Notes to Financial Statements
Years Ended December 31, 2014, 2013 and 2012
(US Dollars)
1. NATURE OF OPERATIONS AND GOING CONCERN
The accounts of Northstar Technical Inc. ("NTI") and Northstar Network Ltd. ("NNL"), formerly wholly owned subsidiaries of the Company, have been written off as the operations of the subsidiaries have been discontinued and the subsidiary companies abandoned. Northstar Electronics Inc (the Company) was incorporated on May 11, 1998 in the state of Delaware.
The Company's business activities are conducted in Canada. However, the financial statements are prepared in accordance with accounting principles generally accepted in the United States of America with all figures translated into United States dollars for financial reporting purposes.
The accompanying financial statements have been prepared on a going concern basis, which assumes the Company will be able to continue as a going-concern and contemplates the realization of assets and satisfaction of liabilities in the normal course of business. As at December 31, 2014, the Company incurred a net loss from operations of $75,587 (2013: $102,286) and had a working capital deficiency of $1,268,397 (2013: $1,192,810).
Management has undertaken initiatives for the Company to continue as a going-concern. For example, the Company is negotiating to secure an equity financing in the short-term and is in discussions with several investors. These initiatives are in recognition that for the Company to continue as a going-concern it must generate sufficient cash flows to meet its obligations and expenses. Management is unable to predict the results of its initiatives at this time. Should management be unsuccessful in its initiative to finance its operations, the Companys ability to continue as a going-concern will remain in doubt.
2. SIGNIFICANT ACCOUNTING POLICIES
a. Revenue recognition
For sales under certain long-term contracts, the Company uses the out-put percentage of completion method to recognize revenue. Actual sales and cost values for units being delivered are used as the basis for recording revenue and its associated margin. Under this method, revenue is recognized when title to products is transferred to the customer.
For sales under other certain long-term contracts, the Company uses the input-basis percentage of completion method to recognize revenue. Under this method, revenue is recognized based on the ratio of cost incurred to date to the total estimated costs at the completion of the contract.
b. Cash and Cash Equivalents
Cash and cash equivalents consist of commercial accounts, trust accounts and interest-bearing bank deposit. Items are considered to be cash equivalents if the original maturity is three months or less.
F-6
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
c. Accounts Receivable and Allowance for Doubtful Accounts
Accounts receivable consist primarily of amounts due to the Company resulting from normal business activities. The Company maintains an allowance for doubtful accounts for estimated uncollectible accounts receivable. The allowance is based on our assessment of known delinquent accounts. Accounts are written off against the allowance account when they are determined to be no longer collectible.
d. Inventory
Inventories consist of raw material stated at the lower of cost and net realizable value, with cost being determined on a first-in, first-out (FIFO) basis, and unbilled work in progress stated at cost.
e. Research and development
Research and development costs are expensed to operations as incurred.
f. Deferred contract costs
The Company accounts for contract costs incurred prior to commencement of production under long term contracts in accordance with FASB Accounting Standards Codification Topic ASC 340, Other Assets and Deferred Costs. Costs on long-term contracts and programs in progress represent recoverable costs incurred for production or contract-specific facilities and equipment, allocable operating overhead, advances to suppliers and general and administrative expenses, whose recovery from future contract revenue is probable. Deferred contract costs are recognized into income on a pro-rata basis in accordance with the sales incurred to date as a percentage of expected sales.
g. Investment tax credits
Investment tax credit refunds arising from the incurrence of qualifying research and development expenditures are not recognized until the applicable project is approved as a qualifying research and development project by Canada Revenue Agency. The refunds are recorded as a reduction of the applicable expense.
h. Equipment
Equipment is recorded at cost less any government assistance received, and is amortized over the estimated useful lives of the equipment using the following annual rates:
| |
Computer equipment
|
30% declining-balance
|
Computer software
|
30% declining-balance
|
Furniture and equipment
|
20% declining-balance
|
Manufacturing equipment
|
20% declining-balance
|
Leasehold improvements
|
20% straight-line
|
F-7
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
i. Long-lived assets
The Company accounts for long-lived assets in accordance with the provisions of ASC 350 (formerly SFAS No.144, Accounting for the Impairment or Disposal of Long-Lived Assets). The statement requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell.
k. Government assistance
The Companys subsidiaries have been awarded research and development assistance under certain Government of Canada assistance programs. Amounts received or receivable under these programs are recorded as other income at the time the amounts are approved for payment by the government agency. Advances for expenses which the Company has yet to incur are also included in deferred revenue (2014 - $0: 2013 - $0: 2012 - $0).
l. Foreign currency translation
The Company's operations and activities are conducted principally in Canada. Hence the Canadian dollar is the functional currency. Amounts incurred in U.S. dollars are translated into the functional currency as follows:
(i)
Monetary assets and liabilities at the rate of exchange in effect as at the balance sheet date;
(ii)
Non-monetary assets and liabilities at the exchange rates prevailing at the time of the acquisition of the assets or assumption of the liabilities; and
(iii)
Revenues and expenditures at rates approximating the average rate of exchange for the year.
For reporting purposes, assets and liabilities of non-U.S. subsidiaries that operate in a local currency environment are translated to U.S. dollars at year end exchange rates. Profit and loss accounts are translated at the average rates for the year. Translation adjustments are recorded as other comprehensive income (loss) and accumulated other comprehensive loss within stockholders equity.
m. Other comprehensive income (loss)
The Company has other comprehensive income (loss) arising from foreign currency translations and from the write off of the subsidiary company liabilities which are in excess of their assets. Accordingly, pursuant to ASC 220, Reporting Comprehensive Income, other comprehensive income (loss) is shown as a separate non cash component of stockholders' equity (deficit).
F-8
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
n. Use of estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant areas requiring the use of management estimates relate to deferred contract costs, revenue recognition, the determination of the impairment of long-lived assets, the estimation of useful lives, rates and methods for amortization, inventory valuation and realization, recognition of bad debt allowances, the calculation of stock based compensation, valuation of deferred tax assets and liabilities, accounts payable and accrued liabilities and deferred revenue. Management believes the estimates are reasonable however actual results could differ from those estimates and would impact future results of operations and cash flows.
o. Income taxes
Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company has adopted ASC 740 whereby the Company is required to compute tax asset benefits for net operating losses carried forward. Potential benefits of net operating losses have not been recognized in these financial statements because the Company cannot be assured that it is more likely than not that it will utilize the net operating losses carried forward in future years. Accordingly any potential benefits of income tax losses are offset by a valuation allowance.
The Company will periodically assess its tax filing exposures related to periods that are open to examination. Based on the latest available information, we evaluate tax positions to determine whether the position will more likely than not be sustained upon examination by the Internal Revenue Service. If it is determined that the tax position is more likely than not to be sustained, the Company records the largest amount of benefit that is more likely than not to be realized when the tax position is settled. If the Company cannot reach that determination, no benefit is recorded. Interest and penalties related to income taxes are recorded as a component of income tax expense in the financial statements.
On January 1, 2007, the Company adopted the provisions of FIN 48, Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109, Accounting for Income Taxes. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in the entitys financial statements in accordance with SFAS No. 109. As of the date of adoption, the Company had no unrecognized income tax benefits, and accordingly, the adoption of FIN 48 did not result in a cumulative effect adjustment to the Companys retained earnings and the annual effective tax rate was not affected. Should the Company incur interest and penalties relating to tax uncertainties, such amounts would be classified as a component of interest expense and operating expense, respectively.
F-9
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
p. Net loss per share before comprehensive income
Net loss per share calculations are based on the weighted average number of common shares outstanding during the year. Diluted loss per share is not shown as the effects of the outstanding stock options and warrants are anti-dilutive.
q. Shipping and handling costs
Shipping and handling costs are recognized as incurred and included in Cost of Sales in the consolidated statement of operations and comprehensive loss.
r. Warranties
Provisions for estimated expenses related to product warranties are made at the time products are sold. These estimates are established using historical information on the nature, frequency, and average cost of warranty claims.
s. Equity-based compensation
Equity-based compensation is calculated in accordance with ASC 505 and ASC 718 (formerly SFAS 123(R), Share-based Payments). ASC 505 and ASC 718 requires the cost of all share-based payment transactions to be recognized in an entitys financial statements, establishes fair value as the measurement objective and requires entities to apply a fair-value-based measurement method in accounting for share-based payment transactions. ASC 505 and ASC 718 applies to all awards granted, modified, repurchased or cancelled after July 1, 2005 and unvested portions of previously issued and outstanding awards. The Company adopted this statement for its first quarter starting January 1, 2006. Prior to 2006, the Company adopted the disclosure provisions of ASC 505 and ASC 718 for stock options granted to employees and directors. The Company disclosed on a supplemental basis, the pro-forma effect of accounting for stock options awarded to employees and directors, as if the fair value based method had been applied, using the Black-Scholes option-pricing model.
t. Fair value measurements
Effective January 1, 2008 the Company adopted ASC 820, Fair Value Measurements. ASC 820 provides a definition of fair value, establishes a hierarchy for measuring fair value under generally accepted accounting principles and requires certain disclosures about fair values used in the financial statements. ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the primary or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value, which are the following:
F-10
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
t. Fair value measurements (continued)
Level 1
- Quoted prices in active markets for identical assets or liabilities.
Level 2
- Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3
- Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
u. Recently adopted accounting pronouncements
In March 2010, the FASB (Financial Accounting Standards Board) issued Accounting Standards Update 2010-11(ASU 2010-11), Derivatives and Hedging (Topic 815): Scope Exception Related to Embedded Credit Derivatives. The amendments in this Update are effective for each reporting entity at the beginning of its first fiscal quarter beginning after June 15, 2010. Early adoption is permitted at the beginning of each entitys first fiscal quarter beginning after issuance of this Update. Adoption of this standard did not have a material effect on the financial position, results of operations or cash flows of the Company.
In February 2010, the FASB Accounting Standards Update 2010-10 (ASU 2010-10), Consolidation (Topic 810): Amendments for Certain Investment Funds. The amendments in this Update are effective as of the beginning of a reporting entitys first annual period that begins after November 15, 2009 and for interim periods within that first reporting period. Early application is not permitted. The Companys adoption of provisions of ASU 2010-10 did not have a material effect on the financial position, results of operations or cash flows.
In February 2010, the FASB issued ASU No. 2010-09 Subsequent Events (ASC Topic 855) Amendments to Certain Recognition and Disclosure Requirements (ASU No. 2010-09). ASU No. 2010-09 requires an entity that is an SEC filer to evaluate subsequent events through the date that the financial statements are issued and removes the requirement for an SEC filer to disclose a date, in both issued and revised financial statements, through which the filer had evaluated subsequent events. The adoption did not have an impact on the Companys financial position and results of operations.
In January 2010, the FASB issued Accounting Standards Update (ASU) No. 2010-06, Improving Disclosures about Fair Value Measurements. ASU No. 2010-06 amends (ASC) 820 and clarifies and provides additional disclosure requirements related to recurring and non-recurring fair value measurements and employers disclosures about postretirement benefit plan assets.
ASU 2010-06 is effective for interim and annual reporting periods beginning after December 15, 2009. The adoption of ASU 2010-06 did not have a material impact on the Companys financial statements.
F-11
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
u. Recently adopted accounting pronouncements (continued)
In January 2010, the FASB issued an amendment to ASC 505, Equity, where entities that declare dividends to shareholders that may be paid in cash or shares at the election of the shareholders are considered to be a share issuance that is reflected prospectively in EPS, and is not accounted for as a stock dividend. This standard is effective for interim and annual periods ending on or after December 15, 2009 and is to be applied on a retrospective basis. The adoption of this standard did not have a significant impact on the Companys consolidated financial statements.
In January 2010, the FASB issued an amendment to ASC 820, Fair Value Measurements and Disclosure, to require reporting entities to separately disclose the amounts and business rationale for significant transfers in and out of Level 1 and Level 2 fair value measurements and separately present information regarding purchase, sale, issuance, and settlement of Level 3 fair value measures on a gross basis. This standard, for which the Company is currently assessing the impact, is effective for interim and annual reporting periods beginning after December 15, 2009 with the exception of disclosures regarding the purchase, sale, issuance, and settlement of Level 3 fair value measures which are effective for fiscal years beginning after December 15, 2010. The adoption of this standard is not expected to have a significant impact on the Companys consolidated financial statements.
In October 2009, the FASB issued an amendment to the accounting standards related to certain revenue arrangements that include software elements. This standard clarifies the existing accounting guidance such that tangible products that contain both software and non-software components that function together to deliver the products essential functionality, shall be excluded from the scope of the software revenue recognition accounting standards. Accordingly, sales of these products may fall within the scope of other revenue recognition standards or may now be within the scope of this standard and may require an allocation of the arrangement consideration for each element of the arrangement.
In October 2009, FASB issued an amendment to the accounting standards related to the accounting for revenue in arrangements with multiple deliverables including how the arrangement consideration is allocated among delivered and undelivered items of the arrangement. Among the amendments, this standard eliminated the use of the residual method for allocating arrangement considerations and requires an entity to allocate the overall consideration to each deliverable based on an estimated selling price of each individual deliverable in the absence of having vendor-specific objective evidence or other third party evidence of fair value of the undelivered items.
This standard also provides further guidance on how to determine a separate unit of accounting in a multiple-deliverable revenue arrangement and expands the disclosure requirements about the judgments made in applying the estimated selling price method and how those judgments affect the timing or amount of revenue recognition. This standard, for which the Company is currently assessing the impact, will become effective on January 1, 2011.
F-12
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
u. Recently adopted accounting pronouncements (continued)
In April 2011, the FASB issued new accounting guidance for purposes of measuring the impairment of receivables and evaluating whether a troubled debt restructuring has occurred. An entity should disclose the total amount of receivables and the allowance for credit losses as of the end of the period of adoption related to those receivables that are newly considered impaired under Section 310-10-35 for which impairment was previously measured under Subtopic 450-20, Contingencies-Loss Contingencies. Currently, this guidance is anticipated to be effective for interim and annual periods ending after June 15, 2011. The adoption of this guidance is not expected to have an impact on our consolidated financial position, results of operations, cash flows, or disclosures.
In December 2010, the FASB issued ASU 2010-28, Intangibles - Goodwill and Other (Topic 350): When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts. The ASU does not prescribe a specific method of calculating the carrying value of a reporting unit in the performance of step 1 of the goodwill impairment test (i.e. equity-value-based method or enterprise-value-based method). However, it requires entities with a zero or negative carrying value to assess, considering qualitative factors such as those used to determine whether a triggering event would require an interim goodwill impairment test (listed in ASC 350-20-35-30, Intangibles - Goodwill and Other - Subsequent Measurement, whether it is more likely than not that a goodwill impairment exists and perform step 2 of the goodwill impairment test if so concluded. ASU 2010-28 is effective for the Company beginning January 1, 2011 and early adoption is not permitted. The Company does not expect the adoption of ASU 2010-28 to have a material impact on its consolidated financial position or results of operations.
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
3. FINANCIAL INSTRUMENTS
Fair values
The carrying values of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities and loans payable approximate their fair values because of the short maturity of these financial instruments. The carrying value of the Companys long-term debt approximates fair value as the loans bear market rates of interest. No interest has been imputed on non-interest bearing loans from government entities.
Interest rate risk
The Company is not exposed to significant interest rate risk due to the fixed rates of interest on its monetary assets and liabilities.
F-13
3. FINANCIAL INSTRUMENTS (continued)
Credit risk
The Company is exposed to credit risk with respect to its accounts receivable. The Company follows a program of credit evaluations of customers and limits the amount of credit extended when deemed necessary. The Company maintains provisions for potential credit losses and any such losses to date have been within managements expectations.
Currency risk
The Company is subject to currency risk as certain of the assets and liabilities are denominated in Canadian currencies. The exchange rate conversion to US dollars may vary from time to time.
4. CONCENTRATIONS AND ECONOMIC DEPENDENCE
For the years ended December 31, 2014, 2013 and 2012 the Company has discontinued its operations and had no accounts receivable. All of the Companys assets and liabilities are located in Canada.
5. LOANS PAYABLE
|
|
|
|
|
|
|
| |
|
2014
|
|
2013
|
|
2012
|
Demand loans
|
$
|
404,704
|
|
$
|
384,704
|
|
$
|
412,704
|
Repayable government assistance
|
|
-
|
|
|
-
|
|
|
-
|
Interest payable
|
|
16,927
|
|
|
16,927
|
|
|
16,927
|
|
$
|
421,631
|
|
$
|
401,631
|
|
$
|
429,631
|
The demand loans are unsecured with no fixed terms of repayment.
6. RELATED PARTY TRANSACTIONS
a.
The amounts due to directors have no specific terms of repayment and are subordinated to amounts due to ACOA (note 7).
b.
The Company accrued management fees payable of $150,000 in total to a director of the Company for his services as an officer of the Company ($50,000 per year for three years, 2014, 2013 and 2012).
The above transactions were in the normal course of operations and were measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties.
F-14
7. CONTINGENT LIABILITIES
The Company is contingently liable to repay $2,294,755 in assistance received under the Atlantic Innovation Fund, repayable annually at the rate of 5% of gross revenues from sales of products resulting from the Companys research and development project. The Company became in default of this conditional loan, was unable to represent itself in Newfoundland court and ACOA was awarded a $7,500,000 judgment against the Company. The Company generated negligible revenues from the program and is in absolute disagreement with this outcome. See note 12.
8. STOCK OPTIONS
For purposes of calculating the compensation cost consistent with ASC 505 and ASC 718, the fair value is estimated on the date of grant using the binomial method. Volatility is based on an average of the implied volatility in the open market and the annualized volatility of the Companys stock history. The following table shows the weighted-average assumptions used for grants of stock options as well as the fair value of the grants based on those assumptions:
|
|
|
| |
|
|
2014
|
|
2013
|
Expected dividend yield
|
|
-
|
|
-
|
Forfeiture rate
|
|
-
|
|
-
|
Volatility
|
|
30.00%
|
|
30.00%
|
Risk free interest rate
|
|
2.70%
|
|
2.70%
|
Expected average life
|
|
2.5 year
|
|
2.5 year
|
Fair Value of options granted
|
|
n/a
|
|
n/a
|
The forfeiture rate is based on the historical annualized forfeiture rate, which is consistent with prior years. This rate includes only pre-vesting forfeitures. Volatility is based on an average of the implied volatility in the open market and the annualized volatility of the Companys stock price over the entire stock history. The risk free interest rate used is the implied yield currently available from the Canadian Treasury zero-coupon yield curve over the contractual term of the options. The expected weighted-average life is based on historical exercise behaviour, which compares the average life of the options that have already been exercised or cancelled with the exercise life of all unexercised options. The exercise life of unexercised options assumes that the option will be exercised at the midpoint of the vesting date and the full contractual term. These assumptions are consistent with the assumptions used in prior years.
F-15
8. STOCK OPTIONS (continued)
Stock option activity for the years ended December 31, 2011 and 2010 are as follows:
|
|
|
|
| |
|
Number of
Shares
|
|
Exercise Price
per Share
|
|
Weighted
Average
Exercise
Price
|
|
|
|
|
|
|
Balance December 31, 2011
|
262,500
|
|
$0.50
|
|
$0.50
|
Granted during the year
|
-
|
|
-
|
|
-
|
Cancelled/Expired
|
(187,500)
|
|
$0.50
|
|
$0.50
|
|
|
|
|
|
|
Balance December 31, 2012
|
75,000
|
|
$0.50
|
|
$0.50
|
Granted during the year
|
-
|
|
-
|
|
-
|
Cancelled/Expired
|
(25,000)
|
|
$0.50
|
|
$0.50
|
Balance December 31, 2013 and 2014
|
50,000
|
|
$0.50
|
|
$0.50
|
As at December 31, 2014 all stock options were fully vested and exercisable and expire two years after the grant date. As at December 31, 2014 and 2013, the outstanding stock options granted to directors, employees and others are as follows:
|
|
|
|
| |
|
Exercise
|
|
Number of Shares
|
Expiry Date
|
Price
|
|
2014
|
|
2013
|
|
|
|
|
|
|
March 1, 2015
|
$ 0.50
|
|
50,000
|
|
50,000
|
|
|
|
|
|
|
Total outstanding and exercisable
|
|
|
50,000
|
|
50,000
|
Weighted average outstanding life of
options (years)
|
|
|
0.16
|
|
1.17
|
F-16
8. STOCK OPTIONS (continued)
Warrants
|
|
|
|
| |
|
Number of
Shares
|
|
Exercise Price
per Share
|
|
Weighted
Average
Exercise
Price
|
|
|
|
|
|
|
Balance December 31, 2011
|
1,015,526
|
|
$0.15 - $0.75
|
|
$0.64
|
Granted during the year
|
-
|
|
-
|
|
-
|
Exercised during the year
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
Balance December 31, 2012
|
1,015,526
|
|
$0.15 - $0.75
|
|
$0.64
|
Granted during the year
|
-
|
|
-
|
|
-
|
Exercised during the year
|
-
|
|
-
|
|
-
|
Balance December 31, 2013 and 2014
|
1,015,526
|
|
$0.15 - $0.75
|
|
$0.64
|
As at December 31, 2011 and 2010, the outstanding warrants are as follows:
|
|
|
|
| |
|
Exercise
|
|
Number of Shares
|
Expiry Date
|
Price
|
|
2014
|
|
2013
|
|
|
|
|
|
|
Open
|
$ 0.50
|
|
389,170
|
|
389,170
|
Open
|
$0.75
|
|
389,170
|
|
389,170
|
Open
|
$0.15
|
|
185,586
|
|
185,586
|
Open
|
$ 0.25
|
|
51,600
|
|
51,600
|
|
|
|
|
|
|
Total outstanding and exercisable
|
|
|
1,015,526
|
|
1,015,526
|
Weighted average outstanding life of
options (years)
|
|
|
open
|
|
open
|
In 2005, the Company issued 389,170 Class A warrants exercisable at $0.50 per share and 389,170 Class B warrants exercisable at $0.75 per share. The Class A and Class B warrants expire six months after the closing bid price for the common stock of the Company has been over $0.65 and $1.00 per share respectively for five consecutive trading days.
In 2008, the Company issued 51,600 warrants exercisable at $0.25 per share.
F-17
9. INCOME TAXES
Income taxes vary from the amount that would be computed by applying the estimated combined statutory income tax rate (34%) for the following reasons:
|
|
|
|
| |
|
2014
|
|
2013
|
(Loss) earnings before income taxes
|
$
|
(1,807,955)
|
|
$
|
(1,330,328)
|
Income tax rate
|
|
34%
|
|
|
34%
|
|
|
|
|
|
|
Expected income tax expense (recovery)
based on above rates
|
|
(614,704)
|
|
|
(431,912)
|
Increase (decrease) due to:
|
|
|
|
|
|
Impact of lower statutory tax rates on foreign
subsidiaries
|
|
73,000
|
|
|
23,085
|
Non-deductible expenses
|
|
100,000
|
|
|
63,525
|
Other permanent differences
|
|
(50,000)
|
|
|
(47,966)
|
Effect of expiry of losses
|
|
400,000
|
|
|
131,007
|
Change in valuation allowance
|
|
91,704
|
|
|
322,261
|
Provision for income taxes
|
$
|
-
|
|
$
|
-
|
Deferred income taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.
The Company's carried losses for income tax purposes are $8,875,029, which may be carried forward to apply against future income tax, expiring between 2014 and 2030. The future tax benefit of these loss carry-forwards has been offset with a full valuation allowance. These losses expire as follows:
|
| |
2014
|
$
|
556,923
|
2015
|
|
1,006,332
|
2026
|
|
681,591
|
2027
|
|
718,441
|
2028
|
|
1,791,899
|
2029
|
|
1,039,431
|
2030
|
|
1,272,447
|
2031
|
|
1,807,955
|
|
$
|
8,875,029
|
F-18
9. INCOME TAXES (continued)
The Company has adopted Financial Accounting Standards Board Interpretation No. 48,
Accounting for Uncertainty in Income Taxes
- an interpretation of SFAS 109. (FIN 48), as codified in ASC 740. ASC 740 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under ASC 740, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position would be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. ASC 740 also provides guidance on de-recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, and accounting for interest and penalties associated with tax positions.
The Company did not file its U.S. federal income tax returns, including, without limitation, information returns on Internal Revenue Service (IRS) Form 5471, Information Return of U.S. Persons With Respect to Certain Foreign Corporations for the years ended December 31, 2007 through 2010. Failure to furnish any information with respect to any foreign business entity required, within the time prescribed by the IRS, subjects the Company to certain civil penalties. The Company has accrued penalties of $60,000 related to these filings.
The Company did not file the information reports for the years ended December 31, 2007 through 2011 concerning its interest in foreign bank accounts on TDF 90-22.1,
Report of Foreign Bank and Financial Accounts
(FBARs). For not complying with the FBAR reporting and recordkeeping requirements, the Company is subject to civil penalties up to $10,000 for each of its foreign bank. The Company does not believe that the failure to file the FBAR was willful and intends to seek a waiver of any penalties. The Company is unable to determine the amount of any penalties that may be assessed at this time and believes that penalties, if any, that may be assessed would not be material to the consolidated financial statements.
In addition, because the Company did not generate any income in the United States or otherwise have any U.S. taxable income, the Company does not believe that it owes U.S. federal income taxes in respect to any transactions that the Company or any of its subsidiaries may have engaged in through December 31, 2014. However, there can be no assurance that the IRS will agree with the position, and therefore the Company ultimately could be held liable for U.S. federal income taxes, interest and penalties. The tax years ended December 31, 2007 to 2010 remain open to examination by tax authorities. In addition, because the Company did not generate any income in the United States or otherwise have any U.S. taxable income, the Company does not believe that it owes U.S. federal income taxes in respect to any transactions that the Company or any of its subsidiaries may have engaged in through December 31, 2014. However, there can be no assurance that the IRS will agree with the position, and therefore the Company ultimately could be held liable for U.S. federal income taxes, interest and penalties. The tax years ended December 31, 2007 to 2010 remain open to examination by tax authorities.
F-19
10. COMMON STOCK
During the year ended December 31, 2009, the Company issued 1,346,547 common shares with a deemed value of $119,756 to consultants in exchange for services, and issued 632,153 common shares for gross proceeds of $53,500 pursuant to a private placement
During the year ended December 31, 2010 the Company issued the following common shares:
January 1 to March 31, 2010:
·
For services: 178,810 shares fairly valued at $32,191 - the market value of those services
·
For cash: 1,100,000 shares fairly valued for cash of $160,000.
·
For conversion of Preferred shares: 160,000 fairly valued for cash of $32,828
·
April 1 to June 30, 2010:
·
For services: 125,964 shares fairly valued at $23,900 - the market value of those services
·
For cash: 1,000,000 shares fairly valued for cash of $125,000.
·
For prepaid expenses: 508,844 shares fairly valued at $97,000 - the market value of those expenses
·
For reduction of a loan payable: 30,000 shares fairly valued at $6,600 - the amount of the loan repaid
July 1 to September 30, 2010:
·
For services: 43,000 shares fairly valued at $4,750 - the market value of those services
·
For cash: 841,172 shares fairly valued for cash of $82,059.
·
October 1 to December 31, 2010:
·
For services: 985,856 shares fairly valued at $155,879 - the market value of those services
·
For cash: 3,191,172 shares fairly valued for cash of $412,059
·
To settle loans: 30,000 shares to settle $6,600
During the year ended December 31, 2011 the Company issued the following common shares:
·
For reduction of loans: 2,082,112 shares fairly valued at $200,000
·
For cash: 9,204,288 shares for $637,000
·
For services: 5,947,482 shares fairly valued at $458,827
Preferred Shares
Issued for cash:
408,000 series A shares of preferred stock for $342,772 (inclusive of 100,000 preferred shares for $90,000 received during the three months ended March 31, 2010 and 80,586 preferred shares for $66,527 received during the three months ended September 30, 2010). The preferred shares bear interest at 10% per annum paid semiannually not in advance and are convertible to shares of common stock of the Company after two years from receipt of funds at a 20% discount to the then current market price of the Companys common stock. The preferred shares may be converted after six months and before two years under similar terms but with a 15% discount to market. At December 31, 2014 the Company had received $456,209 for 535,496 preferred shares.
F-20
11. LOSS PER SHARE
The potentially dilutive securities that were excluded from the earnings (loss) per share calculation consist of stock options with an exercise price greater than the average market price of the Common Shares. 1,065,526 shares were potentially dilutive in 2014 (2013: 1,065,526).
12. NET BENEFIT FROM ABANDONMENT OF OPERATIONS
The Company became unable to provide sufficient cash to successfully operate its business and fulfill its contract obligations to its customer - due to its inability to perform, the Company lost its contracts and discontinued its subsidiaries.
Accounts of abandoned subsidiary companies written off:
|
| |
Cash
|
$
|
36
|
Accounts receivable
|
|
(175,361)
|
Prepaid expense
|
|
(22,537)
|
Inventories
|
|
(318,219)
|
Fixed assets
|
|
(30,791)
|
Accounts payable
|
|
2,096,577
|
Loans payable
|
|
646,437
|
Long term debt
|
|
1,721,841
|
Due to Directors
|
|
633,094
|
Deferred revenue
|
|
112,054
|
Other comprehensive debits
|
|
(652,489)
|
|
|
|
Net benefit from abandonment of operations
|
|
4,010,642
|
ACOA contingent liability loss reserve
|
|
(7,500,000)
|
|
|
|
Net loss on abandonment of operations
|
|
(3,489,358)
|
Additional loss incurred December 31, 2012
|
|
(583,000)
|
|
|
|
Total loss
|
$
|
(4,072,358)
|
NOTE 13 - REPORTING ISSUER REQUIREMENTS
The Company became delinquent in filing its quarterly and annual reports required by a reporting issuer and thereby gave up its reporting issuer status in the United States. The delinquent financial information is provided in the following schedules:
F-21
NORTHSTAR ELECTRONICS INC.
Quarterly Condensed Financial Statements 2012 through 2014
(A Development Stage Enterprise)
CONDENSED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
|
| |
UNAUDITED
|
|
March 31,
2014
|
|
June 30,
2014
|
|
September
30, 2014
|
|
December
31, 2013
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
340
|
|
$
|
194
|
|
$
|
68
|
|
$
|
486
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
340
|
|
|
194
|
|
|
68
|
|
|
486
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
340
|
|
$
|
194
|
|
$
|
68
|
|
$
|
486
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
390,348
|
|
$
|
396,598
|
|
$
|
402,848
|
|
$
|
384,098
|
Loans payable
|
|
|
401,631
|
|
|
401,631
|
|
|
401,631
|
|
|
401,631
|
Due to directors
|
|
|
420,067
|
|
|
432,567
|
|
|
445,087
|
|
|
407,567
|
|
|
|
1,212,046
|
|
|
1,230,796
|
|
|
1,249,566
|
|
|
1,193,296
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitment to issue common shares
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
1,212,046
|
|
|
1,230,796
|
|
|
1,249,566
|
|
|
1,193,296
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital stock
|
|
|
|
|
|
|
|
|
|
|
|
|
Authorized: 20,000,000 preferred shares
each of $0.0001 par value
|
|
|
|
|
|
|
|
|
|
|
|
|
Issued: 535,496 preferred shares
|
|
|
456,209
|
|
|
456,209
|
|
|
456,209
|
|
|
456,209
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Authorized: 100,000,000 common shares
each of $0.0001 par value
|
|
|
|
|
|
|
|
|
|
|
|
|
Issued: 70,771,847 common shares at
March 31, 2012; June 30, 2012;
September 30, 2012; and December 31, 2011,
respectively
|
|
|
7,078
|
|
|
7,078
|
|
|
7,078
|
|
|
7,078
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional paid-in capital
|
|
|
8,051,434
|
|
|
8,051,434
|
|
|
8,051,434
|
|
|
8,051,434
|
Accumulated other comprehensive income (loss)
|
|
|
28,256
|
|
|
28,256
|
|
|
28,256
|
|
|
28,256
|
Loss on discontinued operations
|
|
|
(4,072,358)
|
|
|
(4,072,358)
|
|
|
(4,072,358)
|
|
|
(4,072,358)
|
Contingency reserve
|
|
|
7,500,000
|
|
|
7,500,000
|
|
|
7,500,000
|
|
|
7,500,000
|
Accumulated deficit
|
|
|
(12,780,130)
|
|
|
(12,780,130)
|
|
|
(12,780,130)
|
|
|
(12,780,130)
|
Accumulated deficit during development stage
|
|
|
(402,195)
|
|
|
(421,091)
|
|
|
(439,987)
|
|
|
(383,299)
|
Total stockholders' deficit
|
|
|
(1,211,706)
|
|
|
(1,230,602)
|
|
|
(1,249,498)
|
|
|
(1,192,810)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' deficit
|
|
$
|
340
|
|
$
|
194
|
|
$
|
68
|
|
$
|
486
|
F-22
NORTHSTAR ELECTRONICS INC.
(A Development Stage Enterprise)
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Three
Months
Ended
March 31,
|
|
Three
Months
Ended
June 30,
|
|
Six
Months
Ended
June 30,
|
|
Three
Months
Ended
September 30,
|
|
Nine
Months
Ended
September 30,
|
|
Cumulative
since
re-entry into
development
stage to
September 30,
|
|
|
2014
|
|
2014
|
|
2014
|
|
2014
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
2,632
|
|
$
|
2,632
|
|
$
|
5,264
|
|
$
|
2,632
|
|
$
|
7,896
|
|
$
|
5,559
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rent and storage
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
8,842
|
Administration
|
|
|
6,250
|
|
|
6,250
|
|
|
12,500
|
|
|
6,250
|
|
|
18,750
|
|
|
43,750
|
Management fees
|
|
|
12,500
|
|
|
12,500
|
|
|
25,000
|
|
|
12,500
|
|
|
37,500
|
|
|
87,500
|
Consulting
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
163,537
|
Finders fee
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
5,000
|
Foreign exchange
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(78
|
Professional fees
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
19,000
|
Office and admin
|
|
|
2,778
|
|
|
2,778
|
|
|
5,556
|
|
|
2,778
|
|
|
8,334
|
|
|
42,034
|
Total operating expenses
|
|
|
21,528
|
|
|
21,528
|
|
|
43,056
|
|
|
21,258
|
|
|
64,584
|
|
|
369,585
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(18,896)
|
|
|
(18,896)
|
|
|
(37,792)
|
|
|
(18,896)
|
|
|
(56,688)
|
|
|
(364,026)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss on abandonment of
operations
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(583,000)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(18,896)
|
|
$
|
(18,896)
|
|
$
|
(37,792)
|
|
$
|
(18,896)
|
|
$
|
(56,668)
|
|
$
|
(947,026)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted income
(loss) per common share
|
|
$
|
(0.00)
|
|
$
|
(0.00)
|
|
$
|
(0.00)
|
|
$
|
(0.00)
|
|
$
|
(0.00)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted
average common shares
outstanding
|
|
|
70,771,847
|
|
|
70,771,847
|
|
|
70,771,847
|
|
|
70,771,847
|
|
|
70,771,847
|
|
|
|
F-23
NORTHSTAR ELECTRONICS INC.
(A Development Stage Enterprise)
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
|
|
|
|
|
|
| |
|
|
Three
Months
Ended
March 31,
2014
|
Six
Months
Ended
June 30,
2014
|
Nine
Months
Ended
September 30,
2014
|
Cumulative
since
re-entry into
development
stage to
September 30,
2013
|
|
|
|
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
Net loss
|
|
$
|
(18,896)
|
$
|
(37,792)
|
$
|
(56,668)
|
$
|
(947,026)
|
Non cash items:
|
|
|
|
|
|
|
|
|
|
Services paid with common stock
|
|
|
-
|
|
-
|
|
-
|
|
190,538
|
Loss on discontinued business
|
|
|
-
|
|
-
|
|
-
|
|
583,000
|
Equity based compensation
|
|
|
12,500
|
|
25,000
|
|
37,500
|
|
87,500
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Prepaid expense
|
|
|
-
|
|
-
|
|
-
|
|
2,067
|
Change in accounts payable
|
|
|
6,250
|
|
12,500
|
|
18,750
|
|
43,750
|
Net cash used in operating activities
|
|
|
(146)
|
|
(292)
|
|
(418)
|
|
(40,171)
|
|
|
|
|
|
|
|
|
|
|
Cash flow from investing activities:
|
|
|
|
|
|
|
|
|
|
Acquisition of equipment
|
|
|
-
|
|
-
|
|
-
|
|
-
|
Deferred contract costs
|
|
|
-
|
|
-
|
|
-
|
|
-
|
Net cash used in investing activities
|
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Cash flow from financing activities:
|
|
|
|
|
|
|
|
|
|
Due to (from) related parties
|
|
|
-
|
|
-
|
|
-
|
|
-
|
Issuance of shares for cash
|
|
|
-
|
|
-
|
|
-
|
|
40,000
|
Due to (from) directors
|
|
|
-
|
|
-
|
|
-
|
|
(2,223)
|
Net cash used in financing activities
|
|
|
-
|
|
-
|
|
-
|
|
37,777
|
|
|
|
|
|
|
|
|
|
|
Net change in cash
|
|
|
(146)
|
|
(292)
|
|
(418)
|
|
(2,394)
|
Cash, beginning of period
|
|
|
486
|
|
486
|
|
486
|
|
2,394
|
Cash, end of period
|
|
$
|
340
|
$
|
194
|
$
|
68
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow information:
|
|
|
|
|
|
|
|
|
|
Interest paid
|
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
Taxes paid
|
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
Non-cash financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
F-24
NORTHSTAR ELECTRONICS INC.
(A Development Stage Enterprise)
CONDENSED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
March 31,
2013
|
|
|
June 30,
2013
|
|
|
September,
30, 2013
|
|
|
December
31, 2012
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
11
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
11
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
11
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
365,348
|
|
|
$
|
371,598
|
|
|
$
|
377,848
|
|
|
$
|
359,098
|
Due to related party
|
|
|
429,631
|
|
|
|
429,631
|
|
|
|
401,631
|
|
|
|
429,631
|
Advances from directors
|
|
|
368,117
|
|
|
|
334,926
|
|
|
|
401,147
|
|
|
|
355,001
|
|
|
|
1,163,096
|
|
|
|
1,136,155
|
|
|
|
1,180,626
|
|
|
|
1,143,730
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitment to issue common shares
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
1,163,096
|
|
|
|
1,136,155
|
|
|
|
1,180,626
|
|
|
|
1,143,730
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Authorized: 20,000,000 preferred shares each of $0.0001 par value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issued: nil preferred shares
|
|
|
409,209
|
|
|
|
456,209
|
|
|
|
456,209
|
|
|
|
409,209
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Authorized: 100,000,000 common shares
each of par value $0.0001
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issued: 71,375,179 common shares at
March 31, 2011 and December 31, 2010;
70,771,847 June 30, 2011 and
September 30, 2011;
|
|
|
7,138
|
|
|
|
7,078
|
|
|
|
7,078
|
|
|
|
7,138
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional paid-in capital
|
|
|
8,045,084
|
|
|
|
8,051,434
|
|
|
|
8,051,434
|
|
|
|
8,045,084
|
Accumulated other comprehensive gain
|
|
|
28,256
|
|
|
|
28,256
|
|
|
|
28,256
|
|
|
|
28,256
|
Loss on discontinued operations
|
|
|
(4,072,358)
|
|
|
|
(4,072,358)
|
|
|
|
(4,072,358)
|
|
|
|
(4,072,358)
|
Contingency reserve
|
|
|
7,500,000
|
|
|
|
7,500,000
|
|
|
|
7,500,000
|
|
|
|
7,500,000
|
Accumulated deficit
|
|
|
(12,780,130)
|
|
|
|
(12,780,130)
|
|
|
|
(12,780,130)
|
|
|
|
(12,780,130)
|
Accumulated deficit during development stage
|
|
|
(300,284)
|
|
|
|
(326,644)
|
|
|
|
(371,115)
|
|
|
|
(281,013)
|
Total stockholders' deficit
|
|
|
(1,163,085)
|
|
|
|
(1,136,155)
|
|
|
|
(1,180,626)
|
|
|
|
(1,143,724)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' deficit
|
|
$
|
11
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
6
|
F-25
NORTHSTAR ELECTRONICS INC.
(A Development Stage Enterprise)
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Three
Months
Ended
March 31,
|
|
Three
Months
Ended
June 30,
|
|
Six
Months
Ended
June 30,
|
|
Three
Months
Ended
September 30,
|
|
Nine
Months
Ended
September 30,
|
|
Cumulative
since
re-entry into
development stage to
September 30,
|
|
|
2013
|
|
2013
|
|
2013
|
|
2013
|
|
2013
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
1,853
|
|
$
|
1,853
|
|
$
|
3,706
|
|
$
|
1,853
|
|
$
|
5,559
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rent and storage
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
6,663
|
Administration
|
|
|
6,250
|
|
|
6,250
|
|
|
12,500
|
|
|
6,250
|
|
|
18,750
|
|
|
18,750
|
Management fees
|
|
|
12,500
|
|
|
12,500
|
|
|
25,000
|
|
|
12,500
|
|
|
37,500
|
|
|
37,500
|
Consulting
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
25,200
|
|
|
25,200
|
|
|
138,337
|
Foreign exchange
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(78)
|
Professional fees
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
19,000
|
Office and admin
|
|
|
2,374
|
|
|
2,374
|
|
|
4,748
|
|
|
2,374
|
|
|
7,122
|
|
|
26,184
|
Total operating expenses
|
|
|
21,124
|
|
|
21,124
|
|
|
42,248
|
|
|
46,324
|
|
|
88,572
|
|
|
246,326
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(19,271)
|
|
|
(26,360)
|
|
|
(38,542)
|
|
|
(44,471)
|
|
|
(83,013)
|
|
|
(246,326)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (expense) income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss on abandonment of
operations
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(583,000)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) for the period
|
|
$
|
(19,271)
|
|
$
|
(26,360)
|
|
$
|
(38,542)
|
|
$
|
(44,471)
|
|
$
|
(83,013)
|
|
$
|
(829,326)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted income (loss) per common share
|
|
$
|
(0.00)
|
|
$
|
(0.00)
|
|
$
|
(0.00)
|
|
$
|
(0.00)
|
|
$
|
(0.00)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average common shares outstanding
|
|
|
71,375,847
|
|
|
71,375,847
|
|
|
71,375,847
|
|
|
70,771,847
|
|
|
71,073,513
|
|
|
|
F-26
NORTHSTAR ELECTRONICS INC.
(A Development Stage Enterprise)
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Three
Months
Ended
March 31,
2013
|
|
Six
Months
Ended
June 30,
2013
|
|
Nine
Months
Ended
September 30,
2013
|
|
Cumulative
since
re-entry into
development
stage to September 30,
2012
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(19,271)
|
|
$
|
(38,542)
|
|
$
|
(83,013)
|
|
$
|
(829,326)
|
Non cash items:
|
|
|
|
|
|
|
|
|
|
|
|
|
Services paid with common stock
|
|
|
-
|
|
|
-
|
|
|
25,200
|
|
|
158,587
|
Loss on discontinued business
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(583,000)
|
Equity based compensation
|
|
|
12,500
|
|
|
25,000
|
|
|
37,500
|
|
|
37,500
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid expense
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
2,067
|
Change in accounts payable
|
|
|
6,250
|
|
|
12,500
|
|
|
18,750
|
|
$
|
18,750
|
Net cash flows used in operating activities
|
|
|
(521)
|
|
|
(1,042)
|
|
|
(1,563)
|
|
|
(29,422)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of equipment
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
Deferred contract costs
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
Net cash used in financing activities
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Due to (from) related parties
|
|
|
526
|
|
|
1,048
|
|
|
1,569
|
|
|
(12,122)
|
Issuance of shares for cash
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
40,000
|
Net cash used in financing activities
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
27,878
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change in cash
|
|
|
5
|
|
|
(6)
|
|
|
(6)
|
|
|
(1,544)
|
Cash, beginning of period
|
|
|
6
|
|
|
6
|
|
|
6
|
|
|
2,394
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash, end of period
|
|
$
|
11
|
|
$
|
-
|
|
$
|
-
|
|
$
|
850
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow information:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest paid
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
Taxes paid
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
Non-cash financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
F-27
NORTHSTAR ELECTRONICS INC.
(A Development Stage Enterprise)
CONDENSED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
March 31,
2012
|
|
|
June 30,
2012
|
|
|
September30,
2012
|
|
|
December 31,
2011
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
(audited)
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
272
|
|
|
$
|
17,083
|
|
|
$
|
850
|
|
|
$
|
2,394
|
Prepaid expense
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,066
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
272
|
|
|
|
17,083
|
|
|
|
850
|
|
|
|
4,460
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
272
|
|
|
$
|
17,083
|
|
|
$
|
850
|
|
|
$
|
4,460
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
340,348
|
|
|
$
|
346,598
|
|
|
$
|
352,848
|
|
|
$
|
334,098
|
Loans payable
|
|
|
429,631
|
|
|
|
429,631
|
|
|
|
429,631
|
|
|
|
429,631
|
Due to directors
|
|
|
528,031
|
|
|
|
320,280
|
|
|
|
327,408
|
|
|
|
508,780
|
|
|
|
1,298,010
|
|
|
|
1,096,509
|
|
|
|
114,685
|
|
|
|
1,272,509
|
Commitment to issue common shares
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
1,298,010
|
|
|
|
1,096,509
|
|
|
|
1,109,887
|
|
|
|
1,272,509
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Authorized: 20,000,000 preferred shares each of $0.0001 par value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issued: 488,586
|
|
|
409,299
|
|
|
|
409,299
|
|
|
|
409,299
|
|
|
|
409,299
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Authorized: 100,000,000 common shares each of par value $0.001
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issued: 71,375,179 at September 30, 2012
and June 30, 2012; and 53,377,824
March 31, 2012; and 53,377,824 issued at
December 31, 2011
|
|
|
5,338
|
|
|
|
7,138
|
|
|
|
7,138
|
|
|
|
5,338
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional paid-in capital
|
|
|
7,641,546
|
|
|
|
8,045,084
|
|
|
|
8,045,084
|
|
|
|
7,058,546
|
Accumulated other comprehensive income (loss)
|
|
|
28,256
|
|
|
|
28,256
|
|
|
|
28,256
|
|
|
|
28,256
|
Contingency reserve
|
|
|
7,500,000
|
|
|
|
7,500,000
|
|
|
|
7,500,000
|
|
|
|
7,500,000
|
Loss on discontinued operations
|
|
|
(4,072,358)
|
|
|
|
(4,072,358)
|
|
|
|
(4,072,358)
|
|
|
|
(3,489,358)
|
Accumulated deficit
|
|
|
(12,780,130)
|
|
|
|
(12,780,130)
|
|
|
|
(12,780,130)
|
|
|
|
(12,780,130)
|
Accumulated deficit during development stage
|
|
|
(29,689)
|
|
|
|
(216,715)
|
|
|
|
(246,326)
|
|
|
|
-
|
Total stockholders' deficit
|
|
|
(1,297,738)
|
|
|
|
(1,079,426)
|
|
|
|
(1,109,037)
|
|
|
|
(1,268,049)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' deficit
|
|
$
|
272
|
|
|
$
|
17,083
|
|
|
$
|
850
|
|
|
$
|
4,460
|
F-28
NORTHSTAR ELECTRONICS INC.
(A Development Stage Enterprise)
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Three
Months
Ended
March 31,
2012
|
|
Three
Months
Ended
June 30,
2012
|
|
Six
Months
Ended
June 30,
2012
|
|
Three
Months
Ended
September 30,
2012
|
|
Nine
Months
Ended
September 30,
2012
|
|
Cumulative
since
re-entry into
development
stage to
September 30,
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rent and storage
|
|
|
2,211
|
|
|
2,211
|
|
|
4,422
|
|
|
2,211
|
|
|
6,633
|
|
|
6,663
|
Administration
|
|
|
6,250
|
|
|
6,250
|
|
|
12,500
|
|
|
6,250
|
|
|
18,750
|
|
|
18,750
|
Management fees
|
|
|
12,500
|
|
|
12,500
|
|
|
25,000
|
|
|
12,500
|
|
|
37,500
|
|
|
37,500
|
Consulting
|
|
|
-
|
|
|
138,337
|
|
|
138,337
|
|
|
-
|
|
|
138,337
|
|
|
138,337
|
Foreign exchange
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(78)
|
|
|
(78)
|
|
|
(78)
|
Professional fees
|
|
|
-
|
|
|
19,000
|
|
|
19,000
|
|
|
-
|
|
|
19,000
|
|
|
19,000
|
Office and admin
|
|
|
8,728
|
|
|
8,728
|
|
|
17,456
|
|
|
8,728
|
|
|
26,184
|
|
|
26,184
|
Total operating expenses
|
|
|
29,689
|
|
|
187,036
|
|
|
216,715
|
|
|
29,611
|
|
|
246,326
|
|
|
246,326
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before other items
|
|
|
(29,689)
|
|
|
(187,036)
|
|
|
(216,715)
|
|
|
(29,611)
|
|
|
(246,326)
|
|
|
(246,326)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (expense)income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss on abandonment of
operations
|
|
|
(583,000)
|
|
|
-
|
|
|
(583,000)
|
|
|
-
|
|
|
(583,000)
|
|
|
(583,000)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the period
|
|
$
|
(612,689)
|
|
$
|
(187,036)
|
|
$
|
(799,715)
|
|
$
|
(29,611)
|
|
$
|
(829,326)
|
|
$
|
(829,326)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted income (loss)
per common share
|
|
$
|
(0.01)
|
|
$
|
(0.00)
|
|
$
|
(0.01)
|
|
$
|
(0.00)
|
|
$
|
(0.01)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average
common shares outstanding
|
|
|
54,391,324
|
|
|
56,391,324
|
|
|
55,391,324
|
|
|
56,391,324
|
|
|
56,391,324
|
|
|
|
F-29
NORTHSTAR ELECTRONICS INC.
(A Development Stage Enterprise)
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Three
Months
Ended
March 31,
2012
|
|
Six
Months
Ended
June 30,
2012
|
|
Nine
Months
Ended
September 30,
2012
|
|
Cumulative
since
re-entry into
development
stage to
September 30,
2012
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(612,689)
|
|
$
|
(799,715)
|
|
$
|
(829,326)
|
|
$
|
(829,326)
|
Non cash -items:
|
|
|
|
|
|
|
|
|
|
|
|
|
Services paid with common stock
|
|
|
6,750
|
|
|
151,837
|
|
|
158,587
|
|
|
158,587
|
Loss on discontinued business
|
|
|
583,000
|
|
|
583,000
|
|
|
583,000
|
|
|
583,000
|
Equity based compensation
|
|
|
12,500
|
|
|
25,000
|
|
|
37,500
|
|
|
37,500
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid expense
|
|
|
2,067
|
|
|
2,067
|
|
|
2,067
|
|
|
2,067
|
Change in accounts payable
|
|
|
6,250
|
|
|
12,500
|
|
|
18,750
|
|
|
18,750
|
Net cash used in operating activities
|
|
|
(2,122)
|
|
|
(25,311)
|
|
|
(29,422)
|
|
|
(29,422)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of equipment
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
Deferred contract costs
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
Net cash used in investing activities
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Due to (from) related parties
|
|
|
-
|
|
|
-
|
|
|
(12,122)
|
|
|
(12,122)
|
Issuance of shares for cash
|
|
|
-
|
|
|
40,000
|
|
|
40,000
|
|
|
40,000
|
Net cash used in financing activities
|
|
|
-
|
|
|
40,000
|
|
|
27,878
|
|
|
27,878
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change in cash
|
|
|
(2,122)
|
|
|
14,689
|
|
|
(1,544)
|
|
|
(1,544)
|
Cash, beginning of period
|
|
|
2,394
|
|
|
2,394
|
|
|
2,394
|
|
|
2,394
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash, end of period
|
|
$
|
272
|
|
$
|
17,083
|
|
$
|
850
|
|
$
|
850
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow information:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest paid
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
Taxes paid
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
Non-cash financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
F-30
NORTHSTAR ELECTRONICS INC.
(A Development Stage Enterprise)
BALANCE SHEETS
(audited)
|
|
|
|
|
| |
|
|
December
31, 2012
|
|
December
31, 2011
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
6
|
|
$
|
2,394
|
Prepaid expense
|
|
|
-
|
|
|
2,066
|
Total current assets
|
|
|
6
|
|
|
4,460
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
6
|
|
$
|
4,460
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
359,098
|
|
$
|
334,098
|
Loans payable
|
|
|
429,631
|
|
|
429,631
|
Due to Directors
|
|
|
355,001
|
|
|
508,780
|
|
|
|
1,143,730
|
|
|
1,272,509
|
Commitment to issue common shares
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
1,143,730
|
|
|
1,272,509
|
|
|
|
|
|
|
|
Stockholders' deficit
|
|
|
|
|
|
|
Capital stock
|
|
|
|
|
|
|
Authorized: 20,000,000 preferred shares
each of $0.0001 par value
|
|
|
|
|
|
|
Issued: 488,586 Preferred series A shares
(488,586 - 2011)
|
|
|
409,299
|
|
|
409,299
|
|
|
|
|
|
|
|
Authorized: 100,000,000 common shares
each of $0.0001 par value
Issued: 71,2375,179 Common shares
(53,377,824 December 31, 2011)
|
|
|
7,138
|
|
|
5,338
|
|
|
|
|
|
|
|
Additional paid-in capital
|
|
|
8,045,084
|
|
|
7,058,546
|
Accumulated other comprehensive income
(loss)
|
|
|
28,256
|
|
|
28,256
|
Contingency reserve
|
|
|
7,500,000
|
|
|
7,500,000
|
Accumulated deficit
|
|
|
(12,780,130)
|
|
|
(12,780,130)
|
Loss on discontinued operations
|
|
|
(4,072,358)
|
|
|
(3,489,358)
|
Deficit accumulated during development
stage
|
|
|
(281,013)
|
|
|
-
|
Total stockholders' deficit
|
|
|
(1,143,724)
|
|
|
(1,268,049)
|
|
|
|
|
|
|
|
Total liabilities and stockholders' deficit
|
|
$
|
6
|
|
$
|
4,460
|
F-31
NORTHSTAR ELECTRONICS INC.
(A Development Stage Enterprise)
STATEMENTS OF OPERATIONS
(Unaudited)
|
|
|
|
|
| |
|
|
Year Ended
December 31,
|
|
Year Ended
December 31,
|
|
Development
Stage
Cumulative
to
December 31,
|
|
|
2012
|
|
2011
|
|
2012
|
|
|
|
|
|
|
|
Revenues
|
$
|
-
|
$
|
379,020
|
$
|
-
|
Cost of Goods Sold
|
|
-
|
|
207,930
|
|
-
|
|
|
|
|
|
|
|
Gross Margin
|
|
-
|
|
171,090
|
|
-
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
Salaries, wages and benefits
|
|
-
|
|
752,442
|
|
-
|
Research and development
|
|
-
|
|
-
|
|
-
|
Travel, marketing and business development
|
|
-
|
|
2,682
|
|
-
|
Management fees
|
|
50,000
|
|
135,000
|
|
50,000
|
Administration
|
|
25,000
|
|
-
|
|
25,000
|
Finance fees
|
|
5,000
|
|
158,150
|
|
5,000
|
Consulting
|
|
138,337
|
|
114,000
|
|
138,337
|
Rent
|
|
8,842
|
|
122,863
|
|
8,842
|
Professional fees
|
|
19,000
|
|
98,113
|
|
19,000
|
Office and miscellaneous
|
|
34,912
|
|
152,106
|
|
34,912
|
Bad debts
|
|
-
|
|
-
|
|
-
|
Interest on long-term debt
|
|
-
|
|
389,516
|
|
-
|
Telephone and utilities
|
|
-
|
|
25,693
|
|
-
|
Loss on disposal of assets
|
|
-
|
|
19,104
|
|
-
|
Foreign exchange loss (gain)
|
|
(78)
|
|
(2,100)
|
|
(78)
|
Depreciation
|
|
-
|
|
11,476
|
|
-
|
Amortization of intangible asset
|
|
-
|
|
-
|
|
-
|
Interest and penalties
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
281,013
|
|
1,979,045
|
|
281,013
|
|
|
|
|
|
|
|
Net loss for the year
|
|
(281,013)
|
|
(1,807,955)
|
|
(281,013)
|
Other comprehensive income
|
|
|
|
|
|
|
Net loss on abandonment of operations
|
|
(583,000)
|
|
(3,489,358)
|
|
-
|
Foreign currency translation adjustment
|
|
-
|
|
677,409
|
|
-
|
Net gain (loss) and comprehensive gain (loss)
|
$
|
(864,013)
|
$
|
(4,619,905)
|
$
|
(281,013)
|
|
|
|
|
|
|
|
Loss Per Share (Basic and Diluted)
|
$
|
(0.02)
|
$
|
(0.10)
|
|
|
|
|
|
|
|
|
|
Weighted Average Number of Common
Shares Outstanding (Basic and Diluted)
|
|
56,391,324
|
|
44,760,883
|
|
|
F-32
NORTHSTAR ELECTRONICS INC.
(A Development Stage Enterprise)
STATEMENT OF STOCKHOLDERS' DEFICIT
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Number of
Shares
|
$
|
Par
Value
|
$
|
Additional
Paid-In
Capital
|
$
|
Other
Comprehensive
Income (Loss)
|
$
|
Accumulated
Deficit
|
$
|
Preferred
Shares
|
$
|
Total
Stockholders
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance December 31, 2011
|
53,377,824
|
$
|
5,338
|
$
|
7,058,546
|
$
|
4,038,898
|
$
|
(12,780,130)
|
|
$409,299
|
|
$(1,268,049)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
-
|
|
-
|
|
-
|
|
(583,000)
|
|
(281,013)
|
|
-
|
|
(864,013)
|
Issued for cash
|
1,805,554
|
|
181
|
|
39,819
|
|
-
|
|
-
|
|
-
|
|
40,000
|
Issued for consulting and services
|
6,784,400
|
|
678
|
|
164,660
|
|
-
|
|
-
|
|
-
|
|
165,338
|
Issued to settle debt
|
4,000,000
|
|
400
|
|
199,600
|
|
-
|
|
-
|
|
-
|
|
200,000
|
Settlement of discontinued
Business
|
5,000,000
|
|
500
|
|
582,500
|
|
-
|
|
-
|
|
-
|
|
583,000
|
Correction
|
407,401
|
|
41
|
|
(41)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance December 31, 2012
|
71,375,179
|
$
|
7,138
|
$
|
8,045,084
|
$
|
3,455,898
|
|
(13,061,143)
|
|
409,299
|
|
(1,143,724)
|
F-33
NORTHSTAR ELECTRONICS INC.
(A Development Stage Enterprise)
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
|
| |
|
Year ended
December 31,
2012
|
Year ended
December 31,
2011
|
Development
stage
cumulative
December 31,
2012
|
Operating Activities
|
|
|
|
|
Net gain (loss)
|
$(864,013)
|
$(1,807,955)
|
$(864,013)
|
|
Items not involving cash:
|
|
|
|
|
Depreciation
|
-
|
11,476
|
-
|
|
Amortization of intangible assets
|
-
|
-
|
-
|
|
Services paid with common stock
|
165,338
|
458,827
|
165,338
|
|
Loss on disposal of assets
|
583,000
|
19,056
|
583,000
|
|
Equity based compensation
|
50,000
|
-
|
50,000
|
|
Changes in Non-Cash Working Capital:
|
|
|
|
|
Accounts receivable
|
-
|
(12,059)
|
-
|
|
Prepaid expenses
|
2,067
|
(11,047)
|
2,067
|
|
Inventory
|
-
|
(164,692)
|
-
|
|
Accounts payable and accrued liabilities
|
25,000
|
375,432
|
25,000
|
|
Deferred revenue
|
-
|
107,771
|
-
|
|
Cash Used in Operating Activities
|
(38,608)
|
(1,023,191)
|
(38,608)
|
|
|
|
|
|
|
Investing Activities
|
|
|
|
|
Deferred contract costs
|
-
|
-
|
-
|
|
Acquisition of equipment
|
-
|
(8,002)
|
-
|
|
Cash Used in Investing Activities
|
-
|
(8,002)
|
-
|
|
|
|
|
|
|
Financing Activities
|
|
|
|
|
Issuance of share capital for cash (net of issue costs)
|
40,000
|
631,220
|
40,000
|
|
Loan advances
|
-
|
82,490
|
-
|
|
Long term financing
|
-
|
90,650
|
-
|
|
Repayment of debt
|
-
|
-
|
-
|
|
Advances from directors
|
(3,780)
|
94,417
|
(3,780)
|
|
Cash Provided by Financing Activities
|
36,220
|
898,777
|
36,220
|
|
|
|
|
|
|
Effect of Foreign Currency Translation on Cash
|
-
|
(501)
|
-
|
|
|
|
|
|
|
Increase (Decrease) in Cash and Cash Equivalents
|
(2,388)
|
(132,917)
|
(2,388)
|
|
Cash and Cash Equivalents, Beginning
|
2,394
|
135,311
|
2,394
|
|
Cash and Cash Equivalents, Ending
|
6
|
$ 2,394
|
$ 6
|
|
|
|
|
|
|
Supplemental Information
|
|
|
|
|
Income taxes paid
|
-
|
$ -
|
$ -
|
|
Interest paid
|
-
|
$ 389,516
|
$ -
|
|
Common stock issued for debt
|
-
|
$ 200,000
|
$ -
|
|
F-34
NORTHSTAR ELECTRONICS INC.
Notes to the Quarterly Condensed Financial Statements
2012 through 2014
NOTE 1 - BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
The Company entered the development stage January 31, 2012. The accompanying unaudited financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. However, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted or condensed. In the opinion of management, all adjustments of a normal recurring nature necessary for a fair presentation have been included. The results for interim periods are not necessarily indicative of results for the entire year. These condensed financial statements and accompanying notes should be read in conjunction with the Companys annual financial statements and the notes thereto for the fiscal years ended December 31, 2012, 2013 and 2014.
Loss Per Share
Net loss per share is calculated in accordance with FASB ASC 260,
Earnings Per Share.
The weighted-average number of common shares outstanding during each period is used to compute basic loss per share. Diluted loss per share is computed using the weighted average number of shares and dilutive potential common shares outstanding. Dilutive potential common shares are additional common shares assumed to be exercised.
Basic net loss per common share is based on the weighted average number of shares of common stock outstanding during 2012 through 2014 (since reentry into development stage January 01, 2012). As of December 31, 2014 and since re-entry into development stage, the Company had no dilutive potential common shares.
NOTE 2 - GOING CONCERN
As shown in the accompanying financial statements, the Company incurred net losses since re-entry into development stage January 31, 2012. These conditions raise substantial doubt as to the Companys ability to continue as a going concern.
The Companys financial statements are prepared in accordance with generally accepted accounting principles applicable to a going concern. This contemplates the realization of assets and the liquidation of liabilities in the normal course of business. At December 31, 2014 the Company holds $17,288 in cash, has no material assets and does not have operations or a source of revenue sufficient to cover its operation costs and allow it to continue as a going concern. The Company will be dependent upon the raising of additional capital through placement of common stock in order to implement its business plan, or merge with an operating company. There can be no assurance that the Company will be successful in either situation which raises substantial doubt about the Companys ability to continue as a going concern. The officers and directors have committed to advancing funds for certain operating costs of the Company.
NOTE 3 - EQUITY
The Company has issued 70,771,847 shares of common stock to December 31, 2014.
F-35