U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2009
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR
THE TRANSITION PERIOD FROM N/A to N/A
333-90031
Commission file number
NORTHSTAR ELECTRONICS, INC.
Exact name of small business issuer as specified in its charter
DELAWARE
State or other jurisdiction of organization
#33-0803434
IRS Employee incorporation or Identification No.
SUITE # 410- 409 GRANVILLE STREET,
VANCOUVER, BRITISH COLUMBIA, CANADA V6C 1T2
Address of principal executive offices
(604) 685-0364
Issuer's telephone number
NOT APPLICABLE
Former name, former address and former fiscal year, if changed since last report
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d)
of the Exchange Act during the past 12 months (or 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[ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated filer
and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one):
[ ]Large accelerated filer [ ]Accelerated filer [X]Non-accelerated filer
Indicate by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). [ ]Yes [X]No
Applicable only to issuers involved in bankruptcy proceedings during the preceding five
years:
Check whether the registrant filed all documents and reports required to be filed by Section
12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan
confirmed by a court.
Yes[] No[] Not Applicable
Applicable only to corporate issuers
State the number of shares outstanding of each of the issuer's classes of common equity, as
of the latest practicable date.
COMMON SHARES AS OF MAY 1, 2009: 30,380,780
Transitional Small Business Disclosure Format (check one):
Yes[] No[X]
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NORTHSTAR ELECTRONICS, INC. Consolidated Financial Statements
UNAUDITED - PREPARED BY MANAGEMENT
Consolidated Balance Sheets at March 31, 2009 and at December 31, 2008
Consolidated Statements of Operations for the Three Months Ended March 31, 2009 and 2008
Consolidated Statements of Changes in Stockholders' Equity for the
Three Months Ended March 31, 2009
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2009 and 2008
Notes to Consolidated Financial Statements
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
ITEM 3. CONTROLS AND PROCEDURES
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
ITEM 5. OTHER INFORMATION
ITEM 6. EXHIBITS
SIGNATURES
NORTHSTAR ELECTRONICS, INC.
Consolidated Balance Sheets - U.S. Dollars
March 31 December 31
2009 2008
UNAUDITED Audited
----------------------------
ASSETS
Current
Cash and cash equivalents $ 69,264 $ 210,348
Accounts receivable 355,004 347,798
Inventory - work in process 193,099 85,732
Investment tax credits receivable 25,376 33,317
Prepaid expenses 48,233 48,037
----------------------------
Total Current Assets 690,976 725,232
Pre contract costs 294,728 330,223
Intangible asset 15,860 16,332
Equipment 49,798 48,972
----------------------------
Total Assets $1,051,362 $1,120,759
-----------------------------
LIABILITIES
Current
Accounts payable and accrued liabilities $1,441,275 $1,453,259
Loans payable 136,937 142,422
Deferred revenue 85,707 59,839
Due to Cabot Management Limited 43,221 44,507
Due to Directors 987,254 952,084
Current portion of long term debt 643,542 497,170
-----------------------------
Total Current Liabilities 3,337,936 3,149,281
Long term debt 1,320,060 1,516,988
-----------------------------
Total Liabilities 4,657,996 4,666,269
-----------------------------
Going Concern (note 1), Contingencies (note 5)
STOCKHOLDERS' EQUITY
Authorized
100,000,000 shares of common stock with a
par value of $0.0001 each
20,000,000 shares of preferred stock with a
par value of $0.0001 each
Issued and outstanding
30,280,780 shares of common stock 3,029 2,997
(29,960,370 December 31, 2008)
Nil shares of preferred stock - -
Subscribed - 110,100 preferred series A 110,100 51,600
(51,600 December 31, 2008)
Additional paid in capital 4,985,607 4,954,639
Cumulative other comprehensive income (loss) 151,249 88,935
Deficit (8,856,619) (8,643,681)
------------------------------
Total Stockholders' Equity (Deficit) (3,606,634) (3,545,510)
------------------------------
Total Liabilities and Stockholders' Equity $1,051,362 $1,120,759
==============================
See notes to the consolidated financial statements
NORTHSTAR ELECTRONICS, INC.
Consolidated Statements of Operations
Three Months Ended March 31, 2009 and 2008
Unaudited
U.S.Dollars
2009 2008
-------------------------
Revenue - note 4 $488,034 $423,545
Cost of goods sold 318,376 224,352
------------------------
Gross margin 169,658 199,193
Other income 12,442 8,889
------------------------
182,100 208,082
------------------------
Expenses
Salaries 175,510 307,040
Financial consulting 5,000 0
Finance fees 1,000 49,500
Professional fees 6,126 22,232
Management and administration fees 48,090 0
Research and development 0 0
Advertising and marketing 6,051 16,816
Rent 33,064 32,210
Investor relations 12,500 10,650
Office 20,153 27,320
Travel and business development 12,445 48,165
Interest on debt 78,717 19,296
Telephone and utilities 7,257 14,354
Amortization 3,134 5,134
Bank charges and interest 379 1,919
Foreign exchange (14,797) 191
Transfer agent 409 344
--------------------------
395,038 555,171
--------------------------
Net (loss) for period $(212,938) $(347,089)
--------------------------
Net (loss) per share $ (0.01) $ (0.01)
Weighted average number of shares outstanding 30,129,316 27,814,333
See notes to the consolidated financial statements
NORTHSTAR ELECTRONICS, INC.
Consolidated Statement of Changes in Stockholders' Equity
Three Months Ended March 31, 2009
Unaudited
U.S. Dollars
Additional Other
Paid in Comprehensive Accumulated Total Stockholder
Shares Amount Capital Income Deficit (Deficit)
-------------------------------------------------------------------------------------------------------------
Balance
December 31,
2008 29,960,370 $2,997 $4,954,639 $88,935 $(8,643,681) $(3,597,110)
Net loss for
three months - - - - (212,938) (212,938)
Currency
translation
adjustment - - - 62,314 - 62,314
Issuance of
common stock:
- for debt 25,833 23 23,477 - - 23,500
- for cash 84,577 8 6,492 - - 6,500
- for services 10,000 1 999 - - 1,000
-----------------------------------------------------------------------------------------------------------
Balance
March 31,
2009 30,280,780 $3,029 $4,985,607 $151,249 $(8,856,619) $(3,716,734)
------------------------------------------------------------------------------------------------------------
Series A shares of preferred stock - subscribed 110,100
==========
Total stockholders' equity (deficit) $(3,606,634)
=============
See notes to the consolidated financial statements
NORTHSTAR ELECTRONICS, INC.
Consolidated Statements of Cash Flows
Three Months Ended March 31, 2009 and 2008
Unaudited
U.S.Dollars
2009 2008
Operating Activities
Net income (loss) $(212,938) $(347,089)
Adjustments to reconcile net income (loss) to net
cash used by operating activities
Amortization 3,134 5,134
Issuance of common stock for services 24,500 68,227
Changes in operating assets and liabilities (204,670) 166,989
---------------------------
Net cash (used) provided by operating activities (389,974) (106,739)
---------------------------
Investing Activities
Property and equipment (5,389) (2,433)
----------------------------
Net cash (used) provided by investing activities (5,389) (2,433)
----------------------------
Financing Activities
Issuance of common shares for cash (net of costs) 65,000 40,000
Increase (repayment) of long term debt 208,471 32,705
Advances from (repayment to) directors (1,796) 26,812
---------------------------
Net cash (used) provided by financing activities 271,675 99,517
---------------------------
Effect of foreign exchange on translation (17,395) (5,433)
---------------------------
Inflow (outflow) of cash (141,083) (15,088)
Cash, beginning of period 210,348 34,053
---------------------------
Cash, end of period $ 69,265 $ 18,965
===========================
Supplemental information
Interest paid $78,717 $19,296
Shares issued for services $24,500 $68,227
Corporate income taxes paid $ 0 $ 0
See notes to the consolidated financial statements
NORTHSTAR ELECTRONICS, INC.
Notes to Consolidated Financial Statements
Three Months Ended March 31, 2009
Unaudited
U.S. Dollars
1. NATURE OF OPERATIONS AND ABILITY TO CONTINUE AS A GOING CONCERN
These consolidated financial statements include the accounts of Northstar
Electronics, Inc. ("the Company") and its wholly owned subsidiaries Northstar
Technical Inc. ("NTI") and Northstar Network Ltd. ("NNL"). All inter-company
balances and transactions are eliminated. The Company's business activities are
conducted principally in Canada but these financial statements are prepared in
accordance with accounting principles generally accepted in the United States with
all figures translated into United States dollars for reporting purposes.
These unaudited consolidated interim financial statements have been prepared by
management in accordance with accounting principles generally accepted in the
United States for interim financial information, are condensed and do not include
all disclosures required for annual financial statements. The organization and
business of the Company, accounting policies followed by the Company and other
information are contained in the notes to the Company's audited consolidated
financial statements filed as part of the Company's December 31, 2008 Form 10-K.
In the opinion of the Company's management, this consolidated interim financial
information reflects all adjustments necessary to present fairly the Company's
consolidated financial position at March 31, 2009 and the consolidated results of
operations and the consolidated cash flows for the three months then ended. For
the three months ended March 31, 2008, substantially all of the Company's revenues
were generated from a contract with a subsidiary of a major US customer. The
Company is continually marketing its services for follow on contracts.
The results of operations for the three months ended March 31, 2009 are not
necessarily indicative of the results to be expected for the entire fiscal year.
The accompanying consolidated financial statements have been prepared assuming the
Company will continue as a going concern, which contemplates the realization of
assets and satisfaction of liabilities in the normal course of business. During
the three months to March 31, 2009 the Company incurred a net loss of $212,938
(year to December 31, 2008: $1,740,630) and at March 31, 2009 had a working
capital deficiency (an excess of current liabilities over current assets) of
$2,646,960 (December 31, 2008: $2,424,049), including $643,542 of long term debt
due within one year (December 31, 2008: $497,170).
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 financing firms. The Company
also expects to increase revenues with existing contract sales and new
opportunities resulting from prior period sales efforts. As an example, the
Company received a US$2.05M contract during the period and has other opportunities
closing in the following periods. These initiatives are in recognition that the
Company to continue as a going concern must generate sufficient cash flow to cover
its obligations and expenses. In addition, management believes these initiatives
can provide the Company with a solid base for profitable operations, positive cash
flows and reasonable growth. 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 Company's ability to continue as a going concern is not
certain. These financial statements do not give effect to any adjustments to the
amounts and classifications of assets and liabilities which might be necessary
should the Company be unable to continue its operations as a going concern.
2. SHARE CAPITAL COMMON STOCK
3.
During the three months ended March 31, 2009 the following shares of common stock
were issued:
For services: 10,000 shares fairly valued at $1,000 - the market value of those
services
For cash: 84,577 shares fairly valued for cash of $6,500.
To settle accounts payable: 225,833 fairly valued at $23,500
PREFERRED STOCK
For cash: 110,100 series A shares of preferred stock for $110,100 (inclusive of
65,000 shares for $58,500 received during the three months ended March 31, 2009).
The preferred shares bear interest at 10% per annum paid semi annually 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 Company's 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
March 31, 2009 the Company had received $110,000 for 110,100 preferred shares.
4. LONG TERM DEBT
Balance owing December 31, 2008 $2,014,158
Increase in funding 208,471
Effect of foreign exchange on translation to US dollars (259,027)
----------
Balance due March 31, 2009 1,963,602
----------
Less current portion (643,542)
-----------
$1,320,060
===========
5. REVENUE
Three months Three months
2009 2008
Revenue consists of:
Product sales $ 0 $ 28,123
Contract sales 488,034 354,779
Government assistance 0 40,643
Other 12,442 8,889
---------------------------
$ 500,476 $ 432,434
===========================
6. CONTINGENCIES
(i) The Company is a defendant in a lawsuit commenced against them in 1999
by their former master distributor. The former distributor has alleged that the
Company interfered with the ability of the former distributor to sell products.
The Company has filed a counter claim for monies owing by the former distributor
to the Company. There has been no action from either side to date.
(ii) The Company is contingently liable to repay $1,997,144 in assistance
received under the Atlantic Innovation Fund. The assistance is repayable annually
at the rate of 5% of gross revenues from sales of products resulting from the
Aquacomm research and development project. Gross revenues are to be calculated for
the fiscal year immediately preceding the due date of the respective payment.
Repayment is to continue until the assistance is repaid in full. At March 31, 2009
the Company has accrued $44,157 as repayable.
7. NEW ACCOUNTING PRONOUNCEMENTS
In March 2008, the Financial Accounting Standards Board ("FASB") issued SFAS No.
161, "Disclosure about Derivative Instruments and Hedging Activities - An
Amendment of FASB Statement No. 133 ("SFAS No. 161"). SFAS No. 161 requires
additional disclosures about an entity's derivative and hedging activities in
order to improve the transparency of financial reporting. SFAS No. 161 is
effective for financial statements issued for fiscal years and interim periods
beginning after November 15, 2008, with early application encouraged. The
adoption of SFAS No. 161 on January 1, 2009 did not have a material impact on
the Company's financial position or results of operations.
In December 2007, the FASB issued SFAS No. 160, "Non-controlling Interests in
Consolidated Financial Statements - an amendment of ARB No. 51" ("SFAS No.
160"). SFAS No. 160 requires that non-controlling (or minority) interests in
subsidiaries be reported in the equity section of the company's balance sheet,
rather than in a mezzanine section of the balance sheet between liabilities and
equity. SFAS No. 160 also changes the manner in which the net income of the
subsidiary is reported and disclosed in the controlling company's income
statement. SFAS No. 160 also establishes guidelines for accounting for changes
in ownership percentages and for deconsolidation. SFAS No. 160 is effective for
financial statements for fiscal years beginning on or after December 1, 2008 and
interim periods within those years. The Company adopted SFAS No. 160 effective
January 1, 2009. The adoption of SFAS No. 160 did not have a material impact on
the Company's financial position or results of operations.
In December 2007, the FASB issued SFAS No. 141(R), "Business Combinations"
("SFAS No. 141(R)"). SFAS No. 141(R) replaces SFAS No. 141, "Business
Combinations", but retains the requirement that the purchase method of
accounting for acquisitions be used for all business combinations. SFAS No.
141(R) expands on the disclosures previously required by SFAS No. 141, better
defines the acquirer and the acquisition date in a business combination, and
establishes principles for recognizing and measuring the assets acquired
(including goodwill), the liabilities assumed and any non-controlling interests
in the acquired business. SFAS No. 141(R) also requires an acquirer to record
an adjustment to income tax expense for changes in valuation allowances or
uncertain tax positions related to acquired businesses. SFAS No. 141(R) is
effective for all business combinations with an acquisition date in the first
annual period following December 15, 2008. The Company adopted SFAS No. 141(R)
effective January 1, 2009. The adoption of SFAS No. 141(R) did not have a
material impact on the Company's financial position or results of operations.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
The following discussion should be read in conjunction with the accompanying
unaudited consolidated financial information for the three month periods ended
March 31, 2009 and March 31, 2008 prepared by management and the audited
consolidated financial statements for the twelve months ended December 31, 2008 as
presented in the Form 10K as filed.
Although the Company has experienced a net loss this quarter, it continues to
expend considerable effort securing additional contracts for the contract
manufacture and assembly of military/government systems, submarine command and
control consoles, multi mode fiber optic cables and precision machined parts and
other components for defense systems. As previously indicated, a major contract
was awarded from L3 Communications (MAPPS) Inc. for the delivery of new Machine
Control Consoles over a 5 year period. This is significant for the Company as it
demonstrates its ability to broaden its contract manufacturing customer base.
These consoles are for Halifax Class Frigates for the Canadian Navy.
Additional contracts, expected in the following period, will further demonstrate
the Company's ability to continue to broaden its customer base and at the same
time increasing contract revenues with existing customers. The Company believes
that its overall business prospects look promising and anticipates increased
revenues in the near to medium future.
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
Certain statements in this report and elsewhere (such as in other filings by the
Company with the Securities and Exchange Commission ("SEC"), press releases,
presentations by the Company of its management and oral statements) may constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Words such as "expects," "anticipates," "intends,"
"plans," "believes," "seeks," "estimates," and "should," and variations of these
words and similar expressions, are intended to identify these forward-looking
statements. Actual results may materially differ from any forward-looking
statements. Factors that might cause or contribute to such differences include,
among others, competitive pressures and constantly changing technology and market
acceptance of the Company's products and services. The Company undertakes no
obligation to publicly release the result of any revisions to these forward-
looking statements, which may be made to reflect events or circumstances after the
date hereof or to reflect the occurrence of unanticipated events.
THE COMPANY'S SERVICES
The Company, through its subsidiaries, is an underwater sonar technology developer
(USTD), a defense electronics contract manufacturer (CM) and a defense systems
integrator (DSI).
UNDERWATER SONAR PRODUCTS AND TECHNOLOGIES
A) THE NETMIND SYSTEM
The Company's first underwater sonar product based on core technology is the
NETMIND system. It's market is the world's commercial fishing industry and
government oceanic research agencies. Our largest customers are the United States
National Oceanic and Atmospheric Administration (NOAA) and US State Fishery &
Research Institutes.
NETMIND is both a conservation tool as well as an efficiency tool. Electronic
sensors attached to a fishing trawl measure the height and width of the net
opening, the water temperature, the depth of the net and the volume of fish caught
plus other parameters. The sensor information is transmitted via a wireless
communications link back to the ship. Use of the equipment helps prevent over
fishing and allows fishermen to catch fewer fish and still make profits. This
gives regulators flexibility in reducing quotas when attempting to conserve
limited fish stocks.
Sales decreased from the same period last year due to seasonal activity and
reduction in expenditures in the industry due to uncertainty in fuel costs.
Marketing efforts continued but on a more conservative, cost effective basis.
B) DEFENSE SONAR SYSTEMS
The Company is a subcontractor on Lockheed Martin's anti terrorism Swimmer
Detection System (SDS). The SDS is a wide band high frequency sonar system
designed specifically to detect and classify underwater terrorist threats. The
Company, in collaboration with Lockheed Martin Canada, is also involved in the
design of a wide band sonar projector. The design and technology is applicable
to innovative military sonar products one of which the Company is developing for
Lockheed Martin. The Company delivered the first Prototype unit under its
Project X contract. A production contract for two additional prototype units is
anticipated in the near future.
DEFENSE CONTRACT MANUFACTURING
The Company's wholly owned subsidiary, Northstar Network Ltd., continued work on
the Master Purchase Order for the Wing Assembly Upgrade Component for the P-3
ORION aircraft from Lockheed Martin Aeronautics Inc. and essentially passed its
first major milestone on the project with completion of First Article Inspections
(FAI) for all orders and now moves onto the balance of the initial contracted
aircraft. This work extends to the year 2012 and covers 48 aircraft.
Significantly more aircraft are now available and although parts for 60 aircraft
have been ordered, the number is expected to increase further in following
quarters and discussions have been held regarding the impact of greater volumes of
aircraft within the origianl timeframe. The Company is manufacturing components
for new production service life extension kits for this Lockheed Martin Service
Life Extension Program. These components will add more than 15,000 flying hours
to each aircraft, representing 15 to 20 additional years of service for this
critical maritime patrol and reconnaissance resource.
Another milestone undertaking was completed late in the period with the Company
receiving a US$2.05M contract from L-3 Communications MAPPS Inc. for the
manufacture of Machine Control Consoles for 12 Canadian Navy frigates. This
contract relates to surface naval vessels and for another major defense sub-
contractor company. The contract extends over five years.
SYSTEMS INTEGRATION
The Company developed its approach to securing and executing large defense
contracts by bringing together affiliate companies. The overall affiliate
capability, which is substantial, is presented to the prime contractors. Marketing
efforts continue in this area to broaden our exposure for manufacturing
opportunities. As an example of efforts, a 5 year contract for the manufacturing
of compartment doors for Bombardier's 415 Water Bomber aircraft is anticipated in
following quarters.
The aforementioned P3 ORION Master Purchase Order is an example of how Systems
Integration works for us. In this project, six subcontractors carry out various
tasks, with Northstar bringing all the component parts together for testing,
quality control and delivery to the customer.
RESULTS OF OPERATIONS
Comparison of the three months ended March 31, 2009 with the three months ended
March 31, 2008.
Revenue from sales for the three month period ended March 31, 2009 was $488,034
compared to $423,545 of revenue from sales recorded during the same period of the
prior year. Gross profits decreased from $199,193 (47% of Sales) in the prior
period to $169,658 (35% of Sales) in the current period. The gross profit
percentage decreased due to financial constraints with operating capital required
to process the backlog of orders. This situation is being remedied with the
planned injection of operating capital in the following period.
The net loss for the three-month period ended March 31, 2009 was $212,938 compared
to a net loss of $347,089 for the three months ended March 31, 2008. This
reduction in loss will continue with increased capacity and operating capital. In
addition, the Company has invested considerable resources in seeking out
additional and future contract manufacturing opportunities and is confident that
the efforts will return positive results to the Company over the remainder of
2009.
COMPARISON OF FINANCIAL POSITION AT MARCH 31,2009 WITH MARCH 31, 2008
The Company's working capital deficiency increased at March 31, 2009 to $2,646,960
with current liabilities of $3,337,936 which are in excess of current assets of
$690,976. At December 31, 2008 the Company had a working capital deficiency of
$2,424,049.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
We have adopted various accounting policies that govern the application of
accounting principles generally accepted in the United States of America in the
preparation of our financial statements. Our significant accounting policies are
described in the footnotes to our annual financial statements at December 31,
2008. The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires us to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes.
Although these estimates are based on our knowledge of current events and actions
it may undertake in the future, they may ultimately differ from actual results.
Certain accounting policies involve significant judgments and assumptions by us
and have a material impact on our financial condition and results. Management
believes its critical accounting policies reflect its most significant estimates
and assumptions used in the presentation of our financial statements. Our critical
accounting policies include revenue recognition, accounting for stock based
compensation and the evaluation of the recoverability of long-lived and intangible
assets. We do not have off-balance sheet arrangements, financings or other
relationships with unconsolidated entities or other persons, also known as
"special purpose entities".
LIQUIDITY AND CAPITAL RESOURCES
The Company has increased its shareholders' deficit as a result of its efforts to
increase its business activity and customer base. Cash outflow for the first
quarter ended March 31, 2009 was $(141,083) compared to an outflow of cash of
$(15,088) in the comparative prior quarter March 31, 2008. In the quarter, the
Company received $65,000 ($40,000 in the comparative prior quarter) from equity
funding and received $208,000 (received $32,000 in the comparative quarter) long
term debt leaving cash on hand at March 31, 2009 of $69,264 compared to cash on
hand of $210,348 at December 31, 2008 and $18,965 at March 31, 2008. Until the
Company attains revenues from existing and new contracts above its core base of
expenditures, it will be dependent upon equity and loan financings to compensate
for the outflow of cash anticipated from operations. As an example, with
sufficient operating capital, the Company could have completed an additional
$193,099 billing of revenue during the period.
The Company is preparing a private placement preferred share offering pursuant to
Regulations D and S with the expectation of raising up to $5,000,000. Any funds so
raised are targeted for contract financing, product development, facilities,
marketing and general working capital. At this time, although small amounts have
been received, no commitment for substantial funding has been made to the Company.
The Company's continued operations are dependent upon obtaining revenues from
outside sources or raising additional funds through debt or equity financing
ITEM 3. CONTROLS AND PROCEDURES
(a) Evaluation of disclosure controls and procedures
Based on the evaluation of the Company's disclosure controls and procedures (as
defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of
1934) as of the date of this Quarterly Report on Form 10-QSB, our chief executive
officer and chief financial officer has concluded that our disclosure controls and
procedures are designed to ensure that the information we are required to disclose
in the reports we file or submit under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the SEC's rules and
forms and are operating in an effective manner.
(b) Changes in internal controls
There were no changes in our internal controls or in other factors that could
affect these controls subsequent to the date of their most recent evaluation.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
No change since previous filing.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
Options Granted Date Exercise Price Expiry Date
---------------------------------------------------------------------------
Nil
Warrants Issued
During the three month period ended March 31, 2009 the Company issued nil share
purchase warrants.
Common Stock Issued Date Consideration
-----------------------------------------------------------------------------
80,000 January, 2009 services valued at $6,000
155,833 February, 2009 services valued at $18,500
22,077 February, 2009 cash of $1,500
62,500 March, 2009 cash of $5,000
Preferred Stock Subscribed
65,000 series A shares, for cash of $58,500, convertible to shares of common stock -
proceeds were used in working capital.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
No change since previous filing.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No change since previous filing.
ITEM 5. OTHER INFORMATION.
No change since previous filing
ITEM 6. EXHIBITS
Exhibit 31.1 - CERTIFICATION SECTION 302
Exhibit 32.1 CERTIFICATION SECTION 906
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
May 14, 2008 Northstar Electronics, Inc.
(Registrant)
By: /s/ Wilson Russell
Wilson Russell, PhD, President and Chief Financial Officer