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 March 31, 2003
[ ] Transition Report pursuant to 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period __ to __
Commission File Number 000-32747
FIRST CYPRESS TECHNOLOGIES, INC.
(Exact name of small Business Issuer as specified in its charter)
Nevada 98-0218688
(State or other jurisdiction of IRS Employer Identification No.
incorporation or organization)
1281 West Georgia Street, Suite No. 501
Vancouver, British Columbia V6E 3J7
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: 604-484-2899
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: 20,362,500 Shares of
$.001 par value Common Stock outstanding as of April 14, 2003.
Forward-Looking Statements:
This quarterly report on Form 10-QSB contains forward-looking statements. First
Cypress Technologies, Inc. is referred to herein as "we" or "our." The words or
phrases "would be," "may allow," "intends to," "may likely result," "are
expected to," "may continue," "is anticipated," "estimate," "project," or
similar expressions are intended to identify "forward-looking statements". Such
statements include those concerning our expected financial performance, our
corporate strategy, and operational plans. Actual results could differ
materially from those projected in the forward-looking statements as a result of
a number of risks and uncertainties, including: (a) intense competition in the
short term loan services market and the mineral exploration business; (b) our
ability to continue our rights under option agreements that convey certain
mineral claims interests to us are contingent upon our ability to make required
exploration expenditures, which is further contingent upon our ability to obtain
financing, which we may be unable to obtain; (c)our ability to continue as a
going concern is dependent upon developing our business plan, the continuing
financial support of creditors and stockholders, and obtaining long term
financing as well as achieving revenue producing operations; (d) should we
engage in testing and exploration activities, we will be subject to substantial
exploration and regulation costs that pertain to environmental permitting, air
quality, water quality and wildlife monitoring, safety regulations, claim
filings, and maintenance inspection and monitoring; (e) because we are a
development stage company with a limited operating history and a poor financial
condition, you will be unable to determine whether we will ever become
profitable; (f) although we have conducted our operations for approximately 40
months, we have been unsuccessful in our original business plan of developing an
Internet software program, the EngineMax, or in generating any revenues; (g) our
business model of engaging in the businesses of mineral exploration and short
term financing is unproven and could fail; (h) we have no brand name recognition
and if we fail to establish a brand name in the short term alternative financing
business, which will require substantial costs, our potential revenues will be
negatively affected; (i) mineral exploration is, by its very nature, a highly
risky and speculative business; (j) we may be subject to risks of liability
regarding our exploration activities, such as pollution or cave-ins, for which
we have no insurance protection; (k) our management does not spend full time on
our business activities or developing our Plan of Operations; (l) we may not
meet future National Association of Securities Dealers Bulletin Board Exchange
listing requirements which may lead to increased investment risk and inability
to sell your shares. Statements made herein are as of the date of the filing of
this Form 10-QSB with the Securities and Exchange Commission and should not be
relied upon as of any subsequent date. Unless otherwise required by applicable
law, we do not undertake, and we specifically disclaim any obligation, to update
any forward-looking statements to reflect occurrences, developments,
unanticipated events or circumstances after the date of such statement.
2
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
Because 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, they do not include all information and footnotes necessary for a complete
presentation of financial position, results of operations, cash flows, and
changes in capital deficit in conformity with United States generally accepted
accounting principles. Although these financials are presented in this condensed
format, we believe that the disclosures are adequate to make the information
presented not misleading.
First Cypress Technologies, Inc.
(A Development Stage Company)
Financial Statements
For the three-month periods ended
March 31, 2003 and 2002
(Unaudited - Expressed in US Dollars)
Contents
- -----------------------------------------------------------------------------
Financial Statements
Balance Sheets..................................................4
Statements of Changes in Capital Deficit........................5
Statements of Operations........................................6
Statements of Cash Flows........................................7
Notes to Financial Statements...................................8
3
- ------------------------------------------------------------------------------
First Cypress Technologies, Inc.
(A Development Stage Company)
Balance Sheets
(Expressed in US Dollars)
March 31 December 31
2003 2002
- ------------------------------------------------------------------------------
(Unaudited)
Assets
Current
Cash $ 25 $ -
----------- -----------
$ 25 $ -
=========== ===========
Liabilities and Capital Deficit
Liabilities
Current
Accounts payable and accrued liabilities $ 43,815 $ 41,211
Due to related party (Note 2) 182,375 171,973
--------------------------
Total liabilities 226,190 213,184
--------------------------
Capital deficit
Share capital (Note 1)
Authorized:
25,000,000 common shares with par value $0.001
Issued:
20,362,500 common shares 20,363 20,363
Additional paid-in capital 22,187 22,187
Deficit accumulated in the development stage (268,715) (255,734)
--------------------------
Total capital deficit (226,165) (213,184)
--------------------------
Total Liabilities and Capital Deficit $ 25 $ -
==============================================================================
The accompanying notes are an integral part of these financial statements.
4
- ----------------------------------------------------------------------------------------
First Cypress Technologies, Inc.
(A Development Stage Company)
Statements of Changes in Capital Deficit
(Unaudited - Expressed in US Dollars)
From the period September 14, 1999 (inception) to March 31, 2003
- ----------------------------------------------------------------------------------------
Additional Deficit
Paid-in Accumulated
Common Stock Capital in the Total
(Distribution Development Capital
Shares Amount of Capital) Stage Deficit
- ----------------------------------------------------------------------------------------
Issuance of shares on
incorporation in September 1999
for cash at $0.0002 per share 25,000,000 $ 25,000 $(20,000) $ - $ 5,000
Issuance of shares for cash in
November 1999 at $0.0002 per
share 9,950,000 9,950 9,950 - 19,900
Issuance of shares for cash in
December 1999 at $0.02 per
share 337,500 338 6,412 - 6,750
Net loss for the period - - - (33,298) (33,298)
-------------------------------------------------------
Balance, December 31, 1999 35,287,500 35,288 (3,638) (33,298) (1,648)
Net loss for the year - - - (108,996) (108,996)
-------------------------------------------------------
Balance, December 31, 2000 35,287,500 35,288 (3,638) (142,294) (110,644)
Net loss for the year - - - (52,098) (52,098)
-------------------------------------------------------
Balance, December 31, 2001 35,287,500 35,288 (3,638) (194,392) (162,742)
Issuance and assignment of
common shares in October
2002 on acquisition of
Money Club Financial business
plan
- common shares transferred
from the Company's
president - - 10,582 - 10,582
- issuance of common shares 75,000 75 243 - 318
Redemption and cancellation of
common shares in October
2002 for NIL consideration
(15,000,000) (15,000) 15,000 - -
Net loss for the year - - - (61,342) (61,342)
-------------------------------------------------------
Balance, December 31, 2002 20,362,500 20,363 22,187 (255,734) (213,184)
Net loss for the period - - - (12,981) (12,981)
-------------------------------------------------------
Balance, March 31, 2003 20,362,500 $ 20,363 $22,187 $(268,715) $ (226,165)
========================================================================================
The accompanying notes are an integral part of these financial statements.
5
- -------------------------------------------------------------------------------
First Cypress Technologies,Inc.
(A Development Stage Company)
Statements of Operations
(Unaudited - Expressed in US Dollars)
Period from
For the three-month September 14
periods ended 1999
March 31 (inception) to
------------------------ March 31
2003 2002 2003
- -------------------------------------------------------------------------------
Expenses
Interest and bank charges (Note 2) $ 3,454 $ 2,234 $ 25,016
Management fees (Note 3) 3,000 3,000 28,000
Other 732 - 2,891
Professional fees 2,795 (3,477) 165,908
Rent and office services (Note 3) 1,500 1,500 19,500
Business development - - 10,900
Exploration expense (Note 4) 1,500 - 1,500
--------------------------------------
Loss from continuing operations (12,981) (3,257) (253,715)
Loss from discontined operations
(Note 1) - - (15,000)
--------------------------------------
Net loss for the period $ (12,981) $ (3,257) $ (268,715)
=============================================================================
Loss per share - basic and diluted
- from continuing operations $ (0.00) $ (0.00) $ (0.01)
- discontinued operations - - -
--------------------------------------
$ (0.00) $ (0.00) $ (0.01)
=============================================================================
Weighted average shares outstanding 20,362,500 35,287,500 32,057,405
=============================================================================
The accompanying notes are an integral part of these financial statements.
6
- -----------------------------------------------------------------------------------------
First Cypress Technologies,Inc.
(A Development Stage Company)
Statements of Cash Flows
(Unaudited - Expressed in US Dollars)
Period from
For the three-month September 14
periods ended 1999
March 31 (inception) to
-------------------- March 31
2003 2002 2003
- -----------------------------------------------------------------------------------------
Cash flows from operating activities
Net loss for the period from continuing operations $(12,981) $ (3,257) $(253,715)
Adjustments to reconcile net loss for the period to
net cash used in operating activities
Interest accrued on the stockholder loan 3,439 2,201 24,632
Common shares issued for business development
costs - - 10,900
Increase (decrease) in liabilities
Accounts payable and accrued liabilities 2,604 (8,919) 43,815
---------------------------------
Cash used in operating activities - continuing
operations (6,938) (9,975) (174,368)
Cash used in operating activities - discontinued
operations - - (15,000)
---------------------------------
(6,938) (9,975) (189,368)
Cash flows from financing activities
Loans from related party 6,963 9,941 157,743
Proceeds from issuance of share capital - - 31,650
---------------------------------
Cash provided by financing activities 6,963 9,941 189,393
---------------------------------
Increase (Decrease) 25 (34) 25
Cash, beginning of period - 313 -
---------------------------------
Cash, end of period $ 25 $ 279 $ 25
=========================================================================================
Supplemental information
Interest and taxes paid $ - $ - $ -
=========================================================================================
The accompanying notes are an integral part of these financial statements.
7
- --------------------------------------------------------------------------------
First Cypress Technologies,Inc.
(A Development Stage Company)
Notes to Financial Statements
(Unaudited - Expressed in US Dollars)
March 31, 2003 and 2002
- --------------------------------------------------------------------------------
1. Nature of Business and Ability to Continue Operations
First Cypress Technologies, Inc. was incorporated on September 14, 1999 under
the laws of the State of Nevada. The Company was in the process of developing an
internet computer software program known as EngineMax. The EngineMax computer
software program was being designed to automate the process of submission of
Internet web page information to major Internet search engines. Essentially,
software development was suspended in November 2002 due to cash flow
constraints.
In October 2002, the Company acquired certain items constituting the "Money Club
Financial" business concept and business plan. Due to the Company's inability to
raise the necessary capital to further the Money Club business concept, no
monies were spent furthering the business concept from the date of acquisition
to March 31, 2003. In February and April of 2003, the Company entered into two
option agreements to acquire mineral property rights in British Columbia, Canada
and is in the process of pursuing mineral exploration activity.
The interim financial statements included herein, presented in accordance with
United States generally accepted accounting principles and stated in US dollars,
have been prepared by the Company, 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 generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations, although the Company believes
that the disclosures are adequate to make the information presented not
misleading.
These statements reflect all adjustments, consisting of normal recurring
adjustments, which in the opinion of management, are necessary for fair
presentation contained therein. It is suggested that these interim financial
statements be read in conjunction with the audited financial statements of the
Company for the years ended December 31, 2002 and 2001 included in the Company's
10-KSB Annual Report. The Company follows the same accounting policies in the
preparation of interim reports.
Results of operations for the interim periods are not indicative of annual
results.
These accompanying financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities and commitments in the normal course of business. As at March 31,
2003, the Company has recognized no revenue, has accumulated operating losses of
$268,715 since its inception and has a working capital deficiency of $226,165.
The continuation of the Company is dependent upon pursuing and developing a
sustainable business, the continuing financial support of creditors and
stockholders and obtaining long term financing as well as achieving a profitable
level of operations. Management plans to raise equity capital to finance the
administration and mineral exploration requirements of the Company and to
explore further opportunities with the Money Club Financial business concept. It
is management's intention to raise new equity financing of at least $180,000
within the upcoming year. While the Company is expending its best efforts to
achieve the above plans, there is no assurance that any such activity will
generate funds that will be available for operations. Should the Company not
raise the amount necessary to keep the mineral exploration agreements in good
standing, such agreements, and the Company's rights under those agreements,
would be cancelled.
8
- --------------------------------------------------------------------------------
First Cypress Technologies,Inc.
(A Development Stage Company)
Notes to Financial Statements
(Unaudited - Expressed in US Dollars)
March 31, 2003 and 2002
- --------------------------------------------------------------------------------
1. Nature of Business and Ability to Continue Operations - Continued
These conditions raise substantial doubt about the Company's ability to continue
as a going concern. These financial statements do not include any adjustments
relating to the amounts and classification of liabilities that might arise from
this uncertainty.
In connection with the Money Club Financial purchase in October 2002 and the
mineral option agreements entered into during 2003, the Company has discontinued
its involvement in software development related to its Enginemax computer
software program. Such costs related to software development have been
segregated in these financial statements as discontinued operations. The Company
did not incur any costs in 2002 or 2003 in respect of the software development.
No revenue was ever earned from software development and there were no assets
existing at March 31, 2003 pertaining to the software development business.
On October 14, 2002, the Company completed a five for one split of its common
stock. The effects of the stock split have been retroactively reflected in these
financial statements.
- --------------------------------------------------------------------------------
2. Due to Related Party
Amounts due to the Company's President are unsecured and repayable on demand
with interest at 8% per annum. Interest expense accrued in respect of these
advances totaled $3,439 for the three months ended March 31, 2003 (2002 -
$2,201).
- --------------------------------------------------------------------------------
3. Related Party Transactions
Related party transactions not disclosed elsewhere in these financial statements
are as follows:
2003 2002
------------------
Rent and office services paid to the President
of the Company $ 1,500 $ 1,500
Management fees paid to the President of the
Company $ 3,000 $ 3,000
Related party transactions are recorded at the exchange amount, being the amount
established and agreed to by the related parties.
- --------------------------------------------------------------------------------
9
- ------------------------------------------------------------------------------
First Cypress Technologies,Inc.
(A Development Stage Company)
Notes to Financial Statements
(Unaudited - Expressed in US Dollars)
March 31, 2003 and 2002
- -------------------------------------------------------------------------------
4. Mineral Properties
a) On February 18, 2003, the Company entered into an option agreement whereby
it acquired an exclusive option to purchase a 100% undivided interest in two
mineral claims ("the Cahill Claims") in the Osoyoos Mining Division in
British Columbia, Canada. The option is exercisable upon the payment of
$1,500 (which has been paid), the issuance of 120,000 shares of the Company's
common stock and incurring exploration expenditures of $115,000 in a three
phase exploration program before July 31, 2004. The issuance of common
shares and exploration expenditures are required as follows:
Issuance of
Common Exploration
Shares Expenditures
-----------------------------
On agreement (not yet issued) 10,000 $ -
Before July 31, 2003 10,000 5,000
Before November 30, 2003 50,000 10,000
Before July 31, 2004 50,000 100,000
-----------------------------
120,000 $ 115,000
b) On April 16, 2003, the Company entered into an option agreement whereby it
acquired an exclusive option to purchase a 70% undivided interest in the
Eddy mineral claims in the Fort Steele Mining District of British Columbia,
Canada. The option is exercisable upon the payment of $1,000 (which has
been paid), the issuance of 650,000 shares of common stock and incurring
exploration expenditures of $775,000 in a four phase exploration program
before April 1, 2007. The issuance of common shares and exploration
expenditures are required as follows:
Issuance of
Common Exploration
Shares Expenditures
-----------------------------
On agreement (not yet issued) 200,000 $ -
Before April 16, 2004 150,000 75,000
Before April 16, 2005 150,000 150,000
Before April 16, 2006 150,000 250,000
Before April 16, 2007 - 300,000
-----------------------------
650,000 $ 775,000
Exploration costs are charged to operations as incurred until such time that
proven reserves are discovered. From that time forward, the Company will
capitalize all costs to the extent that future cash flow from mineral reserves
equals or exceeds the costs deferred. Any deferred costs will be amortized over
the recoverable reserves when a property reaches commercial production. As at
March 31, 2003 and December 31, 2002, the Company did not have proven reserves.
Unpaid amounts in respect of the Company's option agreements are not recorded as
a liability since they are payable entirely at the Company's option.
5. Subsequent Events
In May 2003, the Company's Board of Directors approved the 2003 Consulting
Services Plan ("the Plan") whereby 4,200,000 shares of the Company's common
stock may be issued to compensate consultants for services rendered to the
Company pursuant to consulting agreements. Also in May 2003, the Company entered
into two agreements with consultants pursuant to the Plan to obtain legal and
communication services . Partial consideration for those services consisted of
750,000 fully-vested, non-forfeitable shares of the Company's common stock. The
approximate value of the common shares was $ 67,500, based on the quoted market
price on the agreement dates. Such amount will be amortized over the respective
contract terms.
10
Item 2. Management's Discussion and Analysis or Plan of Operations
Forward Looking Statements
The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our financial statements and
related notes. For purposes of this Management's Discussion and Analysis, the
words "we" or "our" refer to First Cypress Technologies, Inc. This discussion
and analysis contains forward-looking statements based on our current
expectations, assumptions, estimates and projections overview. The words or
phrases "believe," "expect," "may," "should," "anticipates," or similar
expressions are intended to identify "forward-looking statements". Actual
results could differ materially from those projected in the forward-looking
statements as a result of a number of risks and uncertainties pertaining to our
business, including those risks summarized on page 3 of this Form 10-QSB.
Background Information Pertaining to Development of Our Business
We were incorporated on September 14, 1999 under the laws of the State of
Nevada. At our incorporation, we were engaged in the business of developing an
Internet computer software program known as EngineMax, which was intended to
automate the process of submission of Internet web page information to major
Internet search engines. Although we attempted to develop this software program
from September 1999 to October 2002, we suspended these efforts in November
2002, due to our insufficient cash flow and inability to obtain financing to
conduct further development of this software program. As such, during late 2002
and in early 2003, based upon our evaluation of our then current business plan,
we: (a) discontinued software development of the Enginemax computer software
program; (b) adopted a new business plan which we believe will better serve our
interests that is comprised of the Money Club Financial business concept and the
2003 Cahill and Eddy mineral claims option agreements.
In October 2002, we acquired the "Money Club Financial" business concept,
website, technology and business plan; however, to date we have been unable to
develop the concept, due to our insufficient cash and our inability to obtain
financing for this purpose.
In February 2003, we entered into an option agreement with Locke B. Goldsmith to
acquire a 100% interest in certain mineral claims known as the "Cahill mineral
claims" which cover approximately 926.7 acres in the Osoyoos Mining Division of
the Province of British Columbia. The option agreement provides that we issue
10,000 shares of our common stock upon execution of the option agreement, which
was issued subsequent to the current reporting period ending March 31, 2003,
10,000 shares of our common stock to Mr. Goldsmith by July 31, 2003, 50,000 of
our shares by November 30, 2003, and 50,000 of our shares by July 31, 2004. The
agreement further provides that we are required to incur total exploration
expenditures of $115,000, as follows: (a) $5,000 on or before July 31, 2003; (b)
$10,000 on or before November 30, 2003; and (c) $100,000 on or before July 31,
2004. Should we fail to issue these shares or make the required expenditures,
the agreement may be terminated and we will have no further interest in the
mineral claims. Our ability to make the required exploration expenditures is
contingent upon our ability to obtain financing, which we may be unable to
obtain.
In April 2003, we entered into an option agreement with Ruby Red Resources, Inc.
to acquire a 70% undivided interest in certain mineral claims known as the "Eddy
mineral claims" which cover approximately 7,000 acres in the Fort Steele Mining
Division of the Province of British Columbia. The option agreement provides that
we issue a total of 650,000 of our shares to Ruby Red Resources, as follows: (a)
200,000 shares upon execution of the option agreement; (b) 3 issuances of
150,000 shares to be made on or before April 16, 2004, April 16, 2005, and April
16, 2006. The agreement further provides that we are required to incur total
exploration expenditures of $775,000, as follows: (a) $75,000 on or before April
16, 2004; (b) $150,000 on or before April 16, 2005; (c) $250,000 on or before
April 16, 2006; and (d) $300,000 on or before April 16, 2007. Should we fail to
issue the shares or make the required expenditures, the agreement may be
terminated and we will have no further interest in the mineral claims. Our
ability to make the required exploration expenditures is contingent upon our
ability to obtain financing, which we may be unable to obtain.
Our ability to continue as a going concern is dependent upon pursuing and
developing a sustainable business, the continuing financial support of creditors
and stockholders and obtaining long term financing as well as achieving revenue
producing operations. Although we plan to raise equity capital to finance our
administration and mineral exploration requirements and to develop and promote
the Money Club Financial business concept, we may be unable to obtain such
financing. Should we fail to raise funds from an equity offering or otherwise
obtain financing, the option agreements referred to above will be cancelled and
we will have no further interest in the mineral claims.
11
Plan of Operations
We have earned no revenues since our inception. We have not attained profitable
operations since inception. We do not have sufficient capital to meet our
obligations for the next twelve months. As a result, we are dependent for our
short term needs upon financing from our management or shareholders; however, we
have no agreements with our management or shareholders which would ensure that
we receive any such financing. To sustain our operations in the near future and
to accomplish our Plan of Operations, we will need funding from other sources.
We anticipate that any additional funding will involve the sale of our common
stock. We plan to raise $180,000 from the sale of our common stock to accredited
investors in private placement transactions to cover our minimum cash
requirements; however, we may be unable to raise such funds. In addition, it is
unlikely that we will receive revenues from the operations concerning the Cahill
and Eddy mineral claims over the next twelve months.
If we do not raise the financing necessary to enable us to complete the
exploration expenditures required under the option agreements for the Cahill and
for the Eddy mineral claims, our options will terminate and we will lose all our
rights and interest in the Cahill and Eddy properties. If we do not secure
additional financing to incur the required exploration expenditures, we may
consider entering into joint venture agreements to provide the required funding.
We cannot provide investors with any assurance that we will be able to locate
joint venture partners that will assist us in funding the exploration of the
Cahill and Eddy mineral claims.
Our Plan of Operations, which will occur over a twelve month period, is
contingent upon receiving adequate financing, as follows:
Annual
Type Expenditures Estimated Amount
- ------------------- -------------------
Hiring Consultant - $ 10,000
Evaluation of Money
Club Financial business
concept
- ------------------- -------------------
Cahill Option
Expenditures* $ 32,400
- ------------------- -------------------
Eddy Option
Expenditures* $ 75,562
- ------------------- -------------------
Operating Expenses ** $ 60,000
- ------------------- -------------------
Total $ 177,962
===================
* A breakdown of the specific expenditures under the Cahill and Eddy Option
agreements are described below.
** Operating Expenses include office rent, utilities, and legal and accounting
expenses.
Should we obtain sufficient financing, our Plan of Operations over a period of
twelve months will be the following:
12
Independent Consultant Evaluation
Engage an independent consultant or personnel with experience or expertise in
the short term loan business to evaluate the development of the Money Club
financial business concept. Based on the consultant's evaluation, we plan to
develop the "Money Club Financial" business and its Plan of Operations. We
anticipate that this Plan of Operations will include opening store locations,
obtaining additional minimum financing of $100,000 to commence loans to
customers, and offering our services and conducting advertising via the
Internet. Only if we complete our evaluation and development of this business
concept and we have sufficient financial resources to do so, will we
commercialize this concept.
We currently have minimal cash reserves and a significant working capital
deficit. Accordingly, our ability to pursue our Plan of Operations is contingent
on our being able to obtain funding for the "MoneyClub Financial" business.
There are no assurances that we will be successful in obtaining such financing.
Exploration Expenditures - Cahill Option Agreement
Under the Cahill Option Agreement, we are required to make certain expenditures
relating to the property which is the subject of this agreement, while Locke B.
Goldsmith, the Optionor under the Agreement who also is a Geologist, will manage
all aspects of the Phase 1 and 2 exploration activities. We are required to
incur $15,000 on or before November 30, 2003; however, we plan on spending
$32,400 on or before November 30, 2003 to complete Phase 1 and Phase 2 of the
exploration activities. The agreement provides that in the event that we spend,
in any period, more than the specified sum required in that period, the excess
may be carried forward and applied to the exploration expenditures to be
incurred in succeeding periods. Therefore, should we spend $32,400 on or before
November 30, 2003, we may apply the $17,400 excess amount spent during the first
2 phases to the $100,000 amount required in Phase 3. The $32,400 of expenditures
is, as follows:
Phase 1
Road construction, drill site preparation $500
Diamond drilling, 68 meters @ $100/m $6,800
Analyses $200
Food and Lodging $800
Vehicle and Fuel $700
Supplies $300
Engineering and Supervision 3,200
Reporting $1,000
Contingencies @ 20% $2,700
Total Phase 1 $16,200
Phase 2
Diamond drilling of one hole incurring similar costs as Phase 1 $16,200
In addition to the foregoing expenditures, we will be required to spend $100,000
on or before July 31, 2004, for Phase 3 requirements which will include:
o Road construction;
o Drill site preparation;
o Diamond drilling;
o Reclamation;
o Engineering; and
o Supervision and support activities.
13
Exploration Expenditures - Eddy Option Agreement
Under the Eddy Option Agreement, we are required to make certain expenditures
relating to the property, while Ruby Red Resources, Inc., the Optionor under
this agreement, will manage all aspects of the Phase 1 and Phase 2 exploration
activities. We are required to incur $75,000 on the property for the following
purposes on or before April 16, 2004, as follows:
Phase 1
Task Amount
Claim Staking
Independent contractor will be hired to perform claim staking $2,700
Access Improvement
A road construction firm and/or logging firm with road
building capabilities will be hired to improve access to the
property through road construction or road repairs $2,812
Trenching
A construction firm will be hired to perform trenching $11,250
Brushing
A road construction firm and/or logging firm with road
building capabilities will be hired to improve access to the
property by clearing out brush and new trees as necessary to
improve access to the property. $900
Prospecting / Geological Orientation / Rock Sampling
These tasks will be accomplished by Ruby Red Resources'
geologist and/or an independent contractor geologist $2,625
Soil Geochemical Sampling
Soil sampling will be accomplished by independent contractors
or Ruby Red Resources' geologist. $6,000
Rock Sampling
Rock sampling will be accomplished by independent contactors
under the supervision of Ruby Red Resources' geologist. $3,750
Detailed Geological Mapping
Geological mapping will be accomplished by Ruby Red Resources'
geologist and our geologist $5,625
ATV Rental
We will lease a four wheeler $1,650
Office Overhead, Report Preparation
A report will be prepared by an independent geologist $1,125
--------
Total $38,437
Phase 2
Diamond Drilling
Diamond drilling will be performed by an
independent diamond drilling contractor $28,125
Geological Supervision and Report
The report will be accomplished by Ruby
Red Resources' geologist and our geologist $6,000
Drill Core Assay
Drill core assay will be performed by an
independent laboratory $3,000
----------
Total $37,125
----------
Total of Phases 1 and 2 $75,562
==========
14
Whether we make any of the above described expenditures under the agreement, is
contingent upon our ability to receive adequate financing.
Explore other Option Agreements for Mineral Properties
Our President will explore other possible option agreements in which we may be
able to acquire mineral claims or properties. If we are successful in completing
such agreements, we plan to conduct mineral testing on the properties and
develop possible mineral reserves; however, any such testing and development is
contingent upon our ability to receive adequate financing.
Explore other Business Opportunities.
Our President will continually explore other business opportunities. In
addition, if we do not have the financial resources to meet our financial
obligations under the mineral option agreements, our President will investigate
entering into joint venture agreements that may permit us to meet such
obligations.
Revenues.
We cannot determine whether our revenues will ever be sufficient to produce a
positive cash flow or result in net profits. You should carefully consider the
discussion appearing below under "Liquidity and Capital Resources". Since our
inception through March 31, 2003, we have earned no revenues. We do not expect
to earn significant operating revenue in the foreseeable future. Our losses are
expected to continue, principally as a result of general and administrative
expenses and mineral exploration costs.
Liquidity and Capital Resources.
As of March 31, 2003, we had limited cash resources of only $25. We do not have
any other internal sources of working capital. All required administrative
expenses are currently being paid by our President subject to reimbursement.
We did not receive any revenues during the three months ended March 31, 2003. We
do not anticipate earning revenues until such time as we have entered into
commercial production of our mineral properties or our short term loan business
becomes operational, if ever. We can provide no assurance that we will discover
commercially exploitable levels of mineral resources on our properties, or if
such resources are discovered, that we will enter into commercial production.
In order to explore other business opportunities and pursue our existing
business plan, we are dependent upon the continuing financial support of
creditors and stockholders until such time when we are successful, if ever, in
raising equity capital through the sale of our common stock. This financing
would cause existing shareholders to experience dilution of their interest in
our common stock.
Since our inception, our operating expenses have exceeded our revenues, which
has been $0. We have insufficient working capital to fund our planned growth and
ongoing operating expenses. As a result, we expect to continue to experience
significant negative operating cash flow for the foreseeable future. Our
existing working capital will not be sufficient to fund the continued
implementation of our plan of operations during the next 12 months and to meet
our general operating expenses. We are unable to predict at this time the exact
amount of additional working capital we will require; however, in order to
provide any additional working capital which we may require, in all likelihood
we will be required to raise additional capital through the sale of equity
securities. We currently have no commitments to provide us with any additional
working capital. If we do not have sufficient working capital to implement our
plan of operations described above, it is likely that we will have to cease
operations.
15
We have no alternative plan of operations. In the event that we do not receive
financing or our financing is inadequate or if we do not adequately implement an
alternative plan of operations that enables us to conduct operations without
having received adequate financing, we may have to liquidate our business and
undertake any or all of the following actions:
o Sell or dispose of our assets, if any;
o Pay our liabilities in order of priority, if we have available cash to
pay such liabilities;
o If any cash remains after we satisfy amounts due to our creditors,
distribute any remaining cash to our shareholders in an amount equal
to the net market value of our net assets;
o File a Certificate of Dissolution with the State of Nevada to
dissolve our corporation and close our business;
o Make the appropriate filings with the Securities and Exchange
Commission so that we will not longer be required to file periodic and
other required reports with the Securities and Exchange Commission,
if, in fact, we are a reporting company at that time; and
o Make the appropriate filings with the National Association of Security
Dealers to affect a delisting of our common stock.
Based upon our current assets, however, we will not have the ability to
distribute any cash to our shareholders.
If we have any liabilities that we are unable to satisfy and we qualify for
protection under the U.S. Bankruptcy Code, we may voluntarily file for
reorganization under Chapter 11 or liquidation under Chapter 7. Our creditors
may also file a Chapter 7 or Chapter 11 bankruptcy action against us. If our
creditors or we file for Chapter 7 or Chapter 11 bankruptcy, our creditors will
take priority over our shareholders. If we fail to file for bankruptcy under
Chapter 7 or Chapter 11 and we have creditors, such creditors may institute
proceedings against us seeking forfeiture of our assets, if any.
We don't know and cannot determine which, if any, of these actions we will be
forced to take.
If any of these foregoing events occur, you could lose your entire investment in
our shares.
There is substantial doubt about our ability to continue as a going concern as
we have suffered recurring losses from operations and have no established source
of revenue. Accordingly, our independent auditors included an explanatory
paragraph in their report on our December 31, 2002 financial statements
regarding concerns about our ability to continue as a going concern. Our
financial statements contain additional note disclosures describing the
circumstances that lead to this disclosure by our independent auditors.
Critical Accounting Policies
Going Concern
These financial statements have been prepared on a going concern basis which
assumes that adequate sources of financing will be obtained as required and that
our assets will be realized and liabilities settled in the ordinary course of
business. Accordingly, these financial statements do not include any adjustments
related to the recoverability of assets and classification of assets and
liabilities that might be necessary should we be unable to continue as a going
concern.
In order for us to continue as a going concern, we require additional financing.
There can be no assurance that additional financing will be available to us when
needed or, if available, that it can be obtained on commercially reasonable
terms.
16
Use of Estimates
The preparation of financial statements in accordance with United States
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could materially differ from these estimates.
Mineral Exploration Costs
Exploration costs are charged to operations as incurred until such time that
proven reserves are discovered. From that time forward, the Company will
capitalize all costs to the extent that future cash flow from mineral reserves
equals or exceeds the costs deferred. Any deferred costs will be amortized over
the recoverable reserves when a property reaches commercial production. As at
March 31, 2003 and December 31, 2002, the Company did not have proven reserves.
Unpaid amounts in respect of the Company's option agreements are not recorded as
a liability since they are payable entirely at the Company's option.
ITEM 3. CONTROLS AND PROCEDURES.
As required by Rule 13a-15 under the Securities Exchange Act of 1934 (the
"Exchange Act"), we carried out an evaluation of the effectiveness of the design
and operation of our disclosure controls and procedures within the 90 days prior
to the filing date of this report. This evaluation was carried out under the
supervision and with the participation of our President/ Chief Executive
Officer, Robert Rosner. Based upon that evaluation, our President/Chief
Executive Officer concluded that our disclosure controls and procedures are
effective in timely alerting management to material information relating to us
required to be included in our periodic SEC filings. There have been no
significant changes in our internal controls or in other factors that could
significantly affect internal controls subsequent to the date we carried out our
evaluation.
Disclosure controls and procedures are controls and other procedures that are
designed to ensure that information required to be disclosed our reports filed
or submitted under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the Securities and Exchange
Commission's rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information
required to be disclosed in our reports filed under the Exchange Act is
accumulated and communicated to management, including our President/Chief
Executive Officer, to allow timely decisions regarding required disclosure.
17
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
EXHIBITS
Exhibit
Number Description of Exhibit
- -------------- -------------------------------------------------------------
10.3 Option Agreement, Cahill Mineral Claims(1)
10.3 Option Agreement, Eddy Mineral Claims(2)
99.1 Section 906 certification
- --------------------------------------------------------------------------------
(1) Previously filed with the Securities and Exchange Commission as an
exhibit to the Form 8-K dated March 5, 2003.
(2) Previously filed with the Securities and Exchange Commission as an
exhibit to the Form 8-K dated April 21, 2003.
REPORTS ON FORM 8-K
On March 5, 2003, we reported with the US Securities and Exchange Commission
that we had entered into an option agreement to acquire 100% interest in the
Cahill mineral claims covering approximately 926.7 acres in the Osoyoos Mining
Division of the Province of British Columbia from Locke B. Smith.
On April 21, 2003, we reported with the US Securities and Exchange Commission
that we had entered into an option agreement to acquire 70% undivided interest
in the Eddy mineral claims covering approximately 7,000 acres in the Fort Steele
Mining Division of the Province of British Columbia from Ruby Red Resources,
Inc.
18
SIGNATURE
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
FIRST CYPRESS TECHNOLOGIES, INC.
By: /s/ ROBERT ROSNER
-----------------------------------
ROBERT ROSNER, President, Chief Executive Officer,
Principal Accounting Officer, and Director
Date: May 14, 2003
CERTIFICATION ACCOMPANYING PERIODIC REPORT PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, ROBERT ROSNER, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of First Cypress
Technologies, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of First
Cypress Technologies, Inc. as of, and for, the periods presented in this
quarterly report.
4. I am responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14)for First Cypress
Technologies, Inc. and have:
a) designed such disclosure controls and procedures to ensure that material
information relating to First Cypress Technologies, Inc., including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report is
being prepared;
b) evaluated the effectiveness of First Cypress Technologies, Inc.'s
disclosure controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. I have disclosed, based on my most recent evaluation, to First Cypress
Technologies, Inc.'s auditors and the audit committee of First Cypress
Technologies, Inc.'s board of directors (or persons performing the equivalent
functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect First Cypress Technologies, Inc.'s
ability to record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in First Cypress Technologies, Inc.'s
internal controls; and
6. I have indicated in this quarterly report whether there were significant
changes in internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies and
material weaknesses.
Date: May 14, 2003
/s/ Robert Rosner
--------------------------------
Robert Rosner, President
and Chief Executive Officer
and Principal Accounting Officer
19
