UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB/A
(Mark one)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2001
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE EXCHANGE ACT OF
1934 for the transition period from to
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Commission File Number: 0-06334
BRAINWORKS VENTURES, INC.
(Exact name of small business issuer as specified in its charter)
NEVADA 87-0281240
(State of Incorporation) (IRS Employer ID Number)
101 MARIETTA STREET, SUITE 3450, ATLANTA, GEORGIA 30303
(Address of principal executive offices)
(404) 524-1667
(Issuer's telephone number, Including area code)
(Former name, former address and former fiscal year, if changed since
last report)
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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 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 [ ]
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 2,459,934 shares as of
November 12, 2001.
Transitional Small Business Disclosure Format (check one): Yes [ ]
No [X]
The assets acquired, liabilities assumed and the cost of the acquisition were as
follows:
Assets acquired:
Current assets, principally accounts and unbilled receivables $122,000
Fixed assets 5,000
Intangible assets 497,000
--------
$624,000
========
Liabilities assumed:
Accounts payable and accrued liabilities $ 35,000
Due to stockholder 35,000
Common stock issued to EVP stockholders at fair value 554,000
--------
$624,000
========
In addition, the Company incurred acquisition costs of approximately $78,000 in
connection with the acquisition, which costs are being amortized over a 36-month
period.
The following unaudited pro forma condensed statements of operations assume the
Company's acquisition of EVP occurred on April 1, 2001. In the opinion of
management, all adjustments necessary to present fairly such unaudited pro forma
statements have been made.
Six months ended September 30,
2001 2000
----------- ------------
Revenue $ 487,000 $ 16,000
Net loss $(1,931,000) $ (658,000)
Net loss per share $ (0.79) $ (0.45)
NOTE C - RECLASSIFICATION
Certain items in the Company's Quarterly Report on Form 10-QSB for the period
ended September 30, 2000 have been reclassified to conform to current year
classifications. Such reclassifications had no effect on previously reported
income.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Certain statements contained in this Quarterly Report on Form 10-QSB are
"forward-looking statements," within the meaning of the Private Securities
Litigation Reform Act of 1995, and are thus prospective in nature. Such
forward-looking statements reflect management's beliefs and assumptions and are
based on information currently available to management. The forward-looking
statements involve known and unknown risks, uncertainties and other factors that
may cause actual results, performance or achievements of Brainworks Ventures,
Inc. to differ materially from those expressed or implied in such statements.
There can be no assurance that such factors or other factors will not affect the
accuracy of such forward-looking statements
RESULTS OF OPERATIONS
For the three months ended September 30, 2001 and 2000, the Company recorded
revenues of $398,000 and $0, respectively. The source of revenue is primarily
consulting services provided by BVL and EVP during the period ended September
30, 2001.
For the three months ended September 30, 2001 and 2000, the cost of revenue was
$404,000 and $0, respectively. The cost of revenue is primarily consulting and
payroll expenses.
For the three months ended September 30, 2001, the selling, general and
administrative expenses amounted to $1,169,000, an increase of $865,000 over the
corresponding period ended September 30, 2000. The increase was primarily due to
higher payroll expenses and operating costs incurred after the acquisitions of
BVL and EVP and a
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non-cash compensation charge of $415,000 related to amortization of stock
options granted to consultants and advisors.
For the six months ended September 30, 2001 and 2000, the Company recorded
revenues of $529,000 and $0, respectively. In addition, during the six months
ended September 30, 2000, the Company realized net gains of $1,120,000 primarily
on the disposal of its investments in Corporacion De La Fonda. The increase in
revenue is primarily due to consulting revenue earned by EVP.
For the six months ended September 30, 2001 and 2000, the cost of revenue was
$484,000 and $0, respectively. The cost of revenue is primarily consulting and
payroll expenses.
For the six months ended September 30, 2001, the selling, general and
administrative expenses was $2,024,000, an increase of $208,000 over the
corresponding period ended September 30, 2000. The increase is primarily due to
higher payroll and operating costs incurred after the acquisition of BVL and EVP
and a non-cash compensation charge of $787,000 related to the amortization of
stock options granted to consultants and advisors. Selling, general and
administrative expenses for the six months period ended September 30, 2000
included a non-cash compensation charge of $1,521,000 related to the stock
options granted for services.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 2001, working capital was a $4,000 deficit compared to $653,000
at March 31, 2001. This decrease was principally due to cash used in operations
resulting from the current period loss.
For the six months ended September 30, 2001, net cash used in operating
activities was $352,000 and net cash used in investing activities was $78,000.
Net cash provided by financing activities was $227,000. For the six months ended
September 30, 2000, net cash used in operations was $228,000, net cash provided
by investing activities was $1,319,000 and net cash provided by financing
activities was $8,000.
Current assets as of September 30, 2001 was $565,000, a decrease of $391,000
from the March 31, 2001 and a decrease of $782,000 from September 30, 2000.
Total assets as of September 30, 2001 of $3,655,000 represents a decrease of
$309,000 in total assets from the March 31, 2001 and an increase in total assets
from September 30, 2000 of $2,103,000. This increase in total assets was
primarily due to the acquisition by the Company of BVL and EVP, which
acquisitions occurred on February 14, 2001 and May 8, 2001, respectively.
While management believes that these acquisitions should assist the Company in
pursuing its business direction, management's plans included seeking additional
capital or debt financing or the possible sale of the Company.
INFLATION
The Company does not currently view the effects of inflation as having a
material effect on the Company's business.
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of the Stockholders of the Company was held on September 8,
2001 (the "Meeting") in Alpharetta, Georgia. There were 2,457,934 shares of the
Company's common stock issued and outstanding and entitled to vote at the
Meeting of which 1,650,271 shares were present at the Meeting in person or
represented by proxy. The table below sets forth the proposal that was voted on
at the Meeting and the voting results of such proposal.
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PROPOSAL: FOR WITHHELD ABSTAIN
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To elect the nominees listed below
to the Board of Directors:
John P. Cayce 1,648,921 1350 0
Donald Ratajczak 1,648,921 1350 0
Kirk K. Reiss 1,648,921 1350 0
Marc J. Schwartz 1,648,921 1350 0
Cole F. Walker 1,648,921 1350 0
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
None.
(b) Reports on Form 8-K.
During the quarter ended September 30, 2001, the Company filed one Current
Report on Form 8-K/A with the Securities and Exchange Commission (the "SEC") on
August 16, 2001, which report amended Item 7 of the Current Report on Form 8-K
filed with the SEC on May 23, 2001 (reporting under item 2 of such report the
Company's acquisition of EVP), to set forth the (i) audited financial statements
of EVP as of March 31, 2001, and for the period from May 1, 2000 (commencement
of operations) to March 31, 2001; and (ii) unaudited pro forma condensed
consolidated financial statements for the year ended March 31, 2000.
.
SIGNATURES
In accordance with Section 13 or 10(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
BRAINWORKS VENTURES, INC.
By: /s/ Marc J. Schwartz
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Marc J. Schwartz
Vice President/ Treasurer
Dated: November 19, 2001
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