10KSB: Optional form for annual and transition reports of small business issuers [Section 13 or 15(d), not S-B Item 405]
Published on March 19, 2004
39
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
(x) ANNUAL REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES ACT OF 1934
(FEE REQUIRED)
For the fiscal year ended September 30, 2003
--------------------
( ) TRANSACTION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (NO FEE REQUIRED)
For the transaction period from to
Commission File number 0-25541
-------
STARBERRYS CORPORATION
-----------------------
(Exact name of Company as specified in charter)
Nevada 91-1948357
------ --------------
State or other jurisdiction of incorporation (I.R.S. Employee
or organization Identification No.)
1100 Melville Street, Suite 320
Vancouver, B.C., Canada V6E 4A6
--------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code 604-688-3931, Ext.1
--------------------------
Securities registered pursuant to section 12 (b) of the Act:
Title of each share Name of each exchange on which registered
None None
- ---------------- --------------------
Securities registered pursuant to Section 12 (g) of the Act:
None
----
(Title of Class)
Check whether the Issuer (1) filed all reports required to be filed by section
13 or 15 (d) of the Exchange Act during the past 12 months (or for a shorter
period that the Company was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
(1) Yes [X] No [ ] (2) Yes [X] No [ ]
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of the Company's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]
-1-
State issuer's revenues for its most recent fiscal year: $ -0-
------------
State the aggregate market value of the voting stock held by nonaffiliates of
the Company. The aggregate market value shall be computed by reference to the
price at which the stock was sold, or the average bid and asked prices of such
stock, as of a specific date within the past 60 days.
As at September 30, 2003, the aggregate market value of the voting stock held by
nonaffiliates is undeterminable and is considered to be 0.
(THE COMPANY INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE LAST FIVE YEARS)
Not applicable
(APPLICABLE ONLY TO CORPORATE COMPANYS)
As of September 30, 2003, the Company has 11,849,848 shares of common stock
issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Exhibits incorporated by reference are referred to under Part 1V
-2-
TABLE OF CONTENTS
PART 1
- -------
Page
----
-3-
PART I
ITEM 1. DESCRIPTION OF BUSINESS
HISTORY AND ORGANIZATION
Starberrys Corporation, a Nevada corporation (the "Company"), was
incorporated on October 8, 1998. The Company has no subsidiaries and no
affiliated companies. The Company's executive offices are located in Vancouver,
British Columbia, Canada.
The Company's Articles of Incorporation currently provide that the
Company is authorized to issue 200,000,000 shares of Common Stock, par value
$0.001 per share, and 50,000,000 Preferred Shares. As at September 30, 2003
there were 11,849,848 Common Shares and no Preferred Shares outstanding.
On November 24, 1998 the Company acquired the exclusive rights to market
high quality cigars through a climate controlled kiosk merchandise display case,
known as the King Climate Control, by the payment of $50,000. The Company did
not proceed with this new business and in 2000 abandoned the activity.
Subsequent to the end of the fiscal year (in November 2002), the
Company signed a Letter of Intent with eVision Technologies Corporation and Ken
Turpin (founder / inventor) to acquire 100% of the assets related to the
business of Colour By Number ("CBN"). The CBN System is a digital color
management system providing one color language across industries and materials,
empowering architects, designers, contractors, retailers and consumers to take
full control of their choice and use of color.
The Company was unsuccessful in raising the financing to complete this
acquisition, which has been abandoned.
In addition, the Company signed a Letter of Intent on 19 January 2003 with
Malaremastarnas Riksforening, the owner of all the shares of Skandinaviska
Farinstituter AB ("SCI" or the Scandinavian Colour Institute) which owns the
colour notation system Natural Color Systems ("NCS") and the Scandinavian Color
School, outlining the general terms of a proposed acquisition by the Company of
all of the shares of SCI. On April 9, 2003 the Company signed a Definitive
Purchase Agreement to complete the acquisition, subject to certain conditions,
of all the shares of SCI for a price of SEK 35,000,000 (see attached Exhibit A.)
Subsequent to June 30, 2003 that Agreement was amended to change the Closing
Date from August 31, 2003 to November 30, 2003. NCS is the leading colour
notation system in Europe and is also highly regarded around the world. It is
the national standard for colour in Sweden, Norway, Spain and South Africa.
The Company was unsuccessful in raising the financing to complete this
acquisition, and it has also been abandoned.
The Company has no revenue to date from its operations, and its ability to
affect its plans for the future will depend on the availability of financing.
Such financing will be required to enable the Company to acquire new businesses.
The Company anticipates obtaining such funds from its officers and directors,
-4-
financial institutions or by way of the sale of its capital stock under an SB-2.
However, there can be no assurance that the Company will be successful in
obtaining additional capital for such business acquisitions from the sale of its
capital stock, or in otherwise raising substantial capital.
During the year, the Company filed with the SEC various documents such as
Forms 10-KSB, 10-QSB, 3, SC 13-D, 8-Ks, Pre-14-C and other forms. The Company
distributed to its shareholders an annual report for the fiscal year ended
September 30, 2002, which included the audited financial statements, information
circular and proxy (refer to page 17). The Company did not distribute any
material to its shareholders in prior years.
The shareholders may read and copy any material filed by the Company with
the SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W.,
Washington, D.C., 20549. The shareholders may obtain information on the
operations of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
In addition, the SEC maintains an Internet site that contains reports, proxy and
information statements, and other information which the Company has filed
electronically with the SEC, by accessing the website using the following
address: http://www.sec.gov. Presently the Company does not have its own
Internet address. The Company is prepared to distribute, upon request from
shareholders, any of the material previously filed with the SEC.
PLANNED BUSINESS
This Form 10-KSB contains forward-looking statements as that term is
defined in the Private Securities Litigation Reform Act of 1995. These
statements relate to future events or the Company's future financial
performance. In some cases, the reader can identify forward-looking statements
by terminology such as "may", "will", "should", "expects", "plans",
"anticipates", "believes", "estimates", "predicts", "potential" or "continue" or
the negative of these terms or other comparable terminology. These statements
are only predictions and involve known and unknown risks, uncertainties and
other factors, including the risks in the section entitled "Risk Factors", that
may cause the Company or its industry's actual results, levels of activity,
performance or achievements to be materially different from any future results,
levels of activity, performance or achievements expressed or implied by these
forward-looking statements. Although the Company believes that the expectations
reflected in the forward-looking statements are reasonable, it cannot guarantee
future results, levels of activity, performance or achievements. Except as
required by applicable law, including the securities laws of the United States,
the Company does not intend to update any of the forward-looking statements to
conform these statements to actual results.
The Company's financial statements are stated in United States Dollars and
are prepared in accordance with United States Generally Accepted Accounting
Principles. In this annual report, unless otherwise specified, all dollar
amounts are expressed in United States Dollars.
RISK FACTORS
There are certain inherent risks which will have an effect on the Company's
development in the future and some of these risk factors are noted below but are
not all encompassing since there may be others unknown to management at the
present time which might have an impact in the future on the development of the
Company.
-5-
1. FUTURE TRADING IN THE COMPANY'S STOCK MAY BE RESTRICTED BY THE SEC'S PENNY
STOCK REGULATIONS WHICH MAY LIMIT A STOCKHOLDER'S ABILITY TO BUY AND SELL
THE COMPANY'S SHARES WHEN, AND IF, THE SHARES ARE EVENTUALLY QUOTED.
The SEC has adopted regulations which generally define "penny stock" to be
any equity security that has a market price (as defined) less than $5.00 per
share or an exercise price of less than $5.00 per share, subject to certain
exceptions. The Company's shares most likely will be covered by the penny stock
rules, which impose additional sales practice requirements on broker-dealers who
sell to persons other than established customers and "accredited investors."
The term "accredited investor" refers generally to institutions with assets in
excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or
annual income exceeding $200,000 or $300,000 jointly with their spouse. The
penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from the rules, to deliver a standardized risk
disclosure document in a form prepared by the SEC which provides information
about penny stocks and the nature and level of risks in the penny stock market.
The broker-dealer also must provide the customer with current bid and offer
quotations for the penny stock, the compensation of the broker-dealer and its
salesperson in the transaction and monthly account statements showing the market
value of each penny stock held in the customer's account. The bid and offer
quotations, and the broker-dealer and salesperson compensation information, must
be given to the customer orally or in writing prior to effecting the transaction
and must be given to the customer in writing before or with the customer's
confirmation. In addition, the penny stock rules require that prior to a
transaction in a penny stock not otherwise exempt from these rules, the
broker-dealer must make a special written determination that the penny stock is
a suitable investment for the purchaser and receive the purchaser's written
agreement to the transaction. These disclosure requirements may have the effect
of reducing the level of trading activity in the secondary market for the stock
that is subject to broker-dealers to trade in the Company's securities. The
Company believes that the penny stock rules discourage investor interest in and
limit the marketability of, its common stock when, and if, it is called for
trading. The Company feels that its shares will be considered to be penny stock
when the shares are finally quoted.
2. THE COMPANY IS UNCERTAIN IF IT WILL BE ABLE TO OBTAIN ADDITIONAL CAPITAL
NECESSARY FOR ITS DEVELOPMENT.
The Company has incurred a cumulative net loss for the period from October
8, 1998 (date of inception) to September 30, 2003 of $2,032,743. As a result of
these losses and negative cash flows from operations, the Company's ability to
continue operations will be dependent upon the availability of capital from
outside sources unless and until it achieves profitability. It can only achieve
profitability if an ore body is found on the Bridge claim.
3. WHETHER THE COMPANY WILL CONTINUE TO BE A GOING CONCERN
The Company's auditors, in the audited financial statements as at September 30
2003, have indicated a concern in their audit opinion as to whether the Company
will be able to raise sufficient funds to complete its objectives and, if not,
indicates that the Company might not be able to continue as a going concern.
Without adequate future financing, the Company might cease to operate and the
existing shareholders and any future shareholders will lose their entire
investment.
-6-
4. THE PRESENT SHAREHOLDERS HAVE ACQUIRED SHARES AT EXTREMELY LOW PRICES
All present shareholders have acquired shares at $0.001 per share. The
Company does not intend to issue further shares at this price; hence, any new
investors would pay a higher price and immediately suffer a dilution in the
value of their shares.
5. FUTURE ISSUANCE OF STOCK OPTIONS, WARRANTS AND/OR RIGHTS WILL HAVE A
DILUTING FACTOR ON EXISTING AND FUTURE SHAREHOLDERS
The grant and exercise of stock options, warrants or rights to be issued in
the future would likely result in a dilution of the value of the Company's
common shares for all shareholders. At present, the Company has granted stock
options to related parties of 25,000 shares of common stock at $1.00 per share
as noted on page 33 of this report and may in the future issue further stock
options to officer, directors and consultants which will dilute the interest of
the existing and future shareholders. Moreover, the Company may seek
authorization to increase the number of its authorized shares and to sell
additional securities and/or rights to purchase such securities at any time in
the future. Dilution of the value of the common shares would likely result from
such sales.
6. THE COMPANY DOES NOT EXPECT TO DECLARE OR PAY ANY DIVIDENDS
The Company has not declared or paid any dividends on its common stock
since its inception, and it does not anticipate paying any such dividends for
the foreseeable future.
7. CONFLICT OF INTEREST
Some of the Directors of the Company are also directors and officers of
other companies and conflicts of interest may arise between their duties as
directors of the Company and as directors and officers of other companies.
8. CONCENTRATION OF OWNERSHIP BY MANAGEMENT.
The management of the Company, either directly or indirectly, owns 735,000
shares. Even though this only represents 6.38 % of the issued and outstanding
shares, it might be difficult for any one shareholder to solicit sufficient
votes to replace the existing management. Therefore, any given shareholder may
never have a voice in the direction of the Company.
9. KEY-MAN INSURANCE
The Company carries no key-man insurance. In the event that Mr. Erickson
either departed the Company or passed away, the Company would not have the
available funds to attract an individual of similar experience. Management is
considering obtaining key-man insurance once it has sufficient funds to do so.
10. NUMBER OF EMPLOYEES AND NUMBER OF FULL-TIME EMPLOYEES
All the directors devote some time to the Company but none of them are full
time since they have other occupations, which requires the majority of their
time. As a group, the directors and officers devote approximately 10 hours a
month to the affairs of the Company. There are no employees in the Company at
the present time and therefore no full time employees.
-7-
11. RECENTLY ENACTED AND PROPOSED REGULATORY CHANGES
Recently enacted and proposed changes in the laws and regulations affecting
public companies, including the provisions of the Sarbanes-Oxley Act of 2002 and
rules proposed by the SEC and NASDAQ could cause the Company to incur increased
costs as it evaluates the implications of new rules and responds to new
requirements. The new rules will make it more difficult for the Company to
obtain certain types of insurance, including directors and officers liability
insurance, and the Company may be forced to accept reduced policy limits and
coverage or incur substantially higher costs to obtain the same or similar
coverage. The impact of these events could also make it more difficult for the
Company to attract and retain qualified persons to serve on the Company's board
of directors, or as executive officers. The Company is presently evaluating and
monitoring developments with respect to these new and proposed rules, and it
cannot predict or estimate the amount of the additional costs it may incur or
the timing of such costs.
ITEM 2. DESCRIPTION OF PROPERTY
OFFICES
The Company's executive offices are located at 1100 Melville Street,
Suite 320, Vancouver, British Columbia, Canada V6E 4A6. The office is located in
premises which are also used by the Secretary of the Company for other business
interests. There is no charge to the Company for using this office.
OTHER PROPERTY
The Company does not own any other property other than the rights to the
Cigar King and the Starberrys food service concepts.
ITEM 3. LEGAL PROCEEDINGS
There are no legal proceedings to which the Company is a party or to
which its property is subject, nor to the best of management's knowledge are any
material legal proceedings contemplated.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
There has been no annual meeting for the Company to the date of this
report. No matters have been submitted to a vote of securities holders.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
During the past year there has been no established trading market for
the Company's common stock. Since its inception, the Company has not paid any
-8-
dividends on its common stock, and the Company does not anticipate that it will
pay dividends in the foreseeable future. As at September 30, 2003 the Company
had 55 shareholders.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
OVERVIEW
The Company was incorporated on October 8, 1998 under the laws of the
State of Nevada. The Company's Articles of Incorporation currently provide that
the Company is authorized to issue 200,000,000 shares of Common Stock, par value
$0.001 per share, and 50,000,000 shares of Preferred Stock with such terms as
will be specified by the Board of Directors at the time it acts to create a
specific series of the Preferred Stock to be issued. As at September 30, 2003
there were 11,849,848 Common Shares and no Preferred Shares outstanding.
Liquidity and Capital Resources
As at September 30, 2003, the Company had assets of $380, and
$1,411,807 in liabilities. Included in the liabilities is accounts payable of
$254,061.
During the year, the Company has incurred the following expenses:
i. The Company has accrued $4,000 in fees to its auditors, Madsen &
Associates, CPA's Inc. for the examination of the Form 10-KSB as at September
30, 2003. In addition, the Company was charges $445 for the March 10-QSB and
$460 for the June 10-QSB by Sellers and Andersen. In addition, the Company has
accrued $2,800 in order that the Company's accountant can prepare the applicable
working papers and other information to be submitted to the auditors for their
review of the Form 10-KSB.
ii. The Company paid consulting fees of $40,000 to its president over an
eight month period, at $5,000 per month. The Company paid fees of $7,350 to its
-9-
former president for financial and management services. In addition, the
Company paid fees to Doxa Consulting of $110,754 for the provision of
technological, functional and strategic consultancy services. Consulting fees
of $25,330 were paid to promoters and others for services to the Company.
iii. The Company has incurred certain expenses during the year for filing
its various Forms 10-KSB and 10-QSB with the SEC. The Company paid $3,207 in
total for the September 30, 2002 10-KSB, the December 31, 10-QSB and an 8-K. It
accrued $1,073 for the March 31, 2003 10-QSB and another 8-K. In addition,
registration and other fees of $344 were charged to the Company.
iv The Company paid fees of $23,900 for assistance in obtaining
financing.
v. Legal fees of $339,731 were incurred during the year.
vi. Loss on foreign exchange consists of the difference between the US and
Canadian dollar exchange rate on monies expended by the Company in Canadian
dollars.
vii. Office expenses consist of photocopy, fax and courier expenses and other
miscellaneous expenses incurred by the officers of the Company.
viii. The Company paid rent expenses to a director of the Company to maintain an
office while doing Company work.
ix. Telephone expenses are those expenses incurred by a director of the
Company to maintain an office for the Company.
x. During the period, the Company received its annual billing from Nevada Agency
and Trust Company for acting as transfer agent for the year in the amount of
$1,200. Amounts for stock transfer fees and original issue fees totaled $1,324.
In addition, the Company has accrued certain late charges of interest totaling
$355. Included in this expense is the 2003 fee for list of officers and
directors with the State of Nevada in the amount of $210.
xi. Travel and promotion expenses incurred by the former president of the
Company totaled $17,176. Travel and promotion expenses of $8,347 were incurred
by a director of the Company, and expenses of $4,090 were charged by the
Company's promoter. Other expenses included $1,028 paid to the current president
of the Company and $1,200 paid to a consultant. A trip for the purposes of
obtaining financing was made by the president of the Company, which cost $2,751.
xii Interest payable is accrued on the note payable to Glencoe Capital Inc. at a
rate of 15% per annum for three months since the funds were advanced to the
Company.
xiii Loss of deposits is the funds expended on the purchase agreements with
eVision Technologies Inc. and the Scandinavian Colour Institute. These deposits
were forfeited since the terms of the contracts were not met.
The Company estimates the following expenses will be required during the
next twelve months to meet its obligations:
1. Accounting and auditing expense has been projected as follows:
2. Filing fees will include the cost of filing the various Forms 10-QSB and
the Form 10-KSB on Edgar. It is estimated that the cost for each of the Form
10-QSBs will be $300 whereas the cost for filing the Form 10-KSB will be $500.
Additional Edgar charges are estimated at $500. Each year the Company is
required to file a list of officers and directors with the State of Nevada at a
cost of $260. Additional costs of $90 are estimated.
3. Legal fees are estimated based on the previous year's fees. It is
estimated that the fees in 2004 will be lower, since in the year ended September
30, 2003, there were some unusual start up fees regarding negotiations of the
letters of intent and financing agreements.
4. Relates to photocopying, faxing and courier, in addition to miscellaneous
expenses incurred by the directors. The estimate of these charges is
approximately $80 per month for 12 months.
5. The estimate of telephone expenses to conduct Company business is
approximately $300 per month for 12 months.
6. The Company is charged $1,200 annually by Nevada Agency & Trust Company.
Additional stock transfer and original issue fees of $1,300 are estimated. The
Company has calculated $400 in late interest charges for the next year.
7. Travel and promotion expenses have been estimated at $20,000. These
expenses may be incurred by the directors who may incur travel expenses to find
a new project for the Company, and to obtain financing.
At the present time, the Company has no contractual obligations for leasing
premises.
At present, the directors devote time to the affairs of the Company as required.
There are no plans to hire any employees at this time. The Company will
continue to use the services of consultants in the furtherance of the Company's
goals.
-11-
Results of Operations
- -----------------------
The Company has had no revenues from operations since its inception.
Plan of operation.
The Company is seeking new acquisition and financing opportunities.
ITEM 7. FINANCIAL STATEMENTS
The financial statements of the Company are included following the
signature page to this Form 10-KSB.
ITEM 8. CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
On February 5, 2004, the Company dismissed Sellers & Andersen, LLC as the
independent accountants. This action was approved by the directors of the
Company. The Company appointed Madsen & Associates, CPA's Inc. as the
independent accountants.
The reports of Sellers & Andersen LLC for the financial statements as at
September 30, 2002 and through the subsequent interim periods ended February 5,
2004, contained no adverse opinion or disclaimers of opinion and were not
modified or qualified as to audit scope or accounting principles, but did
contain modifications as to the Company's ability to continue as a going
concern.
During the fiscal year ended September 30, 2002, and through the subsequent
interim period ended February 5, 2004, to the best of the Company's knowledge,
there have been no disagreements with Sellers & Andersen, LLC on any matters of
accounting principles or practices, financial statement disclosure, or audit
scope or procedures, which disagreement if not resolved to the satisfaction of
Sellers & Andersen, LLC would have caused them to make reference in connection
with its report on the financial statements of the Company for such years.
During the fiscal year ended September 30, 2002, and through subsequent interim
period ended February 5, 2004, Sellers & Andersen, LLC did not advise the
Company on any matters set forth in Item 304 (a)(1)(iv)(B) of Regulation S-B.
For the financial statements for the fiscal years ended September 30, 2002 and
2001, the Company has not consulted with Madsen & Associates CPA's Inc.
regarding (i) the application of accounting principles to a specific
transaction, either completed or proposed, or the type of audit opinion that
might be rendered on the Company's financial statements, and no written report
or oral advice was provided to the Company by concluding there was an important
-12-
factor to be considered by the Company in reaching a decision as to an
accounting, auditing or financial reporting issue; or (ii) any matter that was
either the subject of a disagreement, as that term is defined in Item 304
(a)(1)(iv)(A) of Regulation S-B or an event, as that term is defined in Item 304
(a)(1)(iv)(B) of Regulation S-B.
ITEM 8A. CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures
-----------------------------------------------------
The Company's Chief Executive Officer and Chief Financial Officer, after
evaluating the effectiveness of the Company's controls and procedures (as
defined in the Securities Act of 1934 Rule 13a 14(c) and 15d 14 (c) of the date
within 90 days of the filing of this annual report on Form 10-KSB (the
"Evaluation Date"), have concluded that as of the Evaluation Date, the Company's
disclosure controls and procedures were adequate and effective to ensure that
material information relating to it would be made known to it by others,
particularly during the period in which this quarterly report on Form 10-KSB was
being made.
(b) Changes in Internal Controls
-------------------------------
There were no significant changes in the Company's internal controls or in other
factors that could significantly affect the Company's disclosure controls and
procedures subsequent to the Evaluation Date, nor any significant deficiencies
or material weaknesses in such disclosure controls and procedures requiring
corrective actions.
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16 (A) OF THE EXCHANGE ACT
The following table sets forth as of September 30, 2003, the name, age,
and position of each executive officer and director and the term of office of
each director of the Company.
-13-
Each director of the Company serves for a term of one year and until his
successor is elected at the Company's annual shareholders' meeting and is
qualified, subject to removal by the Company's shareholders. Each officer
serves, at the pleasure of the Board of Directors, for a term of one year and
until his successor is elected at the Annual General Meeting of the Board of
Directors and is qualified.
On November 3, 2003, Kenneth R. Tolmie resigned as Chief Financial Officer,
Chief Accounting Officer and Secretary of the Company. Mary Hethey was
appointed Chief Financial Officer, Chief Accounting Officer and Secretary of the
Company in the place and stead of Kenneth R. Tolmie.
Set forth below is certain biographical information regarding each of
the Company's executive officers and directors.
RONALD P. ERICKSON has been a director and Chairman of the Board of the
Company since April 24, 2003. He was appointed President and Chief Executive
Officer of the Company on September 29, 2003. Resident in Seattle, he is a
seasoned executive with more than 20 years of expertise in the high technology,
telecommunications and microcomputer industries. Mr. Erickson is also Chairman
of Intrinsyc Software Inc., a Vancouver-based publicly-traded company providing
proprietary software and solutions which enable the development and networking
of intelligent devices such as PDA's. Mr. Erickson is the current chair, and
former CEO of eCharge, an electronic payment systems developer, where he played
a major role in raising approximately US $100 million in equity capital from
major international investors. Mr. Erickson previously was co-founder,
Chairman, President and CEO of GlobalTel Resources, Inc., a provider of
telecommunication services, messaging and intranet solutions. During his career
Mr. Erickson has also held executive positions at Egghead Software Inc, NBI Inc
and MicroRim, Inc. With a law degree from the University of California, Davis,
he maintains an active license to practice law in the State of Washington and
the District of Columbia.
HANS NASHOLM has been a director of the Company since December 2, 2002. He
is a former President of CBN Systems SA, based in Geneva. Mr. Nasholm left CBN
Systems SA to focus his attention upon Starberrys. He has worked with business
control, strategic business development, growth projects and M&A throughout his
career with international corporations operating in the European and North
American markets. He has spent his entire career building international
business, recently 9in the last 5 years as Vice President for Uponor Group's
Housing Solution division, which during his years at Uponor grew from MEUR275 to
MEUR550. Prior to that he was Vice President Financial Planning and Control for
the Swedish Match Group, both positions based in Switzerland. Mr. Nasholm is
also a partner of an earlier stage investment company as well as an early stage
venture investor. He was educated at the University of Gothenburg (BSc in
Economics), and an Executive Management Programme led by IMD (International
Institute for Management Development) Switzerland. He speaks Swedish, English,
German and French.
TERRY H. MCKAY has been a director since June 6, 2002. Dr. McKay currently
practices Dentistry in North Vancouver, BC. Since 1999 he is a director of
Swident, a Swiss dental insurance company, and serves on its Financial Audit
Committee. Dr. McKay is past Clinical Director for Knowell Technology and a past
Board member of longivitystore.com. Mr. McKay graduated from the University of
British Columbia with a B.A. and D.M.D. in 1975. He has practiced Dentistry in
BC and in Seattle, Washington. Dr. McKay's professional memberships include the
Canadian Dental Association, B.C. College of Dental Surgeons, Washington State
-14-
Dental Association, American Academy of Gold Foil Operations and the American
Academy of Operative Dentists.
KENNETH R. TOLMIE has been CFO since June 6, 2002. Mr. Tolmie is a
businessman, a consultant and Corporate Director. Since May 2001 he has been
part-time Vice President, Finance of International P.E.T. Diagnostics Inc., a
private company in the business of developing and operating PETSCAN Centres to
provide clinical Positron Emission Tomography (PET) scans, owing and operating
the Vancouver PETSCAN Centre. From 1998 to 2001, Mr. Tolmie was Vice President,
Finance and Secretary of ATC Technologies Corp (a public company on the CDNX:
symbol ATE) and its subsidiary, AutoSoft Tool Corporation. He joined The Beacon
Group of Companies as Chairman and CFO in 1987. He is presently its President
and CFO. This company manages and administers the affairs and funds of limited
partnerships involved in film financing. Previously, Mr Tolmie was President and
CEO of Hastings West Investment Ltd, a financial management / holding company.
He graduated from Queen's University with a Bachelor of Arts in Economics and
Political Science; and from the University of Western Ontario with a Masters of
Business Administration.
MARY M. HETHEY, C.A., was appointed Chief Financial Officer, Chief
Accounting Officer and Secretary of the Company on November 3, 2003. Mrs.
Hethey graduated with a B.A. in Economics from the University of Toronto in
1973. She moved to Vancouver and started to article with Clarkson Gordon
Chartered Accountants in 1975, and transferred to Collins Barrow in 1978, where
she performed both audits and non-audit engagements. In 1979 she obtained her
Chartered Accountant designation. Since 1985, Mrs. Hethey has been a senior
executive with various public companies listed both on the Canadian and US stock
exchanges. She has continued to work as a Chartered Accountant since 1979.
To the knowledge of management, during the past five years, no present
or former director, executive officer or person nominated to become a director
or an executive officer of the Company:
(1)
filed a petition under the federal bankruptcy laws or any state insolvency law,
nor had a receiver, fiscal agent or similar officer appointed by the court for
the business or property of such person, or any partnership in which he was a
general partner at or within two years before the time of such filings;
(2)
was convicted in a criminal proceeding or named subject of a pending criminal
proceeding (excluding traffic violations and other minor offenses);
(3)
was the subject of any order, judgment or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction, permanently or
temporarily enjoining him from or otherwise limiting, the following activities:
(i)
acting as a futures commission merchant, introducing broker, commodity trading
advisor, commodity pool operator, floor broker, leverage transaction merchant,
associated person of any of the foregoing, or as an investment advisor,
-15-
underwriter, broker or dealer in securities, or as an affiliate person, director
or employee of any investment company, or engaging in or continuing any conduct
or practice in connection with such activity;
(ii)
engaging in any type of business practice; or
(iii)
engaging in any activities in connection with the purchase or sale of any
security or commodity or in connection with any violation of federal or state
securities laws or federal commodities laws;
(4)
was the subject of any order, judgment, or decree, not subsequently reversed,
suspended, or vacated, of any federal or state authority barring, suspending or
otherwise limiting for more than 60 days the right of such person to engage in
any activity described above under this Item, or to be associated with persons
engaged in any such activities;
(5)
was found by a court of competent jurisdiction in a civil action or by the
Securities and Exchange Commission to have violated any federal or state
securities law, and the judgment in such civil action or finding by the
Securities and Exchange Commission has not been subsequently reversed,
suspended, or vacated.
(6)
was found by a court of competent jurisdiction in a civil action or by the
Commodity Futures Trading Commission to have violated any federal commodities
law, and the judgment in such civil action or finding by the Commodity Futures
Trading Commission has not been subsequently reversed, suspended or vacated.
COMPLIANCE WITH SECTION 16 (A) OF THE EXCHANGE ACT
The Company knows of no director, officer, beneficial owner of more than
ten percent of any class of equity securities of the registrant registered
pursuant to Section 12 ("Reporting Person") that failed to file any reports
required to be furnished pursuant to Section 16(a). Other than those disclosed
below, the registrant knows of no Reporting Person that failed to file the
required reports during the most recent fiscal year.
The following table sets forth as at September 30, 2003, the name and
position of each Reporting Person that failed to file on a timely basis any
reports required pursuant to Section 16 (a) during the most recent fiscal year.
-16-
ITEM 10. EXECUTIVE COMPENSATION
CASH COMPENSATION
The following table sets forth compensation paid or accrued by the Company
for the last three years ended September 30, 2003:
SUMMARY COMPENSATION TABLE (2001, 2002 AND 2003)
Long Term Compensation (US Dollars)
--------------------------------------
Annual Compensation Awards Payouts
-------------------- ------ -------
-17-
BONUSES AND DEFERRED COMPENSATION
None
COMPENSATION PURSUANT TO PLANS
None
PENSION TABLE
None
OTHER COMPENSATION
None
COMPENSATION OF DIRECTORS
None
TERMINATION OF EMPLOYMENT
There are no compensatory plans or arrangements, including payments to
be received from the Company, with respect to any person named in Cash
Compensation set out above which would in any way result in payments to any such
person because of his resignation, retirement, or other termination of such
person's employment with the Company or its subsidiaries, or any change in
control of the Company, or a change in the person's responsibilities following a
change in control of the Company.
-18-
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth as at September 30, 2003, the name and
address and the number of shares of the Company's common stock, with a par value
of $0.001 per share, held of record or beneficially by each person who held of
record, or was known by the Company to own beneficially, more than 5% of the
issued and outstanding shares of the Company's common stock, and the name and
shareholdings of each director and of all officers and directors as a group.
(1)
All shares owned directly are owned beneficially and of record, and such
shareholder has sole voting, investment and dispositive power, unless otherwise
noted.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TRANSACTIONS WITH MANAGEMENT AND OTHERS
Except as indicated below, there were no material transactions, or
series of similar transactions, since inception of the Company and during its
current fiscal period, or any currently proposed transactions, or series of
similar transactions, to which the Company was or is to be a party, in which the
amount involved exceeds $60,000, and in which any director or executive officer,
or any security holder who is known by the Company to own of record or
beneficially more than 5% of any class of the Company's common stock, or any
member of the immediate family of any of the foregoing persons, has an interest.
-19-
On May 28, 2002, the Company signed an agreement with First Equity
Capital Group Inc. for the assignment of the Starberrys business system and name
from First Equity to the Company. The consideration was 2,500,000 shares plus
$50,000. The 2,500,000 shares were delivered by the Company to First Equity on
June 6, 2002.
INDEBTEDNESS OF MANAGEMENT
There were no material transactions, or series of similar transactions,
since the beginning of the Company's last fiscal year, or any currently proposed
transactions, or series of similar transactions, to which the Company was or is
to be a part, in which the amount involved exceeded $60,000 and in which any
director or executive officer, or any security holder who is known to the
Company to own of record or beneficially more than 5% of the common shares of
the Company's capital stock, or any member of the immediate family of any of the
foregoing persons, has an interest.
TRANSACTIONS WITH PROMOTERS
The Company does not have promoters and has no transactions with any
promoters.
-20-
PART IV
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) (1) FINANCIAL STATEMENTS.
The following financial statements are included in this report:
(a) (2) FINANCIAL STATEMENT SCHEDULES
The following financial statement schedules are included as part of this report:
None.
(a) (3) EXHIBITS
The following exhibits are included as part of this report by reference:
1. Certificate of Incorporation, Articles of Incorporation and By-laws
1.1 Certificate of Incorporation (incorporated by reference from Starberrys
Registration Statement on Form 10-SB filed on March 11, 1999)
1.2 Articles of Incorporation (incorporated by reference from Starberrys
Registration Statement on Form 10-SB filed on March 11, 1999)
-21-
1.3 By-laws (incorporated by reference from Starberrys Registration Statement
on Form 10-SB filed on March 11, 1999)
99.1 Certification of the Chief Executive Officer Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
99.2 Certificate Pursuant to 18 U.S.C. Section 1350 signed by Chief Executive
Officer
99.3 Certification of the Chief Financial Officer Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
99.4 Certificate Pursuant to 18 U.S.C. Section 1350 signed by Chief Financial
Officer
(b) Reports on Form 8-K
(i) Form 8-K incorporated herein by reference to the Company's filing on
January 7, 2003 announcing that the change of auditors from Anderswen
Andersen & Strong to Pricewaterhouse Coopers as described on Form 8-K July
12, 2002 was not implemented.
(ii) Form 8-K incorporated herein by reference to the Company's filing on May
28, 2003 announcing the purchase agreement with the Swedish Painting
Contractors Association
(iii) Form 8-K incorporated by reference to the Company's filing on October 10,
2003 announcing the resignation of John Goodwin as President, Chief
Executive Officer and Director, and the appointment of Ronald P. Erickson
as President and Chief Executive Officer of the Company.
(iv) Form 8-K incorporated herein by reference to the Company's filing on
November 3, 2003 announcing the resignation of Ken Tolmie as Chief
Financial Officer and Secretary and the appointment of Mary Hethey as Chief
Financial Officer and Secretary Treasurer of the Company.
(v) Form 8-K filed on February 5, 2004 regarding the Company's change of
certifying accountants from Sellers & Andersen LLC to Madsen & Associates,
CPA's Inc.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
(1) Audit Fees
-----------
The aggregate fees billed by the independent accountants for the last two fiscal
years for professional services for the audit of Standard's annual financial
statements and the review included in Standard's Form 10-QSBs and services that
are normally provided by the independent accountants in connection with
statutory and regulatory filings or engagements for those fiscal years were
$10,665.
(2) Audit-Related Fees
-------------------
The aggregate fees billed in each of the last two fiscal years for assurance and
related services by the principal accountants that are reasonably related to the
-22-
performance of the audit or review of Standard's financial statements and are
not provided in Item 9 (e)(1) of Schedule 14A was NIL.
(3) Tax Fees
---------
The aggregate fees billed in each of the last two fiscal years for professional
services rendered by the principal accountants for tax compliance, tax advise,
and tax planning was $300.
(4) All Other Fees
----------------
During the last two fiscal years there were no other fees charged by the
principal accountants other than those disclosed in (1) and (3) above.
(5) Audit Committee's Pre-approval Policies
------------------------------------------
At the present time, there are no significant directors, officers and employees
involved with Standard to make any pre-approval policies meaningful. Once
Standard has elected more directors and appointed directors and non-directors to
the Audit Committee it will have meetings and function in a meaningful manner.
(6) Audit Hours Incurred
----------------------
The principal accountants did not spend greater than 50 percent of the hours
spent on the accounting by Standard's internal accountant.
-23-
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
STARBERRYS CORPORATION
(Registrant)
Date: March 10, 2004 By: /s/ "RONALD ERICKSON"
----------------------
Ronald Erickson, President and CEO
Date: March 10, 2004 By: /s/ "MARY HETHEY"
------------------
Mary Hethey, Chief Financial Officer
and Secretary Treasurer
-24-
MADSEN & ASSOCIATES CPA'S INC. 684 East Vine Street #3,
Certified Public Accountants and Murray, Utah 84107
Business Consultants Telephone 801-268-2632
Member SEC Practice Section of the AICPA Fax 801-268-3978
Board of Directors
Starberrys Corporation
Vancouver, B.C., Canada
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have audited the accompanying balance sheet of Starberrys Corporation
(development stage company) at September 30, 2003, and the related statements of
operations, stockholders' equity, and cash flows for the years ended September
30, 2003 and 2002 and the period October 8, 1998 (date of inception) to
September 30, 2003. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards accepted in
the United States of America. These standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit also includes assessing the
accounting principles used and significant estimates made by management as well
as evaluating the overall balance sheet presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Starberrys Corporation at
September 30, 2003, and the results of operations, and cash flows for the years
ended September 30, 2003 and 2002 and the period October 8, 1998 (date of
inception) to September 30, 2003 in conformity with accounting principles
generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company does not have the
necessary working capital to service its debt and for its planned activity,
which raises substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are described in the notes to the
financial statements. These financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
Murray, Utah s\Madsen & Associates, CPA's Inc.
March 10, 2004
-25-
STARBERRYS CORPORATION
(Development Stage Company)
BALANCE SHEET
September 30, 2003
The accompanying notes are an integral part of these financial statements
-26-
STARBERRYS CORPORATION
(Development Stage Company)
STATEMENT OF OPERATIONS
For the Years Ended September 30, 2003 and 2002 and Period
October 8,1998 (Date of Inception) to September 30, 2003
The accompanying notes are an integral part of these financial statements
-27-
STARBERRYS CORPORATION
(Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the period October 8,1998 (Date of Inception) to September 31, 2003
The accompanying notes are an integral part of these financial statements
-29-
STARBERRYS CORPORATION
(Development Stage Company)
STATEMENT OF CASH FLOWS
For the year ended September 30, 2003 and 2002 and the Period
October 8, 1998 (Date of Inception) to September 30, 2003
The accompanying notes are an integral part of these financial statements
-30-
STARBERRYS CORPORATION
(Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
September 30, 2003
1. ORGANIZATION
The Company was incorporated under the laws of the State of Nevada on
October 8, 1998 under the name of "Cigar King Corporation" with authorized
common stock of 200,000,000 shares at $0.001 par value. On September 13,
2002 the name was changed to "Starberrys Corporation" as part of a change
in the authorized capital stock by the addition of 50,000,000 shares of
preferred stock with a par value of $.001. There are no preferred shares
issued and the terms have not been determined.
The Company was originally organized for the purpose of engaging in quality
cigar sales. During 1998 the Company purchased the right to use the name
"Cigar King" to market high quality cigars and during 2000 the activity was
abandoned.
During 2002, the Company entered into a contract of purchase of all the
assets and intellectual property related to the "Color by Numbers" business
and system and on April 9, 2003, the Company signed a Purchase Agreement
for the acquisition of all the shares of the company which owns design,
paint and building products. (see Note 7). The contract was subsequently
rescinded.
The Company has not started any operations and is in the development stage.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Methods
- -------------------
The Company recognizes income and expenses based on the accrual method of
accounting.
Dividend Policy
- ----------------
The Company has not yet adopted a policy regarding payment of dividends.
Income Taxes
- -------------
The Company utilizes the liability method of accounting for income taxes. Under
the liability method deferred tax assets and liabilities are determined based on
the differences between financial reporting and the tax bases of the assets and
liabilities and are measured using the enacted tax rates and laws that will be
in effect, when the differences are expected to reverse. An allowance against
deferred tax assets is recorded, when it is more likely than not, that such tax
benefits will not be realized.
On September 30, 2003 the Company had a net operating loss carry forward of $
2,032,743. The tax benefit of approximately $ 610,000 from the loss carry
forward has been fully offset by a valuation reserve because the use of the
future tax benefit is doubtful since the Company has no operations. The loss
carryforward will expire in 2023.
-31-
STARBERRYS CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (Continued)
September 30, 2003
Basic and Diluted Net Income (Loss) Per Share
- ----------------------------------------------------
Basic net income (loss) per share amounts are computed based on the weighted
average number of shares actually outstanding. Diluted net income (loss) per
share amounts are computed using the weighted average number of common shares
and common equivalent shares outstanding as if shares had been issued on the
exercise of the common share rights unless the exercise becomes antidilutive and
then only if the basic per share amounts are shown in the report.
Cash and Cash Equivalents
- ----------------------------
The Company considers all highly liquid instruments purchased with a maturity,
at the time of purchase, of less than three months, to be cash equivalents.
Financial Instruments
- ----------------------
The carrying amounts of financial instruments, including cash and accounts
payable, are considered by management to be their estimated fair values.
Financial and Concentrations Risk
- ---------------------------------
The Company does not have any concentration or financial credit risk.
Revenue Recognition
- -------------------
Revenue will recognized on the sale and delivery of a product or the completion
of a service provided.
Advertising and Market Development
- ----------------------------------
The Company will expense advertising and market development costs as incurred.
Estimates and Assumptions
- ---------------------------
Management uses estimates and assumptions in preparing financial statements in
accordance with accounting principles generally accepted in the United States of
America. Those estimates and assumptions affect the reported amounts of the
assets and liabilities, the disclosure of contingent assets and liabilities, and
the reported revenues and expenses. Actual results could vary from the estimates
that were assumed in preparing these financial statements.
-32-
STARBERRYS CORPORATION
(Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (Continued)
September 30, 2003
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
Foreign Currency Translation
- ------------------------------
Part of the transactions of the Company were completed in Canadian dollars and
have been translated to US dollars as incurred, at the exchange rate in effect
at the time, and therefore, no gain or loss from the translations is recognized.
US dollars are considered to be the functional currency.
Recent Accounting Pronouncements
- --------------------------------
The Company does not expect that the adoption of other recent accounting
pronouncements will have a material impact on its financial statements.
3. NOTE PAYABLE - RELATED PARTY
The Company has a note payable of $500,000 due July 31, 2004, including interest
of 15%. The note is secured by common shares of the Company owned by
officers-directors.
4. COMMON CAPITAL STOCK
Since its inception, the Company has completed private placements of 11,155,000
shares of its common capital stock for $ 517,792 and has issued 150,000 shares
for services and 184,848 shares for payment of debt.
5. COMMON CAPITAL STOCK OPTIONS
During 2002 the Company granted stock options to related parties of 25,000
shares of common stock at $1.00 per share (net of subsequent cancellations),
which will expire on December 31, 2006.
On the date of the grant the fair value of outstanding shares of the Company was
less than $1.00 and therefore no value was recorded.
6. SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES
Officer-directors and key consultants have acquired 56% of the outstanding
common stock and have received the stock options outlined in Note 5.
During the year ended September 30, 2003, demand, no-interest bearing, unsecured
loans of $645,652 were received by the Company from officer-directors and a note
payable as shown under note 3. During the year ended September 30, 2003 a
$40,000 consultant fee was paid to an officer of the Company.
-33-
STARBERRYS CORPORATION
(Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (Continued)
September 30, 2003
7. LETTER OF INTENT TO PURCHASE SHARES OF SCI
The Company signed a Letter of Intent on November 29, 2002, and amended and
extended on March 13, 2003, and further extended on June 25, 2003, with eVision
Technologies Inc. and Mr. Ken Turpin outlining the general terms of a proposed
acquisition by the Company or its assigns for $5,000,000 of all of the assets
and intellectual property related to the CBN and "Color by Numbers" business .
In consideration for certain undertakings given , the Company agreed to make
monthly payments of CDN $50,000 commencing January 1, 2003 and payments of CDN
$300,000 on June 30, 2003 and CDN $200,000 on August 15, 2003 as deposits toward
the agreed purchase price.
On April 9, 2003 the Company signed a Definitive Purchase Agreement with
Malaremastastarnas Riksforening, the owner of all the shares of Skandinaviska
Farginstituter AB (the Scandinavian Colour Institute or "SCI") which owns the
colour notation system Natural Color Systems ("NCS"), containing the terms of an
acquisition by the Company or its assigns for a price of SEK 35,000,000 of all
shares of SCI. Pursuant to the terms of the above agreements, the Company made
payments of $1,154,327 into an escrow account as part payment toward the
purchase price. The Company subsequently failed to make further payments on the
contracts and by mutual agreement the contracts were cancelled and the moneys
paid were expensed.
8. GOING CONCERN
The Company does not have the working capital necessary to service its debt and
for any future planned activity which raises substantial doubt about its ability
to continue as a going concern.
Continuation of the Company as a going concern is dependent upon obtaining
additional working capital and the management of the Company has developed a
strategy which it believes will accomplish this objective through additional
equity funding, long term debt, and contributions to capital by officers, which
will enable the Company to conduct operations for the coming year.
-34-