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, 2006
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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 001-31669
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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
incorporation or organization) Identification No.)
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 [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: 3,890,000 shares of $0.001 par value
common stock outstanding as of November 15, 2006.
<page>
TARI INC.
(A Pre-exploration Stage Company)
INTERIM FINANCIAL STATEMENTS
September 30, 2006
(Stated in US Dollars)
(Unaudited)
<page>
TARI INC.
(A Pre-exploration Stage Company)
INTERIM BALANCE SHEETS
September 30, 2006 and March 31, 2006
(Stated in US Dollars)
(Unaudited)
<table>
<caption>
September 30, March 31,
ASSETS 2006 2006
------ ---- ----
<s> <c> <c>
Current
Cash $ 3,885 $ 573
================ ================
LIABILITIES
Current
Accounts payable and accrued liabilities - Note 3 $ 38,491 $ 32,892
Advances payable 5,300 -
Due to related party - Note 3 50,813 21,011
---------------- ----------------
94,604 53,903
---------------- ----------------
STOCKHOLDERS' 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 shares issued 3,890 3,890
Additional paid-in capital 90,610 90,610
Deficit accumulated during the pre-exploration stage (185,219) (147,830)
---------------- ----------------
(90,719) (53,330)
---------------- ----------------
$ 3,885 $ 573
================ ================
</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, 2006 and 2005,
and for the period May 2, 2001 (Date of Inception) to September 30, 2006
(Stated in US Dollars)
(Unaudited)
<table>
<caption>
May 2, 2001
(Date of
Three months ended Six months ended Inception)
September 30, September 30, to September 30,
2006 2005 2006 2005 2006
---- ---- ---- ---- ----
<s> <c> <c> <c> <c> <c>
Expenses
Audit and accounting fees $ 2,500 $ 2,533 $ 4,750 $ 6,428 $ 47,077
Bank charges 73 42 105 118 1,137
Consulting fees 5,000 - 5,000 - 20,500
Incorporation costs - - - - 900
Legal fees - - - - 30,768
Management fees - Note 3 1,500 1,500 3,000 3,000 13,500
Mineral lease costs - Note 4 20,000 - 21,172 10,217 48,637
Office expenses 1,200 1,200 2,400 2,400 11,186
Transfer agent and filing fees 322 213 962 942 11,514
-------------- -------------- -------------- -------------- ----------------
Net loss for the period $ (30,595) $ (5,488) $ (37,389) $ (23,105) $ (185,219)
============== ============== ============== ============== ================
Basic loss per share $ (0.01) $ (0.00) $ (0.01) $ (0.01)
============== ============== ============== ==============
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 STOCKHOLDERS' EQUITY (DEFICIENCY)
for the period May 2, 2001 (Date of Inception) to September 30, 2006
(Stated in US Dollars)
(Unaudited)
<table>
<caption>
Deficit
Accumulated
Additional During the
Common Shares 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 year ended
March 31, 2005 - - - (24,235) (24,235)
--------------- -------------- --------------- ---------------- ---------------
Balance, March 31, 2005 3,890,000 3,890 90,610 (109,442) (14,942)
Net loss for the year ended
March 31, 2006 - - - (38,388) (38,388)
--------------- -------------- --------------- ---------------- ---------------
Balance, March 31, 2006 3,890,000 3,890 90,610 (147,830) (53,330)
Net loss for the six months
ended September 30, 2006 - - - (37,389) (37,389)
--------------- -------------- --------------- ---------------- ---------------
Balance, September 30, 2006 3,890,000 $ 3,890 $ 90,610 $ (185,219) $ (90,719)
=============== ============== =============== ================ ===============
</table>
SEE ACCOMPANYING NOTES
<page>
TARI INC.
(A Pre-exploration Stage Company)
INTERIM STATEMENTS OF CASH FLOWS
for the six months ended September 30, 2006 and 2005,
and for the period May 2, 2001 (Date of Inception) to September 30, 2006
(Stated in US Dollars)
(Unaudited)
<table>
<caption>
May 2, 2001
(Date of
Six months ended Inception)
September 30, to September 30,
2006 2005 2006
---- ---- ----
<s> <c> <c> <c>
Cash Flows used in Operating Activities
Net loss for the period $ (37,389) $ (23,105) $ (185,219)
Change in non-cash working capital item
related to operations:
Accounts payable and accrued liabilities 5,599 11,523 38,491
--------------- --------------- ------------------
(31,790) (11,582) (146,728)
--------------- --------------- ------------------
Cash Flows provided by Financing Activities
Proceeds from shares issued - - 94,500
Increase in advances payable 5,300 - 5,300
Increase in due to related party 29,802 10,000 50,813
--------------- --------------- ------------------
35,102 10,000 150,613
--------------- --------------- ------------------
Increase (decrease) in cash during the period 3,312 (1,582) 3,885
Cash, beginning of the period 573 2,458 -
--------------- --------------- ------------------
Cash, end of the period $ 3,885 $ 876 $ 3,885
=============== =============== ==================
</table>
SEE ACCOMPANYING NOTES
<page>
TARI INC.
(A Pre-exploration Stage Company)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
September 30, 2006
(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,
2006 financial statements. Operating results for the period ended
September 30, 2006 are not necessarily indicative of the results
that can be expected for the year ending March 31, 2007.
Note 2 Continuance of Operations
These financial statements have been prepared in accordance with
generally accepted accounting principles applicable to a going
concern, which assumes that the Company will be able to meet its
obligations and continue its operations for its next twelve
months. Realization values may be substantially different from
carrying values as shown and these financial statements do not
give effect to adjustments that would be necessary to the carrying
values and classification of assets and liabilities should the
Company be unable to continue as a going concern. At September 30,
2006, the Company had not yet achieved profitable operations, has
accumulated losses of $185,219 since its inception, has a working
capital deficiency of $90,719 and expects to incur further losses
in the development of its business, all of which casts substantial
doubt about the Company's ability to continue as a going concern.
The Company's ability to continue as a going concern is dependent
upon its ability to generate future profitable operations and/or
to obtain the necessary financing to meet its obligations and
repay its liabilities arising from normal business operations when
they come due. Management has no formal plan in place to address
this concern but considers that the Company will be able to obtain
additional funds by equity financing and/or related party
advances, however there is no assurance of additional funding
being available.
Note 3 Related Party Transactions
The Company was charged the following by the director of the
Company:
<table>
<caption>
May 2, 2001
(Date of
Three months ended Six months ended Incorporation)
September 30, September 30, to September 30,
2006 2005 2006 2005 2006
---- ---- ---- ---- ----
<s> <c> <c> <c> <c> <c>
Management fees $ 1,500 $ 1,500 $ 3,000 $ 1,500 $ 13,500
============ ============= ============ ============ ================
</table>
<page>
Note 3 Related Party Transactions - (cont'd)
Included in accounts payable at June 30, 2006 is $13,500 (March
31, 2006: $10,500) of unpaid management fees due to the director
of the Company.
The amount due to related party, the director of the Company,
consists of unpaid advances of $50,813 (March 31, 2006: $21,011).
The amount due is unsecured, non-interest bearing and has no
specific terms for repayment.
Note 4 Commitments
Mining Lease
By a lease agreement effective May 15, 2001 and amended April
2002, November 2002, April 2003, January 9, 2004, April 11, 2005
and July 24, 2006, the Company was granted the exclusive right to
explore and mine the SF 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:
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 as follows:
- $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);
- $5,000 on April 12, 2005 (paid); and
- $50,000 each January 9 thereafter until termination of the
lease, adjusted based on inflation rates designated by the
Consumer Price Index.
In addition, the Company was required to fund exploration
expenditures of $5,000 by April 12, 2005 (paid).
Pursuant to the July 24, 2006 amending agreement, the Company paid
$20,000 to amend the original lease agreement.
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.
<page>
Note 4 Commitments - (cont'd)
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 SF project in
which we hold a leasehold interest. We anticipate that this program will cost us
$89,000.
On April 11, 2005, the SF Property lease agreement dated May 15, 2001 was
further amended with respect to the Schedule of Minimum Payments. With the
amendment, the Company, instead of paying the advance royalty of $10,000 by
January 9, 2005, shall pay $5,000 by April 12, 2005, and fund exploration
expenditures on the SF Property of $5,000 by April 12, 2005. Both payments were
made on April 12, 2005. In order to keep the lease in good standing, we must pay
the lessor $50,000 by January 9 every year thereafter.
On July 24, 2006, further the lease agreement was further amended respect to the
Schedule of Minimum Payments. With the amendment, the Company shall pay $20,000
by July 24, 2006 and pay the lessor $50,000 by January 9 every year thereafter
in order to keep the lease in good standing. The Company has paid the $20,000
pursuant to the amendment.
In addition, we anticipate spending $15,000 on professional fees and $14,000 on
administrative expenses.
Excluding any mineral property payments, total expenditures over the next 12
months are therefore expected to be $29,000. Our cash on hand at September 30,
2006 was $3,885. Accordingly, we will need to raise additional funds in order to
complete the recommended exploration program on the SF 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, 2006
We incurred a net loss of $30,595 for the three months period ended September
30, 2006, as compared to a loss of $5,488 in the same period in 2005. The
difference in net loss was primarily due to a $5,000 consulting fee and a
$20,000 payment for resource property costs. As per management agreement dated
July 1, 2004, the president started to charge the Company $500 per month for
management fees. After this management agreement expired on June 30, 2005, the
president charges the Company $500 per month on a month by month basis ($3,000
for the period of April to September). The Company also started to incur $400
per month for office rent, telephone expenses, and general miscellaneous office
expenses ($2,400 per the period April - September) related to use of the
Vancouver office. At the end of the second quarter, we had cash on hand of
$3,885. Our liabilities for the same period totalled $94,604 and consisted of
accounts payable of $38,491, advances payable of $5,300 and $50,813 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
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
There were no reports filed on Form 8-K during the six months period ended
September 30, 2006.
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 15, 2006