U. S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X]
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period endedJuly 31, 2004
[ ]
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________________ to _______________________
Commission File No.000-32089
NORTH AMERICAN NATURAL GAS, INC.
(Name of Small Business Issuer as specified in its Charter)
Washington
91-2023071
(State or Other Jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification No)
580 Hornby Street, Suite 210
Vancouver, British Columbia, Canada V6C 3B6
(Address of Principal Executive Offices)
(604) 687-6991
Issuer's Telephone Number
N/A
(Former Name or Former Address, 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 Exchange Act during the past 12 months (or for such shorter period that the Company was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
(1) | Yes | X | No | (2) | Yes | X | No |
(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Not applicable
(APPLICABLE ONLY TO CORPORATE ISSUERS)
State the number of shares outstanding of each of the Issuer's classes of common equity, as of the latest practicable date:
July 31, 2004
Common – 19,812,500 common shares
DOCUMENTS INCORPORATED BY REFERENCE
A description of any "Documents Incorporated by Reference" is contained in Item 6 of this Report.
Transitional Small Business Issuer Format | Yes | X | No |
PART I - FINANCIAL INFORMATION
ITEM 1.
FINANCIAL STATEMENTS
To simplify the language in this Form 10-QSB, North American Natural Gas, Inc., formerly FAR Group Inc., is also referred to as the “Company” or “we”. The Financial Statements of the Company required to be filed with this 10-QSB Quarterly Report were prepared by management and commence on the following page, together with related notes. In the opinion of management, the Financial Statements fairly present the financial condition of the Company.
North American Natural Gas Inc.
(A Development Stage Company)
Balance Sheets
(Expressed in U.S. Dollars)
July 31 2004 $ (Unaudited) | April 30 2004 $ (Audited) | |
ASSETS | ||
Current Assets | ||
Cash | 35,564 | 44,236 |
Total Assets | 35,564 | 44,236 |
LIABILITIES AND STOCKHOLDERS' EQUITY | ||
Current Liabilities | ||
Accounts payable | 2,294 | 429 |
Accrued liabilities | 2,450 | 4,850 |
Total Liabilities | 4,744 | 5,279 |
Stockholders' Equity | ||
Preferred Stock: $.0001 par value; authorized 20,000,000 preferred shares; none issued | – | – |
Common Stock: $0.0001 par value; authorized 100,000,000 common shares; 19,812,500 shares issued and outstanding respectively | 1,981 | 1,981 |
Additional Paid-in Capital | 309,019 | 309,019 |
Deficit Accumulated During the Development Stage | (280,180) | (272,043) |
Total Stockholders' Equity | 30,820 | 38,957 |
Total Liabilities and Stockholders' Equity | 35,564 | 44,236 |
(See Accompanying Notes to the Financial Statements)
North American Natural Gas Inc.
(A Development Stage Company)
Statements of Operations
(Unaudited)
(Expressed in U.S. Dollars)
Accumulated from | ||||
March 24, 2000 | Three Months Ended | |||
(Date of Inception) | July 31, | |||
to July 31, 2004 $ | 2004 $ | 2003 $ | ||
Revenue | – | – | – | |
Expenses | ||||
Accounting and legal | 87,038 | 6,175 | 17,867 | |
Business development | 24,475 | – | – | |
Finance costs | 75,975 | – | – | |
Consulting fees | 25,000 | – | – | |
Directors fee | 12,500 | 1,500 | 1,500 | |
License written-off | 35,000 | – | – | |
Office | 9,447 | 158 | 1,025 | |
Transfer agent and filing fees | 12,590 | 303 | 1,369 | |
Less interest income | (1,845) | – | (457) | |
Total Expenses | 280,180 | 8,136 | 21,304 | |
Net Loss for the Period | (280,180) | (8,136) | (21,304) | |
Net Loss Per Share – Basic and Diluted | – | – | – | |
Weighted Average Number of Shares Outstanding (stock split applied retro actively) | 19,812,500 | 19,812,500 | ||
(See Accompanying Notes to the Financial Statements)
North American Natural Gas Inc.
(A Development Stage Company)
Statements of Cash Flow
(Unaudited)
(Expressed in U.S. Dollars)
Three Months Ended | ||
July 31, | ||
2004 $ | 2003 $ | |
Cash Flows From Operating Activities | ||
Net loss for the period | (8,136) | (21,304) |
Change in non-cash working capital items | ||
(Decrease) in accounts payable and accrued liabilities | (535) | (14,551) |
Share subscriptions refundable (Note 3) | – | (1,600,000) |
Net Cash Used in Operating Activities | (8,671) | (1,635,855) |
Decrease In Cash | (8,671) | (1,635,855) |
Cash - Beginning of Period | 44,236 | 1,704,740 |
Cash - End of Period | 35,564 | 68,885 |
Non - Cash Financing Activities | – | – |
Supplemental Disclosures | ||
Interest paid | – | – |
Income tax paid | – | – |
(See Accompanying Notes to the Financial Statements)
North American Natural Gas Inc.
(A Development Stage Company)
Notes to Financial Statements
(Unaudited)
(Expressed in U.S. Dollars)
NOTE 1 – BASIS OF PRESENTATION
These unaudited financial statements have been prepared in accordance with the instructions to SEC Form 10-QSB. Accordingly, 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 instructions. These unaudited financial statements should be read in conjunction with the audited financial statements and notes thereto as at April 30, 2004.
In the opinion of the Company’s management, all adjustments considered necessary for a fair presentation of these unaudited financial statements have been included and all such adjustments are of a normal recurring nature. Operating results for the three-month period ended July 31, 2004 are not necessarily indicative of the results that can be expected for the year ended April 30, 2005.
NOTE 2 – DEVELOPMENT STAGE COMPANY
North American Natural Gas, Inc. (formerly FAR Group, Inc.) herein (the “Company”) was incorporated in the State of Washington, U.S.A. on March 24, 2000. The Company acquired a license to market and distribute vitamins, minerals, nutritional supplements, and other health and fitness products in which the grantor of the license offers these products for sale from various suppliers on their Web site.
The Company is in the development stage. In a development stage company, management devotes most of its activities in developing a market for its products. Planned principal activities have not yet begun. The ability of the Company to emerge from the development stage with respect to any planned principal business activity is dependent upon its successful efforts to raise additional equity financing and/or attain profitable operations. There is no guarantee that the Company will be able to raise any equity financing or sell any of its products at a profit. There is substantial doubt regarding the Company’s ability to continue as a going concern.
During fiscal 2003, the Company changed its name to North American Natural Gas, Inc. as it had anticipated that it would undertake a new business purpose in the oil and gas exploration industry. The Company was unsuccessful in its efforts to raise the required capital to acquire the oil and gas properties contemplated and reverted back to its original business to exploit the license to market and sell vitamins and other health and fitness products.
ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the accompanying financial statements and notes and the other financial information appearing elsewhere in this report. This Report contains statements that may contain forward-looking statements concerning the Company’s future operations and planned future acquisitions and other matters and the Company intends that such forward-looking statements be subject to the safe harbors for such statements. Any statements that involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performances often, but not always, using phrases such as “expects”, or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans& #148;, “estimates”, or “intends”, or stating that certain actions, events or results “may”, “could”, or “might” or “will” be taken to occur or be achieved are not statements of historical fact and may be “forward looking statements”.
The Company cautions readers not to place undue reliance on any such forward-looking statements which speak only as of the date made. Such forward-looking statements are based on the beliefs and estimates of the Company’s management as well as on assumptions made by and information currently available to the Company at the time such statements were made. Forward-looking statements are subject to a variety of risks and uncertainties which could cause actual events or results to differ from those reflected in the forward-looking statements, including, without limitation, the failure to obtain adequate financing on a timely basis and other risks and uncertainties. Actual results could differ materially from those projected in the forward-looking statements, either as a result of the matters set forth or incorporated in this Report generally and certain economic and business factors, some of which may be beyond the control of the Company.
Critical Accounting Policies
The Company’s discussions and analysis of its financial condition and results of operations, including the discussion on liquidity and capital resources are based upon the Company’s financial statements, which have been prepared in accordance with US GAAP. The preparation of these financial statements requires the Company to make estimates and judgements that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, management re-evaluates its estimates and judgements, particularly those related to the determination of the impairment of its intangible assets.
Plan of Operation
During the period from March 24, 2000 through July 31, 2004, we engaged in no significant operations other than organizational activities, acquisition of the rights to market Vitamineralherb, preparation for registration of securities under the Securities Act of 1933, as amended, preparation of a supplementary business plan and completing a private placement. No revenues were received by us during this period.
During the fourth quarter of fiscal 2003, we changed our name to North American Natural Gas, Inc. as we had anticipated that we would undertake a new business purpose in the oil and gas exploration industry. We entered into agreements to purchase interests in two oil and gas exploration opportunities subject to raising a minimum of US$11,000,000 in a private placement. We were unsuccessful in our efforts to raise the minimum amount and all funds received were subsequently returned to the original subscribers. All agreements were terminated. We spent an aggregate of $85,683 in connection with the failed financing efforts.
As we were unsuccessful in our efforts to raise the required capital to change our business purpose, we reverted back to our original business to determine the feasibility of marketing the Vitamineralherb.com products in various markets, and, if the products proved to be in demand, begin marketing and selling Vitamineralherb.com products.
We extended our license with Vitamineralherb.com for an additional three years to market vitamins, minerals, nutritional supplements and other health and fitness products in Minnesota through the Vitamineralherb.com web site. The license remains in effect until April 2006 subject to the payment of annual fees.
The implementation of our initial plans was delayed as Vitamineralherb.com re-worked its web site rendering it non-operational for a period of time. In addition, Vitamineralherb changed its primary supplier of products again delaying our ability to initiate our business plan. Our efforts to implement our initial plans continues to be delayed as Vitamineralherb continues to modify its web site and to find a replacement supplier for its vitamin and mineral products to offer to its licensees.
To date, the Vitamineralherb.com website continues to be non-operational. It is our intention to continue to explore other business opportunities although we have not identified any new business opportunities and have no agreements related to such opportunities.
For the three-month period ended July 31, 2004, we had total general and administrative expenses of $8,136 as compared to $21,304 during the same period ended July 31, 2003, a decrease of $13,168. In the previous period we incurred additional professional fees relating to our unsuccessful efforts to raise the required capital to acquire the previous contemplated oil and gas properties. For the remainder of the current fiscal year ending April 30, 2005, we anticipate incurring a loss as a result of expenses associated with maintaining the company in good standing and exploring new business opportunities.
We remain a company in the development stage. Our balance sheet as of July 31, 2004 reflects total assets of $35,564 comprising of cash. We had total liabilities of $4,744 for a positive working capital position of $30,820. We have incurred a loss of $8,136 for the fiscal period to date and a total loss of $280,180 from inception. During the quarter ended July 31, 2004, we did not issue any common stock.
Liquidity
We had cash on hand of $35,564 as at July 31, 2004 and working capital of $30,820 as compared to cash on hand of $44,236 and working capital of $38,957 as at April 30, 2004. We believe that we have sufficient funds to meet our administrative operating obligations for the next twelve months but will need additional capital to carry out any business strategies.
We intend to raise additional capital required to fund our financing needs by issuance of debt and equity. Management has been exploring a number of other options to meet our obligations and future capital requirements, including the possibility of an equity offering, a debt financing, and a business combination. There can be no assurance capital will be available or accessible on reasonable terms.
We may engage in a combination with another business. During the fiscal year of 2003, we entered into agreements that would have changed our business to the oil and gas industry. We were unsuccessful in raising the minimum capital required to complete the transaction and subsequently terminated all the agreements. We have engaged in discussions concerning potential business combinations, but have not entered into any agreement for such a combination.
Our failure to generate revenues and conduct operations since inception raises substantial doubt about the Company’s ability to continue as a going concern. We will require substantial working capital, and currently have inadequate capital to fund all of our business strategies, which could severely limit our operations.
ITEM 3.
CONTROL AND PROCEDURES
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s Securities Exchange Act of 1934 reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
As at the end of the period, the Company’s management has carried out an evaluation under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(e). Based upon the foregoing, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective in connection with the filing of this Quarterly Report on Form 10-QSB for the quarter ended July 31, 2004.
There were no significant changes in the Company’s internal controls or other factors that could significantly affect these controls subsequent to their evaluation, including any significant deficiencies or material weaknesses of internal controls that would require corrective action.
PART II - OTHER INFORMATION
ITEM 1.
LEGAL PROCEEDINGS
None; not applicable.
ITEM 2.
CHANGES IN SECURITIES
None
ITEM 3.
DEFAULTS UPON SENIOR SECURITIES
None; not applicable.
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)
Exhibits
a.1
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 – Chief Executive Officer
a.2
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 – Chief Financial Officer
a.1
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002 – Chief Executive Officer
a.2
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002 – Chief Financial Officer
(a)
Reports on Form 8-K
None
Documents incorporated by reference
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
NORTH AMERICAN NATURAL GAS, INC. | ||||||
Date: | August 27, 2004 | By: | /s/ Jim Glavas | |||
Jim Glavas President, Chief Executive Officer and Director | ||||||
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated:
Date: | August 27, 2004 | By: | /s/ Jim Glavas | |||
Jim Glavas President, Chief Executive Officer and Director | ||||||
Date: | August 27, 2004 | By: | /s/ Richard Achron | |||
Richard Achron Chief Financial Officer and Director | ||||||
Date: | August 27, 2004 | By: | /s/ Dickson Coatsworth | |||
Dickson Coatsworth Director |
