SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 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 Bldg.
Tsimshatsui, Kowloon, Hong Kong
(Address of principal executive offices)
(852) 2721-0936
(Registrant's telephone number, including area code)
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 June 30,
1999.
<PAGE>
PART I. FINANCIAL INFORMATION
Unaudited financial statements for the quarter and three-month period ended
June 30, 1999.
<TABLE>
<CAPTION>
Asian Star Development, Inc.
Interim Consolidated Balance Sheet
(Expressed in US Dollars)
June 30, 1999
(Unaudited)
-------------
ASSETS
Current assets
<S> <C>
Cash and cash equivalents. $ 10,371
Prepayments 226,220
Inventories 20,469
Other assets 67,701
----------
Total current assets $ 324,761
Land usage rights 469,814
Land improvement 4,274,312
Construction in progress 1,899,283
Property and equipment, net 1,402,551
----------
Total assets $ 8,370,721
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Due to a shareholder $ 418,720
Accounts payable 587,160
Others payable 266,952
Accrued liabilities 2,557
-----------
Total current liabilities $ 1,275,389
Commitments and contingencies
Minority interest $ -
Shareholders' equity
Common stock, $0.001 par value:
25,000,000 shares authorized
12,955,530 shares issued and
outstanding
Common stock 12,956
Additional paid-in capital 8,299,811
Accumulated losses (1,217,435)
------------
Total shareholders' equity 7,095,332
Total liabilities and shareholders'
equity $8,370,721
</TABLE>
See accompanying notes to unaudited consolidated condensed financial
statements.
1
<PAGE>
Asian Star Development, Inc.
Interim Consolidated Statements of Operations
(Expressed in US Dollars)
<TABLE>
<CAPTION>
Six Months Ended June 30,
1998 1999
(Unaudited) (Unaudited)
-----------------------------
<S> <C> <C>
Revenue, net $ - $ 19,283
Cost of sales - (17,638)
Gross profit - 1,645
Selling expenses - (70,072)
General and administrative expenses - (189,405)
Other income, net - 51,912
Loss before income tax - (205,920)
Income tax provision - -
Net loss before minority interest - (205,920)
Less: Loss in a subsidiary attributed to
minority interest - -
Net loss attributed to common
shareholders $ - $ (205,920)
Net loss per common share -
Basic and diluted $ - $ (0.016)
Weighted average number of common
shares outstanding 11,822,804 12,955,530
</TABLE>
See accompanying notes to unaudited consolidated condensed financial statements.
2
<PAGE>
Asian Star Development, Inc.
Interim Consolidated Statements of Cash Flows
Increase (Decrease) in Cash and Cash Equivalents
(Expressed in US Dollars)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1998 1999
(Unaudited) (Unaudited)
------------------------------
<S> <C> <C>
Cash flows from operating activities
Net loss $ - $ (205,920)
Adjustment to reconcile net loss to
net cash provided by operating activities:
Depreciation and amortization of fixed
assets - 25,154
Recognition of deferred expense - 112,500
Prepayments - 55,098
Inventories - 8,576
Other assets (1,031) (47,296)
Accounts payable - 7,871
Others payable (33,860) 140,505
Accrued expenses (66,901) (93,180)
---------- ---------
Net cash (used in)/provided by
operating activities (101,792) 3,308
Cash flows from investing activities
Payments for overhead (203,664) (186,502)
Payments for construction materials (365,126) (148,251)
Acquisition of properties and fixed assets - (3,652)
-------- ---------
Net cash used in investing activities (568,790) (338,405)
Cash flows from financing activities
Proceeds from common stock subscription 940,662 91,980
Advance from a shareholder (83,566) 181,798
-------- --------
Net cash provided by financing activities 857,096 273,778
Net increase/(decrease) in cash and cash
Equivalents 186,514 (61,319)
Cash and cash equivalents at beginning
of period 34,311 71,690
-------- --------
Cash and cash equivalents at end of
period $ 220,825 $ 10,371
Supplemental disclosure of significant
non-cash transactions
Capital injection in Honpar Shilong for:
Land improvement $ 138,387 $ -
Overhead 291 -
</TABLE>
See accompanying notes to audited consolidated condensed financial statements.
3
<PAGE>
NOTE 1 - BASIS OF PRESENTATION
The accompanying financial data as of June 30, 1999 and for the six months
ended June 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 June 30, 1999 and for the six
months ended June, 1999, have been made. The results of operations for the
six months ended June 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 June 30, 1999 (unaudited)
is as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Project Total
Investment
Per Project Costs Years Remaining to
Per Agreement Incurred Complete the Project Per
or Contract to Date Agreement or Contract
- --------------- -------------- --------- -------------------------
Shilong Town $ 24,200,000 $ 613,828 Seven
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 condition
and endeavoring
complete within
three years
--------------- -----------
$ 89,401,000 $ 6,748,871
============== ===========
</TABLE>
4
<PAGE>
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
plans to acquire 100% of the total issued and outstanding shares of two PRC
corporations through a 75% owned newly-established Hong Kong subsidiary. No
cost has been incurred on this project as of June 30, 1999.
NOTE 5 - SUBSEQUENT EVENTS
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. To
Date, no formal agreement has been entered
ITEM 2. MANAGEMENT'S DISCUSSION OF OPERATIONS AND FINANCIAL CONDITION
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 $1,173,952 through June 30, 1999. Registrant's cash
and cash equivalents decreased from $220,825 at June 30, 1998 to $10,371 at June
30, 1999.
Six Months Ended June 30, 1999 Compared to Six Months Ended June 30, 1998
Sales for the operation of the Water Park's restaurant for the six months ended
June 30, 1999 amounted to $19,283. Registrant had no revenues for the six
months ended June 30, 1998 and for the quarter ended June 30, 1999. Included in
the selling expenses of $70,072 for the six months ended June 30, 1999 are
mainly salary and depreciation expenses. Reduction in selling expenses is
because of the gradual laid off of staff resulting from the temporary suspension
of restaurant business after the Chinese New Year. General and administrative
expenses include $116,628 consulting fees and $20,730 salary expenses.
Liquidity and Capital Resources
For the quarter ended June 30, 1999, Registrant has generated positive cash flow
of $3,308 from its operations for the six months operation due to the prepayment
of expense in last year. 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,
5
<PAGE>
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 increased from zero
for the six months ended June 30, 1998 to $3,652 for the six months ended June
30, 1999. Expenditures for overhead, representing accumulated indirect costs
which are related to projects, decreased from $203,664 for the six months ended
June 30, 1998 to $186,502 for the six months ended June 30, 1999. Payments for
construction materials decreased from $365,126 for the six months ended June 30,
1998 to $148,251 for the six months ended June 30, 1999. Net cash used in
investing activities decreased from $568,790 for six months ended June 30, 1998
to $338,405 for six months ended June 30, 1999.
Proceeds from common stock subscription decreased from $940,662 for the six
months ended June 30, 1998 to $91,980 for the six months ended June 30, 1999.
As of June 30, 1999, Registrant's total assets and total liabilities were
$8,370,721 and $1,275,389.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
EXHIBITS
a) All required exhibits, including Registrant's Articles of Incorporation
and Bylaws, are attached to Registrant's Form 10-SB, filed on May 11,
1999. All exhibits required to be filed herein are incorporated by
reference to that Form.
b) No reports on Form 8-K were filed by Registrant during the quarter.
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 12th day of November, 1999.
Asian Star Development, Inc.
By: /s/ Stephen Chow
President
6
<PAGE>
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<CIK> 0001046883
<NAME> Asian Star Development, Inc.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 10371
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</TABLE>
