UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED APRIL 30, 2008
Commission file number 333-145897
HL VENTURES INC.
(Exact name of registrant as specified in its charter)
Nevada
(State or other jurisdiction of incorporation or organization)
Office 404 - 4th Floor, Albany House
324-326 Regent Street
London, United Kingdom W1B 3HH
(Address of principal executive offices, including zip code.)
702-993-6122
(Telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the last 90 days. YES [X] NO [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer, "accelerated filer,"
"non-accelerated filer," and "smaller reporting company" in Rule 12b-2 of the
Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). YES [X] NO [ ]
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 6,200,000 shares as of April 30, 2008
ITEM 1. FINANCIAL STATEMENTS
The un-audited financial statements for the quarter ended April 30, 2008
immediately follow.
2
HL VENTURES INC.
(An Exploration Stage Company)
Balance Sheets
- --------------------------------------------------------------------------------
As of As of
April 30, July 31,
2008 2007
-------- --------
(Undaudited)
ASSETS
CURRENT ASSETS
Cash $ 56,776 $ 8,000
Deposits 4,250 --
-------- --------
TOTAL CURRENT ASSETS 61,026 8,000
-------- --------
TOTAL ASSETS $ 61,026 $ 8,000
======== ========
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable $ -- $ 590
-------- --------
TOTAL CURRENT LIABILITIES -- 590
TOTAL LIABILITIES -- 590
STOCKHOLDERS' EQUITY
Common stock, ($0.001 par value, 75,000,000 shares
authorized; 6,200,000 and 3,000,000 shares issued and
outstanding as of April 30, 2008 and July 31, 2007) 6,200 3,000
Additional paid-in capital 72,800 12,000
Deficit accumulated during development stage (17,974) (7,590)
-------- --------
TOTAL STOCKHOLDERS' EQUITY 61,026 7,410
-------- --------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 61,026 $ 8,000
======== ========
The accompanying note are an integral part of these financial statements
3
HL VENTURES INC.
(An Exploration Stage Company)
Statement of Operations
(Unaudited)
- --------------------------------------------------------------------------------
May 21, 2007
Three Months Nine Months (inception)
Ended Ended through
April 30, April 30, April 30,
2008 2008 2008
---------- ---------- ----------
REVENUES
Revenues $ -- $ -- $ --
---------- ---------- ----------
TOTAL REVENUES -- -- --
OPERATIONG EXPENSES
Professional Fees 3,000 7,000 7,000
Property Expenditures -- 750 7,750
Office and Administration 723 2,634 3,224
---------- ---------- ----------
TOTAL OPERATING EXPENSES (3,723) (10,384) (17,974)
---------- ---------- ----------
NET INCOME (LOSS) $ (3,723) $ (10,384) $ (17,974)
========== ========== ==========
BASIC EARNINGS PER SHARE $ (0.00) $ (0.00)
========== ==========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 6,200,000 4,074,453
========== ==========
The accompanying note are an integral part of these financial statements
4
HL VENTURES INC.
(An Exploration Stage Company)
Statement of Cash Flows
(Undaudited)
- --------------------------------------------------------------------------------
May 21, 2007
Nine Months (inception)
Ended through
April 30, April 30,
2008 2008
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $(10,384) $(17,974)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Changes in operating assets and liabilities:
(Increase) decrease in Deposits (4,250) (4,250)
Increase (decrease) in Accounts Payable (590) --
-------- --------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (15,224) (22,224)
CASH FLOWS FROM INVESTING ACTIVITIES
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES -- --
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock 64,000 79,000
-------- --------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 64,000 79,000
-------- --------
NET INCREASE (DECREASE) IN CASH 48,776 56,776
CASH AT BEGINNING OF PERIOD 8,000 --
-------- --------
CASH AT END OF PERIOD $ 56,776 $ 56,776
======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during period for:
Interest $ -- $ --
======== ========
Income Taxes $ -- $ --
======== ========
The accompanying note are an integral part of these financial statements
5
HL VENTURES INC.
(An Exploration Stage Company)
Notes to Financial Statements
April 30, 2008
NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS
HL Ventures Inc. (the Company) was incorporated under the laws of the State of
Nevada on May 21, 2007. The Company was formed to engage in the acquisition,
exploration and development of natural resource properties.
The Company is in the exploration stage. Its activities to date have been
limited to capital formation, organization, development of its business plan and
has commenced initial exploration activities.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. BASIS OF ACCOUNTING
The Company's financial statements are prepared using the accrual method of
accounting. The Company has elected a July 31, year-end.
B. BASIC EARNINGS PER SHARE
In February 1997, the FASB issued SFAS No. 128, "Earnings Per Share", which
specifies the computation, presentation and disclosure requirements for earnings
(loss) per share for entities with publicly held common stock. SFAS No. 128
supersedes the provisions of APB No. 15, and requires the presentation of basic
earnings (loss) per share and diluted earnings (loss) per share. The Company has
adopted the provisions of SFAS No. 128 effective May 21, 2007 (inception).
Basic net loss per share amounts is computed by dividing the net loss by the
weighted average number of common shares outstanding. Diluted earnings per share
are the same as basic earnings per share due to the lack of dilutive items in
the Company.
C. CASH EQUIVALENTS
The Company considers all highly liquid investments purchased with an original
maturity of three months or less to be cash equivalents.
D. USE OF ESTIMATES AND ASSUMPTIONS
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. In accordance with FASB 16 all
adjustments are normal and recurring.
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HL VENTURES INC.
(An Exploration Stage Company)
Notes to Financial Statements
April 30, 2008
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
E. INCOME TAXES
Income taxes are provided in accordance with Statement of Financial Accounting
Standards No. 109 (SFAS 109), Accounting for Income Taxes. A deferred tax asset
or liability is recorded for all temporary differences between financial and tax
reporting and net operating loss carryforwards. Deferred tax expense (benefit)
results from the net change during the year of deferred tax assets and
liabilities.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion of all of the deferred
tax assets will be realized. Deferred tax assets and liabilities are adjusted
for the effects of changes in tax laws and rates on the date of enactment.
NEW ACCOUNTING PRONOUNCEMENTS:
In November 2004, the Financial Accounting Standards Board (FASB) issued SFAS
151, Inventory Costs - an amendment of ARB No. 43, Chapter 4. This Statement
amends the guidance in ARB No. 43, Chapter 4, "Inventory Pricing," to clarify
the accounting for abnormal amounts of idle facility expense, freight, handling
costs, and wasted material (spoilage). Paragraph 5 of ARB 43, Chapter 4,
previously stated that "... under some circumstances, items such as idle
facility expense, excessive spoilage, double freight, and rehandling costs may
be so abnormal as to require treatment as current period charges..." This
Statement requires that those items be recognized as current-period charges
regardless of whether they meet the criterion of "so abnormal." In addition,
this Statement requires that allocation of fixed production overheads to the
costs of conversion be based on the normal capacity of the production
facilities. The provisions of this Statement will be effective for the Company
beginning with its fiscal year ending November 30, 2006. Management believes
that the adoption of this Statement will not have any immediate material impact
on the Company.
In December 2004, the FASB issued SFAS No. 152, "Accounting for Real Estate
Time-Sharing Transactions--an amendment of FASB Statements No. 66 and 67" ("SFAS
152) The amendments made by Statement 152 This Statement amends FASB Statement
No. 66, Accounting for Sales of Real Estate, to reference the financial
accounting and reporting guidance for real estate time-sharing transactions that
is provided in AICPA Statement of Position (SOP) 04-2, Accounting No. 67,
Accounting for Costs and Initial Rental Operations of Real Estate Projects, to
state that the guidance for (a) incidental operations and (b) costs incurred to
sell real estate projects does not apply to real estate time-sharing
transactions. The accounting for those operations and costs is subject to the
guidance in SOP 04-2. This Statement is effective for financial statements for
fiscal years beginning after June 15, 2005, with earlier application encouraged.
The Company believes that the implementation of this standard will not have a
material impact on its financial position, results of operations or cash flows.
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HL VENTURES INC.
(An Exploration Stage Company)
Notes to Financial Statements
April 30, 2008
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
In December 2004, the FASB issued SFAS 123 (revised 2004) "Share-Based Payment".
This Statement requires that the cost resulting from all share-based
transactions be recorded in the financial statements. The Statement establishes
fair value as the measurement objective in accounting for share-based payment
arrangements and requires all entities to apply a fair-value-based measurement
in accounting for share-based payment transactions with employees. The Statement
also establishes fair value as the measurement objective for transactions in
which an entity acquires goods or services from non-employees in share-based
payment transactions. The Statement replaces SFAS 13 "Accounting for Stock-Based
Compensation" and supersedes APB Opinion No. 25 "Accounting for Stock Issued to
Employees". The provisions of this Statement will be effective for the Company
beginning with its fiscal year ending November 30, 2006. The Company believes
that the implementation of this standard will not have a material impact on its
financial position, results of operations or cash flows.
In March 2005, the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin No. 107 (SAB 107) which provides guidance regarding the
interaction of SFAS 123 (R) and certain SEC rules and regulations. The new
guidance includes the SEC's view on the valuation of share-based payment
arrangements for public companies and may simplify some of SFAS 123 (R) `s
implementation challenges for registrants and enhance the information investors
receive.
In March 2005, the FASB issued FIN 47, Accounting for Conditional Asset
Retirement Obligations, which clarifies that the term `conditional asset
retirement obligation' as used in SFAS 143, Accounting for Asset Retirement
Obligations, refers to a legal obligation to perform an asset retirement
activity in which the timing and/or method of settlement are conditional on a
future event that may or may not be within the control of the entity. FIN 47
requires an entity to recognize a liability for the fair value of a conditional
asset retirement obligation if the fair value can be reasonably estimated. FIN
47 is effective no later than the end of the fiscal year ending after December
15, 2005. The Company does not believe that FIN 47 will have a material impact
on its financial position or results from operations.
In August 2005, the FASB issued SFAS 154, Accounting Changes and Error
Corrections. This statement applies to all voluntary changes in accounting
principle and to changes required by an accounting pronouncement if the
pronouncement does not include specific transition provisions, and it changes
the requirements for accounting for and reporting them. Unless it is
impractical, the statement requires retrospective application of the changes to
prior periods' financial statements. This statement is effective for accounting
changes and correction of errors made in fiscal year beginning after December
15, 2005.
8
NOTE 3. GOING CONCERN
The accompanying financial statements are presented on a going concern basis.
The Company had no operations during the period from May 21, 2007 (inception) to
April 30, 2008 and generated a net loss of $17,974. This condition raises
substantial doubt about the Company's ability to continue as a going concern.
Because the Company is currently in the exploration stage and has minimal
expenses, management believes that the company's current cash of $56,776 is
sufficient to cover the expenses they will incur during the next twelve months.
NOTE 4. WARRANTS AND OPTIONS
There are no warrants or options outstanding to acquire any additional shares of
common.
NOTE 5. RELATED PARTY TRANSACTIONS
The Company neither owns nor leases any real or personal property. The officers
and directors of the Company are involved in other business activities and may,
in the future, become involved in other business opportunities as they become
available.
Thus they may face a conflict in selecting between the Company and their other
business interests. The Company has not formulated a policy for the resolution
of such conflicts.
NOTE 6. INCOME TAXES
As of April 30, 2008
--------------------
Deferred tax assets:
Net operating tax carryforwards $ 17,974
Other 0
--------
Gross deferred tax assets 6,111
Valuation allowance (6,111)
--------
Net deferred tax assets $ 0
========
Realization of deferred tax assets is dependent upon sufficient future taxable
income during the period that deductible temporary differences and carryforwards
are expected to be available to reduce taxable income. As the achievement of
required future taxable income is uncertain, the Company recorded a valuation
allowance.
9
HL VENTURES INC.
(An Exploration Stage Company)
Notes to Financial Statements
April 30, 2008
NOTE 8. NET OPERATING LOSSES
As of April 30, 2008, the Company has a net operating loss carryforward of
approximately $17,974. Net operating loss carryforward expires twenty years from
the date the loss was incurred.
NOTE 9. STOCK TRANSACTIONS
Transactions, other than employees' stock issuance, are in accordance with
paragraph 8 of SFAS 123. Thus issuances shall be accounted for based on the fair
value of the consideration received. Transactions with employees' stock issuance
are in accordance with paragraphs (16-44) of SFAS 123. These issuances shall be
accounted for based on the fair value of the consideration received or the fair
value of the equity instruments issued, or whichever is more readily
determinable.
On June 29, 2007 the Company issued a total of 1,600,000 shares of common stock
to one director for cash at $0.005 per share for a total of $8,000.
On July 18, 2007 the Company issued a total of 1,400,000 shares of common stock
to one director for cash advanced on behalf of the Company at $0.005 per share
for a total of $7,000.
On January 30, 2008 the Company issued a total of 3,200,000 shares of common
stock to twenty six unrelated investors for cash at $0.02 per share for a total
of $64,000.
As of April 30, 2008 the Company had 6,200,000 shares of common stock issued and
outstanding.
NOTE 10. STOCKHOLDERS' EQUITY
The stockholders' equity section of the Company contains the following classes
of capital stock as of April 30, 2008:
* Common stock, $ 0.001 par value: 75,000,000 shares authorized;
6,200,000 shares issued and outstanding.
10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
FORWARD LOOKING STATEMENTS
This report contains forward-looking statements that involve risk and
uncertainties. We use words such as "anticipate", "believe", "plan", "expect",
"future", "intend", and similar expressions to identify such forward-looking
statements. Investors should be aware that all forward-looking statements
contained within this filing are good faith estimates of management as of the
date of this filing and actual results may differ materially from historical
results or our predictions of future results.
RESULTS OF OPERATIONS
We are still in our exploration stage and have generated no revenues to date.
We incurred operating expenses of $3,723 for the three months ended April 30,
2008. These expenses consisted of general operating expenses and professional
fees incurred in connection with the day to day operation of our business and
the preparation and filing of our required reports with the U.S. Securities and
Exchange Commission.
Our net loss from inception (May 21, 2007) through April 30, 2008 was $17,974.
We have sold $72,000 in equity securities and issued $7,000 in common stock in
exchange for mineral property expenses paid by our officer on our behalf.
The following table provides selected financial data about our company for the
quarter ended April 30, 2008.
Balance Sheet Data: 4/30/08
------------------- -------
Cash $56,776
Total assets $61,026
Total liabilities $ 0
Shareholders' equity $61,026
LIQUIDITY AND CAPITAL RESOURCES
Our cash balance at April 30, 2008 was $56,776. We have paid a deposit of $4,250
to the consulting geologist for exploration work. In order to achieve our
exploration program goals, we needed the funding from the offering of registered
shares pursuant to our Registration Statement filed on Form SB-2 which became
effective on September 18, 2007. The offering was completed on January 30, 2008.
If we experience a shortage of funds prior to generating revenue we may utilize
funds from our director, who has informally agreed to advance funds, however he
has no formal commitment, arrangement or legal obligation to advance or loan
funds to us. We are an exploration stage company and have generated no revenue
to date.
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PLAN OF OPERATION
Our exploration target is to find exploitable minerals on our property. Our
success depends on achieving that target. There is the likelihood of our mineral
claims containing little or no economic mineralization or reserves of silver and
other minerals. There is the possibility that our claims do not contain any
reserves and funds that we spend on exploration will be lost. Even if we
complete our current exploration program and are successful in identifying a
mineral deposit we will be required to expend substantial funds to bring our
claims to production. We are unable to assure investors that we will be able to
raise the additional funds necessary to implement any future exploration or
extraction program even if mineralization is found.
Our plan of operation for the twelve months is to complete the three phases of
the exploration program. In addition to the $57,000 we anticipate spending for
the exploration program as outlined below, we anticipate spending an additional
$4,000 on professional fees and general administrative costs. Total expenditures
over the next 12 months are therefore expected to be approximately $61,000.
The following work program has been recommended by the consulting geologist who
prepared the geology report.
PHASE 1
Detailed prospecting, mapping and soil geochemistry.
The program is expected to take four weeks to complete
including the turn-around time on sample analyses. The
estimated cost for this program is all inclusive $ 8,500
PHASE 2
Magnetometer and VLF electromagnetic, grid controlled
surveys over the areas of interest determined by the
Phase 1 survey. The program is expected to take two
weeks to complete. The estimated cost includes
transportation, travel, accommodation, board, grid
installation, two geophysical surveys, maps and report 8,500
PHASE 3
Induced polarization survey over grid controlled
anomalous areas of interest outlined by Phase 1&2
programs. Hoe or bulldozer trenching, mapping and
sampling of bedrock anomalies. Includes assays, maps
and reports 40,000
-------
Total $57,000
=======
The above program costs are management's estimates based upon the
recommendations of the professional consulting geologist's report and the actual
project costs may exceed our estimates.
12
Each phase following phase 1 is contingent upon favorable results from the
previous phase. We have given the consulting geologist the okay to commence
Phase 1 of the exploration program and have paid him a deposit of $4,250. He has
completed the onsite work, sent the samples to the assay lab and is waiting for
the results at which time he will prepare his report for us.
Following phase one of the exploration program, if it proves successful in
identifying mineral deposits, we intend to proceed with phase two of our
exploration program. The estimated cost of this program is $8,500 and will take
approximately 2 weeks to complete and an additional one to two months for the
consulting geologist to receive the results from the assay lab and prepare his
report.
Following phase two of the exploration program, if it proves successful, we
intend to proceed with phase three of our exploration program. The estimated
cost of this program is $40,000 and will take approximately 4 weeks to complete
and an additional two months for the consulting geologist to receive the results
from the assay lab and prepare his report.
We anticipate commencing the second phase of our exploration program in late
summer 2008 and phase 3 in early fall 2008. We have a verbal agreement with
James McLeod, the consulting geologist who prepared the geology report on our
claims, to retain his services for our exploration program. We cannot provide
investors with any assurance that we will be able to raise sufficient funds to
proceed with any work after the exploration program if we find mineralization.
OFF-BALANCE SHEET ARRANGEMENTS
We have no off-balance sheet arrangements.
ITEM 4. CONTROLS AND PROCEDURES.
Under the supervision and with the participation of our management, including
our principal executive officer and the principal financial officer, we have
conducted an evaluation of the effectiveness of the design and operation of our
disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e)
under the Securities and Exchange Act of 1934, as of the end of the period
covered by this report. Based on this evaluation, our principal executive
officer and principal financial officer concluded as of the evaluation date that
our disclosure controls and procedures were effective such that the material
information required to be included in our Securities and Exchange Commission
reports is recorded, processed, summarized and reported within the time periods
specified in Securities and Exchange Commission rules and forms relating to our
company, particularly during the period when this report was being prepared.
Additionally, there were no significant changes in our internal controls or in
other factors that could significantly affect these controls subsequent to the
evaluation date. We have not identified any significant deficiencies or material
weaknesses in our internal controls, and therefore there were no corrective
actions taken.
13
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS.
The following exhibits are included with this quarterly filing:
Exhibit No. Description
----------- -----------
3.1 Articles of Incorporation*
3.2 Bylaws*
31.1 Sec. 302 Certification of Principal Executive Officer
31.2 Sec. 302 Certification of Principal Financial Officer
32.1 Sec. 906 Certification of Principal Executive Officer
32.2 Sec. 906 Certification of Principal Financial Officer
*Document is incorporated by reference and can be found in its entirety in our
Registration Statement on Form SB-2, SEC File Number 333-145897, at the
Securities and Exchange Commission website at www.sec.gov.
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.
June 9, 2008 HL Ventures Inc.
/s/ Deniz Hassan
---------------------------------------------------
By: Deniz Hassan
(Chief Executive Officer, Chief Financial Officer,
Principal Accounting Officer, President, Secretary,
Treasurer & Sole Director)
14