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: March 31, 2003
Commission File Number: 000-49950
Prelude Ventures, 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)
98-0232018
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(IRS Employer Identification No.)
203-1010 Chilco Street
Vancouver, BC, Canada V6G 2R6
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(Address of principal executive offices)
None
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(Former name or former address, if changed since last report)
V6G 2R6
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(Zip Code)
(604) 922 0029
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(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 March 31, 2003 was 15,000,000 common shares.
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PART ITEM 1. FINANCIAL STATEMENTS.
The unaudited financial statements for the three-month period ended March 31,
2003 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.
OVERVIEW
History And Organization
Prelude Ventures, Inc. (the "Company") was incorporated under the laws of the
state of Nevada on May 24, 2000. 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 mining engineer's report and
the preparation and filing of the registration statement of which this
prospectus is a part of. In connection with the organization of our company, the
founding shareholder of our company contributed an aggregate of $25,000 cash in
exchange for 1,000,000 shares of common stock (pre-roll forward 6:1). 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 April 1, 2003, Prelude Ventures, Inc. entered into a definitive agreement to
acquire an aggregate of 10,000,000 shares of common stock, being all of the
issued and outstanding shares of Pascal Energy Inc. from that company and its
shareholders. Prelude has agreed to issue and or exchange following shares: with
date of April 01, 2003, 5,000,000 common voting shares, restricted under rule
144 of the Sec. Act, and in such form as requested by the sellers; and at a
later date, issue 5,000,000 common voting shares, restricted under rule 144 of
the Sec. Act., and in such forma as requested by the sellers, subject to the
Prelude paying not less than $1,000,000 accumulated dividend to its shareholders
of record.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
We are a start-up, exploration stage company and have not yet started our
business operations or 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.
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 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, develop or expand our operations. Equity financing could result in
additional dilution to existing shareholders.
Results of Operations
From Inception on May 24, 2000
We Initially acquired our first interest in lode mining claims. These claims
were abandoned during the three months ended March 31, 2003.
During the past quarter our operations focused upon the investigation and
acquisition of Pascal Energy Inc.
Pascal Energy Inc. is involved in oilfield infrastructure services mainly in the
Province of Alberta Canada.
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 24, 2000 to June 30,
2001 was $5,500 as a result of proceeds received from our president and sole
director. On April 11, 2001 we received additional cash financing of $19,500 as
a result of proceeds received from our then president and sole director.
Prelude's plan of operations for the next twelve months is to undertake
development of Pascal Energy Inc. including acquisition of additional businesses
and expansion of existing operations in Canada and the United States.
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The Company recognizes a need for additional capital that will be sought through
the sale of additional equity by way of Private Placement. Funds generated will
be used to fund working capital requirements as well as expansion and
acquisitions.
Liquidity and Capital Resources
As of the date of this report, we have yet to generate any revenues from our
business operations. Since our inception, the Company's founder paid $25,000 in
cash in exchange for 1,000,000 shares of common stock. We have also issued
1,500,000 shares of stock pursuant to our Form SB-2 registration statement. This
money was utilized for organizational and start-up costs and as operating
capital. An additional 75,000 was raised through the issue of common shares last
year. As of March 31, 2003 we had sustained cumulative operating losses of
$118,922.
The quarter ended March 31,2003 saw an increase in activity which was due
primarily to the investigation of the purchase of Pascal Energy Inc.
Management fees were $15,000 for the quarter and legal and accounting fees
increased to $5,657 and $5,321 respectively from $nil and $2,167 in the 3 months
ended March 31, 2002. These fees increased in connection with the acquisition
purchase investigation that resulted in the signing of the agreement noted in
the 8K dated April 15, 2003.
As at March 31, 2003 the Company had insufficient funds to continue operations.
Funds have been provided by Directors and Shareholders which if not continued
could result in the Company curtailing operations.
The company's cash resources amounted to $18,063 as at March 31, 2003
Should the Company be unsuccessful in its attempts to raise capital it may have
to curtail operations.
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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
(a) Exhibits - NONE
(b) Reports on Form 8-K
8K dated April 15 2003
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.
PRELUDE VENTURES, INC.
Dated: May 20, 2003 /s/ William Iverson
William Iverson President
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CERTIFICATIONS*
I, William Iverson, certify that;
1. I have reviewed this quarterly report on Form10-QSB of Prelude Ventures,
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: May 20, 2003
/s/ William Iverson
William Iverson
Chief Executive Officer
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PRELUDE VENTURES, INC.
(A Pre-exploration Stage Company)
INTERIM BALANCE SHEETS
March 31, 2003 and December 31, 2002
(Stated in US Dollars)
(Unaudited)
(Unaudited) (Audited)
ASSETS March 31, December 31,
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2003 2002
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Current
Cash $ 18,063 $ 24,397
Prepaid expenses 100 400
$ 18,163 $ 24,797
LIABILITIES
Current
Accounts payable $ 13,085 $ 7,263
Loans payable 24,000 10,000
37,085 17,263
STOCKHOLDERS' EQUITY (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
15,000,000 (December 31, 2002: 15,000,000) shares outstanding 15,000 15,000
Paid-in capital 85,000 85,000
Deficit accumulated during the pre-exploration stage ( 118,922) ( 92,466)
( 18,922) 7,534
$ 18,163 $ 24,797
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PRELUDE VENTURES, INC.
(A Pre-exploration Stage Company)
INTERIM STATEMENTS OF OPERATIONS
for the three month period ended March
31, 2003 and 2002 and for the period May 24, 2000
(Date of Incorporation) to March 31, 2003
(Stated in US Dollars)
(Unaudited)
May 24, 2000
(Date of Incor-
poration) to
Three months ended March 31, March 31,
2003 2002 2003
---- ---- ----
Expenses
Accounting and audit fees $ 5,321 $ 2,167 $ 22,976
Bank charges 56 34 529
Filing fees - 4,627 7,185
Foreign exchange loss - - 692
Legal fees 5,657 - 32,515
Management fees 15,000 3,000 37,500
Office and miscellaneous 116 407 776
Resource property costs - 1,500 12,688
Transfer agent fees 306 30 4,061
Net loss for the period $ ( 26,456) $ ( 11,765) $ 118,922
Basic loss per share $ ( 0.00) $ ( 0.01)
Weighted average number of shares outstanding 15,000,000 1,000,000
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PRELUDE VENTURES, INC.
(A Pre-exploration Stage Company)
INTERIM STATEMENTS OF CASH FLOWS
for the three month period ended March
31, 2003 and 2002 and for the period May 24, 2000
(Date of Incorporation) to March 31, 2003
(Stated in US Dollars)
(Unaudited)
May 24, 2000
(Date of Incor-
poration) to
Three months ended March 31, March 31,
2003 2002 2003
---- ---- ----
Cash Flows from Operating Activities
Net loss for the period $ ( 26,456) $ ( 11,765) $ ( 118,922)
Changes in non-cash working capital balances
related to operations
Prepaid expenses 300 - ( 100)
Accounts payable and accrued liabilities 5,822 ( 4,623) 13,085
Loan payable 14,000 ( 9,500) 24,000
( 6,334) ( 25,888) ( 81,937)
Cash Flows from Financing Activity
Share subscriptions received - 31,000 -
Capital stock issued - - 100,000
Increase (decrease) in cash during the period ( 6,334) 5,112 18,063
Cash, beginning of the period 24,397 2,383 -
Cash, end of the period $ 18,063 $ 7,495 $ 18,063
Supplementary disclosure of cash flow information:
Cash paid for:
Interest $ - $ - $ -
Income taxes $ - $ - $ -
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PRELUDE VENTURES, INC.
(A Pre-exploration Stage Company)
INTERIM STATEMENT OF STOCKHOLDERS'
EQUITY (DEFICIENCY) for the period May 24, 2000
(Date of Incorporation) to March 31, 2003
(Stated in US Dollars)
(Unaudited)
Deficit
Accumulated
Additional During the
Common Shares Paid-in Share Pre-exploration
-----------------------------------
-----------------------------------
Number Par Value Capital Subscriptions Stage Total
Capital stock subscribed
pursuant to an offering
memorandum, for cash at $0.004 6,000,000 $ 6,000 $ 19,000 $ - $ - $25,000
Net loss for the period - - - - ( 7,301) (7,301)
Balance, as at March 31, 2001 6,000,000 6,000 19,000 - ( 7,301) 17,699
Stock subscriptions received - - - 31,000 - 31,000
Net loss for the year - - - - ( 50,409) (50,409)
Balance, March 31, 2002 6,000,000 6,000 19,000 31,000 ( 57,710) (1,710)
Stock subscriptions received - - - 44,000 - 44,000
Shares issued pursuant to an
initial 9,000,000 9,000 66,000 ( 75,000) -
public offering at $0.008
Net loss for the period - - - - ( 34,756) (34,756)
Balance, as at December 31, 15,000,000 15,000 85,000 - ( 92,466) 7,534
2002
Net loss for the period - - - - ( 26,456) (26,456)
Balance, as at March 31, 2003 15,000,000 $ 15,000 $ 85,000 $ - $ ( 118,922) $(18,922)
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PRELUDE VENTURES, INC.
(A Pre-exploration Stage Company)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
March 31, 2003
(Stated in US Dollars)
(Unaudited)
Note 1 Interim Reporting
While information presented in the accompanying interim three
months 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, 2002 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. At March 31, 2003, the Company has a working
capital deficiency of $18,922 and has accumulated losses of
$118,922 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
Mining Lease
By a lease letter agreement effective March 9, 2001 and amended
March 4, 2002 and September 4, 2002, the Company was granted the
exclusive right to explore, develop and mine the Medicine Project
property located in Elko County of the State of Nevada. The term
of the lease was for 20 years, with automatic extensions so long
as the conditions of the lease are met. The Company was required
to pay minimum advance royalty payments totalling $97,500 on
various dates to March 9, 2005 and then $50,000 every March 9
thereafter. The Company had paid a total of $7,500 in minimum
advance royalty payments.
During the three months ended March 31, 2003, management of the
Company abandoned the mining lease. As the Company terminated the
lease, it is required to pay all federal and state mining claim
maintenance fees for the current year. The Company is required to
perform reclamation work in the property as required by federal
state and local law for disturbances resulting from the Company's
activities on the property.
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Note 4 Subsequent event
Business Acquisition
On April 1, 2003, the Company entered into a definitive agreement
to acquire 100% of the issued and outstanding shares of Pascal
Energy Inc., a Canadian corporation, by the issuance of 5,000,000
common shares, restricted under rule 144 of the Securities and
Exchange Act, and at a later date, issue 5,000,000 shares common
shares, restricted under rule 144 of the Securities and Exchange
Act subject to the company paying not less than $1,000,000
accumulated dividends to its shareholders of record. Pascal Energy
Inc.'s business is to provide servicing for the oil and gas
industry.
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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, William Iverson, 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
Prelude Ventures, Inc. for the quarterly period ended March 31, 2003 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 Prelude Ventures, Inc..
By:/s/William Iverson
William Iverson
Chief Executive Officer &
Chief Financial Officer
Date: May 20, 2003