UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-QSB
(X) Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended September 30, 2001
( ) Transition report pursuant of Section 13 or 15(d) of the Securities
Exchange Act of 1939 for the transition period _____ to______
COMMISSION FILE NUMBER
0-32931
Mentor Capital Consultants, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 84-1569905
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
4940 Pearl East Circle, Suite 104, Boulder, Colorado 80301 (303) 444-7755
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(Address of Principal Executive Offices, including Registrant's zip code and
telephone number)
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Former name, former address and former fiscal year, if changed
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. Yes [] No [X]
The number of shares of the registrant's common stock as of September 30, 2001:
16,245,762 shares.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
PART 1: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
Financial Statements of
Mentor Capital Consultants, Inc.
(A Development Stage Company)
For the three and nine month periods ended September 30, 2001
1
MENTOR CAPITAL CONSULTANTS, INC
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED BALANCE SHEETS
September 30, 2001 December 31, 2000
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(Unaudited) (Audited)
ASSETS
Current assets
Cash $ 319,522 $ 934,233
Accounts receivable 5,000 -
------------------ -----------------
Total current assets 324,522 934,233
Property and equipment
Property and equipment 130,139 100,074
Less accumulated depreciation (24,544) (9,623)
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Property and equipment, net 105,595 90,451
Deferred offering costs (Note 2) 93,459 -
Deposits 3,132 2,000
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Total assets $ 526,708 $ 1,026,684
================== =================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accrued expenses $ 12,657 $ $29,259
------------------ -----------------
Total current liabilities 12,657 29,259
Stockholders' equity (Note 4)
Preferred stock, $.0001 par value,
25,000,000 shares authorized,
none issued and outstanding - -
Common stock, $.0001 par value,
100,000,000 shares authorized,
16,245,762 and 15,505,762 shares
issued and outstanding at
September 30, 2001 and
December 31, 2000, respectively 1,625 1,551
Additional paid-in capital 1,958,579 1,648,253
(Deficit) accumulated during the
development stage (1,446,153) (652,379)
------------------ -----------------
Total stockholders' equity 514,051 997,425
Total liabilities and
stockholders' equity $ 526,708 $ 1,026,684
See accompanying summary of accounting policies and notes to financial
statements
2
MENTOR CAPITAL CONSULTANTS, INC
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Cumulative Three Months Nine Months
During Ended Ended
Development September 30 September 30
Stage 2001 2000 2001 2000
------------------------------------------------------------
Revenue
Consulting
revenues $ 48,000 $ 32,000 $ - $ 48,000 $ -
Operating expenses
Cost of revenues 57,685 20,978 - 57,685 -
Selling,
general and
administrative 1,428,551 236,922 158,947 784,389 290,008
Depreciation 24,544 5,589 5,766 14,921 5,766
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Total operating
expenses 1,510,780 263,489 164,713 856,995 295,774
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Income (loss) from
operations (1,462,780) (231,489) (164,713) (808,995) (295,774)
Other income
(expense), net
Other income 6,200 - - - 6,200
Interest income
(expense), net 11,597 2,144 (953) 16,391 (953)
Franchise tax (1,170) - - (1,170) -
------------------------------------------------------------
Total other
income
(expense),
net 16,627 2,144 (953) 15,221 5,247
------------------------------------------------------------
Net income (loss) $(1,446,153) $(229,345) $(165,666) $(793,774) $(290,527)
============================================================
Net income (loss)
per share, basic
and diluted $ (0.10) $ (0.01) $ (0.01) $ (0.05) $ (0.02)
============================================================
Weighted average
number of common
shares
outstanding,
basic and
diluted 14,351,597 15,830,125 12,913,852 15,637,550 12,418,660
============================================================
See accompanying summary of accounting policies and notes to financial
statements
3
MENTOR CAPITAL CONSULTANTS, INC
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Cumulative
During
Development Nine Months Ended September 30
Stage 2001 2000
-----------------------------------------------
Cash flows from operating
activities:
Net (loss) $(1,446,153) $ (793,774) $ (290,527)
Adjustments to reconcile net
(loss) to cash provided
(used) by operations:
Depreciation 24,544 14,921 5,766
Issuance of common stock
and options for services 141,002 70,187 5,510
Issuance of employee
stock options 10,950 10,950 -
Change in assets and liabilities:
Accounts receivable (5,000) (5,000) -
Deferred offering costs (93,459) (93,459) -
Loan from shareholder - - 97,102
Accrued expenses 12,657 (16,602) (12,658)
Deposits (3,132) (1,132) (2,000)
-----------------------------------------------
Net cash (used) by operating
activities $(1,358,591) $ (813,909) $ (196,807)
Cash flows from investing
activities:
Purchases of property and
equipment (130,139) (30,065) (79,366)
-----------------------------------------------
Net cash (used) by
investing activities (130,139) (30,065) (79,366)
Cash flows from financing
activities:
Proceeds from issuance of
common stock, net of
offering costs 1,808,252 229,263 730,000
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Net cash provided by
financing activities 1,808,252 229,263 730,000
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Net increase (decrease) in cash $ 319,522 $ (614,711) $ 453,827
Cash, beginning of period - 934,233 -
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Cash, end of period $ 319,522 $ 319,522 $ 453,827
===============================================
Supplemental disclosure of
non-cash investing and
financing activities:
Issuance of common stock and
options for services $ 141,002 $ 70,187 $ 5,510
===============================================
Issuance of employee stock
options at less than fair
market value $ 10,950 $ 10,950 $ -
===============================================
Interest paid $ 8,830 $ 420 $ 953
===============================================
See accompanying summary of accounting policies and notes to financial
statements
4
MENTOR CAPITAL CONSULTANTS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
Note 1 - Description of the Business and Summary of Significant Accounting
Policies
Description of the Business
Mentor Capital Consultants, Inc. ("the Company") was incorporated in the State
of Delaware on March 13, 2000.
The Company was organized to provide strategic business planning and marketing
consulting services to small and medium sized businesses, and through wholly
owned affiliates or business alliances, to provide specialized investment
banking, investment advisory and related services to its clients.
For the period March 13, 2000 (Inception) to September 30, 2001, the Company has
been in the development stage. The Company's activities since inception have
consisted of developing the business plan, raising capital and initial business
plan implementation.
From inception to September 30, 2001, the Company has revenues of $48,000 and
has expensed costs in the amount of $1,494,153 during the development stage.
The Company has maintained adequate cash resources through its private
placement. In addition, the Company will begin raising cash through its
self-directed initial public offering beginning October, 2001.
Basis of Presentation
The accompanying financial statements have been prepared by management in
accordance with basic rules established by the Securities and Exchange
Commission for Form 10-QSB. Not all financial disclosures required to present
the financial position and results of operations in accordance with generally
accepted accounting principles are included herein. It is suggested that these
condensed financial statements be read in conjunction with the financial
statements and notes thereto included in the Company's December 31, 2000 audited
financial statements on Form SB-2 to the Securities and Exchange Commission
filed on June 29, 2001. In the opinion of management, all accruals and
adjustments (each of which is of a normal recurring nature) necessary for a fair
presentation of the financial position as of September 30, 2001 and the results
of operations for the three-month and nine-month periods then ended have been
made. Significant accounting policies have been consistently applied in the
interim unaudited financial statements and the audited financial statements.
Note 2 - Deferred Offering Costs
Beginning in January, 2001, the Company has recorded deferred offering costs of
$93,459 for preparation of the Company's planned public offering. Subsequent to
September 30, 2001, those costs were expensed in conjunction with the offering.
Note 3 - Software Development Costs
The costs incurred to develop computer software products to be sold or otherwise
marketed are charged to expense until technological feasibility of the product
has been established. Once technologically feasibility of related software
products has been established, computer software development costs will be
capitalized and reported at the lower of amortized cost or net realizable value.
When a product is ready for general release, its capitalized costs will be
amortized using the straight-line method of amortization over a reasonable
period. During the period ended September 30, 2001 and the period from March
13, 2000 (Inception) to December 31, 2000, no software costs have been
capitalized.
5
MENTOR CAPITAL CONSULTANTS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
Note 4 - Shareholders' Equity
During the period from March 13, 2000 (Inception) to December 31, 2000, the
Company issued a private placement memorandum under Regulation D, Rule 504 of
the Securities and Exchange Act of 1933, as amended, for the purpose of raising
capital for administrative costs, marketing costs, capital expenditures and for
the establishment of a cash reserve. Pursuant to the private placement, the
Company sold 1,279,500 shares at $0.25 per share and 2,365,500 shares at $0.50
per share.
The Company also issued 178,262 shares at $0.25 and $0.50 per share to
consultants for services provided in the period from March 13, 2000 (Inception)
to December 31, 2000.
During the nine months ended September 30, 2001, the Company continued its
private placement offering initiated in 2000 and issued common stock to new
investors at $.25 per share for 300,250 shares, and at $.50 per share for
375,000 shares. Offering costs of $33,238 were incurred and recorded as an
offset against the proceeds from the private placement offering in the nine
months ended September 30, 2001.
Through a public offering, the Company will issue common stock to new investors
at $2.00 per share. The common stock is to be offered in units. Each unit is
comprised of two shares of common stock and two warrants to purchase additional
shares of common stock. Each warrant is exercisable to purchase a share of
common stock at prices of $3.00 and $4.00 per share, respectively. The warrants
are exercisable over a period not to exceed 18 months commencing six months from
the effective date of the initial registration statement, which was July 5,
2001. The Company, at its option, may redeem the warrants at a price of $0.01
per warrant at any time during the exercise period if the stock price, as traded
on a national securities exchange, equals or exceeds $5.00 per share for a
period of 20 consecutive days. No assignment of fair value was assigned to
the warrants issued but any future exercises will dilute the holdings of current
and future shareholders.
The Company also issued 64,750 shares at $.25 per share to consultants for
services provided during the nine months ended September 30, 2001. These shares
were valued based on the price at which shares were being issued at the time
services were rendered.
The Company's Articles of Incorporation authorize the issuance of 25,000,000
shares of preferred stock with $.0001 par value. The preferred stock may be
issued from time to time with such designation, rights, preferences and
limitations as the Board of Directors may determine by resolution. As of
September 30, 2001 and December 31, 2000, no shares of preferred stock have been
issued.
Note 5 - Related Party Transactions
At the inception of the Company, the primary stockholder sold certain assets,
consisting primarily of furniture, computers and software to the Company for
$55,000. The value of the assets was estimated to be approximately fair value;
the Board of Directors approved the transaction; the primary stockholder
abstained from voting. For the nine month period ended September 30, 2001, a
director of the Company, who is a partner in the law firm of Kranitz and
Philipp, was paid legal fees of $29,694. In addition, for the nine month period
ended September 30, 2001, the Company retained several consultants who received
common stock and fees for services provided totaling $16,553.
Note 6 - Subsequent Events
Beginning October, 2001, the Company began to raise funds through its
self-directed initial public offering. As of the end of October, the Company
had issued 40,000 units and escrowed $160,000 towards their minimum of $500,000.
6
MENTOR CAPITAL CONSULTANTS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
Item 2: Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
Revenue
For the quarter ended September 30, 2001, and 2000, we had revenue of $32,000
and none, respectively. During the three month period ending September, 30,
2001 we signed consulting agreements with three clients. During the nine months
ended September 30, 2001 and 2000, we had revenue of $48,000 and none,
respectively. The difference between the nine month and three month period
ended September 30, 2001 of $16,000 reflected one client the Company signed
during the first half of 2001.
Operating Expenses
For the third quarter ended September 30, 2001, and 2000, operating expenses
increased by $98,776 or 60%. For the nine months ended September 30, 2001, and
2000, operating expenses increased by $561,221 or 190%. However, the period
from inception to September 30, 2000 was only five and a half months long.
The increases in operating expenses for both periods reflect the building of
the Company's management infrastructure, beginning to implement our business
plan, development of the Company's proprietary software program, and costs to
formulate our broker/dealer operation. Administratively, occupancy costs
increased primarily due to our moving into larger offices and we were operating
two and one half more months in 2001 than 2000.
For the quarter ended September 30, 2001, and 2000, other income (expense)
net, was $2,144 and ($953), respectively. For the nine months ended September
30, 2001, and 2000, other income (expense) net, was $15,221 and $5,247,
respectively. The net increase in 2001 over 2000 for both periods was primarily
due to interest income generated from our money market account as a result of
funds raised through our private placement.
Net Income (Loss)
For the third quarter ended September 30, 2001, we incurred a net (loss) of
($229,345) compared with a net (loss) of ($165,666) for the same period ended in
fiscal year 2000; and for the nine month period ended September 30, 2001, and
2000, we incurred net (losses) of ($793,774) and ($290,527), respectively. We
have had a net (loss) from operations for each period since inception. From
inception to September 30, 2001, we incurred a net (loss) of ($1,446,153) or
($0.10) per share.
Our net operating (losses) are due primarily to the building of the Company's
management infrastructure, beginning to implement our business plan, development
of the Company's proprietary software program, and the formulation of our
broker/dealer operation.
We expect to continue to grow our Company through the further implementation
of our business plan. That is, continuing to develop new clients through our
direct marketing campaigns; completion and licensure of our broker/dealer
operation; completing the development of our proprietary software; and expanding
our business to other cities across the country.
7
Financial Condition
Liquidity; Commitments for Capital Resources; and Sources of Funds
As we have been in the development stage to date, there has been no liquidity
from operations. Liquidity has been generated by utilizing the proceeds of a
private placement of common stock during 2000 and the first half of 2001. We
anticipate our principal sources of liquidity during 2002 will be cash from
operations and net proceeds of our ongoing public offering.
We do not currently have any major capital commitments.
Changes in Assets and Liabilities
As of September 30, 2001, our cash balance was $319,522 as compared with
$934,233 at December 30, 2000. Cash was used primarily to build the Company's
management infrastructure, business development, and marketing as we begin to
implement our business plan. In addition, the Company incurred $93,459 of
deferred offering costs in anticipation of launching its self-directed public
offering.
Fixed assets increased by $30,065 or 30% from December 31, 2000 to September
30, 2001. Purchases of furniture, office equipment, and computers was made for
use in our new offices by newly hired personnel.
Common stock and additional paid-in capital increased 18.8% from December 31,
2000 to September 30, 2001, from $1,649,804 to $1,960,204, respectively. The
increase was a result of our private placement of common stock. Our (deficit)
accumulated during the development stage increased by 121.7% from December 31,
2000 to September 30, 2001as discussed in the Net Income (Loss) paragraph above.
8
Part 2: Other Information
Item 1 Legal Proceedings
None
Item 2 Change In Securities
None
Item 3 Defaults Upon Senior Securities
None
Item 4 Submission Of Matters To Vote Of Securities Holders
None
Item 5 Other Information
None
Item 6 Exhibits And Reports On Form 8-K
None
SIGNATURES
In accordance with the requirements of the Securities and Exchange Act of
1934, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Mentor Capital Consultants, Inc.
Dated: February 22, 2002 By: /s/ W. Michael Bissonnette
_______________________________
W. Michael Bissonnette,
President (Principal Executive Officer)
Dated: February 22, 2002 By: /s/ Jerry L. Gutterman
_______________________________
Jerry L. Gutterman,
Treasurer (Principal Financial Officer)
9
SCHEDULE I
MENTOR CAPITAL CONSULTANTS, INC.
FORM 10-QSB
For the Nine Months Ended September 30, 2001
Pursuant to Securities Act Rule 463, the following information (as identified
in paragraphs (f)(2) through (f)(4) of Regulation S-B Item 701) is provided
concerning the initial public offering ("Offering") of its common stock, par
value $0.0001 per share ("Common Stock"), conducted by Mentor Capital
Consultants, Inc. ("Company"), pursuant to a registration statement on Form SB-2
under the Securities Act of 1933 (File No. 333-58844), which initially became
effective July 5, 2001:
(f)(2) through (f)(4)(i): The Offering commenced as of July 5, 2001,
and remained ongoing as of September 30, 2001.
(f)(4)(ii): Mentor Capital Consultants, Inc. is managing its own
self-underwritten Offering.
(f)(4)(iii) through (f)(4)(iv): 2,000,000 shares of Common Stock were
registered on Form SB-2, all of which are included in the Offering; all such
shares were registered for the account of the Company; the aggregate price of
the Common Stock registered (calculated at $2.00 per share, the initial public
offering price) was $4,000,000; during the period from July 5, 2001 through
September 30, 2001, no shares were sold in the Offering.
(f)(4)(v): Through September 30, 2001, the Company incurred the following
expenses in connection with the Offering:
Legal and accounting fees and expenses $ 44,327.54
Printing/SEC filings (EDGAR) 8,160.50
Other expenses 40,970.47
-------------
Total expenses $ 93,458.51
-------------
Richard Kranitz, a director of the Company, is a partner in the law firm of
Kranitz and Philipp of Milwaukee, Wisconsin, which was paid $29,693.56 of the
above legal and accounting fees and expenses. None of the other above
expenses were paid, directly or indirectly, to directors or officers of the
Company, or to their affiliates, or to persons owning ten percent or more of
any class of equity securities of the Company, or to affiliates of the
Company.
(f)(4)(vi) through (f)(4)(vii): There were no net proceeds from the Offering
from July 5, 2001 through September 30, 2001.
10