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 March 31, 2003
OR
[ ]TRANSITION REPORT UNDER SECTION 13 OF 15(D) OF THE EXCHANGE ACT OF 1934
From the transition period from to .
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Commission File Number 0-27323
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HARBOUR FRONT HOLDINGS, 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 of incorporation or organization)
(IRS Employer Identification No.)
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
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(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 June 19, 2003, 196,533,894 shares of Common Stock of the issuer were
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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
HARBOUR FRONT HOLDINGS, INC.
(FORMERLY THE BAUER PARTNERSHIP, INC.)
CONSOLIDATED BALANCE SHEET
MARCH 31, 2003
ASSETS
Assets $ -
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LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 235,434
Accrued expenses 113,139
Convertible note payable 60,000
Notes payable - related parties 230,500
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Total current liabilities 639,073
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Commitments
STOCKHOLDERS' 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, 143,533,894 shares issued and outstanding 143,534
Additional paid in capital 7,523,492
Accumulated deficit (8,306,099)
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Total Stockholders' Deficit (639,073)
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TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ -
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HARBOUR FRONT HOLDINGS, INC.
(FORMERLY THE BAUER PARTNERSHIP, INC.)
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended
March 31,
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2003 2002
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As restated
Revenues $ - $ -
Cost and Expenses:
Salaries and benefits 39,600 73,000
Other general and administrative 668,863 115,539
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708,483 188,539
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Loss from operations (708,483) (188,539)
Interest expense (4,927) (43,088)
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Net loss $ (713,410) $ (231,627)
============ ============
Net loss per share:
Net loss basic and diluted $ (0.01) $ (0.01)
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Weighted average shares outstanding:
Basic and diluted 74,582,462 40,320,653
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HARBOUR FRONT HOLDINGS, INC.
(FORMERLY THE BAUER PARTNERSHIP, INC.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended
March 31,
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2003 2002
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CASH FLOWS FROM OPERATING ACTIVITIES As restated
Net loss $ (713,410) $(231,627)
Adjustments to reconcile net deficit to cash used by
operating activities:
Expenses paid by shareholder 9,400 -
Common stock for services 441,083 -
Net change in:
Accounts receivable - 5,845
Investments - (44,694)
Accounts payable and accrued expenses 62,927 (567,406)
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CASH FLOWS PROVIDED BY (USED IN)
OPERATING ACTIVITIES (200,000) (837,882)
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CASH FLOWS FROM FINANCING ACTIVITIES
Sale of common stock 200,000 50,000
Proceeds from notes payable - 784,000
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CASH FLOWS PROVIDED BY FINANCING
ACTIVITIES - 834,000
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NET DECREASE IN CASH - (3,882)
Cash, beginning of period - 3,882
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Cash, end of period $ - $ -
============= ==========
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid $ - $ -
Income taxes paid $ - $ -
NONCASH TRANSACTIONS:
Common stock issued for debt $ 442,500 $ 522,500
Debt forgiven by shareholder recorded as contributed
capital $ 350,052 $ -
HARBOUR FRONT HOLDINGS, INC.
(FORMERLY THE BAUER PARTNERSHIP, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1: PRESENTATION
The consolidated balance sheet of the Company as of March 31, 2003, the related
consolidated statements of operations for the three months ended March 31, 2003
and 2002 and the statements of cash flows for the three months ended March 31,
2003 and 2002 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
months ended March 31, 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 The Bauer Partnership, Inc.'s December 31, 2002 Form 10-KSB.
NOTE 2 - RESTATEMENT
In December 2002, management determined it had erroneously recorded a gain on
the sale of its subsidiary. The gain was reversed and the net loss for the
three months ended March 31, 2002 was restated to $231,627 from $71,703. The
deferred gain of 159,924 has been included in accounts payable.
NOTE 3 - COMMON STOCK
In March 2003, Harbour converted $442,500 of notes payable to a former director
and officer and $57,500 of advances to a former director and officer or
$500,000 into 27,500,000 shares of common stock.
In 2003 to date, Harbour issued 33,456,933 shares of common stock under various
agreements for consulting services.
In February 2003, Harbour sold 10,000,000 shares of common stock for $200,000.
In March 2003, Harbour issued 3,300,000 shares of its common stock to Ronald J.
Bauer, its former chief executive office for services performed.
The common shares outstanding after the above transactions are 143,533,894, not
including the 53,000,000 shares held in escrow securing the convertible note
payable.
During 2003, both the directors and the shareholders ratified the "2003 Stock
Option Plan". This plan has 18,000,000 shares of Harbour common stock reserved
for issuance. At March 31, 2003, no options have been granted pursuant to the
plan.
During 2003, a former director and officer converted advances of $350,052 into
a note payable bearing interest at 8% due in March 2004. In March 2003, the
former director and officer has forgiven the note payable which has been
recorded as a contribution to capital.
During 2003, all directors have resigned except for Ron Bauer. Harbour has
closed all of its bank accounts and is currently being funded by Mr. Ron Bauer.
Note 4- JUDGMENT
On March 5, 2003, a default judgment was entered against The Bauer Partnership,
Inc. in a Lawsuit styled as Wilkerson Consulting, Inc. vs. The Bauer
Partnership, Inc. in the District Court of Dallas County, Texas in the 192nd
Judicial District. In plaintiffs original petition, Wilkerson Consulting
alleged that it had assigned contracts to The Bauer Partnership, Inc. in
November 2001 relating to the purchase of properties in France and was entitled
to $31,000 and 571,429 shares of The Bauer Partnership, Inc. Wilkerson
Consulting received a default judgment in the amount of $1,745,287 plus
$5,000,000 in punitive damages. The Company only recently became aware of
the default judgment and the original petition that had been filed and is
currently consulting with counsel regarding the steps it will take. The Company
does not believe it was properly served and is contemplating filing a counter-
claim against Wilkerson Consulting and believes that the lawsuit was filed
fraudulently.
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 was 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. The Company has been
unsuccessful in implementing this strategy. 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.
Until recently, the Company had been seeking development and acquisition
opportunities in promising industries where it would utilize its securities to
acquire emerging businesses and/or companies with growth potential.
Revenues
The Company had no revenues for the three months ended March 31, 2003 and had no
revenues for the three months ended March 31, 2002.
Costs and Expenses
For the three months ended March 31, 2003, the Company had costs and expenses of
$708,483 consisting of salaries and benefits of $39,600 and other general and
administrative expenses of $668,883 which included payment of professional fees,
rent, travel and entertainment. Costs and expenses were $188,539 for
the three months ended March 31, 2002 consisting of salaries and benefits of
$73,000 and other general and administrative expenses of $115,539.
Loss from Operations
The Company had a loss from operations of $708,483, an increase of $519,944 or
276% compared to a loss from operations of $188,539 for the three months ended
March 31, 2002. The increase in loss from operations is due to the increase in
other general and administrative expenses.
Interest Expense
Interest expense decreased from $43,088 for the three months ended March 31,
2002 to $4,927 for the three months ended March 31, 2003.
Net Loss
Net loss increased $481,783, or 208% from $231,627 for the three months ended
March 31, 2002 to $713,410 for the three months ended March 31, 2003.
Net (Loss) Per Share
The Company had a net loss of $(0.01) per share for the three months ended March
31, 2003 and the three months ended March 31, 2002.
Liquidity and Capital Resources
For the three months ended March 31, 2003, the Company did not generate cash
flow from its operations. As a result, the Company requires 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.
In February 2003, the Company issued 10,000,000 shares of common stock for
$200,000. In March 2003, the Company converted $442,500 of notes payable and
$57,500 of advances from a former director and officer into 27,500,000 shares of
common stock. During 2003, a former director and officer converted advances of
$350,052 into a note payable bearing interest at 8% per annum due in March 2004.
In March 2003, the former director and officer forgave the note payable which
has been recorded as a contribution to capital. In March 2003, the Company
issued 3,300,000 shares of its common stock to Ronald J. Bauer, its chief
executive officer, in consideration for services performed. During the first
quarter of 2003, the Company issued 33,456,933 shares of its common stock under
various agreements for consulting services.
As of March 31, 2003, the Company had accounts payable of $235,434, accrued
expenses of $55,139, a convertible note payable of $60,000, and notes payable to
related parties of $230,500.
As of March 31, 2003, the Company had no cash and a working capital deficit of
$639,073
The Company is taking steps to raise equity capital or to borrow additional
funds. 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 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. The Company's bank accounts have been closed and all Company
expenses that have been paid have been paid by Ronald J. Bauer, the Company's
Chief Executive Officer.
The Company is currently seeking a merger, acquisition or stock sale. There is
no assurance that a merger, acquisition or stock sale will take place. In the
event that an agreement is reached, this will likely have a significant impact
on shareholders and they are likely to have their ownership significantly
diluted.
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
In January 2003, Zaven Yaralian filed suit against the Company, Ronald J. Bauer
and Jacques Fischer in the State of South Carolina, County of Beaufort, in the
Circuit Court, Case No. 03-CP-7-81. Zaven Yaralian entered into a consulting
agreement with the Company to serve as its President and executed a subscription
agreement for the purchase of 2,000,000 shares of common stock in installments
of $50,000 for 400,000 shares of common stock. Pursuant to the consulting
agreement, Mr. Yaralian was to receive $10,000 per month for the first three
months of the agreement and then receive $20,000 per month. The Company issued
Mr. Yaralian 400,000 shares in consideration for $50,000, and paid Mr. Yaralian
$10,000 for the first month of services to be preformed pursuant to the terms of
the consulting agreement. Mr. Yaralian's primary cause of action is breach of
contract and he is seeking damages pursuant to the consulting agreement. Due to
Mr. Yaralian's failure to provide services, the Company does not believe it has
any obligations and it is vigorously defending this claim.
In February 2003, a lawsuit for breach of contract for attorneys fees was filed
styled as Richard O. Weed vs. Harbour Front Holdings, Inc., The Bauer
Partnership, Inc., The Bauer Partnership, Ltd., Ronald J. Bauer, and DOES 1
through 25 in the Superior Court of the State of California in Orange County,
Case No. 03CC03810. Mr. Weed is seeking damages of $41,239.06, plus interest and
attorneys fees. The Company does not believe it owes Mr. Weed for services
performed in the amount of $41,239.06. The Company has retained counsel and is
vigorously defending this claim.
In February 2003, a lawsuit for damages based on fraud and securities violations
was filed styled as Richard O. Weed vs. Harbour Front Holdings, Inc., The Bauer
Partnership, Inc., The Bauer Partnership, Ltd., Ronald J. Bauer, David M. Loev,
F. Bryson Farrill, Jacques Fischer, Joseph T. Bauer, Ed Tobin, Geoffrey Button,
Kevin Wallace, Pacific Stock Transfer Company, Malone & Bailey, PLLC and DOES 1
through 25 in the Superior Court of the State of California in Orange County,
Case No. 0300003887. Mr. Weed is the owner of 150,000 shares of the Company's
common stock and he alleges that the market value of his shares has dropped
dramatically. Mr. Weed alleges a violation of Section 16(b) of the Securities
Exchange Act of 1934 seeking short-swing profits from Ronald J. Bauer. Mr. Weed
also seeks damages for a hot check in the amount of $4,310. Mr. Weed is seeking
$1,123,500 for his first cause of action, return of short swing profits for his
second cause of action, and $4,310 on his third cause of action. Mr. Weed is
also seeking prejudgment interest, costs and reasonable attorneys fees. The
Company has retained counsel and is vigorously defending these causes of action.
Mr. Weed received the 150,000 shares of stock in consideration for services
performed and the Company believes that it will settle this claim for a
substantially reduced amount.
On March 5, 2003, a default judgment was entered against The Bauer Partnership,
Inc. in a Lawsuit styled as Wilkerson Consulting, Inc. vs. The Bauer
Partnership, Inc. in the District Court of Dallas County, Texas in the 192nd
Judicial District. In plaintiffs original petition, Wilkerson Consulting
alleged that it had assigned contracts to The Bauer Partnership, Inc. in
November 2001 relating to the purchase of properties in France and was entitled
to $31,000 and 571,429 shares of The Bauer Partnership, Inc. Wilkerson
Consulting received a default judgment in the amount of $1,745,287 plus
$5,000,000 in punitive damages. The Company only recently became aware of
the default judgment and the original petition that had been filed and is
currently consulting with counsel regarding the steps it will take. The Company
does not believe it was properly served and is contemplating filing a counter-
claim against Wilkerson Consulting.
We are not involved in any other 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 2. Changes in Securities and Use of Proceeds
During the quarter ended March 31, 2003 we sold an aggregate of 10,000,000
shares in consideration for $200,000. 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
During the first quarter of 2003, all of the Company's directors and officers
have resigned with the exception of Ronald J. Bauer, our chief executive officer
and director.
The Company borrowed an aggregate of $240,000 from Ocean Strategic Holdings
Ltd., and Turbo International Ltd., of which $190,000 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 made
additional payments aggregating $100,000. 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 work with the Company to accept payment on the
amounts outstanding plus interest and penalties without declaring the loan in
default. If the Company fails to continue making payments 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
99.1 Certification of Financial Statements
b) Reports on Form 8-K
On March 27, 2003, the Registrant filed a report on Form 8-K relating to a
change in the Company's name from The Bauer Partnership, Inc. to Harbour Front
Holdings, Inc.
On March 10, 2003, the Registrant filed a report on Form 8-K updating and
correcting previous disclosures made by the Company via various press releases.
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.
HARBOUR FRONT HOLDINGS, INC.
Date: June 19, 2003
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 Harbour Front
Holdings, 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: June 19, 2003
/s/ Ronald J. Bauer
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Name: Ronald J. Bauer
Title: Chief Executive Officer and Principal Accounting Officer
Exhibit 99.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Harbour Front Holdings, Inc. on Form
10-QSB for the period ended March 31, 2003 as filed with the Securities and
Exchange Commission on the date hereof (the "Report"), the undersigned, in the
capacities and on the dates indicated below, hereby certifies pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that to the best of his knowledge:
1. The Report fully complies with the requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operation of the Company.
/s/ Ronald J. Bauer
Ronald J. Bauer, Chief Executive Officer and Principal Accounting Officer
Dated: June 19, 2003