UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended May 31, 2004_____________
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from _________ to __________
Commission file number 333-101133________________________
Highland Clan Creations Corp. |
(Exact name of small business issuer as specified in its charter) |
|
Nevada | 98-0379351 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Suite 219 - 10654 82 Ave NW, Edmonton, Alberta, Canada T6E 2A7 |
(Address of principal executive offices) |
(778) 863-3079 |
(Issuer's telephone number) |
n/a |
(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 Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]
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APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date:
2,032,500 common shares issued and outstanding as at July 12, 2004
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
PART I
Item 1. Financial Statements
Our financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.
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HIGHLAND CLAN CREATIONS CORP.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
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| May 31, 2004 |
ASSETS |
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Current assets |
|
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Cash |
| $ 96,919 |
Total current assets |
| $ 96,919 |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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|
Current Liabilities |
|
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Accounts payable |
| $ 5,230 |
Advances - shareholders |
| 3,600 |
Total current liabilities |
| 8,830 |
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|
STOCKHOLDERS' EQUITY: |
|
|
Common stock, $.001 par value, 100,000,000 shares |
| 2,633 |
Additional paid in capital |
| 101,667 |
Deficit accumulated during the development stage |
| (16,211) |
Total Stockholders' Equity |
| 88,089 |
|
| $ 96,919 |
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HIGHLAND CLAN CREATIONS CORP.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
Three and Nine Months Ended May 31, 2004 and 2003,
and for the Period from April 1, 2002 (Inception) through May 31, 2004
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| Inception through | |||||||
2004 | 2003 | 2004 | 2003 | 2004 | |||||
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General and | $6,777 |
| $239 |
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Net loss | $ (6,777) |
| $ (239) |
| $ (10,242) |
| $ (2,925) |
| $ (16,211) |
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Net loss per share: |
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Basic and diluted | $ (0.00) |
| $ (0.00) |
| $ (0.01) |
| $ (0.00) |
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Weighted average | |||||||||
Basic and diluted | 2,032,500 |
| 1,950,000 |
| 1,977,400 |
| 1,950,000 |
|
|
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HIGHLAND CLAN CREATIONS CORP.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
Nine Months Ended May 31, 2004 and 2003,
and for the Period from April 1, 2002 (Inception) through May 31, 2004
|
|
| Inception through | ||
| 2004 |
| 2003 |
| 2004 |
CASH FLOWS FROM OPERATING | |||||
Net loss | $(10,242) |
| $(2,925) |
| $(16,211) |
Adjustments to reconcile net |
|
|
|
|
|
Change in current assets and liabilities: |
|
|
|
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|
Accounts payable & accrued expenses | 4,585 |
| (1,355) |
| 5,230 |
|
(5,657) |
(4,280) | (10,981) | ||
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CASH FLOWS FROM FINANCING |
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Issuance of common stock | 102,300 |
| - |
| 104,300 |
Advances by shareholders | - |
| 2,600 |
| 3,600 |
|
|
|
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| 107,900 |
|
|
|
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NET DECREASE IN CASH | 96,643 | (1,680) | 96,919 | ||
Cash, beginning of period | 276 |
| 1,976 |
| - |
Cash, end of period | $96,919 |
| $296 |
| $96,919 |
|
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SUPPLEMENTAL CASH FLOW INFORMATION |
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|
|
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Interest paid | $- |
| $- |
| $- |
Income taxes paid | $- |
| $- |
| $- |
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HIGHLAND CLAN CREATIONS CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited interim financial statements of Highland Clan Creations Corp. have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission ("SEC"), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company's registration statement filed with the SEC on Form SB-1. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for the most recent fiscal year end August 31, 2003 as reported in Form SB-1, have bee n omitted.
NOTE 2 - COMMON SHARES
During the quarter ending May 31, 2004 Highland issued 682,500 shares of common stock for $102,300.
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Item 2. Management's Discussion and Analysis and Plan of Operation.
FORWARD-LOOKING STATEMENTS
This quarterly report contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "will", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors", that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
Our financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars. All references to "CDN$" refer to Canadian dollars and all references to "common shares" refer to the common shares in our capital stock.
As used in this quarterly report, the terms "we", "us", "our", and "Highland Clan" mean Highland Clan Creations Corp., unless otherwise indicated.
General
We were incorporated in Nevada on April 1, 2002. We are a development stage company with no assets, revenue or operations. Our plan of operations is to establish a juice, smoothie and related health products business. There can be no assurance that our common stock will ever develop a market. Our principal executive offices are currently located at Suite 219 10654 Whyte Avenue, Edmonton, Alberta, although we are currently looking for new office space. On April 27, 2004 we changed our telephone number to (778) 863-3079.
On April 27, 2004, our Board of Directors' appointed Mr. Brent McMullin, the father of Mrs. Brett Stewart (formerly Ms. Brett McMullin), as a director and our new president. Mr. McMullin's appointment followed the resignation of our former president, Mrs. Brett Stewart, who remains as a director, our secretary and treasurer.
Our Current Business
On April 27, 2004 we acquired all of the issued and outstanding shares of Legacy Bodysentials Inc. ("Bodysentials") from Mr. Brent McMullin, the father of our former president, Mrs. Brett Stewart (formerly Ms. Brett McMullin), for nominal consideration. Bodysentials has developed and manufactures a nutritional beverage for youth in the form of an orange drink and a milk shake, as well as several nutritional supplement boosters which may be added to our beverages or sold separately. The acquisition is compatible with our current business plan to offer natural beverages and smoothies, as well as related health products. We intend to add these to our current product offering and are also considering additional means in which to market and sell our products.
Our business plan is to offer nutritional drinks and related products. We intend to offer our juices, smoothies and related products through the establishment of up to two stores, (or, if we raise less money, up to two food court kiosks), as well as through multi-level marketing channels. We intend to feature milk shakes, juice supplements and health related products, with an emphasis on health and nutrition. We are planning to locate our first juice stores (or kiosks) in Edmonton, Alberta or Vancouver, British Columbia. If our initial store(s) are successful, we hope to locate stores in other Canadian cities. We intend to compete against other juice and nutrition store chains by
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establishing name recognition and providing better than average customer service. We have no proprietary formulas for our juice drinks, but we may are currently seeking to acquire such formulas or, alternatively, we make create our own products. These will consist of a combination of vitamins, natural and herbal supplements, fresh fruit, juices, non-fat yogurt, and sherbets. Currently we have no secret recipes, although we may seek to establish such recipes later on. The core of our business will be our juices and shakes, but we may also sell health snacks, such as high protein health food bars, vitamins and other health related products. Our plan of operations includes the intention to offer quality products with high perceived value; fast and friendly customer service; to develop a strong brand image and to target an attractive demographic segment of adults, ages 20 through 50, as well as a special juice product offering for children. All of these operations are planned operations at the present time, a s we have no actual business, other than the formation of our business plan.
We are currently raising financing pursuant to our SB2 registration statement, declared effective on September 26, 2003. We have until March 26, 2004 to complete our current offering. We have commenced operations.
Juice Business Operations
All of our planned operations depend on our raising a sufficient amount of capital to dedicate financial resources to each element of our business plan. Our SB2 registration statement, declared effective by the Securities and Exchange Commission on September 26, 2003, has a minimum of $80,000. Management may purchase shares in the offering in order to reach the minimum. Any shares management purchase will be for investment purposes only and not for resale. If we do not raise at least $80,000 all funds will be returned to subscribers promptly and we shall cease operations and terminate our reporting obligations under federal securities laws. There can be no assurance that any capital at all will be raised from the offering, but if significant capital is raised, resources will be devoted to ensure that we offer the highest quality juices, milk shakes, smoothies and health related products. Emphasis will be placed on delivering quality and healthful ingredients that are nutritious, while delivering consi stently high quality service. We intend standardize the specifications for the preparation and service of our shakes and juices, the conduct and appearance of our employees, and the maintenance and repair of our premises.
Planned Advertising and Promotion
As part of our plan of operations, which is dependent upon the raising of sufficient capital, we plan to engage in a marketing program, both before and after the commencement of operations, and on an ongoing basis, to build our brand name. We intend to emphasize local, low cost advertising on cable television and radio. This may be combined with a direct mail campaign in the area, as well as utilization of multi-level marketing channels.
Expenditures
The funds allocated to each expense will depend on the amount of funds raised in the offering pursuant to our SB2 registration statement, declared effective on September 26, 2003. This offering has a minimum of $80,000. If we do not raise at least $80,000 all funds will be returned promptly to shareholders.
Properties
We do not lease or own any real property. Our office space is an office sharing arrangement being provided as an accommodation to us by a business associate of Mrs. Stewart where we can receive mail and perform other minimal corporate functions. This arrangement provides us with the office space necessary to take care of necessary paper work and telephone, fax and mailing facilities. The terms of the office sharing arrangement are such that we are permitted to use the office space for minimal corporate functions free of charge, however, once we commence operations it will be necessary for us to seek our own appropriate individual office space. Management believes suitable office space will be available when it is needed. Suitable office space will include 300 to 600 square feet of space with necessary telephone and Internet hook-ups. We have a website at the addresswww.highlandsmoothies.com. We own the Internet domain namewww.highlandsmoothies.com. When we have sufficient funds, we int end to develop a fully functional website to build our brand name, as well as to allow customers to securely order our juice and related health products online.
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Competition
The nutritional juice and health products business is highly competitive with respect to price, product offering, service, location, formulations and food quality, and there are many well-established competitors. Certain factors, such as substantial price discounting, increased food, labor and benefits costs and the availability of experienced management and hourly employees may adversely affect the industry in general and us in particular. We will compete with a large number of national and regional juice and smoothie and health related product companies, most of which are franchises. Most of the potential competitors which own juice and smoothie chains have financial resources superior to ours, so there can be no assurance that our projected income will not be affected by our competition. We expect this competition to increase. Companies such as Jugo Juice Company and Booster Juice are expected to be competitors of Highland.
Government Regulation
Any locations selling Highland products may be subject to regulation by federal agencies and to licensing and regulation by provincial and local health, sanitation, safety, fire and other departments. Difficulties or failures in obtaining any required licensing or approval could result in delays or cancellations in the opening of new restaurants. We will also be subject to employment standards legislation and other laws governing such matters as minimum wages, overtime and other working conditions. We may also be subject to certain guidelines, codes and regulations that require stores to provide full and equal access to persons with physical disabilities. We will also be subject to various evolving federal, provincial and local environmental laws governing, among other things emissions to the air, discharge to waters and the generation, handling, storage, transportation, treatment and disposal of hazardous and no-hazardous substances and wastes.
FORWARD LOOKING STATEMENTS
This Quarterly Report contains forward-looking statements. Our expectation of results and other forward-looking statements contained in this Quarterly Report involve a number of risks and uncertainties. Among the factors that could cause actual results to differ materially from those expected are the following: business conditions and general economic conditions; competitive factors, such as pricing and marketing efforts; and the pace and success of product research and development. These and other factors may cause expectations to differ.
THE PRODUCTS
We intend to offer juices and blended milk shakes/smoothies, as well as health conscious snacks and other health related products. We intend to offer vitamin supplements, which may be contained in our juices and smoothies. These vitamin supplements may include the following:
- Total: 100% of the daily recommended allowance of 20 vitamins and minerals
- Energy/Concentration: With ginseng and gingko biloba
- Protein: With soy protein
- Defense: With Echinacea, vitamin C and antioxidants
- Fiber: A blend of oat bran, rice bran and wheat bran for digestive tract health
- Iron: With calcium, iron, folic acid and B vitamins
- Fat burner: Chromium Picolinate
We may also combine some of the above mentioned supplements to create our own special nutritional supplement drink.
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Fresh Juices
We intend to offer fresh squeezed orange juice, lemonade, carrot juice, and a special detoxification complex of beet, carrot, celery, and cucumber juice. We may also offer various concentrates of fruit and vegetables for those ordering ready to mix versions of our juices.
Smoothies
We intend to offer combinations of freshly blended strawberries, bananas, blueberries, peaches, raspberries, mangoes, and oranges, blended with orange, peach, apple, and/or cranberry juice, in different combinations, or made to order by the customer.
Concentrates
We may also acquire juice concentrates from companies such as Juice Bar Solutions of Novato, California. The juice concentrate would be used in combination with our fresh juice products. We may also establish our own concentrates.
Health Related Products
We may also decide to also offer other products including nutritional supplement drinks (for adults and/or children), vitamins, supplements, energy bars, hair and skin care products and other health related products.
Product Research and Development
We do not anticipate that we will expend any significant funds on research and development over the twelve months ending May 31, 2005.
Employees
Currently there are no full time or part-time employees of our company (other than our directors and officers who, at present, have not signed employment or consulting agreements with us). We do not expect any material changes in the number of employees over the next 12 month period (although we may enter into employment or consulting agreements with our officers or directors). If our smoothie and health product business is successful and we experience rapid growth, our current officers and directors will be required to hire new personnel to improve, implement and administer our operational, management, financial and accounting systems.
Purchase or Sale of Equipment
We do not intend to purchase any significant equipment over the twelve months ending May 31, 2005.
Results of Operations
Our company posted losses of losses of $10,242 for the nine months ending May 31, 2004, losses of $2,925 for the nine months ending May 31, 2003 and losses of $16,211 since inception to May 31, 2004. The principal component of the losses were for general and administrative expenses.
Operating expenses for the nine months ending May 31, 2004 were $10,242 compared to our operating expenses for the nine months ending May 31, 2003 of $2,925 and our expenses from inception to May 31, 2004 which were $16,211.
Financial Condition, Liquidity and Capital Resources
At May 31, 2004, we had working capital of $88,089.
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At May 31, 2004, our company's total assets of $96,919, which consisted only of cash.
At May 31, 2004, our company's total liabilities were $8,830.
We have not had revenues from inception. We require proceeds from our current offering to satisfy our ongoing cash requirements. We do not expect to purchase or sell any significant equipment. We do not expect any significant changes in the number of our employees.
Our company has no long-term debt and does not regard long-term borrowing as a good, prospective source of financing.
Plan of Operation
Our primary objectives over the 12 months ending May 31, 2005, will be to commence our juice, smoothie and health products business operations, including the establishment of up to two juice stores (or if we do not raise sufficient funds, up to two kiosks) to sell our juices, milk shakes and health products. We also intend to develop our website and marketing materials and to commence our marketing efforts to attract customers. We may also use multi-level marketing channels to distribute our products.
Cash Requirements
Over the next twelve months we intend to use funds to continue and complete the development of our website and marketing materials and commence our marketing efforts, as follows:
Estimated Funding Required During the Next Twelve Months
General and Administrative | $10,000 | ||
Capital Expenditures | $20,000 | ||
Operations |
| ||
| Marketing & Sales | $40,000 | |
Working Capital | $55,000 | ||
Total | $80,000 |
As May 31, 2004, we had working capital of $88,089. We anticipate that we will have to raise additional cash of a minimum of $50,000 no later than November, 2004, to allow us to commence the marketing of our services and provide us with approximately $55,000 in working capital to continue our normal operations. We plan to raise the capital required to meet these immediate short-term needs, and additional capital required to meet the balance of our estimated funding requirements for the twelve months through sales of our securities pursuant to our SB2 registration statement, declared effective on September 26, 2003. We are currently raising up to a maximum of $285,000 by selling up to 1,900,000 shares at a price of $0.15 per share. Our offering has a minimum of $80,000.
There are no assurances that we will be able to obtain funds required for our continued operations. In such event that we do not raise sufficient funds under our SB2 registration statement, declared effective September 26, 2003, we will consider alternative financing options, if any, or be forced to scale down or perhaps even cease our operations.
Product Research and Development
We do not anticipate that we will expend any significant funds on research and development over the twelve months ending May 31, 2005.
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Purchase of Significant Equipment
We do not intend to purchase any significant equipment over the twelve months ending May 31, 2005.
Employees
Currently there are no full time or part-time employees of our company (other than our directors and officers who, at present, have not signed employment or consulting agreements with us). We do not expect any material changes in the number of employees over the next 12 month period (although we may enter into employment or consulting agreements with our officers or directors).
Going Concern
The continuation of our business is dependent upon us raising additional financial support. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.
We have historically incurred losses, and through May 31, 2004 have incurred losses of $16,211 from our inception. Because of these historical losses, we will require additional working capital to develop our business operations.
We intend to raise additional working capital through private placements, public offerings and/or bank financing. As of July 12, 2004, we were in discussions with several potential investors, however no definitive agreements have been reached.
There are no assurances that we will be able to either (1) achieve a level of revenues adequate to generate sufficient cash flow from operations; or (2) obtain additional financing through either private placements, public offerings and/or bank financing necessary to support our working capital requirements. To the extent that funds generated from operations and any private placements, public offerings and/or bank financing are insufficient, we will have to raise additional working capital. No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to us. If adequate working capital is not available we may not increase our operations.
These conditions raise substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might be necessary should we be unable to continue as a going concern.
Our independent auditor's report on our audited financial statements, in our Form 10-KSB for the fiscal year ended August 31, 2003, contained a going concern qualifier. The qualifier explanatory paragraph contained in their audit report should be read in connection with our management's discussion of our financial condition, liquidity and capital resources.
APPLICATION OF CRITICAL ACCOUNTING POLICIES
Our unaudited financial statements and accompanying notes have been prepared in conformity with generally accepted accounting principles in the United States of America for interim financial statements. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management's application of accounting policies. We believe that understanding the basis and nature of the estimates and assumptions involved with the following aspects of our financial statements is critical to an understanding of our financials.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the balance sheet. Actual results could differ from those estimates.
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Basic loss per share has been calculated based on the weighted average number of shares of common stock outstanding during the period.
Our company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on our results of operations, financial position or cash flow.
RISK FACTORS
We have no experience in the nutrition and health products business.
We have no experience in the nutrition and health products business. This may affect our ability to operate successfully. Our management has never established or managed a nutritional drinks, smoothie or related health products business before, and has no experience.
If we do not raise enough money for our smoothie and nutritional product business, we will have to delay proceeding with our business plan or go out of business.
We must generate sufficient revenues to operate our business profitably and if we do not we may have to cease operations. We have nominal assets and no current operations with which to create operating capital. We are raising capital pursuant to an SB2 registration statement declared effective on September 26, 2003 to raise commence our juice and health products business. We must raise a minimum of $80,000 to cover our initial start-up expenses and offering costs and to provide limited working capital to fund our operating costs for an initial 12-month period. However if we do not generate sufficient revenues after we commence our operations we may not be able to operate profitably and if this happens we may have to cease operations beyond this initial period.
We need financing to complete the development of our smoothie and health product business and to implement our proposed business plan. If we do not raise at least $80,000 we may not be able to complete the development of our proposed software and we may cease operations. We may incur unexpected costs, delays or difficulties in developing our software which may result in us requiring more than a minimum or 850,000 and which may result in our failure to implement our proposed operations.
We will have future capital needs and may not be able to obtain additional funding; as a result, we may not be able to continue operating if we cannot meet these funding requirements. To achieve and maintain the competitiveness of our services, and to conduct costly marketing activities and infrastructure development, we may need to raise additional funds. Our anticipation of the time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties. Actual results could vary as a result of a number of factors, including those described in these risk factors. We anticipate being able to meet our needs for working capital and capital expenditures for at least the next 12 months if we raise the minimum of $80,000 in our current offering. In order to expand our operations, however, we may need to arrange for additional funding beyond this amount. We do not have any commitments for such additional funding. We expect to raise additional working capital through offerings of our common stock or through loans. There is no guaranty that we will be able to arrange for equity financings or obtain loans on favorable terms or on any terms at all. If we are not able to raise additional working capital, our ability to expand and raise revenue will be harmed.
Competition in the nutritional juice and health products industry is highly competitive and there is no assurance that we will be successful in our business plan.
The nutritional juice and health products industry is highly competitive with respect to price, service, location and quality, products, and there are many well-established competitors. Certain factors, such as substantial price discounting, increased food, supplement, labor and benefits costs and the availability of experienced management and hourly employees may adversely affect the fast food restaurant industry in general and us in particular. We will compete with a large number of national and regional juice and health products companies, many of which are franchises. Most of the potential competitors have financial resources superior to ours, so there can be no assurance that our projected income will not be affected by our competition.
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Our operations are subject to government regulation which may cause substantial delays or require capital outlays in excess of those anticipated causing an adverse effect on our company.
Our business will be subject to government regulation. Each of our locations will be subject to regulation by federal agencies and to licensing and regulation by provincial and local health, sanitation, safety, fire and other departments. Difficulties or failures in obtaining any required licensing or approval could result in delays or cancellations in our operations.
Because our directors have foreign addresses this may create potential difficulties relating to service of process in the event that you wish to serve them with legal documents.
Neither of our current directors and officers have resident addresses in the United States. They are both resident in Canada. Because our officers and directors have foreign addresses this may create potential difficulties relating to the service of legal or other documents on any of them in the event that you wish to serve them with legal documents. This is because the laws related to service of process may differ between Canada and the US. Similar difficulties could not be encountered in serving the company, proper, since our registered address is located in the United States at 880 - 50 West Liberty Street, Reno, Nevada, 89501.
Because the SEC imposes additional sales practice requirements on brokers who deal in our shares which are penny stocks, some brokers may be unwilling to trade them. This means that you may have difficulty in reselling your shares and may cause the price of the shares to decline.
Our shares qualify as penny stocks and are covered by Section 15(g) of the Securities Exchange Act of 1934 which imposes additional sales practice requirements on broker/dealers who sell our securities in this offering or in the aftermarket. For sales of our securities, the broker/dealer must make a special suitability determination and receive from you a written agreement prior to making a sale to you. Because of the imposition of the foregoing additional sales practices, it is possible that brokers will not want to make a market in our shares. This could prevent you from reselling your shares and may cause the price of the shares to decline.
Mr. McMullin and Mrs. Stewart own more than 50% of the outstanding shares of our company, so they are able to decide who are the directors and you may not be able to elect any directors.
Mr. McMullin and Mrs. Stewart own more than 50% of the issued and outstanding shares of our company and because of this they are able to elect all of our directors and control our operations.
There is no public trading market for our common stock, so you may be unable to sell your shares.
There is currently no public trading market for our common stock. A market may never develop for our common stock. If a market does not develop, it will be very difficult, if not impossible for you to resell your shares.
Item 3. Controls and Procedures.
As required by Rule 13a-15 under the Exchange Act, as of the end of the period covered by this report, being May 31, 2004, we have carried out an evaluation of the effectiveness of the design and operation of our company's disclosure controls and procedures. This evaluation was carried out under the supervision and with the participation of our management, including our president and chief executive officer. Based upon that evaluation, our president and chief executive officer concluded that our disclosure controls and procedures are effective as of the end of the period covered by this report. There have been no significant changes in our internal controls or in other factors, which 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 in our company's 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
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communicated to management, including our president and chief executive officer as appropriate, to allow timely decisions regarding required disclosure.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
We know of no material, active or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceedings or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder are an adverse party or has a material interest adverse to us.
Item 2. Changes in Securities.
During the quarter ending May 31, 2004 Highland issued 682,500 shares of common stock for $102,300. These shares were sold pursuant to our Registration Statement on Form SB-2 which was effective with the SEC on September 23, 2003.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
Exhibits required by Item 601 of Regulation S-B
(3) Articles of Incorporation and By-laws
3.1 Articles of Incorporation (incorporated by reference from our Registration Statement on Form SB-2, filed on November 12, 2002).
3.2 Bylaws (incorporated by reference from our Registration Statement on Form SB-2, filed on November 12, 2002).
(31) Section 302 Certification
31.1 Certification of Brent McMullin
31.2 Certification of Brett Stewart
(32) Section 906 Certification
32.1 Certification of Brent McMullin
32.2 Certification of Brett Stewart
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Reports on Form 8-K
On April 29, 2004 we filed a current report on Form 8-K announcing the purchase of Legacy Bodysentials Inc. and the appointment of Mr. Brent McMullin as our president and a new director.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
HIGHLAND CLAN CREATIONS CORP.
By:/s/ Brent McMullin
Brent McMullin, President and Director
(Principal Executive Officer)
Date: July 20, 2004
By:/s/ Brett Stewart
Brett Stewart, Secretary, Treasurer and Director
(Principal Financial Officer and Principal Accounting Officer)
Date: July 20, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By:/s/ Brent McMullin
Brent McMullin, President and Director
Date: July 20, 2004
By:/s/ Brett Stewart
Brett Stewart, Secretary, Treasurer and Director
Date: July 20, 2004