-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GpIlapsaLvy6qyZ26kdPwSfQBL6RDElTDrpin7m2eCx5KFn9ENetEDXNukT8AhK0 5/6S+XOqkxYy/Tvk+uYYBQ== /in/edgar/work/0001015402-00-003423/0001015402-00-003423.txt : 20001121 0001015402-00-003423.hdr.sgml : 20001121 ACCESSION NUMBER: 0001015402-00-003423 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001120 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BERENS INDUSTRIES INC CENTRAL INDEX KEY: 0000768216 STANDARD INDUSTRIAL CLASSIFICATION: [7389 ] IRS NUMBER: 870565948 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-22711 FILM NUMBER: 773701 BUSINESS ADDRESS: STREET 1: 701 NORTH POST OAK ROAD STREET 2: SUITE 350 CITY: HOUSTON STATE: TX ZIP: 77024 BUSINESS PHONE: 7136827400 MAIL ADDRESS: STREET 1: 5525 S 900 EAST STREET 2: SUITE #10 CITY: SALT LAKE CITY STATE: UT ZIP: 84117 FORMER COMPANY: FORMER CONFORMED NAME: NATIONAL AIR CORP DATE OF NAME CHANGE: 19970521 10QSB 1 0001.txt U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB _______________________________________________________________________________ [ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2000 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 BERENS INDUSTRIES, INC. (Exact name of registrant as specified in its charter) Commission file number: 0-22711 Nevada 87-05065948 ------ ----------- (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 701 N. Post Oak Road, Suite 350, Houston, Texas 77024 - --------------------------------------------------- ----- (Address of Principal Executive Office) (Zip Code) (713) 682-7400 -------------- (Registrant's Telephone Number, Including Area Code) Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] As of September 30, 2000 registrant had 20,901,380 shares of Common Stock outstanding. PART I Item 1. Financial Statements BERENS INDUSTRIES, INC. __________ UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 (UNAUDITED) BERENS INDUSTRIES, INC. TABLE OF CONTENTS __________ PAGE Unaudited Consolidated Condensed Financial Statements: Consolidated Condensed Balance Sheet as of September 30, 2000 and December 31, 1999 F-1 Unaudited Consolidated Condensed Statement of Operations for the three months ended September 30, 2000 and 1999, for the nine months ended September 30, 2000, and for the period from inception, February 26, 1999, to September 30, 1999 F-2 Unaudited Consolidated Condensed Statement of Stockholders' Equity for the nine months ended September 30, 2000 F-3 Unaudited Consolidated Condensed Statement of Cash Flows for the nine months ended September 30, 2000, and for the period from inception, February 26, 1999, to September 30, 1999 F-4 Selected Notes to Unaudited Consolidated Condensed Financial Statements F-5
BERENS INDUSTRIES, INC. CONSOLIDATED CONDENSED BALANCE SHEET __________ (UNAUDITED) SEPTEMBER 30, DECEMBER 31, 2000 1999 ASSETS (UNAUDITED) NOTE ------ -------------- ------------ Current assets: Cash and cash equivalents $ 19,600 $ 13,316 Marketable equity securities 92,125 - Accounts receivable, trade 175,608 1,989 Other receivables 21,331 - Prepaid license fee - 69,300 -------------- ------------ Total current assets 308,664 84,605 Property and equipment, net of accumulated depreciation of $6,210 and $1,618 at September 30, 2000 and December 31, 1999, respectively 70,263 6,022 Loan costs, net 513,490 - Other assets - 1,259 -------------- ------------ Total assets $ 892,417 $ 91,886 ============== ============ LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) - ---------------------------------------------- Current liabilities: Note payable to bank $ 250,000 $ 150,000 Accounts payable 173,271 18,025 Accrued liabilities 79,912 17,863 -------------- ------------ Total current liabilities 503,183 185,888 -------------- ------------ Commitment and contingencies Stockholders' equity (deficit): Common stock, $.001 par value, 20,000,000 shares authorized, 20,901,380 and 18,108,500 shares issued and outstanding at September 30, 2000 and December 31, 1999, respectively 20,901 18,108 Additional paid-in capital 11,481,145 9,258,653 Receivables from stockholders (2,700,000) (2,948,775) Losses accumulated during the development stage (8,412,812) (6,421,988) -------------- ------------ Total stockholders' equity (deficit) 389,234 (94,002) -------------- ------------ Total liabilities and stockholders' equity (deficit) $ 892,417 $ 91,886 ============== ============
Note: The balance sheet at December 31, 1999 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. See accompanying notes. F-1
BERENS INDUSTRIES, INC. UNAUDITED CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS ___________ (UNAUDITED) INCEPTION, THREE MONTHS ENDED NINE MONTHS FEBRUARY 26, ------------------------------ ENDED 1999, TO SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, 2000 1999 2000 1999 --------------- --------------- --------------- -------------- Service revenue $ 184,720 $ - $ 299,879 $ - Cost of services 167,473 - 295,266 - --------------- --------------- --------------- -------------- Gross margin 17,247 - 4,613 - Selling, general and administrative expenses 241,664 165,423 733,853 310,921 --------------- --------------- --------------- -------------- Loss from operations (224,417) (165,423) (729,240) (310,921) --------------- --------------- --------------- -------------- Other income (expense): Other income 1,132 - 3,487 - Unrealized loss on market- able equity securities (131,420) - (131,420) - Interest expense (361,466) - (1,133,651) - --------------- --------------- --------------- -------------- Other expense, net (491,754) - (1,261,584) - --------------- --------------- --------------- -------------- Net loss $ (716,171) $ (165,423) (1,990,824) $ (310,921) =============== =============== =============== ============== Basic and dilutive net loss per common share $ (0.03) $ (0.04) $ (0.10) $ (0.14) =============== =============== =============== ============== Weighted average shares out- standing 20,901,380 4,500,000 20,517,575 2,212,195 =============== =============== =============== ==============
See accompanying notes. F-2
BERENS INDUSTRIES, INC. UNAUDITED CONSOLIDATED CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 ___________ (UNAUDITED) LOSSES ACCUMULATED COMMON STOCK ADDITIONAL RECEIVABLE DURING THE ------------------------- PAID-IN FROM DEVELOPMENT SHARES AMOUNT CAPITAL STOCKHOLDERS STAGE TOTAL ------------ ----------- ----------- -------------- ------------ ------------ Balance at December 31, 1999 18,108,500 $ 18,108 $ 9,258,653 $ (2,948,775) $(6,421,988) $ (94,002) Proceeds from private placements of common stock, net of offering costs of $63,310 759,280 759 438,926 - - 439,685 Common stock issued as compensation to consultants 33,600 34 33,566 - - 33,600 Receipt of cash from stockholder under loan commitment - - - 248,775 - 248,775 Common stock issued to stockholders for loan guarantees 2,000,000 2,000 1,748,000 - - 1,750,000 Net loss - - - - (1,990,824) (1,990,824) ------------ ----------- ----------- -------------- ------------ ------------ Balance at September 30, 2000 20,901,380 $ 20,901 $11,479,145 $ (2,700,000) $(8,412,812) $ 387,234 ============ =========== =========== ============== ============ ============
See accompanying notes. F-3 BERENS INDUSTRIES, INC. UNAUDITED CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS ___________ (UNAUDITED) INCEPTION, NINE MONTHS FEBRUARY 26, ENDED 1999, TO SEPTEMBER 30, SEPTEMBER 30, 2000 1999 --------------- -------------- Cash flows from operating activities: Net loss $ (1,990,824) $ (310,921) Adjustments to reconcile net loss to net cash used in operating activities 1,598,576 110,561 --------------- -------------- Net cash used in operating activities (392,248) (200,360) --------------- -------------- Cash flows from investing activities: Purchase of marketable equity securities (223,545) - Purchase of computers and equipment (68,833) (640) Collection of loan to stockholder (48,775) - --------------- -------------- Net cash used in investing activities (341,153) (640) --------------- -------------- Cash flows from financing activities: Proceeds from note payable to bank 100,000 - Net proceeds from sale of common stock 439,685 201,000 Proceeds from subscriptions receivable from stockholder 200,000 - --------------- -------------- Net cash provided by financing activities 739,685 201,000 --------------- -------------- Net increase in cash and cash equivalents 6,284 - Cash and cash equivalents at beginning of period 13,316 - --------------- -------------- Cash and cash equivalents at end of period $ 19,600 $ - =============== ============== See accompanying notes. F-4 BERENS INDUSTRIES, INC. SELECTED NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS ___________ (UNAUDITED) 1. BASIS OF PRESENTATION --------------------- The accompanying unaudited interim financial statements have been prepared in accordance with generally accepted accounting principles and the rules of the U.S. Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto contained in the Company's Annual Report of Form 10-KSB for the year ended December 31, 1999. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for the most recent fiscal year ended December 31, 1999, as reported in the Form 10-KSB, have been omitted. 2. GENERAL ------- Effective June 15, 1999, Berens Industries, Inc. acquired National Air Corporation (together the "Company") in a recapitalization transaction accounted for similar to a reverse acquisition. Berens Industries, Inc. is currently involved in the development of an online auction site for sale of exclusive paintings and other art works. During the second quarter of 2000, the Company generated significant revenue from its operations and transitioned from a development stage enterprise to an operating company. Prior to the second quarter of 2000, the Company reported as a development stage enterprise because, since its inception, substantially all its efforts had been devoted to Web site development and fund raising activities. Continued F-5 Continued BERENS INDUSTRIES, INC. SELECTED NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS, CONTINUED ___________ (UNAUDITED) 3. COMPREHENSIVE INCOME -------------------- The Company has adopted Statement of Financial Accounting Standards ("SFAS") No. 130, Reporting Comprehensive Income, which requires a company to display an amount representing comprehensive income as part of the Company's basic financial statements. Comprehensive income includes such items as unrealized gains or losses on certain investment securities and certain foreign currency translation adjustments. The Company's financial statements include none of the additional elements that affect comprehensive income. Accordingly, comprehensive income and net income are identical. 4. ESTIMATES --------- The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets or liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 5. NOTE PAYABLE TO BANK -------------------- Effective July 1, 2000 the Company's revolving line of credit with a bank was extended for six months to December 31, 2000. The note bears interest at the bank's prime rate (9.0% at September 30, 2000) plus 2.0% per year and is collateralized by the guarantees of certain primary stockholders/officers of the Company. In order to obtain the continued guarantee of the stockholders/officers of the Company, the Company issued such guarantors a total of 1,000,000 shares of the Company's common stock at July 1, 2000. The value of such shares was $0.875 per share based upon the quoted market price at the date of the guarantee. The resulting $875,000 loan cost is shown as an asset and is being amortized, using the interest method, through December 31, 2000. The remaining unamortized loan cost of $513,490 at September 30, 2000 is presented in non-current assets in the accompanying unaudited consolidated condensed balance sheet. Continued F-6 BERENS INDUSTRIES, INC. SELECTED NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS, CONTINUED ___________ (UNAUDITED) 6. INCOME TAX ---------- The difference between the Federal statutory income tax rate and the Company's effective income tax rate is primarily attributable to increases in valuation allowances for deferred tax assets relating to net operating losses. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS This Management's Discussion and Analysis as of September 30, 2000 and for the three and nine-month periods ended September 30, 2000 and 1999 should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto set forth in Item 1 of this report. The information in this discussion 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. Such statements are based upon current expectations that involve risks and uncertainties. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. For example, words such as, "may," "will," "should," "estimates," "predicts," "potential," "continue," "strategy," "believes," "anticipates," "plans," "expects," "intends," and similar expressions are intended to identify forward-looking statements. Our actual results and the timing of certain events may differ significantly from the results discussed in the forward-looking statement. Factors that might cause or contribute to such a discrepancy include, but are not limited to the risks discussed in our other SEC filings, including those in our annual report on Form 10-KSB for the year ended December 31, 1999. These forward-looking statements speak only as of the date hereof. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. GENERAL We are a Nevada corporation involved in the development of an online auction site for exclusive paintings and other art works. We are considered a development stage enterprise because we have not yet generated significant revenue from our primary business operations. Since inception, we have devoted substantially all of our efforts to website development activities and to the search for sources of capital to fund our efforts. On June 15, 1999, National Air Corporation acquired us in a recapitalization transaction accounted for similar to a reverse acquisition, except that no goodwill was recorded. National Air Corporation was the "acquired" company in the transaction, but remains the surviving legal entity. Prior to the acquisition, National Air Corporation was a non-operating public shell corporation with no significant assets. Accordingly, the transaction was treated as an issuance of stock by us for National Air Corporation's net monetary assets, accompanied by a recapitalization. In connection with this transaction, we issued 3,755,745 shares of common stock in exchange for all outstanding shares of National Air Corporation. Since this transaction was, in substance, a recapitalization of and not a business combination, proforma information is not presented and a valuation of our company was not performed. During the three-month period ended September 30, 2000, we generated $184,720 in revenue from our operations, however, we may not generate significant revenue during the remainder of 2000 because we plan to use substantially all our resources for further development of our markets and for further improvements to our website operations. We have a limited operating history on which to base an evaluation of our business and prospects. Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stages of development, particularly companies in new and rapidly evolving markets such as online commerce. We will encounter various risks in implementing and executing our business strategy. We can provide no assurance that we will be successful in addressing such risks, and the failure to do so could have a material adverse effect on our business. RESULTS OF OPERATIONS During the nine months ended September 30, 2000, we generated service revenue of $299,879 from website hosting activities and made the transition from a development stage enterprise to an operating company. Following is a description of the results of our operations. THREE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO THE THREE MONTHS ENDED - -------------------------------------------------------------------------------- SEPTEMBER 30, 1999 - -------------------- During the three months ended September 30, 2000, we began generating revenues from website hosting activities and those revenues account for the entire increase of $184,720 in the three months ended September 30, 2000 as compared to the three months ended September 30, 1999. Selling, general and administrative expenses increased by $76,241 in the three months ended September 30, 2000 as compared to the three months ended September 30, 1999. This increase was due to increases in staff, reporting costs, telephone and utilities costs, and a significant overall increase in corporate activity. Interest expense was $366,466 during the three months ended September 30, 2000, as compared to zero for the three months ended September 30, 1999. The substantial increase was due to the use of debt financing in the third quarter of 2000 that was not used in 1999. The Company issued 1,000,000 shares of its common stock to officers/stockholders of the Company for their guarantees of the Company's bank line of credit. The value of such shares is being amortized as interest expense over the term of the line of credit and such amortization accounts for the increase in interest expense. NINE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO THE NINE MONTHS ENDED SEPTEMBER - -------------------------------------------------------------------------------- 30, 1999 - --------- During the nine months ended September 30, 2000, we began generating revenues from website hosting activities and those revenues account for the entire increase of $299,879 in the nine months ended September 30, 2000 as compared to the nine months ended September 30, 1999. Selling, general and administrative expenses increased by $422,932 in the nine months ended September 30, 2000 as compared to the nine months ended September 30, 1999. This increase was due to increases in staff, moving to larger quarters, lease of additional computer services (bandwidth), reporting costs, telephone and utilities costs and a significant overall increase in corporate activity. Interest expense was $1,133,651 during the nine months ended September 30, 2000, as compared to zero for the nine months ended September 30, 1999. The substantial increase was due to the use of debt financing in 2000 that was not used in 1999. The Company issued 2,000,000 shares of its common stock to officers/stockholders of the Company during 2000 for their guarantees of the Company's bank line of credit. The value of such shares is being amortized as interest expense over the term of the line of credit and such amortization accounts for the increase in interest expense. PLAN OF OPERATIONS, LIQUIDITY AND CAPITAL RESOURCES As of September 30, 2000, we had an accumulated deficit of $8,412,812 incurred entirely in 1999 and the first nine months of 2000 and funded by paid-in capital, debt, and use of our common stock in acquisitions. At September 30, 2000, we also had cash and cash equivalents of $19,600. We do not expect to make any major capital expenditures in the foreseeable future, but we do expect that operating losses will continue until such time as website operations generate sufficient revenues to fund our continuing operations, and we cannot be sure when or if that will occur. We have financed our operations mainly through the sale of our common stock and we have been entirely dependent on outside sources of financing for continuation of our operations. During the nine months ended September 30, 2000 we raised approximately $439,685 in net proceeds from a private placement of our common stock. Our acquisition of Artmovement.com for $8,263,157 on December 31, 1999 was designed to give us a platform for better market penetration and access to additional capital. As part of our acquisition of Artmovement, we obtained a $3,000,000 non-recourse receivable owed to Artmovement, of which $100,000 was received in 1999 and $200,000 in the first half of 2000. As of September 30, the original debtor terminated the remaining portion of the receivable. During the quarter, the majority shareholder of the Company agreed to assume the obligations of the debtor for the remaining $2,700,000 subscription receivable for an additional period of one year to provide the funding. Based on our current plan of operation we anticipate that our monthly operating expenditures will increase and will average approximately $63,000 per month for the next twelve months. Operating expenditures include administrative expenses, web site development, and professional fees. These amounts are merely estimates, and we can provide no assurance that unexpected expenses will not shorten the period of time within which our funds may be utilized. At the present time, we do not have sufficient funding to continue operations through the remainder of fiscal year 2000, and we are in the process of seeking additional funding, but have no commitments for any funding at this time. If we are not able to raise additional funding, we may have to limit our operations to an extent that we cannot presently determine. The effect on our business may include the sale of our assets, the curtailment of business operations, or the cessation of business operations. Currently, we do not generate significant revenues from the services that we provide and do not expect to generate significant revenues for the foreseeable future. Although we have no commitments for capital, we may raise additional funds through: - - public offerings of equity securities or convertible debt, - - private offerings of equity or debt securities, or - - other sources. Stockholders should assume that any additional funding that we obtain would cause substantial dilution to current stockholders. In addition, we may be unable to raise additional funds on favorable terms, if at all. Our capital requirements will depend on numerous factors, including our website development and marketing efforts and the economic impact of competing websites. Our ability to achieve profitability will depend on our ability to successfully make the transformation from a development stage enterprise to a commercially viable Internet business. We can make no assurance that we will be able to successfully make that transition. The report from our independent accountants, included in our Annual Report on Form 10-KSB, includes an explanatory paragraph, which describes substantial doubt concerning our ability to continue as a going concern, without continuing additional contributions to capital. We may incur losses for the foreseeable future due to the significant costs associated with website development and marketing activities which will be necessary for successful commercialization of Artmovement.com. See "Financial Statements - Report of Independent Accountants" included in our annual report on Form 10-KSB for the year ended December 31, 1999. PART II Pursuant to the Instructions to Part II of the Form 10-QSB, Items 1, and 3-5 are omitted. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS The following information sets forth certain information for all securities we issued during the quarter ended September 30, 2000, without registration under the Act, excluding any information "previously reported" as defined in Rule 12b-2 of the Securities Exchange Act of 1934. There were no underwriters in any of these transactions, nor were any sales commissions paid thereon. During the quarter ended September 30, 2000, we issued one of our customers an option to purchase 1,000,000 shares of our common stock at an exercise price of $.25 per share, in connection with a strategic business venture. We believe this transaction was exempt from registration pursuant to Section 4(2) of the Act, as the issuance was to an accredited investor. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) The following exhibits are to be filed as part of this Form 10-QSB: EXHIBIT NO. IDENTIFICATION OF EXHIBIT Exhibit 27.1 Financial Data Schedule ____________________ (b) Reports on Form 8-K. None. SIGNATURES ---------- In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the undersigned, thereunto duly authorized. Berens Industries, Inc. Date: November 20, 2000 /S/ Marc I. Berens --------------------------------------- Marc I. Berens, Chief Executive Officer and principal financial officer EX-27.1 2 0002.txt
5 1 9-MOS DEC-31-2000 JAN-01-2000 SEP-30-2000 19,600 92,125 175,608 0 0 308,664 76,473 6,210 892,417 503,183 0 0 0 20,901 368,333 892,417 299,879 299,879 295,266 1,160,539 0 0 (1,133,651) (1,990,824) 0 (1,990,824) 0 0 0 (1,990,824) (0.10) (0.10)
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