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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended September 30, 2004
-----------------------
[ ] Transition Report pursuant to 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period to
------------------ --------------------
Commission File Number 001-31669
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TARI INC.
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(Exact name of small Business Issuer as specified in its charter)
Nevada 98-03048905
-------------------------------- -----------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
700 West Pender Street, Suite 802
Vancouver, British Columbia, Canada V6C 1G8
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(Address of principal executive offices)
(604) 685-3317
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Registrant's telephone number, including area code
None
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(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the issuer was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days [ ] Yes [X] No
State the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date: 3,890,000 shares of $0.001 par value
common stock outstanding as of November 4, 2004.
<page>
TARI INC.
(A Pre-exploration Stage Company)
INTERIM FINANCIAL STATEMENTS
September 30, 2004
(Stated in US Dollars)
(Unaudited)
------------
<page>
TARI INC.
(A Pre-exploration Stage Company)
INTERIM BALANCE SHEETS
September 30, 2004 and March 31, 2004
(Stated in US Dollars)
(Unaudited)
------------
<table>
<caption>
September 30, March 31,
ASSETS 2004 2004
------ ---- ----
<s> <c> <c>
Current
Cash $ 4,007 $ 17,698
============== ============
LIABILITIES
-----------
Current
Accounts payable and accrued liabilities $ 4,725 $ 6,250
Due to related party - Note 3 2,155 2,155
-------------- ------------
6,880 8,405
-------------- ------------
STOCKHOLDERS' EQUITY (DEFICIENCY)
---------------------------------
Preferred stock, $0.001 par value
10,000,000 shares authorized, none outstanding
Common stock, $0.001 par value
100,000,000 shares authorized
3,890,000 (March 31, 2004: 3,890,000) shares issued 3,890 3,890
Additional paid-in capital 90,610 90,610
Deficit accumulated during the pre-exploration stage ( 97,373) ( 85,207)
-------------- ------------
( 2,873) 9,293
-------------- ------------
$ 4,007 $ 17,698
============== ============
</table>
SEE ACCOMPANYING NOTES
<page>
TARI INC.
(A Pre-exploration Stage Company)
INTERIM STATEMENTS OF OPERATIONS
for the three and six months ended September 30, 2004 and 2003,
and for the period May 2, 2001 (Date of Incorporation) to September 30, 2004
(Stated in US Dollars)
(Unaudited)
-----------
<table>
<caption>
May 2, 2001
(Date of Incor-
Three months ended Six months ended poration) to
September 30, September 30, September 30,
2004 2003 2004 2003 2004
---- ---- ---- ---- ----
<s> <c> <c> <c> <c> <c>
Expenses
Audit and accounting fees $ 1,332 $ 3,761 $ 2,024 $ 4,761 $ 22,900
Bank charges 69 49 144 103 758
Consulting fees - - - - 15,500
Incorporation costs - - - - 900
Legal fees - - - - 28,768
Management fees 1,500 - 1,500 - 1,500
Office expenses 1,200 - 1,200 - 1,586
Mineral lease costs - Note 4 5,050 221 5,271 1,721 17,248
Transfer agent and filing fees 490 324 2,027 2,541 8,213
----------- ----------- ----------- ----------- -----------
Net loss for the period $ ( 9,641) $ ( 4,355) $ ( 12,166) $ ( 9,126) $ 97,373
=========== =========== =========== =========== ===========
Basic loss per share $ ( 0.00) $ ( 0.00) $ ( 0.00) $ ( 0.00)
=========== =========== =========== ===========
Weighted average number of
shares outstanding 3,890,000 3,890,000 3,890,000 3,890,000
=========== =========== ========== ===========
</table>
SEE ACCOMPANYING NOTES
<page>
TARI INC.
(A Pre-exploration Stage Company)
INTERIM STATEMENTS OF CASH FLOWS
for the six months ended September 30, 2004 and 2003,
and for the period May 2, 2001 (Date of Incorporation) to September 30, 2004
(Stated in US Dollars)
(Unaudited)
-----------
<table>
<caption>
May 2, 2001
(Date of
Incorporation)
Six months ended to September
September 30, 30,
2004 2003 2004
---- ---- ----
<s> <c> <c> <c>
Cash Flows used in Operating Activities
Net loss for the period $ ( 12,166) $ ( 9,126) $ ( 97,373)
Change in non-cash working capital item related to
operations:
Accounts payable and accrued liabilities ( 1,525) ( 883) 4,725
----------- ----------- -----------
( 13,691) ( 10,009) ( 92,648)
----------- ----------- -----------
Cash Flows provided by Financing Activities
Proceeds from shares issued - - 94,500
Due to related party - - 2,155
----------- ----------- -----------
- - 96,655
----------- ----------- -----------
Increase (decrease) in cash during the period ( 13,691) ( 10,009) 4,007
Cash, beginning of the period 17,698 30,773 -
----------- ---------- ----------
Cash, end of the period $ 4,007 $ 20,764 $ 4,007
=========== ========== ==========
Supplemental disclosure of cash flow information: Cash paid for:
Interest $ - $ - $ -
=========== ========== ==========
Income taxes $ - $ - $ -
=========== ========== ==========
</table>
SEE ACCOMPANYING NOTES
<page>
TARI INC.
(A Pre-exploration Stage Company)
INTERIM STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)
for the period May 2, 2001 (Date of Incorporation) to September 30, 2004
(Stated in US Dollars)
(Unaudited)
-----------
<table>
<caption>
Deficit
Accumulated
Common Shares Additional During the
----------------------------------- Paid-in Pre-exploration
Number Par Value Capital Stage Total
------- --------- ------- ----- ------
<s> <c> <c> <c> <c> <c>
Capital stock issued for cash
- at $0.01 2,500,000 $ 2,500 $ 22,500 $ - $ 25,000
Net loss for the period ended
March 31, 2002 - - - ( 39,696) ( 39,696)
---------- ----------- ---------- ----------- -----------
Balance, March 31, 2002 2,500,000 2,500 22,500 ( 39,696) ( 14,696)
Capital stock subscribed
pursuant to an offering
memorandum for cash
- at $0.05 1,390,000 1,390 68,110 - 69,500
Net loss for the year ended
March 31, 2003 - - - ( 27,653) ( 27,653)
---------- ----------- ---------- ----------- -----------
Balance, March 31, 2003 3,890,000 3,890 90,610 ( 67,349) 27,151
Net loss for the year ended
March 31, 2004 - - - ( 17,858) ( 17,858)
---------- ----------- ---------- ----------- -----------
Balance, March 31, 2004 3,890,000 3,890 90,610 ( 85,207) 9,293
Net loss for the period ( 12,166) ( 12,166)
---------- ----------- ---------- ------------ -----------
Balance, September 30, 2004 3,890,000 $ 3,890 $ 90,610 $ ( 97,373) $ ( 2,873)
========== =========== ========== ============ ===========
</table>
SEE ACCOMPANYING NOTES
<page>
TARI INC.
(A Pre-exploration Stage Company)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
September 30, 2004
(Stated in US Dollars)
(Unaudited)
Note 1 Interim Reporting
-----------------
While information presented in the accompanying interim financial
statements is unaudited, it includes all adjustments which are, in
the opinion of management, necessary to present fairly the
financial position, results of operations and cash flows for the
interim period presented. All adjustments are of a normal
recurring nature. It is suggested that these interim financial
statements be read in conjunction with the Company's March 31,
2004 financial statements. Operating results from the period ended
September 30, 2004 are not necessarily indicative of the results
that can be expected for the year ending March 31, 2005.
Note 2 Continuance of Operations
-------------------------
These financial statements have been prepared using generally
accepted accounting principles in the United States of America
applicable for a going concern which assumes that the Company will
realize its assets and discharge its liabilities in the ordinary
course of business. The Company has a working capital deficiency
of $2,873 as at September 30, 2004 and has not yet attained
profitable operations. The Company has accumulated losses of
$97,373 since inception. Its ability to continue as a going
concern is dependent upon the ability of the company to generate
profitable operations in the future and/or to obtain the necessary
financing to meet its obligations and repay its liabilities
arising from normal business operations when they come due.
Note 3 Due to Related Party
--------------------
The amount due to related party, a director of the Company,
consist of unpaid advances of $2,155. The amount due is unsecured,
non-interest bearing and has no specific terms for repayment.
Note 4 Commitments
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Mining Lease
By a lease agreement effective May 15, 2001 and amended April
2002, November 2002, April 2003 and January 9, 2004, the Company
was granted the exclusive right to explore and mine the SP
resource property located in Storey County of the State of Nevada.
The term of this lease is for 20 years, renewable for an
additional 20 years so long as the conditions of the lease are
met. Minimum payments and performance commitments are as follows:
<page>
Tari Inc.
(A Pre-exploration Stage Company)
Notes to the Financial Statements
September 30, 2004
(Stated in US Dollars) - Page 2
--------------------
Minimum Advance Royalty Payments:
The owner shall be paid a royalty of 4% of the net smelter
returns from all production. In respect to this royalty, the
company is required to pay minimum advance royalty payments of
the following:
- $5,000 upon execution (paid);
- $1,250 on or before May 15, 2002 (paid);
- $1,500 on or before November 30, 2002 (paid);
- $1,500 on or before April 15, 2003 (paid);
- $2,000 on January 9, 2004 (paid);
- $5,000 on or before July 9, 2004 (paid);
- $10,000 on or before January 9, 2005; and
- $50,000each January 9 thereafter until termination of the
lease, adjusted based on inflation rates designated by
the Consumer Price Index.
The Company can reduce the net smelter return royalty to 0.5%
by payment of a buy-out price of $5,000,000. Advance royalty
payments made to the date of the buy-out will be applied to
reduce the buy-out price.
Performance Commitment:
In the event that the Company terminates the lease after June
1, of any year it is required to pay all federal and state
mining claim maintenance fees for the next assessment year.
The Company is required to perform reclamation work in the
property as required by federal state and local law for
disturbances resulting from the Company's activities on the
property.
<page>
Item 2. Management's Discussion and Analysis or Plan of Operation
Forward Looking Statements
This quarterly report contains forward-looking statements that involve risks and
uncertainties. We use words such as anticipate, believe, plan, expect, future,
intend and similar expressions to identify such forward-looking statements. You
should not place too much reliance on these forward-looking statements. Our
actual results are likely to differ materially from those anticipated in these
forward-looking statements for many reasons, including the risks faced by us
described in this Risk Factors section and elsewhere in this quarterly report.
Plan of Operation
Our plan of operation for the twelve months following the date of this report is
to complete the recommended phase one exploration program on the SP project in
which we hold a leasehold interest. We still anticipate that this program will
cost us $89,000.
In January 2004, we amended our mineral claims agreement regarding the SP
Project located in Storey County Nevada. We paid the lessor of the property
$2,000 upon execution of the agreement and $5,000 on July 5, 2004. In order to
keep the lease in good standing, we must pay the lessor $10,000 by January 9,
2005, and $50,000 per year thereafter.
In addition, we anticipate spending $12,000 on professional fees and $15,000 on
administrative expenses.
Total expenditures over the next 12 months are therefore expected to be
$126,000. Our cash on hand September 30, 2004 was $4,007. Accordingly, we will
need to raise additional funds in order to complete the recommended exploration
program on the SP project and meet our other expected expenses. We do not
currently have any arrangements for raising additional funding.
Results of Operations for the second quarter-ended September 30, 2004
We incurred a net loss of $12,166 for the six-month period ended September 30,
2004, as compared to a loss of $9,126 in the same period in 2003. The difference
in net loss was primarily due to an increase in management fees, office
expenses, and resource property costs. As per management agreement dated July 1,
2004, the president started to charge the Company $500 per month for management
fees ($1,500 per the period July - September 2004). The Company also started to
incur $400 per month for office rent, telephone expenses, and general
miscellaneous office expenses ($1,200 per the period July-September 2004)
related to use of the Vancouver office. In the previous periods, the president
did not charge the Company for such expenses. During the six months ended
September 30, 2004, we incurred transfer agent and filing fees of $2,027 (2003:
$2,541) and professional fees of $2,024 (2003: $4,761) in order to bring all
outstanding SEC filings current. We also incurred resource property costs of
$5,271 (2003: $1,721) due to the new amended lease agreement. At the end of the
second quarter, we had cash on hand of $4,007. Our liabilities for the same
period totalled $6,880 and consisted of accounts payable of $4,725 and $2,155
due to our president.
<page>
Item 3. Controls and Procedures
As required by Rule 13a-15 under the Exchange Act, within the 90 days prior to
the filing date of this report, the Company carried out an evaluation of the
effectiveness of the design and operation of the Company's disclosure controls
and procedures. This evaluation was carried out under the supervision and with
the participation of the Company's management, including the Company's
President, the Chief Executive Officer, and the Chief Financial Officer.
Based upon that evaluation, the Company concluded that the disclosure controls
and procedures are effective. There have been no significant changes in the
Company's internal controls or in other factors, which could significantly
affect internal controls subsequent to the date the Company carried out its
evaluation.
PART II OTHER INFORMATION
Item 1. Legal Proceedings
The Company is not a party to any pending legal proceeding. Management is not
aware of any threatened litigation, claims or assessments.
Item 2. Changes in Securities
None.
Item 3. Defaults upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Report on Form 8-K
10.1 Management Agreement
31.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002
31.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
32.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
<page>
There were no reports filed on Form 8-K during the six months period ended
September 30, 2004.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Tari Inc.
/s/ Theodore Tsagkaris
---------------------------
Theodore Tsagkaris
President, Secretary, Treasurer
Chief Executive Officer and Director
(Principal Executive Officer,
Principal Financial Officer and
Principal Accounting Officer)
Dated: November 4, 2004
<page>
Exhibit 10.1
MANAGEMENT AGREEMENT
--------------------
This Management Agreement is dated July 1, 2004.
BETWEEN:
Theodore Tsagkaris, with address at 1029 Logan Avenue, Toronto,
Ontario, M4K 3E7
(the "Manager")
and
TARI INC., a company having a registered office in the State
of Nevada and records office at 802 - 700 West Pender Street,
Vancouver, BC, V6C 1G8
(the "Company")
WHEREAS:
A. The Company has agreed to retain the services of the Manager on the terms
and conditions hereinafter set forth effective the date referenced above; and
B. The Manager has agreed to be retained by the Company upon the terms and
conditions hereinafter set forth.
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the premises
and mutual covenants and agreements herein contained, the parties hereto
covenant and agree each with the other as follows:
1. RETAINER
The Company hereby retains the Manager and the Manager hereby accepts such
retainer, to perform the duties and render the services set forth herein during
the term of this Agreement. The Manager agrees to provide the services of
Theodore Tsagkaris ("Tsagkaris") to the Company for the duration of this
Agreement.
2. TERM
This Agreement will be effective July 1, 2004 (the "Commencement Date") and
shall continue in full force and effect for 12 months after the Commencement
Date.
3. COMPENSATION
As compensation for the services of the Manager during the term of this
Agreement, the Company shall pay the Manager a monthly salary of US$500
commencing on the Commencement Date.
<page>
4. REIMBURSEMENT FOR EXPENSES
The Manager will be reimbursed for all reasonable out-of-pocket expenses
incurred by the Manager in or about the execution of his duties which are
pre-approved by the Company.
5. DUTIES AND SERVICES
During the term of this Agreement, the Company agrees that Tsagkaris will
provide general management duties, as required.
6. TERMINATION OF AGREEMENT
Notwithstanding any other provision herein, it is understood and agreed by and
between the parties hereto that the Manager may resign his retainer hereunder by
giving one month's written notice of such intention to resign.
7. APPLICABLE LAW
This Agreement shall be governed by the laws of the State of Nevada, USA and the
Province of British Columbia, Canada.
8. AMENDMENT
This Agreement may not be amended or otherwise modified except in writing signed
by both parties.
9. HEADINGS
All headings and titles in this Agreement are for reference only and are not to
be used in the interpretation of the terms hereof.
10. ACCEPTANCE OF AGREEMENT
This Agreement is subject to the approval of the Board of Directors of the
Company.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the day
and year first above written.
THEODORE TSAGKARIS TARI INC.
Per: Per:
sgd: Theodore Tsagkaris sgd: Theodore Tsagkaris
Theodore Tsagkaris Theodore Tsagkaris, President