SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB/A
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999.
Commission File Number: 0-26029
ASIAN STAR DEVELOPMENT, INC.
(Exact name of registrant as specified in its charter)
Nevada 88-0866395
(State of organization) (I.R.S. Employer Identification No.)
Room 930, Block B, East Wing
New World Office Building
Tsimshatsui, Kowloon, Hong Kong
(Address of principal executive offices)
Registrant's telephone number, including area code: (852) 2721-0936
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 and (2) has been subject to such filing requirements
for the past 90 days. Yes X
There are 12,955,530 shares of common stock outstanding as of September
30, 1999.
1
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TABLE OF CONTENTS
-------------------
Part I Financial Information
Item 1 Financial Statements
Item 2 Management's Discussion of Operations and Financial
Condition
Part II Other Information
Item 6 Exhibits and Reports on Forms 8-K
Item 7 Signatures
2
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PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The unaudited financial statements for the quarter and nine-month
period ended September 30, 1999, prepared by Management, and expressed
in U.S. Dollars, are as follows:
<TABLE>
<CAPTION>
Asian Star Development, Inc.
Interim Consolidated Balance Sheet
September 30, 1999
--------------------
(Unaudited)
<S> <C>
ASSETS
Current assets
Cash and cash equivalents . . . . . . . . . $ 4,601
Prepayments . . . . . . . . . . . . . . . . 170,022
Inventories . . . . . . . . . . . . . . . . 7,586
Other assets. . . . . . . . . . . . . . . . 65,397
--------------------
Total current assets. . . . . . . . . . . 247,606
Land usage rights . . . . . . . . . . . . . . 469,814
Land improvement. . . . . . . . . . . . . . . 4,274,312
Construction in progress. . . . . . . . . . . 1,961,606
Property and equipment, net . . . . . . . . . 1,348,061
---------------------
Total assets. . . . . . . . . . . . . . . . . $ 8,301,399
--------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Due to a shareholder. . . . . . . . . . . . $ 478,903
Accounts payable. . . . . . . . . . . . . . 542,812
Others payable. . . . . . . . . . . . . . . 276,009
Accrued liabilities . . . . . . . . . . . . 9,223
-------------------
Total current liabilities . . . . . . . . 1,306,947
Commitments and contingencies
Minority interest . . . . . . . . . . . . . . -
Shareholders' equity
Common stock, $0.001 par value:
25,000,000 shares authorized and
12,955,530 shares issued and outstanding
Common stock. . . . . . . . . . . . . . . . . 12,956
Additional paid-in capital. . . . . . . . . . 8,299,811
Accumulated losses. . . . . . . . . . . . . . (1,318,315)
Total shareholders' equity. . . . . . . . . 6,994,452
--------------------
Total liabilities and shareholders' equity. . $ 8,301,399
--------------------
</TABLE>
See accompanying notes to unaudited consolidated condensed financial statements.
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<TABLE>
<CAPTION>
Asian Star Development, Inc.
Interim Consolidated Statements of Operations
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- -------------------
1998 1999 1998 1999
---------- ---------- --------- ----------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Revenue, net . . . . . . . $ 174,317 $ 22,643 $ 174,317 $ 41,926
Cost of sales. . . . . . . . .(75,872) (22,965) (75,872) (40,603)
--------- --------- ---------- ---------
Gross profit . . . . . . . . 98,445 (322) 98,445 1,323
Selling expenses . . . . . . (109,836) (8,856) (109,836) (78,928)
General and administrative
expenses . . . . . . . . . (513,821) (93,160) (513,821) (282,565)
Other income, net. . . . . . . . .178 1,458 178 53,370
--------- ---------- --------- ---------
Loss before income tax . . . (525,034) (100,880) (525,034) (306,800)
Income tax provision . . . . . . . .- - - -
-------- --------- --------- ---------
Net loss before minority
interest. . . . . . . (525,034) (100,880) (525,034) (306,800)
Less: Loss in a subsidiary
attributed to minority
interest. . . . . . - - - -
-------- --------- -------- ---------
Net loss attributed to
common shareholders. . $(525,034) $(100,880) $(525,034) $(306,800)
--------- -------- ---------- ----------
loss per common share
- Basic and diluted. . $ (0.042) $ (0.008) $ (0.043) $ (0.024)
---------- --------- --------- ----------
Weighted average number
of common shares
outstanding . . . 12,470,095 12,955,530 12,096,012 12,955,530
---------- ---------- ---------- ----------
<FN>
See accompanying notes to unaudited consolidated condensed financial statements.
</FN>
</TABLE>
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<TABLE>
<CAPTION>
Asian Star Development, Inc.
Interim Consolidated Statements of Cash Flows
Increase (Decrease) in Cash and Cash Equivalents
(Expressed in US Dollars)
Nine Months Ended
September 30,
-------------------
1998 1999
------------------- ------------
<S> <C> <C>
(Unaudited) (Unaudited)
Cash flows from operating activities
Net loss. . . . . . . . . . . . . . . . . . . . . $ (525,034) $ (306,800)
Adjustment to reconcile net loss to
net cash provided by operating activities
Depreciation and amortisation of fixed assets . . . . 19,007 50,419
Loss on disposal of fixed assets. . . . . . . . . . . - 6,548
Recognition of deferred expense . . . . . . . . . . . 56,250 112,500
Non-cash compensation expense . . . . . . . . . . . . 399,657 -
Prepayments . . . . . . . . . . . . . . . . . . . . . (29,093) 111,296
Inventories . . . . . . . . . . . . . . . . . . . . . (24,100) 21,459
Other assets. . . . . . . . . . . . . . . . . . . . . (106,856) (44,992)
Accounts payable. . . . . . . . . . . . . . . . . . . 566,609 (36,477)
Others payable. . . . . . . . . . . . . . . . . . . . 119,479 149,562
Accrued expenses. . . . . . . . . . . . . . . . . . . (60,261) (86,514)
------------------- ------------
Net cash provided by/(used by) operating activities . 415,658 (22,999)
Cash flows from investing activities
Payments for overhead . . . . . . . . . . . . . . . . (256,001) (248,825)
Payments for construction materials . . . . . . . . . (324) (148,251)
Acquisition of properties and fixed assets. . . . . . (1,405,894) (7,137)
Proceeds from disposal of fixed assets. . . . . . . . - 26,162
------------------- ------------
Net cash used in investing activities . . . . . . . . (1,622,219) (378,051)
Cash flows from financing activities
Proceeds from common stock subscription . . . . . . . 1,600,660 91,980
(Repayment to)/advanced from a shareholder. . . . . . (318,293) 241,981
------------------- ------------
Net cash provided by financing activities . . . . . . 1,282,367 333,961
Net increase/(decrease) in cash and cash equivalents. 35,806 (67,089)
Cash and cash equivalents at beginning of period. . . 34,311 71,690
------------------- ------------
Cash and cash equivalents at end of period. . . . . . $ 70,117 $ 4,601
------------------- ------------
Supplemental disclosure of significant
non-cash transactions
Capital injection in Honpar Shilong for:
Land usage right. . . . . . . . . . . . . . . . . . $ 234,905 $ -
Land improvement. . . . . . . . . . . . . . . . . . 195,079 -
Overhead pool . . . . . . . . . . . . . . . . . . . 291 -
<FN>
See accompanying summary of accounting policies and notes to consolidated financial
statements.
</FN>
</TABLE>
5
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Asian Star Development, Inc.
Notes to Interim Consolidated Financial Statements
(Expressed in US Dollars)
NOTE 1 - BASIS OF PRESENTATION
The accompanying financial data as of September 30, 1999 and for the three and
nine months ended September 30, 1999 and 1998, have been prepared by the
Company, without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission. 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. However, the Company believes that the disclosures are adequate to
make the information presented not misleading. These financial statements
should be read in conjunction with the financial statements and the notes
thereto included in the Company's audited annual financial statements for the
year ended December 31, 1998.
The preparation of financial statements in conformity with general accepted
accounting principles requires management to make estimates that affect the
reported amounts of assets, liabilities, revenues and expenses and the
disclosure of contingent assets and liabilities. Actual results could differ
from these estimates.
In the opinion of Management, all adjustments (which include only normal
recurring adjustments) necessary to present fairly the financial position,
results of operations and cash flows as of September 30, 1999 and for the three
and nine months ended September 30, 1999, have been made. The results of
operations for the three and nine months ended September 30, 1999 are not
necessarily indicative of the operating results for the full year.
NOTE 2 - LAND USAGE RIGHTS
Land usage right is an intangible asset and stated at cost and is amortized over
the unexpired land usage term ranging from 50 to 70 years.
NOTE 3 - COMMITMENTS AND CONTINGENCIES
Based on the joint venture contracts and agreements the Company has entered
into, the overall status of the four projects as of September 30, 1999 is as
follows:
<TABLE>
<CAPTION>
Total
Investment
Per Project Costs
Per Agreement Incurred Years Remaining to Complete
Project or Contract to Date Project Per Agreement/Contract
- ------- -------------- --------- ------------------------------
(Unaudited)
<S> <C> <C> <C>
Shilong Town $24,200,000 $ 613,828 Seven
6
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Shilong Water
World 3,630,000 1,468,797 No time limit
Maple City 38,000,000 2,016,621 No time limit
Shilong Town Hall 23,571,000 2,649,625 Pending on the PRC economic
conditions and endeavoring
to complete within 3 years
----------- ---------
$89,401,000 $6,748,871
----------- ----------
</TABLE>
Financing Resource Dependency
Historically, the operating activities of the above four projects were
substantially financed by one of the Company's directors through the form of
either infusing equity capital or providing shareholder's loans in addition to
the fund raising exercises implemented in 1997 and 1998.
Considering the condition that only limited funding is presently available,
management believes that the completion of these four projects on a timely basis
will depend significantly on the additional funding available to the Company
through debt and/or equity financing in the near future.
NOTE 4 - "6-12" CONVENIENCE STORE CHAIN
According to the letter of intent entered into in September 1998, the Company
planned to acquire 100% of total issued and outstanding shares of two PRC
corporations through a 75% owned newly-established Hong Kong subsidiary. This
plan has been subsequently changed as only one PRC corporation will be acquired.
No cost has been incurred on this project as of September 30, 1999.
NOTE 5 - HARMONIC HALL INVESTMENT
On July 6, 1999, one of the Company's wholly owned subsidiary has entered into a
preliminary agreement to purchase 62.5% of Harmonic Hall Investment Holdings
Limited in exchange for 3,870,968 restricted common stock of the Company. Up to
date no formal agreement has been entered and no share exchange has been carried
out yet.
NOTE 6 - CONTINGENCIES
One of the Company's subsidiary, Honpar (Shilong) Properties Limited, is
involved in a legal proceeding with a PRC construction company relating to the
Shilong Town Hall project. The amount claimed by the construction company is
approximately RMB5 million (equivalent to US$605,000). The management of the
Company has denied and defended vigorously against the claim and believes that
the realisation of this contingent liability is remote. Accordingly no
provision has been provided for the claim amount.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION OF OPERATIONS AND FINANCIAL CONDITION
Asian Star Development, Inc.
Management's Discussion and Analysis
(Expressed in US Dollars)
Results of Operations
Limited Operating History; Accumulated Deficit; Need for Additional Capital
There is limited historical financial information about Registrant upon which to
base an evaluation of the Registrant's performance or to make a decision
regarding an investment in shares of Registrant's Common Stock. Registrant has
an accumulated deficit of $1,267,829 through September 30, 1999. Registrant's
cash and cash equivalents decreased from $70,117 at September 30, 1998 to $4,601
at September 30, 1999.
Nine Months Ended September 30, 1999 Compared to Nine Months Ended September 30,
1998
Revenue from the operation of the Water Park's restaurant and swimming pool for
the nine months ended September 30, 1999 amounted to $19,283 and $22,643
respectively. Revenue of Registrant for the nine months ended September 30,
1998 and for the quarter ended September 30, 1998 amounted to $174,317.
Reduction in revenue is because of the suspension of restaurant business after
the Chinese New Year. Included in the selling expenses of $78,928 for the nine
months ended September 30, 1999 are mainly salary and depreciation expenses.
Reduction in selling expenses is because of the gradual laid off of PRC staff
after the Chinese New Year. Included in the general and administrative expenses
include $175,262 consulting fees and $26,894 salary expenses. Reduction in
general and administrative expenses is because of the provision of
$339,657 employees' compensation for stock option granted and the provision of
$60,000 CEO compensation for the quarter ended September 30, 1998.
Liquidity and Capital Resources
For the quarter ended September 30, 1999, Registrant has generated negative cash
flow of $67,089 from its operations for the nine months operation due to the
payment for overhead. Due to the infant stage of its operations, substantial
ongoing investment in properties and development efforts, and expenditures to
build the appropriate infrastructure to support expected future growth,
Registrant has been substantially dependent on private placements of its equity
securities and shareholder loan financing to fund its cash requirements.
Expenditures for acquisition of properties and fixed assets decreased from
$1,405,894 for the nine months ended September 30, 1998 to $7,137 for the nine
months ended September 30, 1999. Expenditures for overhead, representing
accumulated indirect costs which are related to projects, decreased from
$256,001 for the nine months ended September 30, 1998 to $248,825 for the nine
months ended September 30, 1999. Payments for construction materials increased
from $324 for the nine months ended September 30, 1998 to $148,251 for the nine
months ended September 30, 1999. Net cash used in investing activities
decreased from $1,622,219 for nine months ended September 30, 1998 to $378,051
for nine months ended September 30, 1999.
Proceeds from common stock subscription decreased from $1,600,660 for the nine
months ended September 30, 1998 to $91,980 for the nine months ended September
30, 1999.
8
<PAGE>
As of September 30, 1999, Registrant's total assets and total liabilities were
$8,301,399 and $1,306,947.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
EXHIBITS
a) All required exhibits, including the Company's Articles of Incorporation,
and Bylaws, are attached to the Company's Form 10-SB, filed on May 11, 1999.
All previously filed exhibits are incorporated herein by reference.
b) Reports on Form 8-K: No reports were on filed on Form 8K during the
quarter ended September 30, 1999.
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the Registrant has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
Dated this 1st day of December, 1999.
Asian Star Development, Inc.
By: /s/ Stephen Chow
Stephen Chow, President
9
<PAGE>
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