10QSB: Optional form for quarterly and transition reports of small business issuers
Published on May 15, 2003
UNITED
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITES EXCHANGE ACT OF 1934 |
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For the quarterly period ended March 31, 2003 |
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the transition period from to |
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Commission File number 0-25541 |
STARBERRYS CORPORATION
(Exact name of registrant as specified in charter)
Nevada |
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91-1948357 |
(State or other jurisdiction of |
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(I.R.S. Employer |
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212236 Folkestone Way |
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V7S 2X7 |
(Address of principal executive offices) |
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(Zip Code) |
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604-922-0113 |
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Registrants telephone number, including area code |
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(Former name, address, and fiscal year, if changed since last report) |
Indicate by check mark whether the registrant (1) has 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 registrant was required to file such reports), Yes ý No o and ( ) has been subject to filing requirements for the past 90 days. Yes ý No o
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the last practicable date.
Class |
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Outstanding as of March 31, 2003 |
Common Stock, $0.001 per share |
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10,561,200 |
INDEX
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PART 11. |
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2
PART 1 FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The accompanying balance sheet of Starberrys Corporation (a development stage company) at March 31, 2003 and September 30, 2002 and the statement of operations for the three months ended March 31, 2003 and 2002, the six months to March 31, 2003 and 2002 and for the period from October 8, 1998 (date of inception) to March 31, 2003 and the statement of cash flow for the six months ended March 31, 2003 and 2002 and for the period from October 8, 1998 (date of inception) to March 31, 2003 have been prepared by the Companys management in conformity with accounting principles generally accepted in the United States of America. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature.
Operating results for the six months ended March 31, 2003, are not necessarily indicative of the results that can be expected for the year ending September 30, 2003.
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STARBERRYS CORPORATION
(A Development Stage Company)
March 31, 2003 and September 30, 2002
(Unaudited - - Prepared by Management)
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March
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September
30, |
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ASSETS |
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CURRENT ASSETS |
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Bank |
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$ |
49,398 |
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$ |
553 |
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Prepaid expenses |
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10,000 |
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0 |
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TOTAL CURRENT ASSETS |
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59,398 |
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553 |
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Deposits pursuant to Letter of Intent |
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98,125 |
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0 |
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TOTAL ASSETS |
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$ |
157,523 |
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$ |
553 |
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LIABILITIES AND STOCKHOLDERS EQUITY |
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CURRENT LIABILITIES |
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Accounts payable and accrued liabilities |
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$ |
225,669 |
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112,056 |
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Shareholder loans |
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199,056 |
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0 |
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TOTAL CURRENT LIABILITIES |
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424,725 |
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112,056 |
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STOCKHOLDERS EQUITY |
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Common stock |
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$ |
10,561 |
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$ |
10,561 |
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Capital in excess of par value |
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91,281 |
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91,281 |
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Deficit accumulated during the development stage |
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(369,044 |
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(213,345 |
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Total Stockholders Deficiency |
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(267,202 |
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(111,503 |
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$ |
157,523 |
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$ |
553 |
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The accompanying notes are an integral part of these unaudited financial statements.
4
STARBERRYS CORPORATION
(A Development Stage Company)
For the three and six months ended March 31, 2003 and 2002,
and for the period from October 8, 1998 (Date of Inception) to March 31, 2003
(Unaudited - Prepared by Management)
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For the |
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For the |
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For the |
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For the |
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From |
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SALES |
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$ |
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$ |
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$ |
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$ |
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$ |
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GENERAL AND ADMINISTRATIVE EXPENSES: |
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Loss of license |
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50,000 |
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Accounting and audit |
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2,460 |
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950 |
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3,635 |
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1,900 |
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25,268 |
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Bank charges and interest |
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147 |
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17 |
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297 |
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34 |
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846 |
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Consulting |
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14,000 |
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14,000 |
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31,913 |
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Filing fees |
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914 |
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3,208 |
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8,723 |
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Legal |
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100,805 |
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118,631 |
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209,639 |
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Office and administration |
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5,377 |
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14 |
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5,377 |
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14 |
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9,774 |
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Rent |
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4,500 |
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Telephone |
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2,700 |
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Transfer agents fees |
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246 |
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122 |
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1,833 |
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1,664 |
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10,671 |
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Travel |
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7,376 |
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7,376 |
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10,792 |
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Website fees |
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500 |
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Foreign exchange loss |
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1,350 |
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1,342 |
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1,350 |
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Miscellaneous other |
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2,368 |
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NET LOSS |
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(132,675 |
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(1,103 |
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(155,699 |
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(3,612 |
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(369,044 |
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NET LOSS PER COMMON SHARE |
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Basic |
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$ |
(0.01 |
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$ |
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$ |
(0.01 |
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$ |
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AVERAGE OUTSTANDING SHARES |
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Basic |
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10,561,200 |
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10,535,000 |
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10,561,200 |
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10,535,000 |
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The accompanying notes are an integral part of these unaudited financial statements.
5
STARBERRYS CORPORATION
(A Development Stage Company)
For the six months ended March 31, 2003 and 2002 and for the period from
October 8, 1998 (Date of Inception) to March 31, 2003
(Unaudited - - Prepared by Management)
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For the Six |
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For
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From
Inception |
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CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net loss |
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$ |
(155,699 |
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(3,612 |
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(369,044 |
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Adjustments to reconcile net loss to net cash provided by operating activities: |
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Changes in current assets and liabilities: |
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Capital contributions - expenses |
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10,950 |
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Prepaid expenses |
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(10,000 |
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(10,000 |
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Accounts payable |
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113,613 |
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3,628 |
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225,669 |
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Net cash (deficiency) from operations |
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(52,086 |
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(142,425 |
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CASH FLOWS FROM INVESTINGACTIVITIES: |
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Deposits pursuant to Letter of Intent |
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(98,125 |
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(98,125 |
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Proceeds from loans |
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199,056 |
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199,056 |
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Proceeds from issuance of common stock |
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90,892 |
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Net Increase (Decrease) in Cash |
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48,845 |
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16 |
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49,398 |
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Cash at Beginning of Period |
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553 |
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2 |
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CASH AT END OF PERIOD |
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$ |
49,398 |
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$ |
18 |
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$ |
49,398 |
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The accompanying notes are an integral part of these unaudited financial statements.
6
STARBERRYS CORPORATION
(A Development Stage Company)
March 31, 2003
(Unaudited - - Prepared by Management)
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 $0.001. 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. During 2000 the activity was abandoned. Under a new board of directors and management during 2002 and looking for another project, the Company signed a Letter of Intent, dated November 29, 2002 and amended and extended on March 13, 2003, outlining the terms of a proposed acquisition of all of the assets and intellectual property related to the CBN and Color by Numbers business and system (see Note 7). No operations have been started.
The Company 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
On March 31, 2003 the Company had a net operating loss carry forward of $369,044. The tax benefit of approximately $110,700 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 net operating loss will expire in 2022.
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
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shares had been issued on the exercise of the common share rights unless the exercise becomes antidilutive and then only 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.
Estimates and Assumptions
Management uses estimates and assumptions in preparing financial statements in accordance with generally accepted accounting principles. 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.
3. COMMON CAPITAL STOCK
Since its inception, the Company has completed private placements of 10,561,200 shares of its common capital stock for $90,892.
4. COMMON CAPITAL STOCK OPTIONS
On June 6, 2002 the Company granted stock options to related parties of 1,140,000 shares of common stock at $1.00 per share which will expire on June 6, 2005. On January 13, 2003, 210,000 of these options were cancelled. The options outstanding at March 31, 2003 for 930,000 shares vest in equal proportions of one-twelfth on the first day of each calendar quarter starting the October to December 2002 quarter. (See Note 8.) On the date of the grant the fair value of outstanding shares of the Company was less than $1.00. As there have been no transactions involving the Companys shares since common stock was sold from Treasury in July 2002 at $0.50 per share, it is assumed that the options vested to December 31, 2002 have no value.
5. SHAREHOLDER LOANS
During the six months ended March 31, 2002, loans of $199,056 were advanced to the Company by a shareholder. These loans are non-interest bearing and unsecured.
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6. RELATED PARTY TRANSACTIONS
Officers, directors and key consultants have acquired 32% of the outstanding common stock and have received the stock options outlined in Note 4.
7. DEPOSITS PURSUANT TO A LETTER OF INTENT
The Company signed a Letter of Intent on November 29, 2002, amended and extended on March 13, 2003, with eVision Technologies Inc. and Mr. Ken Turpin (the Vendors) 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 owned by the Vendors. The acquisition is subject to, amongst other items, completion of due diligence satisfactory to the Company and the obtaining of the required financing for the purchase. In consideration for certain undertakings given by the Vendors, the Company agreed to make monthly non-refundable payments of CDN$50,000 commencing January 1, 2003 as deposits toward the agreed purchase price.
8. SUBSEQUENT EVENTS
On April 9, 2003 the Company signed a Definitive Purchase Agreement with Målaremästarnas Riksforening, the owner of all the shares of Skandinaviska Färginstituter AB (SCI) which owns the colour notation system Natural Color Systems (NCS), subject to certain conditions, containing the terms of an acquisition by the Company or its assigns for a price of SEK 35,000,000 of all the shares of SCI.
Options for the purchase of 420,000 shares of common stock at $1.00 per share (see Note 4) were cancelled in late April 2003.
9. GOING CONCERN
The Company does not have the working capital to service its debt and for any future planned activity. The Companys management believes they can obtain the necessary working capital needed to pay its debt and for any future planned activity by receiving loans from officers, directors and shareholders, and by additional equity funding which will enable the Company to operate for the coming year.
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ITEM 2. PLAN OF OPERATIONS
Under new management and Board of Directors, the Company is in process of looking for a new business. The Company has signed a Letter of Intent (amended and extended on 13 March 2003) with eVision Technologies Inc. and Mr. Ken Turpin (the Vendors) outlining the general terms of a proposed acquisition by the Company of all of the assets and intellectual property related to CBN and Color By Numbers business owned by the Vendors.
In addition, the Company signed a Letter of Intent (19 January 2003) with Målaremästarnas Riksforening, the owner of all the shares of Skandinaviska Färginstituter AB (SCI or The Scandinavian Colour Institute) which owns the colour notation system Natural Color Systems (NCS), outlining the general terms of a proposed acquisition by the Company of all of the shares of SCI. On 9 April 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.
The Company intends to deploy the technology of CBN, an important element of which is to extend the NCS product offerings to existing NCS customers through the application of the CBN technology.
Liquidity and Capital Resources
The process of raising funds has been initiated to fund these new activities.
Results of Operations
The Company has had no revenues from operations since its inception.
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SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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STARBERRYS CORPORATION |
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(Registrant) |
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By: |
/s/ JOHN H. GOODWIN |
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John H. Goodwin, President and CEO |
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Date: May 14, 2003 |
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In accordance with the Exchange Act, this report has been signed below by the following persons on its behalf by the registrant and in the capacities and on the dates indicated.
By: |
/s/ JOHN H. GOODWIN |
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John H. Goodwin, President and CEO |
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Date: May 14, 2003 |
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By: |
/s/ KENNETH R. TOLMIE |
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Kenneth R. Tolmie, Chief Financial Officer and Secretary |
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Date: May 14, 2003 |
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11
CERTIFICATION PURSUANT TO
SECTION 302(a) OF THE SARBANES-OXLEY ACT OF 2002
I, John H. Goodwin, certify that:
1. I have reviewed this quarterly report on Form 10-Q for the six months ended March 31, 2003 of Starberrys Corporation, the registrant;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4. The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 45 days prior to the filing date of this quarterly report (the Evaluation Date); and
c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5. The registrants other certifying officer and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee of registrants board of directors:
a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and
6. The registrants other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
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/s/ JOHN H. GOODWIN |
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Dated: May 14, 2003 |
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John H. Goodwin |
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CERTIFICATION PURSUANT TO
SECTION 302(a) OF THE SARBANES-OXLEY ACT OF 2002
I, Kenneth R. Tolmie, certify that:
1. I have reviewed this quarterly report on Form 10-Q for the three months ended March 31, 2003 of Starberrys Corporation, the registrant;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4. The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 45 days prior to the filing date of this quarterly report (the Evaluation Date); and
c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5. The registrants other certifying officer and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee of registrants board of directors:
a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and
6. The registrants other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
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/s/ KENNETH R. TOLMIE |
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Dated: May 14, 2003 |
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Kenneth R. Tolmie |
13