10QSB: Optional form for quarterly and transition reports of small business issuers
Published on November 20, 2002
Securities and Exchange Commission
Washington, DC 20549
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FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended September 30, 2002
Commission File No. 2-91651-D
Broadleaf Capital Partners, Inc.
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Nevada 87-0410039
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(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
2531 San Jacinto Street
San Jacinto, CA 92583
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(Address and zip code of principal executive offices)
(909) 652-3885
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 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.
[X] YES [ ] NO
Indicate the number of shares outstanding of each of the
registrant's classes of common stock, as of the latest
practicable date.
Common Stock 16,513,263 Shares Outstanding
$0.001 par value as of September 30, 2002
PAGE-1-
Item 1. Unaudited Financial Statements
BROADLEAF CAPITAL PARTNERS, INC.
AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2002 and December 31, 2001
PAGE-2-
BROADLEAF CAPITAL PARTNERS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
September 30, 2002 and December 31, 2001
ASSETS
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September 30, December 31,
2002 2001
CURRENT ASSETS (Unaudited)
----------------- -------------------
Cash $ 877 $ 764
Accounts receivable, net - 24,855
Notes receivable, net 5,427 -
----------------- -------------------
Total Current Assets 6,304 25,619
----------------- -------------------
FIXED ASSETS, NET 72,464 98,384
----------------- -------------------
OTHER ASSETS
Investments in limited
partnerships 965,455 1,038,856
Other assets 890 1,059
----------------- -------------------
Total Other Assets 966,345 1,039,915
----------------- -------------------
TOTAL ASSETS $ 1,045,113 $ 1,163,918
================= ===================
The accompanying notes are an integral part of
these consolidated financial statements.
PAGE-3-
BROADLEAF CAPITAL PARTNERS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets (Continued)
September 30, 2002 and December 31, 2001
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
---------------------------------------------------
September 30, December 31,
2002 2001
--------------- --------------
(Unaudited)
CURRENT LIABILITIES
Accounts payable $ 469,509 $ 499,195
Accounts payable - officers and directors - 225,760
Accrued expenses 232,212 181,789
Accrued interest 254,311 176,638
Judgments payable 1,041,784 2,083,300
Notes payable - current portion 791,694 862,166
--------------- --------------
Total Current Liabilities 2,789,510 4,028,848
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LONG-TERM DEBT
Notes payable - long term 500,000 500,000
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NET LIABILITIES IN EXCESS OF THE ASSETS OF
DISCONTINUED OPERATIONS 272,397 295,892
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Total Liabilities 3,561,907 4,824,740
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COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock: 10,000,000 shares authorized at
$0.01 par value; 515,300 shares issued and
outstanding 5,153 5,153
Common stock: 250,000,000 shares authorized at
$0.001 par value; 16,513,263 and 2,303,507shares
issued and outstanding, respectively 16,514 2,304
Additional paid-in capital 12,641,332 12,302,987
Subscriptions receivable (157,769) (347,337)
Accumulated deficit (15,022,024) (15,623,929)
--------------- --------------
Total Stockholders' Equity (Deficit) (2,516,794) (3,660,822)
--------------- --------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT) $ 1,045,113 $ 1,163,918
=============== ==============
The accompanying notes are an integral part of
these consolidated financial statements.
PAGE-4-
BROADLEAF CAPITAL PARTNERS, INC. AND SUBSIDIARIES
Schedule of Investments
September 30, 2002 and December 31, 2001
September 30, 2002
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(Unaudited)
Number of
Description of Shares Owned Fair
Company Business (or %) Cost Value
- ---------------- ----------------- ------------- ---------- ----------
Canyon Shadows Real estate 10% $ 1,131,961 $ 965,455 (e)
IPO/Emerging Growth
Company, LLC Start-up 33% 100,000 -0- (f)
San Diego Soccer
Development Dormant company 1,551,001 715,905 -0- (f)
Other 8,000 15,962 -0- (f)
Bio-Friendly
Corporation Start-up 437,500 180,000 -0- (f)
Las Vegas Soccer
Development Start-up 1,020,000 20,000 -0- (f)
---------- ----------
Total $ 2,163,828 $ 965,455
========== ==========
December 31, 2001
-----------------
Canyon Shadows Real estate 10% $ 1,131,961 $ 1,038,856(e)
IPO/Emerging Growth
Company, LLC Start-up 33% 100,000 -0- (a)
San Diego Soccer
Development Soccer franchise 1,551,001 715,905 -0- (c)
Other 8,000 15,962 -0- (f)
Bio-Friendly
Corporation Start-up 437,500 180,000 -0- (d)
Las Vegas Soccer
Development Start-up 1,020,000 20,000 -0- (d)
---------- ----------
Total $ 2,163,828 $ 1,038,856
========== ==========
Note - All of the above investments are considered non-income
producing securities.
The accompanying notes are an integral part of
these consolidated financial statements.
PAGE-5-
BROADLEAF CAPITAL PARTNERS, INC. AND SUBSIDIARIES
Schedule of Investments (Continued)
September 30, 2002 and December 31, 2001
a) Non-public company, represents ownership in an LLC, fair value
is determined in good faith by the Company based on a variety of factors.
b) Public market method of valuation based on trading price of
stock at year-end.
c) The fair value of restricted shares is determined in good faith by
the Company based on a variety of factors, including recent and historical
prices and other recent transactions.
d) No public market for this security exists - cost method of valuation
used.
e) The Company's board of directors has valued this investment at
cost, less cash distributions to the Company from Canyon Shadows.
f) At December 31, 2001, the Company's board of directors determined
that the Company is unlikely to recover its investments in these
companies, and elected to value the investments at zero. The board
maintains the same opinion at September 30, 2002.
The accompanying notes are an integral part of
these consolidated financial statements.
PAGE-6-
BROADLEAF CAPITAL PARTNERS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
For the Nine For the Three
Months Ended Months Ended
September 30, September 30,
------------------ ------------------
2002 2001 2002 2001
-------- -------- -------- --------
REVENUES
Investment banking income $ - $ - $ - $ -
Development income - 68,250 - 28,858
Interest income - 25,429 - -
Realized gain on investments - - - -
Other income 8,132 4,664 1,900 3,944
-------- -------- -------- --------
Total Revenues 8,132 98,343 1,900 32,802
-------- -------- -------- --------
EXPENSES
General and administrative 491,689 412,694 211,470 276,169
Bad debt expense 6,000 333,717 6,000 114,519
Depreciation and amortization 25,920 31,540 8,640 16,332
Loss on disposal of assets - 8,114 - 8,114
-------- -------- -------- --------
Total Expenses 523,609 786,065 226,110 415,134
-------- -------- -------- --------
INCOME (LOSS) FROM
OPERATIONS (515,477) (687,722) (224,210) (382,332)
-------- -------- -------- --------
OTHER INCOME (EXPENSE)
Interest income - - - -
Interest expense (135,865) (82,910) (53,714) (18,963)
Gain on forgiveness of debt 1,184,752 - - -
Realized gain (loss)
on investment 45,000 - 45,000 -
Unrealized gain (loss)
on investment - (392,897) - -
-------- -------- -------- --------
Total Other Income (expense) 1,093,887 (475,807) (8,714) (18,963)
NET INCOME (LOSS) FROM
CONTINUING OPERATIONS 578,410 (1,163,529) (232,924) (401,295)
INCOME (LOSS) FROM
DISCONTINUED OPERATIONS 23,495 61,504 (1,685) (18,021)
-------- -------- -------- --------
NET INCOME (LOSS) 601,905 (1,102,025) (234,609) (419,316)
-------- -------- -------- --------
OTHER COMPREHENSIVE GAIN
Gain on treasury stock - - - -
-------- -------- -------- --------
NET COMPREHENSIVE INCOME
(LOSS) $ 601,905 $(1,102,025) $ (234,609) $(419,316)
======== ======== ======== ========
The accompanying notes are an integral part of
these consolidated financial statements.
PAGE-7-
BROADLEAF CAPITAL PARTNERS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
For the Nine
Months Ended
September 30,
---------------------
2002 2001
--------- ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) from continuing operations $ 578,410 $(1,163,529)
Adjustments to reconcile net loss to
net cash used by operating activities:
Depreciation and amortization 25,920 38,770
Bad debt expense - 333,717
Loss on investment - 8,114
Gain on forgiveness of debt (1,136,952) -
Unrealized loss on investments - 392,897
Stock issued for services 19,236 -
Discontinued operations:
Net income (loss) (6,505) 61,504
Depreciation and amortization - -
Loss on disposal of assets -
Gain on forgiveness of debt 30,000 -
Changes in operating assets and liabilities:
(Increase) decrease in accounts and notes receivable 24,855 (67,858)
(Increase) decrease in notes receivable - related party (5,427) -
(Increase) decrease in prepaid expenses - 2,704
(Increase) decrease in other assets 169 (653)
Increase (decrease) in accounts payable and accrued
expenses (129,842) (20,841)
Increase (decrease) in judgments payable 35,436 (190,000)
Increase (decrease) in discontinued operation,
net liabilities (23,495) (60,046)
--------- ------------
Net Cash Used in Operating Activities (588,195) (665,221)
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CASH FLOWS FROM INVESTING ACTIVITIES
Receipt of cash distributions on investment 73,401 -
Purchase of property and equipment - (2,410)
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Net Cash Used in Investing Activities 73,401 (2,410)
--------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term borrowings 195,000 412,500
Payment on long-term borrowings (10,417) -
Receipt of subscription receivable 202,368 10,000
Stock issued for cash 127,956 244,499
--------- ------------
Net Cash Provided by Financing Activities 514,907 666,999
--------- ------------
NET DECREASE IN CASH 113 (632)
CASH, BEGINNING OF PERIOD 764 2,513
--------- ------------
CASH, END OF PERIOD $ 877 $ 1,881
--------- ------------
The accompanying notes are an integral part of
these consolidated financial statements.
PAGE-8-
BROADLEAF CAPITAL PARTNERS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Continued)
September 30, 2002 and 2001
(Unaudited)
For the Nine Months Ended
September 30,
-------------------------
2002 2001
---------- -------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Interest paid $ - $ 156
Income taxes paid $ - $ -
SUPPLEMENTAL DISCLOSURE OF NON-CASH
ACTIVITIES
Common stock issued in conversion
of debentures and interest $ 195,055 $ 451,169
The accompanying notes are an integral part of
these consolidated financial statements.
PAGE-9-
BROADLEAF CAPITAL PARTNERS, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
September 30, 2002 and 2001
NOTE 1 - BASIS OF FINANCIAL STATEMENT PRESENTATION
The accompanying unaudited consolidated condensed financial
statements have been prepared by the Company pursuant to the rules
and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted in
accordance with such rules and regulations. The information
furnished in the interim condensed financial statements include
normal recurring adjustments and reflects all adjustments, which,
in the opinion of management, are necessary for a fair presentation
of such financial statements. Although management believes the
disclosures and information presented are adequate to make the
information not misleading, it is suggested that these interim
condensed financial statements be read in conjunction with the
Company's most recent audited financial statements and notes
thereto included in its December 31, 2001 Annual Report on
Form 10-KSB. Operating results for the nine months ended September
30, 2002 are not necessarily indicative of the results that may
be expected for the year ending December 31, 2002.
NOTE 2 - GOING CONCERN
As reported in the consolidated financial statements, the Company
has an accumulated deficit of approximately $15,022,000 as of
September 30, 2002. The Company also has certain debts that are
in default at September 30, 2002. The Company's stockholders'
deficit at September 30, 2002 was $2,516,794, and its current
liabilities exceeded its current assets by $2,783,206.
These factors create uncertainty about the Company's ability
to continue as a going concern. The ability of the Company to
continue as a going concern is dependent on the Company obtaining
adequate capital to fund operating losses until it becomes
profitable. If the Company is unable to obtain adequate capital
it could be forced to cease operations.
In order to continue as a going concern, develop and generate
revenues and achieve a profitable level of operations, the
Company will need, among other things, additional capital
resources. Management's plans to obtain such resources for
the Company include (1) raising additional capital through
sales of common stock, (2) converting promissory notes into
common stock and (3) entering into acquisition agreements with
profitable entities with significant operations. In addition,
management is continually seeking to streamline its operations
and expand the business through a variety of industries,
including real estate and financial management. However,
management cannot provide any assurances that the Company
will be successful in accomplishing any of its plans. The
accompanying financial statements do not include any adjustments
that might be necessary if the Company is unable to continue as
a going concern.
NOTE 3 - MATERIAL EVENTS
In March 2002, the shareholders of the Company approved
changing the name of the Company to Broadleaf Capital Partners, Inc.
and changing the state of domicile from Colorado to Nevada.
In addition, the shareholders approved a reverse stock split of
100 to 1. All references to common stock have been retroactively
restated.
PAGE-10-
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
This Form 10-QSB contains forward looking statements within the
meaning of section 27A of the Securities Act of 1933 and section
21E of the Securities Exchange Act of 1934. The Company's actual
results could differ materially from those set forth in the
forward looking statements.
MANAGEMENT DISCUSSION
Broadleaf Capital Partners, Inc. (Company) is a venture capital
fund and plans to continue as a Business Development Corporation
(BDC) under the 1940 Act. The Company makes direct investments
in and provides management services to businesses that have at
least a one-year operating history, the original founding
management, with minimum annual revenues of $1.5 million, and
operating in niche or under-served markets. The Company intends
to expand on its investment strategy and portfolio through the
internal development of its present operations and other business
opportunities, as well as the acquisition of additional business
ventures. The Company has in the past, and may again in the
future, raise capital specifically for the purpose of maintaining
operations and making an investment that the Company believes is
attractive.
ANALYSIS OF FINANCIAL CONDITION
The third quarter of 2002 marked the continuance of assessing and
consolidating the Company's previous investments and operations.
Results of Operations - Three months ended September 30, 2002,
compared to the three months ended September 30, 2001.
Revenues. Revenues for the three months ended September 30, 2002
decreased by $30,902 or 94% to $1,900 from $32,802 for the three
months ended September 30, 2001. This decrease was primarily due
to the absence of development income.
Expenses. Expenses for the three months ended September 30, 2002
decreased by $188,724 or 46% to $226,110 from $415,134 for the
three months ended September 30, 2001. General and
administrative expenses for the three months ended September 30,
2002 decreased by $64,699 or 24% to $211,470 from $276,169. This
decrease was primarily due to a reduction in operations.
Results of Operations - Nine months ended September 30, 2002,
compared to the nine months ended September 30, 2001.
Revenues. Revenues for the nine months ended September 30, 2002
decreased by $90,211 or 92% to $8,132 from $98,343 for the nine
months ended September 30, 2001. This decrease was primarily due
to the absence of development income and interest income.
Expenses. Total expenses for the nine months ended September 30,
2002, decreased by $262,456 or 34% to $523,609 from $786,065 for
the nine months ended September 30, 2001. This decrease was
primarily due to a reduction in bad debt expense. General and
administrative expenses for the nine months ended September 30,
2002, increased by $78,995 or 16% to $491,689 from $412,694 for
the nine months ended September 30, 2001.
PAGE-11-
Changes in Financial Condition, Liquidity and Capital Resource.
For the nine months ended September 30, 2002, the Company funded
its operations and capital requirements partially with its own
working capital and partially with proceeds from stock offerings.
As of September 30, 2002, the Company had cash of $877.
PAGE-12-
Item 3. Controls and Procedures
Within 90 days prior to the date of filing of this report, we
carried out an evaluation, under the supervision and with the
participation of our management, including the Chief Executive
Officer (who also effectively serves as the Chief Financial
Officer), of the design and operation of our disclosure controls
and procedures. Based on this evaluation, our Chief Executive
Officer concluded that our disclosure controls and procedures are
effective for gathering, analyzing and disclosing the information
we are required to disclose in the reports we file under the
Securities Exchange Act of 1934, within the time periods specified
in the SEC's rules and forms. There have been no significant
changes in our internal controls or in other factors that could
significantly affect internal controls subsequent to the date of
this evaluation.
Item 6. Exhibits
Exhibit Name and/or Identification of Exhibit
Number
99 Certification under Section 906 of the Sarbanes-Oxley Act
(18 U.S.C. Section 1350)
PAGE-13-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
BROADLEAF CAPITAL PARTNERS, INC.
November 19, 2002 /s/ Robert A. Braner
- ------------------ -------------------------
Date Robert A. Braner
Interim President
November 19, 2002 /s/ Lisa L. Martinez
- ------------------ -----------------------
Date Lisa L. Martinez
Corporate Secretary
CERTIFICATION
I, Robert A. Braner, certify that:
1.I have reviewed this quarterly report on Form 10-QSB of
BROADLEAF CAPITAL PARTNERS, INC.;
2.Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact, or omit to state a
material fact necessary to make the statements made, in light
of the circumstances under which such statements were made,
not misleading with respect to the period covered by this
quarterly report; and
3.Based on my knowledge, the financial statements, and other
financial information included in this quarterly report,
fairly present in all material respects the financial
position, results of operations, and cash flows of the issuer
as of, and for, the periods presented in this quarterly
report.
4.I am responsible for establishing and maintaining disclosure
controls and procedures for the issuer and have:
(i) Designed such disclosure controls and procedures to
ensure that material information relating to the issuer is
made known to me, particularly during the period in which
the periodic reports are being prepared;
(ii) Evaluated the effectiveness of the issuer's disclosure
controls and procedures as of September 30, 2002; and
(iii) Presented in the report our conclusions about the
effectiveness of the disclosure controls and procedures
based on my evaluation as of the Evaluation Date;
5.I have disclosed, based on my most recent evaluation, to the
issuer's auditors and the audit committee of the board of
directors (or persons fulfilling the equivalent function):
(i) All significant deficiencies in the design or
operation of internal controls which could adversely affect
the issuer's ability to record, process, summarize and
report financial data and have identified for the issuer's
auditors any material weaknesses in internal controls (none
were so noted); and
(ii) Any fraud, whether or not material, that involves
management or other employees who have a significant role
in the issuer's internal controls (none were so noted); and
6.I have indicated in the report whether or not there were
significant changes in internal controls or in other factors
that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and
material weaknesses.
Date: November 19, 2002
/s/ Robert A. Braner
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President and CEO
PAGE-14-