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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 June 30, 2005
----------------------
[ ] Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act
of 1934
For the transition period to
----------------- --------------------
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 [X] Yes [ ] No
State the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date: 39,356,189 shares of $0.001 par value
common stock outstanding as of July 28, 2005
<page>
FOOTHILLS RESOURCES, INC.
(A Pre-exploration Stage Company)
INTERIM FINANCIAL STATEMENTS
June 30, 2005
(Stated in US Dollars)
(Unaudited)
-----------
<page>
FOOTHILLS RESOURCES, INC.
(A Pre-exploration Stage Company)
INTERIM BALANCE SHEETS
June 30, 2005 and December 31, 2004
(Stated in US Dollars)
(Unaudited)
-----------
<table>
<caption>
(Restated)
June 30, December 31,
ASSETS 2005 2004
------ ---- ----
<s> <c> <c>
Current
Cash $ 113 $ 3,472
================= ================
LIABILITIES
-----------
Current
Accounts payable and accrued liabilities - Notes 3 and 4 $ 12,044 $ 18,197
Due to related party - Notes 3 and 4 - 38,963
----------------- ----------------
$ 12,044 57,160
----------------- ----------------
STOCKHOLDERS' DEFICIENCY
------------------------
Preferred stock, $0.001 par value
1,000,000 shares authorized, none outstanding
Common stock, $0.001 par value - Note 4
100,000,000 shares authorized
39,356,189 (2004: 6,426,076) shares outstanding 39,356 6,426
Paid-in capital 96,062 74,374
Contributed surplus - Note 4 4,500 -
Deficit accumulated during the pre-exploration stage (151,849) (134,488)
----------------- ----------------
(11,931) (53,688)
----------------- ----------------
$ 113 $ 3,472
================= ================
</table>
SEE ACCOMPANYING NOTES
<page>
FOOTHILLS RESOURCES, INC.
(A Pre-exploration Stage Company)
INTERIM STATEMENTS OF OPERATIONS
for the three and six months ended June 30, 2005 and 2004
and for the period November 17, 2000 (Date of Incorporation) to June 30, 2005
(Stated in US Dollars)
(Unaudited)
-----------
<table>
<caption>
November 17,
2000 (Date of
Three months ended Six months ended Incorporation)
June 30, June 30, to June, 30,
2005 2004 2005 2004 2005
---- ---- ---- ---- ----
<s> <c> <c> <c> <c> <c>
Expenses
Accounting, audit and legal $ 3,060 $ 717 $ 6,450 $ 2,017 $ 76,048
Bank charges 43 79 106 244 1,396
Consulting fees - - - - 5,000
Management fees - Notes 3 and 4 3,000 - 6,000 - 29,500
Office and miscellaneous
- Notes 3 and 4 1,500 - 3,000 - 6,893
Mineral property costs - 5,547 - 7,547 21,725
Transfer agent and filing fees 335 1,394 1,805 1,694 10,729
Travel - - - - 712
--------------- --------------- -------------- -------------- ----------------
Loss before other item (7,938) (7,737) (17,361) (11,502) (152,003)
Other item
Interest income - - - - 154
--------------- --------------- -------------- -------------- ----------------
Net loss for the period $ (7,938) $ (7,737) $ (17,361) $ (11,502) $ (151,849)
=============== =============== ============== ============== ================
Basic loss per share $ (0.00) $ (0.00) $ (0.00) $ (0.00)
=============== =============== =============== ==============
Weighted average number of shares
outstanding 39,356,189 6,426,076 28,076,261 6,426,076
=============== =============== ============== ==============
</table>
SEE ACCOMPANYING NOTES
<page>
FOOTHILLS RESOURCES, INC.
(A Pre-exploration Stage Company)
INTERIM STATEMENTS OF CASH FLOWS
for the six months ended June 30, 2005 and 2004
and for the period November 17, 2000 (Date of Incorporation) to June 30, 2005
(Stated in US Dollars)
(Unaudited)
-----------
<table>
<caption>
November 17,
2000 (Date of
Six months ended Incorporation)
June 30, to June 30,
2005 2004 2005
--- ---- ----
<s> <c> <c> <c>
Cash Flows used in Operating Activities
Net loss for the period $ (17,361) $ (11,502) $ (151,849)
Add item not affecting cash
Non-cash administrative expenses 4,500 - 4,500
Changes in non-cash working capital balances related to operations
Prepaid expenses - (2,100) -
Accounts payable and accrued liabilities 7,347 994 25,544
----------------- ---------------- ---------------
(5,514) (12,608) (121,805)
----------------- ---------------- ---------------
Cash Flows from Financing Activities
Capital stock issued - - 80,800
Due to related party 2,155 17,706 41,118
----------------- ---------------- ---------------
2,155 17,706 121,918
----------------- ---------------- ---------------
Increase (decrease) in cash during the period (3,359) 5,098 113
Cash, beginning of the period 3,472 681 -
----------------- ---------------- ---------------
Cash, end of the period $ 113 $ 5,779 $ 113
================= ================ ===============
Supplemental disclosure of cash flow information Cash paid for:
Interest $ - $ - $ -
================= ================ ===============
Income taxes $ - $ - $ -
================= ================ ===============
Non-cash Transactions - Note 4
</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 June 30, 2005
(Stated in US Dollars)
(Unaudited)
-----------
<table>
<caption>
Deficit
Accumulated
Additional During the
Common Shares Paid-in Subscriptions Contributed Pre-Exploration
------------------------
Number Par Value Capital Received Surplus Stage Total
------ --------- ------- -------- ------- ----- -----
<s> <c> <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 503 10,197 - - - 10,700
- at $0.021 503,360
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 5,250,001 5,250 50,550 - - - 55,800
- at $0.011
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)
</table>
...Cont'd
SEE ACCOMPANYING NOTES
<page>
Continued
FOOTHILLS RESOURCES, INC.
(A Pre-exploration Stage Company)
INTERIM STATEMENT OF STOCKHOLDERS' DEFICIENCY
for the period November 17, 2000 (Date of Incorporation) to June 30, 2005
(Stated in US Dollars)
(Unaudited)
-----------
<table>
<caption>
Deficit
Accumulated
Additional During the
Common Shares Paid-in Subscriptions Contributed Pre-Exploration
-----------------------
Number Par Value Capital Received Surplus Stage Total
------ --------- ------- -------- ------- ----- -----
<s> <c> <c> <c> <c> <c> <c> <c>
Net loss for the year ended
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 21,688 - - - 54,618
Capital contribution - - - - 4,500 - 4,500
Net loss for the six-months ended
June 30, 2005 - - - - - (17,361) (17,361)
------------ ----------- ---------- ------------ ------------- ------------ -----------
Balance as at June 30, 2005 39,356,189 $ 39,356 $ 96,062 $ - $ 4,500 $ (151,849) $ (11,931)
============ =========== =========== ============ ============== ============ ===========
</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
June 30, 2005
(Stated in US Dollars)
(Unaudited)
-----------
Note 1 Interim Reporting
-----------------
While the information presented in the accompanying interim six
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 June 30, 2005, the Company has
a working capital deficiency of $11,931, has yet to achieve
profitable operations and has accumulated losses of $151,849 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.
<page>
Note 3 Related Party Transactions - Note 4
--------------------------
The Company was charged the following by an entity controlled by a
director of the Company:
<table>
<caption>
November 17,
2000
(Date of
Three months ended Six months ended Incorporation)
June 30, June 30, to June 30,
2005 2004 2005 2004 2005
---- ---- ---- ---- ----
<s> <c> <c> <c> <c> <c>
Management fees $ 3,000 $ - $ 6,000 $ - $ 12,000
Office and
miscellaneous 1,500 - 3,000 - 6,000
--------- ---------- ----------- ---------- ----------------
$ 4,500 $ - $ 9,000 $ - $ 18,000
========= ========== =========== ========== ================
</table>
These charges were measured by the exchange amount which is the
amount agreed upon by the transacting parties.
Included in accounts payable at June 30, 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 Transactions
---------------------
Investing and financing activities that do not have a direct
impact on current cash flows are excluded from the statements.
During the six months ended June 30, 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
$41,118 in amounts due to a related party. These amounts were due
to a company controlled by the President of the Company.
The president of the Company has provided certain administrative
services at no charge to the Company. The fair value for these
services has been recorded as contributed surplus as follows:
<page>
Note 4 Non-cash Transactions - (cont'd)
---------------------
<table>
<caption>
November 17,
2000 (Date of
Three months ended Six months ended Incorporation)
June 30, June 30, to June 30,
2005 2004 2005 2004 2005
---- ---- ---- ---- ----
<s> <c> <c> <c> <c> <c>
Management fees $ 3,000 $ - $ 3,000 $ - $ 3,000
Office and miscellaneous 1,500 - 1,500 - 1,500
----------- ----------- ------------ ------------ ---------------
$ 4,500 $ - $ 4,500 $ - $ 4,500
=========== =========== ============ ============ ===============
</table>
These transactions were excluded from the statements of cash flow.
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.
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. As at December
31, 2004, the Company had paid $19,000 in advance royalty payments
and was required to pay $10,000, which was due January 1, 2005.
This payment was not made and consequently during the period ended
June 30, 2005, management of the Company decided to abandon the
lease.
<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, we decided to
abandon the property and terminate the claims. 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 June 30,
2005 was $113. Accordingly, we will need to raise additional funds in order to
cover our expected expenses.
Results of Operations for the second quarter ended June 30, 2005
- ----------------------------------------------------------------
We incurred a net loss of $17,361 for the six month period ended June 30, 2005,
as compared to a loss of $11,502 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 $2,017 in 2004 to $6,450 in 2005) and management fees (from NIL in 2004 to
$6,000 in 2005). During the six month period ended June 30, 2005, we incurred
accounting, audit and legal fees of $6,450, management fees of $6,000, office
and miscellaneous costs of $3,000, transfer agent fees of $1,805 and bank
charges of $106. Effective April 1, 2005, the president is providing certain
administrative services at no charge to the Company. Accordingly, the fair value
for these services has been recorded as contributed surplus.
At June 30, 2005, we had cash on hand of $113. Our liabilities at the same date
totalled $12,044 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 302 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 to disclose the
issuance, on March 4, 2005, of 7,000,000 pre-stock split restricted shares (post
split 32,930,113 shares) of common stock to our president, J. Earl Terris,
pursuant to the exemptive provisions of Section 4(2) of the Securities Act of
1933. These shares were issued to Mr. Terris in consideration of various
management and consulting services provided to us by an entity controlled by
him.
<page>
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: July 28, 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)