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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: 1,665,830 common shares as of September 30,2005
Transitional
Small Business Disclosure Format (check one): Yes [ ] No [X]
Condensed
Statements of Operations for the nine and three month periods ended
September 30, 2005 and 2004 with Cumulative Totals Since Inception;
(c)
Condensed
Statements of Cash Flow for the nine month periods ended September30,2005 and 2004 with Cumulative Totals Since Inception;
(d)
Notes
to Condensed Financial Statements.
These
unaudited condensed consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United States
of
America for interim financial information and the SEC instructions to Form
10-QSB. In the opinion of management, all adjustments considered necessary
for a
fair presentation have been included. Operating results for the interim period
ended September 30, 2005 are not necessarily indicative of the results that
can
be expected for the full year.
The
condensed unaudited interim financial statements included herein have been
prepared, without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission (“SEC”). The condensed financial statements and notes
are presented as permitted on Form 10-QSB and do not contain information
included in the Company’s annual statements and notes. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with accounting principles generally accepted in the United States
of
America have been condensed or omitted pursuant to such rules and regulations,
although the Company believes that the disclosures are adequate to make the
information presented not misleading. It is suggested that these condensed
financial statements be read in conjunction with the December 31, 2004 audited
financial statements and the accompanying notes thereto. While management
believes the procedures followed in preparing these condensed financial
statements are reasonable, the accuracy of the amounts are in some respects
dependent upon the facts that will exist, and procedures that will be
accomplished by the Company later in the year.
These
condensed unaudited financial statements reflect all adjustments, including
normal recurring adjustments, which in the opinion of management, are necessary
to present fairly the operations and cash flows for the periods
presented.
The
Company was incorporated on December 31, 1998 under the laws of the State of
Nevada. The business purpose of the Company is to acquire and develop oil and
gas leases and, secondarily, to acquire and develop mineral
properties.
NOTE
2- SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
Pre-exploration
Stage Company
The
Company is considered to be in the pre-exploration stage as defined in Statement
of Financial Accounting Standards (SFAS) No. 7, “Accounting
and Reporting by Development Stage Enterprises”
as
modified by the Securities and Exchange Commission for mining companies. The
Company is devoting substantially all of its efforts to development of business
plans and the acquisition of oil and gas leases and mineral
properties.
Use
of Estimates
The
preparation of condensed financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the amounts reported
in
the condensed financial statements and accompanying notes. Actual results could
differ from those estimates.
Cash
and Cash Equivalents
Cash
and
cash equivalents consists principally of currency on hand, demand deposits
at
commercial banks, and liquid investment funds having an original maturity of
three months or less at the time of purchase.
Start-up
Costs
In
accordance with the American Institute of Certified Public Accountants Statement
of Position 98-5, “Reporting
on the Costs of Start-up Activities”,
the
Company expenses all costs incurred in connection with the start-up and
organization of the Company.
Common
Stock Issued For Other Than Cash
Services
purchased and other transactions settled in the Company's common stock are
recorded at the estimated fair value of the stock issued if that value is more
readily determinable than the fair value of the consideration
received.
The
Company has no potentially dilutive securities, such as options or warrants,
currently issued and outstanding.
Stock-Based
Compensation
Employee
stock awards under the Company's compensation plans are accounted for in
accordance with Accounting Principles Board Opinion No. 25 (“APB 25”),
“Accounting
for Stock Issued to Employees”,
and
related interpretations. The Company provides the disclosure requirements of
SFAS No. 123, “Accounting
for Stock-Based Compensation”
(“SFAS
123”), and related interpretations. Stock-based awards to non-employees are
accounted for under the provisions of SFAS 123 and the Company adopted the
enhanced disclosure provisions of SFAS No.
NOTE
2- SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Stock-Based
Compensation (Continued)
148
“Accounting
for Stock-Based Compensation- Transition and Disclosure,”
an
amendment of SFAS No. 123.
The
Company measures compensation expense for its employee stock-based compensation
using the intrinsic-value method. Under the intrinsic-value method of accounting
for stock-based compensation, when the exercise price of options granted to
employees is less than the estimated fair value of the underlying stock on
the
date of grant, deferred compensation is recognized and is amortized to
compensation expense over the applicable vesting period.
The
Company measures compensation expense for its non-employee stock-based
compensation under the Financial Accounting Standards Board (FASB) Emerging
Issues Task Force (EITF) Issue No. 96-18, “Accounting
for Equity Instruments that are Issued to Other Than Employees for Acquiring,
or
in Conjunction with Selling, Goods or Services”.
The
fair value of the option issued is used to measure the transaction, as this
is
more reliable than the fair value of the services received. Fair value is
measured as the value of the Company’s common stock on the date that the
commitment for performance by the counterparty has been reached or the
counterparty’s performance is complete. The fair value of the equity instrument
is charged directly to compensation expense and additional paid-in
capital.
Recent
Accounting Pronouncements
In
December 2004, the FASB issued Financial Accounting Standards No. 123 (revised
2004) (FAS 123R), “Share-Based Payment, “ FAS 123R replaces FAS No. 123,
“Accounting for Stock-Based Compensation”, and supersedes APB Opinion No. 25,
“Accounting for Stock Issued to Employees.” FAS 123R requires compensation
expense, measured as the fair value at the grant date, related to share-based
payment transactions to be recognized in the financial statements over the
period that an employee provides service in exchange for the award. The Company
intends to adopt FAS 123R using the “modified prospective” transition method as
defined in FAS 123R. Under the modified prospective method, companies are
required to record compensation cost prospectively for the unvested portion,
as
of the date of adoption, of previously issued and outstanding awards over the
remaining vesting period of such awards. FAS 123R is effective January 1, 2006.
The Company is evaluating the impact of FAS 123R on its’ results and financial
position.
NOTE
2-
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Recent
Accounting Pronouncements
(Continued)
On
December 16, 2004, FASB issued Financial Accounting Standards No. 153, Exchanges
of Non-monetary Assets, an amendment of APB Opinion No. 29, Accounting for
Non-monetary Transactions ("FAS 153"). This statement amends APB Opinion 29
to
eliminate the exception for non-monetary exchanges of similar productive assets
and replaces it with a general exception for exchanges of non-monetary assets
that do not have commercial substance. Under FAS 153, if a non-monetary exchange
of similar productive assets meets a commercial-substance criterion and fair
value is determinable, the transaction must be accounted for at fair value
resulting in recognition of any gain or loss. FAS153 is effective for
non-monetary transactions in fiscal periods that begin after June 15, 2005.
The
Company does not anticipate that the implementation of this standard will have
a
material impact on its financial position, results of operations or cash flows.
NOTE
3-
PROVISION
FOR INCOME TAXES
The
Company accounts for income taxes using the liability method. At September30,2005 deferred tax assets consist of the following:
Deferred
tax assets
$
70,566
Less:
valuation allowance
(70,566
)
Net
deferred tax assets
$
-
Net
operating losses totaling approximately $235,221 are currently available and
begin to expire in 2014.
A
valuation allowance has been provided for the entire deferred tax asset amount
until such time that the Company demonstrates the ability to produce taxable
income.
As
of
September 30,2005 and 2004, the Company has 50,000,000 shares of common stock
authorized and 1,665,830 issued and outstanding.
The
following details the stock transactions for the Company:
On
December 31, 1998the Company sold 200,000 shares of its common stock at $.001
per share for $200 to provide initial working capital.
On
May18, 1999the Company sold 300,000 shares of its common stock at $.10 per share
to provide further working capital and to begin its operations.
Between
January and September, 2000 the Company sold a total of 70,000 shares at $.10
per share and 29,830 shares at $1.00. The resulting $99,830, net of $6,636
offering costs, yielded $93,194 to be used to acquire oil and gas leases and
mineral properties.
Between
March 2001 and January 2002 the Company sold a total of 436,000 shares at $1.00
per share. The resulting $436,000 was to be used to acquire oil and gas leases
and mineral properties. The Company invested the funds in interest-bearing
notes
as an interim strategy.
The
Company’s stock has no readily determinable market price and has been valued by
the Company at par value, which estimates fair value.
NOTE
5-
GOING
CONCERN
The
accompanying condensed financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America,
which contemplates continuation of the Company as a going concern. The Company
has had recurring operating deficits in the past few years and has large
accumulated deficits and is in the development stage and has no recurring
revenues. These items raise substantial doubt about the Company’s ability to
continue as a going concern.
In
view
of these matters, realization of the assets of the Company is dependent upon
the
Company’s ability to meet its financial requirements and the success of future
operations. These condensed financial statements do not include adjustments
relating to the recoverability and classification of recorded asset amounts
and
classification of liabilities that might be necessary should the Company be
unable to continue in existence.
The
Company’s continued existence is dependent upon its ability to generate
sufficient cash flows from equity financing.
Historical
results and trends should not be taken as indicative of future operations.
Management’s statements contained in this report that are not historical facts
are forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities and
Exchange Act of 1934 (the “Exchange Act”), as amended. Actual results may differ
materially from those included in the forward-looking statements. The Company
intends such forward-looking statements to be covered by the safe-harbor
provisions for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995, and is including this statement for purposes
of
complying with those safe-harbor provisions. Forward-looking statements, which
are based on certain assumptions and describe future plans, strategies and
expectations of the Company, are generally identifiable by use of the
words “believe,”“expect,”“intend,”“anticipate,”“estimate,”“project,”“prospects,” or similar expressions. The Company’s ability to predict results or
the actual effect of future plans or strategies is inherently uncertain. Factors
which could have a material adverse affect on the operations and future
prospects of the Company on a consolidated basis include, but are not limited
to: changes in economic conditions, legislative/regulatory changes, availability
of capital, interest rates, competition, and generally accepted accounting
principles. These risks and uncertainties should be considered in evaluating
forward-looking statements and undue reliance should not be placed on such
statements. Further information concerning the Company and its business,
including additional factors that could materially affect the Company’s
financial results, is included herein and in the Company’s other filings with
the SEC.
Overview
The
Company was incorporated on December 31, 1998 under the laws of the State of
Nevada. The business purpose of the Company is to acquire and develop oil and
gas leases and, secondarily, to acquire and develop mineral
properties.
Plan
of Operation
The
Company was organized to engage in any lawful corporate business, including
but
not limited to, exploration, development, production and sale of oil and gas
and
secondarily in the development of mineral properties. Our primary activity
is
currently involves the procurement of mineral leasehold interest in Arizona.
The
Company has no current business operations.
We
currently have no business activities. Due to our inability to secure funding,
we were unable to implement our business plan. Since this time, we have
attempted to identify and evaluate other businesses and technology opportunities
in order to proceed with an active business operation. At the present time,
we
have not identified any other business and/or technology opportunities that
our
management believes are consistent with the best interest of the company. Given
our lack of success in generating any discussions, we plan to retain a
consultant to assist us identifying additional business and/or technology for
acquisition, but have not retained a consultant at the present time. Our plan
of
operations is to continue our attempts to identify and evaluate other business
and technology opportunities in order to proceed with an active business
operation.
We
currently have forecasted the expenditure of approximately $20,000 during the
next twelve months in order to remain in compliance with the Securities Exchange
Act of 1934, retain a consultant, and to identify additional business and/or
technology for acquisition. We can provide no assurance that we will be
successful in acquiring other businesses or technology due to our limited
working capital. We anticipate that if we are successfully able to identify
any
technology or business for acquisition, we will require additional financing
in
order for us to complete the acquisition. We can provide no assurance that
we
will receive additional financing if sought.
We
do not
anticipate purchasing any real property or significant equipment in the next
twelve months.
At
the
present time, we have no employees other than our sole officer and director,
Mr.
Fong Lee. We do not anticipate hiring any employees until such time as we are
able to acquire any additional businesses and/or technology.
Our
total
liabilities as of September 30, 2005 were $42,900. On September 30, 2005 our
liabilities consisted of accounts payable and accrued expenses in the amount
of
$42,900.
We
have
not earned any revenues from inception through the period ending September30,2005. As a result, we did not earn any revenue during the nine months ended
September 30, 2005 or 2004.
We
incurred operating expenses in the amount of $16,006 for the nine months ended
September 30, 2005, compared to operating expenses of $14,081 for the nine
months ended September 30, 2004. Our operating expenses for the nine months
ended September 30, 2005 were entirely attributable to administrative fees.
The
significant increase in our expenses in primarily attributable to accounting
fees incurred in connection with bringing our disclosure current.
We
have
incurred a net loss of $4,755 for the nine month period ended September 30,2005, compared to $4,973 for the nine month period ended September 30, 2004.
Our
losses for the nine months ended September 30, 2005 are entirely attributable
to
accounts payable and loans receivables.
Liquidity
and Capital Resources
As
of
September 30, 2005, we had cash in the amount of $5,666. We have no working
capital as of September 30, 2005. As a result, we have insufficient capital
to
complete our business plan.
We
anticipate that we will require additional financing to enable us to complete
our business plan. However, we can provide no assurance that if we pursue
additional financing we will receive any financing.
We
have
not attained profitable operations and are dependent upon obtaining financing
to
complete an acquisition of another business or technology. We can provide no
assurance that we will receive any additional financing. For these reasons,
our
auditors have stated in their report that they have substantial doubt about
our
ability to continue as a going concern.
Going
Concern
Our
independent auditors have stated in their Auditor’s Report included in our
annual report on Form 10-KSB that we have incurred operating losses, accumulated
deficit, and negative cash flow from operations. From our inception to September30, 2005, we incurred cumulative losses of approximately $235,221. Our ability
to raise capital through future issuances of common stock is unknown. Our future
is dependent on our ability to obtain financing and develop new business
opportunities into profitable operations.
These
factors, among others, raise substantial doubt about our ability to continue
as
a going concern. Our
consolidated financial statements do not include any adjustments that may result
from the outcome of these aforementioned uncertainties.
We
carried out an evaluation of the effectiveness of the design and operation
of
our disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) as of September 30, 2005. This evaluation was carried
out under the supervision and with the participation of our Chief Executive
Officer and Chief Financial Officer, Mr. Fong Lee. Based upon that evaluation,
our Chief Executive Officer and Chief Financial Officer concluded that, as
of
September 30, 2005, our disclosure controls and procedures are effective. There
have been no significant changes in our internal controls over financial
reporting during the quarter ended September 30, 2005 that have materially
affected or are reasonably likely to materially affect such controls.
Disclosure
controls and procedures are controls and other procedures that are designed
to
ensure that information required to be disclosed in our reports filed or
submitted under the Exchange Act are recorded, processed, summarized and
reported, within the time periods specified in the SEC's rules and forms.
Disclosure controls and procedures include, without limitation, controls and
procedures designed to ensure that information required to be disclosed in
our
reports filed under the Exchange Act is accumulated and communicated to
management, including our Chief Executive Officer and Chief Financial Officer,
to allow timely decisions regarding required disclosure.
Limitations
on the Effectiveness of Internal Controls
Our
management does not expect that our disclosure controls and procedures or our
internal control over financial reporting will necessarily prevent all fraud
and
material error. An internal control system, no matter how well conceived and
operated, can provide only reasonable, not absolute, assurance that the
objectives of the control system are met. Further, the design of a control
system must reflect the fact that there are resource constraints, and the
benefits of controls must be considered relative to their costs. Because of
the
inherent limitations in all control systems, no evaluation of controls can
provide absolute assurance that all control issues and instances of fraud,
if
any, within the Company have been detected. These inherent limitations 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 the internal control. The design
of
any system of controls also is based in part upon certain assumptions about
the
likelihood of future events, and there can be no assurance that any design
will
succeed in achieving its stated goals under all potential future conditions.
Over time, control may become inadequate because of changes in conditions,
or
the degree of compliance with the policies or procedures may deteriorate.
In
accordance with the requirements of the Securities and Exchange Act of 1934,
the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
