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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 June 30, 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 000-30644
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 June 30, 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
JUNE 30, 2000
<CAPTION>
JUNE 30, 2000 DECEMBER 31, 1999
(Unaudited) (Unaudited)
<S> <C> <C>
ASSETS
CURRENT
Cash $1,172 $2,083
Canadian goods and services tax receivable 133 1500
Total current assets 1,305 3583
INVESTMENT IN JOINT VENTURE 0 1
MINERAL PROPERTIES 1 1
Total assets $1,306 $3,585
LIABILITIES AND SHAREHOLDERS' DEFICIT
LIABILITIES
CURRENT
Accounts payable $67,314 $57,552
Loan from shareholder 14,016 14,016
Total current liabilities 81,330 71,568
PROMISSORY NOTE PAYABLE 24,841 24,841
ADVANCES FROM SHAREHOLDERS 153,141 151,718
Total liabilities 259,312 248,127
SHAREHOLDERS' DEFICIT
Share capital
Authorized
200,000,000 shares with a par value of $.001
Issued and outstanding
15,131,000 shares
Par value 15,131 17,211
Additional paid up capital 980,310 978,231
Deferred foreign currency translation gain (loss) (3,915) (3,915)
Deficit accumulated during the development stage (1,249,532) (1,236,069)
Total shareholders' deficit (258,006) (244,542)
Total liabilities and shareholders' deficit $1,306 $3,585
(See accompanying notes)
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<TABLE>
F- 2
CANADIAN NORTHERN LITES, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE QUARTER AND SIX-MONTH PERIOD ENDED JUNE 30, 2000
AND FROM INCEPTION ON JUNE 18, 1990 THROUGH JUNE 30, 2000
<CAPTION>
Cumulative For The Three For The Three For the Six For the Six
Total Since Months Ended Months Ended Months Ended Months Ended
Inception June 30, 2000 June 30, 1999 June 30, 2000 June 30, 1999
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
Exploration and development $19,885 $0 $0 $0 $0
Write off of investment in joint venture 60,463 0 0 0 0
Write off of development and property costs 442,529 0 0 0 0
Total exploration and development expenses 522,877 0 0 0 0
MARKETING EXPENSES
Advertising 2,637 0 0 0 0
Courier and postage 7,383 0 0 0 0
Meetings 1,357 0 0 0 0
Printing 19,056 0 0 0 0
Promotion and entertainment 16,454 0 0 0 0
Services 58,525 0 0 0 0
Telephone and fax 22,438 0 0 0 0
Travel 41,305 0 0 0 0
Total marketing expenses 169,155 0 0 0 0
ADMINISTRATIVE EXPENSES
Accounting and audit fees 26,249 (1,578) 0 (1,757) 0
Automobile 2,689 0 0 0 0
Bank charges and interest (recovery) 2,161 18 189 35 189
Computer servicing 9,830 0 0 0 0
Incorporation expenses written off 6,794 0 0 0 0
Insurance 836 0 0 0 0
Interest on long term debt 11,340 905 3,444 1,511 3,444
Legal 142,683 1,004 3,914 2,511 3,914
Management and consulting fees 159,132 6,098 10,000 10,226 10,000
Meals and entertainment 28 0 0 0 0
Office supplies and service 65,137 336 23 336 23
Rent 9,021 0 0 0 0
SEC filing fees 10,981 0 0 0 0
Telephone and fax 7,036 0 0 0 0
Transfer agent fees 1,940 450 0 601 0
Travel 33,990 0 0 0 0
U.S. financial services 28,339 0 0 0 0
Wages and benefits 25,930 0 0 0 0
Total administrative expenses 544,116 7,233 17,570 13,463 17,570
LOSS BEFORE OTHER INCOME (LOSS) (1,236,148) (7,233) (17,570) (13,463) (17,570)
OTHER INCOME (LOSS) 0
Interest income 798 0 199 0 199
Gain (loss) on disposal of capital assets (11,923) 0 0 0 0
Gain (loss) on cash settlements of accounts payable (2,259) 0 0 0 0
INCOME (LOSS) BEFORE INCOME TAX PROVISION (1,249,532) (7,233) (17,371) (13,463) (17,371)
INCOME TAX PROVISION 0 0 0 0 0
NET INCOME (LOSS) ($1,249,532) ($7,233) ($17,371) ($13,463) ($17,371)
(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 JUNE 30, 2000
(UNAUDITED)
<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 JUNE 30, 2000
(UNAUDITED)
<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, six-months ended June 30, 2000 (13,463)
Balance, June 30, 2000 15,131,000 $15,131 $980,310 ($1,249,532)
(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 SIX MONTHS ENDED JUNE 30, 2000 AND 1999
AND FROM INCEPTION ON JUNE 18, 1990 THROUGH JUNE 30, 2000
<CAPTION>
Cumulative For The Six For the Six
Total Since Months Ending Months Ending
Inception June 30, 2000 June 30, 1999
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) ($1,249,532) ($13,463) ($17,371)
Items not involving an outlay of cash
Non-cash accounting services of a former director 2,000 0 0
Loss (gain) on disposal of capital assets 11,923 0 0
Write off of incorporation costs 794 0 0
Write down of investment in joint venture 60,463 0 0
Write down of development and property costs 442,529 0 0
Loss (gain) on cash settlements of accounts payable 2,260 0 0
Change in working capital items
Canadian goods and services tax receivable (133) 1,367 (1,323)
Accounts payable increase before part of the
balance was settled by issuing shares 191,755 9,762 9,519
Net cash (used in) received from operating activities (537,941) (2,334) (9,175)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock 151,502 0 0
Stock issued on exercise of stock options 500 0 0
Loan from shareholder 14,016 0 0
Advances from shareholders before part of the
balance was settled by issuing shares 867,880 1,423 3,444
Net cash from financing activities 1,033,898 1,423 3,444
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of capital assets (11,949) 0 0
Proceeds from disposal of capital assets 26 0 0
Incorporation costs (794) 0 0
Mineral property payments (478,153) 0 0
Net cash (used in) received from investing activities (490,870) 0 0
NET INCREASE (DECREASE) IN CASH
(BANK INDEBTEDNESS) 5,087 (911) (5,868)
CASH (BANK INDEBTEDNESS) AT
BEGINNING OF YEAR 0 2,083 21,029
FOREIGN CURRENCY TRANSLATION GAIN (LOSS) (3,915) 0 0
CASH (BANK INDEBTEDNESS) AT
END OF PERIOD $1,172 $1,172 $15,161
(See accompanying notes)
</TABLE>
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F- 6
CANADIAN NORTHERN LITES, INC.
(A Development Stage Company)
CONDENSED NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
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
statements include 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
June 30, 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 Company 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 June 30, 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 quarter and six-month period ended
June 30, 2000 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.
On May 2, 2000 at the Annual Meeting of Shareholders, shareholders approved the
Board of Directors proposal to change the Company's state of incorporation to
the State of Nevada. In addition shareholders approved the Board's proposal to
increase the Company's authorized common stock from 100 million $0.001 par value
shares to 200 million $0.001 par value shares, and to recapitalize the common
stock of the company. Details of the above corporate actions can be found in
the Company's Proxy Statement, filed at the Securities and Exchange Commission
on April 4, 2000.
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 quarter and six-month period ended
June 30, 2000.
The Company recorded a net loss of ($7,233) for the quarter and ($13,463)
for the six-month period ended June 30, 2000.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash position at 06/30/2000 was $1,172, compared to $15,161 at
June 30, 1999.
The Company recorded a net loss of ($7,233) for the 3 months and ($13,463)
for the six months ended June 30, 2000.
At 06/30/00, the Company had a negative working capital position of ($80,025),
compared to ($26,575) at June 30, 1999.
The Company incurred administrative expenses of $7,233 for the quarter and
$13,463 for the six-month period ended June 30, 2000.
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 Company 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 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 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 200,000,000 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 June 30, 2000, 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.
--------------------------------
American Depository Receipts. Not applicable.
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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
----------------------------------------
(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 quarter and
six-month period ended June 30, 2000.
<PAGE>
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
August 14, 2000
