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, 2000
[ ] Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of
1934
For the transition period to
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Commission File Number 0-28535
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AQUISTAR VENTURES (USA) INC.
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(Exact name of small Business Issuer as specified in its charter)
Nevada 91-1975651
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
Suite 314-837 West Hastings Street
Vancouver, British Columbia, Canada V6C 3N6
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(Address of principal executive offices) (Postal or Zip Code)
Issuer's telephone number, including area code: 604-642-6410
--------------------------------
None
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(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, 2000.
<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, 2000 are not necessarily
indicative of the results that can be expected for the year ending June 30,
2001.
<PAGE>
AQUISTAR VENTURES (U.S.A.) INC.
(An Exploration Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2000
(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)
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DECEMBER 31 JUNE 30
2000 2000
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ASSETS
Current
Cash $ 778 $ 1,299
Goods and Services Tax recoverable 796 423
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1,574 1,722
Mineral Property (Note 4) 12,445 12,445
Office Equipment, at cost less accumulated
amortization 1,209 1,383
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$ 15,228 $ 15,550
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LIABILITIES
Current
Accounts and advances payable $ 96,641 $ 78,821
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SHAREHOLDERS' DEFICIENCY
Share Capital
Authorized:
50,000,000 common shares, par value $0.001
per share at December 31, 2000 and at June
30, 2000
Issued and Outstanding:
15,463,008 at December 31, 2000 and June 30, 2000 335,362 335,362
Additional Paid-In Capital 10,038 10,038
Contributed Surplus 5,509 5,509
Cumulative Translation Adjustment 316 (721)
Accumulated Deficit (432,638) (413,459)
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(81,413) (63,271)
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$ 15,228 $ 15,550
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<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>
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INCEPTION
APRIL 13
THREE MONTHS ENDED SIX MONTHS ENDED 1995 TO
DECEMBER 31 DECEMBER 31 DECEMBER 31
2000 1999 2000 1999 2000
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<S> <C> <C> <C> <C> <C>
Expenses
Amortization $ 87 $ 87 $ 174 $ 174 $ 2,172
Professional fees 4,593 5,022 4,593 5,612 40,612
Management fees 4,951 5,099 10,000 10,146 106,204
Office and sundry 897 828 1,412 861 10,728
Rent 1,485 2,039 3,000 4,058 33,026
Travel and business promotion - - - - 6,898
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12,013 13,075 19,179 20,851 199,640
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Loss Before The Following (12,013) (13,075) (19,179) (20,851) (199,640)
Share Issue Costs - - - - (34,921)
Exploration Expenditures - - - (1,856) (191,835)
Write Off Of Abandoned
Mineral Property - - - - (5,857)
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Loss For The Period (12,013) (13,075) (19,179) (22,707) $ (432,253)
===========
Accumulated Deficit,
Beginning Of Period (420,625) (375,944) (413,459) (366,312)
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Accumulated Deficit,
End Of Period $ (432,638) $ (389,019) $ (432,638) $ (389,019)
======================================================================================================
Loss Per Share $ (0.01) $ (0.01) $ (0.01) $ (0.01)
======================================================================================================
Weighted Average Number Of
Shares Outstanding 15,463,008 15,463,008 15,463,008 15,463,008
======================================================================================================
</TABLE>
<PAGE>
AQUISTAR VENTURES (U.S.A.) INC.
(An Exploration Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(Stated in U.S. Dollars)
<TABLE>
<CAPTION>
Common Stock
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Additional Cumulative
Number Paid-in Contributed Translation Accumulated
of Shares Amount Capital Surplus Adjustment Deficit Total
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<S> <C> <C> <C> <C> <C> <C> <C>
Issuance of common stock 1 $ 1 $ - $ - $ - $ - $ 1
Net loss - - - - - (3,643) (3,643)
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Balance, June 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)
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Balance, June 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)
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Balance, June 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)
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Balance, June 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)
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Balance, June 30, 1999 15,463,008 335,362 10,038 5,509 (673) (366,312) (16,076)
Translation adjustment - - - - (48) - (48)
Net loss - - - - - (47,147) (47,147)
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Balance, June 30, 2000 15,463,008 335,362 10,038 5,509 (721) (413,459) (63,271)
Translation adjustment - - - - 1,037 - 1,037
Net loss - - - - - (19,179) (19,179)
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Balance, December 31, 2000 15,463,008 $ 335,362 $ 10,038 $ 5,509 $ 316 $ (432,638) $ (81,413)
======================================================================================================
</TABLE>
<PAGE>
AQUISTAR VENTURES (U.S.A.) INC.
(An Exploration Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Stated in U.S. Dollars)
<TABLE>
<CAPTION>
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INCEPTION
APRIL 13
THREE MONTHS ENDED SIX MONTHS ENDED 1995 TO
DECEMBER 31 DECEMBER 31 DECEMBER 31
2000 1999 2000 1999 2000
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<S> <C> <C> <C> <C> <C>
Cash Flows From Operating
Activities
Loss for the period $ (12,013) $ (13,075) $ (19,179) $ (22,707) $ (432,253)
---------------------------------------------------------------------------------
Adjustments To Reconcile
Loss To Net Cash Used
By Operating Activities
Write off of abandoned
mineral property - - - - 5,857
Amortization 87 87 174 174 2,172
Change in Goods and
Services Tax recoverable (380) (22) (373) (18) (796)
Change in accounts and
advances payable 12,772 11,464 17,820 22,009 96,641
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Total Adjustments 12,479 11,529 17,621 22,165 103,874
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Net Cash Used In Operating
Activities 466 (1,546) (1,558) (542) (328,379)
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Cash Flows From Investing
Activities
Mineral property - - - - (18,303)
Office equipment - - - - (3,380)
Net asset deficiency of
legal parent at date
of reverse take-over
transaction - - - - (385)
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- - - - (22,068)
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Cash Flows From Financing
Activities
Issue of share capital - - - - 345,400
Contributed surplus - - - - 5,509
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- - - - 350,909
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Effect Of Exchange Rate Changes
On Cash (262) (935) 1,037 (580) 316
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Increase (Decrease) In Cash 204 (2,481) (521) (1,122) 778
Cash, Beginning Of Period 574 2,645 1,299 1,286 -
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Cash, End Of Period $ 778 $ 164 $ 778 $ 164 $ 778
====================================================================================================================
</TABLE>
<PAGE>
AQUISTAR VENTURES (U.S.A.) INC.
(An Exploration Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2000
(Unaudited)
(Stated in U.S. Dollars)
1. BASIS OF PRESENTATION
The unaudited financial statements as of December 31, 2000 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, 2000 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, 2000
(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, 2000
(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 JUNE 30
2000 2000
------------------------
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)
- 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 payment date
- cash payment of Cdn. $25,000 16 months after the
initial payment date
<PAGE>
AQUISTAR VENTURES (U.S.A.) INC.
(An Exploration Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2000
(Unaudited)
(Stated in U.S. Dollars)
4. MINERAL PROPERTY (Continued)
DECEMBER 31 JUNE 30
2000 2000
------------------------
- 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
========================
5. RELATED PARTY TRANSACTIONS
During the periods indicated, the Company incurred the following amount
with related parties:
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31 DECEMBER 31
2000 1999 2000 1999
----------------------------------------------
Management fees $ 4,951 $ 5,099 $ 10,000 $ 10,146
==============================================
Rent $ 1,485 $ 2,039 $ 3,000 $ 4,058
==============================================
6. INCOME TAXES
No provision for income taxes has been provided in these financial
statements due to the accumulated net losses. At December 31, 2000, the
Company has net operating loss carryforwards, which expire commencing in
2002, totalling approximately $237,000, the benefits of which have not been
recorded.
<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: January 11, 2001
-------------------------------------
By: /s/ Al DeLucrezia
-------------------------------------
AL DELUCREZIA, Director and President
<PAGE>
