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_____________________________________________________________________
_____________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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: September 30, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM:
__________________________________
Commission File Number: 333-46886
__________________________________
KEYSTONE MINES LIMITED
(Exact name of registrant as specified in its charter)
Nevada 88-0467848
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification Number)
1040 West Georgia Street
Suite 1160
Vancouver, British Columbia
Canada V6E 4H1
(Address of Principal Executive Offices, including Zip Code.)
(604) 605-0885
(Registrant's telephone number, including area code.)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days.
Yes [ X ] No [ ]
The number of shares outstanding at September 30, 2000: 5,000,000
shares
______________________________________________________________________
______________________________________________________________________
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PART I. FINANCIAL INFORMATION
Board of Directors
Keystone Mines Limited
Vancouver, BC CANADA
ACCOUNTANT'S REVIEW REPORT
We have reviewed the accompanying balance sheet of Keystone Mines
Limited (an exploration stage enterprise), as of September 30, 2000,
and the related statements of operations, stockholders' equity
(deficit), and cash flows for the three months ended September 30,
2000, for the period from June 26, 2000 (inception) to June 30, 2000,
and for the period from June 26, 2000 (inception) to September 30,
2000. All information included in these financial statements is the
representation of the management of Keystone Mines Limited.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of
interim financial information consists principally of applying
analytical procedures to financial data and making inquiries of persons
responsible for financial and accounting matters. It is substantially
less in scope than an audit in accordance with generally accepted
auditing standards, the objective of which is the expression of an
opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to the accompanying financial statements in order
for them to be in conformity with generally accepted accounting
principles.
The financial statements for the period from June 26, 2000 (inception)
to June 30, 2000 were audited by us and we expressed an unqualified
opinion on it in our report dated September 6, 2000, except for Note 7,
which was dated December 7, 2000. We have not performed any auditing
procedures since that date.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 2,
the Company has been in the exploration stage since its inception on
June 26, 2000 and has no revenues. These factors raise substantial
doubt about the Company's ability to continue as a going concern.
Management's plans regarding those matters also are described in Note
2. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/ Williams & Webster, P.S.
Williams & Webster, P.S.
Certified Public Accountants
Spokane, Washington
January 8, 2001
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KEYSTONE MINES LIMITED
(AN EXPLORATION STAGE ENTERPRISE)
BALANCE SHEETS
September 30, June 30,
2000 2000
(Unaudited) (Restated)
ASSETS
CURRENT ASSETS
Cash $ 92 $ -
--------- ---------
Total Current Assets 92 -
--------- ---------
OTHER ASSETS
Mining claims 27 -
Prepaid expenses - 682
--------- ---------
Total Other Assets 27 682
--------- ---------
TOTAL ASSETS $ 119 $ 682
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Related party payables $ 13,152 $ 400
--------- ---------
Total Current Liabilities 13,152 400
--------- ---------
COMMITMENTS AND CONTINGENCIES - -
--------- ---------
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, 100,000,000 shares
authorized, $0.00001 par value;
5,000,000 shares issued and
outstanding 50 50
Additional paid-in-capital 499,950 499,950
Stock subscriptions receivable - (795)
Deficit accumulated during
exploration stage (513,033) (498,923)
--------- ---------
Total Stockholders' Equity
(Deficit) (13,033) 282
--------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY (DEFICIT) $ 119 $ 682
========= =========
See accompanying notes and accountant's review report.
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KEYSTONE MINES LIMITED
(AN EXPLORATION STAGE ENTERPRISE)
STATEMENTS OF OPERATIONS
From
Three Months From June 26, 2000
Ended June 26, 2000 (Inception) to
September 30, (Inception) to September 30,
2000 June 30, 2000 2000
(Unaudited) (Restated) (Unaudited)
REVENUES $ - $ - $ -
--------- ---------- ----------
EXPENSES
Accounting expenses 2,752 - 2,752
Consulting services
provided by directors - 498,523 498,523
Filing fees - 400 400
Legal expenses 10,000 - 10,000
Mining exploration
expense 1,337 - 1,337
Office expense 41 - 41
--------- ---------- ----------
TOTAL EXPENSES 14,130 498,923 513,053
--------- ---------- ----------
LOSS FROM OPERATIONS (14,130) (498,923) (513,053)
--------- ---------- ----------
OTHER INCOME
Miscellaneous income 20 - 20
--------- ---------- ----------
TOTAL OTHER INCOME 20 - 20
--------- ---------- ----------
LOSS BEFORE INCOME TAXES (14,110) (498,923) (513,033)
INCOME TAXES - - -
--------- ---------- ----------
NET LOSS $ (14,110) $ (498,923) $ (513,033)
========= ========== ==========
NET LOSS PER COMMON
SHARE, BASIC AND
DILUTED $ nil $ (0.10) $ (0.10)
========= ========= ==========
WEIGHTED AVERAGE NUMBER
OF COMMON STOCK SHARES
OUTSTANDING, BASIC AND
DILUTED 5,000,000 5,000,000 5,000,000
========= ========= ==========
See accompanying notes and accountant's review report.
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KEYSTONE MINES LIMITED
(AN EXPLORATION STAGE ENTERPRISE)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
Deficit Total
Accumulated Stock Stock-
Common Stock Additional During the Subscrip- holders'
Number Paid-in Exploration tions Equity
of Shares Amount Capital Stage Receivable (Deficit)
Issuance of common
stock for services
and in payment of
advances at
approximately
$0.10 per share 5,000,000 $ 50 $ 499,950 $ - $ (795) $ 499,205
Loss for period
ending, June 30,
2000 - - - (498,923) - (498,923)
--------- ---- --------- ---------- ----- --------
Balance, June 30,
2000, restated 5,000,000 50 499,950 (498,923) (795) 282
Payment of
subscriptions
receivable - - - - 795 795
Loss for the three
months ended
September 30, 2000 - - - (14,110) - (14,110)
--------- ---- --------- ---------- ----- --------
Balance, September
30, 2000
(Unaudited) 5,000,000 $ 50 $ 499,950 $ (513,033) $ - $(13,033)
========= ==== ========= ========== ===== ========
See accompanying notes and accountant's review report.
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KEYSTONE MINES LIMITED
(AN EXPLORATION STAGE ENTERPRISE)
STATEMENTS OF CASH FLOWS
From
Three Months From June 26, 2000
Ended June 26, 2000 (Inception) to
September 30, (Inception) to September 30,
2000 June 30, 2000 2000
(Unaudited) (Restated) (Unaudited)
CASH FLOWS FROM
OPERATING ACTIVITIES
Net loss $ (14,110) $ (498,923) $ (513,033)
Adjustments to reconcile
net loss to cash
provided (used) in
operating activities:
Increase in related
party payables 12,752 400 13,152
Increase (decrease)
in prepaid expenses 682 (682) -
Increase in mining claims (27) - (27)
Payment of expenses from
issuance of stock - 499,840 499,840
--------- ---------- ----------
Net cash provided (used)
in operating activities (703) 635 (68)
--------- ---------- ----------
CASH FLOWS FROM
INVESTING ACTIVITIES - - -
--------- ---------- ----------
CASH FLOWS FROM
FINANCING ACTIVITIES
Stock subscriptions
(sold) paid 795 (795) -
Proceeds from advances - 160 160
--------- ---------- ----------
Net cash provided (used)
by financing activities 795 (635) 160
--------- ---------- ----------
Change in cash 92 - 92
Cash, beginning of period - - -
--------- ---------- ----------
Cash, end of period $ 92 $ - $ 92
========= ========== ==========
Supplemental cash
flows disclosures:
Interest paid $ - $ - $ -
========= ========== ==========
Income taxes paid $ - $ - $ -
========= ========== ==========
Non-cash transactions:
Stock issued in payment
of consulting and other
expenses $ - $ 499,840 $ 499,840
========= ========== ==========
Stock issued in payment
of advances $ - $ 133 $ 133
========= ========== ==========
Stock issued in payment
of mining claims $ - $ 27 $ 27
========= ========== ==========
KEYSTONE MINES LIMITED
(AN EXPLORATION STAGE ENTERPRISE)
NOTES TO THE FINANCIAL STATEMENTS
September 30, 2000
NOTE 1 ORGANIZATION AND DESCRIPTION OF BUSINESS
Keystone Mines Limited (hereinafter "the Company") was incorporated on
June 26, 2000 under the laws of the State of Nevada for the purpose of
acquiring, exploring and developing mining properties. The Company
maintains offices in Vancouver, British Columbia. The Company's fiscal
year end is June 30.
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies is presented to assist
in understanding the financial statements. The financial statements
and notes are representations of the Company's management, which is
responsible for their integrity and objectivity. These accounting
policies conform to generally accepted accounting principles and have
been consistently applied in the preparation of the financial
statements.
Interim Financial Statements
The interim financial statements as of September 30, 2000 and for the
three months ended September 30, 2000, included herein, have been
prepared for the Company without audit. They reflect all adjustments,
which are, in the opinion of management, necessary to present fairly
the results of operations for these periods. All such adjustments are
normal recurring adjustments. The results of operations for the
periods presented are not necessarily indicative of the results to be
expected for the full fiscal year.
Accounting Method
The Company's financial statements are prepared using the accrual
method of accounting.
Exploration Stage Activities
The Company has been in the exploration stage since its formation in
June 2000 and has not yet realized any revenues from its planned
operations. It is primarily engaged in the acquisition, exploration
and development of mining properties. Upon location of a commercial
minable reserve, the Company will actively prepare the site for
extraction and enter a development stage.
Use of Estimates
The process of preparing financial statements in conformity with
generally accepted accounting principles requires the use of estimates
and assumptions regarding certain types of assets, liabilities,
revenues, and expenses. Such estimates primarily relate to unsettled
transactions and events as of the date of the financial statements.
Accordingly, upon settlement, actual results may differ from estimated
amounts.
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KEYSTONE MINES LIMITED
(AN EXPLORATION STAGE ENTERPRISE)
NOTES TO THE FINANCIAL STATEMENTS
September 30, 2000
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all
short-term debt securities purchased with a maturity of three months or
less to be cash equivalents.
Foreign Currency Valuation
The Company's functional currency is the United States dollar.
Occasional transactions occur in Canadian currency, and management has
elected to value foreign currency transactions on the date the
transaction concludes. The conversion is calculated by multiplying the
foreign currency value by the exchange rate at the close of the nearest
trading day.
Concentration of Risk
The Company maintains its cash accounts in primarily one commercial
bank in Vancouver, British Columbia, Canada. The Company's cash
account is a business checking account maintained in U.S. dollars,
which totaled $92 as of September 30, 2000. This account is not
insured.
Derivative Instruments
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities." This standard
establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. It requires that an entity
recognize all derivatives as either assets or liabilities in the
balance sheet and measure those instruments at fair value.
At September 30, 2000, the Company has not engaged in any transactions
that would be considered derivative instruments or hedging activities.
Fair Value of Financial Instruments
The carrying amounts for cash and payables approximate their fair
value.
Impaired Asset Policy
In March 1995, the Financial Accounting Standards Board issued a
statement, SFAS No. 121, titled "Accounting for Impairment of Long-
lived Assets." In complying with this standard, the Company reviews
its long-lived assets quarterly to determine if any events or changes
in circumstances have transpired which indicate that the carrying value
of its assets may not be recoverable. The Company does not believe any
adjustments are needed to the carrying value of its assets at September
30, 2000.
F-7
KEYSTONE MINES LIMITED
(AN EXPLORATION STAGE ENTERPRISE)
NOTES TO THE FINANCIAL STATEMENTS
September 30, 2000
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Exploration Costs
In accordance with generally accepted accounting principles, the
Company expenses exploration costs as incurred.
Compensated Absences
Currently, the Company has no employees; therefore, no policy regarding
compensated absences has been established. The Company will establish
a policy to recognize the costs of compensated absences at the point in
time that it has employees.
Provision for Taxes
At September 30, 2000, the Company had accumulated net operating losses
of approximately $510,000. No provision for taxes or tax benefit has
been reported in the financial statements, as there is not a measurable
means of assessing future profits or losses.
Basic and Diluted Loss Per share
Loss per share was computed by dividing the net loss by the weighted
average number of shares outstanding during the period. The weighted
average number of shares was calculated by taking the number of shares
outstanding and weighting them by the amount of time that they were
outstanding. Basic and diluted loss per share were the same, as there
were no common stock equivalents outstanding.
Going Concern
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern.
As shown in the accompanying financial statements, the Company incurred
a net loss of $513,033 for the period of June 26, 2000 (inception) to
September 30, 2000 and had no sales. The future of the Company is
dependent upon its ability to obtain financing and upon future
successful exploration for and profitable operations from the
development of 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
and classification of liabilities that might be necessary in the event
the Company cannot continue in existence.
F-8
KEYSTONE MINES LIMITED
(AN EXPLORATION STAGE ENTERPRISE)
NOTES TO THE FINANCIAL STATEMENTS
September 30, 2000
NOTE 3 MINING CLAIMS
The Company, through Mr. Mike Muzylowski, its president and a member of
the board of directors, acquired 100% of the rights, titles and
interests in four mining claims in the Greenwood Mining Division,
Beaverdell, British Columbia, Canada.
Payment of $27 was required to record the four mining claims. These
amounts were paid by the shareholders and repaid by the Company in the
form of stock. See Note 4. Although the claims are recorded in Mr.
Muzylowski's name for tax purposes, title to the claims has been
conveyed to the Company via an unrecorded deed.
NOTE 4 COMMON STOCK
During June 2000, a total of 5,000,000 shares of common stock were
issued to officers and directors only. There was no public offering of
any securities. The value of the shares issued to the officers was
determined by multiplying the number of shares issued by the price
being asked in the initial public offering of the Company's stock. The
aforementioned shares were issued in payment of expenses of $499,840
and advances of $160. A portion of the shares was initially issued in
anticipation of payment of expenses on behalf of the Company by the
Company's officers and directors. The unpaid portion of issued shares
was deemed to be a stock subscription and classified as such on the
June 30, 2000 balance sheet. As of September 30, 2000, the subscribed
shares were paid in full.
NOTE 5 RELATED PARTIES
The Company occupies office space provided by Mr. Muzylowski, its
president, in his capacity as president and director of Callinan Mines
Limited at no charge. The value of this space is not considered
materially significant for financial reporting purposes.
Mr. Muzylowski and Mr. Carlo Civelli, both directors of the Company,
have advanced monies to the Company to open a checking account, and in
payment of expenses. The funds advanced were repaid as part of the
original stock issuance transaction. See Note 4.
In addition, Mr. Muzylowski, who has advanced $13,152 in payment of
incorporation, audit fees, attorney's fees, and other incidental
expenses, has agreed to receive reimbursement when the Company has the
appropriate cash flow for such reimbursement. The funds advanced are
uncollateralized and non-interest bearing.
F-9
KEYSTONE MINES LIMITED
(AN EXPLORATION STAGE ENTERPRISE)
NOTES TO THE FINANCIAL STATEMENTS
September 30, 2000
NOTE 6 COMMITMENTS AND CONTINGENCIES
Registration with the Securities and Exchange Commission
The Company is presently undertaking the required steps to register as
a publicly traded company. In this regard, the Company has signed a
contract with a securities attorney to assist in this matter. The
total fees to be paid to the attorney amount to $20,000. Of this
amount, $10,000 has been paid. The remaining $10,000 will be due when
the Company's registration statement is declared effective by the
Securities and Exchange Commission.
Mining Industry
The Company is engaged in the exploration and development of mineral
properties. At present, there are no feasibility studies establishing
proven and probable reserves.
Although the minerals exploration and mining industries are inherently
speculative and subject to complex environmental regulations, the
Company is unaware of any pending litigation or of any specific past or
prospective matters which could impair the value of its mining claims.
Foreign Operations
The accompanying balance sheet includes $119 relating to the Company's
assets in Canada. Although this country is considered politically and
economically stable, it is always possible that unanticipated events in
foreign countries could disrupt the Company's operations.
NOTE 7 CORRECTION OF AN ERROR
The accompanying financial statements for June 30, 2000, have been
restated to correct an error in the valuation of shares received by
officers in June 2000. The effect of the restatement was to decrease
net income for June 30, 2000 by $225,000 ($0.05 per share).
F-10
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
This section includes a number of forward- looking statements
that reflect our current views with respect to future events and
financial performance. Forward-looking statements are often identified
by words like: believe, expect, estimate, anticipate, intend, project
and similar expressions, or words which, by their nature, refer to
future events. You should not place undue certainty on these forward-
looking statements, which apply only as of the date of this report.
These forward-looking statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from
historical results or out predictions.
We are a start-up, exploration stage company and have not yet
generated or realized any revenues from our business operations.
Our auditors have issued a going concern opinion. This means that
our auditors believe there is doubt that we can continue as an on-going
business for the next twelve months unless we obtain additional capital
to pay our bills. This is because we have not generated any revenues
and no revenues are anticipated until we begin removing and selling
minerals. Accordingly, we must raise cash from sources other than the
sale of minerals found on our property. That cash must be raised from
other sources. Our only other source for cash at this time is
investments by others in our company. We must raise cash to implement
our project and stay in business.
We will be conducting research in connection with the exploration
of our property. We are not going to buy or sell any plant or
significant equipment. We do not expect a change in our number of
employees.
Limited Operating History; Need for Additional Capital
There is no historical financial information about our company
upon which to base an evaluation of our performance. We are an
exploration stage company and have not generated any revenues from
operations. We cannot guarantee we will be successful in our business
operations. Our business is subject to risks inherent in the
establishment of a new business enterprise, including limited capital
resources, possible delays in the exploration of our properties, and
possible cost overruns due to price and cost increases in services.
To become profitable and competitive, we conduct into the research
and exploration of our properties before we start production of any
minerals we may find. We are seeking equity financing to provide for
the capital required to implement our research and exploration phases.
We have no assurance that future financing will be available to us
on acceptable terms. If financing is not available on satisfactory
terms, we may be unable to continue, develop or expand our operations.
Equity financing could result in additional dilution to existing
shareholders.
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Results of Operations
From Inception on June 26, 2000
We just recently acquired our first property and are commencing
the research and exploration stage of our mining operations on that
property at this time.
Since inception, we have used our common stock to raise money for
our property acquisition, for corporate expenses and to repay
outstanding indebtedness.
Liquidity and Capital Resources
As of the date of this report, we have yet to generate any
revenues from our business operations.
We issued 5,000,000 shares of common stock through a Section 4(2)
offering in June 2000. This was accounted for as a compensation expense
of $498,523 and advances and reimbursement expenses of $1,477.
Since our inception, Mr. Muzylowski, has paid expenses from us in
the total sum of $11,400, which included organizational and start-up
costs and operating capital. The loans do not bear interest and have
not been paid as of the date hereof. There are no documents reflecting
the loan and they are not due on a specific date. Mr. Muzylowski will
accept repayment from us when money is available. If the maximum
amount is raised, we intend to repay the $11,400 loaned to us from the
proceeds of this offering.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities.
None.
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.
EXHIBIT INDEX
Exhibit
Number Description
27 Financial Data Schedule
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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.
Dated this 26th day of January, 2001.
KEYSTONE MINES LIMITED
BY: /s/ Mike Muzylowski
Mike Muzylowski, President, Treasurer,
Chief Financial Officer and a member of
the Board of Directors