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U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[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 SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 0-28783
FIVE STAR RESOURCES, INC.
(Exact name of small business issuer as specified in its charter)
State of Kansas 48-1207793
(State or other jurisdiction of (IRS Employer
incorporation or organization) I. D. Number)
106 S. Parkdale, Wichita, KS 67209
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (316) 722-3442
Check whether the issuer (1) filed all reports required to be filed by
Sections 13 or 15(d) of the Securities 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 [X] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
There were 9,940,661 shares of common stock, No Par Value,
outstanding as of December 31, 1999.
Transitional Small Business Disclosure Format (check one); Yes [ ] No [X]
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
REPORT ON REVIEW BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Five Star Resources, Inc.
Wichita, Kansas
We have reviewed the accompanying balance sheet of Five Star
Resources, Inc. (a development stage enterprise) (the "Company")
as of December 31, 1999, and the related statements of
operations, stockholders equity, and cash flows for the three
months ended December 31, 1999 and 1998. These financial
statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established
by the American Institute of Certified Public Accountants. A
review of interim financial information consists principally of
applying analytical review procedures to financial data and
making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an
audit conducted in accordance with generally accepted auditing
standards, the objective of which is the expression of an opinion
regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material
modifications that should be made to the accompanying financial
statements for them to be in conformity with generally accepted
accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the balance sheet as of September 30, 1999,
and the related statements of operations, stockholders' equity
and cash flows for the year then ended (not presented herein);
and in our report dated November 12, 1999, we expressed an
unqualified opinion on those financial statements. In our
opinion, the information set forth in the accompanying balance
sheet as of September 30, 1999 is fairly stated in all material
respects in relation to the balance sheet from which it has been
derived.
/s/ Robert Early & Company
ROBERT EARLY & COMPANY, P.C.
Abilene, Texas
January 18, 2000
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FIVE STAR RESOURCES, INC.
(A Development Stage Enterprise)
Balance Sheets
December 31 September 30
1999 1999
----------- -----------
(Unaudited)
ASSETS
Current Assets:
Cash $ 145,914 $ 91,274
Marketable securities (net) 57,272 99,052
Income taxes receivable 3,361 -
Deferred tax benefit 3,864 2,853
---------- -----------
Total Current Assets 210,411 193,179
Other Assets:
Non-marketable securities 48,596 -
---------- -----------
TOTAL ASSETS $ 259,007 $ 193,179
========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accrued expenses $ 3,000 $ 3,000
Payable to officer 9,000 5,037
Income taxes payable 887 5,556
---------- -----------
Total Liabilities 12,887 13,593
Stockholders' Equity:
Common stock, no par value
(1,000,000,000 shares authorized,
9,940,661 and 9,203,161 outstanding) 241,415 167,665
Earnings accumulated during
the development stage 4,705 11,921
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Total Stockholders' Equity 246,120 179,586
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 259,007 $ 193,179
========== ===========
See accompanying selected information and accountant's report.
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FIVE STAR RESOURCES, INC.
(A Development Stage Enterprise)
Statement of Operations
For the Three Months Ended December 31, 1999 and 1998
(Unaudited)
Cumulative
Three Months Ended During the
December 31, Development
1999 1998 Stage
--------- --------- ----------
Revenues $ - $ - $ -
Operating Expenses:
Directors/officers compensation 9,000 4,000 49,000
Rent 1,800 900 5,400
Legal and professional 195 - 3,195
Transfer fees 245 - 645
Office expenses and other 573 75 1,468
--------- --------- ----------
Total Operating Expenses 11,813 4,975 59,708
--------- --------- ----------
Income from Operations (11,813) (4,975) (59,708)
Other Income and Expenses:
Interest income 932 16 1,394
Interest expense (85) - (85)
Gain on sale of marketable
securities 5,791 (3,374) 83,002
Unrealized loss on marketable
securities (6,808) (7,435) (21,962)
--------- --------- ----------
Income Before Income Taxes (11,983) (15,768) 2,641
Income tax expense/(benefit) (3,756) (1,561) 1,800
Deferred tax expense/(benefit) (1,011) (1,393) (3,864)
--------- --------- ----------
NET INCOME $ (7,216) $ (12,814) $ 4,705
========= ========= ==========
Earnings per Share $ (0.00) $ (0.00) $ 0.00
========= ========= ==========
Weighted Average Shares Outstanding 9,691,612 3,084,411 5,916,189
========= ========= ==========
See accompanying selected information and accountant's report.
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FIVE STAR RESOURCES, INC.
(A Development Stage Enterprise)
Statement of Stockholders' Equity
For the Period from Inception to December 31, 1999
(Unaudited)
Earnings
Accumulated
During the
Common Stock Development
Date Shares Amount Stage
----- --------- ---------- -----------
Stock issued for:
Services and expenses 10/98 475,320 $ 4,075 $ -
Cash 11/98 50,000 500 -
Marketable securities 11/98 3,800,000 34,500 -
Officer compensation 04/99 621,034 7,924 -
Marketable securities 04/99 68,966 880 -
Officer compensation 05/99 767,967 23,039 -
Marketable securities 08/99 3,219,874 90,747 -
Marketable securities 09/99 200,000 6,000 -
Net income for period - - 11,921
--------- ---------- -----------
Balances, September 30, 1999 9,203,161 167,665 11,921
Stock issued for:
Cash 10/99 100,000 10,000 -
Marketable securities 10/99 200,000 20,000 -
Marketable securities 11/99 437,500 43,750 -
Net loss for period - - (7,216)
--------- ---------- -----------
Balances, December 31, 1999 9,940,661 $ 241,415 $ 4,705
========= ========== ===========
See accompanying selected information and accountant's report.
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FIVE STAR RESOURCES, INC.
(A Development Stage Enterprise)
Statement of Cash Flows
Increase/(Decrease) in Cash and Cash Equivalents
For the Three Months Ended December 31, 1999 and 1998
(Unaudited)
Cumulative
Three Months Ended During the
December 31, Development
1999 1998 Stage
--------- ---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ (7,216) $ (12,814) $ 4,705
Adjustments to reconcile net
income/(loss) to net cash
provided by operations:
(Gain)/loss on sales of assets (5,791) 3,374 (83,002)
Unrealized (gain)/loss on
marketable securities 6,808 7,435 21,962
Services and expenses purchased
with stock - 4,075 35,038
Deferred tax benefit (1,011) (1,393) (3,864)
Payables and accrued expenses 3,963 900 12,000
Income taxes payable/receivable (8,030) (1,561) (2,474)
--------- ---------- ---------
NET CASH PROVIDED BY OPERATING
ACTIVITIES (11,277) 16 (15,635)
--------- ---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of marketable
securities 63,999 6,976 181,751
Purchase of marketable securities (8,082) (5,941) (30,702)
--------- ---------- ---------
NET CASH PROVIDED BY INVESTING
ACTIVITIES 55,917 1,035 151,049
--------- ---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of stock 10,000 500 10,500
--------- ---------- ---------
Increase/(decrease) in cash
for period 54,640 1,551 145,914
Cash, Beginning of period 91,274 - -
--------- ---------- ---------
Cash, End of period $ 145,914 $ 1,551 $ 145,914
========= ========== =========
Supplemental Disclosures:
Cash payments for:
Interest $ 85 $ - $ 85
Income taxes 4,274 - 4,274
Non-Cash Investing and Financing:
Stock issued to related parties:
In exchange for marketable
securities $ 63,750 $ 34,500 $ 195,876
For services rendered - 4,000 34,963
For expenses - 75 75
See accompanying selected information and accountant's report.
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FIVE STAR RESOURCES, INC.
(A Development Stage Enterprise)
Selected Information
For the Three Months Ended December 31, 1999 and 1998
NOTE 1: BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions of Regulation S-B.
They do not include all information and footnotes required by
generally accepted accounting principles for complete financial
statements. However, except as disclosed herein, there has been no
material change in the information included in the Company's Annual
Report on Form 10-SB for the period from inception to September 30,
1999. In the opinion of Management, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair
presentation have been included. The report of Robert Early &
Company, P.C. commenting on their review accompanies the condensed
financial statements included in Item 1 of Part 1. Operating results
for the three month period ended December 31, 1999, are not
necessarily indicative of the results that may be expected for the
year ending September 30, 2000.
Development Stage Enterprise -- The Company has been in the
development stage since its inception in October 1998. Management is
searching for potential merger partners in order to move from the
development stage.
NOTE 2: STOCK TRANSACTIONS
As indicated in the Statement of Stockholders' Equity, the Company
has issued shares in payment of various expenses and for the
acquisition of a stock investments during its first year. During the
quarter ended December 31, 1999, the Company continued issuing shares
for investment in marketable securities.
The investments during the current year, as presented below, include
the acquisition of 25,000 shares of Ness Energy International, Inc.
and 200,000 shares of Golden Chief Resources, Inc.
NOTE 3: INVESTMENTS
In November 1998, the Company acquired 100,000 shares of Ness Energy
International, Inc. from its president in exchange for 3,800,000
newly issued shares. The Company continued exchanges similar to this
during the year ended September 30, 1999 and into the quarter ended
December 31, 1999 with an exchange of 437,500 newly issued shares for
25,000 Ness Energy shares. Ness Energy is a bulletin board stock
that has traded in the $1.06 to $2.00 price range during the quarter
ended December 31, 1999. The Company plans to hold or sell the stock
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as needed in order to pay costs of restarting the Company. The
exchanges have been valued at the closing price of Ness Energy on the
date of exchange. Valuation of the issuance of the Company's common
stock was in the range of $.01 to $.03 per share during the year
ended September 30, 1999. During the quarter ended December 31,
1999, the Company's stock was issued at $.10 per share.
The Company also acquired 200,000 shares of Golden Chief Resources,
Inc. GCRI is a fully reporting corporation that is in the process of
acquiring an existing business. There is no current market for the
stock.
NOTE 4: CURRENT ACTIVITIES AND SUBSEQUENT EVENTS
During the January 2000, the Company filed Form 10-SB with the
Securities and Exchange Commission. This filing places the Company
as a fully reporting entity with the SEC. The Company has received
inquires from several privately held companies regarding a possible
merger or acquisition. Management has held meetings and discussions
with some of these companies, but no proposals or deals have been
consummated as of the date of this report. Management plans to
continue to pursue these opportunities vigorously and has an
agreement with a consultant who is to assist in identifying merger
candidates and contract negotiations.
Item 2. Plan of Operation
The Company is a development stage enterprise. Since inception, the plan
of operation has included investing in a business, preferably technology
related, either through its own start up operations, or through a possible
acquisition or merger with a private company.
As a development stage enterprise the Company has no operating revenues,
but has accumulated cash through the sale of marketable securities.
Cumulatively during the development stage the Company is showing a net
profit.
Total assets were $259,007 for this quarter compared to $193,179 in the
previous quarter, with 56% of the asset base being cash and 22% being
marketable securities (see Note 3: Investments). The Company believes it
can satisfy its cash requirements for the next twelve months through the
sale of its marketable securities, if necessary. Total stockholders'
equity increased by 33% over the last quarter.
Subsequent to the end of the quarter the Company purchased 25% of the
authorized common stock of U.S. Wireless, Inc. ("USW") for $85,000, with
the intent to purchase the balance of 75% of USW with restricted common
stock or cash within the next six months. This is the only material
commitment for capital expenditures during the next twelve months. USW
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holds and owns a licensing and service agreement for the marketing and
sales of voice and data communications services (wired and wireless) for a
store located in Wichita, Kansas. The Company also voted to amend its
Articles of Incorporation to change the name of the Company to Five Star
Wireless, Inc.
Disclosure Regarding Forward-Looking Statements - This Form 10Q-SB includes
"forward-looking" statements within the meaning of Section 27A of the
Securities Act and the Company desires to take advantage of the "safe
harbor" provisions thereof. Therefore, the Company is including this
statement for the express purpose of availing itself of the protections of
such safe harbor provisions with respect to all of such forward-looking
statements. The forward-looking statements in this Form 10Q-SB reflect the
Company's current views with respect to future events and financial
performance. These forward-looking statements are subject to certain risks
and uncertainties that could cause actual results to differ from those
anticipated. In this Form 10Q-SB, the words "anticipates," "believes,"
"expects," "intends," "future" and similar expressions identify forward-
looking statements. The Company undertakes no obligation to publicly
revise these forward-looking statements to reflect events or circumstances
that may arise after the date hereof. All subsequent written and oral
forward-looking statements attributable to the Company or persons acting on
its behalf are expressly qualified in their entirety by this section.
PART II: OTHER INFORMATION
Item 5: Other Information
During January 2000, Debra K. Vaughn, a director of the Company,
has resigned from her position as director due to health concerns.
Item 6: Exhibits and Reports on Form 8-K
a. Exhibits
Exhibit 27. Financial Data Schedule
b. Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FIVE STAR RESOURCES, INC.
November 22, 1999 /s/ ART SYKES
Art Sykes, President and
Chief Financial Officer
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<ARTICLE> 5
<LEGEND>
The following schedule contains summary financial information which has
been extracted from the consolidated financial statements of FIVE STAR
RESOURCES INC. for the interim financial statements filed on Form 10-QSB
for the periods indicated. These summary schedules are qualified in their
entirety by reference to such financial statements and the notes thereto.
</LEGEND>
<CIK> 0001102053
<NAME> FIVE STAR RESOURCES, INC.
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> SEP-30-2000 SEP-30-1999
<PERIOD-END> DEC-31-1999 DEC-31-1998
<CASH> 145,914 91,274
<SECURITIES> 57,272 99,052
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 210,411 193,179
<PP&E> 0 0
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 259,007 193,179
<CURRENT-LIABILITIES> 12,887 13,593
<BONDS> 0 0
0 0
0 0
<COMMON> 241,415 167,665
<OTHER-SE> 4,705 11,921
<TOTAL-LIABILITY-AND-EQUITY> 259,007 193,179
<SALES> 0 0
<TOTAL-REVENUES> 0 0
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 11,813 4,975
<LOSS-PROVISION> (11,813) (4,975)
<INTEREST-EXPENSE> (85) 0
<INCOME-PRETAX> (11,983) (15,768)
<INCOME-TAX> (4,767) (2,954)
<INCOME-CONTINUING> (7,216) (12,814)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (7,216) (12,814)
<EPS-BASIC> 0.00 0.00
<EPS-DILUTED> 0.00 0.00
</TABLE>
