Securities and Exchange Commission Washington, DC 20549 ------------------------------------------------- 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. ------------------------------------- Nevada 87-0410039 ---------------- ----------------------------- (State or other jurisdiction of (I.R.S. Employer Identification incorporation or organization) Number) 2531 San Jacinto Street San Jacinto, CA 92583 ----------------------------------- (Address and zip code of principal executive offices) (909) 652-3885 -------------------------- (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 ----------- 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 --------------- -------------- LONG-TERM DEBT Notes payable - long term 500,000 500,000 --------------- -------------- NET LIABILITIES IN EXCESS OF THE ASSETS OF DISCONTINUED OPERATIONS 272,397 295,892 --------------- -------------- Total Liabilities 3,561,907 4,824,740 --------------- -------------- 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 ------------------ (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) --------- ------------ CASH FLOWS FROM INVESTING ACTIVITIES Receipt of cash distributions on investment 73,401 - Purchase of property and equipment - (2,410) --------- ------------ 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 --------------------- President and CEO PAGE-14-