UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
[ X ] Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended December 31, 1999
[ ] Transition Report pursuant to 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period to
---------------- ---------------------
Commission File Number 0-28535
-------
AQUISTAR VENTURES (USA) INC.
--------------------------------------------------------------
(Exact name of small Business Issuer as specified in its charter)
Nevada 91-1975651
- ------------------------------- -------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
Suite 314-837 West Hastings Street
Vancouver, British Columbia, Canada V6C 3N6
- -------------------------------------- -------------------
(Address of principal executive offices) (Postal or Zip Code)
Issuer's telephone number, including area code: 604-642-6410
None
-----------------------------------------
(Former name, former address and former fiscal year, if changed since
last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the issuer was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days [ X ] Yes [ ] No
State the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date: 15,463,008 Shares of $0.001 par value
Common Stock outstanding as of December 31, 1999.
<PAGE>
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
The accompanying unaudited financial statements have been prepared in accordance
with the instructions to Form 10-QSB and Item 310 (b) of Regulation S-B, and,
therefore, do not include all information and footnotes necessary for a complete
presentation of financial position, results of operations, cash flows, and
stockholders' equity in conformity with generally accepted accounting
principles. In the opinion of management, all adjustments considered necessary
for a fair presentation of the results of operations and financial position have
been included and all such adjustments are of a normal recurring nature.
Operating results for the six months ended December 31, 1999 are not necessarily
indicative of the results that can be expected for the year ending June 30,
2000.
<PAGE>
AQUISTAR VENTURES (U.S.A.) INC.
(An Exploration Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
(unaudited)
(Stated in U.S. Dollars)
<PAGE>
AQUISTAR VENTURES (U.S.A.) INC.
(An Exploration Stage Company)
CONSOLIDATED BALANCE SHEETS
(unaudited)
(Stated in U.S. Dollars)
- -------------------------------------------------------------------------------
DECEMBER 31 JUNE 30
1999 1999
- -------------------------------------------------------------------------------
ASSETS
Current
Cash $ 164 $ 1,286
Goods and services tax recoverable 1,342 1,324
Prepaid expense - -
--------- ----------
1,506 2,610
--------- ----------
Mineral Property (Note 4) 12,445 12,445
Office Equipment, at cost less
accumulated amortization 1,557 1,731
--------- ----------
$ 15,508 $ 16,786
===============================================================================
LIABILITIES
Current
Accounts payable $ 54,871 $ 32,862
--------- ----------
SHAREHOLDERS' DEFICIENCY
Share Capital
Authorized:
50,000,000 common shares, par value $0.001
per share at December 31, 1999
100,000,000 common shares without par value
at December 31, 1998
Issued And Outstanding
15,463,008 at December 31, 1999, and
14,983,008 at December 31, 1998 335,362 335,362
Additional Paid In Capital 10,038 10,038
Contributed Surplus 5,509 5,509
Cumulative Translation Adjustment (1,253) (673)
Accumulated Deficit (389,019) (366,312)
(39,363) (16,076)
--------- ----------
$ 15,508 $ 16,786
================================================================================
<PAGE>
AQUISTAR VENTURES (U.S.A.) INC.
(An Exploration Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
(unaudited)
(Stated in U.S. Dollars)
<TABLE>
<CAPTION>
INCEPTION
FOR THE THREE FOR THE SIX APRIL 13, 1995
MONTHS ENDED MONTHS ENDED TO
DECEMBER 31 DECEMBER 31 DECEMBER 31
----------------------------------------------------------------------------
1999 1998 1999 1998 1999
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Expenses
Amortization $ 87 $ 108 $ 174 $ 216 $ 1,824
Professional fees 5,022 - 5,612 - 27,059
Management fees 5,099 4,866 10,146 9,817 86,080
Office and sundry 828 3 861 155 7,685
Rent 2,039 1,946 4,058 3,927 26,483
Travel and business
promotion - - - - 6,898
----------------------------------------------------------------------------
13,075 6,923 20,851 14,115 156,029
----------------------------------------------------------------------------
Loss Before The Following (13,075) (6,923) (20,851) (14,115) (156,029)
Share Issue Costs - - - - (34,921)
Exploration Expenditures - - (1,856) - (191,827)
Write Off Abandoned Mineral
Property - - - - (5,857)
----------------------------------------------------------------------------
Loss For The Period (13,075) (6,923) (22,707) (14,115) $ (388,634)
===========
Accumulated Deficit, Beginning
Of Period (375,944) (333,807) (366,312) (326,615)
----------------------------------------------------------------------------
Accumulated Deficit, End Of
Period $(389,019) $ (340,730) $ (389,019) $(340,730)
============================================================================================================
Loss Per Share $ (0.01) $ (0.01) $ (0.01) $ (0.01)
============================================================================================================
Weighted Average Number Of
Shares Outstanding 15,463,008 14,983,008 15,463,008 14,983,008
============================================================================================================
</TABLE>
<PAGE>
AQUISTAR VENTURES (U.S.A.) INC.
(An Exploration Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(Stated in U.S. Dollars)
INCEPTION
FOR THE SIX APRIL 13, 1995
MONTHS ENDED
DECEMBER 31
TO
DECEMBER 31
------------------------------------------------
1999 1998 1999
- --------------------------------------------------------------------------------
Cash Flows From Operating
Activities
Loss for the period $ (22,707) $ (14,115) $ (388,634)
--------------------------------------------
Adjustments To Reconcile Loss
To Net Cash Used By
Operations Activities
Write off abandoned
mineral property - - 5,857
Amortization 174 216 1,824
Change in Goods and
Services Tax recoverable (18) 34 (1,343)
Change in prepaid expense - (2,609) -
Change in accounts payable 22,009 (20,904) 54,871
-------------------------------------------
Total Adjustments 22,165 (23,263) 61,209
-------------------------------------------
Net Cash Used In Operating
Activities
(542) (37,378) (327,425)
-------------------------------------------
Cash Flows From Investing
Activities
Mineral property - - (18,302)
Office equipment - - (3,380)
Net asset deficiency of
legal parent at date of
reverse take-over
transaction - - (385)
-------------------------------------------
- - (22,067)
-------------------------------------------
Cash Flows From Financing
Activities
Issue of share capital - 36,565 345,400
Contributed surplus - 5,509 5,509
-------------------------------------------
- 42,074 350,909
-------------------------------------------
Effect Of Exchange Rate
Changes On Cash (580) (1,145) (1,253)
-------------------------------------------
Increase (Decrease) In Cash (1,122) 3,551 164
Cash, Beginning Of Period 1,286 1,021 -
-------------------------------------------
Cash, End Of Period $ 164 $ 4,572 $ 164
============================================================================
<PAGE>
AQUISTAR VENTURES (U.S.A.) INC.
(An Exploration Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(unaudited)
(Stated in U.S. Dollars)
Common Stock
======================================
<TABLE>
<CAPTION>
Additional Cumulative
Number Paid-in Contributed Translation Accumulated
of Shares Amount Capital Surplus Adjustment Deficit Total
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Issuance of common stock 1 $ 1 $ - $ - $ - $ - $ 1
Net loss - - - - - (3,643) (3,643)
------------------------------------------------------------------------------------------------------
Balance, September 30, 1995 1 1 - - - (3,643) (3,642)
Issuance of common stock 1,700,000 179,975 - - - - 179,975
Translation adjustment - - - - (489) - (489)
Net loss - - - - - (136,164) (136,164)
------------------------------------------------------------------------------------------------------
Balance, September 30, 1996 1,700,001 179,976 - - (489) (139,807) 39,680
Issuance of common stock 600,000 109,190 - - - - 109,190
Translation adjustment - - - - 670 - 670
Net loss - - - - - (146,298) (146,298)
------------------------------------------------------------------------------------------------------
Balance, September 30, 1997 2,300,001 289,166 - - 181 (286,105) 3,242
Issuance of common stock 50,000 9,151 - - - - 9,151
Translation adjustment - - - - 1,883 - 1,883
Net loss - - - - - (40,510) (40,510)
------------------------------------------------------------------------------------------------------
Balance, September 30, 1998 2,350,001 298,317 - - 2,064 (326,615) (26,234)
Issuance of common stock 240,000 42,074 - - - - 42,074
Cancellation of common
stock (750,000) (5,509) - - - - (5,509)
Contributed surplus - - - 5,509 - - 5,509
Increase in issued common
stock due to 8 for 1
stock split 12,880,007 - - - - - -
Exchange of stock to
acquire subsidiary
Aquistar Ventures Inc. (14,720,008) - - - - - -
Aquistar Ventures
(U.S.A.) Inc. 14,983,008 - - - - - -
Net asset deficiency of
legal parent at date
of reverse take-over
transaction - - - - - (385) (385)
Issuance of common stock 480,000 480 10,038 - - - 10,518
Translation adjustment - - - - (2,737) - (2,737)
Net loss - - - - - (39,312) (39,312)
------------------------------------------------------------------------------------------------------
Balance, June 30, 1999 15,463,008 335,362 10,038 5,509 (673) (366,312) (16,076)
Translation adjustment - - - - (580) - (580)
Net Loss - - - - - (22,707) (22,707)
------------------------------------------------------------------------------------------------------
Balance December 31, 1999 15,463,008 $ 335,362 $ 10,038 $ 5,509 $ (1,253) $(389,019) $(39,363)
==================================================================================================================================
</TABLE>
<PAGE>
AQUISTAR VENTURES (U.S.A.) INC.
(An Exploration Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
(unaudited)
(Stated in U.S. Dollars)
1. BASIS OF PRESENTATION
The unaudited financial statements as of December 31, 1999 included herein
have been prepared 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 United States generally accepted principles have been
condensed or omitted pursuant to such rules and regulations. In the
opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair a presentation have been
included. It is suggested that these financial statements be read in
conjunction with the June 30, 1999 audited financial statements and notes
thereto.
2. NATURE OF OPERATIONS
Exploration Stage Activities
The Company is in the process of exploring its mineral property and has not
yet determined whether the property contains ore reserves that are
economically recoverable.
The recoverability of amounts shown as mineral property is dependent upon
the discovery of economically recoverable reserves, confirmation of the
company's interest in the underlying mineral claims and the ability of the
Company to obtain the necessary financing to place the property into
production, and upon future profitable operations, none of which is
assured.
3. SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the Company have been prepared in accordance
with generally accepted accounting principles in the United States.
Because a precise determination of many assets and liabilities is dependent
upon future events, the preparation of financial statements for a period
necessarily involves the use of estimates which have been made using
careful judgement.
The financial statements have, in management's opinion, been properly
prepared within reasonable limits of materiality and within the framework
of the significant accounting policies summarized below:
a) Consolidation
These financial statements include the accounts of the Company and
its wholly owned Canadian subsidiary Aquistar Ventures Inc.
<PAGE>
AQUISTAR VENTURES (U.S.A.) INC.
(An Exploration Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
(unaudited)
(Stated in U.S. Dollars)
3. SIGNIFICANT ACCOUNTING POLICIES (Continued)
b) Mineral Property and Related Exploration Expenditures
The Company capitalizes all option payments on mineral properties in
which it has a continuing interest to be amortized over the recoverable
reserves when a property reaches commercial production. On abandonment
of any property, applicable accumulated mineral property costs will be
written off.
Exploration expenditures are expensed as incurred.
To date none of the Company's properties have reached commercial
production.
c) Office Equipment and Amortization
Office equipment is recorded at cost and amortized at a rate of 20%
per annum on the declining balance basis.
d) Income Taxes
The Company has adopted Statement of Financial Accounting Standards
No. 109 - "Accounting for Income Taxes" (SFAS 109). This standard
requires the use of an asset and liability approach for financial
accounting and reporting on income taxes. If it is more likely than
not that some portion of all of a deferred tax asset will note be
realized, a valuation allowance is recognized.
e) Foreign Currency Translation
The Company's subsidiary's operations are located in Canada and its
functional currency is the Canadian dollar. The financial statements
of the subsidiary have been translated using the current method whereby
the assets and liabilities are translated at the year end exchange
rate, capital accounts at the historical exchange rate, and revenues
and expenses at the average exchange rate for the period. Adjustments
arising from the translation of the Company's subsidiary's financial
statements are included as a separate component of shareholders' equity.
<PAGE>
AQUISTAR VENTURES (U.S.A.) INC.
(An Exploration Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
(unaudited)
(Stated in U.S. Dollars)
3. SIGNIFICANT ACCOUNTING POLICIES (Continued)
f) Financial Instruments
The Company's financial instruments consist of cash, Goods and
Services Tax recoverable, and accounts payable.
Unless otherwise noted, it is management's opinion that this Company
is not exposed to significant interest or credit risks arising from
these financial instruments. The fair value of these financial
instruments approximate their carrying values, unless otherwise noted.
g) Loss Per Share
The loss per share is calculated using the weighted average number of
common shares outstanding during the period.
4. MINERAL PROPERTY
DECEMBER 31
------------------
1999 1998
------------------
Sutton Property
The Company has entered into an option
agreement dated December 2, 1997, as
amended, which provides for the acquisition
of a 100% interest, subject to a 2.5% net
smelter royalty in 21 unpatented mineral
claims in the Larder Lake Mining Division
of Ontario. In order to earn its interest
the Company must make cash payments and
incur exploration expenditures as follows:
- - cash payment of Cdn. $17,000 on execution
of the agreement (paid)
<PAGE>
AQUISTAR VENTURES (U.S.A.) INC.
(An Exploration Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
(unaudited)
(Stated in U.S. Dollars)
4. MINERAL PROPERTY (Continued)
DECEMBER 31
------------------
1999 1998
------------------
- - cash payment of Cdn. $35,000 13 months
from the date the Company's common
shares are listed for trading on the NASD
Bulletin Board or a stock exchange (the
initial payment date)
- - cash payment of Cdn. $25,000 8 months
after the initial date
- - cash payment of Cdn. $25,000 16 months
after the initial payment date
- - cash payment of Cdn. $30,000 28 months
after the initial payment date
- - cash payment of Cdn. $30,000 40 months after
the initial payment date
- - Cash payment of Cdn. $40,000
52 months after the initial payment date
Exploration Expenditures
- - a total of Cdn. $210,000, Cdn. $100,000
by December 2, 2000 and Cdn. $110,000
upon a recommendation to conduct the
phase 2 work program
Consideration paid to date $ 12,445 $ 12,445
==================
<PAGE>
AQUISTAR VENTURES (U.S.A.) INC.
(An Exploration Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
(unaudited)
(Stated in U.S. Dollars)
5. RELATED PARTY TRANSACTIONS
During the periods indicated the Company incurred the following amounts with
related parties:
DECEMBER 31
------------------
1999 1998
------------------
Management fees $ 10,146 $ 9,817
==================
Rent $ Nil $ 3,927
==================
6. INCOME TAXES
No provision for income taxes has been provided in these financial
statements due to the accumulated net losses. At December 31, 1999, the
Company has net operating loss carryforwards, which expire commencing in
2002 totalling approximately $191,500, the benefits of which have not been
recorded.
7. UNCERTAINTY DUE TO THE YEAR 2000 ISSUE
The Year 2000 Issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize
the year 2000 as 1900 or some other date, resulting in errors when
information using year 2000 dates is processed. In addition, similar
problems may arise in some systems which use certain dates in 1999 to
represent something other than a date. The effects of the Year 2000 Issue
may be experienced before, on, or after January 1, 2000, and, if not
addressed, the impact on operations and financial reporting may range from
minor errors to significant systems failure which could affect an entity's
ability to conduct normal business operations. It is not possible to be
certain that all aspects of the Year 2000 Issue affecting the entity,
including those related to the efforts of customers, suppliers, or other
third parties, will be fully resolved.
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operations
The Company is a natural resource company engaged in the acquisition,
exploration and development of mineral properties. The Company, through its
wholly own Canadian subsidiary Aquistar Ventures Inc., has an interest in a
mineral property located in Ontario, Canada, and intends to carry out
exploration work on this property in order to ascertain whether it possesses
commercially developable quantities of gold and other precious minerals.
For the next 12 months, management of the Company plans to satisfy its cash
requirements by raising additional funds by way of private placements and/or a
public offering, to satisfy working capital needs and Phase 1 of the work
program intended for its Mineral Property. The Company will assess whether to
proceed with Phase 2 of the exploration program upon completion of Phase 1 and
an evaluation of the results of the Phase 1 exploration program.
Aquistar Canada obtained an engineering report on its Mineral Property, dated
July 1, 1997. The Report summarizes the exploration and development history of
the Property, the geology of the Property and the proposed exploration and
development program for the Property.
The Report states that follow-up surveys are required which will include
detailed magnetic coverage with the more advanced "walking mag" continuous
profiling method, further assessment and definition of the gradient IP and
resistivity anomalies utilizing the multiple-gradient "realsection" technique,
trenching, geochemistry, soil and/or vegetation and diamond drilling. The budget
for this Phase 1 program is estimated at CDN $182,000.
Phase 2 of the Report is contingent on the results of Phase 1 and will include
further drill testing on the Property, as required, estimated to cost CDN
$300,000.The Company has not purchased or sold any plant or significant
equipment and does not expect to do so in the foreseeable future.
The Company currently has no employees, and does not expect to hire any
employees in the foreseeable future. The Company conducts its business through
agreements with consultants and arms-length third parties.
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995
<PAGE>
From time to time, the Company will make written and oral forward-looking
statements about matters that involve risk and uncertainties that could cause
actual results to differ materially from projected results. Important factors
that could cause actual results to differ materially include, among others:
- - Fluctuations in the market prices of gold
- - General domestic and international economic and political conditions
- - Unexpected geological conditions or rock instability conditions resulting
in cave-ins, flooding, rock bursts or rock slides
- - Difficulties associated with managing complex operations in remote areas
- - Unanticipated milling and other processing problems
- - The speculative nature of mineral exploration
- - Environmental risks
- - Changes in laws and government regulations, including those relating to
taxes and the environment
- - The availability and timing of receipt of necessary governmental permits
and approval relating to operations, expansion of operations and financing
of operations
- - Fluctuations in interest rates and other adverse financial market
conditions
- - Other unanticipated difficulties in obtaining necessary financing
- - The failure of equipment or processes to operate in accordance with
specification or expectations
- - Labour relations
- - Accidents
- - Unusual weather or operating conditions
- - Force majeure events
- - Other risk factors described from time to time in the Company's filings
with the Securities and Exchange Commission
Many of these factors are beyond the Company's ability to control and predict.
Investors are cautioned not to place undue reliance on forward-looking
statements. The Company disclaims any intent or obligation to update its
forward-looking statements, whether as a result of receiving new information,
the occurrence of future events, or otherwise.
<PAGE>
PART 2 - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) None
(b) Reports on Form 8-K - None
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
AQUISTAR VENTURES (USA) INC.
Date: February 18, 2000
-------------------
By: /s/Al Delucrezia
-----------------------------------------
AL DELUCREZIA, Director and President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
condensed consolidated financial statements contained in the Company's quarterly
report on Form 10-Q for the quarter ended December 31, 1999 and is qualified in
its entirety by reference to such financial statements:
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> DEC-31-1999
<CASH> 164
<SECURITIES> 0
<RECEIVABLES> 1,342
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,506
<PP&E> 14,002
<DEPRECIATION> 0
<TOTAL-ASSETS> 15,508
<CURRENT-LIABILITIES> 54,871
<BONDS> 0
0
0
<COMMON> 350,909
<OTHER-SE> (390,272)
<TOTAL-LIABILITY-AND-EQUITY> 15,508
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> (22,707)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (22,707)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (22,707)
<EPS-BASIC> ($0.01)
<EPS-DILUTED> ($0.01)
</TABLE>
