<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended: March 31, 2000
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OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ________________ to _______________________
Commission File No. 0-96764
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Digital Star Inc.
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(Exact name of small business issuer as
specified in its charter)
British Virgin Islands N/A
--------------------------------- -----------------
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
Room 1806, Hutchison House
10 Harcourt Road, Central
Hong Kong
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(Address of principal executive offices)
(852) 2802 3638
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(Issuer's telephone number)
Not Applicable
- --------------------------------------------------------------------------------
(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 Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes No X
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APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practical date:
2,000,000 common stock, $.0001 par value
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Transitional Small Business Disclosure Format (check one).
Yes No X
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<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial reporting and pursuant to the rules and regulations of the
Securities and Exchange Commission. While these statements reflect all normal
recurring adjustments which are, in the opinion of management, necessary for
fair presentation of the results of the interim period, they do not include
all of the information and footnotes required by generally accepted accounting
principles for complete financial statements. For further information, refer
to the financial statements included in the Company's registration statement
filed on Form 20-F on November 11, 1999, as amended on February 11, 2000.
DIGITAL STAR INC.
(a development stage company)
BALANCE SHEET AS OF MARCH 31, 2000
<TABLE>
<CAPTION>
December 31, March 31,
1999 2000
Unaudited Unaudited
------------ ----------
<S> <C> <C>
Assets
Current assets
Cash and cash equivalents $ 20,000 $ 20,000
-------- --------
Total current assets $ 20,000 $ 20,000
======== ========
capital assets -0- -0-
Other assets -0- -0-
Excess of purchase paid over book values -0- -0-
Security deposits -0- -0-
-------- --------
Total other assets -0- -0-
-------- --------
Total assets $ 20,000 $ 20,000
======== ========
Liability and Stockholders' Equity
Current liabilities
Accounts payable and accrued expenses $ 8,680 $ 12,767
-------- --------
Total liabilities $ 8,680 $ 12,767
======== ========
Stockholders' equity
Class A stock-$.0001 par value,
authorized 400,000,000 shares
The number of Class A shares outstanding
at March 31, 2000 was 2,000,000 200 200
Class B stock-$.0001 par value,
authorized 100,000,000 shares
The number of Class B shares outstanding
at March 31, 2000 was 0 0 0
Additional paid in capital 19,800 19,800
Accumulated deficit during development stage (8,680) (12,767)
-------- --------
Total stockholders' equity 11,320 7,233
-------- --------
Total liabilities and stockholders' equity 20,000 20,000
======== ========
</TABLE>
<PAGE> 3
Digital Star Inc.
(a development stage company)
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the For the For the
quarter ended quarter ended quarter ended
December 31, December 31, March 31,
1998 1999 2000
Unaudited Unaudited Unaudited
------------- -------------- -------------
<S> <C> <C> <C>
Income $ -0- $ -0- $ -0-
Costs of goods sold -0- -0- -0-
---------- ---------- ----------
Gross profit -0- -0- -0-
operations:
General and administration -0- $ (3,680) $ (4,087)
Depreciation and
amortization -0- -0- -0-
---------- ---------- ----------
Total expense $ (3,680) $ (4,087)
Net Profit (Loss)
from operations $ (0) $ (3,680) $ (4,087)
Net income (Loss) per
share-basic $ (0) 0.18 cents 0.20 cents
Total number of
shares outstanding -0- 2,000,000 2,000,000
</TABLE>
<PAGE> 4
DIGITAL STAR INC.
(a development stage company)
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
For the For the For the
quarter quarter quarter
ended ended ended
December 31, December 31, March 31,
1998 1999 2000
Unaudited Unaudited Unaudited
------------ ------------ -----------
<S> <C> <C> <C>
Cash Flows from Operating Activities
Net profit (loss) $ 0 $ (3,680) $ (4,087)
Increase in accrued liabilities 0 3,680 4,087
Depreciation and amortization 0 0 0
Non-cash transactions
officer loans 0 0 0
Total Cash Flows from Operations 0 0 0
Cash Flows from Financing Activities
Sale of stock 0 0 0
Total Cash Flows from Financing
Activities 0 0 0
Cash Flows from Investing Activities
Capital assets 0 0 0
Loan receivable
Security deposit 0 0 0
Total Cash Flows from Investing
Activities 0 0 0
Net Increase (Decrease) in Cash 0 0 0
Cash Balance Beginning of Period 0 $ 20,000 $ 20,000
Cash Balance End of Period 0 $ 20,000 $ 20,000
</TABLE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
1. Forward-Looking Statements
The statements contained in this Report on Form 10-QSB that are not
historical facts are forward-looking statements (as such term is
defined in the Private Securities Litigation Reform Act of 1995) that
involve risks and uncertainties. Such forward-looking statements may be
identified by, among other things, the use of forward-looking
terminology such as "believes," "expects," "may," "should" or
"anticipates" or the negative thereof or other variations thereon or
comparable terminology, or by discussions of strategy that involve
risks and uncertainties. From time to time, the Company or its
representatives have made or may make forward-looking statements,
orally or in writing. Such forward-looking statements may be included
in various filings made by the Company with the Securities and Exchange
Commission (the "SEC"), or press releases or oral statements made by or
with the approval of an authorized executive officer of the Company.
These forward-looking statements, such as statements regarding
anticipated future revenues, capital expenditures, Year 2000 compliance
and other statements regarding matters that are not historical facts,
involve predictions. The Company's actual results, performance or
achievements could differ materially from the results expressed in, or
implied by, these
<PAGE> 5
forward-looking statements. Potential risks and uncertainties that
could affect the Company's future operating results include, but are
not limited to: (i) economic conditions, including economic conditions
related to entry into any new business venture; (ii) the availability
of equipment from the Company's vendors at current prices and levels;
(iii) the intense competition in the markets for the Company's new
products and services; (iv) the Company's ability to integrate acquired
companies and businesses in a cost-effective manner; (v) the Company's
ability to effectively implement its branding strategy; and (vi) the
Company's ability to develop, market, provide, and achieve market
acceptance of new service offerings to new and existing clients.
2. Development stage activities.
The Company has been a development stage enterprise since its
incorporation on September 15, 1999 and for the three months ended
March 31, 2000. During this period, management had devoted the majority
of its efforts to registering with the Securities and Exchange
Commission pursuant to Sections 12(b) or (g) of the Securities Exchange
Act of 1934 (the "Exchange Act"). The Company has incurred liabilities
in the amount of $12,767 through March 31, 2000. These additional
liabilities are owed to the Company's outside legal counsel for the
performance of services. Outside legal counsel provided legal advice
relating to the formation of the Company and the finalization of its
registration statement with the Securities and Exchange Commission. The
Company expects additional legal fees of at least $2,000 will be due
and payable in the next fiscal quarter. The Company has not yet
generated sufficient revenues during its limited history to fund its
expenses.
The Company operates on a fiscal year ending September 30.
3. Results of operations for the period from December 31, 1999 through
March 31, 2000
For the quarterly period from December 31, 1999 through March
31, 2000, the Company generated net sales of approximately $-0-.
The Company's gross profit on sales was approximately -0-%
for the quarterly period from December 31, 1999 through March 31, 2000.
The Company's overhead costs aggregated approximately $-0-
for the quarterly period from December 31, 1999 through March 31, 2000.
The Company incurred expenses totaling approximately $4,087
for the quarterly period from December 31, 1999 through March 31, 2000.
4. Liquidity and capital resources.
The Company has maintained its liquidity of $20,000 from a
cash balance at the Company's incorporation. The Company has been
funded through the process of selling shares of common stock in a
private placement aggregating $20,000.
The Company did not expend any funds from December 31, 1999
through March 31, 2000. The Company has, however, incurred expenses and
additional liabilities totaling $4,087 from December 31, 1999 through
March 31, 2000.
The accompanying financial statements have been prepared on a
going concern basis, which contemplates the realization of assets and
the satisfaction of liabilities in the normal course of business. The
Company incurred net losses of $4,087 for the period from December 31,
1999 to March 31, 2000. These factors indicate that the Company's
continuation as a going concern is dependent upon its ability to obtain
adequate financing. The Company will require substantial additional
funds to finance its business activities on an ongoing basis and will
have a continuing long-term need to obtain additional financing. The
Company plans to engage in such ongoing financing efforts on a
continuing basis.
<PAGE> 6
RESULTS OF OPERATIONS
PART II - 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
The Company did not file a report on Form 8-K during the three
months ended March 31, 2000.
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Digital Star Inc.
(Registrant)
Date: May 12, 2000 By: /s/ Kevin Sheung Wai Chan
-----------------------------
Director
By: /s/ Silas Sheung Kwan Chan
-----------------------------
Director and Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2000 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-START> DEC-31-1999
<PERIOD-END> MAR-31-2000
<CASH> 20,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 20,000
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 20,000
<CURRENT-LIABILITIES> 12,767
<BONDS> 0
0
0
<COMMON> 200
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 20,000
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 4,087
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
