<PAGE> 1
U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[ X ] Quarterly Report Under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended: June 30, 1996
[ ] Transition Report Under Section 13 or 15(d) of the Exchange Act
Commission File Number: 33-19980-D
Gemstar Enterprises, Inc.
(Exact name of small business issuer as specified in its charter)
Nevada 87-0450450
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
73-251 Amber Street
Palm Desert, California 92260
(Address of principal executive offices)
619 - 346 - 4812
(Issuer's telephone number)
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.
(1) Yes [X] No [ ] (2) Yes [X] No [ ]
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: 10,758,614 shares of its
$0.001 par value common stock as of November 5, 1996.
Transitional Small Business Disclosure Format (check one) Yes [ ] No [ X ]
<PAGE>
<PAGE> 2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The following unaudited financial statements included as a part of this Form
10-QSB Report for the third quarter ended June 30, 1996, have been prepared by
the Company 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 generally
accepted accounting principles have been condensed or omitted. However, in the
opinion of management, all adjustments (which include only normal recurring
accruals) necessary to present fairly the financial position, results of
operations, cash flows and stockholders' equity for the periods presented have
been made. These financial statements should be read in conjunction with the
accompanying notes, and with the historical financial statements and footnotes
thereto and other information contained in the Company's most recent Form 10-KSB
Report.
<PAGE> 3
Gemstar Enterprises, Inc.
(A Development Stage Company)
Balance Sheet
June 30, 1996
[Unaudited]
ASSETS
Current Assets:
Cash in bank $ 604
-----------
Total Current Assets $ 604
-----------
TOTAL ASSETS $ 604
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ -0-
Loans from officers 665
-----------
Total Current Liabilities $ 665
-----------
Stockholders' Equity:
Preferred Stock, none outstanding $ -0-
Common Stock, 6,758,614 shares outstanding 6,759
Additional paid-in capital 908,285
Deficit accumulated prior to the development stage <905,548>
Deficit accumulated during the development stage <9,557>
-----------
Total Stockholders' Equity <Deficit> $ <61>
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 604
===========
The accompanying notes are an integral part of these financial statements.
<PAGE 4>
Gemstar Enterprises, Inc.
(A Development Stage Company)
Statements of Operations
[Unaudited]
<TABLE>
<CAPTION>
From the Date
of Inception
as a Development
Stage Company
For the Three Month For the Nine Month (April 10, 1993)
Period Ended Period Ended Through
June 30, June 30, June 30,
1996 1995 1996 1995 1996
--------- --------- --------- --------- ---------------
<S> <C> <C> <C> <C> <C>
Revenue $ -0- $ -0- $ -0- $ -0- $ -0-
------- ------- ------- ------- -------
Expenses:
Office Supplies $ 13 $ -0- $ 74 $ -0- $ 74
Filing Fees 125 -0- 425 300 1,392
Cost of public entity 935 315 1,295 315 1,875
Travel -0- -0- 268 -0- 281
Taxes, non-income -0- -0- -0- -0- 127
Impairment of assets -0- -0- 5,396 -0- 5,396
Amortization -0- -0- -0- -0- 412
------- ------- ------- ------- -------
Total Expenses $ 1,073 $ 315 $ 7,458 $ 615 $ 9,557
------- ------- ------- ------- -------
NET LOSS $<1,073> $ <315> $<7,458> $ <615> $<9,557>
======= ======= ======= ======= =======
NET LOSS PER SHARE $ <0.00> $ <0.00> $ <0.00> $ <0.00> $ <0.00>
======= ======= ======= ======= =======
Common Shares used in
Net Loss Computation 6,758,614 6,758,614 6,758,614 6,758,614 6,758,614
========= ========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 5
Gemstar Enterprises, Inc.
(A Development Stage Company)
Statement of Stockholders' Equity
[Unaudited]
<TABLE>
<CAPTION>
Deficit Deficit
Accum. Accum. Total
Prior to the During the Due Stockholders'
Common Stock Paid-in Development Development From Equity
Shares Amount Capital Stage Stage Officer <Deficit>
------ ------ ------- ------------ ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at inception
of Development Stage
April 10, 1993 1,698,864 $ 1,699 $812,150 $<905,548> $ -0- $ -0- $<91,699>
Common stock valued
at $.02 per share
for assumption of
liabilities, amounts
due shareholder and
receivable from
officer
August 16, 1993 5,000,000 5,000 95,000 -0- -0- <7,783> 92,217
Net Loss from the
start of the
Development Stage
to September 30, 1993 -0- -0- -0- -0- <1,300> -0- <1,300>
-------- ------- ------- ------- ------- ------ ------
Balance,
September 30, 1993 6,698,864 $ 6,699 $907,150 $<905,540> $<1,300> $<7,783> $ <612>
Expenses paid by
officer -0- -0- -0- -0- -0- 966 966
Net Loss for the
year ended,
September 30, 1994 -0- -0- -0- -0- <354> -0- <354>
-------- ------- ------- ------- ------- ------ ------
Balance,
September 30, 1994 6,698,864 $ 6,699 $907,150 $<905,540> $<1,484> $<6,817> $ -0-
Common stock issued
for cash at $.02 per
share
October 15, 1994 59,750 60 1,135 -0- -0- -0- -0-
Loan to officer -0- -0- -0- -0- -0- <1,195> <1,195>
Expenses paid by
officer -0- -0- -0- -0- -0- 615 615
Collection of loan
from officer
September 30, 1995 -0- -0- -0- -0- -0- 7,397 7,397
Net Loss for the
year ended,
September 30, 1995 -0- -0- -0- -0- <615> -0- <615>
-------- ------- ------- ------- ------- ------ ------
Balance,
September 30, 1995 6,758,614 $ 6,759 $908,285 $<905,540> $<2,099> $ -0- $ 7,397
Net Loss for the
nine month period,
June 30, 1996 -0- -0- -0- -0- <7,458> -0- <7,458>
-------- ------- ------- ------- ------- ------ ------
Balance,
June 30, 1996 6,758,614 $ 6,759 $908,285 $<905,540> $<9,557> $ -0- $ <61>
========= ======= ======== ========= ======= ======= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 6
Gemstar Enterprises, Inc.
(A Development Stage Company)
Statements of Cash Flows
[Unaudited]
<TABLE>
<CAPTION>
From the Date
of Inception
as a Development
Stage Company
(April 10, 1993)
For the Nine Month Period Through
Ended June 30, June 30,
1996 1995 1996
---- ---- ----
<S> <C> <C> <C>
Cash Flows from
Operating Activities:
Net Loss from Operations $ <7,458> $ <615> $ <9,557>
Amortization -0- -0- 412
Expenses paid by officer -0- -0- 1,581
Increase <Decrease> in
accounts payable -0- -0- <612>
-------- -------- --------
Net Cash Used In
Operating Activities $ <7,458> $ <615> $ <8,176>
-------- -------- --------
Cash Flows from
Financing Activities:
Proceeds from sale of
common stock $ -0- $ 1,195 $ 1,195
Advances from officer 62 615 665
Collection of receivable
from officer -0- -0- 7,397
Advances to officer -0- <1,195> <1,195>
-------- -------- --------
Net Cash Provided by
Financing Activities $ 62 $ 615 $ 8,062
-------- -------- --------
Net Increase <Decrease> In Cash $ <7,396> $ -0- $ <114>
Cash at beginning of period 8,000 -0- 718
-------- -------- --------
Cash at end of period $ 604 $ -0- $ 604
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 7
Gemstar Enterprises, Inc.
(A Development Stage Company)
Notes to Financial Statements
[Unaudited]
NOTE 1 - ACCOUNTING POLICIES AND OTHER DISCLOSURES
The condensed financial statements included in this Form 10-QSB Report have
been prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. These financial
statements have been prepared in the ordinary course of business for the
purpose of providing information with respect to the interim three and nine
month periods ended June 30, 1996 and 1995, and are not necessarily indicative
of the results to be expected for the entire year. The accounting policies
followed by the Company and other pertinent footnote disclosures are set forth
in the Company's audited financial statements contained in its Form 10-KSB
Report.
The loss per common share has been computed using the number of common shares
outstanding as of the end of the latest period presented. Inasmuch as the
Company is a development stage enterprise, using the number of common shares
outstanding as of March 31, 1996, rather than the weighted average number of
common shares outstanding during each of the periods presented, provides a
more conservative approach to the loss per share computation.
NOTE 2 - SUBSEQUENT EVENTS
In August of 1996, the Company sold to four individuals in a private
transaction, 4,000,000 shares of its common stock at a price of $0.0025 per
share and received therefrom $10,000.00 cash. Thus, after this transaction,
the Company has a total of 10,758,614 shares of $.001 par value common stock
outstanding. Of the shares sold, the Company's sole officer and director
purchased 1,500,000 shares for a total of $3,750.00.
<PAGE> 8
PART I - FINANCIAL INFORMATION
Item 2. Plan of Operations
Statements regarding the Company's expectations as to future operations
and certain other statements presented in this Form 10-QSB Report constitute
forward looking information within the meaning of the Private Securities
Litigation Reform Act of 1995. Although the Company believes that its
expectations are based on reasonable assumptions within the bounds of its
knowledge of its business operations, there can be no assurance that actual
results will not differ materially from the expectations expressed herein. In
addition to matters affecting the Company in general, factors which could
cause expectations to differ are, but not limited to, the following: 1)
changes in federal and/or state securities laws; 2) changes in federal and/or
state income tax laws, in particular as they relate to tax free
reorganizations; 3) economic conditions, particularly as they relate to
securities markets; and 4) the Company's ability to continue to have
sufficient capital available to maintain its operations.
The Company was incorporated under the laws of the state of Nevada in
October of 1987, under the name of North Star Petroleum, Inc. and completed a
public offering of its common stock and warrants in August of 1988. Subsequent
to the public offering, the Company engaged in the exploration, development
and production of oil and gas on a joint venture basis with other industry
partners.
In May of 1990, the Company amended its Articles of Incorporation,
thereby changing its name to Gemstar Enterprises, Inc., increasing its par
value from $0.001 per share to $0.02 per share, and authorizing for issuance
5,000,000 shares of preferred stock. Additionally, the Company reverse split
its common stock on the basis of one $0.02 par value common share for twenty
[20], $0.001 par value common shares [1 for 20 reverse split]. All references
contained herein to the Company's common stock have taken this reverse split
into account. During 1990, the Company also acquired approximately 200 acres
of real property located in Alexander County, North Carolina. The Company's
performance in both its oil and gas business and its investment in real estate
did not generate sufficient revenue to result in profitable operations.
During the fiscal year ending in September, 1993, the Company sold all of
its assets and included those liabilities associated with those assets. Thus,
the Company avoided any bankruptcy, receivership or similar proceeding. These
transactions were completed by April 10, 1993, and since that time the Company
has been considered a new entity for accounting purposes. During August of
1993, all liabilities which had remained after the sale of the Company's
assets, were assumed by the Company's sole officer and director, for which the
Company issued its common stock at a value of $0.02 per share and retained a
receivable from this individual, which amounted to less than $10,000. During
the Company's latest fiscal year, ending in September, 1996, and for its
preceding two fiscal years ending September, 1995 and 1994, the Company did
not engage in any revenue producing business activity.
The Company sold shares of its common stock during the fourth quarter of
this fiscal year in a private transaction for the purpose of paying its
operating costs. The Company is now actively seeking a business to acquire or
with which to merge, in order to establish business operations. The Company
can not assure success in this endeavor and the acquisition of any asset or
business enterprise (profitable or not profitable) will in all likelihood
result in a dilution in the percentage ownership that a current shareholder
has in the Company. This dilution will be a result of the Company issuing
additional equity securities in exchange for the assets or operations being
acquired.
If and when such a business reorganization occurs, the resultant dilution
in a current shareholder's ownership percentage in the Company after the
completion of the reorganization will occur because the Company will need to
provide payment or consideration to the previous owners of the operations or
business being acquired. Additionally, an incentive to such owners to have
their business acquired by the Company, is that the Company may sell shares of
its equity securities to have cash available to fulfill certain capital
requirements that may be contained in the plan of reorganization.
<PAGE> 9
The Company had no employees during each of its last two fiscal years and
no employees were hired during the current fiscal year. However, if the
Company's business operations were to change through an acquisition of a
business operation, then the employees of the business acquired will probably
be retained and additional employees may be hired. At the present time,
management is providing the Company with a location for its principal
executive offices on a "rent free basis" and no salaries or other form of
compensation are currently being paid by the Company for the time and efforts
required by management to seek an entity for the purpose of entering into a
reorganization. To the extent that the utilization of management increases,
the Company intends to reimburse management for its out-of-pocket costs and to
compensate management for the time required to fulfill its responsibilities to
the Company. During 1993, the board of directors approved resolutions
authorizing the issuance of the Company's common stock as consideration for
amounts advanced to the Company by its stockholders and may again do so in the
future.
The investigation of specific business opportunities and the negotiation,
drafting and execution of relevant agreements, disclosure documents and other
instruments will require substantial management time and attention and will
require the Company to incur substantial costs for payment of accountants,
attorneys and others, which may include management. If a decision is made not
to participate in or complete the acquisition of a specific business
opportunity, the costs thus incurred may not be recoverable in a subsequent
related investigation. Further, even if an agreement is reached for the
participation in a specific business opportunity by way of investment or
otherwise, the failure to consummate that particular transaction may result in
the loss to the Company of all related costs incurred.
Currently, management is not able to determine the time or resources that
will be necessary to complete the participation in or acquisition of any
future business prospect. There is no assurance that the Company will be able
to acquire an interest in any such prospects, products or opportunities that
may exist or that any activity of the Company, regardless of the completion of
any participation in or the acquisition of any business prospect will be
profitable.
Liquidity and Capital Resources
As of June 30, 1996, the Company had cash assets of $604 and liabilities
which exceeded its assets by approximately $60. In order to provide adequate
capital to conduct its operations and to pay the substantial legal, accounting
and other costs associated with bringing current its financial and corporate
reporting obligations to the Securities and Exchange Commission, the Company
raised $10,000 through the sale of its common stock to four individuals in an
isolated transaction. Total costs incurred in this regard through the fiscal
year ended September 31, 1996, amounted to $10,069, which does not represent
all of the costs yet to be incurred. Management has not received any
compensation for its efforts to bring the Company's financial and corporate
reporting obligations current. Additionally, it is anticipated that the
Company will incur more cost, including legal and accounting fees, in the
location, evaluation and completion of a reorganization, should such occur.
As additional time commitments are being given to the Company by
management or costs associated therewith are incurred and paid by management,
the Company may reimburse such costs in cash or through the issuance of its
equity securities or enter into promissory notes, for such services and costs
rendered by management to the Company.
<PAGE> 10
Results of Operations
The Company has not engaged in any business operations, other than as
previously disclosed herein. Thus, during the quarters ended June 30, 1996 and
1995, no revenue was generated by the Company. Furthermore, the Company did
not generate any revenue during all of its fiscal year ended September 30,
1996 and it is not anticipated that any revenue will be generated until a
business reorganization with an operating entity has occurred.
PART II - OTHER INFORMATION
Items 1 - 5
The Company's response with respect to Items 1 - 5 of this Form 10-QSB Report
for the quarter ended June 30, 1996, is "NONE."
Item 6 - Exhibits and Reports on Form 8-K.
The Company has not filed any Reports on Form 8-K during the quarter being
covered by this Form 10-QSB.
Index of Exhibits:
Number 3: Initial Articles of Incorporation and By-laws
Incorporated by reference to the Company's registration statement on Form
S-18, File No. 33-19980-D
Number 3: Amended Articles of Incorporation
Incorporated by reference to the Company's Form 10-KSB, for the year ended
September 30, 1989
Number 3: Amended Articles of Incorporation
Incorporated by reference to the Company's Form 10-QSB, for the quarter ended
December 31, 1995
Number 3: Amended Articles of Incorporation
Incorporated by reference to the Company's Form 10-KSB, for the year ended
September 30, 1995
Number 4: Warrant Agent Agreement
Incorporated by reference to the Company's registration statement on Form
S-18, File No. 33-19980-D
Number 4: First Amendment to Warrant Agent Agreement
Incorporated by reference to the Company's Form 10-QSB, for the quarter ended
December 31, 1995
Number 4: Second Amendment to Warrant Agent Agreement
Incorporated by reference to the Company's Form 10-KSB, for the year ended
September 30, 1995
<PAGE> 11
Number 27: Financial Data Schedule
Included in this Report as Exhibit 27
SIGNATURES
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.
GEMSTAR ENTERPRISES, INC.
By: /S/Denny W. Nestripke
Denny W. Nestripke
Chief Executive Officer and
Chief Financial Officer
Date: November 15, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000829323
<NAME> GEMSTAR ENTERPRISES, INC.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> JUN-30-1996
<CASH> 604
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 604
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 604
<CURRENT-LIABILITIES> 665
<BONDS> 0
0
0
<COMMON> 915,044
<OTHER-SE> (915,105)
<TOTAL-LIABILITY-AND-EQUITY> 604
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 1,073
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,073)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,073)
<EPS-PRIMARY> (0.00)
<EPS-DILUTED> (0.00)
</TABLE>
