UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE
EXCHANGE ACT
FOR THE TRANSITION PERIOD FROM __________ TO ___________
000-30254
(Commission File Number)
SHANNON INTERNATIONAL RESOURCES, INC.
(Exact name of small business issuer as specified in its charter)
NEVADA 98-0204956
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
#4020, 7 STREET S.W., CALGARY, ALBERTA T2G 2Y8
(Address of principal executive offices)
(403) 543-0970
(Issuer's telephone number)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
AS OF OCTOBER 24, 2000 THE ISSUER HAD 10,050,000 SHARES OF COMMON
STOCK, $0.001 PAR VALUE.
Transitional Small Business Disclosure Format (check one):
Yes No X
------- -------
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS.
SHANNON INTERNATIONAL RESOURCES, INC.
(A Development Stage Company)
Balance Sheet
September 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
ASSETS
<S> <C>
CURRENT ASSETS
Cash and cash equivalents $ 38
Loans receivable affiliate net of discount 28,011
Total current assets 28,049
-------
OIL AND GAS PROPERTIES
Unevaluated oil and gas properties (using the full cost method) 45,000
-------
Total assets $ 73,049
=======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 1,651
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STOCKHOLDERS' EQUITY (Note 4 and 8)
Common stock - authorized 200,000,000 shares of $.001 par value,
issued and outstanding 10,050,000 shares 10,050
Additional paid-in capital 82,749
Accumulated deficit (21,401)
-------
Total Stockholders' Equity 71,398
-------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 73,049
=======
</TABLE>
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<PAGE>
SHANNON INTERNATIONAL RESOURCES, INC.
(a Development Stage Company)
Statements of Operations
September 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Inception Inception
Three Three (February 17, (February
Months Months 1999) to 17, 1999) to
Ended Ended September September
September September 30, 2000 30, 1999
30, 2000 30, 1999
--------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Expenses
General and administrative $ (2,541) $ (4,076) $ (21,401) $ (12,525)
----- ----- ------ ------
Net (loss) $ (2,541) $ (4,076) $ (21,401) $ (12,525)
===== ===== ====== ======
Net (loss) per common share $ * $ * $ * $ *
Weighted average shares outstanding
10,000,000 10,000,000 10,000,000 10,000,000
========== ========== ========== ==========
</TABLE>
* Less than $(.01) per share
3
<PAGE>
SHANNON INTERNATIONAL RESOURCES, INC.
(a Development Stage Company)
Statements of Cash Flows
September 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Inception Inception
Three Months (February 17, (February 17,
Ended 1999) to 1999) to
September 30, September 30, September 30,
2000 1999 2000
------------------- ------------------- -----------------
<S> <C> <C> <C>
Operating Activities
Net loss $ (2,541) $ (12,525) $ (21,401)
Reconciling adjustments:
Amortization of discount 1,535 4,358
Change in assets and liabilities
Accounts payable and advances 3,555 1,651
Prepaid expenses (47)
Common stock issued for services 2,500 - 2,500
----- ------ ------
Total adjustments 2,500 5,043 2,500
----- ------ ------
Net cash used for operating activities (41) (7,482) (12,892)
Investing activities
Acquisition of oil and gas properties (15,000) (15,000)
Loans receivable (35,000) (35,000)
------ ------
Net cash(used by) investing activities - (50,000) (50,000)
Financing Activities
Issuance of common stock 72,300 72,300
Offering costs (12,000) (12,000)
Receipts from loans receivable - 2,630
------ -------
Net cash provided by financing
activities - 60,299 62,930
----- ------ -------
Net change in cash and cash equivalents (41) 2,817 38
Cash at beginning of period 79 - -
----- ------ -------
Cash at end of period $ 38 $ 2,817 $ 38
===== ====== =======
Supplemental disclosure of cash flow
information
Cash paid during the period for:
Interest $ - $ - $ -
Income taxes $ - $ - $ -
Supplemental schedule of noncash investing
and financing activities
Issuance of 770,000 shares of common
stock for services $ - $ 7,700 $ 7,700
Issuance of 2,000,000 shares of common
stock for oil and gas properties $ - $ 30,000 $ 30,000
</TABLE>
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<PAGE>
SHANNON INTERNATIONAL RESOURCES, INC.
(a Development Stage Company)
Notes to Financial Statements
September 30, 2000
(Unaudited)
NOTE 1 - MANAGEMENT STATEMENT
In the opinion of management, the accompanying unaudited financial statements
contain all adjustments (all of which are normal and recurring in nature)
necessary to present fairly the financial position of Shannon International
Resources, Inc. as of September 30, 2000, and the results of operations for the
three months then ended and cash flows for the three months ended September 30,
2000. The Notes to Financial Statements that are contained in the Form 10-KSB
should be read in conjunction with these financial statements.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
The Corporation was incorporated pursuant to the provisions of the corporate
charter of the State of Nevada on February 17, 1999. The Corporation established
June 30th as its year end.
The Corporation's primary business activity is the acquisition of coalbed
methane properties in the province of Prince Edward Island, Canada. Currently,
the Corporation only has an interest in non-producing properties. The
Corporation is in the development stage as its operations principally involve
oil and gas activities and they have no revenue from oil and gas activities.
NOTE 3- BASIS OF PRESENTATION
The Company has no revenue and limited resources to develop its oil and gas
properties. It is the Company's intent to raise additional capital through
private placements or public offerings of its equity securities and use the
capital for development of its current Working Interest. Thereafter the Company
intends to establish or acquires assets with development and exploitation
potential through industry contacts and opportunities known to the company's
management. Whenever possible, the Company intends to use its common stock as
consideration for such acquisitions. The ultimate objective is to conduct a
balanced exploration and development program and seek to acquire operating
control and majority ownership of interests in order to optimize the efficiency
of operations.
NOTE 4 - RECENT ACCOUNTING PRONOUNCEMENTS
In June of 1998, the FASB issued Statement of Accounting Standards No. 133
("SFAS 133"), "Accounting for Derivative Instruments and Hedging Activities."
SFAS 133 establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. It requires that an entity recognize all
derivatives as either assets or liabilities on the balance sheet at their value.
This statement, as amended by SFAS 137, is effective for financial statements
for all fiscal quarters to all fiscal years beginning after June 15, 2000. The
Company does not expect the adoption of this standard to have a material impact
on its results of operation, financial position, or cash flows as the Company
currently does not engage in any derivative or hedging activities.
NOTE 5 - ISSUANCE OF COMMON STOCK
On July 20, 2000, the Company issued 50,000 shares of restricted common stock in
payment for Consulting Services totaling $2,500.
5
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
OVERVIEW
The Company holds a 25% working interest in petroleum, natural gas and coalbed
methane leases in Prince Edward Island, Canada (the "Working Interest"). Until
the Company is able to engage in financing activities or finds a joint venture
partner, the Company will be unable to engage in any exploration of its Working
Interest.
The Company intends to follow the full cost method of accounting for oil and gas
properties. Presently, the full cost method is inapplicable because the Company
has not commenced its oil and gas activities. The Company is deemed to be in the
development stage. Under the full cost method of accounting for oil and gas
properties, all costs associated with acquisition, exploration and development
of oil and gas reserves, including directly related overhead costs, are
capitalized.
All capitalized costs of oil and gas properties, including the estimated future
costs to develop proved reserves, are amortized on the unit-of-production method
using estimates of proved reserves. Investments in unproved properties and major
development projects are not amortized until proved reserves associated with the
projects can be determined or until impairment occurs. If the results of an
assessment indicate that the properties are impaired, the amount of the
impairment is added to the capitalized costs to be amortized.
In addition, the capitalized costs are subject to a "ceiling test," which
basically limits such costs to the aggregate of the "estimated present value,"
discounted at a 10% interest rate, of future net revenues from proved reserves,
based on current economic and operating conditions, plus the lower of cost or
fair market value of unproved properties.
Sales of proved and unproved properties are accounted for as adjustments of
capitalized costs with no gain or loss recognized, unless such adjustments would
significantly alter the relationship between capitalized costs and proved
reserves or oil and gas, in which case the gain or loss is recognized in income.
Abandonment of properties is accounted for as adjustments of capitalized costs
with no loss recognized.
PLAN OF OPERATION
As of September 30, 2000, the Company had current assets of $28,049, which
consisted of $38 cash and $28,011 in loans receivable. The Company has not
engaged in any exploration activities on the Working Interest. The Company does
not have the funds necessary to purchase equipment for exploration.
Additionally, the Company will not be able to satisfy its cash requirements for
the next twelve months and will have to raise additional funds or find a joint
venture partner to engage in exploration activities of the Working Interest and
to fund ongoing overhead and operational expenses. A joint venture with another
company would most likely result in a significant reduction in the Company's
interest in the Prince Edward Island property.
The Company intends to seek a joint venture partner to conduct and fund the
exploration and development of the Prince Edward Island property. The Company is
engaged in discussions concerning the formation of a joint venture for
exploratory drilling. There is drilling activity in the general area of the
Company's Working Interest, which is expected to create increased interest in
the exploration of the Company's leases and lead to the formation of a joint
venture exploratory drilling program. As of September 30, 2000, the Company has
not secured a joint venture partner to begin an exploration program on its
Working Interest.
THREE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 1999
RESULTS OF OPERATIONS
During the three months ended September 30, 2000, the Company had a net loss of
$2,541 compared to a net loss of
6
<PAGE>
$4,076 for three months ended September 30, 1999. The net loss per common share
during both of these periods was less than $0.01 per share. During the three
months ended September 30, 2000, the Company's general and administrative
expenses were $2,541, a decrease of $1,535 (38%) compared to the three months
ended September 30, 1999. The Company's expenses during the three months ended
September 2000 related primarily to consulting services. During the 1999 period,
the Company's expenses consisted primarily of expenses relating to the Company's
formation.
As a result of the expenses incurred in preparing the Company's annual report,
and this quarterly report, management expects the Company's net loss for the
three months ending December 31, 2000 to be significantly higher than the net
loss for the three months ended September 30, 2000.
LIQUIDITY
At present, the Company is not producing revenues and its main source of funds
has been the sale of the Company's equity securities. As of September 30, 2000,
the Company had working capital of $26,398, compared to working capital of
$28,090 at June 30, 2000. Subsequent to September 30, 2000, the Company received
$7,500 in funds from an investor. As of November 20, 2000, management does not
know whether those funds will be a loan or an equity investment. The Company had
$30,554 in cash and receivables and other current assets as of October 31, 2000.
In April and June of 1999, the Company made loans in the amount of $35,000 U.S.,
to Calgary Chemical, an affiliate. Blair Coady, the Company's President is also
President of Calgary Chemical. As of September 30, 2000 the Company had a loan
receivable in the amount of $28,011. As of October 31, 2000, Calgary Chemical
did not have sufficient funds to repay the loans. Management does not anticipate
that the loans will be repaid in cash.
The Company will need to raise additional capital to meet its ongoing overhead
obligations and to finance the contemplated development program. Such funding
may be obtained through sale of additional securities. If the Company is unable
to obtain sufficient funds, the Company may seek to find development partners
and increase funds available to the Company through the sale of some portion of
its Working Interest. The ability of the Company to sell a portion of the
Working Interest is not a certainty and the proceeds derived from such sale will
be subject to the ongoing economic viability of the project. Any decision to
locate a development partner or to sell a portion of the Working Interest must
be approved by CMB Energy.
PART II
ITEM 1. LEGAL PROCEEDINGS.
Not applicable.
ITEM 2. CHANGES IN SECURITIES.
On July 20, 2000, the Company issued 50,000 shares of common stock at a value of
$0.05 per share to consultants in exchange for services. The exemption relied
upon by the Company for this transaction is Section 4(2) of the Securities Act
of 1933, as amended. As of October 24, 2000, the Company had 10,050,000 shares
of common stock outstanding.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
7
<PAGE>
ITEM 5. OTHER INFORMATION.
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
<TABLE>
<CAPTION>
(a) Exhibits:
REGULATION CONSECUTIVE
S-B NUMBER EXHIBIT PAGE NUMBER
<S> <C> <C>
3.1 Articles of Incorporation (1)<F1> N/A
3.2 Bylaws (1)<F1> N/A
4.1 1999 Stock Option Plan (2)<F2> N/A
10.1 Working Interest Acquisition Agreement (1)<F1> N/A
10.2 Purchase and Joint Venture Agreement (1)<F1> N/A
10.3 Oil and Natural Gas Permit No. 96-06 (1)<F1> N/A
10.4 Amendment to Working Interest Acquisition Agreement (2)<F2> N/A
10.5 Promissory Note with 714674 Alberta Ltd. (April 1999) (2)<F2> N/A
10.6 Promissory Note with 714674 Alberta Ltd. (June 1999) (2)<F2> N/A
27 Financial Data Schedule 10
<FN>
<F1>
(1) Incorporated by reference to the exhibits to the Company's registration statement in Form 10-SB
(file number 000-30254).
<F2>
(2) Incorporated by reference to the exhibits to the Company's annual report in From 10-KSB (file
number 000-30254).
</FN>
</TABLE>
(b) The following reports on Form 8-K were filed during the last quarter of the
period covered by this report:
Not applicable.
8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Exchange Act, the registrant has caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
SHANNON INTERNATIONAL RESOURCES, INC.
Date: November 20, 2000 By: /s/ Blair Coady
------------------------------------
Blair Coady, President and Director
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