U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
Quarterly Report Under
the Securities Exchange Act of 1934
For Quarter Ended: September 30, 2002
Commission File Number:
Pacific Spirit, Inc.
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(Exact name of small business issuer as specified in its charter)
Nevada
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(State or other jurisdiction of incorporation or organization)
98-0349685
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(IRS Employer Identification No.)
11640-96 A Avenue
Vancouver, B.C., Canada
(Address of principal executive offices)
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None
(Former name or former address, if changed since last report)
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V3V2A1
(Zip Code)
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(604) 760-1400
(Issuer's Telephone Number)
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 past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days:
Yes __X__ No ____.
The number of shares of the registrant's only class of common stock issued and
outstanding, as of September 30, 2002 was 2,500,000 common shares.
PART I
ITEM 1. FINANCIAL STATEMENTS.
The un-audited financial statements for the three-month period ended June
30, 2002 are attached hereto.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with our audited
financial statements and notes thereto included herein. In connection with, and
because we desire to take advantage of, the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995, we caution readers regarding
certain forward looking statements in the following discussion and elsewhere in
this report and in any other statement made by, or on our behalf, whether or not
in future filings with the Securities and Exchange Commission. Forward looking
statements are statements not based on historical information and which relate
to future operations, strategies, financial results or other developments.
Forward looking statements are necessarily based upon estimates and assumptions
that are inherently subject to significant business, economic and competitive
uncertainties and contingencies, many of which are beyond our control and many
of which, with respect to future business decisions, are subject to change.
These uncertainties and contingencies can affect actual results and could cause
actual results to differ materially from those expressed in any forward looking
statements made by, or our behalf. We disclaim any obligation to update forward
looking statements.
History And Organization
Pacific Spirit, Inc. (the "Company") was recently incorporated under
the laws of the state of Nevada on May 4, 2001. We have not commenced business
operations and we are considered an exploration stage enterprise. To date, our
activities have been limited to organizational matters, obtaining a geologist's
report and the preparation and filing of the registration statement of which
this prospectus is a part. In connection with the organization of our company,
the founding shareholder of our company contributed an aggregate of $25,000 cash
in exchange for 2,500,000 shares of common stock. We have no significant assets,
and we are totally dependent upon the successful completion of this offering and
receipt of the proceeds there from, of which there is no assurance, for the
ability to commence our proposed business operations.
Proposed Business
On June 7, 2001, Pacific Spirit acquired a 30 year mineral lease from
Nevada Mine Properties II, Inc., the owner of six unpatented lode mineral
claims, sometimes referred to as the "Del Oro" property in Nevada. There is no
affiliation between Pacific Spirit and the lessor. An unpatented claim is one in
which more assessment work is necessary before all mineral rights can be
claimed. We are presently in the pre-exploration stage and there is no assurance
that a commercially viable mineral deposit exists in our property until
exploration is done and a comprehensive evaluation concludes economic and legal
feasibility.
Under the terms of the mineral lease, Pacific Spirit may extend the
initial term for one additional period of 30 years by giving the owner notice of
such extension not less than thirty days prior to the expiration of the initial
term or any extension thereof. Pacific Spirit has the exclusive possession of
the property for mining purposes during the term of the lease.
If Pacific Spirit fails to comply with any of the provisions of the
lease and does not initiate and diligently pursue steps to correct the default
within thirty days after notice has been given to it by owner specifying with
particularity the nature of the default, then upon the expiration of the
thirty-day period, all rights of Pacific Spirit under the lease terminate and
all liabilities and obligations of Pacific Spirit except royalties then due
terminate. Any default claimed with respect to the payment of money may be cured
by the deposit in escrow of the amount in controversy (not including claimed
consequential, special, exemplary, or punitive damages) and giving of notice of
the deposit to the owner, the amount to remain in escrow until the controversy
is resolved by decision of a court or otherwise. If Pacific Spirit by notice to
owner disputes the existence of a default, then the lease shall not terminate
unless Pacific Spirit does not initiate and diligently pursue steps to correct
the default within thirty days after the existence of a default has been
determined by decision of a court or otherwise.
Under the terms of the lease, Pacific Spirit is obligated to pay
royalties of 4% of the net returns from all minerals sold or processed. In
addition, Pacific Spirit must pay a minimum annual royalty as follows, of which
the first payment of $5,000 has already been made:
Anniversary Date Amount
June 7, 2002 $ 8,000.00
June 7, 2003 $16,000.00
June 7, 2004 $24,000.00
June 7, 2005 $50,000.00
June 7, 2006 and thereafter $50,000.00
Our business activities to date have been restricted to obtaining a
report from our mining engineer, Sam S. Arentz, III, and preparing this
offering. According to Mr. Arentz's report, the six Del Oro claims were staked
in 1986 by wx syndicate who completed 12 shallow air track drill holes which
returned gold assays in the amount of 0.019 Ounces per ton over 10 feet to 0.010
Ounces per ton over 50 feet.
In 1992, Equinox Resources assumed the operations of the wx Syndicate.
The Del Oro claims were leased in 1993 to Cameco U. S., Inc. which conducted
magnetic surveys, rock and limited soil sampling and then drilled 4,610 feet in
eleven reverse circulation drill holes. This drilling returned anomalous gold
assays to 0.012 ounces per ton over 25 feet north of the present claim position.
Cameco surrendered their lease in 1994 to Nevada Mine Properties, Inc. (a
subsidiary of Hecla Mining Co.). Subsequently Nevada Mine Properties
quit-claimed the property to Nevada Mine Properties II,Iinc (no association with
Hecla).
In 1995 Newhawk Gold Mines LTD. Acquired a land position in the area
which included a lease on the Del Oro Property. A regional soil grid survey in
1996 resulted in a three-hole 1,850 foot reverse circulation drill program
testing the roots beneath the previously drilled air track targets. Drill
intercepts returned 0.017 ounces per ton of gold over 15 feet. The leased
property has been maintained by Nevada Mine Properties II, Inc. Since 1998. In
June 2001, Pacific Spirit Inc. leased the six claims from Nevada Mine Properties
II, Inc.
Mr. Arentz recommends a two phase program to explore the Del Oro Property.
Phase 1 includes additional claim staking followed by geologic mapping and rock
chip and soil sampling. A five hole, 2,500 foot reverse circulation drill
program is proposed for phase 1. If drilling intersects gold values in the 0.05
To 0.10 Ounces per ton range over thicknesses of tens of feet, then
consideration would be given toward a phase 2 effort which would include an
additional 5000 feet of reverse circulation drilling.
PHASE 1 - PROPOSED BUDGET
ESTIMATED COSTS (US$)
---------------------
Claim Acquisition 2,000.
Rock and Soil Sampling and Assays 2,500.
Geologic Mapping 3,000.
Drilling + Assays (2,500' @ $15 / Ft) 37,500.
Reclamation 5,000.
Report Preparation 3,000.
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53,000.
PHASE 2 - PROPOSED BUDGET
ESTIMATED COSTS (US$)
---------------------
Drilling + Assays (5000' @ $15 / Ft) 75,000.
Reclamation 5,000.
Report Preparation 3,000.
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83,000.
Location and Access
The Del Oro Property is Located in Sections 29, 30, and 31, Township 31
North, Range 38 East, MDB&M, Pershing county, Nevada. The claims are situated in
the Goldbanks Mining District approximately 28 miles south of Winnemucca,
Nevada. Access from Winnemucca is south along the Grass Valley paved / gravel
road for approximately 22 miles, turning southwest onto a dirt road toward the
east range about one mile north of Leach Hot Springs. The dirt road runs
generally down-slope toward the southwest for approximately four miles, then
changes to a south-southeast direction and begins upslope for approximately
three miles here the road enters unnamed drainage and continues approximately
two and one half miles southwest onto the north side line of the claims.
Our Proposed Exploration Program
We must conduct exploration to determine what amount of minerals, if any,
exist on our properties, and if any minerals which are found can be economically
extracted and profitably processed. Our exploration program is designed to
economically explore and evaluate our claims.
We do not claim to have any minerals or reserves whatsoever at this time on
any of our claims. We intend to implement an exploration program and to proceed
in the following two phases:
Phase 1 will begin with research of the available geologic literature,
personal interviews with geologists, mining engineers and others familiar with
the prospect sites.
When research is completed, our initial work will be augmented with
geologic mapping, geophysical testing and geo-chemical testing of our claims.
When available, existing workings, like trenches, prospect pits, shafts or
tunnels will be examined. If an apparent mineralized zone is identified and
narrowed down to a specific area by the studies, we will begin drilling the
area.
Once drilling is performed samples are taken and then analyzed for
economically potential minerals that are known to have occurred in the area.
Careful interpretation of this available data collected from the various tests
aid in determining whether or not the prospect has current economic potential
and whether further exploration is warranted. Phase 1 will take about three
months and cost up to $53,000.
Phase 2 involves an initial examination of the underground characteristics
of the mineralization structure that was identified by Phase 1 of exploration.
Phase 2 is aimed at identifying any mineral deposits of potential economic
importance. The methods employed are
- more extensive drilling
- more advanced geophysical work
Drilling identifies the continuity and extent of mineralization, if
any, below the surface. After a thorough analysis of the data collected in Phase
2, we will decide if the property warrants a Phase 3 study. Phase 2 will take
about six months and cost up to $83,000. We do not intend to interest other
companies in the property if we find mineralized materials.
Competitive Factors
The mineral industry is fragmented. We compete with other exploration
companies looking for a variety of mineral reserves. We may be one of the
smallest exploration companies in existence. Although we will be competing with
other exploration companies, there is no competition for the exploration or
removal of minerals from our property. Readily available markets exist in North
America and around the world for the sale of minerals. Therefore, we intend to
explore mining claims to the production point in which major mining production
companies would seriously consider pursuing the property as a valuable and
significant acquisition.
Regulations
Our exploration activities will be subject to the Federal Land Policy
And Management Act of 1976 in addition to surface management regulations issued
in 1980 by the Bureau of Land Management in the Code of Federal Regulations.
These statutes and regulations are designed to protect public lands from
unnecessary or undue degradation and to ensure that areas disturbed during the
search for and extraction of mineral resources are reclaimed. BLM rules and
regulations governing mining on federal lands include the preparation of a Draft
Environmental Impact Statement, public hearings and approval of a final
Environmental Impact Statement. The final Environmental Impact Statement will
address county and state needs and requirements and covers issues and permit
requirements concerning air quality, heritage resources, geology, energy, noise,
soils, surface and ground water, wetlands, use of hazardous chemicals,
vegetation, wildlife, recreation, land use, socioeconomic impact, scenic
resources, health and welfare, transportation and reclamation. Bonding
requirements for our exploration activities are developed from the final
Environmental Impact Statement.
We will follow these procedures for exploration and, if development is
warranted on the property, will file final plans of operation before we start
any mining operations. We anticipate no discharge of water into active stream,
creek, river, lake or any other body of water regulated by environmental law or
regulation. No endangered species will be disturbed. Restoration of the
disturbed land will be completed according to law. All holes, pits and shafts
will be sealed upon abandonment of the property. It is difficult to estimate the
cost of compliance with the environmental law since the full nature and extent
of our proposed activities cannot be determined until we start our operations
and know what that will involve from an environmental standpoint.
The initial drill program outlined in Phase I will be conducted on BLM
lands. The BLM will require the submittal of a plan of operation which would be
used as the basis for the bonding requirement, water permit and reclamation
program. The reclamation program could include both surface reclamation and
drill hole plugging and abandonment. The amount of the bonding would be based
upon an estimate by the BLM related to the cost of reclamation if done by an
independent contractor. It is estimated the bonding requirement would be
$5000.00. The water permit and fee is included in the reclamation cost which is
estimated to be $1000.00.
The estimate for Phase II reclamation and bonding is based on the
assumption that we have completed the Phase I reclamation and that the $5000.00
Phase I bond is still in place. Based upon this assumption, it is estimated that
an additional bond of $5,000.00 would be required for Phase II for a total
bonding requirement of $10,000.00.
Following the completion of a feasibility study at the completion of
Phase II, we would be subjected to the BLM rules and regulations governing
mining on federal lands including a draft environmental impact statement or EIS,
public hearings and a final EIS. The final EIS would address county and state
needs and requirements and would cover issues and permit requirements
concerning: air quality, heritage resources, geology, energy, noise, soils,
surface and ground water, wetlands, use of hazardous chemicals, vegetation,
wildlife, recreation, land use, socioeconomic impact, scenic resources, health
and welfare, transportation and reclamation. Bonding requirements for mining are
developed from the final EIS. A draft EIS would be submitted following a
feasibility study that could only be performed at the completion of Phase II of
the exploration plans. It is impossible to know at this time how long it would
take to obtain a final EIS because we can not yet say what the feasibility study
will reveal.
We are in compliance with all laws and will continue to comply with the
laws in the future. We believe that compliance with the laws will not adversely
affect our business operations. Pacific Spirit anticipates that it will be
required to post bonds in the event the expanded work programs involve extensive
surface disturbance.
Employees
Initially, we intend to use the services of subcontractors for manual
labor exploration work on our properties. Pacific Spirit will consider hiring
technical consultants as funds from this offering and additional offerings or
revenues from operations in the future permit. At present, our only employee is
Mr. Solota.
Employees
Initially, we intend to use the services of subcontractors for manual labor
exploration work on our properties. Pacific Spirit will consider hiring
technical consultants as funds from this offering and additional offerings or
revenues from operations in the future permit. At present, our only employee is
Mr. Sotola.
Employees and Employment Agreements
At present, we have no employees, other than Mr. Peter Sotola, our
president and sole director who has received no compensation for his services.
Mr. Sotola does not have an employment agreement with us. We presently do not
have pension, health, annuity, insurance, stock options, profit sharing or
similar benefit plans; however, we may adopt plans in the future. There are
presently no personal benefits available to any employees.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
We are a start-up, exploration stage company and have not yet generated or
realized any revenues from our business operations.
Our auditors have issued a going concern opinion. This means that our
auditors believe there is doubt that we can continue as an on-going business for
the next twelve months unless we obtain additional capital to pay our bills.
This is because we have not generated any revenues and no revenues are
anticipated until we begin removing and selling minerals. Accordingly, we must
raise cash from sources other than the sale of minerals found on our property.
Our only other source for cash at this time is investments by others in our
company. We must raise cash to implement our project and stay in business.
To meet our need for cash we are attempting to raise money from this
offering. There is no assurance that we will be able to raise enough money
through this offering to stay in business. Whatever money we do raise will be
applied first to exploration and then if reserves are found, to development, if
warranted. If we do not raise all of the money we need from this offering, we
will have to find alternative sources, like a second public offering, a private
placement of securities, or loans from our officers or others. At the present
time, we have not made any arrangements to raise additional cash, other than
through this offering. If we need additional cash and cannot raise it, we will
either have to suspend operations until we do raise the cash, or cease
operations entirely.
We will be conducting research in connection with the exploration of our
property. We are not going to buy or sell any plant or significant equipment. We
do not expect a change in our number of employees.
Limited Operating History; Need for Additional Capital
There is no historical financial information about our company upon which
to base an evaluation of our performance. We are an exploration stage company
and have not generated any revenues from operations. We cannot guarantee we will
be successful in our business operations. Our business is subject to risks
inherent in the establishment of a new business enterprise, including limited
capital resources, possible delays in the exploration of our properties, and
possible cost overruns due to price and cost increases in services.
To become profitable and competitive, we must conduct research and
exploration of our properties. We are seeking equity financing to provide for
the capital required to implement our research and exploration phases.
We have no assurance that future financing will be available to us on
acceptable terms. If financing is not available on satisfactory terms, we may be
unable to continue, or expand our operations. Equity financing could result in
additional dilution to existing shareholders.
Results of Operations
From Inception on May 4, 2001
On June 7, 2001 we acquired our first interest in un-patented lode
mineral claims. At this time we have not yet commenced the research and/or
exploration stage of our operations on that property. We have paid $5,000 for a
mining lease. As of December 31, 2001, the date of our latest audited financial
statements, we have experienced operating losses of $40,255.
Plan of Operations
Since inception, we have used our common stock to raise money for our
property acquisition, for corporate expenses and to repay outstanding
indebtedness. Net cash provided by financing activities from inception on May 4,
2001 to May 31, 2001 was $25,000 as a result of proceeds received from our
president and sole director. Our business activities to date have been
restricted to obtaining a mining engineer's report and preparing this offering.
Pacific Spirit 's plan of operations for the next twelve months is to
undertake Phase I of the drilling and exploration program. Phase I is estimated
to be cost $53,000.00 and therefore can not be completed unless more than 75% of
the offering is sold. If only 50% of the offering is sold, we will be able to
make an annual royalty payment, obtain permits, bonds and conduct land
preparation along with surveying, drill site location and some drilling, but we
will not be able to complete our exploration program or analyze the results. If
only 25% of our offering is sold, we will be able to pay the offering expenses
only. If less than 25% of the offering is sold we will become indebted for
offering expenses and we may have to cease operations entirely. We have no plan
to engage in any alternative business if Pacific Spirit ceases or suspends
operations as a result of not having enough money to complete any phase of the
exploration program.
Phase I will involve drilling five holes to investigate the extent of
mineralization of the claims which will include additional claim staking
followed by geologic mapping and rock chip and soil sampling. Claim staking is
estimated to cost $2,000. Geological mapping, rock chip and soil sampling will
cost approximately $5,500. Drilling expenses are expected to about $37,500 and
reclamation about $5,000. Expenses associated with the geologist's report for
Phase I are anticipated to be approximately $3,000.
Liquidity and Capital Resources
As of the date of this registration statement, we have yet to generate
any revenues from our business operations. Since our inception, Mr. Sotola has
paid $25,000 in cash in exchange for 2,500,000 shares of common stock. This
money has been utilized for organizational and start-up costs and as operating
capital. As of December 31, 2001 we had sustained operating losses $40,255.
We will not able to conduct meaningful business operations unless we
sell at least 50% of this offering. In addition, unless more than 75% of the
offering is sold, we will not be able to complete Phase I. Assuming sufficient
funds are raised in this offering to complete Phase I, we will be able evaluate
within the next 12 months whether to proceed with Phase II. Should we decide to
proceed with Phase II, we will be required to raise an additional $83,000.00 in
addition to offering expenses.
According to the terms or our mineral lease, we are obligated by June
7, 2002 to pay a minimum royalty of $8,000 followed by annual minimum royalty
payments thereafter of $16,000 in 2003, $24,000 in 2004, $50,000 in 2005 and
$50,000 every year thereafter. We will be required to renegotiate the terms of
the mineral lease in the event we are unable to raise sufficient funds in time
to meet these obligations.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no material legal proceedings to which we (or any of our officers
and directors in their capacities as such) is a party or to which our property
is subject and no such material proceedings is known by our management to be
contemplated.
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 REPORTS ON FORM 8-K -
(a) Exhibits - 99.1
(b) Reports on Form 8-K - NONE
SIGNATURE
In accordance with the requirements of the Securities and Exchange Act of 1934,
as amended, the Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: January 17, 2002 /s/ Peter Sotola
Peter Sotola
President
CERTIFICATIONS*
I, Peter Sotola, certify that;
1. I have reviewed this quarterly report on Form10-QSB of Pacific Spirit, Inc.;
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 registrant's other certifying officers 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 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 registrant's disclosure controls and
procedures as of a date within 90 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 registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's 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 registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other facts 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.
Date: Janaury 17, 2003
/s/ Peter Sotola
Peter Sotola, CEO
*Provide a separate certification for each principal executive officer and
principal financial officer of the registrant. See Rules 13a-14 and 15d-14. The
required certification must be in the exact form set forth above.
PACIFIC SPIRIT INC.
(A Pre-exploration Stage Company)
INTERIM BALANCE SHEETS
September 30, 2002 and December 31, 2001
(Stated in US Dollars)
(Unaudited)
---------
ASSETS September 30, December 31,
------
2002 2001
---- ----
Current
Cash $ 5,383 $ 29
LIABILITIES
Current
Accounts payable 16,017 14,534
Advance from a director 7,750 750
23,767 15,284
STOCKHOLDERS' DEFICIENCY
Preferred stock, $0.001 par value
10,000,000 shares authorized, none outstanding
Common stock, $0.001 par value - Note 3
100,000,000 shares authorized
2,500,000 shares issued 2,500 2,500
Paid in capital 22,500 22,500
Stock subscriptions - Note 3 12,500 -
Deficit accumulated during the pre-exploration stage ( 55,884) ( 40,255)
( 18,384) ( 15,255)
$ 5,383 $ 29
PACIFIC SPIRIT INC.
(A Pre-exploration Stage Company)
INTERIM STATEMENT OF OPERATIONS
for the three months ended September 30, 2002 and 2001,
the nine months ended September 30, 2002
and for the period May 4, 2001 (Date of Incorporation)
to September 30, 2001 and 2002
(Stated in US Dollars)
(Unaudited)
---------
May 4, 2001 May 4, 2001
Three months Three months Nine months (Date of Incor- (Date of Incor-
ended ended ended poration) to poration) to
September 30, September 30, September 30, September 30, September 30,
2002 2001 2002 2001 2002
---- ---- ---- ---- ----
Expenses
Accounting and audit fees $ 855 $ 650 $ 5,983 $ 2,396 $ 10,465
Bank charges 63 53 215 103 367
Exploration costs - 645 2,258 989 3,247
Incorporation costs - - - 900 900
Legal fees - 20,034 - 20,034 21,534
Management fees 7,000 3,000 7,000 4,000 14,000
Mineral lease advance royalty
- Note 3 - - - 5,000 5,000
Office - 253 - 253 253
Transfer agent fees - - 180 - 180
Net loss before other item ( 7,918) ( 24,635) ( 15,636) ( 33,675) ( 55,946)
Other item
Interest income 7 24 7 51 62
Net loss for the period $ ( 7,911) $ ( ) $ ( 15,629) $ ( 33,624) $ ( 55,884)
Basic and diluted loss per share $ ( 0.003) $ ( 0.01) $ ( 0.006) $ ( 0.015)
Weighted average number of shares
outstanding 2,500,000 2,500,000 2,500,000 2,265,101
PACIFIC SPIRIT INC.
(A Pre-exploration Stage Company)
INTERIM STATEMENT OF CASH FLOWS
for the nine months ended September 30, 2002,
and for the period May 4, 2001 (Date of Incorporation)
to September 30, 2001 and 2002
(Stated in US Dollars)
(Unaudited)
---------
May 4, 2001 May 4, 2001
Nine months (Date of Incor- (Date of Incor-
ended poration) to poration) to
September 30, September 30, September 30,
2002 2001 2002
---- ---- ----
Cash Flows from Operating Activities
Net loss for the period $ ( 15,629) $ ( 33,624) $ ( 55,884)
Changes in non-cash working capital balances
related to operations
Prepaid expenses - ( 1,000) -
Accounts payable 1,483 11,034 16,017
( 14,146) ( 23,590) ( 39,867)
Cash Flows from Financing Activities
Capital stock issued - 25,000 25,000
Stock subscriptions received 12,500 - 12,500
Advance from a director 7,000 650 7,750
19,500 25,650 45,250
Increase in cash during the period 5,354 2,060 5,383
Cash, beginning of the period 29 - -
Cash, end of the period $ 5,383 $ 2,060 $ 5,383
Supplemental disclosure of cash flow information Cash paid during the period
for:
Interest $ - $ - $ -
Income taxes $ - $ - $ -
PACIFIC SPIRIT INC.
(A Pre-exploration Stage Company)
INTERIM STATEMENT OF STOCKHOLDERS'
DEFICIENCY for the period May 4, 2001 (Date of
Incorporation) to September 30, 2002
(Stated in US Dollars)
(Unaudited)
---------
Deficit
Accumulated
During the
Additional Stock Pre-
Common Shares Paid-in Subscriptions exploration
--------------------------------
--------------------------------
Number Par Value Capital 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)
Stock subscriptions
received 12,500 12,500
Net loss for the period
- - - - ( 15,629) ( 15,629)
Balance, as at
September 30, 2002 2,500,000 $ 2,500 $ 22,500 $ 12,500 $ ( 55,884) $ ( 18,384)
PACIFIC SPIRIT INC.
(A Pre-exploration Stage Company)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
September 30, 2002
(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,
2001 financial statements.
Note 2 Continuance of Operations
The 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, 2002, the Company has a
working capital deficiency of $18,384, which is not sufficient to
meet its planned business objective or to fund mineral property
expenditures and ongoing operations for the next fiscal year. The
Company has accumulated losses of $55,884 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.
Note 3 Commitments
(a) Mineral Property
By a lease agreement effective June 1, 2001 and amended June
25, 2002, 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:
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 of
the following:
- $5,000 upon execution (paid);
- $8,000 on December 1, 2002;
- $16,000 on June 7, 2003
- $24,000 on June 7, 2004
- $50,000 on June 7, 2005 and thereafter
Note 3 Commitments - (cont'd)
-----------
The Company paid $1,500 to extend the due date of the $8,000
payment.
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.
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.
(b) Initial Public Offering
The Company has filed a SB-2 registration statement, which
includes an initial public offering of 1,500,000 common shares
at $0.05 per share. This offering is subject to regulatory
approval. This offering will remain open for up to 150 days
from the effective date of the offering.
At September 30, 2002, the Company had received $12,500 as
subscriptions for 250,000 common shares at $0.05 per share
pursuant to the above noted SB-2.
Subsequent to September 30, 2002, the Company received an
additional $18,000 as subscriptions for 360,000 common shares
at $0.05 per share pursuant to the above noted SB-2.
Exhibit 99.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
AND CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Peter Sotola, Chief Executive Officer and Chief Financial Officer,
certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, that the Quarterly Report on Form 10-QSB of
Axtion Foods, Inc. for the quarterly period ended December 31, 2002 fully
complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 and that the information contained in the Quarterly Report
on Form 10-QSB fairly presents in all material respects the financial condition
and results of operations of Pacific Spirit, Inc..
By:
/s/Peter Sotola
Julia I. Reynolds
Chief Executive Officer &
Chief Financial Officer
Date: January 17, 2003