U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
SEPTEMBER 30, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
______________ TO ______________
COMMISSION FILE NUMBER: 000-26051
BEAR AEROSPACE, INC.
(Exact name of registrant as specified in its charter)
Nevada 88-0424430
(State or jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
23401 Park Sorrento, Suite 18, Calabasas, California 91302
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (818) 225-0077
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common
Stock, $0.001 Par Value
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) been subject to such filing requirements for the
past 90 days. Yes X No .
As of November 5, 2002, the Registrant had 27,449,668 shares of
common stock issued and outstanding.
Transitional Small Business Disclosure Format (check one): Yes No X .
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION PAGE
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheet:
September 30, 2002
Condensed Consolidated Statements of Losses:
Three Months and Nine Months Ended September 30, 2002
and 2001
Period October 27, 1998 (Date of Inception of
Development Stage ) through September 30, 2002
Condensed Consolidated Statement of Stockholders' Equity
Period October 27, 1998 (Date o Inception of
Development Stage ) through September 30, 2002
Condensed Consolidated Statements of Cash Flows:
Nine Months Ended September 30, 2002 and 2001
Period October 27, 1998 (Date of Inception of
Development Stage) through September 30, 2002
Notes to Condensed Consolidated Financial Statements:
September 30, 2002
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCAL STATEMENTS.
BEAR AEROSPACE, INC.
(A Development Stage Company)
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
ASSETS
September 30 2002
Unaudited
CURRENT ASSETS:
Cash and equivalents $ 547
Inventories, at cost 497,976
Accounts receivable, net 213,447
Total current assets 711,970
PROPERTY AND EQUIPMENT:
Furniture, equipment, and leasehold improvements, net 413,100
$1,125,070
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Due to shareholders and related parties 1,075,257
Total current liabilities 1,075,257
STOCKHOLDER'S EQUITY
Common stock, par value $.001
per share; 190,000,000 shares
authorized; 27,449,667 issued at
September 30, 2002 27,450
Additional paid-in-capital 455,490
Deficiency accumulated during development stage (433,127)
Total stockholder's equity 49,813
1,125,070
See accompanying notes to the unaudited condensed consolidated financial
information
BEAR AEROSPACE, INC.
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENTS OF LOSS
(UNAUDITED)
For the period from
October 30, 1998
Three months ended Nine months ended (date of inception)
September 30 September 30 through September 30
2002 2001 2002 2001 2002
Cost and Expenses:
Selling, General and administrative 50,726 273 138,189 75,224 465,810
Depreciation 24,450 - 57,900 - 75,900
Total Operating Expenses 75,176 273 196,089 75,224 541,710
Loss from Operations (75,176) (273) (196,089) (75,224) (541,710)
Other (net) Income - - - - 108,344
Interest Income (Expenses) - - - - 239
Income (taxes) benefit - - - - -
Net (Loss) $ (75,176) $ (273) $ (196,089) $(75,224) $(433,127)
Loss per common share (basic and
assuming dilution - - (0.01) - (0.02)
Weighted average common shares
outstanding 27,449,667 27,449,667 27,449,667 27,449,667 27,449,667
See accompanying notes to unaudited condensed consolidated financial information
BEAR AEROSPACE, INC.
(A Development Sage Company)
CONDENSED CONSOLIDATED STATEMENT OF DEFICIENCY IN STOCKHOLDERS' EQUITY
FOR THE PERIOD OCTOBER 27, 1998 (Date of Inception) TO SEPTEMBER 30, 2002
Common Stock
Additional Deficit
Paid-in Accumulated
Number of Amount Capital During
Shares Development
Stage Total
Shares issued in
October 1998 in
exchange for cash in
connection with
private placement at
$550 per share 750 $ 2,278 $ 35,168 $ - $ 37,446
Net income (loss) - - - (11,872) (11,872)
Balance at December 31, 1998 750 2,278 35,168 (11,872) 25,174
Net income (loss) - - - 3,112 3,112
Balance at December 31, 1999 750 2,278 35,168 (8,760) 28,686
Capital contributed - - 12,011 - 12,011
Net income (loss) - - - (86,001) (86,001)
Balance at December 31, 2000 750 2,278 47,179 (94,761) (45,304)
Capital contributed in connection with
acquisition of Bear Aviation LLC - - 400,515 - 400,515
Shares issued in April 2001 in connection
with acquisition of Theinternetcorp.net,
Inc. at $.001 per share, as restated
for reverse stock split in April 2002 27,417,042 27,417 (27,417) - -
Retirement of Bear Aerospace, Inc.
shares in connection
with merger with The
internetcorp.net,Inc. (750) (2,278) 2,278 -
Net income (loss) - - - (142,277) (142,277)
Balance at December 31, 2001 27,416,667 27,417 422,555 (237,038) 212,934
Shares issued in April 2002 in
exchange for previously incurred
debt at $.50 per share 5,000 5 4,995 - 5,000
Shares issued in August 2002 in
exchange for services
rendered valued at
approximately $1 per share 28,000 28 27,940 - 27,968
Net income (loss) for
the nine months ended
September 30, 2002 - - - (196,089) (196,089)
Balance at September 30, 2002 27,449,667 27,450 455,490 (433,127) 49,813
The accompanying notes are an integral part of these financial statements
BEAR AEROSPACE, INC.
(A Development Sage Company)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD OCTOBER 27, 1998 (Date of Inception) TO SEPTEMBER 30, 2002
For the period from
October 27, 1998
(date of inception)
Nine Months Ended through
September 30 September 30
2002 2001 2002
INCREASE (DECREASE) IN CASH AND EQUIVALENTS
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss from development stage operations $ (196,089) (75,224) $ (433,127)
Adjustments to reconcile net loss from development stage
operations to cash used for operating activities:
Common stock issued in exchange for
services rendered 27,968 27,968
Common stock issued in exchange for
previously incurred debt 5,000 5,000
Depreciation 57,900 75,900
Increase in inventories - - (12,276)
NET CASH USED IN OPERATING ACTIVITIES (105,221) (75,224) (336,535)
CASH FLOWS USED IN INVESTING ACTIVITIES:
Capital expenditures, net of disposals (309,000) (80,000) (489,000)
NET CASH USED IN INVESTING ACTIVITIES (309,000) (80,000) (489,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock, net of costs 49,457
Proceeds from (repayments of) stockholder advances 414,600 150,089 776,625
NET CASH PROVIDED BY FINANCING ACTIVITIES 414,600 150,089 826,082
NET (DECREASE) INCREASE IN CASH AND EQUIVALENTS 379 (5,135) 547
Cash and cash equivalents at the beginning of the period 168 6,290 -
Cash and cash equivalents at the end of the period 547 1,155 547
Supplemental Disclosures of Cash Flow Information
Cash paid during the period for interest - - -
Income taxes paid - - -
Non cash Investing and Financing Activities:
Issuance of common stock in exchange
for previously incurred debt 5,000 - 5,000
Common stock issued for services 27,968 - 27,968
Acquisition:
Assets Acquired 699,147 699,147
Liabilities Assumed 298,632 298,632
Common Stock issued 400,515 400,515
See accompanying notes to the unaudited condensed consolidated
financial information
BEAR AEROSPACE, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE A-SUMMARY OF ACCOUNTING POLICIES
General
The accompanying unaudited consolidated financial statements have
been prepared in accordance with the instructions to Rule 310(b) of
Regulation S-B, and therefore, do not include all the information
necessary for a fair presentation of financial position, results of
operations and cash flows in conformity with generally accepted
accounting principles.
In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the nine month period ended
September 30, 2002 are not necessarily indicative of the results that
may be expected for the year ended December 31, 2002. The unaudited
condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements and footnotes
thereto included in the Company's SEC Form 10-KSB.
Business and Basis of Presentation
Bear Aerospace, Inc.(the "Company") is in the development stage and its
efforts have been principally devoted to developing an ultra-long range
business jet. To date the Company has generated no sales revenues, has
incurred expenses, and has sustained losses. Consequently, its
operations are subject to all risks inherent in the establishment of a
new business enterprise. For the period from October 27, 1998 (date of
inception) through September 30, 2002, the Company has accumulated
losses of $ 433,127.
The consolidated financial statements include the accounts of the
Company and its wholly-owned and partially-owned subsidiaries,
Bearaerospace Poland, sp. zo.o. Bear Asia Aerospace, LTD.
Significant inter-company transactions have been eliminated in consolidation.
Capital Stock
In April 2002, the Company issued 20,000 shares of the Company's
common stock to a vendor in exchange for $5,000 of goods. The
Company valued the shares issued at $.25 per share, which
approximated the fair value of the goods received, which did not
differ materially from the value of the shares issued.
In April 2002, the Company's Board of Directors approved a one (1)
share for four (4) share reverse stock split. The accompanying
financial statements have been restated to give effect for the
reverse split.
In August 2002, the Company issued 28,000 shares of its common stock
to vendors in exchange for previously incurred debt of $ 27,968.
ITEM 2.
(a) Twelve Month Plan of Operation.
In the year 2002 and into 2003, the Company will focus its
attention on acquiring the funds necessary to implement its business
plan by further developing its products lines, marketing development
and deployment of its airplanes. The Company may focus on
infrastructure, as well as possibly seeking strategic partners.
The Company further intends to focus on the following:
(1) The Company is in the development stages, and is expected to
roll out its product through the next twelve months. Although delays
have occurred, the Company is ready to move forward. The Company
intends to position itself for a full-scale product launch. Further
development and testing of the production model will be ongoing.
(2) With the proper funding, the Company has already identified
key personnel to enhance the Company and ensure the continued
evolution and success of current products and to design and develop
new technology.
(3) The Company will seek out as to whether there is patent
applications in its products or mechanical applications.
(4) Where permissible, the Company intends to demonstrate its
products to media and shareholders of the Company throughout the
course of the next twelve months.
(5) The Company will seek to expose its products through
alliances with Investor/public relations firm, industry experts,
media and other key professionals.
(6) The Company will attempt to secure additional funding
through traditional as well as non-traditional forms of funding.
(7) The Company will seek alliances with original equipment
manufacturers; retrofit market and related enterprises for its
existing and future technology.
(8) The Company may need to relocate its offices to a more
spacious center that is able to house existing employees and
anticipated expansion if the Company grows larger than its current
operations
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Other than as set forth below, the Registrant is not a party to
any material pending legal proceedings and, to the best of its
knowledge, no such action by or against the Registrant has been
threatened.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
Sales of Unregistered Securities.
In August 2002, the Company issued 28,000 shares of its common
stock to vendors in exchange for previously incurred debt of $27,968.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There were not any matters submitted to security holders
requiring a vote during the three-month period ending September 30, 2002.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Reports on Form 8-K. No reports on Form 8-K were filed
during the three month period covered this Form 10-QSB.
(b) Exhibits. Exhibits included or incorporated by
reference herein: See Exhibit Index.
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) 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.
Bear Aerospace, Inc.
Dated: November 18, 2002 By: /s/ Skip Holm
Skip Holm, President
EXHIBIT INDEX
Exhibit No. Description
2 Exchange Agreement and Plan of Reorganization (incorporated
by reference to in the Form 8-K filed on July 13, 2001).
3.1 Articles of Incorporation (incorporated by reference to Exhibit
3.1 to the Registration Statement on Form 10-SB/A filed on May
28, 1999).
3.2 Amendment to the Articles of Incorporation for
Theinternetcorp.net, Inc. (incorporated by reference to in the
Form 8-K filed on July 13, 2001).
3.3 Amendment to the Articles of Incorporation for
Theinternetcorp.net, Inc. (incorporated by reference to in the
Form 8-K filed on July 13, 2001).
99.1 Certification pursuant of President to 18 U.S.C. Section 1350, as
adopted to Section 906 of the Sarbanes Oxley Act of 2002.
99.2 Certification pursuant of Chief Financial Officer to 18 U.S.C.
Section 1350, as adopted to Section 906 of the Sarbanes Oxley Act
of 2002.
CERTIFICATIONS
I, Skip Holm, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Bear
Aerospace, 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;
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 condition, results of
operations, and cash flows of the registrant as of, and for the
periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible
for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-14 and 15d-14 for the registrant
and have:
a) designed such disclosure controls and procedures to
ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls and procedures
based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and
the audit committee of the registrant's board of directors (or persons
performing the equivalent functions);
a) all significant deficiencies in the design or operation
of internal controls which could adversely affect the registrant's
ability to record, process, summarize, and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officers and I have
indicated in this quarterly 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 18, 2002
/s/ Skip Holm
Skip Holm, President
CERTIFICATIONS
I, David Fawcett, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Bear
Aerospace, 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;
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 condition, results of
operations, and cash flows of the registrant as of, and for the
periods presented in this quarterly report;
4. The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14 for the
registrant and have:
a) designed such disclosure controls and procedures to
ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls and procedures
based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and
the audit committee of the registrant's board of directors (or persons
performing the equivalent functions);
a) all significant deficiencies in the design or operation
of internal controls which could adversely affect the registrant's
ability to record, process, summarize, and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated
in this quarterly 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 18, 2002
/s/ David Fawcett
David Fawcett, Treasurer
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly
authorized.
Bear Aerospace, Inc.
Dated: November 18, 2002 By: /s/ Skip Holm
Skip Holm, President