<PAGE>2
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 AND EXCHANGE ACT OF 1934
For the Quarter ended March 31, 1998
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period to
Commission file number - 0-22965
Pinnacle Resources, Inc..
(Exact name of Small Business Issuer in its charter)
WYOMING 84-1414869
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
7345 E. Peakview Avenue, Englewood, Colorado 80111
(Address of principal executive offices) (Zip Code)
Registrant's Telephone number, including area code:
(303) 771-8100
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 and Exchange
Act of 1934 during the preceding twelve months (or such shorter period that
the Registrant was required to file such reports), and (2) has been subject to
file such filing requirements for the past thirty days.
Yes x No
------- --------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the close of the period covered by this report:
4,150,000 Shares of Common Stock ($.00001 par value)
(Title of Class)
Transitional Small Business Disclosure Format (check one):
Yes No x
--------- --------
<PAGE>3
PINNACLE RESOURCES, INC.
PART I: Financial Information
ITEM 1 - Financial statements
ITEM 2 - Management's' discussion and analysis of
financial condition and results of operations
PART II: Other Information
ITEM 6 - Exhibits and Reports on Form 8-K
<PAGE>4
PART I
Item 1. Financial Statements:
Pinnacle Resources, Inc.
(Fka Claremont House, Corp.)
A Development Stage Company
Balance Sheet
<TABLE>
<CAPTION>
Unaudited Audited
March 31 June 30,
1998 1997
<S> <C> <C>
ASSETS
Cash $ 27,001 $100,000
Interest Receivable - Relate Party 2,505 0
Note Receivable - Related Party 115,000 0
------- --------
Total Current Assets 144,508 $100,000
TOTAL ASSETS $144,508 $100,000
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Current Liabilities
Current Portion of Note Payable $100,000 0
Accounts Payable $6,460 0
Accrued Interest 164 0
-------- --------
Total Current Liabilities 106,624 0
Long-Term Portion of Note Payable 0 0
TOTAL LIABILITIES 106,624 0
SHAREHOLDER' EQUITY
Preferred Stock, $.01 Par Value
Authorized 2,000,000 Shares; Issued
And Outstanding -0- Shares 0 0
Common Stock, $.00001 Par Value
Authorized 500,000,000 Shares; Issued
And Outstanding 4,150,000 Shares 42 42
Capital Paid in Excess of
Par Value of Common Stock 101,458 101,458
Retained Earnings (Deficit) Accumulated
During the Development Stage (63,618) (1,500)
------- --------
TOTAL SHAREHOLDERS' EQUITY 37,882 100,000
------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 144,508 $100,000
======== ========
</TABLE>
The Accompanying Notes Are An Integral Part Of These Unaudited Financial
Statements.
<PAGE>5
PINNACLE RESOURCES, INC.
(FKA CLAREMONT HOUSE, CORP.)
A DEVELOPMENT STAGE COMPANY
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Unaudited Unaudited JANUARY 6, 1995
9 month 9 month (INCEPTION)
Period ended period ended Through March
March 31, 1998 March 31, 1997 31, 1998
<S> <C> <C> <C>
Revenue $0 $0 $0
Expenses:
Administrative 750 1,500 2,250
Bank Charges 20 0 20
Legal and Accounting 15,389 0 15,389
Officer Remuneration 7,200 0 7,200
Professional Fees 38,400 0 38,400
Rent 2,700 0 2,700
------ ----- -----
Total 64,459 0 64,459
------ ----- -----
(Loss) Before Other Income $(64,459) $(1,500) $(65,959)
Other Income - Interest 2,505 0 2,505
Interest (Expense) (164) 0 (164)
-------- ------- --------
Net (Loss) $(62,118) $(1,500) $(62,118)
Basis (Loss) per Common Shares ($0.01) ($0.01) ($0.02)
Weighted Average Common Shares
Outstanding 4,150,000 150,000 4,150,000
========= ======= =========
</TABLE>
The Accompanying Notes Are An Integral Part Of These Unaudited Financial
Statements.
<PAGE>6
PINNACLE RESOURCES, INC.
(FKA CLAREMONT HOUSE, CORP.)
A DEVELOPMENT STAGE COMPANY
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Unaudited Unaudited
3 month 3 month
Period ended period ended
March 31, 1998 March 31, 1997
<S> <C> <C>
Revenue $0 $0
Expenses:
Administrative 750 0
Bank Charges 20 0
Legal and Accounting 1,361 0
Officer Remuneration 2,400 0
Professional Fees 0 0
Rent 900 0
------ -----
Total 5,431 0
------ -----
(Loss) Before Other Income $(5,431) $0
Other Income(Expense)
Interest Income 1,505 0
Interest (Expense) (164) 0
-------- -------
Total 1,341 0
Net (Loss) $(4,090) $0
======== =======
Basis (Loss) per Common Shares ($0.01) $0.00
======== =======
Weighted Average Common Shares
Outstanding 4,150,000 150,000
========= =======
</TABLE>
The Accompanying Notes Are An Integral Part Of These Unaudited Financial
Statements.
<PAGE>7
PINNACLE RESOURCES, INC.
(FKA CLAREMONT HOUSE, CORP.)
A DEVELOPMENT STAGE COMPANY
Statement of Cash Flows
<TABLE>
<CAPTION>
Unaudited Unaudited JANUARY 6, 1995
9 month 9 month (INCEPTION)
Period ended period ended Through March
March 31, 1998 March 31, 1997 31, 1998
<S> <C> <C> <C>
Net (Loss) $(62,118) $(1,500) $(63,618)
Adjustments to Reconcile Net
Loss to Net Cash Used in
Operating Activities 0 0 0
Issuance of Common Stock For
Services 0 1,500 1,500
Changes in Operating Assets
and Liabilities
Increase in Interest Receivable (2,500) 0 (2,505)
Increase in Accounts Payable 6,460 0 6,460
Increase in Accrued Interest
Payable 164 0 164
------ ----- -------
Net Cash Flows From Operations (57,999) 0 (57,999)
------- ----- -------
Cash Flows From Investing
Activities:
Advances made to Related Entity (115,000) 0 (115,000)
Net Cash Flows from Investing (115,000) 0 (115,000)
-------- ----- -------
Cash Flows From Financing
Activities:
Issuance of Common Stock 100,000 0 100,000
Monies received from Loans 100,000 0 100,000
------- ----- -------
Cash Flows From Financing 200,000 0 200,000
------- ----- -------
Net Increase in Cash (72,999) 0 (72,999)
Cash At Beginning of Period 100,000 0 100,000
Cash At End of Period Period 27,001 0 27,001
Non-Cash Activities:
Stock Issued For Services $ 0 $0 $1,500
====== === ======
</TABLE>
The Accompanying Notes Are An Integral Part of These Unaudited Financial
Statements.
<PAGE>8
PINNACLE RESOURCES, INC.
(FKA CLAREMONT HOUSE, CORP.)
A DEVELOPMENT STAGE COMPANY
Statement of Shareholders' Equity
<TABLE>
<CAPTION>
Deficit
Capital Paid Accumulated
Number Of In Excess During The
Common Common of Development
NOTES Shares Stock Par Value Stage Total
<S> <C> <C> <C> <C> <C> <C>
Balance At
January 6, 1995 1,2 0 $0 $ 0 $0 $ 0
Issuance of Common Stock:
January 1995 for Cash
Advances Made On Behalf
of the Company & Services
at $.01 Per Share * 150,000 2 1,498 1,500
Net (Loss) (1,500) (1,500)
------- --- ------- ------ -------
Balance At June 30,
1995, 1996 150,000 $2 $1,498 ($1,500) $0
Issuance Of Common Stock:
June 26, 1997 for Cash
At $.025 Per Share 4,000,000 40 99,960 0 100,000
Net (Loss) 0 0
--------- --- ------ ------ -------
Balance At June 30,
1995, 1996 4,150,000 $42 $101,458 ($1,500) $100,000
========= === ======== ======
========
Net Loss (62,118)
Balance at March 31,
1998 4,150,000 $42 $101,458 ($63,618) $100,000
========= === ======== =======
========
</TABLE>
The Accompanying Notes Are An Integral Part of These Unaudited Financial
Statements.
<PAGE>9
PINNACLE RESOURCES, INC.
(FKA CLAREMONT HOUSE, CORP.)
A DEVELOPMENT STAGE COMPANY
Notes To Unaudited Financial Statements
For the Six Month Period Ended December 31, 1997
Note 1 - Unaudited Financial Information
The unaudited financial information included for the three month and nine
month period ended March 31, 1998 and 1997 and were taken from the books
and records without audit. However, such information reflects all
adjustments (consisting only of normal recurring adjustments, which are of
the opinion of management necessary to reflect properly the results of
interim periods presented) The results of operations for the three month
and nine month periods ended March 31, 1998 are not necessarily indicative
of the results expected for the year ended June 30,1998.
Note Receivable - Related Entity
In October 1997, monies were advanced to a related entity in the amount of
$40,000. These funds are accruing interest at a rate of 13% per annum.
The funds were originally due to be repaid on April 22, 1998. This note has
been extended until October 22, 1998.
In March 1998, monies were advanced to a related entity in the amount of
$75,000. These funds are accruing interest at a rate of 10% per annum. The
funds are due to be repaid on March 22, 1999.
Related Party Events;
When the Company organized in January 1995, stock was issued for services
valued at $1,500. This amount was treated as administrative fees.
Commencing July 1, 1997, the shareholders of the Company are providing office
space to the Company for $300 per month. The officers are providing
services valued at $800 per month.
In July 1997, the Company paid $20,000 to a related party. These monies
were treated as professional fees.
In December 1997, the Company paid a related entity that provides office
space and services $25,000. Of this, $4,800 was treated as officer
renumeration for the six months from July 1, 1997 through December 31, 1997
and $1,800 was treated as rent for the same period. The remaining $18,400
was treated as other professional fees.
<PAGE>10
PART I (cont.)
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations:
Trends and Uncertainties. The financial statements have been prepared
assuming that the Company will continue as a going concern. The Company is
in the development stage and has no operations as of March 31, 1998. The
deficiency in working capital as of March 31, 1998 raises substantial doubt
about its ability to continue as a going concern. In the course of its
development activities the Company has sustained continuing losses and
expects such losses to continue for the foreseeable future. The Company's
management plans on advancing funds on an as needed basis and in the longer
term revenues from the operations. The
Company's ability to continue as a going concern is dependent on these
additional management advances, and, ultimately, upon achieving profitable
operations.
Until revenues commence, the Company shall raise funds through equity
financing which may or not be successful. The Company has tried to limit
its general and administrative expenses. The Company has little or no
control as to the demand for its services and, as a result, inflation and
changing prices could have a material effect on the future profitability of
the Company.
The Company will focus its financing and capital arrangement activities on
emerging growth companies which plan to raise capital in the public markets
within a reasonable short period of time, i.e., one to two years.
Although the Company will initially target small mining companies due to its
contacts in that industry, management has not identified any particular
industry within which the Company will focus its efforts. Rather,
management intends to identify any number of candidates which may be brought
to its attention through present associations or by word-of-mouth.
Initially the Company intends to arrange sources of funding and finance for
its prospective clients through established sources for such funds by acting
as a finder or broker to the lender and as an arranger or financial
consultant to the borrowing party. In the emerging markets of South Africa
and South America, opportunities exist where small mining companies seek
funding from outside sources for capitalization because it is not available
locally.
Management has over 70 years of combined business experience involving a
variety of situations where financing and/or funding has been required in
order to effectuate a mining opportunity. Individually, management
personnel has directly funded, underwritten or brokered financing for a
number of mining prospects over the years, both in the domestic market as
well as South Africa and South America.
Management believes that the Company will be able to successfully seek out
potential candidates who are interested in obtaining loans from the Company
in the immediate future. This belief is based upon the perceived difficulty
of many development and growth stage companies who require additional
financing, but are unable to obtain the same from established sources, such
as banking institutions and venture capitalists. As interest rates begin to
rise, management anticipates that those types of entities earmarked by the
Company as possible clients will continue to seek out the Company as a
lending source, as management views a potential borrower's borrowing base in
a different light than banks. For loans made by regulated commercial
lenders, there is normally a structured review and evaluation of a
prospective borrower's loan application by the lender, including an in-depth
review of such application by a loan committee. The loan committee will
then approve or reject each application as it is submitted. The evaluation
and approval of loans depends on subjective factors and judgments, as well as
objective criteria, such as loan to value ratios and independent appraisals,
when appropriate or available. The Company's loan committee consists of
substantially fewer persons than a commercial lender and uses a less formal
procedure than more traditional lenders. It is possible that any such
subjective factors and judgments may prove to be incorrect with a resulting
loss of part or all of the Company's investment in any particular loan.
However, as part of the consideration provided to the Company for issuance of
its loans, the Company receives its interest and attempts to also obtain
additional consideration in the form of equity or options or warrants in the
borrower. In the event the borrower's business plan proves successful, the
Company may receive substantial returns as a result of this equity
enhancement.
Most venture capitalists take an aggressive equity position far in excess of
that of the Company and in many instances, takes an active role in the
management of their clients. Management believes that this makes venture
capitalists unattractive to those types of entities with whom the Company
does business.
The Company's ability to become a significant lender is impaired primarily by
its own lack of capital with which to make loans. While management would
welcome the opportunity to make more loans for larger amounts, management
finds itself in the same predicament as that of its prospective clients.
That is, the lack of capital with which to fully implement the Company's
business plan. Management hopes that as the Company begins to make
successful loans, its track record will allow the Company to attract
<PAGE>11
either private investors seeking to invest in the business of the Company on
a private basis, or that the Company will be able to attract an investment
banker willing to underwrite a secondary offering of the Company's securities
to generate additional capital. There are no assurances that the Company
will be able to attract either of the aforesaid entities to increase the
Company's working capital. If the Company is unable to obtain additional
working capital, it is unlikely that the Company will generate any
substantial growth in the near future.
Many existing computer programs use only two digits to identify a year in the
date field. These programs were designed and developed without considering
the impact of the upcoming change in the century. If not corrected, many
computer applications could fail or create erroneous results by or at the
Year 2000. As a result, many companies will be required to undertake major
projects to address the Year 2000 issue. Because the Company has nominal
assets, including no personal property such as computers, it is not
anticipated that the Company will incur any negative impact as a result of
this potential problem. However, it is possible that this issue may have an
impact on the Company after the Company successfully consummates a merger or
acquisition.
Capital Resources and Source of Liquidity. The Company currently has no
material commitments for capital expenditures. As of July 1997, the Company
pays $300 rent per month for its current office space. An increase in
lease payments could have negative effect on the cash flow and liquidity of
the Company.
On June 26, 1997, the Company sold 4,000,000 at $.025 per Common Share for
an aggregate of $100,000. At June 30, 1997, the Company had working capital
of $100,000 consisting of $100,000 in current assets and $0 in current
liabilities. The Company received a loan of $100,000 in March, 1998. For
the nine month period ended March 31, 1998, the Company advanced a related
party $115,000 resulting in net cash flows used in financing activities of
$115,000. At March 31, 1998, the Company had working capital of $37,882
consisting of $144,506 in current assets and $106,624 in liabilities. The
Company has no long-term liabilities.
Results of Operations. The Company expects to earn consulting fees,
commissions, brokerage points and equity participation for having acted as an
arranger and go-between from having effectuated a financing package on behalf
of a client and a funding source. To date, the Company has not yet commenced
operations or received any revenues. The Company had a net loss for the
nine months ended March 31, 1998 of $62,118. The Company had an increase of
$2,505 in interest receivable for the nine months ended March 31, 1998, an
increase in accounts payable of $6,460 and an increase in accrued interest
payable of $164. As a result, the Company had net cash flows from operations
of $(57,999) for the nine months ended March 31, 1998.
For the nine months ended March 31, 1997, the Company had a net loss of
$1,500 and issued stock for services valued at $1,500. This resulted in net
cash flows from operations of $0.00 for the nine months ended March 31, 1997.
Plan of Operation. The Company is not delinquent on any of its obligations
even though the Company has not yet begun to generate revenue. The Company
will identify and subsequently qualify prospective clients. Current
operations require minimal cash infusions. The Company may borrow funds or
obtain equity financing from affiliated persons or entities to continue
operations, if necessary. The Company intends to market its services
utilizing cash made available from the recent private sale of its Common
Shares. The Company is of the opinion that revenues from its services along
with proceeds of the private sale of its securities will be sufficient to pay
its expenses until receipt of revenues at a level to sustain operations.
<PAGE>12
PINNACLE RESOURCES, INC.
PART II
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits (numbered in accordance with Item 601 of
Regulation S-K)
None
(b) Reports on Form 8-K
None
<PAGE>13
SIGNATURE
Pursuant to the requirements 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.
Date: May 26, 1998 /s/ Glen "Trig" Gamble
---------------------------
Glen "Trig" Gamble, President
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> MAR-31-1998
<CASH> 27,001
<SECURITIES> 0
<RECEIVABLES> 117,505
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 144,506
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 42
0
0
<OTHER-SE> 37,840
<TOTAL-LIABILITY-AND-EQUITY> 144,506
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 64,459
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (62,118)
<INCOME-TAX> 0
<INCOME-CONTINUING> (62,118)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (62,118)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
