Opinions?10QSB: BENTLEY COMMERCE CORP
2/12/2004 2:34:40 PM
(EDGAR Online via COMTEX) -- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.
When used in this Form 10-QSB, the words "expects," "anticipates," "estimates" and similar expressions are intended to identify forward-looking statements. Such statements are subject to risks and uncertainties, including those set forth below under "Risks and Uncertainties," that could cause actual results to differ materially from those projected. These forward-looking statements speak only as of the date hereof. The company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the company's expectations with regard thereto or any change in events, conditions or circumstances on which any statement is based. This discussion should be read together with the financial statements and accompanying notes included in the company's Annual Form 10-KSB.
GENERAL
Beginning in calendar year 2003, Bentley began its transition to a business-to-business, Internet e-commerce company focused on establishing a new marketplace and distribution channel for worldwide barter and trade. Through the development of a seamlessly integrated family of Internet barter services, it envisions that most barter transactions can be handled online, in real time, with the comprehensive, proprietary VirtualBarter 3.0 software it licensed for North America.
Bentley's mission is to become the online "market maker" for the multi-billion dollar barter industry serving as the neutral intermediary that will bring together fragmented multiple groups of buyers and sellers to trade interactively with each other over the Internet. Bentley intends to serve as a clearinghouse for barter trades for fortune 500 trading partners, hundreds of existing retail barter exchanges that serve companies of all sizes, corporate barter companies that serve large multinational corporations, trade associations and their member companies, as well as media and travel agencies.
o ANNUAL MEETING OF SHAREHOLDERS
On Thursday, October 30, 2003, Bentley held its Annual Meeting of Shareholders. Among the proposals passed were changing the company's name to Bentley Commerce Corp. from Bentley Communications Corp.; the purchase of the assets of Crump Barter Systems, Inc.; the election of Gordon F. Lee, chairman and CEO, and Robert Schumacher, president and COO, for a one year term as directors; and approval of the company's new business plan.
o NAME CHANGE TO BENTLEY COMMERCE CORP.
To more accurately reflect the company's position as an emerging leader in e-commerce based online barter and trade, shareholders authorized a name change from Bentley Communications Corp. to Bentley Commerce Corp. at its Annual Meeting of Shareholders. This action did not change or consolidate the issued and outstanding common stock of the company. In subsequent events, its new name became effective on January 12, 2004, its trading Symbol changed from BTLY to BLYC, and its CUSIP number changed to 08264E 10 3.
o BENTLEY CRUMP BARTER NETWORK
On August 4, 2003, Bentley reached an agreement in principal to acquire the assets of Crump Barter Systems, Inc., including the sole and exclusive use of
the name "Crump Barter," all right, title and interest in and to the website " www.crumpbarter.com the Crump Barter system, including its 180 affiliates and alliances, trade receivables and trade payables, fixed assets, all goodwill, real property, personal property, choses in action, and intangible or intellectual property in which Crump has a right or interest or the right to acquire an interest. The Crump Barter System was founded in 1998 by Mr. Crump to bring efficiencies to the barter industry by providing a clearinghouse through which members of different barter exchanges worldwide can make available each other's inventory and services and trade seamlessly with one another.
On November 6, 2003, Bentley and Crump Barter Systems, Inc. mutually agreed to cancel the Asset Purchase Agreement because Crump failed to deliver the required financial statements. Bentley and Crump instead entered into a License Agreement, whereby Bentley licensed the business methods of Crump. This License is for three years and renews automatically thereafter for three year periods until terminated. In exchange for the License, at closing, Bentley will pay to Crump a one-time license fee of 10,000,000 shares of restricted common stock, valued at $.01 per share, and $30,000. Further, the license is subject to an ongoing royalty fee of Three Percent (3%) of the barter fees or $5,000 during any fiscal quarter, which ever is greater, as long as the royalty fee does not exceed $10,000 per fiscal quarter.
In December 2003, Bentley Crump Barter Network was set up as a wholly owned subsidiary of Bentley Commerce Corp., with Joe Crump serving as its president. It has a membership of 180 independent local barter exchanges and about 50,000 members that trade through them. This represents approximately 30 percent of the barter exchanges in the USA and 50 percent of those in Canada.
o VIRTUALBARTER 3.0 SOFTWARE
On Monday, December 8, 2003, VirtualBarter 3.0 went online. VirtualBarter 3.0 is the comprehensive suite of trade exchange management software that builds and enables an Internet based worldwide network of barter and trade exchanges, that Bentley licensed exclusively for North America, This software is the cornerstone for Bentley's worldwide collaborative trade alliance. It will link the members of the Bentley Crump Barter Network in a global online system, as well as other independent exchanges that join. It is intended to help eliminate barriers to trade by providing new multi-lingual, multi-currency trading for barter and trade exchanges, and their members worldwide.
VirtualBarter software enables exchanges and their members to manage, merchandise and market their products and services in an online barter marketplace to an integrated worldwide network of trade exchanges. It has made global online trading possible since January 2000. It was significantly enhanced with the release of version 2.0 in July 2002. Version 3.0, the platform Bentley will be using, was released December 2003.
VirtualBarter will give members of Bentley's trade exchanges the ability to manage their own accounts as they can post transactions, view real time online statements, view detailed transaction history, search local and global member directories, and manage their inventory offered for trade with a fully integrated item and inventory control management system.
In addition to national, regional and local trade exchanges joining the system, exchanges are being set up through VirtualBarter 3.0 that cater to specific
industries as well as nonprofit organizations. Examples include exchanges that will enable:
o artists to trade their art work for the products and services they need; o an online trade marketplace to enable hotels, resorts, bed & breakfasts, cruise lines, restaurants and others in the hospitality industry to purchase furniture, fixtures, equipment and supplies at below standard wholesale pricing by partially paying for purchases with excess room night and food and beverage capacity; and o qualified non-profit organizations to more efficiently acquire and convert donated gifts in kind to other products and services more useful to their organizations.
Bruce Kamm, managing director of Intertrade Capital Group, will manage Bentley's corporate trade division. As part of the strategic alliance, Intertrade will provide Bentley with the ability to facilitate trading under its corporate accounts receivable trading format. Intertrade will market and promote Bentley's corporate and industrial trading business and will negotiate and enter into Accounts Receivable Purchase Agreements. Intertrade will also manage the utilization or unwinding of cash credits by providing Bentley's corporate and industrial trade clients with cash equivalent credit spending opportunities.
o BENTLEY CORPORATE TRADE - Bentley begins its entry into the corporate barter business through a strategic alliance with Intertrade Capital Group, Ltd., a leading corporate barter company. This will join Bentley's Crump Barter Network with Intertrade's team of international trade, finance and corporate barter specialists. Bentley's new division will enable the individual exchanges within the Crump Network to initiate corporate trade and to obtain the resources necessary to successfully complete transactions. It will also be able to present a wide range of goods obtained through corporate trade to thousands of retail barter customers. In addition, Bentley plans to execute corporate trades that originate from sources outside of the Crump Network.
o BENTLEY 20% STOCK DIVIDEND
On October 1, 2003, Bentley announced a twenty percent (20%) stock dividend payable to shareholders of record as of October 24, 2003. It was extended on October 17 to shareholders of record as of November 5, 2003, with dividend shares distributed on or about December 1, 2003. As a result of the dividend, shareholders of record received 1 (one) additional share of Bentley Communications Corp. common stock for every five (5) shares they held.
SUBSEQUENT EVENTS:
o BRUCE KAMM, NEW CEO OF BENTLEY
Bruce Kamm, one of the barter and trade industries most experienced and highly regarded executives, was appointed CEO of Bentley Commerce Corporation, effective February 1, 2004.
Mr. Kamm is the developer of VirtualBarter software that enables exchanges and their members to manage, merchandise and market their products and services in an online barter marketplace to an integrated worldwide network of trade exchanges. It has made global online trading possible since January 2000. He is also the founder and CEO of Intertrade Capital Group, a global alliance
organization that enables barter, trade, countertrade, asset management and alternative capital and financial transactions to greatly expand liquidity and bottom line profitability. At Intertrade he engineered numerous alternative finance and corporate trade transactions for many of America's foremost companies.
Previously, Mr. Kamm established an ITEX office in New York City, which in less than one year became ITEX'S largest and most successful exchange and facilitated the highest amount of trade volume and revenues of any ITEX office for seven consecutive years, culminating in over $16 million in annual trade volume in 1999.
In addition, Mr. Kamm founded TradeBanc, at the time, the first and only Internet based transactional trade banking system that enabled barter transactions, trade finance and asset auctions between small, medium and large national and international companies on a global basis. He was co-founder of UNITE, the global trade network of barter and trade exchanges. Mr. Kamm also founded and managed a real estate development company that specialized in using trade and offset as a component in many of its real estate and construction transactions.
Bentley's executive management team will consist of Gordon Lee, chairman of the board and chief financial officer; Mr. Kamm, chief executive officer; Robert Schumacher, president and chief operating officer; and Joe Crump, president of the Bentley's Crump Barter Network, Inc.
Results of Operations -
Six Months ended December 31, 2003 and 2002
REVENUES - For the six months ended December 31, 2003 and 2002, the Company generated no revenues.
COSTS AND EXPENSES - Total operating costs and expenses decreased from $3,455,791 for the six months ending December 31, 2002 to $1,135,817 for the same period ending in 2003. The decrease of $2,319,974 is primarily attributable to the reduction of investment impairment in Kryptosima of $1,500,000 paid for in shares of the Company in December of 2002, and, approximately $750,000 in consultants' fees for services rendered paid for with shares.
Depreciation and amortization expense for the six-month period ending December 31, 2003 and 2002 was $351 and $350, respectively.
Liquidity and Capital Resources -
As of December 31, 2003, the Company had a working capital deficit of $582,441 compared to a deficit of $426,926 at June 30, 2003, an increase in deficit of $155,515. The increase in deficit was primarily due to a reduction of approximately $54,000 in prepaid expenses, an increase of approximately $26,000 in accounts payable, an increase of approximately $89,000 in cash advances due, and, a decrease of approximately $15,000 in due related parties liabilities.
While the Company has raised capital and borrowed funds to meet its current and projected working capital needs, additional financing will be required in order to meet its obligations. The Company is seeking financing in the form of equity and debt for working capital. There are no assurances the Company will be successful in raising the funds required.
The Company has borrowed funds from significant shareholders of the Company in the past to satisfy certain obligations and anticipates continuing to borrow funds to meet future working capital requirements.
The Company generated a cash flow deficit from operations of $291,055 for the six months ended December 31, 2003. Cash flow deficits from operating activities for the six months ended December 31, 2003 is primarily attributable to the Company's net loss from operations of $1,141,006 adjusted for depreciation and amortization of $351 and common stock issued for services rendered, accrued expenses, organization costs and prepaid consulting fees.
The effect of inflation on the Company's revenue and operating results was not significant. The Company's operations are in the southwestern United States and there are no seasonal aspects that would have a material effect on the Company's financial condition or results of operations.
The Company's independent certified public accountants have stated in their report included in the Company's June 30, 2003 Form 10-KSB, that the Company has incurred operating losses in the last two years, and that the Company is dependent upon management's ability to develop profitable operations. These factors among others may raise substantial doubt about the Company's ability to continue as a going concern.
RISKS AND UNCERTAINTIES
The Company has sought to identify what it believes to be the most significant risks to its business, but cannot predict whether or to what extent any of such risks may be realized nor can there be any assurances that the Company has identified all possible risks that might arise. Investors should carefully consider all of such risk factors before making an investment decision with respect to the Company's stock.
BENTLEY HAS LIMITED EXPERIENCE IN THE E-COMMERCE BUSINESS SECTOR; ANTICIPATES
LOSSES; AND IS UNCERTAIN OF FUTURE RESULTS.
Bentley has only limited experience in the e-commerce business sector. Bentley will be incurring costs to develop, introduce and enhance its barter services, to establish marketing relationships, to acquire and develop products that will compliment each other and to build an administrative organization. To the extent that such expenses are not subsequently followed by commensurate revenues, Bentley's business, results of operations and financial condition will be materially adversely affected. Bentley may not be able to generate sufficient revenues from the sale of its service and products. Bentley expects negative cash flow from operations to continue for the next four quarters as it continues to develop and market its business. If cash generated by operations is insufficient to satisfy Bentley's liquidity requirements, Bentley may be required to sell additional equity or debt securities. The sale of additional equity or convertible debt securities would result in additional dilution to Bentley's stockholders.
BENTLEY FACES POTENTIAL FLUCTUATIONS IN QUARTERLY OPERATING RESULTS.
Bentley's quarterly operating results may fluctuate significantly in the future as a result of a variety of factors, most of which are outside Bentley's control, including:
o the level of use of the Internet;
o the demand for alternative payment services;
o approval of Electronic Funds Transfer networks
o seasonal trends in Internet use,
o the amount and timing of capital expenditures; and other costs
relating to the expansion of Bentley's Internet operations;
o the introduction of new services by Bentley or its
competitors;
o technical difficulties or system downtime;
o general economic conditions, and
o economic conditions specific to the Internet and Internet
media.
Bentley's quarterly results may also be significantly impacted by the accounting
treatment of acquisitions, financing transactions or other matters. Due to the
foregoing factors, among others, it is likely that Bentley's operating results
will fall below the expectations of Bentley or investors in some future period.
BENTLEY'S COMMON STOCK TRADES IN A LIMITED PUBLIC MARKET, THE NASD OTC
ELECTRONIC BULLETIN BOARD; ACCORDINGLY, INVESTORS FACE POSSIBLE VOLATILITY OF
SHARE PRICE.
Bentley's common stock is currently quoted on the NASD OTC Bulletin Board under the ticker symbol BLYC. As of December 31, 2003, there were 455,144,625 shares of common stock outstanding, of which approximately 178,475,923 were tradable without restriction under the Securities Act. There can be no assurance that a trading market will be sustained in the future. Factors such as, but not limited to, technological innovations, new products, acquisitions or strategic alliances entered into by Bentley or its competitors, failure to meet security analysts' expectations, government regulatory action, patent or proprietary rights developments, and market conditions for technology stocks in general could have a material effect on the liquidity of Bentley's common stock and volatility of Bentley's stock price.
BENTLEY'S FUTURE OPERATIONS ARE CONTINGENT ON ITS ABILITY TO MANAGE ITS GROWTH,
IF ANY.
Bentley expects to experience significant growth in the number of employees and the scope of its operations. In particular, Bentley may hire additional engineering, sales, marketing, content acquisition and administrative personnel. Additionally, acquisitions could result in an increase in employee headcount and business activity. Such activities could result in increased responsibilities for management. Bentley believes that its ability to increase its customer support capability and to attract, train, and retain qualified technical, sales, marketing, and management personnel, will be a critical factor to its future success.
Further, Bentley's future success will be highly dependent upon its ability to successfully manage the expansion of its operations. Bentley's ability to manage and support its growth effectively will be substantially dependent on its ability to: implement adequate improvements to financial and management controls, reporting and order entry systems, and other procedures and hire sufficient numbers of financial, accounting, administrative, and management personnel. Bentley's expansion and the resulting growth in the number of its employees will result in increased responsibility for both existing and new management personnel. Bentley is in the process of establishing and upgrading its financial accounting and procedures. Bentley may not be able to identify, attract, and retain experienced accounting and financial personnel. Bentley's future operating results will depend on the ability of its management and other key employees to implement and improve its systems for operations, financial control, and information management, and to recruit, train, and manage its employee base. Bentley may not be able to achieve or manage any such growth successfully or to implement and maintain adequate financial and management controls and procedures, and any inability to do so would have a material adverse effect on its business, results of operations, and financial condition.
Bentley's future success depends upon its ability to address potential market opportunities while managing its expenses to match its ability to finance its operations. This need to manage its expenses will place a significant strain on the Bentley's management and operational resources. If Bentley is unable to manage its expenses effectively, the company may be unable to finance its operations.
BENTLEY FACES RISKS ASSOCIATED WITH FUTURE ACQUISITIONS, IF ANY.
As part of its business strategy, Bentley expects to acquire assets and businesses relating to or complementary to its operations. These acquisitions by Bentley will involve risks commonly encountered in acquisitions of companies. These risks include, among other things, the following:
o Bentley may be exposed to unknown liabilities of the acquired
companies;
o Bentley may incur acquisition costs and expenses higher than
it anticipated;
o Fluctuations in Bentley's quarterly and annual operating
results may occur due to the costs and expenses of acquiring
and integrating new businesses or technologies;
o Bentley may experience difficulties and expenses in
assimilating the operations and personnel of the acquired
businesses;
o Bentley's ongoing business may be disrupted and its
management's time and attention diverted; and
o Bentley may be unable to integrate successfully.
Feb 12, 2004
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