<PAGE>
UNITED STATES
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 March 31, 2000
[ ] TRANSITION REPORT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Transition Period from _______________ TO _______________.
Commission File Number 000-27203
CANADIAN NORTHERN LITES, INC.
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(Exact name of registrant as specified in its charter)
Texas, USA 76-048710
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State or other Jurisdiction (IRS Employer Identification No.)
of Incorporation or Organization
Suite U13 Broadway Plaza, 601 W. Broadway, Vancouver, B.C. V5Z 4C2
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(Address of principal executive offices)
Issuer's Telephone Number, (604) 879-9001
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 [ ]
As of March 31, 2000, 15,131,000 shares of Common Stock, $.001 par value,
of Canadian Northern Lites Inc. were issued and outstanding.
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TABLE OF CONTENTS
PART I
ITEM 1 FINANCIAL STATEMENTS
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
PART II
ITEM 1 LEGAL PROCEEDINGS
ITEM 5 OTHER INFORMATION
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
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<TABLE>
PART I
ITEM 1. FINANCIAL STATEMENTS
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F- 1
CANADIAN NORTHERN LITES, INC.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2000
<CAPTION>
MARCH 31, 2000
<S> <C>
ASSETS
CURRENT
Cash $2,060
Canadian goods and services tax receivable 1,595
Total current assets 3,655
INVESTMENT IN JOINT VENTURE 0
MINERAL PROPERTIES 1
Total assets $3,656
LIABILITIES AND SHAREHOLDERS' DEFICIT
LIABILITIES
CURRENT
Accounts payable $63,255
Loan from shareholder 14,016
Total current liabilities 77,271
PROMISSORY NOTE PAYABLE 24,841
ADVANCES FROM SHAREHOLDERS 152,316
Total liabilities 254,428
SHAREHOLDERS' DEFICIT
Share capital
Authorized
100,000,000 shares with a par value of $.001
Issued and outstanding
15,131,000 shares
Par value 15,131
Additional paid up capital 980,310
Deferred foreign currency translation gain (loss) (3,915)
Deficit accumulated during the development stage (1,242,299)
Total shareholders' deficit (250,772)
Total liabilities and shareholders' deficit $3,656
(See accompanying notes)
</TABLE>
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<TABLE>
F- 2
CANADIAN NORTHERN LITES, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE QUARTER ENDED MARCH 31, 2000
AND FROM INCEPTION ON JUNE 18, 1990 THROUGH MARCH 31, 2000
<CAPTION>
Cumulative For The Three
Total Since Months Ending
Inception March 31, 2000
<S> <C> <C>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
Exploration and development $19,885 $0
Write off of investment in joint venture 60,463 0
Write off of development and property costs 442,529 0
Total exploration and development expenses 522,877 0
MARKETING EXPENSES
Advertising 2,637 0
Courier and postage 7,383 0
Meetings 1,357 0
Printing 19,056 0
Promotion and entertainment 16,454 0
Services 58,525 0
Telephone and fax 22,438 0
Travel 41,305 0
Total marketing expenses 169,155 0
ADMINISTRATIVE EXPENSES
Accounting and audit fees 27,826 (179)
Automobile 2,689 0
Bank charges and interest (recovery) 2,143 17
Computer servicing 9,830 0
Incorporation expenses written off 6,794 0
Insurance 836 0
Interest on long term debt 10,435 606
Legal 141,679 1,507
Management and consulting fees 153,034 4,128
Meals and entertainment 28 0
Office supplies and service 64,801 0
Rent 9,021 0
SEC filing fees 10,981 0
Telephone and fax 7,036 0
Transfer agent fees 1,490 151
Travel 33,990 0
U.S. financial services 28,339 0
Wages and benefits 25,930 0
Total administrative expenses 536,882 6,230
LOSS BEFORE OTHER INCOME (LOSS) (1,228,914) (6,230)
OTHER INCOME (LOSS)
Interest income 798 0
Gain (loss) on disposal of capital assets (11,923) 0
Gain (loss) on cash settlements of accounts payable (2,259) 0
INCOME (LOSS) BEFORE INCOME TAX PROVISION (1,242,299) (6,230)
INCOME TAX PROVISION 0 0
NET INCOME (LOSS) ($1,242,299) ($6,230)
(See accompanying notes)
</TABLE>
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<TABLE>
F- 3
CANADIAN NORTHERN LITES, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
FROM INCEPTION ON JUNE 18, 1990 THROUGH MARCH 31, 2000
<CAPTION>
Deficit
Accumulated
Common Stock Additional During The
Per Paid-up Development
Share Shares Par Value Capital Stage
<S> <C> <C> <C> <C> <C>
Issuance of stock to officers, directors and
other individuals, for an amount equal to
part of the organization costs,
on April 10, 1991 $0.10 30,000 $300 $2,700
Reorganization of capital reducing the par
value from $.01 / share to $.001 / share (270) 270
Net loss, year ended December 31, 1994
Balance, December 31, 1992, 1993 & 1994 30,000 30 2,970
Issuance of stock to investment banker,
controlled by a director for services
rendered and valued at the billed amount
for the services 0.50 12,000 12 5,988
Issuance of common stock to public for cash 0.50 8,000 8 3,992
Net loss, year ended December 31, 1995
Balance, December 31, 1995 50,000 50 12,950
Issuance of common stock pursuant to stock
options of which 1,220 shares were issued
to an affiliate of the issuer for cash 0.01 50,000 50 450
Balance prior to stock split 100,000 100 13,400
Stock split effective April, 1996 300,000 300 (300)
Balance after stock split 400,000 400 13,100
Stock issued for acquisition of Dakota
Mining & Exploration, Ltd. ("Dakota")
valued at the net book value of Dakota
at the date of acquisition 0.01 10,000,000 10,000 59,488
Recognition of deficit accumulated during
the development stage by Dakota up to
the date of acquisition 78,064 ($78,064)
Issue of shares to H J S Financial Services,
Inc. for services rendered valued at the
market value of the shares when issued 1.28 24,000 24 30,732
Issuance of common stock to repay
advances to Canadian Northern Lites, Inc.
made by former directors and valued at the
net book value of those advances which
was less than the market value of the
shares 0.15 4,000,000 4,000 596,822
Net loss, year ended December 31, 1996 (460,106)
Balance at December 31, 1996 14,424,000 $14,424 $778,206 ($538,170)
(See accompanying notes)
</TABLE>
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<TABLE>
F- 4
CANADIAN NORTHERN LITES, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
FROM INCEPTION ON JUNE 18, 1990 THROUGH MARCH 31, 2000
<CAPTION>
Deficit
Accumulated
Common Stock Additional During The
Per Paid-up Development
Share Shares Par Value Capital Stage
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1996 14,424,000 $14,424 $778,206 ($538,170)
Issuance of common stock for services to
former legal counsel valued at the billed
value for the services rendered $0.17 570,000 570 98,911
Fair value of donated accounting services
provided by a former director 2,000
Net loss, year ended December 31, 1997 (521,159)
Balance at December 31, 1997 14,994,000 14,994 879,117 (1,059,329)
Issuance of common stock to former directors
to repay amounts advanced by them to the
Company and the shares are valued at the
value of the amount owing to them 0.12 667,000 667 82,672
Issuance of common stock to an arm's
length supplier to repay the amount owing
and shares valued at the fair value of
the shares issued 0.06 50,000 50 2,942
Issuance of common stock to a company
controlled by a current director to repay an
amount owing and valued at the market
value of the shares issued 0.01 1,500,000 1,500 13,500
Net loss, year ended December 31, 1998 (118,524)
Balance at December 31, 1998 17,211,000 17,211 978,231 (1,177,853)
Net loss, year ended December 31, 1999 (58,216)
Balance at December 31, 1999 17,211,000 17,211 978,231 (1,236,069)
Cancellation of shares in consideration for
the release by the Company of its 20%
joint venture interest 0.001 (2,080,000) (2,080) 2,079
Net loss, quarter ended March 31, 2000 (6,230)
Balance, March 31, 2000 15,131,000 $15,131 $980,310 ($1,242,299)
(See accompanying notes)
</TABLE>
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<TABLE>
F- 5
CANADIAN NORTHERN LITES, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
AND FROM INCEPTION ON JUNE 18, 1990 THROUGH MARCH 31, 2000
<CAPTION>
Cumulative For The Three
Total Since Months Ending
Inception March 31, 2000
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) ($1,242,299) ($6,230)
Items not involving an outlay of cash
Non-cash accounting services of a former director 2,000
Loss (gain) on disposal of capital assets 11,923 0
Write off of incorporation costs 794 0
Write down of investment in joint venture 60,463 0
Write down of development and property costs 442,529 0
Loss (gain) on cash settlements of accounts payable 2,260 0
Change in working capital items
Canadian goods and services tax receivable (1,595) (95)
Accounts payable increase before part of the
balance was settled by issuing shares 187,696 5,703
Net cash (used in) received from operating activities (536,228) (621)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock 151,502 0
Stock issued on exercise of stock options 500 0
Loan from shareholder 14,016 0
Advances from shareholders before part of the
balance was settled by issuing shares 867,055 598
Net cash from financing activities 1,033,073 598
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of capital assets (11,949) 0
Proceeds from disposal of capital assets 26 0
Incorporation costs (794) 0
Mineral property payments (478,153) 0
Net cash (used in) received from investing activities (490,870) 0
NET INCREASE (DECREASE) IN CASH
(BANK INDEBTEDNESS) 5,975 (23)
CASH (BANK INDEBTEDNESS) AT
BEGINNING OF YEAR 0 2,083
FOREIGN CURRENCY TRANSLATION GAIN (LOSS) (3,915) 0
CASH (BANK INDEBTEDNESS) AT
END OF YEAR $2,060 $2,060
(See accompanying notes)
</TABLE>
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F- 6
CONDENSED NOTES TO FINANCIAL STATEMENTS
1. BASIS OF FINANCIAL STATEMENT PRESENTATION
The financial statements have been prepared by CANADIAN NORTHERN LITES INC.
without audit and pursuant to the rules and regulations of the Securities
and Exchange Commission. The information furnished in the financial
includes normal recurring adjustments and reflects all adjustments, which
are, in the opinion of management, necessary for a fair presentation of such
financial statements. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to
such rules and regulations. The Company believes that the information
presented is not misleading. These condensed financial statements should
be read in conjuction with the financial statements and the accompanying
notes included in the Company's Form 10KSB for the fiscal year ended
December 31, 1999. The results of operations for the period ended
March 31, 2000 are not necessarily indicative of operating results for the
fiscal year.
2. CONTINGENT LIABILITY
On March 26,1997, the Joint-Venture Partner on the Ewer-Klinker property
filed a statement of claim in the Supreme Court of British Columbia
alleging that an amount of $29,847 USD was due for work done, goods supplied
and accounts incurred. The Company has returned goods costing $12,499 USD
thereby effectively reducing the Joint-Venture Partner's claim to
$17,348 USD.
On March 27,2000 the Company reached a formal agreement with the former
Joint Venture Party for the former Joint Venture Party to return its 20%
interest in the joint venture in exchange for the Joint Venture Party
returning 2,080,000 shares of the Company back to the Company for
cancellation and releasing the Company from any claim arising from the
Option Agreement or the British Columbia Supreme Court Action.The Consent
Dismissal Order has now been filed and the shares have now been returned to
the Company. The financial statements for the period ending March 31, 2000
fully reflect the impact of this legal settlement.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
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The Company has minimal cash and has not yet developed any producing mines.
The Company has no history of earnings, and due to the nature
of its business, there can be no assurance that the Company will be profitable.
Since the Company has been a development stage company since inception and has
not generated revenues, the Company operates with minimal overhead.
The Company will need to raise additional funds , either in
the form of an advance or an equity investment by the Company's President; or in
the form of equity investment by outside investors, or some combination of each.
The Company's primary activity for the 3 months ended 03/31/00 has been to seek,
investigate and, if such investigation warrants, acquire controlling interest in
business opportunities presented to it by persons or firms involved in any
appropriate business who wish to seek the advantages of being acquired by the
Company.
In view of the Company's very limited capital, Company management will continue
to seek out potential joint-venture partners with the capital and expertise to
pursue further exploration in the Company's core area.
At present management is not aware of any joint-venture proposals offered to
the Company, to further exploration.
The Company has not conducted any product research and development and
currently has no plans to conduct any product research and development.
Management is not aware of any expected purchase or sale of any plant or of any
significant equipment. Management is not aware of any expected significant
changes in the number of employees.
RESULTS OF OPERATION
The Company had no revenue for the 3 months ended 03/31/00.
The Company recorded a net loss of ($6,230) for the 3 months ended 03/31/00.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash position at 03/31/2000 was $ 2,060.
The Company recorded a net loss for the 3 months ended 03/31/00 of ($6,230).
At 03/31/00,the Company had a negative working capital position of ($73,616).
During the 3 months ended 03/31/00 the Company incurred a total of $6,230 in
administrative expenses.
CONTINGENT LIABILITY
On March 26,1997, the Joint-Venture Partner on the Ewer-Klinker property filed
a statement of claim in the Supreme Court of British Columbia alleging that an
amount of $29,847 USD was due for work done, goods supplied and accounts
incurred. The Company has returned goods costing $12,499 USD thereby
effectively reducing the Joint-Venture Partner's claim to $17,348 USD.
On March 27,2000 the Company reached a formal agreement with the former Joint
Venture Party for the former Joint Venture Party to return its 20% interest in
the joint venture in exchange for the Joint Venture Party returning 2,080,000
shares of the Company back to the Company for cancellation and releasing the
Company from any claim arising from the Option Agreement or the British
Columbia Supreme Court Action.The Consent Dismissal Order has now been filed
and the shares have now been returned to the Company.
<PAGE>
FORWARD-LOOKING STATEMENTS
>From time-to-time, the Company or its representatives may have made or may
make forward-looking statements, orally or in writing. Such forward-looking
statements may be included in, but not limited to, press releases, oral
statements made with the approval of an authorized executive officer or in
various filings made by the Company with the Securities and Exchange Commission
or other regulatory agencies. Words or phrases "will likely result", "are
expected to", "will continue", " is anticipated", "estimate", "project or
projected", or similar expressions are intended to identify "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995 (the "Reform Act"). The Reform Act does not apply to initial
registration statements, including this filing by the Company. The Company
wishes to ensure that such statements are accompanied by meaningful cautionary
statements, so as to maximize to the fullest extent possible the protections of
the safe harbor established in the Reform Act. Accordingly, such statements are
qualified in their entirety by reference to and are accompanied by the following
discussion of certain important factors that could cause actual results to
differ materially from such forward-looking statements.
The risks identified here are not inclusive. Furthermore, reference is also made
to other sections of this Registration Statement that include additional factors
that could adversely impact the Company's business and financial performance.
Also, the Company operates in a very competitive and rapidly changing
environment. New risk factors emerge from time to time and it is not possible
for management to predict all such risk factors, nor can it assess the impact of
all such risk factors on the Company's business or the extent to which any
factor or combination of factors may cause actual results to differ
significantly from those contained in any forward-looking statements.
Accordingly, forward-looking statements should not be relied upon as a
prediction of actual results.
<PAGE>
DESCRIPTION OF PROPERTY
Property Status
- ---------------
The Banjo 1 & 2 claims consist of the following mineral claims, located within
the Vernon Mining District:
Claim Name Tenure Number Units Record Date
Banjo 1 366334 20 10/17/98
Banjo 2 366335 20 10/18/98
DESCRIPTION OF SECURITIES
The authorized capital of the Registrant is 100,000,000 shares of common stock
with $0.001 par value of which 17,211,000 shares of common stock were issued
and outstanding at December 31, 1999, the end of the most recent fiscal year.
At the end of the quarter ending 03/31/00 , there were 15,131,000 shares
outstanding reflecting the cancellation of 2,080,000 shares as per Item 2,
section entitled Contingent Liability, above.
Debt Securities to be Registered. Not applicable.
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American Depository Receipts. Not applicable.
- ----------------------------
Other Securities to be Registered. Not applicable.
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PART II
ITEM 1 LEGAL PROCEEDINGS
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Other than as discussed above, the Company knows of no material, active or
pending legal proceedings against them; nor is the Company involved as a
plaintiff in any material proceeding or pending litigation.
ITEM 5 OTHER INFORMATION
- -------------------------
None
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
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(a) Exhibits
27 Financial Data Schedule
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the three month
period ended March 31, 2000.
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SIGNATURES
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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.
CANADIAN NORTHERN LITES, INC.
By: /s/ Terry G. Cook
_______________________________
Name: Terry G. Cook
Title: President
May 12, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
EXHIBIT 27 - FINANCIAL DATA SCHEDULE
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This schedule contains summary financial information extracted from the balance
sheet as of March 31, 2000, and statements of operations for the three
months ended March 31, 2000, and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 2,060
<SECURITIES> 0
<RECEIVABLES> 1,595
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,655
<PP&E> 1
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,656
<CURRENT-LIABILITIES> 77,271
<BONDS> 177,157
0
0
<COMMON> 15,131
<OTHER-SE> (265,903)
<TOTAL-LIABILITY-AND-EQUITY> 3,656
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 6,230
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (6,230)
<INCOME-TAX> 0
<INCOME-CONTINUING> (6,230)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,230)
<EPS-BASIC> 0.00
<EPS-DILUTED> 0.00
</TABLE>
