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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 March 31, 2006
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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
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
Yes [ X ] 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 May 8, 2006.
PACIFIC SPIRIT INC.
(A Pre-exploration Stage Company)
INTERIM FINANCIAL STATEMENTS
March 31, 2006
(Stated in US Dollars)
(Unaudited)
-----------
PACIFIC SPIRIT INC.
(A Pre-exploration Stage Company)
INTERIM BALANCE SHEETS
March 31, 2006 and December 31, 2005
(Stated in US Dollars)
(Unaudited)
-----------
March 31, December 31,
ASSETS 2006 2005
------ ---- ----
Current
Cash $ 39 $ -
=============== ===============
LIABILITIES
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Current
Bank overdraft $ - $ 12
Accounts payable and accrued liabilities - Note 4 21,032 18,318
Due to related party - Note 4 37,767 34,227
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58,799 52,557
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STOCKHOLDERS' DEFICIENCY
------------------------
Preferred stock, $0.001 par value
10,000,000 shares authorized, none outstanding
Common stock, $0.001 par value
100,000,000 shares authorized
3,820,000 (2005: 3,820,000) shares outstanding 3,820 3,820
Additional paid-in capital 87,180 87,180
Deficit accumulated during the pre-exploration stage (149,760) (143,557)
---------------- -----------------
(58,760) (52,557)
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$ 39 $ -
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SEE ACCOMPANYING NOTES
PACIFIC SPIRIT INC.
(A Pre-exploration Stage Company)
INTERIM STATEMENTS OF OPERATIONS
for the three-months ended March 31, 2006 and 2005
and for the period May 4, 2001 (Date of Inception) to March 31, 2006
(Stated in US Dollars)
(Unaudited)
-----------
May 4, 2001
(Date of
Three-months ended Inception) to
March 31, March 31,
2006 2005 2006
---- ---- ----
Expenses
Accounting and audit fees $ 2,250 $ 2,692 $ 41,315
Administrative services - Note 4 1,500 1,500 28,000
Bank charges and interest 79 72 1,144
Exploration costs - - 1,747
Incorporation costs - - 900
Legal fees - - 33,206
Mineral lease advance royalty - Note 3 - - 28,615
Office and miscellaneous 750 750 5,768
Transfer agent & filing fees 1,624 144 9,165
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Loss before other item (6,203) (5,158) (149,860)
Other item
Interest income - - 100
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Net loss for the period $ (6,203) $ (5,158) $ (149,760)
============== =============== ===============
Basic loss per share $ (0.00) $ (0.00)
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Weighted average number of shares outstanding 3,820,000 3,820,000
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SEE ACCOMPANYING NOTES
PACIFIC SPIRIT INC.
(A Pre-exploration Stage Company)
INTERIM STATEMENTS OF CASH FLOWS
for the three-months ended March 31, 2006 and 2005
and for the period May 4, 2001 (Date of Inception) to March 31, 2006
(Stated in US Dollars)
(Unaudited)
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May 4, 2001
(Date of
Three-months ended Inception) to
March 31, March 31,
2006 2005 2006
---- ---- ----
Cash Flows used Operating Activities
Net loss for the period $ (6,203) $ (5,158) $ (149,760)
Changes in non-cash working capital items
related to operations:
Prepaid expenses - 200 -
Accounts payable and accrued liabilities 2,714 3,611 21,032
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(3,489) (1,347) (128,728)
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Cash Flows from Financing Activities
Bank overdraft (12) - -
Capital stock issued - - 91,000
Advance from a related party 3,540 1,274 37,767
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3,528 1,274 128,767
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Decrease in cash during the period 39 (73) 39
Cash, beginning of the period - 576 -
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Cash, end of the period $ 39 $ 503 $ 39
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SEE ACCOMPANYING NOTES
PACIFIC SPIRIT INC.
(A Pre-exploration Stage Company)
INTERIM STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)
for the period May 4, 2001 (Date of Inception) to March 31, 2006
(Stated in US Dollars)
(Unaudited)
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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)
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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 ended
December 31, 2002 - - - (31,249) (31,249)
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Balance as at December 31, 2002 3,820,000 3,820 87,180 (71,504) 19,496
Net loss for the year ended
December 31, 2003 - - - (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 ended
December 31, 2004 - - - (23,338) (23,338)
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Balance as at December 31, 2004 3,820,000 3,820 87,180 (107,804) (16,804)
Net loss for the year ended
December 31, 2005 - - - (35,753) (35,753)
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Balance as at December 31, 2005 3,820,000 3,820 87,180 (143,557) (52,557)
Net loss for the three-months ended
March 31, 2006 - - - (6,203) (6,203)
----------- --------------- --------------- ------------------ ---------------
Balance as at March 31, 2006 3,820,000 $ 3,820 $ 87,180 $ (149,760) $ (58,760)
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SEE ACCOMPANYING NOTES
PACIFIC SPIRIT INC.
(A Pre-exploration Stage Company)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
March 31, 2006 and 2005
(Stated in US Dollars)
(Unaudited)
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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,
2005 financial statements.
The results of operations for the period ended March 31, 2006, are
not necessarily indicative of the results that can be expected for
the year ended December 31, 2006.
Note 2 Continuance of Operations
-------------------------
These financial statements have been prepared in accordance with
generally accepted accounting principles applicable to a going
concern , which assumes that the Company will be able to meet its
obligations and continue its operations for its next twelve
months. Realization values may be substantially different from
carrying values as shown and these financial statements do not
give effect to adjustments that would be necessary to the carrying
values and classification of assets and liabilities should the
Company be unable to continue as a going concern. At March 31,
2006 the Company had not yet achieved profitable operations, has
accumulated losses of $149,760 since its inception, has a working
capital deficiency of $58,760 and expects to incur further losses
in the development of its business, all of which casts substantial
doubt about the Company's ability to continue as a going concern.
The Company's ability to continue as a going concern is dependent
upon its ability to generate future profitable operations and/or
to obtain the necessary financing to meet its obligations and
repay its liabilities arising from normal business operations when
they come due. Management has no formal plan in place to address
this concern but considers that the Company will be able to obtain
additional funds by equity financing and/or related party
advances, however there is no assurance of additional funding
being available.
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:
Pacific Spirit Inc.
(A Pre-exploration Stage Company)
Notes to the Interim Financial Statements
March 31, 2006
(Stated in US Dollars)
(Unaudited) - Page 2
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Note 3 Commitments (cont'd)
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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 of the following:
- $5,000 upon execution (paid) and $4,500 (paid) for
extension of the agreement;
- $2,000 upon execution of the amended agreement dated
January 9, 2004 (paid);
- $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 date
of inflation designated by the Consumer Price Index for
that year with the execution year as the base year.
The advance royalty payment of $50,000 due January 9, 2006 has not
been made. The Company is currently negotiating an amendment to
the balance of the advance royalty payments due. As per the lease
agreement, the landlord must give written default notice to the
Company and the Company then has 15 days to cure the default or
the lease can be terminated. On March 10, 2006 the Company
received a termination notice. The Company is attempting to
negotiate an amendment to the agreement.
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.
Pacific Spirit Inc.
(A Pre-exploration Stage Company)
Notes to the Interim Financial Statements
March 31, 2006
(Stated in US Dollars)
(Unaudited) - Page 3
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Note 4 Related Party Transactions
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The Company was charged the following by a director of the
Company:
May 2, 2001
(Date of
Three-months ended Inception) to
March 31, March 31,
2006 2005 2006
---- ---- ----
Administrative services $ 1,500 $ 1,500 $ 10,500
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The amount due to related party, a director of the Company,
consists of unpaid advances and management fees. 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 business plan for the next twelve months calls for significant expenses in
connection with the exploration of the Del Oro Property. In order to complete
phase one of the exploration program, we anticipate the costs to be $53,000. We
are also required to pay an additional $50,000 in order to keep our lease
agreement respecting the Del Oro Property in good standing. The royalty payment
of $50,000 due by January 9, 2005 has not been made. The Company is currently
negotiating an amendment to the balance of the scheduled advance royalty
payments. As per the lease agreement, the landlord must give written default
notice to the Company and the Company then has 15 days to cure the default or
the lease can be terminated. On March 10, 2006 the Company received a
termination notice. In addition to royalty payments, we anticipate incurring
$15,000 in professional fees and $15,000 in administrative expenses.
We will require additional financing in order to meet the anticipated
exploration costs and to sustain our business operations. We do not currently
have any arrangements for financing and we can provide no assurance to investors
that we will be able to find such financing if required. Obtaining additional
financing would be subject to a number of factors, including the market prices
for gold, copper, nickel and platinum group metals, investor acceptance of our
property and investor sentiment. These factors may make the timing, amount,
terms or conditions of additional financing unavailable to us.
Results of Operations for the three months ended March 31, 2006
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We incurred a net loss of $6,203 for the three-month period ended March 31,
2006, as compared to a loss of $5,158 in the same period in 2005. The difference
in net loss of $1,045 was primarily due to an increase in transfer agent and
filing fees. As per management agreement dated July 1, 2004, the president
started to charge the Company $500 per month for administrative services ($1,500
for the period). The Company also incurred $250 per month for office rent,
telephone expenses, and general miscellaneous office expenses ($750 for the
period) related to the use of the Vancouver office. During the three-month
period ended March 31, 2006, we incurred transfer agent and filing fees of
$1,624 (2005: $144) and accounting and audit fees of $2,250 (2005: $2692) in
order to keep SEC filings current. At the end of the first quarter, we had cash
on hand of $39. Our liabilities at the same date totalled $58,799, and consisted
of accounts payable of $21,032 and $37,767 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 three-month period ended
March 31, 2006.
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: May 12, 2006