10QSB 1 star10qsb.txt SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB (Mark One) [X]Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended June 30, 2003. [ ]Transition report under Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from to . ------------ -------------- Commission file number: 000-29325 --------- STAR ENERGY CORPORATION (Formerly known as "Cairo Acquisitions, Inc.") ---------------------------------------------- (Exact name of small business issuer as specified in its charter) NEVADA 87-0643634 ------ ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1403 East 900 South, Salt Lake City, Utah 84105 ----------------------------------------------- (Address of principal executive office) (Zip Code) (801) 582-9609 -------------- (Registrant's telephone number) Check whether the registrant: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 outstanding shares of the registrant's common stock, $0.001 par value (the only class of voting stock), as of July 14, 2003 was 6,312,500. 1
TABLE OF CONTENTS PART I ITEM 1. FINANCIAL STATEMENTS ......................................................................3 Unaudited Balance Sheet as of June 30, 2003.......................................................................4 Unaudited Statement of Operations for the three and six months ended June 30, 2003 and 2002 and the period since Date of Inception to June 30, 2003......................................................5 Unaudited Statement of Cash Flows for the six months ended June 30, 2003 and 2002 and the period since Date of Inception to June 30, 2003..................................................6 Notes to Unaudited Financial Statements...........................................................................7 ITEM 2. MANAGEMENT'S PLAN OF OPERATION...........................................................................8 ITEM 3. CONTROLS AND PROCEDURES..................................................................................8 PART II ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.........................................................................9 SIGNATURES.......................................................................................................10 INDEX TO EXHIBITS................................................................................................12 2 PART I ITEM 1. FINANCIAL STATEMENTS As used herein, the term "Company" refers to Star Energy Corporation (formerly known as "Cairo Acquisitions, Inc.), a Nevada corporation, unless otherwise indicated. In the opinion of management, the accompanying unaudited financial statements included in this Form 10-QSB reflect all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of the results of operations for the periods presented. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year. 3 STAR ENERGY CORPORATION ----------------------- (A Development Stage Company) UNAUDITED BALANCE SHEET June 30, 2003 ASSETS Current assets - cash $ 3,912 Long-term assets - oil and gas properties 90,000 ----------------- Total assets $ 93,912 ================= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 4,537 Related party payable 2,500 ----------------- Total current liabilities 7,037 ----------------- Commitments - Stockholders' equity: Preferred stock, $.001 par value, 5,000,000 shares authorized, no shares issued and outstanding - Common stock, $.001 par value, 50,000,000 shares authorized, 6,312,500 shares issued and outstanding 6,312 Additional paid-in capital 102,614 Deficit accumulated during the development stage (22,051) ----------------- Total stockholders' equity 86,875 ----------------- Total liabilities and stockholders' equity $ 93,912 ================= The accompanying notes are an integral part of these financial statements 4 STAR ENERGY CORPORATION ----------------------- (A Development Stage Company) UNAUDITED STATEMENTS OF OPERATIONS Three Months Ended Six Months Ended June 30, June 30, Cumulative ------------------------------ ------------------------- 2003 2002 2003 2002 Amounts ----------------- ------------ ----------- ------------ ------------------ Revenue $ - - - - - General and administrative costs 1,569 415 4,053 2,973 22,051 ----------------- ------------ ----------- ------------ ------------------ Loss before income taxes (1,569) (415) (4,053) (2,973) (22,051) Provision for income taxes - - - - - ----------------- ------------ ----------- ------------ ------------------ Net loss $ (1,569) (415) (4,053) (2,973) (22,051) ================= ============ =========== ============ ================== Loss per common share - basic and diluted $ - - - - ================= ============ =========== ============ Weighted average common shares - basic and diluted 6,313,000 1,313,000 5,898,000 1,313,000 ----------------- ------------ ----------- ------------ The accompanying notes are an integral part of these financial statements 5 STAR ENERGY CORPORATION ----------------------- (A Development Stage Company) UNAUDITED STATEMENTS OF CASH FLOWS Six Months Ended June 30, Cumulative -------------------------------------- 2003 2002 Amounts ----------------- ----------------- ----------------- Cash flows from operating activities: Net loss $ (4,053) (2,889) (22,051) Adjustments to reconcile net loss to net cash used in operating activities: Stock compensation expense - 5,007 Increase (decrease) in accounts payable (1,603) (570) 4,537 ----------------- ----------------- ----------------- Net cash used in operating activities (5,656) (3,459) (12,507) ----------------- ----------------- ----------------- Cash flows from investing activities: Purchase of oil and gas properties (90,000) - (90,000) ----------------- ----------------- ----------------- Cash flows from financing activities: Increase in related party payable - - 2,500 Decrease in stock subscription receivable - - 445 Issuance of common stock 99,564 3,000 103,474 ----------------- ----------------- ----------------- Net cash provided by financing activities 99,564 3,000 106,419 ----------------- ----------------- ----------------- Net increase (decrease) in cash 3,908 (459) 3,912 Cash, beginning of period 4 547 - ----------------- ----------------- ----------------- Cash, end of period $ 3,912 88 3,912 ================= ================= ================= The accompanying notes are an integral part of these financial statements 6 STAR ENERGY CORPORATION ----------------------- (A Development Stage Company) NOTES TO UNAUDITED FINANCIAL STATEMENTS June 30, 2003 Note 1 - Basis of Presentation The accompanying unaudited condensed financial statements have been prepared by management in accordance with the instructions in Form 10-QSB and, therefore, do not include all information and footnotes required by generally accepted accounting principles and should, therefore, be read in conjunction with the Company's Form 10-KSB for the year ended December 31, 2002, filed with the Securities and Exchange Commission. These statements do include all normal recurring adjustments which the Company believes necessary for a fair presentation of the statements. The interim operations are not necessarily indicative of the results to be expected for the full year ended December 31, 2003. Note 2 - Additional Footnotes Included By Reference Except as indicated in Notes above, there have been no other material changes in the information disclosed in the notes to the financial statements included in the Company's Form 10-KSB for the year ended December 31, 2002, filed with the Securities and Exchange Commission. Therefore, those footnotes are included herein by reference. 7 ITEM 2. MANAGEMENT'S PLAN OF OPERATION When used in this discussion, the words "believes", "anticipates", "expects", and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties, which could cause actual results to differ materially from those projected. Readers are cautioned not to place undue reliance on these forward-looking statements, that speak only as of the date hereof. The Company undertakes no obligation to republish revised forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Readers are also urged to carefully review and consider the various disclosures made by the Company that attempt to advise interested parties of the factors which affect the Company's business, in this report, as well as the Company's periodic reports on Forms 10-KSB, 10-QSB and 8-K filed with the Securities and Exchange Commission. Plan of Operation The Company's plan of operation is to acquire, develop and produce proven reserves of oil and gas with limited up front acquisition costs in partnership with established small independent producers on properties that realize limited production but have the potential to develop additional production on the same properties. The Company focuses that strategy primarily on oil and natural gas properties with proven developed and undeveloped reserves that are economically feasible but not attractive in terms of potential recoveries to the major oil and gas companies due to the limited scope of the operations. The Company believes that these types of properties can be operated at a profit and has defined its growth strategy accordingly. Management intends to seek working interests in oil and gas producing properties within the United States. The Company recently completed the placement of 5,000,000 of its common shares raising a gross amount of $100,000 to be used for the purpose of satisfying operational expenses and the purchase of oil and gas production on a participation interest basis. On July 2, 2003, the Company purchased a 15% working interest (12% net revenue interest) in eight gas producing wells held by Monument Resources, Inc., in exchange for $90,000, pursuant to an Assignment and Bill of Sale dated effective as of June 1, 2003. The eight wells are on eight separate parcels of land spread over 680 acres within the Galvan Ranch, located in Webb County, Texas. ITEM 3. CONTROLS AND PROCEDURES The Company's chief executive officer and chief financial officer ("Certifying Officers") are responsible for establishing and maintaining disclosure controls and procedures for the Company. The Certifying Officers have concluded (based on their evaluation of these controls and procedures as of a date within 90 days of the filing of this report) that the design and operation of the Company's disclosure controls and procedures (as defined in Rule 13a-14(c) under the Securities Exchange Act of 1934) are effective. No significant changes were made in the Company's internal controls or in other factors that could significantly affect those controls subsequent to the date of the evaluation, including any corrective actions with regard to slight deficiencies and material weaknesses. 8 PART II ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Exhibits required to be attached by Item 601 o -------- Regulation S-B are listed in the Index to Exhibits on page 12 of this Form 10-QSB, and are incorporated herein by this reference. (b) Reports on Form 8-K. No reports on Form 8-K were filed ------------------- during the period covered by this Form 10-QSB. 9 SIGNATURES In accordance with the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, hereunto duly authorized, this 15th day of July, 2003. STAR ENERGY CORPORATION /s/ Dr. Nafi Onat Dr. Nafi Onat Chief Executive Officer and Director /s/ Ruairidh Campbell Ruairidh Campbell Chief Financial Officer and Director 10 CERTIFICATION PURSUANT TO RULE 13a-14 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES- OXLEY ACT OF 2002 We, Dr. Nafi Onat, chief executive officer and Ruairidh Campbell, chief financial officer of Star Energy Corporation certify that: 1. We have reviewed this quarterly report on Form 10-QSB of Star Energy Corporation; 2. Based on our 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 our 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. We 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. We 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. We have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors 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: July 15, 2003 /s/ Dr. Nafi Onat /s/ Ruairidh Campbell ----------------- --------------------- Dr. Nafi Onat Ruairidh Campbell Chief Executive Officer Chief Financial Officer 11 INDEX TO EXHIBITS EXHIBIT PAGE NO. NO. DESCRIPTION 3(i)(a) * Articles of Incorporation of the Company 3(i)(b) ** Amended Articles of Incorporation of the Company 3(ii) * Bylaws of the Company 10(i) 13 Assignment and Bill of Sale between the Company and Monument Resources, Inc. in connection with that acquisition of the Galvan Ranch wells interest 99.1 15 Certification Pursuant to 18 U.S.C. Section 1350, Section 906 of the Sarbanes-Oxley Act of 2002 * Incorporated by reference from the Form 10-SB filed with the Securities and Exchange Commission on February 3, 2000. ** Incorporated by reference from the Form 10-KSB filed wit the Securities and Exchange Commission on March 11, 2003. 12 EXHIBIT 10(i) Galvan Ranch Gas Wells Webb County, Texas ASSIGNMENT AND BILL OF SALE MONUMENT RESOURCES, INC., 2050 South Oneida Street, Suit 106, Denver, CO 80244 (herein Assignor), for sufficient consideration, the receipt of which is hereby acknowledged, does hereby assign, transfer, sell and convey unto: STAR ENERGY CORPORATION e 1403 East 900 SouthTION e Salt Lake City, Utah 84105 e (herein Assignee), all of Assignor's right title and interest in a 15% working interest (12% net revenue interest) in and to the oil and gas wells located on the leases described on Exhibit "A", attached hereto and made a part hereof, including the oil and gas equipment, balanced gas and wellbores now owned by Assignor under the lands located thereon. The Assignor retains its ownership to a 2% overriding royalty interest, which is excluded from the interests to be conveyed. This assignment is made without representation or warranty of any kind, expressed or implied, including but not limited to, warranties of title, the warranty of merchantability or the warranty of fitness for a particular purpose. Assignee has inspected the wells and equipment attached hereto and accepts the wellbores, assigned herein, in their present condition. Assignee agrees to plug and abandon the wells assigned herein. After the effective date Assignee agrees to protect and defend Assignor from all claims for damages, liability, including but not limited to the plugging and abandonment of the wells herein assigned. To have and to hold unto Assignee, it's heirs, successor and assigns forever. This instrument is executed as of the respective dates indicated in the acknowledgement but effective for all purposes as of June 1, 2003. Assignor Monument Resources, Inc. x /s/ A.G. Foust, President A. G. Foust, President Assignee Star Energy Corporation x /s/ Ruairidh Campbell Ruairidh Campbell, Chief Financial Officer 13 EXHIBIT "A" 8 parcels of land, totaling 680 acres, set forth on the attached plat, and further described as follows: 40 acres surrounding the General Crude Ed Rachel GC (A1) #1 well. API #42-47931026 RRC #63437 40 acres surrounding the Lewis Petro. Prop. Ed. Rachal GC (3A) #1 well API #42-47931344 RCC #70319 40 acres surrounding the Lewis Petro. Prop. Ed Rachal Tide #A- well API #42-47931242 RCC #68983 40 acres surrounding the General Crude Ed Rachal GC (2) #1 wel API #42-47931015 RRC #64146 40 acres surrounding the General Crude Ed Rachal GC #1 well API #42-47930880 RRC #62300 160 acres surrounding the Lewis Petro. Prop. Rachal #2 well API #42-47935922 RRC #47600 160 acres surrounding the Lewis Petro. Prop. Rachal #5 well API #42-47935975 RRC #148205 160 acres surrounding the Lewis Petro. Prop. Rachal #6 well API#42-47936009 RRC 14 EXHIBIT 99.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the quarterly report of the Company on Form 10-QSB for the period ended June 30, 2003 as filed with the Securities and Exchange Commission on the date hereof, we, Dr. Nafi Onat, chief executive officer and Ruairidh Campbell, 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: (1) This quarterly report complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The financial information contained in this quarterly report fairly represents, in all material respects, the financial condition and result of operations of the Company. /s/ Dr. Nafi Onat Nafi Onat Chief Executive Officer July 15, 2003 /s/ Ruairidh Campbell Ruairidh Campbell Chief Financial Officer July 15, 2003 15