UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of
The Securities Exchange Act of 1934
VANSTAR FILMS, INC.
----------------------------------------------
(Name of Small Business Issuer in its charter)
NEVADA No number at present
---------- ------------------------
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
3rd Floor, 1622 West 7th Avenue, Vancouver, B.C. CANADA V6J 1S5
---------------------------------------------------------------
(Address of principal executive offices)
Issuer's telephone number (604) 731-1191
----------------
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
Common stock NASD Bulletin Board
Securities to be registered under Section 12(g) of the Act:
Common Stock
------------------
(Title of class)
<PAGE>
Item 1. Description of Business.
------------------------
(a) The Business of the Company. The Company hopes to develop a number of
products and services that will take advantage of the growing demands of British
Columbia's maturing film and television industry. Initially, the Company intends
to focus on three areas of growth: (i) a strong co-production environment, where
the Company might benefit from strategic partnerships in film production, with
both domestic and foreign producers - the Company has an understanding with
Entertech Media of Los Angeles, California, on a best efforts basis, to produce
an animated feature (Gunga Din, $2,000,000 CDN; (ii) the development of a series
of nature videos in cooperation and with the distribution assistance of a nature
magazine; and (iii) the development of two animated TV series with local
producers.
Distribution for the Company's products have been identified, as well as
potential users of its services. The Company will attempt to have a marketing
and sales presence in as many of the traditional entertainment industry outlets
as may be possible, with the goal of creating a strong demand for the full range
of the company's products. The Company intends to focus on trade shows, film
festivals, industry periodicals, Company generated promotional material and
direct sales both by telemarketing as well as through a comprehensive and
ongoing series of face to face meetings with industry leaders, and the
industry's major distributors.
(b) Film Production and Production Services. Vancouver, British Columbia is
one of the fastest growing film and television production centers in North
America outside of Hollywood, California. With a cosmopolitan, multi-ethnic
population that is nearing two million, Vancouver, British Columbia has become
the production center of choice for some of the most recognized names in the
entertainment industry. In the year 1996, 101 productions were completed for a
total dollar benefit to the province's film industry of more than one billion
dollars ($1,000,000,000CDN). This included 48 feature films and 26 TV series.
Direct employment, according to the government of British Columbia surveys, is
now in excess of 8,500 people and indirect employment totals nearly 25,000
people.
The factors that make Vancouver an attractive center for the production of
films and television in the Company's estimation are: (i) the highly competitive
Canadian dollar; (ii) the majestic and versatile scenery, both natural and
urban; (iii) the more than ten thousand highly skilled professional actors,
technicians and support staff; (iv) liberal tax credits from both federal and
provincial governments; (v) state-of-the- art post production services; and,
(vi) a highly developed and skilled intellectual properties sector of accredited
and highly skilled writers.
Co-production and Service Production are the backbone of the industry in
Vancouver, having experienced years of strong growth, culminating at this time
with projections for Vancouver's fiscal 1999, total dollars for film and
television production, of near or indeed surpassing one billion dollars
($1,000,000,000 CDN).
<PAGE>
Service Production is the management, for foreign producers, of single or
multiple film projects and or television movies or series. The Company, in this
area of the industry, would supply the staff required to manage these projects
on behalf of foreign producers, on a fee for services basis. As well, the
Company intends to lease or purchase a facility from a Vancouver
contractor-developer.
The Company, with the creation of its own staff to manage in-house
projects, such as its projected video series and infomercial programming, will
endeavor to utilize this same staff to service production for foreign producers,
thereby establishing new sources of revenue for the Company. This will create an
ongoing demand for the Company's products and services.
(c) Animation. The company has letters of intent with two local groups to
develop a claymation project (Babblebrook) and a computer animation project
(Motorworld). Babblebrook is aimed at 3-6 year olds and comes with a ten song
CD. Motorworld is aimed at 6-12 year old boys. Both projects need a 1/2 hour
pilot to be completed for marketing purposes and to develop into possible TV
series shows. These will enable the company to obtain penetration in the retail
marketing area. The company's limited focus will be on the development of
Babblebrook.
(d) Feature Films Co-Production. The Company has a "deal memo" outstanding
with Entertech Media of Los Angeles, California, for the development of an
animated film (Gunga Din) with an estimated cost of $2,000,000 CDN. A local
animation house has agreed to produce this film within the above budget figure.
(e) Nature Video Production. The Company has identified the field of nature
videos, specifically those featuring wild animals associated with the Canadian
Tundra: wolf, grizzly, orca and others as having a unique potential for a wide
market distribution. To create an environment where production costs can be
properly managed, as well as to insure the quality of production, assured
distribution and to give the project its best chance at success, the Company is
currently negotiating to bring one or more national nature periodicals to
partner this project. The Company had discussions with Canadian Geographic
Magazine with a view to co-distributing the end product.
(f) Infomercial Television Production and Merchandising. The Company
intends to seek out regional and national manufacturers and or suppliers of
uniquely priced, one of a kind products that would benefit from a focused
marketing program as is understood in the infomercial format. The Company
intends to negotiate the payment of its production costs by the product
manufacturer and or supplier, such that any ancillary advertising revenue
accrues to the Company, and profits are generated by the Company's share of the
new and or increased sales volume for the product. One such program is currently
in negotiation with a regional travel service supplier and a national travel
product supplier.
(g) Film Library and Distribution. The Company, which will require a
distribution arm to maximize the sales of its own products; nature videos,
infomercial television and feature films, will seek out under-utilized film
libraries, whose marketability is known but may have remained dormant for
whatever reason. The area that
<PAGE>
the Company has identified for accumulating a substantial inventory of
distributable product focuses on one large family-owned film library and several
smaller institutionally managed inventories. No negotiations are presently
ongoing in this area.
Item 2. Management's Discussion and Analysis or Plan of Operation.
----------------------------------------------------------
a) Plan of Operation:
------------------
1) The issuer plans to complete an offering of its shares at US$1.00 per
share, to raise a total of US$1 Million with which to acquire existing
businesses involved in the entertainment services industry in Vancouver, British
Columbia, Canada.
i) The initial capital raised by the Company will enable it to purchase two
existing entertainment service companies and inject the necessary investment
into each, so as to enhance their respective businesses and complete the
production of a half hour, animated television show pilot.
There will be enough operating capital in the company treasury to see the
Company through its first year of operation, after these acquisitions have been
made. The Company also expects that the continuing cash-flow from the acquired
companies will enable it to carry business into the near and medium term, before
further expansion is required.
ii) The Company will be developing scripts and artwork that will enable it
to sell an animated series to the market, as an ongoing development, and as
such, has budgeted the necessary funds from its initial capitalization, to
accomplish these ends.
iii) The Company does not envision the purchase of an operating plant, at
this time. Any facilities that may be required for its ongoing business, will be
part of the acquisition plan and will be leased premises.
iv) The Company will be taking on the staff of the acquired companies and
will employ an executive group to oversee operations, made up of a CEO, an
executive vice-president of development and an accountant. These have been
provided for in the Plan of Operation budget.
The Company is in negotiations presently with two existing companies,
servicing the entertainment industry in Vancouver, British Columbia, Canada for
an eventual takeover by the Company.
Since these discussions cannot lead to a binding agreement until the
Company has placed its initial capitalization, there may be material changes in
the final agreements and costs associated thereto. Although these do not
indicate a major change in the eventual agreements at this time, the Company is
prepared for any eventualities that may occur due to any delay in completing its
initial capitalization.
In considering these possible material changes, the Company is negotiating
with more than one possible takeover target for each project in its Plan of
Operation, and has alternative choices to fill each of its needs, while
maintaining its target budgets.
<PAGE>
Item 3. Description of Property.
------------------------
i) The Company does not presently own any property and no significant
acquisition is projected for the short term in the Company's Plan of Operation.
ii) The Company is aware of the growing need for studio space in Vancouver,
British Columbia, Canada and the possibility that exists to develop such a
property for a large, potential market. It is the Company's intention to further
investigate this area for future expansion and look at acquiring land and/or
buildings to suit these needs, at such time as the Company can financially
justify this investment.
Item 4. Security Ownership of Certain Beneficial Owners and Management.
--------------------------------------------------------------
a) Security ownership of certain beneficial owners.
The number and percentage of the shares of Common stock owned on record by
a beneficial owner holding more than 5% is as follows:
Number of Shares Percentage of
Name and address of Common Common
of Beneficial Owner Stock Owned Stock Owned
------------------- ----------- -----------
Louis Tardif 1,500,000(1) 30.3
4087 S.W. Marine Drive
Vancouver, B.C.
Canada V6N 4A5
Cede & Co. 1,192,500 24.1
Box 20, Bowling Green Station
New York, NY
USA 10004
Michael Down 400,000 8.1
#806 - 2190 Bellevue Avenue
West Vancouver, B.C.
Canada V7R 1L7
Anne and Henry Huber 950,000 19.2
4163 Almondel Court
West Vancouver, B.C.
Canada V7V 4J4
--------------------------------------------------------------------------------
(1) Includes stock held by Tardif Holdings Ltd.
<PAGE>
b) Security ownership of management.
Number of Shares Percentage of
Name and address of Common Common
of Beneficial Owner Stock Owned Stock Owned
------------------- ----------- -----------
Louis Tardif 1,500,000(1) 30.3
4087 S.W. Marine Drive
Vancouver, B.C.
Canada V6N 4A5
Grant Curran 15,000 ---
1501 Jubilee Court
North Vancouver, B.C.
Canada V7G 2H7
Item 5. Directors, Executive Officers, Promoters and Control Persons.
-------------------------------------------------------------
Name Position
---- --------
Louis Tardif Director, President, Secretary
4087 S.W. Marine Drive
Vancouver, B.C.
Canada V6N 4A5
Dr. Marvin Wideen Director, Vice-President
833 Seymour Drive
Coquitlam, B.C.
Canada V3J 6V8
Grant Curran Director, Controller
1501 Jubilee Court
North Vancouver, B.C.
Canada V7G 2H7
--------------------------------------------------------------------------------
(1) Includes stock held by Tardif Holdings Ltd.
<PAGE>
The principal occupation and business experience during the last five years
for each of the present directors and executive officers of the Issuer are as
follows:
Louis Tardif
------------
Director, President and Secretary and owns on record or beneficially
approximately 30.3% of the issued and outstanding common shares of the Issuer.
Entrepreneur, small business lecturer and past member of the Creative Property
Management writing team.
Dr. Marvin Wideen
-----------------
Director, Vice-President of Development, Professor Emeritus and private
consultant in educational programs.
Grant Curran
------------
Director and Controller, Partner of Cawley & Associates, a Vancouver chartered
accountancy firm,
None of the directors of the issuer are related as family, but are friends and
long time associates.
Item 6. Executive Compensation.
-----------------------
Remuneration has been paid to one of the officers and directors and
reimbursement has been made for out-of-pocket expenditures for activities on the
Issuer's behalf. Except for Louis Tardif, none of the officers and directors
anticipates devoting more than 25% of his time to Issuer activities.
For the fiscal years ended June 30, 1998, and June 30, 1999, and the nine
month period ended March 31, 2000, the Issuer paid management fees of $37,099,
$1,016 and $NIL respectively for the periods noted above.
The Issuer is not a party to any employment agreements. No advances have
been made or are contemplated to be made by the Issuer to any of its officers or
directors.
The Issuer has no retirement pension, profit sharing or stock option plans
or insurance or medical reimbursement plans covering its officers and directors,
and does not contemplate implementing any such plans at this time.
Item 7. Certain Relationships and Related Transactions.
-----------------------------------------------
Louis Tardif (Director, President and Secretary) is related to Tardif
Holdings Ltd. (owned by his children) who beneficially own 250,000 common shares
of the Issuer.
<PAGE>
Item 8. Legal Proceedings.
------------------
To the best of the Issuer's knowledge there are no legal proceedings
pending that involve the Issuer and none are contemplated.
Item 9. Market for Common Equity and Related Stockholder Matters.
---------------------------------------------------------
a) Market Information.
i) The Issuer's shares are currently trading on the NASD Over the
Counter/Pink Sheets. The trading is sporadic, as are the quotations and as such
there is no "established public trading" at this time.
ii) The Issuer's shares have been trading Over the Counter on the NASD
since January 1999. The range of these trades has been from US$0.75 its high, to
a low of US$0.50.
iii) The high and low trades in the Issuer's common shares reflect
inter-dealer prices and are not as a result of electronic quotations.
iv) The Issuer has not as of yet identified a foreign market for its shares
and does not trade on any foreign exchange.
v) The Issuer has not and does not foresee issuing any of its shares for
the purposes of any acquisition as of the filing of this document.
b) Holders (see shareholders' list).
c) Dividends.
Dividends have not been paid out to the shareholders and none are
contemplated at this time. There are no restrictions set out by the Issuer that
would limit the payment of dividends, both now and in the future.
Item 10. Recent Sales of Unregistered Securities.
----------------------------------------
Since the date of inception 4,951,500 shares of its common stock have been
issued for $160,751. Offerings under rule 504 of Regulation D total 4,910,500
shares of its common stock.
Item 11. Description of Securities.
-------------------------
The Issuer is offering 900,000 shares of its common stock for a price of
US$1.00 per share. The common stock carries no pre-emptive or subscription
rights and is not redeemable. Each share of common stock is entitled to one
vote, however, cumulative voting in the election of directors is denied. All
shares of common stock are entitled to participate equally in dividends and rank
equally upon liquidation. The shares of common stock upon issuance are fully
paid and nonassessable by the Issuer.
<PAGE>
Item 12. Identification of Directors and Officers.
----------------------------------------
There are no statutes, charter provisions, by-laws, contracts or other
arrangements that insures or indemnifies a controlling person, director or
officer of the Issuer relating to their liability in their capacity.
Item 13. Financial Statements.
--------------------
Audited financial statements of the Issuer are included for the years ended
June 30, 1998, June 30, 1999 and the nine months ended March 31, 2000.
Item 14. Changes In and Disagreements with Accountants on Accounting and
---------------------------------------------------------------
Financial Disclosure.
---------------------
The Issuer has not changed its independent accountant and has had no
disagreements with their accountant on accounting and financial disclosure.
Item 15. Financial Statements and Exhibits.
(a) Financial statements for the years ended June 30, 1998, and June 30,
1999 and the nine months ended March 31, 2000.
(b) Exhibit Table
(1) Articles of Incorporation (3) (i).
(2) By-laws (3) (ii).
(c) Other Reports
(1) Shareholders' List.
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereby duly authorized.
VANSTAR FILMS, INC.
Date: June 26, 2000 By: /s/ Louis Tardif
------------- ----------------
Louis Tardif, President
<PAGE>
ANDERSEN ANDERSEN & STRONG, L.C.
Certified Public Accountants and Business Consultants
941 East 3300 South, Suite 202
Salt Lake City, Utah 84106
Telephone 801 486-0096
Fax 801 486-0098
Board of Directors
Vanstar Films, Inc.
Vancouver, B.C.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have audited the accompanying balance sheets of Vanstar Films, Inc.
(development stage company) at June 30, 1999, and the statements of operations,
stockholders' equity, and cash flows for the years ended June 30, 1999 and 1998
and the period July 8, 1997 (date of inception) to June 30, 1999. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Vanstar Films, Inc. at June 30,
1999, and the results of operations, and cash flows for the years ended June 30,
1999 and 1998 and the period July 8, 1997 (date of inception) to June 30, 1999,
in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company has suffered recurring
losses from operations since its inception and does not have sufficient working
capital for its planned activity, which raises substantial doubt about its
ability to continue as a going concern. Management's plans in regard to these
matters are described in Note 4. These financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
ANDERSEN ANDERSEN & STRONG
Salt Lake City, Utah
September 4, 1999
<PAGE>
VANSTAR FILMS, INC.
( Development Stage Company)
BALANCE SHEET
June 30, 1999
--------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS
Cash $ 983
--------
Total Current Assets $ 983
========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable - related parties $ 1,670
Accounts payable 3,855
--------
Total Current Liabilities 5,525
--------
STOCKHOLDERS' EQUITY
Preferred Stock
10,000,000 shares authorized at $0.001 par
value; none issued and outstanding -
Common stock
50,000,000 shares authorized at $0.001 par
value; 4,885,500 shares issued and outstanding 4,886
Capital in excess of par value 121,727
Deficit accumulated during the development stage (131,155)
--------
Total Stockholders' Equity (4,542)
--------
$ 983
The accompanying notes are an integral part of these financial statements.
<PAGE>
VANSTAR FILMS INC.
( Development Stage Company)
STATEMENTS OF OPERATIONS
For the Years Ended June 30, 1999 and 1998 and the Period
July 8, 1997 (Date of Inception) to June 30, 1999
--------------------------------------------------------------------------------
July 8, 1997
June 30 June 30 (Date of Inception)
1999 1998 to June 30, 1999
----------- ----------- -------------------
REVENUES $ - $ 136 $ 136
EXPENSES 34,439 96,852 131,291
----------- ----------- -----------
NET LOSS $ (34,439) $ (96,716) $ (131,155)
=========== =========== ===========
NET LOSS PER COMMON
SHARE
Basic $ (.01) $ (.02)
----------- -----------
AVERAGE OUTSTANDING
SHARES
Basic 4,885,500 4,859,500
----------- -----------
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
VANSTAR FILMS, INC.
( Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Period from July 8, 1997 (Date of Inception)
to June 30, 1999
-----------------------------------------------------------------------------------------------------------------------------------
Common Stock Capital in
----------------------------- Excess of Accumulated
Shares Amount Par Value Deficit
---------- --------- ------------ ---------------
<S> <C> <C> <C> <C>
Balance July 8, 1997 (date of inception) - $ - $ - $ -
Issuance of common stock for cash at 2,315,000 2,315 19,900 -
$.0088 - July 10, 1997
Issuance of common stock for cash at
$.0089 - Sept 18, 1997 2,301,000 2,301 19,900 -
Issuance of common stock for cash at
$.001 - Sept 30, 1997 86,000 86 - -
Issuance of common stock for cash at
$.27 - Jan 2, 1998 107,500 108 31,392 -
Issuance of common stock for cash at
$.37 - April 20, 1998 50,000 50 19,950 -
Net operating loss for the year ended
June 30, 1998 - - - (96,716)
Balance June 30, 1998 4,859,500 4,860 91,142 (96,716)
Issuance of common stock for cash at 70,000 70 20,930 -
$.31 - Sept 15, 1998
Cancellation of common stock -
December 9, 1998 (44,000) (44) -
Contributions to capital by officers - expenses - - 9,655 -
Net operating loss for the year
ended June 30, 1999 - - - (34,439)
Balance June 30, 1999 4,885,500 $ 4,886 $ 121,727 $ (131,155)
========== ========== ============ ============
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
VANSTAR FILMS, INC.
(Development Stage Company)
STATEMENT OF CASH FLOWS
For the Years Ended June 30, 1999 and 1998
and the Period July 8, 1997 (Date of
Inception) to June 30, 1999
------------------------------------------------------------------------------------------------------------------------------------
July 8, 1997
June 30 June 30 (Date of Inception)
1999 1998 to June 30, 1999
------------- ------------- ---------------------
<S> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES
Net loss $ (34,439) $ (96,716) $ (131,155)
Adjustments to reconcile net loss to
net cash provided by operating
activities
Changes in accounts payable 3,275 2,251 5,525
Conributions to capital - expenses 9,655 - 9,655
Net Decrease in Cash From Operations (21,509) (94,465) (115,975)
------------ ------------- ------------------
CASH FLOWS FROM INVESTING
ACTIVITIES
- - -
------------ ------------- ------------------
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from issuance of common stock 20,956 96,001 116,958
------------ ------------- ------------------
Net Increase (Decrease) in Cash (553) 1,536 983
Cash at Beginning of Period 1,536 - -
------------ ------------- ------------------
Cash at End of Period $ 983 $ 1,536 $ 983
=========== ============== ==================
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
VANSTAR FILMS, INC.
( Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
1. ORGANIZATION
The Company was incorporated under the laws of the State of Nevada on July 8,
1997 with authorized common stock of 50,000,000 shares at $.001 par value and
10,000,000 shares of preferred stock at $.001 par value.
The preferred stock will have rights and preferences as may be determined by the
Board of Directors when issued.
The Corporation was organized for the purpose of conducting business in the
field of film development and production service.
Since its inception the company completed offerings under rule 504 of Regulation
D of 4,799,500 shares of its common capital stock.
The Company has been in the development stage since inception.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Methods
------------------
The Company recognizes income and expenses based on the accrual method of
accounting.
Dividend Policy
---------------
The Company has not yet adopted a policy regarding payment of dividends.
Income Taxes
------------
At June 30, 1999, the Company had a net operating loss carry forward of $
131,155. The tax benefit from the loss carry forward has been fully offset by a
valuation reserve because the use of the future tax benefit is undeterminable
since the Company has no operations. The operating loss expires in 2020.
Basic and Diluted Net Income (Loss) Per Share
Basic net income (loss) per share amounts are computed based on the weighted
average number of shares actually outstanding. Diluted net income (loss) per
share amounts are computed using the weighted average number of common shares
and common equivalent shares outstanding as if shares had been issued on the
exercise of the preferred share rights unless the exercise becomes antidilutive
and then only the basic per share amounts are shown in the report.
<PAGE>
VANSTAR FILMS, INC.
( Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (Continued)
--------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Financial Instruments
---------------------
The carrying amounts of financial instruments, including cash and accounts
payable, are considered by management to be their estimated fair values. These
values are not necessarily indicative of the amounts that the Company could
realize in a current market exchange.
Comprehensive Income
--------------------
The Company adopted Statement of Financial Accounting Standards No. 130. The
adoption of this standard had no impact on the total stockholder's equity on
January 31, 2000.
Recent Accounting Pronouncements
--------------------------------
The Company does not expect that the adoption of other recent accounting
pronouncements will have a material impact on its financial statements.
Foreign Currency Translation
----------------------------
Part of the transactions of the Company were completed in Canadian currency
however the functional currency is considered to be U S Currency. The Canadian
transactions have been translated to US currency as incurred, at the exchange
rate in effect at the time, and therefore, no gain or loss from the translations
is recognized.
Estimates and Assumptions
-------------------------
Management uses estimates and assumptions in preparing financial statements in
accordance with generally accepted accounting principles. Those estimates and
assumptions affect the reported amounts of the assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported revenues and
expenses. Actual results could vary from the estimates that were assumed in
preparing these financial statements.
3. RELATED PARTY TRANSACTIONS
The statement of changes in stockholder's equity shows a total of 4,885,500
shares of common stock issued of which 3,155,000 shares were issued to related
parties.
4. GOING CONCERN
Continuation of the Company as a going concern is dependent upon obtaining
sufficient working capital for its planned activity and the management of the
Company has developed a strategy, which it believes will accomplish this
objective through additional equity funding, and long term financing, which will
enable the Company to operate for coming year.
<PAGE>
ANDERSEN ANDERSEN & STRONG, L.C.
Certified Public Accountants and Business Consultants
941 East 3300 South, Suite 202
Salt Lake City, Utah 84106
Telephone 801 486-0096
Fax 801 486-0098
REPORT ON REVIEW BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
Vanstar Films, Inc.
We have reviewed the balance sheets of Vanstar Films, Inc.(development stage
company) at March 31, 2000 and June 30, 1999 and the related statements of
operations, stockholders' equity, and the statement of cash flows for the nine
months ended March 31, 2000 and the years ended June 30, 1999 and 1998 and the
period July 8, 1997 (date of inception ) to March 31. 2000. 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 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.
ANDERSEN ANDERSEN & STRONG
Salt Lake City, Utah
June 9, 2000
<PAGE>
<TABLE>
<CAPTION>
VANSTAR FILMS, INC.
(Development Stage Company)
BALANCE SHEETS
March 31, 2000 and June 30, 1999
------------------------------------------------------------------------------------------
March 31, June 30,
2000 1999
---- ----
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 4,916 $ 983
------- -------
Total Current Assets $ 4,916 $ 983
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable - related parties $ 5,132 $ 1,670
Accounts payable 2,496 3,855
------- -------
Total Current Liabilities 7,628 5,525
------- -------
STOCKHOLDERS' EQUITY
Preferred Stock
10,000,000 shares authorized at $0.001 par
value; none issued and outstanding - -
Common stock
50,000,000 shares authorized at $0.001 par
value; 4,951,500 shares issued and outstanding on
March 31; 4,885,500 on June 30 4,952 4,886
Capital in excess of par value 155,799 121,727
Deficit accumulated during the development stage (163,463) (131,155)
------- -------
Total Stockholders' Deficiency (2,712) (4,542)
------- -------
$ 4,916 $ 983
======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
VANSTAR FILMS INC.
(Development Stage Company)
STATEMENTS OF OPERATIONS
For the Nine Months Ended March 31, 2000 and the Years
Ended June 30, 1999 and 1998 and the Period July 8,
1997 (Date of Inception) to March 31, 2000
---------------------------------------------------------------------------------------------------------------
July 8, 1997
March 31, June 30 June 30 (Date of Inception) to
2000 1999 1998 March 31, 2000
---------- --------- --------- ----------------
<S> <C> <C> <C> <C>
REVENUES $ - $ - $ 136 $ 136
EXPENSES 32,308 34,439 96,852 163,599
---------- --------- --------- ----------
NET LOSS $ (32,308) $ (34,439) $ (96,716) $ (163,463)
========== ========= ========= ===========
NET LOSS PER COMMON
SHARE
Basic $ (.01) $ (.01) $ (.02)
---------- --------- ---------
AVERAGE OUTSTANDING
SHARES
Basic 4,951,500 4,885,500 4,859,500
---------- --------- ---------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
VANSTAR FILMS, INC.
(Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Period July 8, 1997 (Date of Inception)
to March 31, 2000
------------------------------------------------------------------------------------------------------------------------------------
Common Stock Capital in
---------------------------- Excess of Accumulated
Shares Amount Par Value Deficit
------------- -------------- --------- ---------------
<S> <C> <C> <C> <C>
Balance July 8, 1997 (date of inception) - $ - $ - $ -
Issuance of common stock for cash at 2,315,000 2,315 19,900 -
$.0088 - July 10, 1997
Issuance of common stock for cash at
$.0089 - Sept 18, 1997 2,301,000 2,301 19,900 -
Issuance of common stock for cash at
$.001 - Sept 30, 1997 86,000 86 - -
Issuance of common stock for cash at
$.27 - Jan 2, 1998 107,500 108 31,392 -
Issuance of common stock for cash at
$.37 - April 20, 1998 50,000 50 19,950 -
Net operating loss for the year ended
June 30, 1998 - - - (96,716)
Issuance of common stock for cash at 70,000 70 20,930 -
$.31 - Sept 15, 1998
Cancellation of common stock
December 9, 1998 (44,000) (44) -
Contributions to capital by officers - expenses - - 9,655 -
Net operating loss for the year
ended June 30, 1999 - - - (34,439)
Balance June 30, 1999 4,885,500 4,886 121,727 (131,155)
Issuance of common stock for cash at $1.49
September and October 1999 16,000 16 23,812 -
Issuance of common stock for cash at $.21
March 9, 2000 50,000 50 10,260 -
Net operating loss for the nine months
ended March 31, 2000 - - - (32,308)
Balance March 31, 2000 4,951,500 $ 4,952 $ 155,799 $ (163,463)
========= =========== =========== ============
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
(Development Stage Company)
STATEMENT OF CASH FLOWS
For the Nine Months Ended March 31, 2000 and the Years
Ended June 30, 1999 and 1998 and the Period from July 8,
1997 (Date of Inception) to March 31, 2000
------------------------------------------------------------------------------------------------------------------------------------
July 8, 1997
March 31, June 30, June 30, (Date of Inception)
2000 1999 1998 to March 31, 2000
-------- -------- ----------- ---------------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES
Net loss (32,308) $ (34,439) $ (96,716) $ (163,463)
Adjustments to reconcile net loss to
net cash provided by operating
activities
Changes in accounts payable 2,103 3,275 2,251 7,628
Contributions to capital - expenses - 9,655 - 9,655
Net Decrease in Cash From Operations (30,205) (21,509) (94,465) (146,180)
-------- ---------- ----------- ------------------
CASH FLOWS FROM INVESTING
ACTIVITIES
- - - -
-------- ---------- ----------- ------------------
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from issuance of common stock 34,138 20,956 96,001 151,096
-------- ---------- ----------- ------------------
Net Increase (Decrease) in Cash 3,933 (553) 1,536 4,916
Cash at Beginning of Period 983 1,536 - -
-------- ---------- ----------- ------------------
Cash at End of Period $ 4,916 $ 983 $ 1,536 $ 4,916
======== ========== =========== ==================
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
VANSTAR FILMS, INC.
( Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
1. ORGANIZATION
The Company was incorporated under the laws of the State of Nevada on July 8,
1997 with authorized common stock of 50,000,000 shares at $.001 par value and
10,000,000 shares of preferred stock at $.001 par value.
The preferred stock will have rights and preferences as may be determined by the
Board of Directors when issued.
The Corporation was organized for the purpose of conducting business in the
field of film development and production service.
Since its inception the company completed offerings under rule 504 of Regulation
D of 4,865,500 shares of its common capital stock.
The Company has been in the development stage since inception.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Methods
------------------
The Company recognizes income and expenses based on the accrual method of
accounting.
Dividend Policy
---------------
The Company has not yet adopted a policy regarding payment of dividends.
Income Taxes
------------
At March 31, 2000, the Company had a net operating loss carry forward of $
163,463. The tax benefit from the loss carry forward has been fully offset by a
valuation reserve because the use of the future tax benefit is undeterminable
since the Company has no operations. The operating loss expires in 2021.
Basic and Diluted Net Income (Loss) Per Share
---------------------------------------------
Basic net income (loss) per share amounts are computed based on the weighted
average number of shares actually outstanding. Diluted net income (loss) per
share amounts are computed using the weighted average number of common shares
and common equivalent shares outstanding as if shares had been issued on the
exercise of the preferred share rights unless the exercise becomes antidilutive
and then only the basic per share amounts are shown in the report.
<PAGE>
VANSTAR FILMS, INC.
( Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (Continued)
--------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Comprehensive Income
--------------------
The Company adopted Statement of Financial Accounting Standards No. 130. The
adoption of this standard had no impact on the total stockholder's equity.
Recent Accounting Pronouncements
--------------------------------
The Company does not expect that the adoption of other recent accounting
pronouncements will have a material impact on its financial statements.
Foreign Currency Translation
----------------------------
Part of the transactions of the Company were completed in Canadian currency
however the functional currency is considered to be U S Currency. The Canadian
transactions have been translated to US currency as incurred, at the exchange
rate in effect at the time, and therefore, no gain or loss from the translations
is recognized.
Financial Instruments
---------------------
The carrying amounts of financial instruments, including cash and accounts
payable, are considered by management to be their estimated fair values.
Estimates and Assumptions
-------------------------
Management uses estimates and assumptions in preparing financial statements in
accordance with generally accepted accounting principles. Those estimates and
assumptions affect the reported amounts of the assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported revenues and
expenses. Actual results could vary from the estimates that were assumed in
preparing these financial statements.
3. RELATED PARTY TRANSACTIONS
The statement of changes in stockholder's equity shows a total of 4,885,500
shares of common stock issued of which 3,205,000 shares were issued to related
parties.
4. GOING CONCERN
Continuation of the Company as a going concern is dependent upon obtaining
sufficient working capital for its planned activity and the management of the
Company has developed a strategy, which it believes will accomplish this
objective through additional equity funding, and long term financing, which will
enable the Company to operate for the coming year.
