UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-QSB [X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 2000 [ ] Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period to ---------------------- ----------------------- Commission File Number 0-28535 ----------------------------- AQUISTAR VENTURES (USA) INC. -------------------------------------------------------------------- (Exact name of small Business Issuer as specified in its charter) Nevada 91-1975651 - ------------------------------------ --------------------------------- (State or other jurisdiction of (IRS Employer Identification No.) ------------------------------ incorporation or organization) - ----------------------------- Suite 314-837 West Hastings Street Vancouver, British Columbia, Canada V6C 3N6 - ------------------------------------ --------------------------------- (Address of principal executive offices) (Postal or Zip Code) Issuer's telephone number, including area code: 604-642-6410 --------------------------------- None -------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days [X] Yes [ ] No State the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: 15,463,008 Shares of $0.001 par value Common Stock outstanding as of September 30, 2000. PART 1 - FINANCIAL INFORMATION Item 1. Financial Statements The accompanying unaudited financial statements have been prepared in accordance with the instructions to Form 10-QSB and Item 310 (b) of Regulation S-B, and, therefore, do not include all information and footnotes necessary for a complete presentation of financial position, results of operations, cash flows, and stockholders' equity in conformity with generally accepted accounting principles. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. Operating results for the three months ended September 30, 2000 are not necessarily indicative of the results that can be expected for the year ending June 30, 2001. AQUISTAR VENTURES (U.S.A.) INC. (An Exploration Stage Company) CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2000 (Unaudited) (Stated in U.S. Dollars) AQUISTAR VENTURES (U.S.A.) INC. (An Exploration Stage Company) CONSOLIDATED BALANCE SHEETS (Unaudited) (Stated in U.S. Dollars) - -------------------------------------------------------------------------------- SEPTEMBER 30 JUNE 30 2000 2000 - -------------------------------------------------------------------------------- ASSETS Current Cash $ 574 $ 1,299 Goods and Services Tax recoverable 416 423 ---------------------------------- 990 1,722 Mineral Property (Note 4) 12,445 12,445 Office Equipment, at cost less accumulated amortization 1,296 1,383 ---------------------------------- $ 14,731 $ 15,550 ================================================================================ LIABILITIES Current Accounts and advances payable $ 83,869 $ 78,821 ---------------------------------- SHAREHOLDERS' DEFICIENCY Share Capital Authorized: 50,000,000 common shares, par value $0.001 per share at September 30, 2000 and at June 30, 2000 Issued and Outstanding: 15,463,008 at September 30, 2000 and June 30, 2000 335,362 335,362 Additional Paid-In Capital 10,038 10,038 Contributed Surplus 5,509 5,509 Cumulative Translation Adjustment 578 (721) ---------------------------------- Accumulated Deficit (420,625) (413,459) ---------------------------------- (69,138) (63,271) ---------------------------------- $ 14,731 $ 15,550 ================================================================================ AQUISTAR VENTURES (U.S.A.) INC. (An Exploration Stage Company) CONSOLIDATED STATEMENT OF OPERATIONS AND DEFICIT (Unaudited) (Stated in U.S. Dollars) - -------------------------------------------------------------------------------- INCEPTION APRIL 13 THREE MONTHS ENDED 1995 TO SEPTEMBER 30 SEPTEMBER 30 2000 1999 2000 - -------------------------------------------------------------------------------- Expenses Amortization $ 87 $ 87 $ 2,085 Professional fees - 590 36,019 Management fees 5,049 5,047 101,253 Office and sundry 515 33 9,831 Rent 1,515 2,019 31,541 Travel and business promotion - - 6,898 --------------------------------------- 7,166 7,776 187,627 --------------------------------------- Loss Before The Following (7,166) (7,776) (187,627) Share Issue Costs - - (34,921) Exploration Expenditures - (1,856) (191,835) Write Off Of Abandoned Mineral Property - - (5,857) Loss For The Period (7,166) (9,632) $ 420,240 =========== Accumulated Deficit, Beginning Of Period (413,459) (366,312) ---------------------- Accumulated Deficit, End Of Period $(420,625) $(375,944) =============================================================== Loss Per Share $ (0.01) $ (0.01) =============================================================== Weighted Average Number Of Shares Outstanding 15,463,008 15,463,008 =============================================================== AQUISTAR VENTURES (U.S.A.) INC. (An Exploration Stage Company) CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (Unaudited) (Stated in U.S. Dollars)
Common Stock ---------------------------------- Additional Cumulative Number Paid-in Contributed Translation Accumulated of Shares Amount Capital Surplus Adjustment Deficit Total -------------------------------------------------------------------------------------------------- Issuance of common stock 1 $ 1 $ - $ - $ - $ - $ 1 Net loss - - - - - (3,643) (3,643) -------------------------------------------------------------------------------------------------- Balance, June 30, 1995 1 1 - - - (3,643) (3,642) Issuance of common stock 1,700,000 179,975 - - - - 179,975 Translation adjustment - - - - (489) - (489) Net loss - - - - - (136,164) (136,164) -------------------------------------------------------------------------------------------------- Balance, June 30, 1996 1,700,001 179,976 - - (489) (139,807) 39,680 Issuance of common stock 600,000 109,190 - - - - 109,190 Translation adjustment - - - - 670 - 670 Net loss - - - - - (146,298) (146,298) -------------------------------------------------------------------------------------------------- Balance, June 30, 1997 2,300,001 289,166 - - 181 (286,105) 3,242 Issuance of common stock 50,000 9,151 - - - - 9,151 Translation adjustment - - - - 1,883 - 1,883 Net loss - - - - - (40,510) (40,510) -------------------------------------------------------------------------------------------------- Balance, June 30, 1998 2,350,001 298,317 - - 2,064 (326,615) (26,234) Issuance of common stock 240,000 42,074 - - - - 42,074 Cancellation of common stock (750,000) (5,509) - - - - (5,509) Contributed surplus - - - 5,509 - - 5,509 Increase in issued common stock due to 8 for 1 stock split 12,880,007 - - - - - - Exchange of stock to acquire subsidiary Aquistar Ventures Inc. (14,720,008) - - - - - - Aquistar Ventures (U.S.A.) Inc. 14,983,008 - - - - - - Net asset deficiency of legal parent at date of reverse take-over transaction - - - - - (385) (385) Issuance of common stock 480,000 480 10,038 - - - 10,518 Translation adjustment - - - - (2,737) - (2,737) Net loss - - - - - (39,312) (39,312) -------------------------------------------------------------------------------------------------- Balance, June 30, 1999 15,463,008 335,362 10,038 5,509 (673) (366,312) (16,076) Translation adjustment - - - - (48) - (48) Net loss - - - - - (47,147) (47,147) -------------------------------------------------------------------------------------------------- Balance, June 30, 2000 15,463,008 335,362 10,038 5,509 (721) (413,459) (63,271) Translation adjustment - - - - 1,299 - 1,299 Net loss - - - - - (7,166) (7,166) -------------------------------------------------------------------------------------------------- Balance, September 30, 2000 15,463,008 $ 335,362 $ 10,038 $ 5,509 $ 578 $ (420,625) $ (69,138) ==================================================================================================
AQUISTAR VENTURES (U.S.A.) INC. (An Exploration Stage Company) CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Stated in U.S. Dollars) - -------------------------------------------------------------------------------- INCEPTION APRIL 13 THREE MONTHS ENDED 1995 TO SEPTEMBER 30 SEPTEMBER 30 2000 1999 2000 - -------------------------------------------------------------------------------- Cash Flows From Operating Activities Loss for the period $ (7,166) $ (9,632) $ (420,240) -------------------------------------------- Adjustments To Reconcile Loss To Net Cash Used By Operating Activities Write off of abandoned mineral property - - 5,857 Amortization 87 87 2,085 Change in Goods and Services Tax recoverable 7 4 (416) Change in prepaid expense - - - Change in accounts and advances payable 5,048 10,545 83,869 -------------------------------------------- Total Adjustments 5,142 10,636 91,395 -------------------------------------------- Net Cash Used In Operating Activities (2,024) 1,004 (328,845) -------------------------------------------- Cash Flows From Investing Activities Mineral property - - (18,303) Office equipment - - (3,380) Net asset deficiency of legal parent at date of reverse take-over transaction - - (385) -------------------------------------------- - - (22,068) -------------------------------------------- Cash Flows From Financing Activities Issue of share capital - - 345,400 Contributed surplus - - 5,509 -------------------------------------------- - - 350,909 -------------------------------------------- Effect Of Exchange Rate Changes On Cash 1,299 355 578 -------------------------------------------- Increase (Decrease) In Cash (725) 1,359 574 Cash, Beginning Of Period 1,299 1,286 - -------------------------------------------- Cash, End Of Period $ 574 $ 2,645 $ 574 ================================================================================ AQUISTAR VENTURES (U.S.A.) INC. (An Exploration Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2000 (Unaudited) (Stated in U.S. Dollars) 1. BASIS OF PRESENTATION The unaudited financial statements as of September 30, 2000 included herein have been prepared without audit pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with United States generally accepted principles have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair a presentation have been included. It is suggested that these financial statements be read in conjunction with the June 30, 2000 audited financial statements and notes thereto. 2. NATURE OF OPERATIONS Exploration Stage Activities The Company is in the process of exploring its mineral property and has not yet determined whether the property contains ore reserves that are economically recoverable. The recoverability of amounts shown as mineral property is dependent upon the discovery of economically recoverable reserves, confirmation of the Company's interest in the underlying mineral claims, and the ability of the Company to obtain the necessary financing to place the property into production, and upon future profitable operations, none of which is assured. 3. SIGNIFICANT ACCOUNTING POLICIES The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States. Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of financial statements for a period necessarily involves the use of estimates which have been made using careful judgement. The financial statements have, in management's opinion, been properly prepared within reasonable limits of materiality and within the framework of the significant accounting policies summarized below: a) Consolidation These financial statements include the accounts of the Company and its wholly owned Canadian subsidiary, Aquistar Ventures Inc. AQUISTAR VENTURES (U.S.A.) INC. (An Exploration Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2000 (Unaudited) (Stated in U.S. Dollars) 3. SIGNIFICANT ACCOUNTING POLICIES (Continued) b) Mineral Property and Related Exploration Expenditures The Company capitalizes all option payments on mineral properties in which it has a continuing interest to be amortized over the recoverable reserves when a property reaches commercial production. On abandonment of any property, applicable accumulated mineral property costs will be written off. Exploration expenditures are expensed as incurred. To date, none of the Company's properties have reached commercial production. c) Office Equipment and Amortization Office equipment is recorded at cost and amortized at a rate of 20% per annum on the declining balance basis. d) Income Taxes The Company has adopted Statement of Financial Accounting Standards No. 109 - "Accounting for Income Taxes" (SFAS 109). This standard requires the use of an asset and liability approach for financial accounting and reporting on income taxes. If it is more likely than not that some portion of all of a deferred tax asset will note be realized, a valuation allowance is recognized. e) Foreign Currency Translation The Company's subsidiary's operations are located in Canada and its functional currency is the Canadian dollar. The financial statements of the subsidiary have been translated using the current method whereby the assets and liabilities are translated at the year end exchange rate, capital accounts at the historical exchange rate, and revenues and expenses at the average exchange rate for the period. Adjustments arising from the translation of the Company's subsidiary's financial statements are included as a separate component of shareholders' equity. AQUISTAR VENTURES (U.S.A.) INC. (An Exploration Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2000 (Unaudited) (Stated in U.S. Dollars) 3. SIGNIFICANT ACCOUNTING POLICIES (Continued) f) Financial Instruments The Company's financial instruments consist of cash, Goods and Services Tax recoverable, and accounts payable. Unless otherwise noted, it is management's opinion that this Company is not exposed to significant interest or credit risks arising from these financial instruments. The fair value of these financial instruments approximate their carrying values, unless otherwise noted. g) Loss Per Share The loss per share is calculated using the weighted average number of common shares outstanding during the period. 4. MINERAL PROPERTY SEPTEMBER 30 JUNE 30 2000 2000 ------------------------- Sutton Property The Company has entered into an option agreement dated December 2, 1997, as amended, which provides for the acquisition of a 100% interest, subject to a 2.5% net smelter royalty in 21 unpatented mineral claims in the Larder Lake Mining Division of Ontario. In order to earn its interest, the Company must make cash payments and incur exploration expenditures as follows: - cash payment of Cdn. $17,000 on execution of the agreement (paid) - cash payment of Cdn. $35,000 13 months from the date the Company's common shares are listed for trading on the NASD Bulletin Board or a stock exchange (the initial payment date) - cash payment of Cdn. $25,000 8 months after the initial date - cash payment of Cdn. $25,000 16 months after the initial payment date AQUISTAR VENTURES (U.S.A.) INC. (An Exploration Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2000 (Unaudited) (Stated in U.S. Dollars) 4. MINERAL PROPERTY (Continued) SEPTEMBER 30 JUNE 30 2000 2000 ------------------------- - cash payment of Cdn. $30,000 28 months after the initial payment date - cash payment of Cdn. $30,000 40 months after the initial payment date - Cash payment of Cdn. $40,000 52 months after the initial payment date Exploration Expenditures - a total of Cdn. $210,000, Cdn. $100,000 by December 2, 2000 and Cdn. $110,000 upon a recommendation to conduct the phase 2 work program Consideration paid to date $ 12,445 $ 12,445 ========================= 5. RELATED PARTY TRANSACTIONS During the periods indicated, the Company incurred the following amounts with related parties: THREE MONTHS ENDED SEPTEMBER 30 2000 1999 ------------------------- Management fees $ 5,049 $ 5,047 ========================= Rent $ 1,515 $ 2,019 ========================= 6. INCOME TAXES No provision for income taxes has been provided in these financial statements due to the accumulated net losses. At September 30, 2000, the Company has net operating loss carryforwards, which expire commencing in 2002, totalling approximately $225,000, the benefits of which have not been recorded. Item 2. Management's Discussion and Analysis or Plan of Operations The Company is a natural resource company engaged in the acquisition, exploration and development of mineral properties. The Company, through its wholly own Canadian subsidiary Aquistar Ventures Inc., has an interest in a mineral property located in Ontario, Canada, and intends to carry out exploration work on this property in order to ascertain whether it possesses commercially developable quantities of gold and other precious minerals. For the next 12 months, management of the Company plans to satisfy its cash requirements by raising additional funds by way of private placements and/or a public offering, to satisfy working capital needs and Phase 1 of the work program intended for its Mineral Property. The Company will assess whether to proceed with Phase 2 of the exploration program upon completion of Phase 1 and an evaluation of the results of the Phase 1 exploration program. Aquistar Canada obtained an engineering report on its Mineral Property, dated July 1, 1997. The Report summarizes the exploration and development history of the Property, the geology of the Property and the proposed exploration and development program for the Property. The Report states that follow-up surveys are required which will include detailed magnetic coverage with the more advanced "walking mag" continuous profiling method, further assessment and definition of the gradient IP and resistivity anomalies utilizing the multiple-gradient "realsection" technique, trenching, geochemistry, soil and/or vegetation and diamond drilling. The budget for this Phase 1 program is estimated at CDN $182,000. Phase 2 of the Report is contingent on the results of Phase 1 and will include further drill testing on the Property, as required, estimated to cost CDN $300,000.The Company has not purchased or sold any plant or significant equipment and does not expect to do so in the foreseeable future. The Company currently has no employees, and does not expect to hire any employees in the foreseeable future. The Company conducts its business through agreements with consultants and arms-length third parties. CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 From time to time, the Company will make written and oral forward-looking statements about matters that involve risk and uncertainties that could cause actual results to differ materially from projected results. Important factors that could cause actual results to differ materially include, among others: - - Fluctuations in the market prices of gold - - General domestic and international economic and political conditions - - Unexpected geological conditions or rock instability conditions resulting in cave-ins, flooding, rock bursts or rock slides - - Difficulties associated with managing complex operations in remote areas - - Unanticipated milling and other processing problems - - The speculative nature of mineral exploration - - Environmental risks - - Changes in laws and government regulations, including those relating to taxes and the environment - - The availability and timing of receipt of necessary governmental permits and approval relating to operations, expansion of operations and financing of operations - - Fluctuations in interest rates and other adverse financial market conditions - - Other unanticipated difficulties in obtaining necessary financing - - The failure of equipment or processes to operate in accordance with specification or expectations - - Labour relations - - Accidents - - Unusual weather or operating conditions - - Force majeure events - - Other risk factors described from time to time in the Company's filings with the Securities and Exchange Commission Many of these factors are beyond the Company's ability to control and predict. Investors are cautioned not to place undue reliance on forward-looking statements. The Company disclaims any intent or obligation to update its forward-looking statements, whether as a result of receiving new information, the occurrence of future events, or otherwise. PART 2 - OTHER INFORMATION Item 1. Legal Proceedings None Item 2. Changes in Securities None Item 3. Defaults upon Senior Securities None Item 4. Submission of Matters to a Vote of Security Holders None Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K (a) None (b) Reports on Form 8-K - None SIGNATURES In accordance with the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. AQUISTAR VENTURES (USA) INC. Date: November 20, 2000 --------------------------------------- By: /s/ Al De Lucrezia --------------------------------------- AL DE LUCREZIA, Director and President