UNITED
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
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| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITES EXCHANGE ACT OF 1934 |
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For the quarterly period ended June 30, 2003 | ||
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| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the transition period from to | ||
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Commission File number 0-25541 |
STARBERRYS CORPORATION |
(Exact name of registrant as specified in charter) |
Nevada |
| 91-1948357 |
(State or other jurisdiction of |
| (I.R.S. Employer |
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21—2236 Folkestone Way |
| V7S 2X7 |
(Address of principal executive offices) |
| (Zip Code) |
604-922-0113 | ||
Registrant’s telephone number, including area code | ||
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(Former name, address, and fiscal year, if changed since last report) |
Indicate by check mark whether the registrant (1) has 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 registrant was required to file such reports), Yes ý No o and ( ) has been subject to filing requirements for the past 90 days. Yes ý No o
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the last practicable date.
Class |
| Outstanding as of June 30, 2003 |
Common Stock, $0.001 per share |
| 13,311,200 |
INDEX
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PART 11. |
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PART 1 – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The accompanying balance sheet of Starberrys Corporation (a development stage company) at June 30, 2003 and September 30, 2002 and the statement of operations for the three months ended June 30, 2003 and 2002, the nine months to June 30, 2003 and 2002 and for the period from October 8, 1998 (date of inception) to June 30, 2003 and the statement of cash flow for the nine months ended June 30, 2003 and 2002 and for the period from October 8, 1998 (date of inception) to June 30, 2003 have been prepared by the Company’s management in conformity with accounting principles generally accepted in the United States of America. 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 nine months ended June 30, 2003 are not necessarily indicative of the results that can be expected for the year ending September 30, 2003.
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STARBERRYS CORPORATION
(A Development Stage Company)
June 30, 2003 and September 30, 2002
(Unaudited - Prepared by Management)
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| June 30, |
| September 30, |
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ASSETS |
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CURRENT ASSETS |
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Bank |
| $ | 0 |
| $ | 553 |
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Prepaid expenses |
| 10,000 |
| 0 |
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TOTAL CURRENT ASSETS |
| 10,000 |
| 553 |
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Deposits pursuant to Letters of Intent and Purchase Agreement |
| 897,777 |
| 0 |
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TOTAL ASSETS |
| $ | 907,777 |
| $ | 553 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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CURRENT LIABILITIES |
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Bank overdraft |
| $ | 94,285 |
| $ | 0 |
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Accounts payable and accrued liabilities |
| 271,087 |
| 112,056 |
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Shareholder and other loans payable |
| 1,061,314 |
| 0 |
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TOTAL CURRENT LIABILITIES |
| 1,426,686 |
| 112,056 |
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STOCKHOLDERS’ EQUITY |
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Common stock 200,000,000 shares authorized, at $0.001 par value; 13,311,200 |
| $ | 13,311 |
| $ | 10,561 |
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Capital in excess of par value |
| 91,281 |
| 91,281 |
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Stock subscriptions receivable |
| (2,750 | ) | 0 |
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Deficit accumulated during the development stage |
| (620,751 | ) | (213,345 | ) | ||
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TOTAL STOCKHOLDERS’ DEFICIENCY |
| (518,909 | ) | (111,503 | ) | ||
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TOTAL LIABILITIES & STOCKHOLDERS’ DEFICIENCY |
| $ | 907,777 |
| $ | 553 |
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The accompanying notes are an integral part of these unaudited financial statements.
4
STARBERRYS CORPORATION
(A Development Stage Company)
For the three and nine months ended June 30, 2003 and 2002,
and for the period from October 8, 1998 (Date of Inception) to June 30, 2003
(Unaudited - Prepared by Management)
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| For the |
| For the |
| For the |
| For the |
| From |
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SALES |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
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GENERAL AND ADMINISTRATIVE EXPENSES: |
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Loss of license |
| — |
| — |
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| — |
| 50,000 |
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Accounting and audit |
| 1,445 |
| — |
| 5,080 |
| 1,900 |
| 26,713 |
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Bank charges and interest |
| 302 |
| — |
| 599 |
| 34 |
| 1,148 |
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Consulting |
| 56,744 |
| — |
| 70,744 |
| — |
| 88,657 |
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Filing fees |
| 1,073 |
| — |
| 4,281 |
| — |
| 9,796 |
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Legal |
| 149,773 |
| — |
| 268,404 |
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| 359,412 |
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Office and administration |
| 6,567 |
| — |
| 18,944 |
| 14 |
| 23,341 |
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Rent |
| — |
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| — |
| — |
| 4,500 |
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Telephone |
| — |
| — |
| — |
| — |
| 2,700 |
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Transfer agent’s fees |
| 642 |
| — |
| 2,475 |
| 1,664 |
| 11,313 |
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Travel |
| 13,631 |
| — |
| 14,007 |
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| 17,423 |
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Website fees |
| — |
| — |
| — |
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| 500 |
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Foreign exchange loss |
| 21,529 |
| — |
| 22,871 |
| — |
| 22,880 |
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Miscellaneous other |
| — |
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| 2,368 |
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NET LOSS |
| $ | (251,706 | ) | $ | — |
| $ | (407,405 | ) | $ | (3,612 | ) | $ | (620,751 | ) |
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NET LOSS PER COMMON SHARE |
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Basic |
| $ | (0.02 | ) | $ | — |
| $ | (0.03 | ) | $ | — |
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TOTAL OUTSTANDING SHARES |
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Basic |
| 13,311,200 |
| 10,535,000 |
| 13,311,200 |
| 10,535,000 |
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The accompanying notes are an integral part of these unaudited financial statements.
5
STARBERRYS CORPORATION
(A Development Stage Company)
For the nine months ended June 30, 2003 and 2002 and for the period from
October 8, 1998 (Date of Inception) to June 30, 2003
(Unaudited - Prepared by Management)
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| For the Nine |
| For the Nine |
| From Inception |
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CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net loss |
| $ | (407,405 | ) | $ | (3,612 | ) | $ | (620,751 | ) |
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Adjustments to reconcile net loss to net cash provided by operating activities: |
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Changes in current assets and liabilities: |
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Capital contributions — expenses |
| — |
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| 10,950 |
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Prepaid expenses |
| (10,000 | ) | 135 |
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Accounts payable |
| 159,030 |
| 3,493 |
| 271,087 |
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Net cash (deficiency) from operations |
| (258,375 | ) | 16 |
| (348,714 | ) | |||
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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Deposits pursuant to Letters of Intent and Purchase Agreement |
| (897,777 | ) | — |
| (897,777 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: |
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Proceeds from loans |
| 1,061,314 |
| — |
| 1,061,314 |
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Proceeds from issuance of common stock |
| 0 |
| — |
| 90,892 |
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Net Increase (Decrease) in Cash |
| (94,838 | ) | 16 |
| (94,285 | ) | |||
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Cash at Beginning of Period |
| 553 |
| 2 |
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CASH (BANK OVERDRAFT) AT END OF PERIOD |
| $ | (94,285 | ) | $ | 18 |
| $ | (94,285 | ) |
The accompanying notes are an integral part of these unaudited financial statements.
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STARBERRYS CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 2003
(Unaudited - Prepared by Management)
1. ORGANIZATION
The Company was incorporated under the laws of the State of Nevada on October 8, 1998 under the name of “Cigar King Corporation” with authorized common stock of 200,000,000 shares at $0.001 par value. On September 13, 2002 the name was changed to “Starberrys Corporation” and the authorized capital stock was changed by the addition of 50,000,000 shares of preferred stock with a par value of $0.001. There are no preferred shares issued and the terms have not been determined.
The Company was originally organized for the purpose of engaging in quality cigar sales. During 1998 the Company purchased the right to use the name “Cigar King” to market high quality cigars. During 2000 the activity was abandoned. Under a new board of directors and management during 2002, the Company signed a Letter of Intent, dated November 29, 2002 and amended and extended on March 13, 2003 and on June 25, 2003, outlining the terms of a proposed acquisition of all of the assets and intellectual property related to the CBN and “Color by Numbers” business and system (see Note 7). On April 9, 2003, the Company signed a Purchase Agreement for the acquisition of all of the shares of the company which owns the Natural Colour System, a colour notation/specification system used worldwide among professionals in architecture, design, paint and building products (see Note 8).
No operations have been started.
The Company is in the development stage.
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
On June 30, 2003 the Company had a net operating loss carry forward of $613,751. The tax benefit of approximately $184,000 from the loss carry forward has been fully offset by a valuation reserve because the use of the future tax benefit is doubtful since the Company has no operations. The net operating loss will expire in 2022.
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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 common share rights unless the exercise becomes antidilutive and then only the basic per share amounts are shown in the report.
Cash and Cash Equivalents
The Company considers all highly liquid instruments purchased with a maturity, at the time of purchase, of less than three months, to be cash equivalents.
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.
Foreign Currency Translation
Part of the transactions of the Company were completed in Canadian dollars and have been translated to US dollars as incurred, at the exchange rate in effect at the time, and, therefore, no gain or loss from the translations is recognized. US dollars are considered to be the functional currency.
3. COMMON CAPITAL STOCK
Since its inception, the Company has completed private placements of 13,311,200 shares of its common capital stock for $93,642. See also Subsequent Events note.
4. COMMON CAPITAL STOCK OPTIONS
On June 6, 2002 the Company granted stock options to related parties of 1,140,000 shares of common stock at $1.00 per share which will expire on June 6, 2005. On January 13, 2003,
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210,000 of these options were cancelled. In April 2003, an additional 420,000 of these options were cancelled. The options outstanding at June 30, 2003 for 510,000 shares vest in equal proportions of one-twelfth on the first day of each calendar quarter starting the October to December 2002 quarter. (See Note 8.) On the date of the grant the fair value of outstanding shares of the Company was less than $1.00. As there have been no transactions involving the Company’s shares since common stock was sold from Treasury in June 2003 at the par value of $0.001 per share, it is assumed that the options vested to June 30, 2003 have no value.
5. SHAREHOLDER LOANS AND OTHER LOANS PAYABLE
During the nine months ended June 30, 2002, loans of $561,314 were advanced to the Company by shareholders and a loan of $500,000 was advanced to the Company by a third party. The loans from shareholders are non-interest bearing and unsecured. The third party loan bears interest at the rate of 15% per annum, payable monthly, and is secured by the pledge of Company shares from directors, officers and certain others.
6. RELATED PARTY TRANSACTIONS
Officers, directors and key consultants have acquired 43% of the outstanding common stock and have received the stock options outlined in Note 4.
7. DEPOSITS PURSUANT TO LETTER OF INTENT AND TO PURCHASE AGREEMENT
The Company signed a Letter of Intent on November 29, 2002, amended and extended on March 13, 2003, and further extended on June 25, 2003, with eVision Technologies Inc. and Mr. Ken Turpin (“the Vendors”) outlining the general terms of a proposed acquisition by the Company or its assigns for $5,000,000 of all of the assets and intellectual property related to the CBN and “Color by Numbers” business owned by the Vendors. The acquisition is subject to, amongst other items, completion of due diligence satisfactory to the Company, negotiating a definitive purchase agreement and the obtaining of the required financing for the purchase. In consideration for certain undertakings given by the Vendors, the Company agreed to make monthly payments of CDN$50,000 commencing January 1, 2003 and payments of CDN$300,000 on June 30, 2003 and CDN$200,000 on August 15, 2003 as deposits toward the agreed purchase price.
On April 9, 2003 the Company signed a Definitive Purchase Agreement with Målaremästarnas Riksforening, the owner of all the shares of Skandinaviska Färginstituter AB (the Scandinavian Colour Institute or “SCI”) which owns the colour notation system Natural Color Systems (“NCS”), subject to certain conditions, containing the terms of an acquisition by the Company or its assigns for a price of SEK 35,000,000 of all the shares of SCI. Pursuant the terms of that agreement, on June 30, 2003 the Company deposited $436,832 into an escrow account as the initial payment for the purchase.
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A summary of these deposits is:
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| In CDN $ |
| CDN $ Deposits |
| In US $ |
| Total in US $ |
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Deposits made to: |
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eVision Technologies Inc. |
| 650,000.00 |
| 460,945.00 |
| 0.00 |
| 460,945.00 |
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Karlero &Co., in trust |
| 0.00 |
| 0.00 |
| 436,832.00 |
| 436,832.00 |
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Total |
| 650,000.00 |
| 460,945.00 |
| 436,832.00 |
| 897,777.00 |
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8. SUBSEQUENT EVENTS
Subsequent to June 30, 2003, the Company refunded the subscription proceeds to the only three individuals who subscribed for a total of 26,200 common shares of the Company in July 2002 pursuant to an Offering Memorandum for Non-Qualifying Issuers dated July 8, 2002. As that Offering Memorandum indicated that the intended use of funds was for a business different from the activities now planned for the Company, the Company and those shareholders agreed that their subscription proceeds of $13,100 should be refunded and the shares then purchased cancelled.
On August 18, 2003, the Company and Målaremästarnas Riksforening, the owner of all the shares of Skandinaviska Färginstituter AB (“SCI”), signed an agreement to suspend the Closing Date of the purchase of all of the outstanding shares of SCI, pursuant to the April 9, 2003 Agreement on the Sale and Purchase of Shares, from August 31, 2003 to November 30, 2003.
9. GOING CONCERN
The Company does not have the working capital to service its debt and for any future planned activity. The Company’s management believes they can obtain the necessary working capital needed to pay its debt and for any future planned activity by receiving loans from officers, directors and shareholders, and by additional equity funding which will enable the Company to operate for the coming year.
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ITEM 2. PLAN OF OPERATIONS
Under new management and Board of Directors, the Company is in process of raising funds and acquiring assets and an operating company for the purposes of engaging in a new business. The Company has signed a Letter of Intent (amended and extended on 13 March 2003 and further extended on 25 June 2003) with eVision Technologies Inc. and Mr. Ken Turpin (“the Vendors”) outlining the general terms of a proposed acquisition by the Company of all of the assets and intellectual property related to the CBN and digital “Color By Numbers” business owned by the Vendors.
In addition, the Company signed a Letter of Intent on 19 January 2003 with Målaremästarnas Riksforening, the owner of all the shares of Skandinaviska Färginstituter AB (“SCI” or The Scandinavian Colour Institute) which owns the colour notation system Natural Color Systems (“NCS”) and the Scandinavian Colour School, outlining the general terms of a proposed acquisition by the Company of all of the shares of SCI. On 9 April 2003 the Company signed a Definitive Purchase Agreement to complete the acquisition, subject to certain conditions, of all the shares of SCI for a price of SEK 35,000,000 (see attached Exhibit A). Subsequent to 30 June 2003 that Agreement was amended to change the Closing Date from 31 August 2003 to 30 November 2003. NCS is the leading colour notation system in Europe and is also highly regarded around the world. It is the national standard for colour in Sweden, Norway, Spain and South Africa.
The Company intends to expand the NCS revenues in both existing markets and new markets in the colour world through the addition of its marketing expertise, financial resources and network of contacts, and to deploy the technology of CBN, an important element of which is to extend the NCS product offerings to existing NCS customers through the application of the CBN technology.
Liquidity and Capital Resources
The process of raising funds has been initiated to fund these new activities.
Results of Operations
The Company has had no revenues from operations since its inception.
Changes in Securities
On 2 June 2003 the Company issued 2,750,000 common shares from Treasury at the par value price of $0.001 each, or total proceeds of $2,750, to be paid upon delivery of the shares pursuant to an agreement entered into by the Company in November 2002. The five purchasers are either members of the Company’s Board of Directors or key consultants to the Company who are expecting to join the Company’s management team in the near future. These shares were sold in
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reliance on the exemption provided by Section 4 (2) of the U.S Securities Act of 1933 and by Rule 701 of the Securities Act.
Subsequent to 30 June 2003 the Company cancelled 26,200 common shares issued from Treasury in July 2002 to three Canadian subscribers pursuant to a 8 July 2002 Offering Memorandum for Non-Qualifying Issuers with respect to a business unrelated to the present plans of the Company, and refunded their subscription proceeds.
Exhibits and Reports on Form 8-K
The Company filed a Form 8-K report on 28 May 2003 with respect to the proposed acquisition of all the shares of Skandinaviska Färginstituter AB (“SCI” or The Scandinavian Colour Institute). No financial statements were filed related to that pending acquisition. The purchase agreement for that acquisition is appended as Exhibit A to this Form 10-QSB.
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In accordance with Section 13 or 15(d) of the Exchange Act, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
STARBERRYS CORPORATION | |||||
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| By: | /s/ “JOHN H. GOODWIN” |
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| John H. Goodwin, President and CEO | |||
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| Date: August 28, 2003 | |||
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In accordance with the Exchange Act, this report has been signed below by the following persons on its behalf by the registrant and in the capacities and on the dates indicated.
| By: | /s/ “JOHN H. GOODWIN” |
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| John H. Goodwin, President and CEO | ||
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| Date: August 28, 2003 | ||
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| By: | /s/ “KENNETH R. TOLMIE” |
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| Kenneth R. Tolmie, Chief Financial Officer and Secretary | ||
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| Date: August 28, 2003 | ||
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