UNITED STATES
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 June 30, 2004
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______to________
Commission file number: O-50212
BAS CONSULTING, INC.
(Exact name of small business issuer as specified in its charter)
Nevada 81-0592184
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification Number)
5675B Baldwin Court
Norcross, GA 30071
(Address of principal executive offices)
770-378-4180
(Issuer's telephone number)
Check 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 [ ] 1No [X]
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 10.453,850 shares of Common Stock, as
of November 30, 2004.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [ X ]
------------------
1. Except that the Issuer did not file its Forms 10-QSB for quarters ended June
30, 2004 and September 30, 2004 until December 14, 2004.
BAS CONSULTING, INC.
INDEX
PART I.
FINANCIAL INFORMATION
Page
Number
PART I
Item 1 - Unaudited Condensed Financial Statements:
Condensed Balance Sheet as of June 30, 2004...................................3
Condensed Statements of Operations for the Six Months Ended June 30,
2004 and 2003 and the Cumulative Period from December 18, 2002
(inception) to June 30, 2004..................................................4
Condensed Statements of Operations for the Three Months Ended June 30,
2004 and 2003 and the Cumulative Period from December 18, 2002
(inception) to June 30, 2004..................................................5
Statements of Cash Flows for the Six Months Ended June 30, 2004 and 2003
and the Cumulative Period from December 18, 2002 (inception) to June
30, 2004......................................................................6
Statement of Stockholders' Deficit............................................7
Notes to Unaudited Condensed Financial Statements.............................8
Item 2. - Management's Discussion and Analysis or Plan of Operation..........16
Item 3 - Controls and Procedures.............................................20
PART II.
Other Information (Items 1-6)................................................20
2
BAS CONSULTING, INC.
Balance Sheet
June 30, 2004
(A Development Stage Company)
ASSETS
CURRENT ASSETS:
Cash $ -
-----------------
Total Current Assets -
-----------------
TOTAL ASSETS $ -
=================
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accrued expenses $ 22,000
-----------------
Total Current Liabilities 22,000
-----------------
STOCKHOLDERS' DEFICIT:
Preferred stock at $0.001 par value; 1,000,000 shares
authorized, -0- outstanding -
Common stock at $0.001 par value; authorized 24,000,000
shares; 10,453,850 shares issued and outstanding 10,454
Additional paid-in capital 45,239
Deficit accumulated in the development stage (77,693)
-----------------
Stockholders' Deficit (22,000)
-----------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ -
=================
The accompanying notes are an integral part of these financial statements.
3
BAS CONSULTING, INC.
(A Development Stage Company)
Statements of Operations
(unaudited)
Cumulative from
Six Months Six Months December 18, 2002
Ended Ended (inception) to
June 30, 2004 June 30, 2003 June 30, 2004
---------------------- --------------------- -------------------------
Revenue $ - $ - $ 18,000
General and administrative 51,693 3,000 95,693
---------------------- --------------------- -------------------------
Net loss $ (51,693) $ (3,000) $ (77,693)
====================== ===================== =========================
Basic and diluted loss
per share $ (.01) $(.00) $ (.01)
====================== ===================== =========================
Weighted average number of
common shares outstanding 9,807,694 9,000,000 9,145,083
====================== ===================== =========================
The accompanying notes are an integral part of these financial statements
4
BAS CONSULTING, INC.
(A Development Stage Company)
Statements of Operations
(unaudited)
Cumulative from
Three Months Three Months December 18, 2002
Ended Ended (inception) to
June 30, 2004 June 30, 2003 June 30, 2004
---------------------- --------------------- -------------------------
Revenue $ - $ - $ 18,000
General and administrative 5,000 1,500 95,693
---------------------- --------------------- -------------------------
Net loss $ (5,000) $ (1,500) $ (77,693)
====================== ===================== =========================
Basic and diluted loss
per share $ (.00) $(.00) $ (.01)
====================== ===================== =========================
Weighted average number of
common shares outstanding 9,807,694 9,000,000 9,145,083
====================== ===================== =========================
The accompanying notes are an integral part of these financial statements
5
BAS CONSULTING, INC.
(A Development Stage Company)
Statements of Cash Flows
For the Six Months Ended June 30, 2004 and 2003 and the Cumulative Period from
December 18, 2002 (inception) to June 30, 2004
(unaudited)
2004 2003 Cumulative
----------------- ----------------- -------------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Loss $ (51,693) $ (3,000) $ (77,693)
Noncash services received 43,893 52,893
Increase (decrease) in accrued
expenses 5,000 3,000 22,000
----------------- ----------------- -------------------
Net Cash (Used) by Operating
Activities (2,800) - (2,800)
----------------- ----------------- -------------------
CASH FLOWS FROM INVESTING ACTIVITIES - - -
----------------- ----------------- -------------------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Issuance of common stock 2,800 - 2,800
----------------- ----------------- -------------------
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS: - - -
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD - - -
----------------- ----------------- -------------------
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $ - $ - $ -
================= ================= ===================
SUPPLEMENTAL SCHEDULE OF CASH FLOW
ACTIVITIES:
Cash Paid For:
Interest $ - $ - $ -
================= ================= ===================
Income taxes $ - $ - $ -
================= ================= ===================
The accompanying notes are an integral part of these financial statements.
6
BAS CONSULTING INC.
(A Development Stage Company)
Statement of Stockholders' Deficit
(unaudited)
Common Stock Deficit
Accumulated
Additional During the
Paid-in Development
Shares Amount Capital Stage
------------- ------------- ------------- ---------------
Inception - $ - $ - $ -
------------- ------------- ------------- ---------------
Common stock issued for services at
$0.001 per share, December 18, 2002 9,000,000 9,000 - -
Net loss for the period from
inception to December 31, 2002 - - - (9,000)
------------- ------------- ------------- ---------------
Balance, December 31, 2002 9,000,000 9,000 - (9,000)
Net loss for the year ended
December 31, 2003 - - - (19,000)
------------- ------------- ------------- ---------------
Balance, December 31, 2003 9,000,000 9,000 - (26,000)
Exercise of stock options 1,397,850 1,398 $ 12,581 -
Issuance of stock options - - 29,914 -
Sale of shares of common stock 56,000 56 2,744 -
Net loss for the six months ended
June 30, 2004 (unaudited) - - - (51,693)
------------- ------------- ------------- ---------------
Balance June 30, 2004 (unaudited)
10,453,850 $ 10,454 $ 45,239 $ (77,693)
============= ============= ============= ===============
The accompanying notes are an integral part of these financial statements.
7
BAS CONSULTING, INC.
(A Development Stage Company)
NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited)
NOTE 1--BASIS OF PRESENTATION
BAS Consulting, Inc. (the "Company") was incorporated under the laws of
the State of Nevada on December 18, 2002 (inception). The Company, which has not
yet generated revenue but has obtained two initial agreements to perform
consulting services, will operate as a consulting firm. The Company is
considered a development stage company as defined by Statements of Financial
Accounting Standards No. 7.
The accompanying unaudited condensed financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial information and with the
instructions to Form 10-QSB and Item 310 of Regulation S-B. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for the
three and six-month periods ended June 30, 2004 are not necessarily indicative
of the results that may be expected for the year ending December 31, 2004. For
further information, refer to the financial statements and footnotes thereto
included in the Company's Form 10-KSB for the fiscal period ended December 31,
2003.
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 and disclosure of contingent assets and liabilities at the date of
the financial statements as well as the reported amount of revenues and expenses
during the reporting period. Actual results could differ from these estimates.
NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Accounting Method
The Company's financial statements are prepared using the
accrual method of accounting. The Company has elected a year
ending on December 31.
b. Provision for Taxes
8
At June 30, 2004, the Company had net operating loss
carry-forwards for Federal income tax purposes of $55,914 that
may be offset against future taxable income through 2024. No tax
benefit has been reported with respect to these net operating
loss carryforwards in the accompanying financial statements
because the Company believes that realization is not likely.
Accordingly, the potential tax benefits of the net loss
carryforwards are fully offset by a valuation allowance.
The loss for financial reporting purposes for the six months
ended June 30, 2004 differs from the loss for Federal income tax
purposes as follows:
Loss for financial reporting purposes $ 51,693
Expenses associated with the issuance
of stock options that are not deductible
for Federal income taxes
Change in valuation allowance (29,914)
----------------------
Loss for Federal income tax purposes $ 21,779
======================
The income tax benefit differs from the amount computed at the
federal statutory rates of approximately 38% as follows:
Income tax benefit at statutory rate $ 21,247
Change in valuation allowance (21,247)
----------------------
Total $ -
======================
Deferred tax assets (liabilities) at June 30, 2004 are comprised
of the following:
Net operating loss carryforwards $ 21,247
Allowance (21,247)
----------------------
Net $ -
======================
If substantial changes in the Company's ownership should occur,
there would be an annual limitation of the amount of net
operating loss carryforwards that could be utilized by the
Company.
c. Cash Equivalents
The Company considers all highly liquid investments with a
maturity of three months or less when purchased to be cash
equivalents.
9
d. 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 disclosure of contingent assets
and 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.
e. Basic Loss Per Common Share
Basic loss per common share has been calculated based on the
weighted average number of shares outstanding during the period
after giving retroactive effect to stock splits.
f. Recently Issued Accounting Standards
On October 1, 2002, the FASB issued SFAS 147, which applies to
all acquisitions of a financial institution except those between
two or more mutual enterprises, which is being addressed in a
separate project. SFAS 147 is not expected to have any impact on
the Company
On December 31, 2002, the FASB issued SFAS No. 148, Accounting
for Stock-Based Compensation--Transition and Disclosure, which
amends SFAS No. 123, Accounting for Stock Based Compensation.
SFAS 148 provides alternative methods of transition for a
voluntary change to the fair value based method of accounting
for stock-based employee compensation. (Under the fair value
based method, compensation cost for stock options is measured
when options are issued.) In addition, SFAS 148 amends the
disclosure requirements of SFAS 123 to require more prominent
and more frequent disclosures in financial statements of the
effects of stock-based compensation. The transition guidance and
annual disclosure provisions of SFAS 148 are effective for
fiscal years ending after December 15, 2002, with earlier
application permitted in certain circumstances. The interim
disclosure provisions are effective for financial reports
containing financial statements for interim periods beginning
after December 15, 2002.
In May 2003, the FASB issued SFAS No. 150, Accounting for
Certain Financial Instruments with Characteristics of both
Liabilities and Equity." This statement establishes standards
for how an issuer classifies and measures in its statement of
financial position certain financial instruments with
characteristics of both liabilities and equity. In accordance
with the standard, financial instruments that embody obligations
for the issuer are required to be classified as liabilities.
This Statement is effective for financial instruments entered
into or modified after May 31, 2003, and otherwise is effective
at the beginning of the first interim period beginning after
June 15, 2003. The Company does not expect the provision of this
statement to have a significant impact on the Company's
financial statements.
10
In November 2002, the FASB issued Interpretation No. 45,
Guarantor's Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of
Others." Interpretation 45 requires a guarantor to include
disclosure of certain obligations, and if applicable, at the
inception of the guarantee, recognize a liability for the fair
value of other certain obligations undertaken in issuing a
guarantee. The recognition requirement is effective for
guarantees issued or modified after December 31, 2002. The
Company has no obligations regarding Interpretation No. 45.
In January 2003, the FASB issued Interpretation No. 46,
Consolidation of Variable Interest Entities. Interpretation 46
clarifies the application of Accounting Research Bulletin No.
51, Consolidated Financial Statements, and applies immediately
to any variable interest entities created after January 31, 2003
and to variable interest entities in which an interest is
obtained after that date. The Company holds no interest in
variable interest entities.
In March 2004, the Financial Accounting Standards Board
published an Exposure Draft Share-Based Payment, an Amendment of
FASB Statements No. 123 and 95. The proposed change in
accounting would replace existing requirements under SFAS 123,
Accounting for Stock-Based Compensation, and APB Opinion No 25,
Accounting for Stock Issued to Employees. Under this proposal,
all forms of share-based payments to employees, including
employee stock options, would be treated the same as other forms
of compensation by recognizing the related cost in the income
statement. The expense of the award would generally be measured
at fair value at the grant date. Current accounting guidance
requires that the expense relating to so-called fixed plan
employee stock options only be disclosed in the footnotes to the
financial statements. The comment period for the exposure draft
ends June 30, 2004.
g. Revenue Recognition
The Company will recognize revenue on contracts when work has
been performed and the project completed satisfactorily. The
Company will not undertake contingency contracts wherein income
is linked to the completion of activities performed or completed
by others.
11
h. Stock Options and Warrants
As permitted by Statement of Financial Accounting Standards No.
123 Accounting for Stock based Compensation ("SFAS No. 123"),
the Company has elected to measure and record compensation cost
relative to employee stock option and warrant costs in
accordance with Accounting Principles Board ("APB") Opinion 25,
Accounting for Stock Issued to Employees, and related
Interpretations and will make pro forma disclosures of net
income and earnings per share as if the fair value method of
valuing stock options and warrants had been applied. Under APB
Opinion 25. compensation cost is recognized for stock options
and warrants granted to employees when the option or warrant
price is less than the market price of the underlying common
stock on the date of grant. In addition, the Company will
provide pro forma disclosure of stock-based compensation, as
measured under the fair value requirements of SFAS No. 123,
Accounting for Stock-Based Compensation. These pro forma
disclosures will be provided as required under SFAS No 148,
Accounting for Stock-Based Compensation--Transition and
Disclosure.
Options and warrants issued to individuals other than employees
or directors will be accounted for in accordance with SFAS
No.123 which requires recognition of compensation expense for
grants of stock, stock options, and other equity instruments
over the vesting periods of such grants, based on the estimated
grant-date fair values of those grants.
NOTE 3 -GOING CONCERN
The Company's financial statements are prepared using generally
accepted accounting principles applicable to a going concern that contemplates
the realization of assets and liquidation of liabilities in the normal course of
business. The Company has not established revenues sufficient to cover its
operating costs to allow it to continue as a going concern. The Company will
engage in very limited activities without incurring material liabilities that
must be satisfied in cash until a source of funding is secured. The Company will
offer noncash consideration and seek equity lines as a means of financing its
operations. If the Company is unable to obtain revenue producing contracts or
financing or if the revenue or financing it does obtain is insufficient to cover
any operating losses it may incur, it may substantially curtail or terminate its
operations or seek other business opportunities through strategic alliances,
acquisitions or other arrangements that may dilute the interests of existing
stockholders.
12
NOTE 4 -SHAREHOLDERS' DEFICIT
On December 18, 2002, the Board of Directors issued 9,000,000 shares of
common stock for $9,000 in services to the founding shareholders of the Company.
These services included the payment of approximately $5,500 in professional fees
on behalf of the Company. The preparation of documents and similar founding
activities was considered to have a value of at least $3,500. In February 2004,
the Company sold 56,000 shares of common stock for $.05 per share or an
aggregate of $2,800.
Preferred Stock
The Company's certificate of incorporation authorizes the issuance of
1,000,000 shares of preferred stock with designations, rights and preferences
determined from time to time by its board of directors. Accordingly, the
Company's board of directors is empowered, without stockholder approval, to
issue shares of preferred stock with voting, liquidation, conversion, or other
rights that could adversely affect the rights of the holders of the common
stock. The Board of Directors is authorized to determine:
o the number of shares and the designation of the series;
o whether to pay dividends on the series and, if so, the dividend rate,
whether dividends will be cumulative and, if so, from which date or
dates, and the relative rights of priority of payment of dividends on
shares of the series;
o whether the series will have voting rights in addition to the voting
rights provided by law and, if so, the terms of the voting rights;
o whether the series will be convertible into or exchangeable for shares
of any other class or series of stock and, if so, the terms and
conditions of conversion or exchange;
o whether or not the shares of the series will be redeemable and, if so,
the dates, terms and conditions of redemption and whether there will
be a sinking fund for the redemption of that series and, if so, the
terms and amount of the sinking fund; and
o the rights of the shares of the series in the event of our voluntary
or involuntary liquidation, dissolution or winding up and the relative
rights or priority, if any, of payment of shares of the series.
At June 30, 2004, the Company had no shares of preferred stock issued
and outstanding.
13
Common Stock
The holders of the Company's common stock:
o Have equal ratable rights to dividends from funds legally available
for payment of dividends when, as and if declared by the board of
directors;
o Are entitled to share ratably in all of the assets available for
distribution to holders of common stock upon liquidation, dissolution
or winding up of our affairs;
o Do not have preemptive, subscription or conversion rights, or
redemption or access to any sinking fund; and
o Are entitled to one noncumulative vote per share on all matters
submitted to stockholders for a vote at any meeting of stockholders.
Stock Option Plan
Pursuant to a December 31, 2002 Board of Directors approval and
subsequent stockholder approval, the Company adopted its 2002 Non-Statutory
Stock Option Plan (the "Plan") whereby it reserved for issuance up to 1,500,000
shares of its common stock. The purpose of the Plan is to provide directors,
officers and employees of, consultants, attorneys and advisors to the Company
and its subsidiaries with additional incentives by increasing their ownership
interest in the Company. Directors, officers and other employees of the Company
and its subsidiaries are eligible to participate in the Plan. Options in the
form of Non-Statutory Stock Options ("NSO") may also be granted to directors who
are not employed by the Company and consultants, attorneys and advisors to the
Company providing valuable services to the Company and its subsidiaries. In
addition, individuals who have agreed to become an employee of, director of or
an attorney, consultant or advisor to the Company and/or its subsidiaries are
eligible for option grants, conditional in each case on actual employment,
directorship or attorney, advisor and/or consultant status. The Plan provides
for the issuance of NSO's only, which are not intended to qualify as "incentive
stock options" within the meaning of Section 422 of the Internal Revenue Code,
as amended.
The Board of Directors of the Company or a Compensation Committee (once
established) will administer the Plan with the discretion generally to determine
the terms of any option grant, including the number of option shares, exercise
price, term, vesting schedule and the post-termination exercise period.
Notwithstanding this discretion (i) the term of any option may not exceed 10
years and (ii) an option will terminate as follows: (a) if such termination is
on account of termination of employment for any reason other than death, without
cause, such options shall terminate one year thereafter; (b) if such termination
is on account of death, such options shall terminate 15 months thereafter; and
14
(c) if such termination is for cause (as determined by the Board of Directors
and/or Compensation Committee), such options shall terminate immediately. Unless
otherwise determined by the Board of Directors or Compensation Committee, the
exercise price per share of common stock subject to an option shall be equal to
no less than 10% of the fair market value of the common stock on the date such
option is granted. No NSO shall be assignable or otherwise transferable except
by will or the laws of descent and distribution or except as permitted in
accordance with SEC Release No.33-7646 as effective April 7, 1999.
The Plan may be amended, altered, suspended, discontinued or terminated
by the Board of Directors without further stockholder approval, unless such
approval is required by law or regulation or under the rules of the stock
exchange or automated quotation system on which the common stock is then listed
or quoted. Thus, stockholder approval will not necessarily be required for
amendments which might increase the cost of the Plan or broaden eligibility
except that no amendment or alteration to the Plan shall be made without the
approval of stockholders which would (a) increase the total number of shares
reserved for the purposes of the Plan or decrease the NSO price (except as
provided in paragraph 9 of the Plan) or change the classes of persons eligible
to participate in the Plan or (b) extend the NSO period or (c) materially
increase the benefits accruing to Plan participants or (d) materially modify
Plan participation eligibility requirements or (e) extend the expiration date of
the Plan. Unless otherwise indicated the Plan will remain in effect until
terminated by the Board of Directors.
A summary of stock option activity follows:
Options Granted Exercise price
----------------------- -----------------------
Granted and outstanding at
December 31, 2002 650,000 $ .01
Granted in 2003 - -
Exercised in 2003 - -
----------------------- -----------------------
Options outstanding at
December 31, 2003 (1) 650,000 $ .01
Granted during the Six Months
Ended June 30, 2004 747,850 $ .01
Exercised during the Six Months
Ended June 30, 2004 (1) (1,397,850) $ .01
------------------------ ----------------------
Balance outstanding at June 30,
2004 -0- -
======================= =======================
(1) 500,000 of these options were held by the Company's president.
All of 1,397,850 options were exercised during the first quarter of 2004 in
consideration for cash and credit again outstanding bills ($7,479) and for
services rendered ($6,500).
15
The Company recorded expenses of $29,914 in connection with the
issuance of the 747,850 options calculated as the difference between the fair
market value ($.05 based on the sale of shares during the period) and the
exercise price of the options ($.01).
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN
OF OPERATION
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
Certain matters discussed in this interim report on Form 10-QSB are
forward-looking statements. Such forward-looking statements contained in this
annual report involve risks and uncertainties, including statements as to:
o our future operating results,
o our business prospects,
o our contractual arrangements and relationships with third
parties,
o the dependence of our future success on the general economy and
its impact on the industries in which we may be involved,
o the adequacy of our cash resources and working capital, and
o other factors identified in our filings with the SEC, press
releases and other public communications.
These forward-looking statements can generally be identified as such because the
context of the statement will include words such as we "believe," "anticipate,"
"expect," "estimate" or words of similar meaning. Similarly, statements that
describe our future plans, objectives or goals are also forward-looking
statements. Such forward-looking statements are subject to certain risks and
uncertainties which are described in close proximity to such statements and
which could cause actual results to differ materially from those anticipated as
of the date of this Form 10-QSB. Shareholders, potential investors and other
readers are urged to consider these factors in evaluating the forward-looking
statements and are cautioned not to place undue reliance on such forward-looking
statements. The forward-looking statements included herein are only made as of
the date of this report and we undertake no obligation to publicly update such
forward-looking statements to reflect subsequent events or circumstances.
16
Operations
BAS, incorporated in Nevada in 2002, has not yet generated significant
amounts of revenue, is considered a development stage company as defined by
Statement of Financial Accounting Standards No. 7. During its development stage,
BAS has developed and refined its basic business plan and strategy and commenced
making business contacts and seeking clients. BAS generated its initial revenue
in the quarter ended September 30, 2003. BAS had begun soliciting and signing
engagements and performing work during the six months ended June 30, 2003. In
July 2003, BAS had entered into engagement agreements that contained
contingencies or milestones which may have required BAS to register with the SEC
as a broker/dealer.
One agreement contained milestones the first of which was achieved in
July 2003 resulting in the receipt of revenue and cash in the amount of
$12,500.Such agreement dated July 14, 2003 provided for the Company acting as a
finder with respect to certain transactions relating to financings (i.e.,
introducing firms to an unaffiliated third-party that would make an equity
investment in the firm introduced). The finder's fee (transaction-based
compensation) was equal to five (5%) percent of the financing conducted as a
result of the Company's introduction. Accordingly, compensation to us was
contingent upon closing, (i.e., receipt of financing). This Agreement has been
cancelled although the Company did not participate in any negotiations relating
to the financings.
The remaining two consulting engagements involved:
a) An agreement dated May 16, 2003 whereby we were engaged as the
exclusive representative with respect to a client's desired
acquisition of a publicly tradable corporate entity. In that
regard, we had agreed to search for and identify two or three
prospective acquisition candidates and to perform such due
diligence as deemed necessary with respect thereto. The client
had agreed to pay us a fee of $57,500 upon closing of an
acquisition with a corporate entity initially identified by us,
i.e., compensation was contingent upon closing. The contract has
been cancelled.
b) An agreement dated June 2, 2003 to assist a client with respect
to its overall corporate strategy of introducing timesharing to
the cruise ship industry. A fee of $50,000 was due and payable
upon the successful completion of the engagement. We intended to
commence work on this contract in late July 2003. Since
compensation was contingent upon closing, this contract has been
cancelled.
The Company will not enter any future agreements that call for a finder
fee or other similar compensation.
17
Because BAS does not wish to register with the SEC as a broker/dealer,
it decided to cancel those agreements heretofore entered into and referred to
above, due, in part, to the contingent nature of any compensation which it might
receive under those agreements. We have indicated elsewhere herein that we will
not assist clients in raising or soliciting capital or conducting any
negotiations with potential funding sources for financing, but will be available
in our role as a consulting firm, to discuss structuring concepts to the extent
permitted, so long as these procedures do not involve activities whereby we
would be required to register with the SEC as a broker/dealer. Accordingly, we
will not effect any transaction in, or induce, or attempt to induce the purchase
or sale of any securities (unless otherwise exempt under the '34 Exchange Act)
for the account of others, nor will we engage in the business of buying and
selling securities for our own account through a broker or otherwise.
Additionally, we do not intend to raise or find capital for issuers of
securities.
Accordingly, we will attempt to negotiate fixed minimum (or otherwise)
fees for engagements, as well as non-contingent hourly fees for services
rendered, but will not undertake engagements whereby the fee is based upon
contingencies such as transaction closings.
The extent of our operations over the next 12 months will be
determined by:
o The number of client engagements that can be obtained that are
either short-term in nature or provide for progress billing, and
o Our ability to negotiate non-cash compensation to satisfy
commitments.
We cannot predict what our level of activity will be over the next 12
months because we do not know how many, if any, client engagements we will be
able to obtain. We will not incur any cash obligations that we cannot satisfy
with known resources of which there are currently none except as hereinafter
indicated. Our founder will provide his services at no cost and will advance a
limited amount of funds to cover costs incurred. All of these advances will be
treated as loans and will be repaid if and when we have the financial resources
to do so. These costs will include the costs of seeking engagements,
professional services and incidentals. If we obtained funding of $50,000, such
funds would be used to cover initial needs for salaries, travel and advertising
costs, including printed marketing materials and a basic website. We believe
that this amount would cover at least 12 months of costs.
We are contacting our base of contacts to seek client engagements. We
do not believe that we currently need funding for operations because we do not
have a capital intensive business plan and can also use independent contractors
to assist in many projects.
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We have obtained an engagement that will be started in late August or
early September 2004 and will generate at least $12,000 in revenue during
September and October 2004 with the possibility of additional work.
As a part of our strategy, we are also marketing our services to
business development companies to perform due diligence and management services
in connection with potential and actual portfolio companies. These services will
include assessing the technologies of the target companies as well as assisting
in establishing managerial and control systems. Our founder is also a co-founder
of a recently established business development company. We are working with two
business development companies that are seeking funding and will begin
engagements for them if and when these companies complete their planned
financings.
Liquidity
BAS does not have any credit facilities or other commitments for debt
or equity. No assurances can be given that advances when needed will be
available. BAS has begun seeking engagements. We do not believe that we need
funding to cover initial operations because we do not have a capital intensive
business plan and can also use independent contractors to assist in many
projects. We will use funding, if obtained, to cover the salary of our founder
and to pay for marketing materials and proposal efforts. We currently have no
formal salary arrangements with Dr. Schoomer. While no definitive annual salary
or length of employment has been determined to date, we anticipate providing a
minimum annual salary of $50,000 to be accrued and paid out of revenues, if any.
No salary will be earned or accrued until initial revenue commences. No formal
written arrangements will be made until we have either obtained financing or
client engagements, however, under no circumstances will the first year's base
salary exceed $100,000. To meet commitments in the future, we will have to
obtain client engagements in sufficient number and at sufficient levels of
profitability to generate cash to meet obligations. There does not currently
appear to be any other viable source of long-term financing except that
management may consider various sources of debt and/or equity financing if same
can be obtained on terms deemed reasonable to management.
Recent Accounting Pronouncements
No new pronouncement issued by the Financial Accounting Standards
Board, the American Institute of Certified Public Accountants or the Securities
and Exchange Commission is expected to have a material impact on BAS' financial
position or reported results of operations.
Seasonality
We do not yet have a basis to determine whether our consulting business
will be seasonal.
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ITEM III.
CONTROLS AND PROCEDURES
As of the end of the period covered by this Quarterly Report on Form 10-QSB, an
evaluation of the effectiveness of the design and operation of the Company's
disclosure controls and procedures was carried out by the Company under the
supervision and with the participation of the Company's Chief Executive Officer
and Chief Financial Officer. Based on that evaluation, the Chief Executive
Officer and Chief Financial Officer concluded that the Company's disclosure
controls and procedures have been designed and are being operated in a manner
that provides reasonable assurance that the information required to be disclosed
by the Company in reports filed under the Securities Exchange Act of 1934, as
amended, is recorded, processed, summarized and reported within the time periods
specified in the SEC's rules and forms. A system of controls, no matter how well
designed and operated, cannot provide absolute assurance that the objectives of
the system of controls are met, and no evaluation of controls can provide
absolute assurance that all control issues and instances of fraud, if any,
within a company have been detected. There have been no changes in the Company's
internal controls over financial reporting that occurred during the most recent
fiscal quarter that have materially affected, or are reasonably likely to
materially affect, the Company's internal controls over financial reporting.
PART II OTHER INFORMATION
Item 1 Legal Proceedings
None
Item 2 Changes in Securities and Small Business Issuer Purchases of
Equity Securities
None during 2nd quarter of 2004.
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Item 3 Defaults Upon Senior Securities
None
Item 4 Submission of Matters to a Vote of Shareholders
None
Item 5 Other Information
None
Item 6 Exhibits and Reports on Form 8-K
None
Exhibit Number Description
31.1 Section 302 Certification of Chief Executive Officer and
Chief Financial Officer
32.1 Certification Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of The Sarbanes-Oxley Act of
2002
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Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
BAS Consulting, Inc.
(Registrant)
/s/ B. Alva Schoomer
----------------------
By: B. Alva Schoomer
President
December 13, 2004
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