Bernard Allan & Edwards 10QSB 2002 Q3 Quarterly report (small business)

Form 10-QSB
U.S. Securities and Exchange Commission
Washington, D.C. 20549

(Mark One)

[X] Quarterly report pursuant section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended ..........................................................................................
[ ] Transition report pursuant section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from ..............................................to.........................................
Commission file number :333-62994

Bernard, Allan & Edwards, Inc. (Exact name of small business issuer as specified in its charter)

Florida (State or jurisdiction of incorporation or organization)	41-1964282 (I.R.S. Employer Identification No.)
1016 Shore Acres Drive, Leesburg, Florida 34748 (800) 769-1037
(Address and telephone number of principal executive offices)
1016 Shore Acres Drive, Leesburg, Florida 34748
(Address of principal place of business or intended principal place of business)

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 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. YesX No........

Applicable only to issuers involved in bankruptcy proceedings during the preceding five years

Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by court. Yes......No........

Applicable only to corporate issuers

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 5,013,400 shares outstanding at August 15, 2002
Transitional Small Business Disclosure Format (check one);
Yes......NoX

PART 1 - FINANCIAL INFORMATION

Item 1. Financial Statements.

BERNARD, ALLAN & EDWARDS, INC

BALANCE SHEET

AS OF AND FOR THE PERIODS ENDED SEPTEMBER 30, 2002

AND SEPTEMBER 30, 2001

ASSETS

	SEPTEMBER 30, 2002	SEPTEMBER 30, 2001
Current Assets:
Cash	$3,774	$64
Investments, Money Market	-	27,616
Prepaid Expenses
Total Current Assets	$3,774	$27,680
TOTAL ASSETS	$3,774	$27,680
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts Payable	$1,030	$100
Total Current Liabilities	$1,030	$100
Shareholders' Equity:
Common shares, No Par Value 80,000,000 and 30,000,000 shares authorized; and 8,863,400 and 2,574,600 shares issued and outstanding	$212,372	$159,356
Retained earnings (Deficit)	(209,628)	(131,776)
TOTAL SHAREHOLDERS' EQUITY	2,774	27,580
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$3,774	$27,680

The accompanying notes are an integral part of these financial statements

2

BERNARD, ALLAN & EDWARDS, INC.

CONSOLIDATED STATEMENT OF OPERATIONS

STATEMENT OF OPERATIONS

AS OF AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002

AND SEPTEMBER 30, 2001

	Nine Months	Nine Months
	Ended	Ended
	SEPTEMBER 30, 2002	SEPTEMBER 30, 2001
REVENUES:
Interest Income	$-	$240
Other Income	-	-
TOTAL REVENUES	-	240
EXPENSES:
Salaries	2,250	27,300
Professional Expenses	1,075	43,175
Other Expenses	175	1,074
TOTAL EXPENSES	3500	71,549
Income (Loss) Before Income Taxes	(3500)	(71,309)
Provision for Income Taxes	-	0
Net Income (Loss)	$(3,500)	$(71,309)
Net Income (Loss) per Share of Common Stock
Basic	$0.00	$0.00
Diluted	$0.00	$0.00
Weighted Average Number of Common Shares Outstanding
Basic	6,371,733	2,579,200
Diluted	6,925,933	3,133,400

The accompanying notes are an integral part of these financial statements.

3

BERNARD, ALLAN & EDWARDS, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

STATEMENT OF CASH FLOWS

AS OF AND FOR THE PERIODS ENDED SEPTEMBER 30, 2002

AND SEPTEMBER 30, 2001

	Period	Period
	Ended	Ended
	SEPTEMBER 30, 2002	SEPTEMBER 30, 2001
Cash Flows from Operating Activities:
Net Income (Loss)	$(3,500)	$(71,309)
Adjustment to Reconcile Net Income (Loss) to Net Cash (Used In) Provided by Operating Activities:
<Decrease> in Accounts Payable	(972)	(27,200)
Adjustments not requiring outlay of cash:	2
Common Shares Issued for Compensation	2,250	94,600
Net Cash (Used In) Operating Activities	(276)	(3,909)
Cash Flows from Investing Activities:
Net Cash (Used In) Investing Activities	-
Cash Flows from Financing Activities:
Net Cash Provided by Financing Activities
Net Increase in Cash and Cash Equivalents	(276)	(3,909)
Cash and Cash Equivalents
at Beginning of Period	4,050	31,589
Cash and Cash Equivalents
at End of Period	$3,774	$27,680

The accompanying notes are an integral part of these financial statements.

4

BERNARD, ALLAN & EDWARDS, INC

STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

FOR THE PERIOD FROM FEBRUARY 7, 2000 (FROM INCEPTION)

THROUGH SEPTEMBER 30, 2002

					ADDITIONAL PAID-IN CAPITAL	RETAINED EARNINGS DEFICIT
	PREFERRED	STOCK	COMMON	STOCK
	SHARES	AMOUNT	SHARES	AMOUNT
BALANCE
December 31, 1999	50	$1	4,490	$45	$358,721	($258,676)
Preferred stock, cash dividend;						(33,441)
Net income for year						24,426
BALANCE
December 31, 2000	50	1	4,490	45	358,721	(267,691)
March 16, 2001
Acquisition of Bernard, Allan & Edwards, Inc. by Bernard, Lee & Edwards Securities, Inc.
Shares owned by BAE shareholders		1,177,100	64,756		(15,021)
Shares issued to BLE shareholders			1,247,500	87,043
Recapitalization of Bernard, Lee & Edwards Securities, Inc.	(50)	(1)	(4,490)	(45)	(358,721)	267,691
Issuance of shares for services			775,200	117,270
Net income (loss) for year						(161,410)
BALANCE
December 31, 2001 (audited)	0	$0	3,199,800	$269,039	$0	($176,431)
Issuance of shares for services			333,000	13,322
Net Income (loss) for period						(9,015)
BALANCE
March 31, 2002	0	$0	3,532,800	282,361	$0	(185,446)
April 11, 2002
Spin off of Bernard, Allan & Edwards Securities, Inc. to shareholders May 18, 2002				(87,045)		5,540
Issued 4,100,000 shares in an S-8 registration for consulting and other corporate services.			4,100,000	41,000
Issued shares in a one for three forward split			1,177,600	11,776
Issuance of shares for services			53,200	528
Net income (loss) for period						(64,722)
BALANCE
June 30, 2002.			8,863,400	$248,622	$-	(244,628)
August 2, 2002 Cancellation of shares			(3,850,000)	$(38,500)		38,500
Issuance of shares for services			225,000	$2,250
Net income(loss) for period						(3,500)
BALANCE
September 30, 2002.	$-	$-	5,238,400	$212,372	$-	$209,628

The accompanying notes are an integral part of these financial statements.

5

BERNARD, ALLAN & EDWARDS, INC.

NOTES TO FINANCIAL STATEMENTS

AS OF AND FOR THE PERIODS ENDED SEPTEMBER 30, 2002

AND SEPTEMBER 30, 2001

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS

Bernard, Allan & Edwards, Inc. was incorporated on February 7, 2000 in the State of Florida as Internet-Estreet.Com, Inc. On March 16, 2001, the shareholders approved the change of the name to Bernard, Allan & Edwards, Inc. The Company intends to achieve future growth through the acquisition of public accounting practices and the offering of investment banking services to the clients of these firms and others.

BASIS OF PRESENTATION

The accompanying financial statements have been prepared on the going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amount and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company's continuation as a going concern is dependent upon its ability to generate sufficient cash flow to meet its obligations on a timely basis and to obtain additional financing as may be required.

CASH AND CASH EQUIVALENTS

For purposes of the statement of cash flows, the Company considers all highly liquid investments with a maturity of three months or less at the date of purchase to be cash equivalents.

ESTIMATES

The preparation of the Company's financial statements in conformity with generally accepted accounting principles requires the Company's management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying value of cash approximates fair value due to the short maturity of these instruments. None of the financial instruments are held for trading purposes.

6

BERNARD, ALLAN & EDWARDS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

AS OF AND FOR THE PERIODS ENDED SEPTEMBER 30, 2002

AND SEPTEMBER 30, 2001

DEPRECIATION

Equipment is carried at cost. Depreciation is computed using the straight line method for financial reporting purposes over a period of five years.

INCOME TAXES

Deferred income taxes are provided for temporary differences between the financial reporting and tax bases of assets and liabilities using enacted tax laws and rates for the years when the differences are expected to reverse.

NET INCOME (LOSS) PER SHARE OF COMMON STOCK

As of December 31, 2000, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings Per Share", which specifies the method of computation, presentation, and disclosure for earnings per share. SFAS No. 128 requires the presentation of two earnings per share amounts, basic and diluted. Basic earnings per share is calculated using the average number of common shares outstanding . Diluted earnings per share is computed using the weighted average number of common shares outstanding, stock options and warrants using the treasury stock method. Approximately 554,220 options and warrants were outstanding as of September 30, 2002 and September 30, 2001, respectively, but were not included in the computation of the diluted earnings per share as the effect would be antidulitive.

PRINCIPLES OF CONSOLIDATION

This report contains the accounts of Bernard, Allan & Edwards, Inc. and accounting predecessor, Bernard, Lee & Edwards Securities, Inc. The assets of Bernard, Lee & Edwards Securities, Inc. were acquired as a purchase in late March, 2001. On April 3, 2002, the shareholders approve the spin off of Bernard, Lee & Edwards Securities, Inc. to the shareholders of the company. The shares were transferred on April 11, 2002. All intercompany accounts have been eliminated upon consolidation.

NOTE 2 - PREFERRED STOCK

The Company is authorized to issue 3,000,000 shares of no par value preferred stock. No shares have been issued to date.

7

BERNARD, ALLAN & EDWARDS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

AS OF AND FOR THE PERIODS ENDED SEPTEMBER 30, 2002

AND SEPTEMBER 30, 2001

NOTE 3 - CAPITALIZATION -- PRIVATE PLACEMENT

A private offering memorandum, dated July 1, 2000 provided for the sale of up to 250,000 units with an effective date of July 1, 2000. The offering price of a unit was $.40 and consisted of one share of common stock, one warrant A to purchase eight shares of common stock and one warrant B to purchase two and one-half shares of common stock. The agency agreement to offer the units for sale was signed with Bernard, Lee & Edwards Securities, Inc., a Company related through common ownership. The agreement for a payment of a 10% commission was for a period of ninety days. The offering closed during September, 2000 with the sale of 177,100 units. Warrant A gives the holder the right to acquire eight shares of the Company's common stock for each warrant A at an exercise price of $1.25 per share. Warrant B gives the holder the right to acquire two and one-half shares of the Company's common stock for each warrant B at an exercise price of $4.00 per share. The warrants could not have been exercised until the e ffective date of the registration statement that has been filed with the Securities and Exchange Commission for the purpose of registering the common stock and warrants. The Company became effective February 14, 2002. Warrant A will expire twelve months from said effective date or February 14, 2003 and warrant B will expire eighteen months from said date or August 14, 2003. The warrants will remain effective during the exercise period, and the Company's board of directors has the right to extend expiration dates as long as the registration statement filed with the SEC is kept current. On August 6,2002, the Board of Directors extended the expiration dates of the A and B warrants to February 14, 2002 and August 14, 2002, respectively. The Company will have the right to call the warrants upon thirty days written notice to warrant owners, and it will pay $.02 per warrant for each warrant not exercised. Warrant A cannot be called unless the bid price of the Company's common stock is $2.00 or higher for a period o f twenty consecutive trading days, and warrant B cannot be called unless the bid price of the common stock is $5.00 or higher for twenty consecutive trading days.

INCENTIVE STOCK OPTION PLAN

The Board of Directors has approved on March 16, 2001 and the shareholders have approved the plan to grant 1,000,000 options to purchase 1,000,000 common shares of the Company's stock. No options have been granted as of this date.

NOTE 4 - RELATED PARTY AND NOTE RECEIVABLE

The note receivable was dated August 2, 1999, bears interest at 8% per annum, and was written in the amount of $55,100. A $600 payment was made on September 17, 1999 and a $34,692 payment was made on September 30, 2000. The note was due on demand and was secured by stock of a publicly traded corporation. The maker of the note is Heartland Diversified Industries, Inc. The president and stockholder of Heartland is also the chief executive officer and a stockholder in Bernard, Lee & Edwards Securities, Inc.

The Note was satisfied on March 16, 2001 as part of the acquisition of Bernard, Allan & Edwards, Inc. by Bernard, Lee & Edwards, Inc. See Note 7.

8

BERNARD, ALLAN & EDWARDS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

AS OF AND FOR THE PERIODS ENDED SEPTEMBER 30, 2002

AND SEPTEMBER 30, 2001

NOTE 5 - DEPOSITS HELD

The Company had held until the period ended March 31, 2002 a $20,000 deposit from the New York Office of Bernard, Lee & Edwards Securities, Inc. The money was being held to cover any unsecured customer debits.

NOTE 6 - INCOME TAXES

Significant components of deferred income taxes for both the parent company and the wholly-owned subsidiary are as follows:

Net Operating Loss	$248,127
Total Deferred Tax Asset	99,251
Less Valuation Allowance	99,251
Net Deferred Tax Asset	$0

The Company has assessed its past earnings history and trends and expiration dates of carry forwards and has determined that it is more than likely that no deferred tax assets will be realized. A valuation allowance of $99,251 as of September 30, 2002 is maintained on deferred tax assets which the Company has determined to be more than likely not realized at this time. The Company will continue to review this valuation on an annual basis and make adjustments as appropriate.

As of September 30, 2002, the Company had a consolidated net operating loss carry forward of $248,128. The net operating loss can be carried forward to offset future taxable income and will expire between December 31, 2009 and December 31, 2022.

NOTE 7 - PURCHASE OF SUBSIDIARY

The Board of Directors, on March 16, 2001, approved a plan to acquire Bernard, Lee & Edwards Securities, Inc. This will facilitate the Company's plans to offer, besides accounting services, financial planning, variable annuities, mutual funds and investment banking which are all classified as securities. The Company acquired all of the outstanding common and preferred stock in exchange for 1,247,500 shares of common shares. Bernard, Lee & Edwards Securities, Inc. had 500 shares of 8% cumulative and convertible preferred stock outstanding. It also had a note receivable from a company, both of which were owned by a company whose principal stockholder and president is also a stockholder and the Chief Executive Officer of Bernard, Allan & Edwards, Inc. As an inducement to the preferred stockholder to forgive all unpaid cumulative preferred dividends and to reduce the note receivable from $25,000 to $15,000, the Company has issued warrants to purchase 200,000 shares of the Company's common stock at the exercise price of $4.50 for a period of three years from the effective date of the SEC registration with the understanding that the underlying shares to be issued upon the exercise of the warrants will be registered with the contemplated SEC filing. In August, 2002 the Board of the Directors extended the expiration dates of the A and B warrants.

NOTE 8- CONTRACTS FOR SERVICES

The Board of Directors, on March 16, 2001, approved a consulting agreement with a certified public accountant named Allan B. Dombrow. Mr. Dombrow, as a long-time practitioner in South Florida, has agreed to be involved in identifying and evaluating accounting firms that may be acquired. The agreement commenced February 14, 2002, the effective date of the SEC registration for the Company. In exchange for his services, Mr. Dombrow received 100,000 shares of common shares as initial compensation. The shares were valued at $.40 per share and the value of the initial compensation is $40,000. The shares were transferred to Mr. Dombrow at $.40 per share.

During the second, third and fourth quarters of 2001, and the first, second and third quarters of 2002, several officers of the Company received shares in lieu of salaries. The shares were transferred to the officers of the Company in the second and third quarters at $.50 per share and during the fourth quarter at $.04 per share, and subsequently at $.01 per share.

NOTE 9 - SPIN OFF OF SUBSIDIARY

On April 3, 2002 the shareholders approved the spin-off of the subsidiary Bernard, Lee & Edwards Securities, Inc. As such this report shows the results for Bernard, Allan & Edwards, Inc. only.

NOTE 10 - SECURITIES REGISTRATION

In May, 2002 the company issued 4,100,000 shares of commons stock in a S-8 Registration Statement for business development, consulting and other corporate services. Of this number 250,000 shares valued at $.01 per share were issued to corporate counsel for services rendered. In August 2, 2002, 3,850,000 of these shares were withdrawn from registration and cancelled.

NOTE 11 - SPLIT OF COMMON STOCK

On May 18, 2002 the company issued 1,177,633 shares of common stock in a one for three forward split. On May 16, 2002 the shareholders approved an increase the number of authorized shares from 30,000,000 to 80,000,000 shares of common stock, no par value.

Item 2. Managements Plan of Operation.

The following should be read in conjunction with the Consolidated Financial Statements of Bernard, Allan & Edwards, Inc. and the notes thereto included elsewhere in this Report.

Plan of Operation

In May, 2002 management abandoned the financial services industry business plan that had been the focus of the companys operations since the acquisition of Bernard, Lee & Edwards Securities, Inc., a NASD broker-dealer, in March, 2001.

From March, 2001 until early 2002 we earned commissions and fees from Bernard, Lee & Edwards Securities, Inc. New York City retail securities brokerage office. Prior to September, 2001 that office had about five independent contractor agents servicing about 300 retail customers. Commissions and fees were earned primarily from the sale of mutual funds and equity securities listed on the major US stock exchanges. Although our business plan did not aim for an increase in the number of agents in that office, we did intend to allow the office to continue in operation while we were seeking growth of the overall financial services business by establishing independent contractor relationships with tax and accounting professionals, or by acquiring small to medium tax and accounting practices in Florida.

For the fiscal year ending December 31, 2001, we recognized a loss of ($161,410) on gross revenues of $215,560. Gross revenues earned primarily on commissions from customer transactions were $89,195 for the fiscal year ending December 31, 1999 and $409,341 for the fiscal year ending December 31, 2000. Expenses during fiscal 1999 were $131,994 and Bernard Lee Securities experienced a net loss of ($42,799) for that year. Expenses during fiscal 2000 were $384,915 and Bernard Lee Securities experienced a net profit of $24,426 for fiscal 2000. The substantial increase in revenue and expenses from fiscal 1999 to fiscal 2000 is due primarily to the establishment of a New York City office that resulted in more sales and the payment of more commissions to the independent contractors working out of that office. Prior to the establishment of the New York office sales were made primarily by management.

Bernard, Lee & Edwards Securities, Incs New York office was located in close proximity to the World Trade Center and after September 11, 2001 the office space was not useable. The staff conducted business out of temporary offices or from home. At that time we expected them to continue to do so until early into the first quarter of 2002 when we expected telephone service to become fully reestablished and the office building would again become available for safe occupancy. Revenues for the months of September and October, 2001 were negatively impacted. Revenue for November, 2001, however, was within the lower end of the normal, expected range, and revenue for December, 2001 was only somewhat below the expected range established from experience prior to the events of September 11. We reported a net loss of ($161,410) for fiscal 2001 on total revenue of $215,560.

During the first quarter of 2002 the independent contractor sales staff was attrited to one person. The general market decline experienced during most of 2001 made working in the industry generally less attractive to many retail sales people. The proximity of the office to the World Trade Center, and the disruption and dislocation caused by the events of September 11 made it more difficult for Bernard, lee & Edwards Securities, Inc. to retain its existing staff or to compete successfully for qualified sales personnel as compared with securities brokerage firms that were better capitalized or not so directly impacted by September 11. Additionally a NASD arbitration was filed in November, 2001 naming an independent contractor agent in the New York City office, along with the broker-dealer, as defendants. The broker-dealer, in turn, filed a claim for indemnification against the manager of the New York Office in the event there were an adverse result in the original arbitration.

Prior to May, 2002 our general plan of operation for the remainder of fiscal 2002 was to concentrate on expanding our broker-dealers customer base by acquiring or affiliating with practicing accounting professionals of established small tax preparation and accounting businesses located in Florida. We did not intend to increase the staff of our New York City office beyond five sales agents. We anticipated that the principals of many tax preparation and accounting firms may prefer adding financial services to their existing business as opposed to selling their entire practice. In these situations we intended to offer these principals the opportunity to affiliate with our broker-dealer subsidiary as financial services independent contractors.

We also intended to increase the number and variety of financial products and services that we could offer to our clients by expanding into tax and estate planning, mortgages, and insurance products although we had no specific plan or timetable for when any of these new products and services would become available.

By May, 2002, however, management reassessed the probability of successfully implementing our business plan in light of a continuing decline in revenue likely to be produced by the broker-dealer, the potential cost in capital resources and management time in rehabilitating the New York City office, the expense of defending the arbitration, the perceived damage to our marketing program among tax and accounting professionals caused by the arbitration, regardless of fault or outcome, and the harmful effect on present and future operations of a possibly adverse result in the arbitration against Bernard, Lee & Edwards Securities, Inc..

In May, 2002 management took the decision to abandon the financial services industry business plan. All Bernard, Allan & Edwards ownership interest in Bernard, Lee & Edwards Securities, Inc. was distributed to its shareholders. Since Accounting Services Acquisition partners, Inc., the lone remaining subsidiary, had never conducted any business the divestiture of the broker-dealer subsidiary left Bernard, Allan & Edwards with no business operations and no source of revenue. In an attempt to preserve our remaining assets and any shareholder value, management is seeking to acquire or the opportunity to be acquired by an ongoing business through merger. At the date of this Prospectus management is not involved in any discussions or negotiations relative to any proposed acquisition or merger.

Our ability to complete a future acquisition or merger is uncertain. We may not be able to identify a suitable businesses partner for acquisition or merger. We may not be able to complete an acquisition or merger on terms that we consider economically acceptable. Even if we are successful in completing an acquisition or merger the resultant business may not be profitable. There is intense competition for acquisition and merger opportunities in almost every area of the country and in almost every industry. Many of our competitors are likely to be more experienced and better capitalized. Also, our management is not experienced in operating a variety of businesses outside the financial services industry and it may not be able to accurately evaluate the business prospects of any acquisition or merger candidate.

Liquidity

At the date of this Report we have about $3,700 in cash and $1,000 in current liabilities. We have no recurring monthly obligations for office rent, telephone, or other usual operating expenses as these items are being donated by management. We do anticipate future incidental expenses consisting of professional fees related primarily to our ongoing SEC filing obligations. We anticipate that we can continue to meet our obligations as they occur until about March, 2003, after which time we will have to raise additional cash to pay the professional fees needed to stay current in our SEC filings.

We may also incur expenses related to our search for and evaluation of suitable merger or acquisition candidates. We anticipate that the greater portion of expenses related to this activity would consist of travel, lodging if required, and similar related expenses. After one or more suitable acquisition or affiliation candidates are determined the dominant cost related to this activity will likely become legal and accounting expenses. In the event that management determines that our liquidity at any time would not be sufficient to perform an adequate search for or evaluation of potential merger or acquisition candidates then management intends to conduct a small private offering of our securities to raise cash sufficient to complete the process. Management anticipates it likely would be successful in raising sufficient cash at that time through a private offering of securities to management personnel or to a small number of business associates, although we are unable at this time to ascertain the limits o r the parameters of any such possible offering.

Results of Operations

Nine months ended September,30 2002 as compared to the nine months ended September 30, 2001. A tabular breakdown of revenue and expenses is shown below.

	Nine Months	Nine Months
	Ended	Ended
	SEPTEMBER 30, 2002	SEPTEMBER 30, 2001
REVENUES:
Interest Income	$-	$240
Other Income	$ -	$-
TOTAL REVENUES	-	240
EXPENSES:
Salaries	2,250	27,300
Regulatory Fees	-	-
Professional Expenses	1,075	43,175
Other Expenses	175	1,074
TOTAL EXPENSES	3,500	71,549
Income (Loss) Before Income Taxes	(3,500)	(71,309)
Provision for Income Taxes	0	0
Net Income (Loss)	$3,500	$(71,309)

Executive salaries have been paid in common stock and not cash. We anticipate that arrangement shall continue into the indefinite future during any period in which we shall have no regular source of operating income. Professional fees are related primarily to the preparation of SEC filings and also to legal fees related to the defense of the arbitration involving our former broker-dealer subsidiary during the period before its divestiture. We anticipate paying future legal fees associated with regulatory filings primarily in common stock. The divestiture of the broker-dealer subsidiary has eliminated the expense to us of legal defense in arbitration.

PART II--OTHER INFORMATION

Item 1. Legal Proceedings
Previously reported items regarding arbitration claims against Bernard, Lee & Edwards Securities, Inc., the former subsidiary of Bernard, Allan & Edwards, Inc. have been reported previously but are not reported here. The subsidiary was divested in May, 2002. Bernard, Allan & Edwards is not a party in any arbitration involving the former subsidiary and has no reasonably known contingent liability resulting therefrom.

No director, officer or affiliate of Bernard, Allan & Edwards, any owner of record or beneficially of more than 5% of any class of voting securities of Bernard, Allan & Edwards, or security holder is a party adverse to Bernard, Allan & Edwards or has a material interest adverse to Bernard, Allan & Edwards.

Item 2. Changes in Securities and Use of Proceeds

Bernard, Allan & Edwards, Inc. issued the following securities in lieu of cash compensation and without registration under the Securities Act during the period from July 1, 2002 to September 30, 2002.

Date	Title		Number of Shares		Price per Share		Purchaser
July 15, 2002		Common		25,000		$0.01		Michael McLaughlin
July 15, 2002		Common		25,000		$0.01		Thomas LaRossa
July 15, 2002		Common		3,000		$0.01		James Oberst
August 15, 2002		Common		25,000		$0.01		Michael McLaughlin
August 15, 2002		Common		25,000		$0.01		Thomas LaRossa
August 15, 2002		Common		3,000		$0.01		James Oberst
September15, 2002		Common		25,000		$0.01		Michael McLaughlin
September 15, 2002		Common		25,000		$0.01		Thomas LaRossa
September 15, 2002		Common		3,000		$0.01		James Oberst

The issuance of these shares was exempt from registration in reliance on Section 4(2) of the Securities Act. The purchasers had a prior business relationship with the issuer, no general media was used in the offerings, and the purchasers are financially sophisticated investors with knowledge and experience in financial and business matters and were capable of evaluating the merits and risks of the prospective investment, and had full access to, or were otherwise provided with, all relevant information reasonably necessary to evaluate the prospects for success of Bernard, Allan & Edwards and other relevant factors before making an investment.

The following information is being provided pursuant to Rule 463 (17 CFR 230.463) of the Securities Act of 1933.

This use of proceeds information relates to the registration statement which became effective on February 14, 2002, Commission File No. 333-62994. To the date of this report, Bernard, Allan & Edwards, Inc. has not received any offering proceeds related to the securities described in that registration statement. There is no public market for the securities because the issuer has not completed at the date of this report all the steps necessary to have its securities quoted on the NASDAQ OTCBB. vFinance Investments, Inc. has agreed to become a market maker for the issuer's securities. A Form 15c2-11 has been submitted to NASDAQ and we anticipate the completion of the OTCBB quotation approval process within the near future.

On June 28, 2002, the issuer, Bernard, Allan & Edwards, Inc., made a $500 deposit with its transfer agent, Mountain Share transfer, Inc in connection with the anticipated issuance and distribution of the securities registered on Form SB-2.

Item 3. Defaults upon Senior Securities

NA

Item 4. Submission of Matters to a Vote of Security Holders

No matters were submitted for vote of the shareholders during the period.

Item 5. Other Information.

NA

Item 6. Exhibits and Reports on Form 8-K

Exhibits: None.

On August 28, 2002 the company reported the resignation of a director on Form 8-k.

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

BERNARD, ALLAN & EDWARDS, INC.
(Registrant)
Date: November 14, 2002
/s/ Michael McLaughlin, CEO