SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000
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)
(852) 2721-0936
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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 13,267,390 SHARES OF COMMON STOCK OUTSTANDING AS OF MARCH 31, 2000.
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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 5 OTHER INFORMATION
ITEM 6 EXHIBITS AND REPORTS ON FORMS 8-K
ITEM 7 SIGNATURES
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PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THE UNAUDITED FINANCIAL STATEMENTS FOR THE QUARTER ENDED MARCH 31, 2000,
PREPARED BY MANAGEMENT, AND EXPRESSED IN U.S. DOLLARS, ARE AS FOLLOWS:
ASIAN STAR DEVELOPMENT, INC.
UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 2000
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ASIAN STAR DEVELOPMENT, INC.
INDEX TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
PAGES
Interim Consolidated Balance Sheet F - 1
Interim Consolidated Statements of Operations F - 2
Interim Consolidated Statements of Cash Flows F - 3
Notes to Interim Consolidated Financial Statements F - 4 to F - 6
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<TABLE>
<CAPTION>
ASIAN STAR DEVELOPMENT, INC.
INTERIM CONSOLIDATED BALANCE SHEET
(Expressed in US Dollars)
MARCH 31, 2000 DEC. 31, 1999 MARCH 31, 1999
-------------- ------------- --------------
(UNAUDITED) (AUDITED) (UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 112,788 $ 5,628 $ 18,105
Prepayments 326,245 133,059 281,250
Inventories 9,030 3,905 24,440
Other assets 1,073,410 43,690 70,586
--------- -------- ---------
Total current assets $1,521,473 $ 186,282 $ 394,381
Goodwill 86,983 - -
Land usage rights 469,814 469,814 469,814
Land improvement 4,297,445 4,274,312 4,274,312
Construction in progress 1,363,369 1,656,970 1,817,185
Property and equipment, net 1,698,910 1,363,294 1,425,153
--------- --------- ---------
Total asset $9,437,994 $7,950,672 $8,380,845
========= ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Due to a shareholder $1,045,926 $ 714,204 $ 299,449
Accounts payable 681,228 542,821 584,985
Other payables 410,277 159,150 285,139
Accrued liabilities 197,167 180,890 6,548
--------- --------- ---------
Total current liabilitie $2,334,598 $1,597,065 $1,176,121
COMMITMENTS AND CONTINGENCIES
MINORITY INTEREST - - -
SHAREHOLDERS EQUITY
Common stock, $0.001 par value:
25,000,000 shares authorized, 13,267,390
shares issued and outstanding
Common stock 13,268 12,956 12,956
Additional paid-in capital 9,017,661 8,510,311 8,299,811
Accumulated losses (1,927,533) (2,169,660) (1,108,043)
--------- --------- ---------
Total shareholders' equity 7,103,396 6,353,607 7,204,724
Total liabilities and shareholders' equity 9,437,994 7,950,672 8,380,845
========= ========= =========
</TABLE>
F - 1
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<TABLE>
<CAPTION>
ASIAN STAR DEVELOPMENT, INC.
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
(Expressed in US Dollars)
THREE MONTHS ENDED
MARCH 31,
2000 1999
----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C>
Revenue, net $ 370,447 $ 19,283
Cost of Sales (379,134) (17,638)
---------- ----------
Gross profit / (loss) (8,687) 1,645
Selling expenses (2,660) (40,820)
General and administrative expenses $ (209,589) (88,255)
Other income, net 463,063 30,902
---------- ----------
Profit / (Loss) before income tax 242,127 (96,528)
Income tax provision - -
---------- ----------
Net profit / (loss) before minority interest 242,127 (96,528)
Less : loss in a subsidiary attributed to minority interest - -
Net profit / (loss) attributed to common shareholders $ 242,127 $ (96,528)
========== ==========
Net loss per common share - Basic and diluted $ 0 $ 0
========== ==========
Weighted average number of common
shares outstanding 13,267,390 12,955,530
========== ==========
</TABLE>
F - 2
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<TABLE>
<CAPTION>
ASIAN STAR DEVELOPMENT, INC.
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOW
(Expressed in US Dollars)
THREE MONTHS ENDED
MARCH 31,
2000 1999
----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net profit / (loss) $ 242,127 $ (96,528)
Adjustments to reconcile net profit / (loss) to
net cash provided by operating activities:
Depreciation and amortisation of fixed assets 104,095 8,602
Recognition of deferred expenses - 56,250
Prepayments (193,186) 56,318
Inventories (5,125) 4,605
Other assets (1,029,720) (50,181)
Accounts payable 138,407 5,696
Other payables 251,127 158,692
Accrued expenses 16,277 (89,189)
Gain on disposal of subsidiaries 461,687 -
--------- --------
NET CASH (USED IN)/PROVIDED BY OPERATING ACTIVITIES (14,311) 54,265
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for overheads (23,133) (138,768)
Payments for construction materials and fixed assets (249,618) (123,589)
--------- --------
NET CASH USED IN INVESTING ACTIVITIES (272,751) (262,357)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from common stock subscription 62,500 91,980
Advance from a shareholder 331,722 62,527
--------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES 394,222 154,507
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 107,160 (53,585)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 5,628 71,690
--------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD 112,788 18,105
========= ========
</TABLE>
F - 3
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ASIAN STAR DEVELOPMENT, INC.
Notes to Interim Consolidated Financial Statements
NOTE 1 - BASIS OF PRESENTATION
The accompanying financial data as of March 31, 2000 and for the three months
ended March 31, 1999 and 2000, 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 the 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,
1999.
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 as of
March 31, 2000, results of operations and cash flows for the three months ended
March 31, 2000, have been made. The results of operations for the three months
ended March 31, 2000 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 entered into
two projects in China as of March 31, 2000. Details of the current status of the
projects are as follows:
<TABLE>
Total
Investment
Per Projects Costs Years Remaining to
Per Agreement Incurred Complete the Project Per
Project or Contract to Date Agreement or Contract
- ------- ----------- ------- ---------------------
(unaudited)
<S> <C> <C> <C>
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 three
years
----------- ----------
$61,571,000 $4,666,246
=========== ==========
</TABLE>
F - 4
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ASIAN STAR DEVELOPMENT, INC.
Notes to Interim Consolidated Financial Statements
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.
FINANCING RESOURCE DEPENDENCY
Historically, the operating activities of the above 2 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 exercised implements from 1997.
Considering the condition that only limited funding is presently available,
management believes that the completion of these two 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 - DONGGUAN DRAGON VILLA LIMITED
DONGGUAN DRAGON ENTERTAINMENT CENTER LIMITED
In March, 2000, the Company disposed of its 80% equity interest in the "Dongguan
Dragon Villa Limited" and "Dongguan Dragon Entertainment Center Limited" to the
"Shilong Town House and Properties Corporation".
NOTE 5 - ABLE WEALTH INVESTMENTS LIMITED
In January, 2000, the sales and purchase transactions were completed between one
of the Company's subsidiaries, Able Wealth Investments Limited, and the owners
of two Hong Kong incorporated companies. Through this agreement, Able Wealth
Investments Limited acquires the entire equity shares of these two Hong Kong
companies which operate a cafeteria business in Hong Kong.
NOTE 6 - SUPERPORT PROJECT
On January 25, 2000, the Company entered into an agreement to acquire an
existing to LPG cylinder manufacturing plant and an associated LPG bottling
plant in the State of Kelantan, Malaysia. The Project also includes an exclusive
right to install a deep-water port for tankers. The total project cost is
estimated to be $2.3 billion.
NOTE 7 - HARMONIC HALL INVESTMENT
On March 28, 2000, the Company and one of the Company's subsidiaries, Asian Star
(Hong Kong) Limited ("The Group"), have entered into agreements with Harmonic
Hall Investment Holdings Ltd, a B.V.I. Corporation, with 13 subsidiaries,
operated in Hong Kong and China, whereby the Group acquired approximately 52%
shares by exchange of 2,313,625 shares of the Company's Restricted Common Stock
at par value $.001 and approximately US$650,000 cash. The transactions were
completed in April 2000.
F - 5
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ASIAN STAR DEVELOPMENT, INC.
Notes to Interim Consolidated Financial Statements
NOTE 8 - "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 March 31, 2000.
F - 6
<PAGE>
ASIAN STAR DEVELOPMENT, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS.
RESULTS OF OPERATION
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 $1,927,533 as of March 31, 2000. Registrant's cash and
cash equivalents increased from $18,105 at March 31, 1999 to $112,788 at March
31, 2000.
THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THREE MONTHS ENDED MARCH 31, 1999
Revenue from the operation of the Ocean Wealth Restaurant for the three months
ended March 31, 2000 amounted to $370,447. Water Park Restaurant had no revenue
for the three months ended March 31, 2000 due to the seasonal operation. The
Company has entered into an agreement to assign the Water Park operation to the
Panyu Trend Water Amusement Park Construction Ltd for a period of seven years at
RMB1.2 million per annum with effect from June 1, 2000. The restaurant in the
Water Park may also be assigned to other interest party or operated by the
Registrant. Included in the general and administrative expenses are mainly
salary, commission and depreciation expenses. Other income include gain on
disposal of subsidiaries amounted to $461,687.
LIQUIDITY AND CAPITAL RESOURCES
For the quarter ended March 31, 2000, Registrant has generated positive cash
flow of $107,160 from its operations for the three months mainly due to more
advances from the shareholder. Due to the infant stage of its operations,
substantial ongoing investment in properties and development efforts, and
expenditures incurred 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.
Payments for overheads, representing accumulated indirect costs which are
related to projects, decreased from $138,768 for the three months ended March
31, 1999 to $23,133 for the three months ended March 31, 2000. Payments for
construction materials and fixed assets increased from $123,589 for the three
months ended March 31, 1999 to $249,618 for the three months ended March 31,
2000.
Registrant issued 50,000 restricted shares of its common stock to an accredited
investor and 261,860 restricted shares of its common stock in exchange for 100%
equity shares of two Hong Kong incorporated companies which operate a cafeteria
business in Hong Kong for the three months ended March 31, 2000.
As of March 31, 2000, Registrant's total assets and total liabilities were
$9,437,994 and $2,334,598.
<PAGE>
ITEM 5. OTHER INFORMATION
(1) On May 8, 2000, Registrant dismissed BDO International and, on May 9,
2000, Registrant retained PriceWaterhouse Coopers as its auditor. During the two
previous fiscal years, the auditor expressed no adverse opinion, nor was any
audit qualified or modified. There were no disagreements of any kind between
Asian Star Development, Inc. and BDO International. The Board of Directors of
Asian Star Development, Inc. decided that it wanted to use a larger accounting
firm to perform its audit and therefore dismissed BDO International and approved
the appointment of Price Waterhouse Coopers.
(2) On May 9, 2000, Registrant engaged Price Waterhouse Coopers as its
certifying accountant. Management has not previously consulted with Price
Waterhouse Coopers on any accounting or financial reporting matters.
(3) Other than the disclosures above, there are no other matters required
pursuant to Form 8-K, or Item 304 of Regulation S-K, to be disclosed herein.
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-KSB, for the year ended December
31, 1999, filed on March 20, 2000.
All previously filed exhibits are incorporated herein by reference.
b) Reports on Form 8-K: No reports were filed on Form 8K during the quarter
ended March 31, 2000.
<PAGE>
ITEM 7. SIGNATURES
SIGNATURES
Pursuant to the requirements of Section 13 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 10th day of May, 2000.
Asian Star Development, Inc.
By: /s/ STEPHEN CHOW
------------------------
Stephen Chow, President
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001046883
<NAME> Asian Star Development, Inc.
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<EXCHANGE-RATE> 1.000
<CASH> 112,788
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0
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<SALES> 370,447
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<CGS> 379,134
<TOTAL-COSTS> 379,134
<OTHER-EXPENSES> 212,249
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