24 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB (X ) QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2003 ------------------- ( ) TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT For the transition period from to Commission File number 0-25541 ------- STARBERRYS CORPORATION ----------------------- (Exact name of registrant as specified in charter) Nevada 91-1948357 ------ -------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1100 Melville Street, Suite 320 Vancouver, B.C. Canada V6E 4A6 - ------------------------ ---------------- (Address of principal executive offices) (Zip Code) 604-688-3931, Ext. 1 --------------------------- Registrant's telephone number, including area code N/A --- (Former name, address, and fiscal year, if changed since last report) 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), Yes [X] No [ ] and ( ) has been subject to filing requirements for the past 90 days. Yes [X] No [ ] APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the last practicable date. Class Outstanding as of December 31, 2003 ---------- ---------------------------------------- Common Stock, $0.001 per share 11,489,848 ========== -1- INDEX Page Number ----------- PART 1. . .FINANCIAL INFORMATION ITEM 1. . Financial Statements (unaudited) 3 Balance Sheet as at December 31, 2003 and September 30, 2003 4 Statement of Operations For the three months ended December 31, 2003 and 2002, and for the period from October 8, 1998 (Date of Inception) to December 31, 2003 . . . 5 Statement of Cash Flows For the three months ended December 31, 2003 and 2002 and for the period from October 8, 1998 (Date of Inception) to December 31, 2003. . . . 6 Notes to the Financial Statements . . 7 ITEM 2. Management's Discussion and Analysis or Plan . ..of Operation 11 ITEM 3. . Controls and Procedures 16 PART 11 . . . OTHER INFORMATION 17 ITEM 1. . Legal Proceedings 17 ITEM 2. . Changes in Securities 17 ITEM 3. . Default Upon Senior Securities 17 ITEM 4. . Submission of Matters to a Vote of Security Holders 17 ITEM 5. Other Information 17 ITEM 6. . Exhibits and Reports on Form 8-K 18 SIGNATURES. . . . . . 19 -2- PART 1 - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS The accompanying balance sheet of Starberrys Corporation (development stage company) at December 31, 2003 and September 30, 2003 and the statement of operations and statement of cash flow for the three months ended December 31, 2003 and 2002 and for the period from October 8, 1998 (date of incorporation) to December 31, 2003, have been prepared by the Company's management, in conformity with principles generally accepted in the United States of America. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. Operating results for the quarter ended December 31, 2003 are not necessarily indicative of the results that can be expected for the year ending September 30, 2004. -3- STARBERRYS CORPORATION (Development Stage Company) BALANCE SHEET December 31, 2003 DECEMBER 31, 2003 SEPTEMBER 30, 2003 ------------------- -------------------- ASSETS CURRENT ASSETS Cash . . . . . . . . . . . . . . . . . . . . . . . . . . $ 105 $ 380 ------------------- -------------------- TOTAL CURRENT ASSETS . . . . . . . . . . . . . . . . . . . . $ 105 $ 380 =================== ==================== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Note payable & accrued interest - related party. . . . . $ 537,500 $ 518,750 Accounts payable - related parties . . . . . . . . . . . 653,717 645,652 Accounts payable . . . . . . . . . . . . . . . . . . . . 274,877 247,405 ------------------- -------------------- TOTAL CURRENT LIABILITIES. . . . . . . . . . . . . . . . . . 1,466,094 1,411,807 ------------------- -------------------- STOCKHOLDERS' EQUITY Preferred stock 50,000,000 shares authorized, at $0.001 per share; none outstanding Common stock 200,000,000 shares authorized, at $0.001 par value; 11,489,848 shares issued and outstanding . . . . . . 11,490 11,490 Capital in excess of par value . . . . . . . . . . . . . 609,826 609,826 Deficit accumulated during the development stage . . . . (2,087,305) (2,032,743) ------------------- -------------------- TOTAL STOCKHOLDERS' DEFICIENCY . . . . . . . . . . . . . . . (1,465,989) (1,411,427) ------------------- -------------------- $ 105 $ 380 =================== ==================== The accompanying notes are an integral part of these financial statements -4- STARBERRYS CORPORATION (Development Stage Company) STATEMENT OF OPERATIONS For the Three Months Ended December 31, 2003 and 2002 and Period October 8,1998 (Date of Inception) to December 31, 2003 Oct 8, 1998 Dec 31, Dec 31, to Dec 31, 2003 2002 2003 ------------- --------- ------------ REVENUES. . . . . . . . . . . . $ - $ - $ - ------------- --------- ------------ EXPENSES Administrative. . . . . . . 35,812 23,024 895,478 ------------- --------- ------------ NET LOSS - before other losses. (35,812) (23,024) (895,478) OTHER EXPENSES AND LOSSES Interest. . . . . . . . . . (18,750) - (37,500) Loss of deposit - note 7. . - - (1,154,327) ------------- --------- ------------ NET LOSS. . . . . . . . . . . . $ (54,562) $(23,024) $(2,087,305) ============= ========= ============ NET LOSS PER COMMON SHARE Basic and diluted . . . . . $ (.05) $ (.01) ============= ========= AVERAGE OUTSTANDING SHARES (stated in 1000,s) Basic 11,490 10,535 ============= ============= The accompanying notes are an integral part of these financial statements -5- STARBERRYS CORPORATION (Development Stage Company) STATEMENT OF CASH FLOWS For the three months ended December 31, 2003 and 2002 and the Period October 8, 1998 (Date of Inception) to December 31, 2003 Dec 31 Dec 31 Oct 8, 1998 2003 2002 to Dec 31, 2003 --------- --------------- ------------------- CASH FLOWS FROM OPERATING ACTIVITIES Net loss. . . . . . . . . . . . . . . . . $(54,562) $ (23,024) $ (2,087,305) Adjustments to reconcile net loss to net cash provided by operating activities Issuance of common stock for Expenses. . . . . . . . . . . . . - - 150 Changes in accounts and notes payable 54,287 54,701 1,558,518 Capital contributions - expenses. . . - - 10,950 Loss of deposit . . . . . . . . . . . - - 1,154,327 --------- --------------- ----------------------------- Net Cash Used in Operations . . . (275) 31,677 636,640 --------- --------------- ----------------------------- CASH FLOWS FROM INVESTING ACTIVITIES Purchase of investment - deposit. . . - - (1,154,327) --------- --------------- ----------------------------- CASH FLOWS FROM FINANCING ACTIVITIES Net proceeds from issuance of common stock. . . . . . . . . . . - - 517,792 --------- --------------- ----------------------------- Net Increase (Decrease) in Cash . . . . . (275) 31,677 105 Cash at Beginning of Period . . . . . . . 380 553 - --------- --------------- ----------------------------- Cash at End of Period . . . . . . . . . . $ 105 $ 32,230 $ 105 ========= =============== ============================= SCHEDULE OF NONCASH FLOWS FROM OPERATING ACTIVITIES Capital contributions - expenses. . . $ 10,950 ========= The accompanying notes are an integral part of these financial statements -6- STARBERRYS CORPORATION (Development Stage Company) NOTES TO FINANCIAL STATEMENTS December 31, 2003 1. ORGANIZATION The Company was incorporated under the laws of the State of Nevada on October 8, 1998 under the name of "Cigar King Corporation" with authorized common stock of 200,000,000 shares at $0.001 par value. On September 13, 2002 the name was changed to "Starberrys Corporation" and the authorized capital stock was changed by the addition of 50,000,000 shares of preferred stock with a par value of $0.001. There are no preferred shares issued and the terms have not been determined. The Company was originally organized for the purpose of engaging in quality cigar sales. During 1998 the Company purchased the right to use the name "Cigar King" to market high quality cigars and during 2000 the activity was abandoned. During 2002, the Company entered into a contract of purchase of all the assets and intellectual property related to the "Color by Numbers" business and system and on April 9, 2003, the Company signed a Purchase Agreement for the acquisition of all the shares of the company which owns design, paint and building products. (see Note 7). The contract was subsequently rescinded. The Company has not started any operations and is in the development stage. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Accounting Methods - ------------------- The Company recognizes income and expenses based on the accrual method of accounting. Dividend Policy - ---------------- The Company has not yet adopted a policy regarding payment of dividends. Income Taxes - ------------- The Company utilizes the liability method of accounting for income taxes. Under the liability method deferred tax assets and liabilities are determined based on the difference between financial reporting and the tax bases of the assets and liabilities and are measured using the enacted tax rates and laws that will be in effect , when the differences are expected to reverse. An allowance against deferred tax assets is recorded, when it is more likely than not, that such tax benefits will not be realized. On December 31, 2003 the Company had a net operating loss carry forward of $ 2,087,305. The tax benefit of approximately $ 626,000 from the loss carry forward has been fully offset by a valuation reserve because the use of the future tax benefit is doubtful since the Company has no operations. The net operating loss will expire in 2024. -7- STARBERRYS CORPORATION (Development Stage Company) NOTES TO FINANCIAL STATEMENTS December 31, 2003 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED Basic and Diluted Net Income (Loss) Per Share - ---------------------------------------------------- Basic net income (loss) per share amounts are computed based on the weighted average number of shares actually outstanding. Diluted net income (loss) per share amounts are computed using the weighted average number of common shares and common equivalent shares outstanding as if shares had been issued on the exercise of the common share rights unless the exercise becomes antidilutive and then only if the basic per share amounts are shown in the report. Cash and Cash Equivalents - ---------------------------- The Company considers all highly liquid instruments purchased with a maturity, at the time of purchase, of less than three months, to be cash equivalents. Financial Instruments - ---------------------- The carrying amounts of financial instruments, including cash and accounts payable, are considered by management to be their estimated fair values. Financial and Concentrations Risk - ------------------------------------ The Company does not have any concentration or financial credit risk. Revenue Recognition - -------------------- Revenue will be recognized on the sale and delivery of a product or the completion of a service provided. Advertising and Market Development - ------------------------------------- The Company will expense advertising and market development costs as incurred. Estimates and Assumptions - --------------------------- Management uses estimates and assumptions in preparing financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of the assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were assumed in preparing these financial statements. -8- STARBERRYS CORPORATION (Development Stage Company) NOTES TO FINANCIAL STATEMENTS December 31, 2003 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED Foreign Currency Translation - ------------------------------ Part of the transactions of the Company were completed in Canadian dollars and have been translated to US dollars as incurred, at the exchange rate in effect at the time, and therefore, no gain or loss from the translations is recognized. US dollars are considered to be the functional currency. Recent Accounting Pronouncements - ---------------------------------- The Company does not expect that the adoption of other recent accounting pronouncements will have a material impact on its financial statements. 3. NOTE PAYABLE - RELATED PARTY The Company has a note payable of $500,000 due July 31, 2004, including interest of 15%. The note is secured by common shares of the Company owned by officers-directors. 4. COMMON CAPITAL STOCK Since its inception, the Company has completed private placements of 11,155,000 shares of its common capital stock for $ 517,792 and has issued 150,000 shares for services and 184,848 shares for payment of debt. 5. COMMON CAPITAL STOCK OPTIONS During the year ended September 30, 2003 the Company granted stock options to related parties of 25,000 shares of common stock at $1.00 per share (net of subsequent cancellations), which will expire on December 31, 2006. On the date of the grant the fair value of outstanding shares of the Company was less than $1.00 and therefore no value was recorded. 6. SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES Officer-directors and key consultants have acquired 56% of the outstanding stock and have received the stock options outlined in Note 5. -9- STARBERRYS CORPORATION (Development Stage Company) NOTES TO FINANCIAL STATEMENTS December 31, 2003 7. DEPOSITS PURSUANT TO LETTER OF INTENT AND TO PURCHASE AGREEMENT The Company signed a Letter of Intent on November 29, 2002, and amended and extended on March 13, 2003, and further extended on June 25, 2003, with eVision Technologies Inc. and Mr. Ken Turpin (the "Vendors") outlining the general terms of a proposed acquisition by the Company or its assigns for $5,000,000 of all of the assets and intellectual property related to the CBN and "Color by Numbers" business owned by the vendors. The acquisition is subject to, amongst other items, completion of due diligence satisfactory to the Company, negotiating a definitive purchase agreement and the obtaining of the required financing for the purchase. In consideration for certain undertakings given by the Vendors, the Company agreed to make monthly payments of CDN $50,000 commencing January 1, 2003 and payments of CDN $300,000 on June 30, 2003 and CDN $200,000 on August 15, 2003 as deposits toward the agreed purchase price. On April 9, 2003 the Company signed a Definitive Purchase Agreement with Malaremastastarnas Riksforening, the owner of all the shares of Skandinaviska Farginstituter AB (the Scandinavian Colour Institute or "SCI") which owns the colour notation system Natural Color Systems ("NCS"), subject to certain conditions, containing the terms of an acquisition by the Company or its assigns for a price of SEK 35,000,000 of all shares of SCI. Pursuant the terms of that agreement the Company made payments of $1,154,327 into an escrow account as part payment toward the purchase price. The Company subsequently failed to make further payments on the contracts and by mutual agreement the contracts were cancelled and the moneys paid were expensed. 9. GOING CONCERN The Company does not have the working capital necessary to service its debt and for any future planned activity which raises substantial doubt about its ability to continue as a going concern. Continuation of the Company as a going concern is dependent upon obtaining additional working capital and the management of the Company has developed a strategy, which it believes will accomplish this objective through additional equity funding, long term debt, and contributions to capital by officers, which will enable the Company to conduct operations for the coming year. -10- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS Starberry's Corporation, a Nevada corporation (the "Company"), was incorporated on October 8, 1998. The Company's executive offices are located in Vancouver, British Columbia. The Company's Articles of Incorporation currently provide that the Company is authorized to issue 200,000,000 shares of Common Stock, par value $0.001 per share, and 50,000,000 Preferred Shares. As at December 31, 2003 there were 11,489,848 Common Shares and no Preferred Shares outstanding. On November 24, 1998 the Company acquired the exclusive rights to market high quality cigars through a climate controlled kiosk merchandise display case, known as the King Climate Control, by the payment of $50,000. The Company did not proceed with this new business and in 2000 abandoned the activity. In November 2002 the Company signed a Letter of Intent with eVision Technologies Corporation and Ken Turpin (founder / inventor) to acquire 100% of the assets related to the business of Colour By Number ("CBN"). The CBN System is a digital color management system providing one color language across industries and materials, empowering architects, designers, contractors, retailers and consumers to take full control of their choice and use of color. The Company was unsuccessful in raising the financing to complete this acquisition, which has been abandoned. In addition, the Company signed a Letter of Intent on 19 January 2003 with Malaremastarnas Riksforening, the owner of all the shares of Skandinaviska Farinstituter AB ("SCI" or the Scandinavian Colour Institute) which owns the colour notation system Natural Color Systems ("NCS") and the Scandinavian Color School, outlining the general terms of a proposed acquisition by the Company of all of the shares of SCI. On April 9, 2003 the Company signed a Definitive Purchase Agreement to complete the acquisition, subject to certain conditions, of all the shares of SCI for a price of SEK 35,000,000. Subsequent to June 30, 2003 that Agreement was amended to change the Closing Date from August 31, 2003 to November 30, 2003. NCS is the leading colour notation system in Europe and is also highly regarded around the world. It is the national standard for colour in Sweden, Norway, Spain and South Africa. The Company was unsuccessful in raising the financing to complete this acquisition, and it has also been abandoned. The Company has no revenue to date from its operations, and its ability to affect its plans for the future will depend on the availability of financing. Such financing will be required to enable the Company to acquire new businesses. The Company anticipates obtaining such funds from its officers and directors, financial institutions or by way of the sale of its capital stock under an SB-2. However, there can be no assurance that the Company will be successful in obtaining additional capital for such business acquisitions from the sale of its capital stock, or in otherwise raising substantial capital. When used in this discussion, the words "believe", "anticipates", "expects" and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties, which could cause actual results to differ materially from those projected. Readers are cautioned not to place undue reliance on these forward-looking statements, which -11- speak only as of the date hereof. The Company undertakes no obligation to republish revised forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Readers are also urged to carefully review and consider the various disclosures made by the Company that attempt to advise interested parties of factors which affect the Company's business, in this report, as well as the Company's periodic reports on Forms 10-KSB, 10-QSB and 8-K filed with the Securities and Exchange Commission (the "SEC"). The Company's financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles. RISK FACTORS There are certain inherent risks which will have an effect on the Company's development in the future and some of these risk factors are noted below but are not all encompassing since there may be others unknown to management at the present time which might have an impact in the future on the development of the Company. 1. FUTURE TRADING IN THE COMPANY'S STOCK MAY BE RESTRICTED BY THE SEC'S PENNY STOCK REGULATIONS WHICH MAY LIMIT A STOCKHOLDER'S ABILITY TO BUY AND SELL THE COMPANY'S SHARES WHEN, AND IF, THE SHARES ARE EVENTUALLY QUOTED. The SEC has adopted regulations which generally define "penny stock" to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. The Company's shares most likely will be covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and "accredited investors." The term "accredited investor" refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer's account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer's confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to broker-dealers to trade in the Company's securities. The Company believes that the penny stock rules discourage investor interest in and limit the marketability of, its common stock when, and if, it is called for trading. The Company feels that its shares will be considered to be penny stock when the shares are finally quoted. 2. THE COMPANY IS UNCERTAIN IF IT WILL BE ABLE TO OBTAIN ADDITIONAL CAPITAL NECESSARY FOR ITS DEVELOPMENT. The Company has incurred a cumulative net loss for the period from October 8, 1998 (date of inception) to December 31, 2003 of $2,087,305. As a result of -12- these losses and negative cash flows from operations, the Company's ability to continue operations will be dependent upon the availability of capital from outside sources unless and until it achieves profitability. It can only achieve profitability if an ore body is found on the Bridge claim. 3. WHETHER THE COMPANY WILL CONTINUE TO BE A GOING CONCERN The Company's auditors, in the audited financial statements as at September 30 2003, have indicated a concern in their audit opinion as to whether the Company will be able to raise sufficient funds to complete its objectives and, if not, indicates that the Company might not be able to continue as a going concern. Without adequate future financing, the Company might cease to operate and the existing shareholders and any future shareholders will lose their entire investment. 4. THE PRESENT SHAREHOLDERS HAVE ACQUIRED SHARES AT EXTREMELY LOW PRICES All present shareholders have acquired shares at $0.001 per share. The Company does not intend to issue further shares at this price; hence, any new investors would pay a higher price and immediately suffer a dilution in the value of their shares. 5. FUTURE ISSUANCE OF STOCK OPTIONS, WARRANTS AND/OR RIGHTS WILL HAVE A DILUTING FACTOR ON EXISTING AND FUTURE SHAREHOLDERS The grant and exercise of stock options, warrants or rights to be issued in the future would likely result in a dilution of the value of the Company's common shares for all shareholders. At present, the Company has granted stock options to related parties of 25,000 shares of common stock at $1.00 per share as noted on page 9 of this report and may in future issue further stock options to officer, directors and consultants which will dilute the interest of the existing and future shareholders. Moreover, the Company may seek authorization to increase the number of its authorized shares and to sell additional securities and/or rights to purchase such securities at any time in the future. Dilution of the value of the common shares would likely result from such sales. 6. THE COMPANY DOES NOT EXPECT TO DECLARE OR PAY ANY DIVIDENDS The Company has not declared or paid any dividends on its common stock since its inception, and it does not anticipate paying any such dividends for the foreseeable future. 7. CONFLICT OF INTEREST Some of the Directors of the Company are also directors and officers of other companies and conflicts of interest may arise between their duties as directors of the Company and as directors and officers of other companies. 8. CONCENTRATION OF OWNERSHIP BY MANAGEMENT. The management of the Company, either directly or indirectly, owns 735,000 shares. Even though this only represents 6.38 % of the issued and outstanding shares, it might be difficult for any one shareholder to solicit sufficient votes to replace the existing management. Therefore, any given shareholder may never have a voice in the direction of the Company. -13- 9. KEY-MAN INSURANCE The Company carries no key-man insurance. In the event that Mr. Erickson either departed the Company or passed away, the Company would not have the available funds to attract an individual of similar experience. Management is considering obtaining key-man insurance once it has sufficient funds to do so. 10. NUMBER OF EMPLOYEES AND NUMBER OF FULL-TIME EMPLOYEES All the directors devote some time to the Company but none of them are full time since they have other occupations, which requires the majority of their time. As a group, the directors and officers devote approximately 10 hours a month to the affairs of the Company. There are no employees in the Company at the present time and therefore no full time employees. 11. RECENTLY ENACTED AND PROPOSED REGULATORY CHANGES Recently enacted and proposed changes in the laws and regulations affecting public companies, including the provisions of the Sarbanes-Oxley Act of 2002 and rules proposed by the SEC and NASDAQ could cause the Company to incur increased costs as it evaluates the implications of new rules and responds to new requirements. The new rules will make it more difficult for the Company to obtain certain types of insurance, including directors and officers liability insurance, and the Company may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. The impact of these events could also make it more difficult for the Company to attract and retain qualified persons to serve on the Company's board of directors, or as executive officers. The Company is presently evaluating and monitoring developments with respect to these new and proposed rules, and it cannot predict or estimate the amount of the additional costs it may incur or the timing of such costs. LIQUIDITY AND CAPITAL RESOURCES As at December 31, 2003, the Company had assets of $105, and liabilities of $1,466,094. The liabilities include accounts payable of $274,877, There has been no change in the Company's financial position since its last fiscal year. The Company has incurred certain expenses during the three months ended December 31, 2003 as follows: EXPENDITURE AMOUNT Accounting and audit. . . . . . . . . i $ 1,375 Bank Charges. . . . . . . . . . . . . 76 Edgar filing fees . . . . . . . . . . ii 2,458 Foreign exchange loss . . . . . . . . iii 9,055 Legal fees. . . . . . . . . . . . . . iv 20,755 Office expenses . . . . . . . . . . . v 644 Transfer agent's fees . . . . . . . . vi 1,449 ------- Total expenses before other losses 35,812 Interest expense . . . . . . . . . vii 18,750 ------- Net loss for the year. . . . . . . $ 54,562 ======== -14- i. The Company accrued $500 in fees to its auditors for the review of this Form 10-QSB and $750 in fees to its Chief Financial Officer for the preparation of the financial statements and 10-QSB. An additional $125 was accrued for the year end audit. ii. The Company has incurred certain expenses during the three months for filing its various disclosure forms with the SEC, including the Forms 10-QSB for June 2003 and December 2003 and a Form 8-K. iii. Loss on foreign exchange consists of the difference between the US and Canadian exchange rate on monies expended by the Company in Canadian dollars. iv. Legal fees of $20,755 were incurred during the year. v. Office expenses consist of miscellaneous expenses incurred during the year. vi. Transfer agent fees include the annual registration fee of $1,200 charged by the transfer agent during the year. Additional fees consist of transfer fees, shareholder list and interest charges on the balance outstanding. vii. Interest expense is accrued on the note payable to Glencoe Capital Inc. at a rate of 15% per annum for three months. Estimated expenses over twelve months and required funds: Requirements for Expenditures twelve months - --------------------- -------------- Accounting and audit. 1 $11,000 Bank charges. . . . . 1,500 Filing fees . . . . . 2 1,210 Legal fees. . . . . . 3 25,000 Office. . . . . . . . 4 1,000 Telephone . . . . . . 5 3,500 Transfer agent's fees 6 2,900 Travel and promotion. 7 20,000 ------- Estimated expenses. $ 66,110 ======= 1. Accounting and auditing expense has been projected as follows: Filing Accountant Auditors Total - ---------------------------- ----------- --------- -------- Form 10-QSB - March 31, 2004 $ 1,000 $ 500 $ 1,500 Form 10-QSB - June 30, 2004. 1,000 500 1,500 Form 10-KSB - Sept. 30, 2004 2,500 4,000 6,500 Form 10-QSB - Dec. 31, 2004. 1,000 500 1,500 ----------- --------- -------- $ 5,500 $ 5,500 $ 11,000 =========== ========= ======== -15- 2. The Company pays $300 for filing of its Form 10-KSB and $200 for each of its Forms 10-QSB's. It is estimated that this expense will be approximately $900 during the next twelve months. In addition, the Company will incur a cost for filing the Annual List of Directors and Officers to the State of Nevada to maintain the Company in good standing for the next twelve months. The annual charge for filing this form is $310. 3. Legal fees are estimated based on the previous year's fees. It is estimated that the fees in 2004 will be much lower, since in the year ended September 30, 2003, there were some unusual start up fees regarding negotiations of the letters of intent and financing agreements. 4. Relates to photocopying, faxing and courier, in addition to miscellaneous expenses incurred by the directors. The estimate of these charges is approximately $80 per month for 12 months. 5. The estimate of telephone expenses to conduct Company business is approximately $300 per month for 12 months. 6. The Company is charged $1,200 per annum by Nevada Agency and Trust Company. Additional stock transfer and original issue fees of $1,300 are estimated. The Company has calculated $400 in late interest charges for the next year. 7. Travel and promotion expenses have been estimated at $20,000. These expenses may be incurred by the directors who may incur travel expenses to find a new project for the Company, and to obtain financing. As mentioned previously, the Company does not have sufficient funds to pay any of the above noted expenses other than if its directors and officers continue to contribute funds to the Company. At the present time, the Company has no contractual obligations for leasing premises. At present, the directors devote time to the affairs of the Company as required. There are no plans to hire any employees at this time. The Company will continue to use the services of consultants in the furtherance of the Company's goals. ITEM 3. CONTROLS AND PROCEDURES ------------------------------- (a) Evaluation of Disclosure Controls and Procedures - ------------------------------------------------------------- The Company's Chief Executive Officer and Chief Financial Officer, after evaluating the effectiveness of the Company's controls and procedures (as defined in the Securities Act of 1934 Rule 13a 14(c) and 15d 14 (c) of the date within 45 days of the filing of this quarterly report on Form 10-QSB (the "Evaluation Date"), have concluded that as of the Evaluation Date, the Company's disclosure controls and procedures were adequate and effective to ensure that material information relating to it would be made known to it by others, particularly during the period in which this quarterly report on Form 10-QSB was being made. (b) Changes in Internal Controls ------------------------------- There were no significant changes in the Company's internal controls or in other factors that could significantly affect the Company's disclosure controls and -16- procedures subsequent to the Evaluation Date, nor any significant deficiencies or material weaknesses in such disclosure controls and procedures requiring corrective actions. PART 11. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS There are no legal proceedings to which the Company is a party or to which its property is subject, nor to the best of management's knowledge are any material legal proceedings contemplated. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS None ITEM 3. DEFAULTS IN SENIOR SECURITIES None ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not Applicable ITEM 5. OTHER INFORMATION On February 5, 2004, the Company dismissed Sellers & Andersen, LLC as the independent accountants. This action was approved by the directors of the Company. The Company appointed Madsen & Associates, CPA's Inc. as the independent accountants. The reports of Sellers & Andersen LLC for the financial statements as at September 30, 2002 and through the subsequent interim periods ended February 5, 2004, contained no adverse opinion or disclaimers of opinion and were not modified or qualified as to audit scope or accounting principles, but did contain modifications as to the Company's ability to continue as a going concern. During the fiscal year ended September 30, 2002, and through the subsequent interim period ended February 5, 2004, to the best of the Company's knowledge, there have been no disagreements with Sellers & Andersen, LLC on any matters of accounting principles or practices, financial statement disclosure, or audit scope or procedures, which disagreement if not resolved to the satisfaction of Sellers & Andersen, LLC would have caused them to make reference in connection with its report on the financial statements of the Company for such years. During the fiscal year ended September 30, 2002, and through subsequent interim period ended February 5, 2004, Sellers & Andersen, LLC did not advise the Company on any matters set forth in Item 304 (a)(1)(iv)(B) of Regulation S-B. For the financial statements for the fiscal years ended September 30, 2002 and 2001, the Company has not consulted with Madsen & Associates CPA's Inc. regarding (i) the application of accounting principles to a specific transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company's financial statements, and no written report or oral advice was provided to the Company by concluding there was an important factor to be considered by the Company in reaching a decision as to an accounting, auditing or financial reporting issue; or (ii) any matter that was -17- either the subject of a disagreement, as that term is defined in Item 304 (a)(1)(iv)(A) of Regulation S-B or an event, as that term is defined in Item 304 (a)(1)(iv)(B) of Regulation S-B. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K The exhibits required to be filed herewith by Item 601 of Regulation S-B, as described in the following index of exhibits, are incorporated herein by reference, as follows: (a) Exhibits (1) Certificate of Incorporation incorporated herein by reference to the Company's Registration Statement on Form 10-SB filed on March 9, 1999; (2) Articles of Incorporation incorporated herein by reference to the Company's Registration Statement on Form 10-SB filed on March 9, 1999; and (3) By laws incorporated herein by reference to the Company's Registration Statement on Form 10-SB filed on March 9, 1999. 99.1 Certification of the Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 99.2 Certificate Pursuant to 18 U.S.C Section 1350 signed by the Chief Executive Officer 99.3 Certification of the Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 99.4 Certificate Pursuant to 18 U.S.C. Section 1350 signed by the Chief Financial Officer (b) Reports on Form 8-K (i) Forms 8-K incorporated herein by reference to the Company's filing on January 7, 2003 announcing that the change of auditors from Andersen Andersen & Strong to PriceWaterhouse Coopers as described on Form 8-K July 12, 2002 was not implemented. (ii) Form 8-K incorporated herein by reference to the Company's filing on May 28, 2003 announcing the purchase agreement with the Swedish Painting Contractors Association. (iii) Form 8-K incorporated herein by reference to the Company's filing on October 10, 2003 announcing the resignation of John Goodwin as President, Chief Executive Officer and Director, and the appointment of Ronald P. Erickson as President and Chief Financial Officer of the Company. (iv) Form 8-K incorporated herein by reference to the Company's filing on November 3, 2003 announcing the resignation of Ken Tolmie as Chief Financial Officer and Secretary and the appointment of Mary Hethey as Chief Financial Officer and Secretary Treasurer of the Company. (v) Form 8-K filed on February 5, 2004 regarding the Company's change of certifying accountants from Sellers & Andersen LLC to Madsen & Associates, CPA's Inc. (vi) Form 8-K filed on December 15, 2002 dismissing Andersen Andersen & Strong LC as certifying accountants and appointing Sellers & Andersen LLC as certifying accountants. -18- 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. STARBERRYS CORPORATION. (Registrant) By: ------------------------ Ronald Erickson Chief Executive Officer, President and Director Date: May 21, 2004 By: ------------------------------- Mary Hethey Chief Financial Officer and Secretary Treasurer Date: May 21, 2004 -19-