UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended: September 30, 2004
Commission File Number: 000-26953
Bach-Hauser, Inc.
(Exact name of registrant as specified in its charter)
Nevada 88-0390697
(State of incorporation) (I.R.S. Employer Identification No.)
1561 Highway 3, Cayuga, Ontario N0A 1E0
(Address of principal executive offices)
(905) 772-5738
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed
since last report.)
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. Yes [X] No [ ]
There are 40,909,392 shares of common stock issued and outstanding
as of November 15, 2004.
1
INDEX
Page
----
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet (Unaudited)....................... 3
Consolidated Statements of Operations (Unaudited)............ 4
Consolidated Statement of Stockholders' Deficit (Unaudited).. 5
Consolidated Statements of Cash Flows (Unaudited)............ 6
Notes to Consolidated Financial Statements................... 7
Item 2. Management's Plan of Operation.......................... 9
Item 3. Controls and Procedures................................. 12
PART II - OTHER INFORMATION
Item 1. Legal Proceedings...................................... 12
Item 2. Changes in Securities.................................. 12
Item 3. Defaults Upon Senior Securities........................ 14
Item 4. Submission of Matters to a Vote of
Security Holders....................................... 14
Item 5. Other Information...................................... 14
Item 6. Exhibits and Reports on Form 8-K....................... 15
Signatures......................................................... 16
2
PART I - FINANCIAL STATEMENTS
BACH-HAUSER, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2004
(UNAUDITED)
ASSETS
OTHER ASSETS:
Intangible assets $ 4,500
------------
TOTAL ASSETS $ 4,500
============
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accrued liabilities and purchases $ 60,463
Officers' advances 1,075
------------
TOTAL CURRENT LIABILITIES 61,538
SHAREHOLDERS' DEFICIT
Common stock, $.001 par value, 41,666,667
shares authorized, 22,609,392 shares
issued and outstanding 22,609
Additional paid-in capital 20,107,599
Deficit accumulated during development stage (20,187,246)
-------------
TOTAL SHAREHOLDERS' DEFICIT (57,038)
-------------
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT $ 4,500
=============
(THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS)
3
BACH-HAUSER, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
<Table>
<s> <c> <c> <c> <c>
FOR THE PERIOD
FOR THE NINE MONTHS ENDED FOR THE THREE MONTHS ENDED FROM OCT. 10, 1995
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, (INCEPTION) TO
2004 2003 2004 2003 SEPTEMBER 30, 2004
------------- ------------- ------------- ------------- -------------
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
REVENUE $ - $ - $ - $ - $ -
------------- ------------- ------------- ------------- -------------
EXPENSES
General, selling and
administrative 851,533 139,600 170,833 - 20,062,633
Loss on impairment of
film assets 124,613 - 124,613 - 124,613
------------- ------------- ------------- ------------- -------------
976,146 139,600 295,446 - 20,187,246
------------- ------------- ------------- ------------- -------------
LOSS BEFORE INCOME TAXES (976,146) (139,600) (295,446) - (20,187,246)
PROVISION FOR INCOME TAXES - - - - -
------------- ------------- ------------- ------------- -------------
NET LOSS $ (976,146) $ (139,600) $ (295,446) $ - $(20,187,246)
============= ============= ============= ============= =============
NET LOSS PER COMMON SHARE
- BASIC AND DILUTED $ (0.06) $ (0.02) $ (0.01) $ -
============= ============= ============= =============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
- BASIC AND DILUTED 16,470,796 8,481,903 21,757,943 9,009,391
============= ============= ============= =============
(THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS)
</Table>
4
BACH-HAUSER, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
FROM DECEMBER 31, 1995 TO SEPTEMBER 30, 2004
<Table>
<s> <c> <c> <c> <c> <c>
Deficit
accumulated
Common stock Additional during Total
---------------------- paid-in development stockholders'
Shares Amount capital stage equity
---------- --------- ------------ ------------ ------------
Balance at December 31, 1995, as adjusted
for 1 to 10 and 1 to 6 reverse stock splits 937,309 $ 937 $ 5,063 $ (6,000) $ -
Net income - - - - -
---------- --------- ------------ ------------ ------------
Balance at December 31, 1996 937,309 937 5,063 (6,000)
Net income - - - - -
---------- --------- ------------ ------------ ------------
Balance at December 31, 1997 937,309 937 5,063 (6,000) -
Net loss - - - (1,075) (1,075)
---------- --------- ------------ ------------ ------------
Balance at December 31, 1998 937,309 937 5,063 (7,075) (1,075)
Stock issued for intangibles 150,000 150 4,350 4,500
Net income - - - - -
---------- --------- ------------ ------------ ------------
Balance at December 31, 1999 1,087,309 1,087 9,413 (7,075) 3,425
Issuance of shares for services, May 1 3,333 3 55,997 - 56,000
Issuance of shares for services, May 10 3,333 3 74,997 - 75,000
Issuance of shares for services, Sept. 1 17,500 18 283,482 - 283,500
Issuance of shares for services, Sept. 12 13,333 13 347,987 - 348,000
Issuance of shares for services, Sept. 15 266,667 267 7,839,733 - 7,840,000
Issuance of shares for services, Sept. 27 10,000 10 210,590 - 210,600
Issuance of shares for services, Oct. 2 46,667 47 1,035,953 - 1,036,000
Issuance of shares for services, Oct. 18 220,667 221 5,097,179 - 5,097,400
Issuance of shares for services, Nov. 6 36,667 37 549,963 - 550,000
Issuance of shares for services, Nov. 17 279,500 280 2,599,070 - 2,599,350
Issuance of shares for services, Dec. 15 13,333 13 39,987 - 40,000
Issuance of shares for services, Dec. 18 13,333 13 35,987 - 36,000
Expenses paid by shareholder - - 6,095 - 6,095
Net loss - - - (18,177,945) (18,177,945)
---------- --------- ------------ ------------ ------------
Balance at December 31, 2000 2,011,642 2,012 18,186,433 (18,185,020) 3,425
Issuance of shares for services, Jan. 2 4,167 4 13,246 - 13,250
Issuance of shares for services, Aug. 24 6,667 7 19,993 - 20,000
Issuance of shares for services, Aug. 28 33,583 34 141,016 - 141,050
Issuance of shares for services, Sept. 20 8,333 8 29,992 - 30,000
Expenses paid by shareholder - - 500 - 500
Issuance of shares for services, Oct. 24 33,333 33 9,967 - 10,000
Issuance of shares for services, Oct. 31 383,333 383 91,617 - 92,000
Net loss - - - (310,300) (310,300)
---------- --------- ------------ ------------ ------------
Balance at December 31, 2001 2,481,058 2,481 18,492,764 (18,495,320) (75)
Issuance of shares for services, Jan. 31 786,667 787 235,213 - 236,000
Issuance of shares for services, May 29 666,667 667 79,333 - 80,000
Issuance of shares for services, Sept. 4 183,333 183 20,167 - 20,350
Issuance of shares for services, Oct. 2 1,283,333 1,283 152,717 - 154,000
Issuance of shares for services, Dec. 5 266,667 267 29,813 - 30,080
Issuance of shares for services, Dec. 17 1,275,000 1,275 82,875 - 84,150
Issuance of options for services, Oct. 18 - - 2,500 - 2,500
Net loss - - - (556,180) (556,180)
---------- --------- ------------ ------------- -----------
Balance at December 31, 2002 6,942,725 6,943 19,095,382 (19,051,500) 50,825
Issuance of shares for services, Mar. 25 1,733,333 1,733 185,467 - 187,200
Issuance of shares for services, May 27 333,333 333 35,667 - 36,000
Net loss - - - (159,600) (159,600)
---------- --------- ------------ ------------- -----------
Balance at December 31, 2003 9,009,391 9,009 19,316,516 (19,211,100) 114,425
Issuance of shares for services,
Jan. 20 (unaudited) 4,358,333 4,358 257,142 - 261,500
Issuance of shares for services,
Mar. 23 (unaudited) 425,000 425 42,925 - 43,350
Issuance of shares for services,
Jun. 3 (unaudited) 4,141,667 4,142 244,358 - 248,500
Issuance of shares for services,
Jun. 29 (unaudited) 1,341,667 1,342 79,158 - 80,500
Issuance of shares for services,
Jul. 14 (unaudited) 2,500,000 2,500 147,500 - 150,00
Issuance of shares for services,
Aug. 25 (unaudited) 833,334 833 20,000 - 20,833
Net loss (unaudited) - - - (976,146) (976,146)
---------- --------- ------------ ------------- -----------
Balance as of Sept. 30, 2004 (unaudited) 22,609,392 $ 22,609 $ 20,107,599 $(20,187,246) $ (57,038)
=========== ========= ============= ============= ===========
(THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS)
</Table>
5
BACH-HAUSER, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<Table>
<s> <c> <c> <c>
FOR THE PERIOD
FROM OCT. 10,
1995 (INCEPTION)
FOR THE NINE MONTHS ENDED TO
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2004 2003 2004
------------- ------------- --------------
(unaudited) (unaudited) (unaudited)
CASH FLOWS PROVIDED BY (USED FOR)
OPERATING ACTIVITIES:
Net loss $ (976,146) $ (139,600) $ (20,187,246)
----------- ----------- ------------
Adjustments to reconcile net loss
to net cash provided by (used for)
operating activities:
Common stock issued for services 788,533 129,600 19,945,463
Expenses paid by shareholder - - 6,595
Options issued for services - - 2,500
Impairment loss on film assets 174,613 - 174,613
Changes in assets and liabilities:
(Increase) decrease in assets -
Film assets - - -
IncreaseS in liabilities -
Increases in advances and accrued
liabilities payable 13,000 10,000 52,075
----------- ----------- ------------
Total adjustments 976,146 139,600 20,181,246
----------- ----------- ------------
Net cash provided by operating
activities - - (6,000)
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES:
Issuance of common stock for cash - - 6,000
----------- ----------- ------------
NET CHANGE IN CASH AND CASH EQUIVALENTS - - -
CASH AND CASH EQUIVALENTS:
- beginning of period - - -
----------- ----------- ------------
CASH AND CASH EQUIVALENTS:
- end of period - - -
----------- ----------- ------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Interest $ - $ - $ -
=========== =========== ============
Income taxes $ - $ - $ -
=========== =========== ============
SUPPLEMENTAL DISCLOSURE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES:
Issuance of common shares for development
services capitalized as film costs $ 16,150 $ - $ 169,150
=========== =========== ============
Issuance of common shares for services $ 788,533 $ 129,600 $19,945,463
=========== =========== ============
Issuance of common shares for
intangibles $ - $ - $ 4,500
=========== =========== ============
Film costs acquired in Plan B
acquisition $ - $ - $ 5,463
=========== =========== ============
</Table>
(THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS)
6
BACH-HAUSER, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 2004
(UNAUDITED)
NOTE 1 - DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
NATURE OF OPERATIONS
Bach-Hauser, Inc. (the "Company") is currently a development-
stage company under the provisions of the Financial Accounting
Standards Board's ("FASB") Statement of Financial Accounting
Standard ("SFAS") No. 7, "Accounting and Reporting by Development
Stage Enterprises." The Company was incorporated under the laws
of the state of Nevada on October 10, 1995.
INTERIM FINANCIAL INFORMATION
The accompanying unaudited interim consolidated financial statements
have been prepared by the Company in accordance with accounting
principles generally accepted in the United States of America
pursuant to Regulation S-B of the Securities and Exchanges
Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with
accounting principles generally accepted in the United States of
America have been condensed or omitted. Accordingly, these interim
consolidated financial statements should be read in conjunction with
the Company's audited financial statements and related notes as
contained in the Company's Form 10-KSB for the year ended
December 31, 2003. In the opinion of management, the interim
consolidated financial statements reflect all adjustments, including
normal recurring adjustments, necessary for fair presentation of the
interim periods presented. The results of operations for the nine
months ended September 30, 2004 are not necessarily indicative of
results of operations to be expected for the full year.
NOTE 2 - STOCK PLAN
In January 2004, the Board of Directors of the Company adopted
the 2004 Stock Plan for the grant of common stock in lieu of cash
compensation, for Stock Awards, and for the exercise of stock
options. Under the Stock Plan, 8,333,333 shares are reserved for
issuance. On September 30, 2004, the Company amended the Stock
Plan to increase the number of shares reserved for issuance to
200,000,000.
NOTE 3 - FILM ASSET IMPAIRMENT
Management has decided to write-off the entire amount of costs
capitalized for the development of film assets, as in their opinion
these costs have become impaired and no longer represent any value.
NOTE 4 - STOCKHOLDERS' EQUITY
In January 2004, the Company issued 3,775,000 shares of its
$.001 par value common stock in exchange for consulting services
valued at $226,500. These shares were issued under consulting
agreements and were valued at the fair value of the stock at the
time of issuance, which was $.06 per share.
In January 2004, the Company issued 583,333 shares of its $.001
par value common stock in exchange for services valued at
$35,000. These shares were issued for legal services and were
valued at the fair value of the stock at the time of issuance,
which was $.06 per share.
7
In March 2004, the Company issued 425,000 shares of its $.001
par value common stock in exchange for consulting services valued
at $43,350. These shares were issued under consulting agreements
and were valued at the fair value of the stock at the time of
issuance, which was $.10 per share. $16,150 was capitalized as
film assets in accordance with SOP 00-2.
In June 2004, the Company issued 4,141,667 shares of its $.001
par value common stock in exchange for consulting services valued
at $248,500. These shares were issued under consulting agreements
and were valued at the fair value of the stock at the time of
issuance, which was $.06 per share.
In June 2004, the Company issued 1,341,667 shares of its $.001
par value common stock in exchange for consulting services valued
at $80,500. These shares were issued under consulting agreements
and were valued at the fair value of the stock at the time of
issuance, which was $.06 per share.
In July 2004, the Company issued 2,500,000 shares of its
$.001 par value common stock in exchange for consulting services
valued at $150,000. These shares were issued under consulting
agreements and were valued at the fair value of the stock at the
time of issuance, which was $.06 per share.
In August 2004, the Company issued 833,334 shares of its
$.001 par value common stock in exchange for consulting services
valued at $20,833. These shares were issued under consulting
agreements and were valued at the fair value of the stock at the
time of issuance, which was $.025 per share.
In September 2004, the board of directors approved a 1 for 6
reverse split of the Company's common stock. As a result of the
1 for 6 reverse stock split, the number of shares of common stock
authorized was reduced from 250,000 shares to 41, 666,667 shares.
All numbers in the accompanying financial statements have been
restated to give effect to the reverse stock split.
NOTE 5 - SUBSEQUENT EVENTS
In October 2004, the Company issued 16,900,000 shares of its
$.001 par value common stock in exchange for consulting services
valued at $507,000. These shares were issued under consulting
agreements and were valued at the fair value of the stock at the
time of issuance, which was $.03 per share.
In October 2004, the Company issued 1,400,000 shares of its $.001
par value common stock in exchange for consulting services valued
at $70,000. These shares were issued under consulting agreements
and were valued at the fair value of the stock at the time of
issuance, which was $.05 per share.
On October 14, 2004, the Company authorized the issuance of up to
68,700,000 shares of its $.001 par value common stock for consulting
services valued at $2,748,000. These shares will be issued on a
later date subsequent to the Company obtaining a Certificate of
Amended and Restated Articles increasing the authorized number of
shares of common stock. These shares will be issued under consulting
agreements and will be valued at the fair value of the stock at the
time the Company authorized the issuance, which was $.04 per share.
On November 15, 2004, the Company increased its authorized shares
of common stock from 41,667,667 to 300,000,000 and created 50,000,000
authorized shares of preferred stock.
On November 10, 2004, the Company entered into a definitive
Acquisition Agreement with DM2 Technology Inc., a corporation
organized under the laws of the Province of Quebec ("DM2"). Pursuant
to the Acquisition Agreement, in exchange for cash and common stock
of the Company, the Company will acquire 100% of the issued and
outstanding stock of DM2, including, but not limited to, all current
assets, accounts receivable, customer lists and equipment of DM2 (the
"Business"). Further, the Company will assume the liabilities of the
Business in an amount not to exceed $120,000. At Closing, the
Company will tender 10,000,000 shares of its restricted common stock
and cash in the amount of $1,000,000 in the form of a promissory
note, the terms of which shall be mutually agreed upon prior to
Closing. Closing is scheduled to occur on or about December 1, 2004.
8
ITEM 2. MANAGEMENT'S PLAN OF OPERATION
This Report may contain "forward-looking" statements. Examples
of forward-looking statements include, but are not limited to:
(a) projections of revenues, capital expenditures, growth,
prospects, dividends, capital structure and other financial
matters; (b) statements of plans and objectives of our management
or Board of Directors; (c) statements of our future economic
performance; (d) statements of assumptions underlying other
statements and statements about us and our business relating to
the future; and (e) any statements using the words "anticipate,"
"expect," "may," "project," "intend" or similar expressions.
We believe the critical accounting policies listed below affect
significant judgments and estimates used in the preparation of
our consolidated financial statements.
Critical Accounting Policies and Estimates
- ------------------------------------------
Our Management's Discussion and Plan of Operations section
discusses our consolidated financial statements, which have been
prepared in accordance with accounting principles generally
accepted in the United States of America. The preparation of
these financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. On an ongoing basis, management evaluates its estimates
and judgments, including those related to revenue recognition,
accrued expenses, financing operations, and contingencies and
litigation. Management bases its estimates and judgments on
historical experience and on various other factors that are
believed to be reasonable under the circumstances, the results of
which form the basis for making judgments about the carrying
value of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these
estimates under different assumptions or conditions. The most
significant accounting estimates inherent in the preparation of
our financial statements include estimates as to the appropriate
carrying value of certain assets and liabilities which are not
readily apparent from other sources. These accounting policies
are described at relevant sections in this discussion and in the
notes to the consolidated financial statements included in this
Report.
PLAN OF OPERATION
The Company plans to pursue the acquisition of film and
television projects; the development, production, and
distribution of film and television projects or properties; with
a particular emphases on Computer Generated Imaging ("C.G.I.").
This industry includes animation. Despite the cancellation of
the SMG acquisition, BHSR remains committed to the principal
behind the deal, which is to secure a percentage participation or
equity stake in a C.G.I. company. To this end, BHSR is currently
sourcing new relationships both domestically and in Asia.
9
Business Strategy
- -----------------
We plan to capitalize on the growing demand worldwide for film
and television products, with an emphasis on C.G.I. and
particularly animation. Our business plan was developed to find,
develop, package and produce animation within the field of C.G.I.
and to engage writers, producers, directors animators and other
talent who have a lot of combined experience, talent, and credits
for their past endeavors in producing animated films.
Our business plan has these main elements which we hope will be
successful:
- - Locate our facilities in Canada: this makes sense due to
the lower cost of doing business in Canada vs. the exchange rate
for the U.S. Dollar (which may change without notice).
- - There is an abundance of film talent in Canada and in Asia.
- - Both federal and provincial governments are favorable to the
film industry.
- - Many tax treaties and other tax advantages will help with
film financing.
- - Keep control of costs to maximize profits.
- - Enter into co-productions with other independents when it
makes economic sense.
- - Find and use the most reputable distributors for our
products.
In October 2002, we acquired 100% of the outstanding shares of a
U.S.-based independent film company, Plan B Productions of Utah,
Inc., described elsewhere in this Report. Plan B's assets
included an uncompleted film with the working title of "Bottom
Dollar." This film will require approximately US$60,000 to
complete and be ready for distribution. We have begun
discussions with another independent film company regarding a
possible joint venture or licensing agreement whereby the other
company would commit to finance, complete, and market "Bottom
Dollar" and pay a licensing fee to the Company. No agreement has
been reached as of the date of this report.
We also acquired two completed film scripts from Plan B. We are
also exploring with the above-mentioned third party, a possible
financing and a co-production of one of the scripts as a
production for later this year or early 2005. We are also
exploring several similar acquisition possibilities of other
independent film-related companies we believe would quickly
establish our company as a production company, or would acquire
other similar film properties, or could generate cash flow. Such
acquisitions, if made, would most likely be on a stock-for-stock
basis, as in the Plan B acquisition.
10
We will need to find more talented people with film credits or
industry experience to join our Company. At present, we do not
have adequate capital to attract such talent; major efforts will
need to be expended to arrange a stable capital base in our
Company.
We will also need to expend efforts to align our Company with
reputable film distributors, especially in the foreign film
distribution markets.
Acquisition of DM2 Technologies Inc.
- ------------------------------------
On November 10, 2004, the Company entered into a definitive
Acquisition Agreement with DM2 Technology Inc., a corporation
organized under the laws of the Province of Quebec ("DM2").
Pursuant to the Acquisition Agreement, in exchange for a
promissory note and common stock of BHSR, the Company will
acquire the business of DM2 and 100% of its issued and
outstanding stock. Further, the Company will assume the
liabilities of the business in an amount not to exceed
US$120,000. Closing is scheduled to occur on or about
December 1, 2004.
DM2 specializes in the sale of POS (point of sale) equipment
and software to handle bank card and credit card payments. DM2
is in the market of electronic transactions, both wired and
wireless.
DM2 currently has 150 commissioned sales representatives across
Canada that sell their hardware and software products to various
customers. In addition, sales are generated from their web site,
advertising and referrals from an existing customer base.
DM2 specializes in providing proprietary software that handles
all POS transactions (whether wired or wireless) in a safe,
secure and efficient manner that meets and surpasses the
expectations of all subscribing clients.
DM2 is constantly developing and implementing proprietary
software to handle the requirements and needs of its major
market, the electronic transactions market.
DM2 currently has seven full time employees in addition to
its President. Four full time employees are dedicated software
programmers that create and maintain its proprietary software
technology.
DM2 is looking to expand its business outside Canada in the
future.
In light of the acquisition of DM2, during the fourth quarter
2004, the Company plans to evaluate its film and other business
endeavors. The Company is continuing to pursue its film
and other business activities, but will concentrate on DM2's
business activities going forward.
Employees
- ---------
Our only employees at the present time are our officers and
directors. Upon completion of the acquisition of DM2, we expect
significant changes in the number of our employees during the
next 12 months.
11
ITEM 3. CONTROLS AND PROCEDURES
The Company's Chief Executive and Financial Officer has
concluded, based on an evaluation conducted as of the end of the
period covered by this Quarterly Report on Form 10-QSB, that the
Company's disclosure controls and procedures have functioned
effectively so as to provide that officer the information
necessary whether:
(i) this Quarterly Report on Form 10-QSB contains any
untrue statement of a material fact or omits 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 on Form 10-QSB, and
(ii) the financial statements, and other financial
information included in this Quarterly Report on Form
10-QSB, fairly present in all material respects the
financial condition, results of operations and cash
flows of the Company as of, and for, the periods
presented in this Quarterly Report on Form 10-QSB.
There have been no significant changes in the Company's internal
controls or in other factors since the date of the Chief
Executive and Financial Officer's evaluation that could
significantly affect these internal controls, including any
corrective actions with regards to significant deficiencies and
material weaknesses.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is not a party to any material pending legal
proceedings and, to the best of its knowledge, no such action by
or against the Company has been threatened.
ITEM 2. CHANGES IN SECURITIES
On September 15, 2004, we effected a 1 for 6 reverse split of our
common stock and correspondingly decreased our authorized shares
common stock from 250,000,000 to 41,667,667. As a result of the
reverse split, our outstanding shares of common stock were reduced
from 135,656,013 to approximately 22,634,392, subject to rounding.
On November 15, 2004, we increased our authorized common stock from
41,667,667 shares to 300,000,000 and created 50,000,000 authorized
shares of preferred stock, pursuant to the Written Consent of
Shareholders holding a majority of the voting power of our
securities. In addition, we amended and restated our Articles of
Incorporation to include the changes in our capital stock and to
elect not to be governed by (i) Sections 78.411 through 78.444,
inclusive, of the Nevada Revised Statutes (the share control law
or business combination laws), and (ii) Sections 78.2055 and 78.207
of the Nevada Revised Statutes which requires shareholder approval
of forward and reverse splits in cases where there is no
corresponding increase or decrease in or to the number of shares
of the class or series subject to the split. With respect to these
changes, on October 25, 2004 we mailed to our shareholders of
record at October 14, 2004 an Information Statement, detailed below
in Item 4.
12
Recent Sales of Unregistered Securities
- ---------------------------------------
There were no unregistered shares of the Company's common stock
issued during the three month period ended September 30, 2004.
Securities Authorized for Issuance Under Equity Compensation Plans
- ------------------------------------------------------------------
On January 13, 2004, the Company adopted a Stock Plan. The Stock
Plan was amended on September 30, 2004 to include a total of
200,000,000 shares of common stock for issuance pursuant to a Stock
Award or pursuant to the exercise of options. The authority to
determine the person to whom shares shall be issued or options shall
be granted, the amount of such option, the exercise price and number
of shares subject to each option, the time or times on which all or
a portion of each option may be exercised, and certain other
provisions of each option, shall be in the Board of Directors of the
Company.
In addition, the Stock Plan provides for the issuance of the Company's
equity securities as compensation for consulting and/or legal services
provided to the Company from time to time. The Company limits the
recipients of stock issued pursuant to the Stock Plan to natural
persons who performed bona-fide services to the Company which were not
in connection with the offer or sale of securities in a capital-raising
transaction, and which do not directly or indirectly promote or maintain
a market for the Company's securities. All shares issued pursuant to the
Stock Plan were registered with the Securities and Exchange Commission
on Form S-8, as follows:
SEC Effective Date Number of Number of
Registration of Registration securities securities
Number Statement issued under remaining
equity available for
compensation future issuance
plan under equity
compensation
plans
(excluding
securities
reflected in
column (c))
- -----------------------------------------------------------------
(a) (b) (c) (d)
- -----------------------------------------------------------------
333-111958 01/16/04 5,000,000 (1)(2) 0
333-116140 06/03/04 5,000,000 (1)(2) 0
333-117351 07/14/04 3,333,333 (1)(2) 0
333-119529 10/05/04 19,000,000 (1) 700,000
- -----------------------------------------------------------------
(1) Number of shares issued pursuant to this Registration Statement
as of the filing of this Report. 3,333,333 shares were issued
during the quarter ended September 30, 2004 to 7 persons who
provided consulting or legal services to the Company.
(2) The number of shares issued have been restated to give effect to
the September 15, 2004 1 for 6 reverse stock split.
On October 14, 2004, the Company authorized the issuance of up to
68,700,000 shares of common stock to eligible participants in its Stock
Plan, which shares will be registered on Form S-8 and issued on a date
subsequent to the Company obtaining a Certificate of Amended and Restated
Articles increasing the authorized number of shares of common stock.
13
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The information required by this Item 4 is incorporated by reference
to the Company's definitive Information Statement filed with the
Securities and Exchange Commission on October 25, 2004 and mailed to
shareholders of record at October 14, 2004.
As set forth in the Information Statement, the Company received written
consents in lieu of a Special Meeting from shareholders representing
61% of the total voting shares of the Company, approving the following
actions:
1. To increase the number of authorized shares of common stock from
41,666,667 shares to 300,000,000 shares.
2. To create 50,000,000 authorized shares of preferred stock.
3. To amend and restate the Articles of Incorporation to include the
amendments stated above and to elect not to be governed by (i)
Sections 78.411 through 78.444, inclusive, of the Nevada Revised
Statutes (the share control law or business combination laws), and
(ii) Sections 78.2055 and 78.207 of the Nevada Revised Statutes
which requires shareholder approval of forward and reverse splits
in cases where there is no corresponding increase or decrease in or
to the number of shares of the class or series subject to the split.
Pursuant to Rule 14c-2 under the Securities Exchange Act of 1934, as
amended, the proposals will not be adopted until a date at least 20 days
after the date on which this Information Statement was mailed to our
shareholders. We anticipate that the actions will not be effected until
we file with the Nevada Secretary of State on or about the close of
business on November 15, 2004. A copy of the Amended and Restated
Articles of Incorporation is attached hereto at Exhibit 3.1.
ITEM 5. OTHER INFORMATION
None.
14
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
Number Description
------ -----------
2.1 Agreement and Plan of Exchange with Plan B
Productions of Utah, Inc. (incorporated by
reference to Exhibit 2.1 to the Company's Form
8-K, filed on November 15, 2002)
2.2 Amendment No. 1 to the Agreement and Plan of
Exchange with Plan B Productions of Utah, Inc.
(incorporated by reference to Exhibit 2.2 to the
Company's Form 10-KSB, filed on April 8, 2003)
2.3 Acquisition Agreement dated November 10, 2004
between Bach-Hauser, Inc. and DM2 Technologies
Inc. (incorporated by reference to Exhibit 2.1
to the Company's Form 8-K, filed on November 12,
2004)
3.1* Amended and Restated Articles of Incorporation
3.2 Bylaws (incorporated by reference to Exhibit 3.2
to the Company's Amended Form 10-SB, filed on
August 13, 1999)
4.1 Bach-Hauser, Inc. Stock Plan as amended (incorporated
by reference to Exhibit 4.1 to the Company's Form
10-QSB, filed on September 30, 2004)
31.1* Certification of the Chief Executive and Financial
Officer pursuant to Rule 13a-14(a)
32.1* Certification by the Chief Executive and Financial
Officer pursuant to 18 U.S.C. 1350 as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002
* Filed herewith.
(b) Reports on Form 8-K
September 15, 2004 Reporting the 1 for 6 reverse split
of the Company's common stock and the
corresponding decrease in the
authorized common stock.
November 12, 2004 Reporting that the Company has entered
into a definitive Acquisition Agreement
with DM2 Technologies Inc.
15
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.
(Registrant) BACH-HAUSER, INC.
By: /s/ Peter L. Preston
Peter L. Preston, President,
Secretary/Treasurer and Chief Executive
and Financial Officer
Date: November 16, 2004
16