U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 For the transition period
from________ to___________
Commission file number: 33-28562
TOUCAN GOLD CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 75-2661571
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8201 Preston Road
Suite 600
Dallas, Texas 75225
(Address of principal executive offices)
(214) 890-8065
(Registrants's telephone number, including area code)
Indicate by check mark whether the registrant (1) has 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 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 the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable date:
Common Stock, $0.01 par value: 5,664,600 Shares Outstanding at August 19, 1996
Transitional Small Business Disclosure Format. Yes No X
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TOUCAN GOLD CORPORATION
INDEX TO FORM 10-QSB
Part I.
FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited) Page
Consolidated Balance Sheets as of
December 31, 1995 and June 30, 1996 ...... ............ 3
Consolidated Statements of Operations for the
Three Months and Six Months Ended
June 30, 1996 .................... 4
Consolidated Statements of Stockholders'
Equity for the Six Months Ended
June 30, 1996 .................... 5
Consolidated Statements of Cash Flows
for the Three Months and Six Months Ended
June 30, 1996.......................................... 6
Notes to Financial Statements.......................... 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations........ 9
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K....................... 10
SIGNATURE .............................................. 11
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Toucan Gold Corporation
(formerly Starlight Acquisitions, Inc.)
(a development stage company)
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(See Accountants' Compilation Report)
June 30, December 31,
ASSETS 1996 1995
------ -----
Cash $ 84,310 $ 45,208
Prepaid expenses 10,000 -
------- --
Total current assets 94,310 45,208
Mineral rights 175,290 175,290
-------- -------
Total assets $ 269,600 $220,498
======== =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Amounts payable to related parties $ 165,136 $126,328
Accrued expenses and other 48,000 -
------- --
Total current liabilities 213,136 126,328
Stockholders' equity
Preferred stock, no par value; authorized, 2,000,000 shares;
no shares outstanding - -
Common stock, $.02 par value per share in 1996 and no par
value in 1995; authorized 15,000,000 shares in 1996 and
1,000,000 in 1995; issued and outstanding, 5,664,600 shares
in 1996 and 647,857 in 1995 113,292 96,170
Additional paid-in capital 195,413 -
Deficit accumulated during development stage (252,241) (2,000)
-------- -------
Total stockholders' equity 56,464 94,170
------- -------
Total liabilities and stockholders' equity $ 269,600 $220,498
======== =======
The accompanying notes are an integral part of these statements.
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Toucan Gold Corporation
(formerly Starlight Acquisitions, Inc.)
(a development stage company)
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(See Accountants' Compilation Report)
Three months Six months
ended ended
June 30, 1996 June 30, 1996
Cost and expenses
Consulting fees $ 65,358 $ 117,020
Legal and professional fees 47,147 56,234
Travel and entertainment 22,369 51,028
Public relations 10,108 10,108
Maps and stationery 9,000 9,000
Transfer agent 3,156 3,156
Other 1,984 3,695
----- ------
Operating loss $(159,122) $(250,241)
======== ========
Net loss per share $ (.03) $ (.05)
======= =======
Weighted average shares outstanding 5,355,182 5,228,320
========= =========
The accompanying notes are an integral part of these statements.
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Toucan Gold Corporation
(formerly Starlight Acquisitions, Inc.)
(a development stage company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED)
(See Accountants' Compilation Report)
Deficit
accumulated
Additional during
Preferred stock Common stock paid-in development
Shares Amount Shares Amount capital stage Total
------ ------ -------- ------ --------- ------- ------
Balance at January 1, 1996 $ - $ - $ 647,857 $ 96,170 $ - $ (2,000) $ 94,170
Recapitalization of Toucan
Mining Limited and
merger with Starlight
Acquisitions, Inc. - - 4,453,602 5,859 94,141 - 100,000
Issuance of common stock - - 563,141 11,263 101,272 - 112,535
Net loss - - - - - (250,241) (250,241)
--- --- --- --- --- -------- -------
Balance at June 30, 1996 $ - $ - 5,664,600 $113,292 $195,413 $(252,241) $ 56,464
=== === ========= ======= ======= ======== =======
The accompanying notes are an integral part of these statements.
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Toucan Gold Corporation
(formerly Starlight Acquisitions, Inc.)
(a development stage company)
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(See Accountants' Compilation Report)
Three months Six months
ended ended
June 30, 1996 June 30, 1996
Operating activities
Net loss $(159,122) $(250,241)
Net changes in operating assets and liabilities
Prepaid expenses - (10,000)
Accrued expenses 39,574 48,000
------- ----------
Net cash used in operating activities (119,548) (212,241)
Financing activities
Net on borrowings from related parties (28,783) 38,808
Issuance of common stock 112,535 112,535
Proceeds from merger with Starlight Acquisition, Inc. 100,000 100,000
-------- --------
Net cash provided by financing activities 183,752 251,343
-------- --------
Net increase in cash 64,204 39,102
Cash at beginning of period 20,106 45,208
------- -------
Cash at end of period $ 84,310 $ 84,310
======= =======
The accompanying notes are an integral part of these statements.
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Toucan Gold Corporation
(formerly Starlight Acquisitions, Inc.)
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
June 30, 1996
NOTE A - ORGANIZATION
Starlight Acquisitions, Inc. (Starlight) was formed in 1989 and was a
publicly-held development stage company with no principal operations since
its incorporation. On May 10, 1996, Starlight merged with Toucan Mining
Limited (Toucan Mining). Pursuant to the terms of the merger agreement,
each stockholder of Toucan Mining received seven shares of Starlight common
stock for each share of Toucan Mining common stock. Immediately after the
merger, the stockholders of Toucan Mining owned approximately 89% of the
outstanding common stock of Starlight. Therefore, the merger has been
accounted for as a reverse merger, whereby Toucan Mining is deemed to have
acquired Starlight.
During July 1996, Starlight formed Toucan Gold Corporation (Toucan Gold or
the Company), a wholly-owned subsidiary and a Delaware corporation. On July
29, 1996, Starlight merged into Toucan Gold, and pursuant to the terms of
the merger, the outstanding shares of Starlight were canceled in exchange
for shares of Toucan Gold. The authorized shares of Toucan Gold include
2,000,000 and 30,000,000 shares of preferred stock and common stock,
respectively, with par values of $.01.
NOTE B - GOING CONCERN
The Company is a development stage company at June 30, 1996, and is still
in the initial stages of exploration. However, management believes that the
Company will be able to obtain adequate resources to develop its mineral
rights. Management also believes that future revenues will exceed the
carrying amount of the mineral rights and that revenues will be adequate to
support the Company's cost structure and enable it to achieve profitable
operations in the future.
NOTE C - BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Rule
10-01 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (which include only normal recurring adjustments) necessary
for a fair presentation of the results for the interim periods presented
have been made. The results of operations for such interim periods are not
necessarily indicative of the results of operations for a full year.
The accompanying notes are an integral part of these statements.
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Toucan Gold Corporation
(formerly Starlight Acquisitions, Inc.)
(a development stage company)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
June 30, 1996
NOTE D - MINERAL RIGHTS
Costs incurred to acquire and develop mineral rights have been capitalized
and will be amortized as revenues are generated from the holding of those
rights. If future revenues are less than the carrying amount of the mineral
rights, the Company may recognize a loss to write-down the mineral rights
to their realizable value. The Company's wholly-owned Brazilian
incorporated subsidiary, Mineradora de Bauxita Ltda., is the registered
holder of the mineral rights.
NOTE E - RELATED PARTIES
Amounts payable to related parties consist of the following at June 30,
1996:
Stockholders $ 60,512
Cardinal Holdings Limited 103,710
Mustardseed Estates Limited 914
----------
$ 165,136
The loans to the stockholders are noninterest-bearing, unsecured and with
no specific maturity date. The loans to Cardinal Holdings Limited and
Mustardseed Estates Limited bear interest at 10%. These loans are unsecured
and are due upon demand.
The accompanying notes are an integral part of these statements.
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ITEM 2 - Management's Discussion and Analysis of Financial Condition or Plan of
Operations
Effective May 10, 1996, Starlight Acquisitions, Inc. (Starlight), a
Colorado corporation, acquired all of the outstanding capital stock of Toucan
Mining Limited (Toucan Mining), a company organized under the laws of the Isle
of Man, in exchange for shares of common stock of Starlight. As a result of the
share exchange, a change in control of Starlight occurred, whereby Toucan Mining
is deemed to have acquired Starlight. See Notes to the Consolidated Financial
Statements.
Toucan Mining is a development stage company that conducts its operations
primarily through its wholly-owned subsidiary, Mineradora de Bauxita Ltda.
(MBL), which is an authorized mining company organized under the laws of Brazil.
MBL has been financed entirely by Toucan Mining for the purpose of conducting
mineral exploration, specifically gold exploration.
During July 1996, Starlight formed Toucan Gold Corporation, (Toucan Gold or
the Company), a wholly-owned subsidiary and a Delaware corporation. On July 29,
1996, Starlight merged into Toucan Gold, and pursuant to the terms of the
merger, the outstanding shares of Starlight were canceled in exchange for shares
of Toucan Gold.
The consolidated financial statements for the three months and six months
ended June 30, 1996, reflect the results of the Company's operations, which
consisted primarily of legal and consulting fees incurred by the Company for the
merger between Starlight and Toucan Mining.
The Company intends to undertake a program of mineral exploration to target
and explore selected areas of its Brazilian mining claims to determine which
areas are most likely to contain economic gold mineralization. A mapping program
based upon satellite imagery will precede field investigation, which will
include detailed geologic mapping, geochemical sampling and drilling in
accordance with standard exploration practice. A program of this nature is
likely to take several years and could involve joint ventures. In the event of
encouraging results in a particular area, a more concentrated study will be
undertaken to provide the basis of a feasibility study for mineral development.
MBL will also be working to acquire additional claims in the Cuiba basin.
To fund this program for up to two years and to pay for normal expenses,
the Company will need to raise approximately $4 million, net of offering costs,
although there is no assurance that such funds will be adequate. The expenses
for the first 12 months are anticipated to be approximately $2.5 million of
which approximately 80% is expected to be spent on direct or ancillary in-ground
exploration costs and 10% on the acquisition of future claims. The plan will be
subject to review depending upon the results obtained. Costs could rise if,
among other things, the weather proves untypically harsh, unforeseen ground
conditions are encountered, equipment becomes difficult to source or
negotiations with surface owners become prolonged. MBL may spend more or less on
claim acquisitions than currently estimated. There can be no assurance that the
exploration program will result in the discovery of economic gold
mineralization. The matters discussed herein contain forward-looking statements
that involve certain risks, uncertainties and additional costs detailed herein.
The actual results that are achieved may differ materially from any
forward-looking projections, due to such risks, uncertainties and additional
costs.
Currently, the Company intends to raise approximately $4.5 million of gross
offering proceeds through the issuance of preferred stock pursuant to Regulation
S under the Securities Act of 1933, as amended (the "Act"). The Company has
agreed upon a preliminary term sheet with a non-U.S. placement agent. If such
offering is made under Regulation S, the securities will not be registered under
the Act and will not be offered or sold in the United States or to U.S. persons.
There can be no assurance that the Company will be able to raise such funds
through the issuance of preferred stock as described above or through other
means.
Certain of the information contained in Parts I and II of this Form 10-QSB
constitutes forward looking statements within the meaning of Section 27A of the
Securities Act and Section 21E of the Securities Exchange Act of 1934. Although
the Company believes that the expectations reflected in such forward looking
statements are based upon
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reasonable assumptions, it can give no assurance that its expectations will be
achieved. An important factor is the Company's ability to raise sufficient
capital to execute its business plan and meet its obligations. Therefore, the
actual results that are achieved may differ materially from any such forward
looking information.
PART II. OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) Exhibits:
2.1* Agreement and Plan of Merger, dated as of July 29,1996,
between Toucan Gold Corporation, a Delaware
Corporation, and Starlight Acquisitions, Inc., a
Colorado Corporation (Exhibit 2.1).
2.2** Share Exchange Agreement, dated May 10, 1996, by and
among Starlight Acquisition, Inc. and the Shareholders
of Toucan Mining Limited (Exhibit 2).
3(i)* Certificate of Incorporation of Toucan Gold Corporation
(Exhibit 4.1).
3(ii) Bylaws.
10.1** Warrant Agreement, dated May 10, 1996, by and between
Starlight Acquisitions, Inc. and R. Haydn Silleck, John
B. Marvin,Peter S. Daley and Jay Lutsky (Exhibit 10.1).
10.2** Indemnification Agreement, dated May 10, 1996, by and
among R. Haydn Silleck, John B. Marvin, Peter S. Daley,
Jay Lutsky, Starlight Acquisition, Inc. and Toucan
Mining Limited (Exhibit 10.2).
16.1* Statement from Deloitte & Touche regarding change in
certifying accountant for Toucan Mining Limited
(Exhibit 16.1).
16.2** Statement from Comiskey & Company, P.C. regarding
change in certifying accountants (Exhibit 16).
27 Financial Data Schedule.
99.1* Press Release, dated July 29, 1996, announcing
Starlight's reincorporation and name change (Exhibit
99.1).
- ---------------------
*Incorporated by reference from the exhibit shown in parenthesis
contained in the Company's Current Report on Form 8-K dated August 8,
1996.
**Incorporated by reference from the exhibit shown in parenthesis
contained in the Company's Current Report on Form 8-K dated May 13,
1996.
(B) Reports on Form 8-K
On May 13, 1996, the Company filed a Current Report on Form 8-K (the
"May 8-K") reporting (i) the share exchange and change of control of the Company
under Items 1 and 2, (ii) the change in the Company's certifying accountant
under Item 4 and (iii) the approval of a Regulation S offering and the approval
of the Company's name change by the Board of Directors under Item 5. On June 19,
1996, the Company filed a Current Report on Form 8-K reporting the consummation
of the Regulation S offering described in the May 8-K and the change in the
Company's transfer agent, each under Item 5. On July 15, 1996, the Company filed
an Amended Current Report on Form 8-K/A to amend the May 8-K to include the
financial statements required under Item 7. On August 8, 1996, the Company filed
a Current Report on Form 8-K to report (i) the engagement of new certifying
accountants for the Company and the resignation of the former certifying
accountant of Toucan Mining Limited, each under Item 4, and (ii) the
reincorporation of the Company under Item 5.
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SIGNATURE
In accordance with the requirements of the Exchange Act, the registrant
caused this amended report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Toucan Gold Corporation
(Registrant)
Date: August 23, 1996 By: /s/ Robert Jeffcock
-------------------
Robert Jeffcock
(Principal Financial Officer and
Duly Authorized Officer)
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INDEX TO EXHIBITS
Exhibits Exhibit Item
2.1 Agreement and Plan of Merger, dated as of July 29,1996,
between Toucan Gold Corporation, a Delaware
Corporation, and Starlight Acquisitions, Inc., a
Colorado Corporation (Exhibit 2.1).
2.2** Share Exchange Agreement, dated May 10, 1996, by and
among Starlight Acquisition, Inc. and the Shareholders
of Toucan Mining Limited (Exhibit 2).
3(i)* Certificate of Incorporation of Toucan Gold
Corporation (Exhibit 4.1).
3(ii) Bylaws.
10.1** Warrant Agreement, dated May 10, 1996, by and between
Starlight Acquisitions, Inc. and R. Haydn Silleck, John
B. Marvin, Peter S. Daley and Jay Lutsky (Exhibit
10.1).
10.2** Indemnification Agreement, dated May 10, 1996, by and
among R. Haydn Silleck, John B. Marvin, Peter S. Daley,
Jay Lutsky, Starlight Acquisition, Inc. and Toucan
Mining Limited (Exhibit 10.2).
16.1* Statement from Deloitte & Touche regarding change in
certifying accountant for Toucan Mining Limited
(Exhibit 16.1).
16.2** Statement from Comiskey & Company, P.C. regarding
change in certifying accountants (Exhibit 16).
27 Financial Data Schedule.
99.1* Press Release, dated July 29, 1996, announcing
Starlight's reincorporation and name change (Exhibit
99.1).
- ---------------------
*Incorporated by reference from the exhibit shown in parenthesis
contained in the Company's Current Report on Form 8-K dated August 8,
1996. **Incorporated by reference from the exhibit shown in parenthesis
contained in the Company's Current Report on Form 8-K dated May 13,
1996.
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