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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 period ended December 31, 2005.
[ ] 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 333-126504
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HOST VENTURES INC.
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(Exact name of small Business Issuer as specified in its charter)
Nevada Applied For
- ------------------------------ ----------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
9544 South Chesapeake Street
Highlands Ranch,
Colorado 80126
- ---------------------------------- -------------------------
(Address of principal executive offices) (Postal or Zip Code)
Issuer's telephone number, including area code: 970-567-7717
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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
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
stock, as of the latest practicable date: 5,125,000 Shares of $0.001 par value
Common Stock outstanding as of February 14, 2006.
<page>
HOST VENTURES INC.
(An Exploration Stage Company)
FINANCIAL STATEMENTS
December 31, 2005
(Unaudited)
<page>
HOST VENTURES INC.
(An Exploration Stage Company)
Financial Statements
(Unaudited)
TABLE OF CONTENTS
Page
FINANCIAL STATEMENTS
Balance sheet 1
Statements of operations 2
Statements of stockholders' equity 3
Statements of cash flows 4
Notes to financial statements 6
<page>
HOST VENTURES INC.
(An Exploration Stage Company)
BALANCE SHEET
December 31, 2005
(Unaudited)
<table>
<caption>
ASSETS
<s> <c>
Current assets
Cash $ 18,695
---------------
Total current assets 18,695
---------------
Fixed assets 950
Accumulated depreciation (53)
---------------
897
---------------
Total Assets $ 19,592
===============
LIABILITIES & STOCKHOLDERS' EQUITY
Liabilities $ -
---------------
Stockholders' Equity
Common stock, $.001 par value;
75,000,000 shares authorized;
5,125,000 issued and outstanding 5,125
Additional paid in capital 52,125
Deficit accumulated during the exploration stage (37,658)
---------------
Total Stockholders' Equity 19,592
---------------
Total Liabilities and Stockholders' Equity $ 19,592
===============
</table>
The accompanying notes are an integral part of the financial statements.
1
<page>
HOST VENTURES INC.
(An Exploration Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)
<table>
<caption>
Period From Period From
July 20, 2004 July 20, 2004
Three Months Three Months Six Months (Inception) Inception)
Ended Ended Ended Through Through
Dec. 31, 2005 Dec. 31, 2004 Dec. 31, 2005 Dec. 31, 2004 Dec. 31, 2005
----------------- --------------- ---------------- ---------------- ---------------
<s> <c> <c> <c> <c> <c>
Revenue $ - $ - $ - $ - $ -
----------------- --------------- ---------------- ---------------- ---------------
Expenses:
Bank charges 5
Legal & accounting 1,900 3,290 6,290
Mining property expenses 5,000 5,000 12,500
Office expense 1,366 1,000 1,366
Rent 750 750 1,500 4,000
Travel 500 500 500
Transfer agent 3,120 3,120 3,120
Depreciation 53 53 53
Administration and management 3,000 1,500 4,824 2,000 9,824
----------------- --------------- ---------------- ---------------- --------------
14,323 2,250 19,653 3,000 37,658
----------------- --------------- ---------------- ---------------- --------------
Loss from operations (14,323) (2,250) (19,653) (3,000) (37,658)
------------------ --------------- ---------------- ---------------- --------------
Other income (expense) - - - - -
----------------- --------------- ----------------- ---------------- --------------
Income (loss) before provision for
income taxes (14,323) (2,250) (19,653) (3,000) (37,658)
Provision for income tax - - - - -
----------------- ---------------- ---------------- ---------------- --------------
Net income (loss) $ (14,323) $ (2,250) $ (19,653) $ (3,000) $ (37,658)
================= ================ ================ ================ ==============
Net income (loss) per share
(Basic and fully diluted) $ (0.00) $ (0.01) $ (0.00) $ (0.02) $ (0.01)
================= ================ ================ ================= ==============
Weighted average number of
common shares outstanding 5,125,000 333,333 5,125,000 200,000 3,585,588
================= ================= ================ ================ ==============
</table>
The accompanying notes are an integral part of the financial statements.
2
<page>
HOST VENTURES INC.
(An Exploration Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)
<table>
<caption>
Deficit
Accum.
During the Stock-
Common Stock Paid In Exploration holders'
Shares Amount Capital Stage Equity
------------- ----------- ------------ --------------- --------
<s> <c> <c> <c> <c> <c>
- $ - $ - $ - $ -
December 15, 2004, 2,000,000 shares
of common stock issued for cash of
$2,000 to a founder, for
$.001 per share 2,000,000 2,000 2,000
January, 2005 - February, 2005, 2,825,000 shares of
common stock issued for cash of $28,250 pursuant
to a Regulation D offering, at .01 per share 2,825,000 2,825 25,425 28,250
March, 2005 - April, 2005, 300,000 shares
of common stock issued for cash of
$15,000 pursuant to a Regulation D offering,
at .05 per share 300,000 300 14,700 15,000
August, 2004 - April, 2005,
Services and office space
provided by officer 7,500 7,500
Gain (loss) for the period from
July 20, 2004 (Inception)
through June 30, 2005 (18,005) (18,005)
------------- ----------- ------------ --------------- ---------
Balances at June 30, 2005 5,125,000 $ 5,125 $ 47,625 $ (18,005) 34,745
July, 2005 - Dec. 31, 2005,
Services and office space
provided by officer 4,500 4,500
Gain (loss) for the period (19,653) (19,653)
------------- ----------- ------------ --------------- ---------
Balances at December 31, 2005 5,125,000 $ 5,125 $ 52,125 $ (37,658) 19,592
============= =========== ============ =============== =========
The accompanying notes are an integral part of the financial statements.
3
HOST VENTURES INC.
(An Exploration Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)
Period From Period From
July 20, 2004 July 20, 2004
Six Months (Inception) (Inception)
Ended Through Through
Dec. 31, 2005 Dec. 31, 2004 Dec. 31, 2005
-------------- -------------- --------------
Cash Flows From Operating Activities:
Net income (loss) during the exploration stage $ (19,653) $ (3,000) $ (37,658)
Adjustments to reconcile net loss to net
cash provided by (used for)
operating activities:
Depreciation 53 53
Donated office space and services 4,500 3,000 12,000
-------------- -------------- --------------
Net cash provided by (used for)
operating activities (15,100) - (25,605)
-------------- -------------- --------------
Cash Flows From Investing Activities:
Purchase of fixed assets (950) - (950)
-------------- -------------- --------------
Net cash provided by (used for)
investing activities (950) - (950)
-------------- -------------- --------------
</table>
(Continued On Following Page)
The accompanying notes are an integral part of the financial statements.
4
<page>
HOST VENTURES INC.
(An Exploration Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)
(Continued From Previous Page)
<table>
<caption>
Period From Period From
July 20, 2004 July 20, 2004
Six Months (Inception) (Inception)
Ended Through Through
Dec. 31, 2005 Dec. 31, 2004 Dec. 31, 2005
-------------- -------------- --------------
<s> <c> <c> <c>
Cash Flows From Financing Activities:
Sales of common stock - 2,000 45,250
-------------- -------------- --------------
Net cash provided by (used for)
financing activities - 2,000 45,250
-------------- -------------- --------------
Net Increase (Decrease) In Cash (16,050) 2,000 18,695
Cash At The Beginning Of The Period 34,745 - -
-------------- -------------- --------------
Cash At The End Of The Period 18,695 2,000 18,695
============== ============== ==============
Schedule Of Non-Cash Investing And Financing Activities
None
Supplemental Disclosure
Cash paid for interest $ - $ - $ -
Cash paid for income taxes $ - $ - $ -
</table>
The accompanying notes are an integral part of the financial statements.
5
<page>
HOST VENTURES INC.
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Host Ventures, Inc. (the "Company"), was incorporated in the State of Nevada on
July 20, 2004. The Company was formed to engage in the acquisition, exploration,
and production of precious minerals. The Company may also engage in any other
business permitted by law, as designated by the Board of Directors of the
Company.
Exploration Stage
- -----------------
The Company is currently in the exploration stage and has no significant
operations to date.
Cash and cash equivalents
- -------------------------
The Company considers all highly liquid investments with an original maturity of
three months or less as cash equivalents.
Use of Estimates
- ----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect 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.
Income tax
- ----------
The Company accounts for income taxes under Statement of Financial Accounting
Standards No. 109 ("SFAS 109"). Under SFAS 109 deferred taxes are provided on a
liability method whereby deferred tax assets are recognized for deductible
temporary differences and operating loss carryforwards and deferred tax
liabilities are recognized for taxable temporary differences. Temporary
differences are the differences between the reported amounts of assets and
liabilities and their tax bases. Deferred tax assets are reduced by a valuation
allowance when, in the opinion of management, it is more likely than not that
some portion or all of the deferred tax assets will not be realized. Deferred
tax assets and liabilities are adjusted for the effects of changes in tax laws
and rates on the date of enactment.
Fiscal year
- -----------
The Company employs a fiscal year ending June 30.
6
<page>
HOST VENTURES INC.
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued):
Net income (loss) per share
- ---------------------------
The net income (loss) per share is computed by dividing the net income (loss) by
the weighted average number of shares of common outstanding. Warrants, stock
options, and common stock issuable upon the conversion of the Company's
preferred stock (if any), are not included in the computation if the effect
would be anti-dilutive and would increase the earnings or decrease loss per
share.
Revenue recognition
- -------------------
Revenue is recognized on an accrual basis as earned under contract terms. The
Company has had no revenue to date.
Mineral Properties
- ------------------
Costs of acquiring specific mineral properties are capitalized on a property by
property basis. Mineral properties are periodically assessed for impairment of
value and any impairments are charged to operations at the time of impairment.
Should a property be sold or abandoned, its capitalized costs are charged to
operations and gain or loss recognized.
Financial Instruments
- ---------------------
The carrying value of the Company's financial instruments, including cash and
cash equivalents, as reported in the accompanying balance sheet, approximates
fair value.
Recent Accounting Pronouncements
- --------------------------------
In November 2004, the FASB issued SFAS No. 151, "Inventory Costs (An Amendment
of ARB No. 43, Chapter 4)". SFAS 151 amends and clarifies financial accounting
and reporting for abnormal amounts of idle facility expense, freight, handling
costs, and wasted material (spoilage). The Company has adopted the provisions of
SFAS No. 151 which are effective in general for inventory costs incurred during
fiscal years beginning after June 15, 2005. The adoption did not have a material
effect on the results of operations of 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 amends FASB 66 and 67 to reference the accounting and reporting
guidance for real estate time-sharing transactions provided for in AICPA
Statement of Position 04-2. The Company has adopted the provisions of SFAS
No. 152 which are effective for financial
7
<page>
HOST VENTURES INC.
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued):
statements for fiscal years beginning after June 15, 2005. The adoption did not
have a material effect on the results of operations of the Company.
In December 2004, the FASB issued SFAS No. 153, "Exchange of Nonmonetary Assets
(An Amendment of APB No. 29)". SFAS 153 amends Opinion 29 to eliminate the fair
value accounting exception for nonmonetary exchanges of similar productive
assets, and replaces that exception with a general exception for nonmonetary
assets that do not have commercial substance. The Company has adopted the
provisions of SFAS No. 153 which are effective in general for nonmonetary asset
exchanges occurring in fiscal years beginning after June 15, 2005. The adoption
did not have a material effect on the results of operations of the Company.
In March 2005, the FASB issued SFAS No. 123 (revised 2004), "Share-Based
Payment". SFAS 123(r) requires that the cost resulting from all share-based
payment transactions be recognized in the financial statements. The Company has
adopted the provisions of SFAS No. 123(r) which are effective in general for
transactions entered into or modified after June 15, 2005. The adoption did not
have a material effect on the results of operations of the Company.
In August 2005, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard ("SFAS") No. 154, "Accounting Changes
and Error Corrections." SFAS 154 changes the requirements for the accounting for
and reporting of a change in accounting principle, requiring in general
retrospective application to prior periods' financial statements of changes in
accounting principle. The Company has adopted the provisions of SFAS No. 154
which are effective for accounting changes and corrections of errors beginning
after December 15, 2005. The adoption did not have a material effect on the
results of operations of the Company.
NOTE 2. RELATED PARTY TRANSACTIONS
The Company recorded rent expense of $250 per month for the use of office space
donated to the Company by an officer. Total rent expense under this arrangement
was $1,500 for the six months ended December 31, 2005. The Company also recorded
compensation expense of $500 per month ($3,000 total) for administrative and
management services donated to the Company by an officer.
NOTE 3. INCOME TAXES
At December 31, 2005 the Company had a net operating loss carryforward for tax
purposes of approximately $25,000 which will begin to expire in 2025. The
deferred tax asset of $5,000 created by the net operating loss has been offset
by a 100% valuation allowance. The change in the valuation allowance in fiscal
year 2006 was $2,931.
8
<page>
Forward-Looking Statements
This Form 10-QSB includes "forward-looking statements" within the meaning of the
"safe-harbor" provisions of the Private Securities Litigation Reform Act of
1995. Such statements are based on management's current expectations and are
subject to a number of factors and uncertainties that could cause actual results
to differ materially from those described in the forward-looking statements.
All statements other than historical facts included in this Form, including
without limitation, statements under "Plan of Operation", regarding our
financial position, business strategy, and plans and objectives of management
for the future operations, are forward-looking statements.
Although we believe that the expectations reflected in such forward-looking
statements are reasonable, it can give no assurance that such expectations will
prove to have been correct. Important factors that could cause actual results to
differ materially from our expectations include, but are not limited to, market
conditions, competition and the ability to successfully complete financing.
Item 2. Plan of Operation
- -------------------------
Our plan of operation for the next twelve months is to complete the recommended
phase one and two exploration programs on the Scadding West claim consisting of
a geological mapping, prospecting and geochemical sampling. We anticipate that
these exploration programs will each cost approximately $5,000 and $10,000
respectively.
As well, we anticipate spending an additional $20,000 on administrative fees,
including fees payable in connection with the filing of this registration
statement and complying with reporting obligations.
Total expenditures over the next 12 months are therefore expected to be $35,000.
While we have enough funds to cover the cost of our exploration programs, we
will require additional funding in order to cover anticipated administrative
fees and to proceed with any additional recommended exploration on the Scadding
West claim following the completion of the phase two program. We anticipate that
additional funding will be in the form of equity financing from the sale of our
common stock or from director loans. We do not have any arrangements in place
for any future equity financing or loans.
If our proposed exploration programs are not successful in identifying economic
mineralization on the Scadding West mineral claim, we intend to acquire an
interest in an alternative mineral property in order to assess its potential to
contain a mineral deposit. It is likely that we would have to raise additional
funding in order to acquire an interest in an additional mineral claim and would
sell shares of our common stock to obtain this financing.
Results Of Operations For The Period From Inception Through December 31, 2005
We have not earned any revenues from our incorporation on July 20, 2004 to
December 31, 2005. We do not anticipate earning revenues unless we enter into
commercial production on the Scadding West claim, which is doubtful. We have
only recently commenced the exploration stage of our business and can provide no
assurance that we will discover economic mineralization on the Scadding West
claim, or if such minerals are discovered, that we will enter into commercial
production.
We incurred operating expenses in the amount of $18,653 for the six-month period
ended December 31, 2005. These operating expenses were comprised of mining
property expenses of $5,000, administration and management fees of $4,824, legal
and accounting fees of $3,290, transfer agent fees of $3,120, rent of $1,500,
office expenses of $1,366, travel costs of $500 and depreciation expense of $53.
<page>
At December 31, 2005, we had total assets of $19,592, consisting of cash
($18,695) and fixed assets ($950) less accumulated depreciation ($53). At the
same date, we had no liabilities.
We have not attained profitable operations and are dependent upon obtaining
financing to pursue exploration activities.
Item 3 Controls and Procedures
- ------------------------------
Evaluation of Disclosure Controls
We evaluated the effectiveness of our disclosure controls and procedures as of
December 31, 2005. This evaluation was conducted by William Stewart, our chief
executive officer and our principal accounting officer.
Disclosure controls are controls and other procedures that are designed to
ensure that information that we are required to disclose in the reports we file
pursuant to the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported.
Limitations on the Effective of Controls
Our management does not expect that our disclosure controls or our internal
controls over financial reporting will prevent all error and fraud. A control
system, no matter how well conceived and operated, can provide only reasonable,
but no absolute, assurance that the objectives of a control system are met.
Further, any control system reflects limitations on resources, and the benefits
of a control system must be considered relative to its costs. These limitations
also include the realities that judgments in decision-making can be faulty and
that breakdowns can occur because of simple error or mistake. Additionally,
controls can be circumvented by the individual acts of some persons, by
collusion of two or more people or by management override of a control. A design
of a control system is also based upon certain assumptions about potential
future conditions; over time, controls may become inadequate because of changes
in conditions, or the degree of compliance with the policies or procedures may
deteriorate. Because of the inherent limitations in a cost-effective control
system, misstatements due to error or fraud may occur and may not be detected.
Conclusions
Based upon their evaluation of our controls, William Stewart, our chief
executive officer and principal accounting officer, has concluded that, subject
to the limitations noted above, the disclosure controls are effective providing
reasonable assurance that material information relating to us is made known to
management on a timely basis during the period when our reports are being
prepared. There were no changes in our internal controls that occurred during
the quarter covered by this report that have materially affected, or are
reasonably likely to materially affect our internal controls.
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.
<page>
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
31.1 Certification pursuant to Rule 13a-14(a) under the Securities
Exchange Act of 1934
31.2 Certification pursuant to Rule 13a-14(a) under the Securities
Exchange Act of 1934
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
We did not file any current reports on Form 8-K during the period.
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.
February 14, 2006
Host Ventures Inc.
/s/ William Stewart
- ------------------------------
William Stewart, President