UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
DC 20549
 
 FORM
10-QSB
 
 [
X]  Quarterly
Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
 
 For the
quarterly period ended MARCH 31, 2005
 
 [
]  Transition
Report pursuant to 13 or 15(d) of the Securities Exchange Act of
1934
 For the
transition period to
 
 
 Commission
File Number   000-28535
 
 
 NOVASTAR
RESOURCES LTD.
 (Exact
name of small Business Issuer as specified in its charter)
 
 NEVADA
    91-1975651(State
      or other jurisdiction of
    (IRS
      Employer Identification No.)incorporation
      or organization)
 
 821 E.
29TH
 NORTH
VANCOUVER, B.C.  V7K
1B6
 
 (Address
of principal executive offices)  (Zip
Code)
 
 Issuer's
telephone number, including area code: 604-904-6946
 
 
 CUSTOM
BRANDED NETWORKS, INC.
 (Former
name, former address and former fiscal year, if changed since last
report)
 
 Check
whether the issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the issuer was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days [X] Yes [
] No
 
 State the
number of shares outstanding of each of the issuer's classes of common stock, as
of the latest practicable date: 73,172,532 SHARES OF $.001 PAR VALUE COMMON
STOCK OUTSTANDING AS OF MARCH 31, 2005.
 
 
 PART 1 -
FINANCIAL INFORMATION
 
 ITEM 1.
FINANCIAL STATEMENTS
 
 The
accompanying un-audited financial statements have been prepared in accordance
with the instructions to Form 10-QSB and, therefore, do not include all
information and footnotes necessary for a complete presentation of financial
position, results of operations, cash flows, and stockholders' deficit in
conformity with generally accepted accounting principles. In the opinion of
management, all adjustments considered necessary for a fair presentation of the
results of operations and financial position have been included and all such
adjustments are of a normal recurring nature. Operating results for the nine
months ended March 31, 2005 are not necessarily indicative of the results that
can be expected for the year ending June 30, 2005.
  ****
 **CUSTOM
BRANDED NETWORKS, INC.**
 **(A
Development Stage Company)**
 
 
 **CONSOLIDATED
FINANCIAL STATEMENTS**
 
 
 **MARCH
31, 2005**
 **(Unaudited)**
 **(Stated
in U.S. Dollars)**
  
  **CUSTOM
BRANDED NETWORKS, INC.**
 **(A
Development Stage Company)**
 
 **CONSOLIDATED
BALANCE SHEETS**
 **(Unaudited)**
 **(Stated
in U.S. Dollars)**
 
 
 
 **MARCH
      31**
    JUNE
      30**2005**
    2004**ASSETS****Equipment**,
      net
    
    
    $
    657
    
    
    $
    774**LIABILITIES****Current**Accounts
      payable and accrued liabilities
    
    
    $
    226,373
    
    
    $
    323,663**Convertible
      Note Payable**,****net
      of discount****(Note
      2)
    
    
    
    **-**
    
    
    
    449,306**226,373**
    
    
    
    772,969**STOCKHOLDERS’
      DEFICIENCY****Share
      Capital**Authorized
      (Note 4):250,000,000
      common shares with a par value of $0.001 per share50,000,000
      preferred shares with a par value of $0.001 per share (none
      issued)Issued
      and outstanding:73,172,532
      common shares at March 31, 2005 and38,372,532
      common shares at June 30, 2004
    
    
    
    **73,173**
    
    
    
    38,373Additional
      paid-in capital
    
    
    
    **2,687,299**
    
    
    
    636,281**Deficit
      Accumulated During The Development Stage**
    
    
    
    **(2,803,236**
    **)**
    
    
    (1,446,849
    )**Deferred
      Compensation**
    
    
    
    **(182,952**
    **)**
    
    
    -**(225,716**
    **)**
    
    
    (772,195
    )$
    657
    
    
    $
    774
 
  
  **CUSTOM
BRANDED NETWORKS, INC.**
 **(A
Development Stage Company)**
 
 **CONSOLIDATED
STATEMENTS OF OPERATIONS**
 **(Unaudited)**
 **(Stated
in U.S. Dollars)**
 
 
 
 INCEPTIONJUNE
      18**THREE
      MONTHS ENDED**
    **NINE
      MONTHS ENDED**
    1999
      TO**MARCH
      31**
    **MARCH
      31**
    MARCH
      31**2005**
    2004
    **2005**
    2004
    2005**Revenue**
    **$**
    **-**
    $
    -
    **$**
    **-**
    $
    -
    $
    184,162**Expenses**Administrative
      expenses
    
    **77,439**
    
    3,432
    
    **80,526**
    
    33,516
    
    1,511,848Consulting
      fees
    
    **833,048**
    
    -
    
    **833,048**
    
    -
    
    833,048Interest
      expense
    
    **411,693**
    
    13,581
    
    **442,813**
    
    40,743
    
    580,057Mineral
      property payment
    
    **-**
    
    -
    
    **-**
    
    -
    
    50,000Write
      down of capital assets
    
    **-**
    
    -
    
    **-**
    
    -
    
    12,445**1,322,180**
    
    17,013
    
    **1,356,387**
    
    74,259
    
    2,987,398**Net
      Loss For The Period**
    **$**
    **(1,322,180)**
    $
    (17,013)
    **$**
    **(1,356,387)**
    $
    (74,259)
    $
    (2,803,236)**Basic
      And Diluted Loss Per Share**
    **$**
    **(0.02)**
    $
    (0.01)
    **$**
    **(0.03)**
    $
    (0.01)**Weighted
      Average Number Of Shares Outstanding**
    
    **65,722,532**
    
    38,372,352
    
    **50,110,123**
    
    38,372,532
 
  
  **CUSTOM
BRANDED NETWORKS, INC.**
 **(A
Development Stage Company)**
 
 **CONSOLIDATED
STATEMENTS OF CASH FLOWS**
 **(Unaudited)**
 **(Stated
in U.S. Dollars)**
 
 
 
 INCEPTIONJUNE
      28**NINE
      MONTHS ENDED**
    1999
      TO**MARCH
      31**
    MARCH
      31**2005**
    2004
    2005**Operating
      Activities**Net
      loss for the period
    **$**
    **(1,356,387)**
    $
    (74,259)
    $
    (2,803,236)**Adjustments
      To Reconcile Loss To Net Cash Used By Operating
      Activities**Shares
      issued for other than cash
    
    **733,048**
    
    22,500
    
    778,048Amortization
    
    **117**
    
    145
    
    3,156Amortization
      of interest
    
    **442,813**
    
    40,743
    
    579,379Write
      down of capital assets
    
    **-**
    
    -
    
    12,445Change
      in accounts payable and accrued liabilities
    
    **72,528**
    
    6,449
    
    396,191**(107,881)**
    
    (4,422)
    
    (1,034,017)**Investing
      Activity**Purchase
      of capital assets
    
    **-**
    
    -
    
    (1,808)**Financing
      Activities**Proceeds
      from loan payable to shareholder
    
    **-**
    
    -
    
    16,097Issue
      of common shares
    
    **-**
    
    -
    
    18,950Convertible
      note payable
    
    **107,881**
    
    4,422
    
    1,000,000Cash
      acquired on acquisition of subsidiary
    
    **-**
    
    -
    
    778**107,881**
    
    4,422
    
    1,035,825**(Decrease)
      Increase In Cash**
    
    **-**
    
    -
    
    -**Cash,
      Beginning Of Period**
    
    **-**
    
    894
    
    -**Cash,
      End Of Period**
    **$**
    **-**
    $
    894
    $
    -
 
  
  **CUSTOM
BRANDED NETWORKS, INC.**
 **(A
Development Stage Company)**
 
 **CONSOLIDATED
STATEMENT OF SHAREHOLDERS’ DEFICIENCY**
 
 **PERIOD
FROM INCEPTION ON JUNE 28, 1999 TO MARCH 31, 2005**
 **(Unaudited)**
 **(Stated
in U.S. Dollars)**
 
 
 
 **DEFICIT****ACCUMULATED****ADDITIONAL**
    
    **DURING
      THE****COMMON
      STOCK**
    **PAID-IN**
    **DEFERRED**
    **DEVELOPMENT****SHARES**
    **AMOUNT**
    **CAPITAL**
    **COMPENSATION**
    **STAGE**
    **TOTAL**Issuance
      of shares to founders
    3,465
    $
    3
    $
    18,947
    $
    -
    $
    -
    $
    18,950Net
      loss for the period
    -
    
    -
    
    -
    
    -
    
    (159,909)
    
    (159,909)Balance,
      June 30, 2000
    3,465
    
    3
    
    18,947
    
    -
    
    (159,909)
    
    (140,959)Repurchase
      of common stock by consideration of forgiveness of loan payable to
      shareholder
    (1,445)
    
    (1)
    
    16,098
    
    -
    
    -
    
    16,0972,020
    
    2
    
    35,045
    
    -
    
    (159,909)
    
    (124,862)Adjustment
      to number of shares issued and outstanding as a result of the reverse
      take-over transactionCustom
      Branded Networks, Inc.
    (2,020)
    
    (2)
    
    2
    
    -
    
    -
    
    -Aquistar
      Ventures (USA) Inc.
    15,463,008
    
    15,463
    
    (15,463)
    
    -
    
    -
    
    -15,463,008
    
    15,463
    
    19,584
    
    -
    
    (159,909)
    
    (124,862)Shares
      allotted in connection with the acquisition of Custom Branded Networks,
      Inc.
    25,000,000
    
    25,000
    
    (9,772)
    
    -
    
    -
    
    15,228Less:
      Allotted and not yet issued
    (8,090,476)
    
    (8,090)
    
    8,090
    
    -
    
    -
    
    -Common
      stock conversion rights
    -
    
    -
    
    421,214
    
    -
    
    -
    
    421,214Net
      loss for the year
    -
    
    -
    
    -
    
    -
    
    (723,239)
    
    (723,239)Balance,
      June 30, 2001
    32,372,532
    
    32,373
    
    439,116
    
    -
    
    (883,148)
    
    (411,659)
  
  **CUSTOM
BRANDED NETWORKS, INC.**
 **(A
Development Stage Company)**
 
 **CONSOLIDATED
STATEMENT OF SHAREHOLDERS’ DEFICIENCY (Continued)**
 
 **PERIOD
FROM INCEPTION ON JUNE 28, 1999 TO MARCH 31, 2005**
 **(Unaudited)**
 **(Stated
in U.S. Dollars)**
 
 
 
 **DEFICIT****ACCUMULATED****ADDITIONAL**
    
    **DURING
      THE****COMMON
      STOCK**
    **PAID-IN**
    **DEFERRED**
    **EXPLORATION****SHARES**
    **AMOUNT**
    **CAPITAL**
    **COMPENSATION**
    **STAGE**
    **TOTAL**Balance,
      June 30, 2001
    32,372,532
    $
    32,373
    $
    439,116
    $
    -
    $
    (883,148)
    $
    (411,659)Additional
      shares issued in connection with the acquisition of Custom Branded
      Networks, Inc.
    1,500,000
    
    1,500
    
    (1,500)
    
    -
    
    -
    
    -Common
      stock conversion rights
    -
    
    -
    
    109,748
    
    -
    
    -
    
    109,748Net
      loss for the year
    -
    
    -
    
    -
    
    -
    
    (326,038)
    
    (326,038)Balance,
      June 30, 2002
    33,872,532
    
    33,873
    
    547,364
    
    -
    
    (1,209,186)
    
    (627,949)Issue
      of common stock for deferred compensation expense
    4,500,000
    
    4,500
    
    40,500
    
    (45,000)
    
    -
    
    -Amortization
      of deferred compensation
    -
    
    -
    
    -
    
    22,500
    
    -
    
    22,500Common
      stock conversion rights
    -
    
    -
    
    45,116
    
    -
    
    -
    
    45,116Net
      loss for the year
    -
    
    -
    
    -
    
    -
    
    (142,233)
    
    (142,233)Balance,
      June 30, 2003
    38,372,532
    
    38,373
    
    632,980
    
    (22,500)
    
    (1,351,419)
    
    (702,566)Amortization
      of deferred compensation
    -
    
    -
    
    -
    
    22,500
    
    -
    
    22,500Common
      stock conversion rights
    -
    
    -
    
    3,301
    
    -
    
    -
    
    3,301Net
      loss for the year
    -
    
    -
    
    -
    
    -
    
    (95,430)
    
    (95,430)Balance,
      June 30, 2004
    38,372,532
    
    38,373
    
    636,281
    
    -
    
    (1,446,849)
    
    (772,195)
  
  **CUSTOM
BRANDED NETWORKS, INC.**
 **(A
Development Stage Company)**
 
 **CONSOLIDATED
STATEMENT OF SHAREHOLDERS’ DEFICIENCY (Continued)**
 
 **PERIOD
FROM INCEPTION ON JUNE 28, 1999 TO MARCH 31, 2005**
 **(Unaudited)**
 **(Stated
in U.S. Dollars)**
 
 
 
 **DEFICIT****ACCUMULATED****ADDITIONAL**
    
    **DURING
      THE****COMMON
      STOCK**
    **PAID-IN**
    **DEFERRED**
    **EXPLORATION****SHARES**
    **AMOUNT**
    **CAPITAL**
    **COMPENSATION**
    **STAGE**
    **TOTAL**Balance,
      June 30, 2004
    38,372,532
    $
    38,373
    $
    636,281
    $
    -
    $
    (1,446,849)
    $
    (772,195)Issue
      of common stock for services
    14,800,000
    
    14,800
    
    901,200
    
    (182,952)
    
    -
    
    733,048Issue
      of common stock for convertible notes
    20,000,000
    
    20,000
    
    980,000
    
    -
    
    -
    
    1,000,000Forgiveness
      of debt
    -
    
    -
    
    169,818
    
    -
    
    -
    
    169,818Net
      loss for the period
    -
    
    -
    
    -
    
    -
    
    (1,356,387)
    
    (1,356,387)Balance,
      March 31, 2005
    73,172,532
    $
    73,173
    $
    2,687,299
    $
    (182,952)
    $
    (2,803,236)
    $
    (225,716)
  
  **CUSTOM
BRANDED NETWORKS, INC.**
 **(A
Development Stage Company)**
 
 **NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **MARCH
31, 2005**
 **(Unaudited)**
 **(Stated
in U.S. Dollars)**
 
 
 
 **1.**
    **BASIS
      OF PRESENTATION**
 
 The
unaudited consolidated financial statements as of March 31, 2005 included herein
have been prepared without audit pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with United
States generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. It is suggested that these consolidated
financial statements be read in conjunction with the June 30, 2004 audited
consolidated financial statements and notes thereto.
 
 
 **2.**  **CONVERTIBLE
NOTE PAYABLE**
 
 On
January 31, 2002, the Company executed $1,000,000 aggregate principal amount of
convertible notes due not earlier than January 31, 2009. The Company had
received $1,000,000 in advances through to March 31, 2005. The notes bore no
interest until the maturity date. On January 20, 2005, the Company issued
20,000,000 common shares at a price of $0.05 per share and 20,000,000 warrants
to the holder on conversion of the notes. The warrants are exercisable at a
price of $0.05 per share until January 20, 2008.
 
 Because
the market interest rate on similar types of notes was approximately 14% per
annum the day the notes were issued, the Company has recorded a discount of
$579,378 related to the beneficial conversion feature. The discount was fully
amortized as interest expense upon conversion.
 
 
 **3.**
    **RELATED
      PARTIES**
 
 During
the three month period ended March 31, 2005, two former directors forgave
$169,818 of accounts payable owned to them. This resulted in a charge to
additional paid-in capital.
 
 During
the three month period ended March 31, 2005, the Company issued 2,000,000 common
shares to a director for consulting services rendered at a value of
$40,000.
 
  
  **CUSTOM
BRANDED NETWORKS, INC.**
 **(A
Development Stage Company)**
 
 **NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **MARCH
31, 2005**
 **(Unaudited)**
 **(Stated
in U.S. Dollars)**
 
 
 
 **4.**
    **SUBSEQUENT
      EVENTS**
 
 Effective
May 10, 2005, the Company changed its name to Novastar Resources Ltd., and
increased its authorized capital to 250,000,000 common shares with a par value
of $0.001 per share, and 50,000,000 preferred shares with a par value of $0.001
per share.
 ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
 
 Plan of
Operations:
 ---------------------
 
 At March
31, 2005, the Company had no cash on hand. Expenses for the fiscal quarter
covered by this report totaled $1,322,180 giving the Company a net loss for the
quarter of $1,322,180 since the Company has no operating revenues at the present
time. This level of expense is an increase of approximately 84 times the expense
of the prior fiscal quarter and is attributable mainly consulting fees paid to
consultants that are moving the Company forward into the natural resource
industry. The consulting fees were paid through the issuance of stock.
Accordingly, the consulting fees do not represent cash payment or accrual on the
part of the Company. The Company does have plans, however, to borrow money as
needed to sustain current operations that require cash payment.
 
 Since
2001, the business plan for the Company has been to provide Internet solutions
to businesses and private organizations. However, since May of 2003, we have
been actively looking for other business opportunities that would provide the
Company with economic opportunity. Since that time, we have investigated several
businesses and assets that we believed would have been excellent opportunities
for the Company but as of yet have made no acquisitions. However, on May 1,
2005, the Company entered into an agreement through which it is entitled to
acquire up to a 92.25% interest in mineral properties located in North
Queensland, Australia. Our business plan for the next 12 months is to pursue the
business opportunity represented by that agreement.
 
 Forward-Looking
Statements:
 
 Many
statements made in this report are forward-looking statements that are not based
on historical facts. Because these forward-looking statements involve risks and
uncertainties, there are important factors that could cause actual
 results
to differ materially from those expressed or implied by these forward-looking
statements. The forward-looking statements made in this report relate only to
events as of the date on which the statements are made.
 
 ITEM 3.
CONTROLS AND PROCEDURES.
 
 We have
evaluated, with the participation of our Principal Executive Officer and
Principal Financial Officer, the effectiveness of our disclosure controls and
procedures as of March 31, 2005. Based on this evaluation, our Principal
Executive Officer and Principal Financial Officer has concluded that our
disclosure controls and procedures are effective to ensure that we record,
process, summarize, and report information required to be disclosed by us in our
quarterly reports filed under the Securities Exchange Act within the time
periods specified by the Securities and Exchange Commission's rules and forms.
During the quarterly period covered by this report, there were no changes in our
internal controls over financial reporting that materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.
 
 PART II -
OTHER INFORMATION
 
 ITEM 1.
LEGAL PROCEEDINGS
 
 None.
 
 
 ITEM 2.
CHANGES IN SECURITIES
 
 During
the three month period ended March 31, 2005, the Company issued 2,000,000 common
shares to an affiliate of the Company for consulting services rendered at a
value of $40,000. The Company also issued 20,000,000 common shares to the same
person upon the conversion of $1,000,000 in debt owed by the Company to that
person. These stock issuances were exempt from registration pursuant to Section
4(2) of the Securities Exchange Act of 1933.
 
 ITEM 3.
DEFAULTS UPON SENIOR SECURITIES
 
 None.
 
 ITEM 4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
 On
February 12, 2005, the Company held a special meeting of is shareholders at
which the shareholders approved changing the name of the Company to Novastar
Resources Ltd., authorizing 50,000,000 shares of preferred stock, and increasing
the authorized common stock of the Company to 250,000,000 shares. 58% of the
common stock of the Company attended the meeting either in person or by proxy
and voted in favor of the proposals.
 
 ITEM 5.
OTHER INFORMATION
 
 None
 
 ITEM 6.
EXHIBITS AND REPORTS ON FORM 8-K.
 
 EXHIBITS
 
 31.1
    Certification
      by CEO and CFO pursuant to Rule 13a-14(a) or 15d-14(a) of The Securities
      Exchange Act of 1934, as adopted pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.32.1
    Certification
      by CEO and CFO pursuant to 18 U.S.C. Section 1350, as Adopted pursuant to
      Section 906 of the Sarbanes-Oxley Act of
2002.
 
 REPORTS
ON FORM 8-K
 
 None
 
 
 
 SIGNATURES
 
 In
accordance with the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
 
 NOVASTAR
RESOURCES LTD.
 
 Date:  May 16,
2005
 
 
 By: /s/
Paul G. Carter
 Paul G.
Carter
 Principal
Executive Officer
 Principal
Financial Officer
 Chief
Accounting Office