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 June 30, 2004
---------------
( ) TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT
For the transition period from to
Commission File number 0-25541
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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.)
Suite 420, 500 Union Street
Seattle, Washington USA 98101
- ------------------------- -------------
(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 June 30, 2004
---------- ------------------------------------
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 June 30, 2004 and September 30,
2003 4
Statement of Operations
For the three and nine months ended June 30, 2004 and
2003, and for the period from October 8,
1998 (Date of Inception) to June 30, 2004. . . . . . 5
Statement of Cash Flows
For the nine months ended June 30, 2004 and
2003 and for the period from October 8, 1998
(Date of Inception) to June 30, 2004 . . . . . . . . 6
Notes to the Financial Statements. . 7
ITEM 2 Management's Discussion and Analysis or Plan
.. . . . .of Operation 12
ITEM 3.. . Controls and Procedures 17
PART 11. . . .. OTHER INFORMATION 17
ITEM 1.. . Legal Proceedings 17
ITEM 2.. . Changes in Securities 17
ITEM 3.. . Default Upon Senior Securities 18
ITEM 4.. Submission of Matters to a Vote of Security Holders 18
ITEM 5.. . Other Information 18
ITEM 6.. . Exhibits and Reports on Form 8-K 18
SIGNATURES . . . . . 21
-2-
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The accompanying balance sheet of Starberrys Corporation (development stage
company) at June 30, 2004 and September 30, 2003 and the statement of operations
and statement of cash flow for the nine months ended June 30, 2004 and 2003 and
for the period from October 8, 1998 (date of incorporation) to June 30, 2004,
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 June 30, 2004 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
June 30, 2004
JUNE 30, SEPTEMBER 30,
2004 2003
-------------- -------------
ASSETS
CURRENT ASSETS
Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 39 $ 380
-------------- ------
TOTAL CURRENT ASSETS. . . . . . . . . . . . . . . . . . . . . $ 39 $ 380
============== =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Note payable - related party . . . . . $ 500,000 $ 500,000
Accrued interest 0n note payable - related party 75,000 18,750
Accounts payable - related parties. . . . . . . . . . . . 650,458 645,652
Accounts payable. . . . . . . . . . . . . . . . . . . . . 291,775 247,405
-------------- ------------
TOTAL CURRENT LIABILITIES . . . . . . . . . . . . . . . . . . 1,517,233 1,411,807
-------------- -------------
STOCKHOLDERS' EQUITY (DEFICIENCY)
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. . . . . (2,138,510) (2,032,743)
-------------- --------------
TOTAL STOCKHOLDERS' DEFICIENCY. . . . . . . . . . . . . . . . (1,517,194) (1,411,427)
-------------- --------------
$ 39 $ 380
========== =========
The accompanying notes are an integral part of these financial statements
-4-
STARBERRYS CORPORATION
(Development Stage Company)
STATEMENT OF OPERATIONS
For the Three and Nine Months Ended June 30, 2004 and 2003 and Period
October 8,1998 (Date of Inception) to June 30, 2004
Three Three Nine Nine October 8,
Months Months Months Months 1998
Ended Ended Ended Ended to
June 30, June 30, June 30, June 30, June 30,
2004 2003 2004 2003 2004
------------- -------------- ---------- ---------- -------------
REVENUES. . . . . . . . . . . . $ - $ - $ - $ - $ -
------------- -------------- ---------- ---------- ----------
EXPENSES
Administrative. . . . . . . 8,778 251,706 49,517 407,405 909,183
------------- -------------- ---------- ---------- ------------
NET LOSS - before other losses. (8,778) (251,706) (49,517) (407,405) (909,183)
OTHER EXPENSES AND LOSSES
Interest. . . . . . . . . . (18,750) - (56,250) - (75,000)
Loss of deposit - note 7. . - - - - (1,154,327)
------------- -------------- ---------- ---------- -------------
NET LOSS. . . . . . . . . . . . $ (27,528) $ (251,706) $(105,767) $(407,405) $ (2,138,510)
============= ============== ========== ========== ===========
NET LOSS PER COMMON SHARE
Basic and diluted . . . . . $ (0.00) $ (0.02) $ (0.01) $ (0.04)
============= ============== ========== ==========
AVERAGE OUTSTANDING SHARES
(stated in 1000,s)
Basic . . . . . . . . . . . 11,490 10,561 11,490 10,561
============= =========== ======== ==========
The accompanying notes are an integral part of these financial statements
-5-
STARBERRYS CORPORATION
(Development Stage Company)
STATEMENT OF CASH FLOWS
For the nine months ended June 30, 2004 and 2003 and the Period
October 8, 1998 (Date of Inception) to June 30, 2004
June 30 June 30 Oct 8, 1998 to
2004 2003 June 30, 2004
---------- --------------- -----------------
CASH FLOWS FROM
OPERATING ACTIVITIES
Net loss. . . . . . . . . . . . . . . . . $(105,767) $ (407,405) $ (2,138,510)
Adjustments to reconcile net loss
to net cash provided by operating
activities
Issuance of common stock for
expenses . . . . . . . . . . . . . - - 150
Changes in prepaid expenses . . . . . - (10,000) -
Changes in accounts and notes payable 105,426 1,220,344 1,517,233
Capital contributions - expenses. . . - - 10,950
Loss of deposit . . . . . . . . . . . - - 1,154,327
---------- --------------- -------------
Net Cash Used in Operations . . . (341) 802,939 544,150
---------- --------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of investment - deposit. . . - (897,777) (1,154,327)
---------- --------------- -------------
CASH FLOWS FROM
FINANCING ACTIVITIES
Net proceeds from issuance of
common stock. . . . . . . . . . . - - 610,216
---------- --------------- --------------
Net Increase (Decrease) in Cash . . . . . (341) (94,838) 39
Cash at Beginning of Period . . . . . . . 380 553 -
---------- --------------- ----------------
Cash at End of Period . . . . . . . . . . $ 39 $ (94,285) $ 39
========== =============== =============
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
June 30, 2004
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. The contract was subsequently rescinded.
On June 16, 2004, the Company executed an agreement securing rights to color
technology outside the visible spectrum. (see Note 7).
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.
-7-
STARBERRYS CORPORATION
(Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 2004
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Income Taxes - continued
- ---------------------------
On June 30, 2004 the Company had a net operating loss carry forward of $
2,138,510. The tax benefit of approximately $ 641,500 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.
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
due to their short term maturities.
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.
-8-
STARBERRYS CORPORATION
(Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 2004
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
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.
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, 2003, including interest
of 15%. The note is secured by common shares of the Company owned by
officers-directors. The note payable is presently in default. The accrued
interest at June 30, 2004 is $75,000.
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.
-9-
STARBERRYS CORPORATION
(Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 2004
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.
7. CONTRACTUAL AGREEMENTS
On June 16, 2004, the Company executed an Intellectual Property Agreement with
Ken Turpin to confirm the Company's ownership of the business of researching,
developing, acquiring and commercializing products and services related to color
technology outside the visible spectrum, using specialized narrow band N-IR and
N-UV sensors and special analysis software modeling. In this Agreement, Turpin
acknowledges and agrees that all work product has been made for the Company and
that the Company is the exclusive owner of all right, title and interest in and
to the work product and all intellectual property rights therein.
Also on June 16, 2004, the Company executed an Independent Contractor Agreement
with E-Vision Technologies Inc., by which the Company hired E-Vision to research
and develop the Company's color technology outside the visible spectrum on a fee
for service basis.
8. 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.
9. SUBSEQUENT EVENTS
On August 18, 2004, the Company changed its name to "Visulant, Incorporated" to
reflect its new business pursuits. On August 31, 2004, the Company concluded a
US $100,000 private placement of its common stock at $0.50 per share.
-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 Seattle,
Washington.
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 June 30, 2004 there were
11,489,848 Common Shares and no Preferred Shares outstanding.
On June 16, 2004, the Company executed an Intellectual Property Agreement with
Ken Turpin to confirm the Company's ownership of the business of researching,
developing, acquiring and commercializing products and services related to color
technology outside the visible spectrum, using specialized narrow band N-IR and
N-UV sensors and special analysis software modeling. In this Agreement, Turpin
acknowledges and agrees that all work product has been made for the Company and
that the Company is the exclusive owner of all right, title and interest in and
to the work product and all intellectual property rights therein.
Also on June 16, 2004, the Company executed an Independent Contractor Agreement
with E-Vision Technologies Inc., by which the Company hired E-Vision to research
and develop the Company's color technology outside the visible spectrum on a fee
for service basis.
On August 18, 2004, the Company changed its name to Visulant, Incorporated to
reflect its new business pursuits. Hans Nasholm resigned as a director of the
Company on this date, and the Company concluded a US $100,000 private placement
of its common stock at $0.50 per share.
On August 31, 2004, the resignation of Ronald Erickson as Chief Executive
Officer and President was accepted and Ralph Brier was appointed as Chief
Executive Officer, President and a director of the Company.
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 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").
-11-
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 June 30, 2004 of $2,138,510. As a result of
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
-12-
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.
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
-13-
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 June 30, 2004, the Company had assets of $39, and liabilities of
$1,517,233. The liabilities include accounts payable of $291,775, accounts
payable to related parties of $650,458 and a note payable, with accrued
interest, which is payable to a related party in the amount of $575,000.
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 June 30,
2004 as follows:
EXPENDITURE AMOUNT
Accounting and audit . . . . . i $ 985
Bank Charges . . . . . . . . . . . . . 31
Edgar filing fees. . . . . . ii 150
Foreign exchange (gain). . . iii (5,277)
Legal fees . . . . . . . . . iv 5,826
Research and development . . . v 6,938
Transfer agent's fees. .. . . vi 125
--------
Total expenses before other
losses. 8,778
Interest expense. . . . . . . vii 18,750
--------
Net loss for the period . . . . . . $ 27,528
=======
i. The Company accrued $485 in fees to its auditors for the review of this
Form 10-QSB and $500 in fees to its Chief Financial Officer for the
preparation of the financial statements and 10-QSB.
ii. The Company has incurred certain expenses during the three months for
filing its various disclosure forms with the SEC, including the Form 10-QSB
for June 30, 2004.
-14-
iii. Gain 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 $5,826 were incurred during the period.
v. Research and development fees consist of the bi-monthly charge of $9,300
Canadian for software development related to color technology outside the
visible spectrum.
vi. Transfer agent fees of $149 consist of 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 $ 9,500
Bank charges . . . . . . 500
Filing fees. . . . . 2 1,060
Legal fees . . 3 25,000
Office . . . . . . . 4 960
Research and development 5 167,400
Telephone. . . . . . . . 6 3,600
Transfer agent's fees. . 7 2,900
Travel and promotion . . 8 20,000
--------
Estimated expenses . . $ 230,920
==========
1. Accounting and auditing expense has been projected as follows:
Filing Accountant Auditors Total
-------- ----------- --------- ---------
Form 10-KSB - Sept. 30, 2004 $ 2,500 $ 4,000 $ 6,500
Form 10-QSB - Dec. 31, 2004. 500 500 1,000
Form 10-QSB - Mar. 31, 2005. 500 500 1,000
Form 10-QSB - June 30, 2005. 500 500 1,000
----------- --------- ---------
$ 4,000 $ 5,500 $ 9,500
======== ======= =======
2. The Company pays approximately $300 for filing of its Form 10-KSB and $150
for each of its Form 10-QSB's on the Edgar system with the Securities and
Exchange Commission. It is estimated that this expense will be
approximately $750 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.
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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. Research and development is paid to Kenneth Turpin at a rate of $18,600
Canadian ($13,950 US) per month for twelve months.
6. The estimate of telephone expenses to conduct Company business is
approximately $300 per month for 12 months.
7. 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.
8. 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
procedures subsequent to the Evaluation Date, nor any significant deficiencies
or material weaknesses in such disclosure controls and procedures requiring
corrective actions.
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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
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.
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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.
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(vii) Form 8-K filed on September 13, 2004, announcing the Intellectual Property
Agreement between Kenneth Turpin and the Company, signed June 16, 2004.
Also announced were the resignation of Hans Nasholm as director and Ronald
Erickson as Chief Executive Officer and President of the Company. On August
31, 2004, Ralph Brier was appointed Chief Executive Officer, President and
a Director of the Company, Kenneth Turpin was appointed as Chief Science
Officer and Chair of the Research and Development Committee and Zack Wickes
was appointed Chief Technical Officer. The Form 8=K also announced that the
name of the Company was changed to Visualant, Incorporated and was
registered with the Secretary of State of Nevada.
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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.
VISUALANT, INCORPORATED
(FORMERLY STARBERRYS CORPORATION)
(Registrant)
By: "Ralph Brier"
--- -------------
Ralph Brier
Chief Executive Officer, President,
and Director
Date:
By: "Mary Hethey"
--- -------------
Mary Hethey
Chief Financial Officer and Secretary
Treasurer
Date:
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