Evaluation Date"); and
(c)presented in this quarterly report my conclusions about the
effectiveness of the disclosure controls and procedures based on my evaluation
as of the Evaluation Date;
5. As the registrant's certifying officer, I have disclosed, based on my most
recent evaluation, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
functions):
(a)all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize, and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
(b)any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls.
6. As the registrant's certifying officer, I have indicated in this quarterly
report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of my most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: November 14, 2002 /s/ Ronald J. Bauer
Name: Ronald J. Bauer
Title: Chief Executive Officer and Principal
Accounting Officer