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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 March 31, 2005
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[ ] Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act
of 1934
For the transition period to
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Commission File Number 001-31546
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FOOTHILLS RESOURCES, INC.
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(Exact name of small Business Issuer as specified in its charter)
Nevada 98-0339560
--------------------------------- -----------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
Canadiana Lodge, Wellfield Close, Coad's Green
Launceston, Cornwall, England, PL15 7LR
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(Address of principal executive offices)
01566 782 199
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Registrant's telephone number, including area code
Not Applicable
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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: 39,356,182 shares of $0.001 par value
common stock outstanding as of June 7, 2005
<page>
FOOTHILLS RESOURCES, INC.
(A Pre-exploration Stage Company)
INTERIM FINANCIAL STATEMENTS
March 31, 2005
(Stated in US Dollars)
(Unaudited)
-----------
<page>
FOOTHILLS RESOURCES, INC.
(A Pre-exploration Stage Company)
INTERIM BALANCE SHEETS
March 31, 2005 and December 31, 2004
(Stated in US Dollars)
(Unaudited)
<table>
<caption>
March 31, December 31,
ASSETS 2005 2004
------ ---- ----
<s> <c> <c>
Current
Cash $ 2,115 $ 3,472
================= ================
LIABILITIES
Current
Accounts payable and accrued liabilities - Notes 3 and 4 $ 12,763 $ 18,197
Due to related party - Notes 3 and 4 - 38,963
----------------- ----------------
12,763 57,160
----------------- ----------------
STOCKHOLDERS' DEFICIENCY
Preferred stock, $0.001 par value
1,000,000 shares authorized, none outstanding
Common stock, $0.001 par value - Note 5
100,000,000 shares authorized
39,356,189 (2004: 6,426,076) shares outstanding 8,366 1,366
Paid-in capital 124,897 79,434
Deficit accumulated during the pre-exploration stage (143,911) (134,488)
----------------- ----------------
(10,648) (53,688)
----------------- ----------------
$ 2,115 $ 3,472
================= ================
</table>
SEE ACCOMPANYING NOTES
<page>
FOOTHILLS RESOURCES, INC.
(A Pre-exploration Stage Company)
INTERIM STATEMENTS OF OPERATIONS
for the three months ended March 31, 2005 and 2004
and for the period November 17, 2000 (Date of Incorporation) to March 31, 2005
(Stated in US Dollars)
(Unaudited)
-----------
<table>
<caption>
November 17,
2000 (Date of
Three months ended Incorporation)
March 31, to March 31,
2005 2004 2005
---- ---- ----
<s> <c> <c> <c>
Expenses
Accounting, audit and legal fees $ 3,390 $ 1,300 $ 72,988
Bank charges 63 165 1,353
Consulting fees - - 5,000
Management fees 3,000 - 26,500
Office and miscellaneous 1,500 - 5,393
Resource property costs - 2,000 21,725
Transfer agent fees 1,470 300 10,394
Travel - - 712
----------------- ----------------- -----------------
Loss before other item (9,423) (3,765) (144,065)
Other item
Interest income - - 154
----------------- ----------------- -----------------
Net loss for the period $ (9,423) $ (3,765) $ (143,911)
================= ================= =================
Basic loss per share $ (0.00) $ (0.00)
================ ================
Weighted average number of shares outstanding 16,671,000 6,426,076
================= =================
</table>
SEE ACCOMPANYING NOTES
<page>
FOOTHILLS RESOURCES, INC.
(A Pre-exploration Stage Company)
INTERIM STATEMENTS OF CASH FLOWS
for the three months ended March 31, 2005 and 2004
and for the period November 17, 2000 (Date of Incorporation) to March 31, 2005
(Stated in US Dollars)
(Unaudited)
-----------
<table>
<caption>
November 17,
2000 (Date of
Three months ended Incorporation)
March 31, to March 31,
2005 2004 2005
---- ---- ----
<s> <c> <c> <c>
Cash Flows used in Operating Activities
Net loss for the period $ (9,423) $ (3,765) $ (143,911)
Changes in non-cash working capital balances
related to operations
Prepaid expenses - (2,400) -
Accounts payable and accrued liabilities 8,066 2,582 12,763
----------------- ----------------- -----------------
(1,357) (3,583) (131,148)
----------------- ----------------- -----------------
Cash Flows from Financing Activities
Capital stock issued - - 133,263
Due to related party - 3,679 -
----------------- ----------------- -----------------
- 3,679 133,263
----------------- ----------------- -----------------
Increase (decrease) in cash during the period (1,357) 96 2,115
Cash, beginning of the period 3,472 681 -
----------------- ----------------- -----------------
Cash, end of the period $ 2,115 $ 777 $ 2,115
================= ================= =================
Supplemental disclosure of cash flow information Cash paid for:
Interest $ - $ - $ -
================= ================= =================
Income taxes $ - $ - $ -
================= ================= =================
</table>
Non-cash Transaction - Note 4
SEE ACCOMPANYING NOTES
<page>
FOOTHILLS RESOURCES, INC.
(A Pre-exploration Stage Company)
INTERIM STATEMENT OF STOCKHOLDERS' DEFICIENCY
for the period November 17, 2000 (Date of Incorporation) to March 31, 2005
(Stated in US Dollars)
(Unaudited)
-----------
<table>
<caption>
Deficit
Accumulated
Common Shares Additional During the
-------------------- Paid-in Subscriptions Pre-Exploration
Number Par Value Capital Received Stage Total
------ --------- ------- -------- ----- -----
<s> <c> <c> <c> <c> <c> <c>
Capital stock issued for cash - at $0.021 672,715 $ 673 $ 13,627 $ - $ - $ 14,300
Net loss for the period - - - - (4,927) (4,927)
---------- ----------- ----------- ------------ ------------- -----------
Balance as at December 31, 2000 672,715 673 13,627 - (4,927) 9,373
Capital stock issued for cash - at $0.021 503,360 503 10,197 - - 10,700
Net loss for the year ended
December 31, 2001 - - - - (44,243) (44,243)
Subscriptions received - - - 5,000 - 5,000
---------- ----------- ----------- ------------ ------------- -----------
Balance as at December 31, 2001 1,176,075 1,176 23,824 5,000 (49,170) (19,170)
Subscriptions converted - - - (5,000) - (5,000)
Capital stock issued for cash - at $0.011 5,250,001 5,250 50,550 - - 55,800
Net loss for the year ended
December 31, 2002 - - - - (41,883) (41,883)
---------- ----------- ----------- ------------ ------------- -----------
Balance as at December 31, 2002 6,426,076 6,426 74,374 - (91,053) (10,253)
...Cont'd
</table>
SEE ACCOMPANYING NOTES
<page>
FOOTHILLS RESOURCES, INC.
(A Pre-exploration Stage Company)
INTERIM STATEMENT OF STOCKHOLDERS' DEFICIENCY
for the period November 17, 2000 (Date of Incorporation) to March 31, 2005
(Stated in US Dollars)
(Unaudited)
-----------
<table>
<caption>
Deficit
Accumulated
Common Shares Additional During the
-------------------- Paid-in Subscriptions Pre-Exploration
Number Par Value Capital Received Stage Total
------ --------- ------- -------- ----- -----
<s> <c> <c> <c> <c> <c> <c>
December 31, 2003 - - - - (12,934) (12,934)
---------- ----------- ----------- ------------ ------------- -----------
Balance as at December 31, 2003 6,426,076 6,426 74,374 - (103,987) (23,187)
Net loss for the year ended
December 31, 2004 - - - - (30,501) (30,501)
---------- ----------- ----------- ------------ ------------- -----------
Balance as at December 31, 2004 6,426,076 6,426 74,374 - (134,488) (53,688)
Capital stock issued for settlement
of debts - at $0.0016 32,930,113 32,930 19,533 - - 52,463
Net loss for the three-months ended
March 31, 2005 - - - - (9,423) (9,423)
---------- ----------- ----------- ------------ ------------- -----------
Balance as at March 31, 2005 39,356,189 $ 39,356 $ 93,907 $ - $ (143,911) $ (10,648)
========== =========== =========== ============ ============= ===========
</table>
By a director's resolution dated April 20, 2005 and effective on that date, the
Company declared a forward stock split and increased its authorized and issued
common shares on a 4.704301 for 1 basis. The number of shares and allocation
between par value and additional paid-in capital has been restated to give
retroactive effect to the forward stock split.
SEE ACCOMPANYING NOTES
<page>
FOOTHILLS RESOURCES, INC.
(A Pre-exploration Stage Company)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
March 31, 2005
(Stated in US Dollars)
(Unaudited)
Note 1 Interim Reporting
-----------------
While the information presented in the accompanying interim three
months 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 financial
statements be read in conjunction with the company's December 31,
2004 annual financial statements.
Note 2 Continuance of Operations
-------------------------
The interim 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. At March 31, 2005, the Company
has a working capital deficiency of $10,648, has yet to achieve
profitable operations and has accumulated losses of $143,911 since
its commencement. 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 pay its liabilities arising from
normal business operations when they come due. The outcome of
these matters cannot be predicted with any certainty at this time
and raise substantial doubt that the Company will be able to
continue as a going concern. These financial statements do not
include any adjustments to the amounts and classification of
assets and liabilities that may be necessary should the company be
unable to continue as a going concern. The Company anticipates
that additional funding will be in the form of equity financing
from the sale of common shares. The Company may also seek to
obtain short-term loans from the directors of the company. There
are no current arrangements in place for equity funding or
short-term loans.
Note 3 Due to Related Party - Note 4
--------------------
Amounts due to related party are comprised of unpaid advances to
the Company and are unsecured, non-interest bearing with no
specific terms for repayment. The related party is the President
of the Company.
<page>
FOOTHILLS RESOURCES, INC.
(A Pre-exploration Stage Company)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
March 31, 2005
(Stated in US Dollars)
(Unaudited)
Note 3 Due to Related Party - (cont'd)
--------------------
The Company was charged the following by a director of the
Company:
<table>
<caption>
November 17,
2000
(Date of
Incorporation)
March 31, to March 31,
2005 2004 2005
---- ---- ----
<s> <c> <c> <c>
Management fees $ 3,000 $ - $ 9,000
Office and miscellaneous 1,500 - 4,500
------------- ------------- ----------------
$ 4,500 $ - $ 13,500
============= ============= ================
</table>
These charges were measured by the exchange amount which is the
amount agreed upon by the transacting parties.
Included in accounts payable at March 31, 2005 is $Nil (December
31, 2004: $9,000) consisting of unpaid management fees and rent
due to a company with a common director.
The amount due to a related party, a company with a common
director, consists of unpaid advances of $Nil (December 31, 2004:
$38,963). The amount due is unsecured, non-interest bearing and
has no specific terms for repayment.
Note 4 Non-cash Transaction
--------------------
Investing and financing activities that do not have a direct
impact on current cash flows are excluded from the statements.
During the three months ended March 31, 2005, the Company issued
32,930,113 common shares at $0.0016 per share as consideration for
settlement of $13,500 in accounts payable and $38,963 in amounts
due to a related party. These amounts were due to the President of
the Company. This transaction was excluded from the statements of
cash flow.
<page>
FOOTHILLS RESOURCES, INC.
(A Pre-exploration Stage Company)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
March 31, 2005
(Stated in US Dollars)
(Unaudited)
Note 5 Commitments
Exploration Lease
By a lease agreement effective March 1, 2001 and amended February
22, 2002, September 30, 2002, December 1, 2002, March 28, 2003 and
January 1, 2004 the Company was granted the exclusive right to
explore, develop and mine the Golden Cross resource property
located in White Pine County of the State of Nevada. The term of
the lease was for 20 years, renewable for an additional 20 years
so long as conditions of the lease are met.
Pursuant to an amending agreement dated March 28, 2003, the
Company paid an extension fee of $1,500 to extend the terms for
the advance royalty payments.
The Company was to pay a royalty of 3% of the net smelter returns
from all production. In respect to this royalty, the Company was
required to pay minimum advance royalty payments of the following:
- $5,000 upon execution (paid);
- $1,500 on March 1, 2002 (paid);
- $2,000 on September 1, 2002 (paid);
- $2,000 on December 1, 2002 (paid);
- $2,000 upon execution of the amended agreement dated
January 1, 2004 (paid);
- $5,000 on July 1, 2004 (paid);
- $10,000 on January 1, 2005; and
- each annual payment thereafter of US $50,000 plus an annual
increase or decrease equivalent to the rate of inflation
designated by the Consumer's Price Index for that year with
execution year as base year. Each such payment shall be made
by January 1 of each successive year of the lease.
In the event that the Company terminated 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 on the property as required
by federal, state and local law for disturbances resulting from
the Company's activities on the property.
The advance royalty payment of $10,000 due January 1, 2005 has not
been made. The Company was unable to negotiate an amendment to the
terms of the advance royalty payments due and consequently the
lease agreement was terminated.
<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
We are a pre-exploration stage company. In 2001, we acquired a mining lease on a
total of five unpatented lode mineral claims property located in the State of
Nevada. Subsequent to our fiscal year ended December 31, 2004, the owners of
these claims terminated the lease agreement due to our failure to make a
required lease payment. Management intends to review other potential resource
and non-resource assets for acquisition.
We anticipate incurring $10,000 in business investigation costs and $21,000 in
administrative expenses over the next 12 months. Our cash on hand at March 31,
2005 was $2,115. Accordingly, we will need to raise additional funds in order to
cover our expected expenses.
Results of Operations for the second quarter ended March 31, 2005
We incurred a net loss of $9,423 for the three month period ended March 31,
2005, as compared to a loss of $3,765 in the same period in 2004. The increase
in the net loss was primarily due to an increase in accounting, audit and legal
fees (from $1,300 in 2004 to $3,390 in 2005) and management fees (from NIL in
2004 to $3,000 in 2005). During the three month period ended March 31, 2005, we
incurred accounting, audit and legal fees of $3,390, management fees of $3,000,
office and miscellaneous costs of $1,500, transfer agent fees of $1,470 and bank
charges of $63.
At March 31, 2005, we had cash on hand of $2,115. Our liabilities at the same
date totalled $12,763 and consisted entirely of accounts payable and accrued
liabilities.
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 conducted by the sole director of the
Company, who also acts as 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.
<page>
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 Reports on Form 8-K
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
During the period, we filed a current report on Form 8-K announcing that we
issued 7,000,000 restricted shares of our common stock to our president, Mr.
Earl Terris on March 4, 2005 pursuant to Section 4(2) of the Securities Act of
1933. These shares were issued to Earl Terris in consideration of various
management and consulting services he has provided to us.
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.
Dated: June 7, 2005 FOOTHILLS RESOURCES, INC.
/s/ J. Earl Terris
------------------------------------
J. Earl Terris
President, Secretary, Treasurer
Chief Executive Officer and Director
(Principal Executive Officer,
Principal Financial Officer and
Principal Accounting Officer)