UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended September 30, 2005
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[ ] Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act
of 1934
For the transition period to
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Commission File Number 001-31608
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PACIFIC SPIRIT, INC.
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(Exact name of small Business Issuer as specified in its charter)
Nevada 98-0349685
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
11640 96A Avenue
Surrey, British Columbia V3V 2A1
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(Address of principal executive offices) (Postal or Zip Code)
Issuer's telephone number, including area code: 604-760-1400
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None
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(Former name, former address and former fiscal year, if changed since
last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the issuer was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days [X] Yes [ ] No
State the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date: 3,820,000 shares of $0.001 par value
common stock outstanding as of November 8, 2005.
PACIFIC SPIRIT INC.
(A Pre-exploration Stage Company)
INTERIM FINANCIAL STATEMENTS
September 30, 2005
(Stated in US Dollars)
(Unaudited)
PACIFIC SPIRIT INC.
(A Pre-exploration Stage Company)
INTERIM BALANCE SHEETS
September 30, 2005 and December 31, 2004
(Stated in US Dollars)
(Unaudited)
ASSETS September 30, December 31,
------
2005 2004
---- ----
Current
Cash $ 212 $ 576
Prepaid expenses 200 800
---------------- ----------------
$ 412 $ 1,376
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LIABILITIES
-----------
Current
Accounts payable and accrued liabilities - Note 4 $ 23,530 $ 12,504
Due to related party - Note 4 19,450 5,676
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42,980 18,180
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STOCKHOLDERS' DEFICIENCY
------------------------
Preferred stock, $0.001 par value
10,000,000 shares authorized, none outstanding
Common stock, $0.001 par value
100,000,000 shares authorized
3,820,000 shares issued (December 31, 2004: 3,820,000) 3,820 3,820
Additional paid in capital 87,180 87,180
Deficit accumulated during the pre-exploration stage (133,568) (107,804)
---------------- ----------------
(42,568) (16,804)
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$ 412 $ 1,376
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SEE ACCOMPANYING NOTES
PACIFIC SPIRIT INC.
(A Pre-exploration Stage Company)
INTERIM STATEMENTS OF OPERATIONS for
the three and nine months ended September 30, 2005 and
2004
and for the period May 4, 2001 (Date of Incorporation) to September 30, 2005
(Stated in US Dollars)
(Unaudited)
May 4, 2001
(Date of
Three months ended Nine months ended Incorporation)
September 30, September 30, to September 30,
2005 2004 2005 2004 2005
---- ---- ---- ---- ----
Expenses
Accounting and audit fees $ 1,837 $ 670 $ 6,780 $ 2,592 $ 33,014
Administrative services
- Note 4 1,500 1,500 4,500 1,500 25,000
Bank charges 45 81 157 179 1,016
Exploration costs - 150 655 805 2,402
Incorporation costs - - - - 900
Legal fees - - - - 32,206
Mineral lease advance royalty
- Note 3 - 5,000 10,000 7,000 27,960
Office and miscellaneous 750 750 2,250 750 4,268
Transfer agent and listing fees 426 509 1,422 2,461 6,902
-------------- --------------- -------------- -------------- -----------------
Loss before other item (4,558) (8,660) (25,764) (15,287) (133,668)
Other item
Interest income - - - - 100
-------------- --------------- -------------- -------------- -----------------
Net loss for the period $ (4,558) $ (8,660) $ (25,764) $ (15,287) $ (133,568)
============== =============== ============== ============== =================
Basic loss per share $ (0.00) $ (0.00) $ (0.01) $ (0.00)
============= ============== ============= =============
Weighted average number of
shares outstanding 3,820,000 3,820,000 3,820,000 3,820,000
============== =============== ============== ==============
SEE ACCOMPANYING NOTES
PACIFIC SPIRIT INC.
(A Pre-exploration Stage Company)
INTERIM STATEMENTS OF CASH FLOWS
for the nine months ended September 30, 2005 and
2004 and for the period May 4, 2001 (Date of Incorporation)
to September 30, 2005
(Stated in US Dollars)
(Unaudited)
May 4, 2001
(Date of
Nine months ended Incorporation)
September 30, to September 30,
2005 2004 2005
---- ---- ----
Cash Flows from Operating Activities
Net loss for the period $ (25,764) $ (15,287) $ (133,568)
Changes in non-cash working capital balances
related to operations
Prepaid expenses 600 480 200
Accounts payable and accrued liabilities 11,026 (2,538) 23,530
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(14,138) (17,345) (110,238)
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Cash Flows from Financing Activities
Capital stock issued - - 91,000
Advance from a director 13,774 5,676 19,450
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13,774 5,676 110,450
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Increase (decrease) in cash during the period (364) (11,669) 212
Cash, beginning of the period 576 12,499 -
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Cash, end of the period $ 212 $ 830 $ 212
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Supplemental disclosure of cash flow information; Cash paid for:
Interest $ - $ - $ -
================= ================= =================
Income taxes $ - $ - $ -
================= ================= =================
PACIFIC SPIRIT INC.
(A Pre-exploration Stage Company)
INTERIM STATEMENT OF STOCKHOLDERS' EQUITY
(DEFICIENCY) for the period May 4, 2001 (Date of
Incorporation) to September 30, 2005
(Stated in US Dollars)
(Unaudited)
Deficit
Accumulated
Additional During the
Common Shares Paid-in Pre-Exploration
-----------------------------------
Number Par Value Capital Stage Total
------ --------- ------- ----- -----
Capital stock issued for cash
- at $0.01 2,500,000 $ 2,500 $ 22,500 $ - $ 25,000
Net loss for the period - - - (40,255) (40,255)
--------------- --------------- --------------- --------------- ---------------
Balance, as at December 31, 2001 2,500,000 2,500 22,500 (40,255) (15,255)
Capital stock issued for cash
- at $0.05 1,320,000 1,320 64,680 - 66,000
Net loss for the year - - - (31,249) (31,249)
--------------- --------------- --------------- --------------- ---------------
Balance, as at December 31, 2002 3,820,000 3,820 87,180 (71,504) 19,496
Net loss for the year - - - (12,962) (12,962)
--------------- --------------- --------------- --------------- ---------------
Balance, as at December 31, 2003 3,820,000 3,820 87,180 (84,466) 6,534
Net loss for the year - - - (23,338) (23,338)
--------------- --------------- --------------- --------------- ---------------
Balance, as at December 31, 2004 3,820,000 $ 3,820 $ 87,180 $ (107,804) $ (16,804)
Net loss for the period - - - (25,764) (25,764)
--------------- --------------- --------------- --------------- ---------------
Balance, as at September 30, 2005 3,820,000 3,820 87,180 (133,568) (42,568)
=============== =============== =============== =============== ===============
PACIFIC SPIRIT INC.
(A Pre-exploration Stage Company)
NOTES TO INTERIM THE FINANCIAL STATEMENTS
September 30, 2005
(Stated in US Dollars)
(Unaudited)
Note 1 Interim Reporting
-----------------
While information presented in the accompanying interim financial
statements is unaudited, it includes all adjustments, which are,
in the opinion of management, necessary to present fairly the
financial position, results of operations and cash flows for the
interim period presented. All adjustments are of a normal
recurring nature. It is suggested that these interim financial
statements be read in conjunction with the company's December 31,
2004 financial statements.
The results of operations for the period ended September 30, 2005,
are not necessarily indicative of the results that can be expected
for the year ended December 31, 2005.
Note 2 Continuance of Operations
-------------------------
The interim financial statements have been prepared using
generally accepted accounting principles in the United States of
America applicable for a going concern which assumes that the
Company will realize its assets and discharge its liabilities in
the ordinary course of business. As at September 30, 2005, the
Company has a working capital deficiency of $42,568, has not yet
attained profitable operations and has accumulated losses of
$133,568 since its commencement. Its ability to continue as a
going concern is dependent upon the ability of the Company to
obtain the necessary financing to meet its obligations and pay its
liabilities arising from normal business operations when they come
due. The outcome of these matters cannot be predicted with any
certainty at this time and raise substantial doubt that the
Company will be able to continue as a going concern. These
financial statements do not include any adjustments to the amounts
and classification of assets and liabilities that may be necessary
should the Company be unable to continue as a going concern. The
Company anticipates that additional funding will be in the form of
equity financing from the sale of common shares. The Company may
also seek to obtain short-term loans from the directors of the
Company. There are no current arrangements in place for equity
funding or short-term loans.
Pacific Spirit Inc.
(A Pre-exploration Stage Company)
Notes to the Interim Financial Statements
September 30, 2005
(Stated in US Dollars)
(Unaudited) - Page 2
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Note 3 Commitments
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Mineral Property
By a lease agreement effective June 1, 2001 and amended June 25,
2002, November 25, 2002, January 9, 2004 and April 11, 2005, the
Company was granted the exclusive right to explore and mine the
Del Oro and NP Claims located in Pershing County of the State of
Nevada. The term of this lease is for 30 years, renewable for an
additional 30 years so long as the conditions of the lease are
met. Minimum payments and performance commitments are as follows:
Mineral Property - (cont'd)
Minimum Advance Royalty Payments:
The owner shall be paid a royalty of 4% of the net smelter returns
from all production. In respect to this royalty, the Company is
required to pay minimum advance royalty payments as follows:
- $5,000 upon execution (paid) and $4,500 (paid) for extension
of the agreement;
- $2,000 upon execution (paid) of the amended agreement dated
January 9, 2004;
- $5,000 on July 9, 2004 (paid);
- $5,000 on April 12, 2005 (paid); and
- each January 9 thereafter, a payment of $50,000 plus an annual
increase or decrease equivalent to the rate of inflation
designated by the Consumer Price Index for that year with
execution year as base year.
In addition, the Company is required to fund exploration
expenditures of $5,000 by April 12, 2005 (paid).
The Company can reduce the net smelter return royalty to 0.5% by
payment of a buy-out price of $5,000,000. Advance royalty payments
made to the date of the buy-out will be applied to reduce the
buy-out price.
Pacific Spirit Inc.
(A Pre-exploration Stage Company)
Notes to the Interim Financial Statements
September 30, 2005
(Stated in US Dollars)
(Unaudited) - Page 3
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Performance Commitment:
In the event that the Company terminates the lease after June 1 of
any year, it is required to pay all federal and state mining claim
maintenance fees for the next assessment year. The Company is
required to perform reclamation work on the property as required
by federal, state and local law for disturbances resulting from
the Company's activities on the property.
Note 4 Related Party Transactions
--------------------------
The Company was charged the following by a director of the
Company:
May 2, 2001
(Date of
Three months ended Six months ended Incorporation)
September 30, September 30, to September 30,
2005 2004 2005 2004 2005
---- ---- ---- ---- ----
Administrative services $ 1,500 $ - $ 4,500 $ - $ 7,500
========== =========== =========== =========== ================
These charges were measured by the exchange amount which is the
amount agreed upon by the transacting parties.
Included in accounts payable at September 30, 2005, is $7,500
(December 31, 2004: $3,000) consisting of unpaid management fees
due to a director of the Company.
The amount due to related party, a director of the Company,
consists of unpaid advances. The amount due is unsecured,
non-interest bearing and has no specific terms for repayment.
Item 2. Management's Discussion and Analysis or Plan of Operation
Forward Looking Statements
--------------------------
This quarterly report contains forward-looking statements that involve risks and
uncertainties. We use words such as anticipate, believe, plan, expect, future,
intend and similar expressions to identify such forward-looking statements. You
should not place too much reliance on these forward-looking statements. Our
actual results are likely to differ materially from those anticipated in these
forward-looking statements for many reasons, including the risks faced by us
described in this Risk Factors section and elsewhere in this quarterly report.
Plan of Operation
-----------------
Our plan of operation for the twelve months following the date of this report is
to complete the recommended phase one exploration program on the Del Oro
Property in which we hold a leasehold interest. We still anticipate that this
program will cost us $53,000.
In April 2005, we amended our mineral claims agreement regarding the Del Oro
Property located in Pershing County Nevada. We paid the lessor of the property
$5,000 advance royalty on April 12, 2005 and paid $5,000 on April 12, 2005 for
exploration expenditures.
In addition, we anticipate spending $12,000 on professional fees and $15,000 on
administrative expenses.
Total expenditures over the next 12 months are therefore expected to be $90,000.
Our cash on hand at September 30, 2005 was $212. Accordingly, we will need to
raise additional funds in order to complete the recommended exploration program
on the Del Oro Property and meet our other expected expenses. We do not
currently have any arrangements for raising additional funding.
Results of Operations for the second quarter ended September 30, 2005
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We incurred a net loss of $25,764 for the nine-month period ended September 30,
2005, as compared to a loss of $15,287 in the same period in 2004. The
difference in net loss was primarily due to an increase in accounting and audit
fees, office expenses, and administrative services expense and office expenses,
and increase in resource costs as per lease agreement. As per management
agreement dated July 1, 2004, the president started to charge the Company $500
per month for administrative services ($4,500 per the period January -
September, 2005). The Company also incurred $250 per month for office rent,
telephone expenses, and general miscellaneous office expenses ($2,250 per the
period January - September, 2005) related to the use of the Vancouver office. In
the comparative period, the president did not charge the Company for such
expenses. During the nine-month period ended September 30, 2005, we incurred
transfer agent and filing fees of $1,422 (2004: $2,461) and accounting and audit
fees of $6,780 (2004: $2,592) in order to bring all outstanding SEC filings
current. We incurred $10,000 resource property costs during this period (2004:
$7,000). At the end of the third quarter, we had cash on hand of $212. Our
liabilities at the same date totalled $42,980, and consisted of accounts payable
of $23,530 and $19,450 due to a related party.
Item 3. Controls and Procedures
As required by Rule 13a-15 under the Exchange Act, within the 90 days prior to
the filing date of this report, the Company carried out an evaluation of the
effectiveness of the design and operation of the Company's disclosure controls
and procedures. This evaluation was carried out under the supervision and with
the participation of the Company's management, including the Company's
President, the Chief Executive Officer, and the Chief Financial Officer.
Based upon that evaluation, the Company concluded that the disclosure controls
and procedures are effective. There have been no significant changes in the
Company's internal controls or in other factors, which could significantly
affect internal controls subsequent to the date the Company carried out its
evaluation.
PART II OTHER INFORMATION
Item 1. Legal Proceedings
The Company is not a party to any pending legal proceeding. Management is not
aware of any threatened litigation, claims or assessments.
Item 2. Changes in Securities
None.
Item 3. Defaults upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Report on Form 8-K
31.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
There were no reports filed on Form 8-K during the nine-month period ended
September 30, 2005.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Pacific Spirit, Inc.
/s/ Peter Sotola
---------------------------
Peter Sotola
President, Secretary, Treasurer
Chief Executive Officer and Director
(Principal Executive Officer,
Principal Financial Officer and
Principal Accounting Officer)
Dated: November 8, 2005