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 May 31, 2004
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[ ] Transition Report pursuant to 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period to
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Commission File Number 333-102740
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MANCHESTER INC.
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(Exact name of small Business Issuer as specified in its charter)
Nevada 98-0380409 |
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(State or other jurisdiction of (IRS Employer Identification No.) |
incorporation or organization) |
675 West Hastings Street, Suite 200 |
Vancouver, British Columbia, Canada V6B 1N2 |
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(Address of principal executive offices) (Postal or Zip Code) |
Issuer's telephone number, including area code: (604) 719-8747 |
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None
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(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 [ ] Yes [X] No
State the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 3,012,500 shares of $0.001
par value common stock outstanding as of April 22, 2004.
MANCHESTER INC.
(An Exploration Stage Company)
UNAUDITED INTERIM FINANCIAL STATEMENTS
MAY 31, 2004
(Stated in U.S. Dollars)
MANCHESTER INC.
(An Exploration Stage Company)
INTERIM BALANCE SHEET
(Unaudited)
(Stated in U.S. Dollars)
MAY 31 | NOVEMBER 30 | |||
2004 | 2003 | |||
ASSETS | ||||
Current | ||||
Cash | $ | 391 | $ | 20,403 |
Prepaid expense | 5,000 | - | ||
$ | 5,391 | $ | 20,403 | |
LIABILITIES | ||||
Current | ||||
Accounts payable and accrued liabilities | $ | 6,425 | $ | 4,480 |
STOCKHOLDERS’ DEFICIENCY | ||||
Capital Stock | ||||
Authorized: | ||||
100,000,000 common shares, par value $0.001 per share | ||||
10,000,000 preferred shares, par value $0.001 per share | ||||
Issued and outstanding: | ||||
3,012,500 common shares | 3,012 | 3,012 | ||
Additional paid-in capital | 70,438 | 70,438 | ||
Deficit Accumulated During The Exploration Stage | (74,484) | (57,527) | ||
(1,034) | 15,923 | |||
$ | 5,391 | $ | 20,403 | |
MANCHESTER INC.
(An Exploration Stage Company)
INTERIM STATEMENT OF OPERATIONS
(Unaudited)
(Stated in U.S. Dollars)
CUMULATIVE | ||||||||||
FROM DATE | ||||||||||
OF INCEPTION | ||||||||||
AUGUST 27 | ||||||||||
THREE MONTHS ENDED | SIX MONTHS ENDED | 2002 TO | ||||||||
MAY 31 | MAY 31 | MAY 31 | ||||||||
2004 | 2003 | 2004 | 2003 | 2004 | ||||||
Expenses | ||||||||||
Consulting fees | $ | 10,000 | $ | - | $ | 10,000 | $ | - | $ | 27,510 |
Office and sundry | 152 | 1,200 | 323 | 6,160 | 1,699 | |||||
Professional fees | 5,174 | - | 5,174 | 675 | 16,804 | |||||
Transfer agent fees | 1,460 | - | 1,460 | 800 | 6,471 | |||||
Mineral property exploration expenditures (Note 4) | - | - | - | - | 12,000 | |||||
Mineral property option payments | - | - | - | - | 10,000 | |||||
Net Loss For The Period | $ | 16,786 | $ | 1,200 | $ | 16,957 | $ | 7,635 | $ | 74,484 |
Basic And Diluted Loss Per Share | $ | (0.01) | $ | (0.01) | $ | (0.01) | $ | (0.01) | ||
Weighted Average Number Of Shares Outstanding | 3,012,500 | 3,012,500 | 3,012,500 | 3,012,500 | ||||||
MANCHESTER INC.
(An Exploration Stage Company)
INTERIM STATEMENT OF CASH FLOWS
(Unaudited)
(Stated in U.S. Dollars)
CUMULATIVE | |||||||||||
FROM DATE | |||||||||||
OF INCEPTION | |||||||||||
AUGUST 27 | |||||||||||
THREE MONTHS ENDED | SIX MONTHS ENDED | 2002 TO | |||||||||
MAY 31 | MAY 31 | MAY 31 | |||||||||
2004 | 2003 | 2004 | 2003 | 2004 | |||||||
Cash Flows From Operating Activities | |||||||||||
Net loss for the period | $ | (16,786) | $ | (1,200) | $ | (16,957) | $ | (7,635) | $ | (74,484) | |
Adjustments To Reconcile Net Loss To Net Cash Used By Operating Activities | |||||||||||
Prepaid expenses | (5,000) | 900 | (5,000) | 2,150 | (5,000) | ||||||
Accounts payable and accrued liabilities | 5,825 | - | 1,945 | (600) | 6,425 | ||||||
(15,961) | (300) | (20,012) | (6,085) | (73,059) | |||||||
Cash Flows From Financing Activity | |||||||||||
Share capital issued | - | - | - | - | 73,450 | ||||||
(Decrease) Increase In Cash | (15,961) | (300) | (20,012) | (6,085) | 391 | ||||||
Cash, Beginning Of Period | 16,352 | 44,955 | 20,403 | 50,740 | - | ||||||
Cash, End Of Period | $ | 391 | $ | 44,655 | $ | 391 | $ | 44,655 | $ | 391 | |
MANCHESTER INC.
(An Exploration Stage Company)
INTERIM STATEMENT OF STOCKHOLDERS’ DEFICIENCY
MAY 31, 2004
(Unaudited)
(Stated in U.S. Dollars)
DEFICIT | |||||||||
ACCUMULATED | |||||||||
ADDITIONAL | DURING THE | ||||||||
PAID-IN | EXPLORATION | ||||||||
SHARES | AMOUNT | CAPITAL | STAGE | TOTAL | |||||
Opening balance, August 27, 2002 | - | $ | - | $ | - | $ | - | $ | - |
September 2002 – Shares issued for cash at $0.001 | 1,200,000 | 1,200 | - | - | 1,200 | ||||
October 2002 – Shares issued for cash at $0.01 | 1,600,000 | 1,600 | 14,400 | - | 16,000 | ||||
October 2002 – Shares issued for cash at $0.25 | 200,000 | 200 | 49,800 | - | 50,000 | ||||
November 2002 – Shares issued for cash at $0.50 | 12,500 | 12 | 6,238 | - | 6,250 | ||||
Net loss for the period | - | - | - | (21,410) | (21,410) | ||||
Balance, November 30, 2002 | 3,012,500 | 3,012 | 70,438 | (21,410) | 52,040 | ||||
Net loss for the year | - | - | - | (36,117) | (36,117) | ||||
Balance, November 30, 2003 | 3,012,500 | 3,012 | 70,438 | (57,527) | 15,923 | ||||
Net loss for the period | - | - | - | (16,957) | (16,957) | ||||
Balance, May 31, 2004 | 3,012,500 | $ | 3,012 | $ | 70,438 | $ | (74,484) | $ | (1,034) |
MANCHESTER INC.
(An Exploration Stage Company)
NOTES TO INTERIM FINANCIAL STATEMENTS
MAY 31, 2004
(Unaudited)
(Stated in U.S. Dollars)
1.
BASIS OF PRESENTATION
The unaudited interim financial statements as of May 31, 2004 included herein have been prepared without audit pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with United States generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. It is suggested that these financial statements be read in conjunction with the November 30, 2003 audited financial statements and notes thereto.
2.
NATURE OF OPERATIONS
a)
Organization
The Company was incorporated in the State of Nevada, U.S.A., on August 27, 2002.
b)
Exploration Stage Activities
The Company has been in the exploration stage since its formation and has not yet realized any revenues from its planned operations. It is primarily engaged in the acquisition and exploration of mining properties. Upon location of a commercial minable reserve, the Company expects to actively prepare the site for its extraction and enter a development stage.
c)
Going Concern
The accompanying financial statements have been prepared assuming the Company will continue as a going concern.
As shown in the accompanying financial statements, the Company has incurred a net loss of $74,484 for the period from August 27, 2002 (inception) to May 31, 2004, and has no sales. The future of the Company is dependent upon its ability to obtain financing and upon future profitable operations from the development of its mineral properties. Management has plans to seek additional capital through a private placement and public offering of its common stock. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.
MANCHESTER INC.
(An Exploration Stage Company)
NOTES TO INTERIM FINANCIAL STATEMENTS
MAY 31, 2004
(Unaudited)
(Stated in U.S. Dollars)
3.
SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States. Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of financial statements for a period necessarily involves the use of estimates which have been made using careful judgement.
The financial statements have, in management’s opinion, been properly prepared within reasonable limits of materiality and within the framework of the significant accounting policies summarized below:
a)
Organizational and Start Up Costs
Costs of start up activities, including organizational costs, are expensed as incurred.
b)
Mineral Property Option Payments and Exploration Costs
The Company expenses all costs related to the maintenance and exploration of mineral claims in which it has secured exploration rights prior to establishment of proven and probable reserves. To date, the Company has not established the commercial feasibility of its exploration prospects, therefore, all costs are being expensed.
c)
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses for the reporting period. Actual results could differ from these estimates.
d)
Income Taxes
The Company has adopted Statement of Financial Accounting Standards No. 109 – “Accounting for Income Taxes” (SFAS 109). This standard requires the use of an asset and liability approach for financial accounting, and reporting on income taxes. If it is more likely than not that some portion or all of a deferred tax asset will not realized, a valuation allowance is recognized.
MANCHESTER INC.
(An Exploration Stage Company)
NOTES TO INTERIM FINANCIAL STATEMENTS
MAY 31, 2004
(Unaudited)
(Stated in U.S. Dollars)
3.
SIGNIFICANT ACCOUNTING POLICIES (Continued)
e)
Basic and Diluted Loss Per Share
In accordance with SFAS No. 128 – “Earnings Per Share”, the basic loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding. Diluted loss per common share is computed similar to basic loss per common share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. At May 31, 2004, the Company has no common stock equivalents that were anti-dilutive and excluded in the earnings per share computation.
4.
MINERAL PROPERTY INTEREST
The Company has entered into an option agreement, dated October 4, 2002 and amended October 2003, to acquire an 80% interest in a total of two mineral claims located in the Sudbury Mining District in Ontario, Canada.
In order to earn its interests, the Company made a cash payment totalling $8,000 on signing and must incur exploration expenditures totalling $209,800, of which $23,800 must be incurred by April 30, 2004. The Company has not completed the necessary exploration expenditures by April 30, 2004 and the option agreement was allowed to lapse.
5.
CONTINGENCY AND COMMITMENT
i)
Mineral Property
The Company’s mineral property interests have been acquired pursuant to option agreements. In order to retain its interest, the Company must satisfy the terms of the option agreements described in Note 4.
ii)
Commitment
The Company has committed to pay the costs associated with a planned offering of 1,812,500 shares held by shareholders of the Company.
Item 2. Management’s Discussion and Analysis or Plan of Operation
FORWARD LOOKING STATEMENTS
This quarterly report contains forward-looking statements that involve risks and uncertainties. We use words such as anticipate, believe, plan, expect, future, intend and similar expressions to identify such forward-looking statements. You should not place too much reliance on these forward-looking statements. Our actual results are likely to differ materially from those anticipated in these forward-looking statements for many reasons, including the risks faced by us described in this Risk Factors section and elsewhere in this annual report.
Plan of Operation
During the three-month period ended May 31, 2004 our option to acquire an interest in the Mac South property lapsed after we were unable to complete minimum exploration expenditures of $23,800 on the property by April 30, 2004. Accordingly, we are now looking to acquire an interest in an alternative asset. We do not have any specific assets in mind.
We anticipate spending the following over the next 12 months:
* $9,000 on legal fees, $3,000 on accounting fees, $2,500 on EDGAR
filing fees and $2,000 on transfer agent fees
Results Of Operations For Period Ending May 31, 2004
We did not earn any revenues during the three-month period ending May 31, 2004. We incurred operating expenses in the amount of $16,957 for the six-month period ended May 31, 2004, as compared to a loss of $7,635 for the comparative period in 2003. The increase in net loss in the current fiscal year is primarily a result of an increase in consulting and professional fees.
Our operating expenses were comprised of consulting fees of $10,000, professional fees of $5,174, transfer agent fees of $1,460 and office and sundry costs of $323.
At May 31, 2004, we had cash on hand of $391 and accounts payable and accrued liabilities of $6,425.
ITEM 3: CONTROLS AND PROCEDURES
Evalution of Disclosure Controls
Our former management evaluated the effectiveness of our disclosure controls and procedures as of the end of our second fiscal quarter on May 31, 2004. This evaluation was conducted with the participation of our chief executive officer and our principal accounting officer.
Disclosure controls are controls and other procedures that are designed to ensure that information that we are required to disclosed in the reports we file pursuant to the Securities Exchange Act of 1934 is recorded, processed, summarized and reported.
Limitations on the Effective of Controls
Our management does not expect that our disclosure controls or our internal controls over financial reporting will prevent all error and fraud. A control system, no matter how well conceived and operated, can provide only reasonable, but no absolute, assurance that the objectives of a control system are met. Further, any control system reflects limitations on resources, and the benefits of a control system must be considered relative to its costs. These limitations also include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of a control. A design of a control system is also based upon certain assumptions about potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected.
Conclusions
Based upon their evaluation of our controls, our chief executive officer and principal accounting officer have concluded that, subject to the limitations noted above, the disclosure controls are effective providing reasonable assurance that material information relating to us is made known to management on a timely basis during the period when our reports are being prepared. There were no changes in our internal controls that occurred during the quarter covered by this report that have materially affected, or are reasonably likely to materially affect our internal controls.
PART II- OTHER INFORMATION
Item 1.
Legal Proceedings
The Company is not a party to any pending legal proceeding. Management is not aware of any threatened litigation, claims or assessments.
Item 2.
Changes in Securities
The Company did not issue any securities during the quarter ended May 31, 2004.
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 Report on Form 8-K
31.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002
31.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
32.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
There were no reports filed on Form 8-K during the period ended May 31, 2004.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Manchester Inc.
/s/ Jackson Buch
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Jackson Buch, President
