U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 2000
[ ] TRANSITION REPORT PURSUANT SECTION 13 OF 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to ______________
Commission file number 0-27953
GOLDEN RIVER RESOURCES INC.
(Exact name of small business issuer as specified in its charter)
NEVADA 98-0187538
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
2420 PANDOSY STREET, KELOWNA, BRITISH COLUMBIA, CANADA V1Y 1T8
(Address of principal executive offices)
(250) 717-1049
(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 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 No X
State the number of shares outstanding of each of the issuer=s classes
of common equity, as of the last practicable date:
17,005,072 SHARES OF COMMON STOCK, $.001 PAR VALUE, AS OF
MARCH 31, 2000
Transitional Small Business Disclosure Format (check one); Yes No X
Consolidated Financial Statements of
GOLDEN RIVER RESOURCES INC.
(An Exploration Stage Enterprise)
Nine month period ended, March 31, 2000
(Unaudited - Prepared by Management)
2
GOLDEN RIVER RESOURCES INC.
(An Exploration Stage Enterprise)
Consolidated Balance Sheet
$ United States
March 31, 2000 and June 30, 1999
===========================================================================================
March 31, June 30,
2000 1999
(Unaudited - Prepared
by Managment)
- -------------------------------------------------------------------------------------------
ASSETS
Current Assets
Cash $ 14,597 $ 57,149
Prepaid expense 4,361 6,220
- -------------------------------------------------------------------------------------------
18,958 63,369
Capital assets, net of amortization 9,114 9,428
- -------------------------------------------------------------------------------------------
$ 28,072 $ 72,797
===========================================================================================
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities
Accounts payable and accrued liabilities $ 188,818 $ 146,569
Due to shareholders 22,229 12,190
Shares to be issued for services - 75,000
Debt (note 2) 100,233 -
Interim financing payable (note 3) 75,000 -
- -------------------------------------------------------------------------------------------
386,280 233,759
Stockholders' Deficiency
Capital stock 1,539,657 1,537,475
Additional paid in capital 299,738 -
Deficit accumulated during the exploration stage (2,209,446) (1,711,359)
Accumulated other comprehensive income 11,843 12,922
- -------------------------------------------------------------------------------------------
(358,208) (160,962)
- -------------------------------------------------------------------------------------------
$ 28,072 $ 72,797
===========================================================================================
See accompanying notes to consolidated financial statements.
On behalf of the Board:
Roger D. Watts Director
- --------------------------------
R. Bruce Manery Director
- --------------------------------
3
GOLDEN RIVER RESOURCES INC.
(An Exploration Stage Enterprise)
Consolidated Statement of Loss
$ United States
Nine month period ended March 31, 2000 and 1999 (Unaudited - Prepared by
Management)
========================================================================================================
From Inception Nine Months Nine Months
(June 13, 1997) Ended March 31, Ended March 31,
to March 31, 2000 2000 1999
- --------------------------------------------------------------------------------------------------------
Expenses
Amortization $ 2,595 $ 1,363 $ 1,065
Consulting fees 215,806 212,985 -
Exploration of mineral properties 358,363 42,390 52,489
General and administrative 94,015 31,622 27,869
Management fees to related parties 165,275 39,967 41,277
Option payments to acquire mineral
Properties 860,489 30,000 346,735
Professional fees 274,288 89,917 75,790
Travel and promotion 238,615 49,843 81,845
- --------------------------------------------------------------------------------------------------------
2,209,446 498,087 627,070
- --------------------------------------------------------------------------------------------------------
Loss $(2,209,446) $ (498,087) $ (627,070)
========================================================================================================
Weighted average number of shares 7,878,612 16,104,134 5,776,710
Earnings per share $ (0.28) $ (0.03) $ (0.11)
========================================================================================================
See accompanying notes to consolidated financial statements.
4
GOLDEN RIVER RESOURCES INC.
(An Exploration Stage Enterprise)
Consolidated Statement of Stockholders' Deficiency and Comprehensive Income
$ United States
Nine month period ended March 31, 2000 and 1999 (Unaudited - Prepared by
Management)
===============================================================================================================
Deficit
Accumulated Accumulated
Capital Stock Additional During the Other Total
------------------------- Paid-In Exploration Comprehensive Stockholders
Shares Amount Capital Stage Income Equity
- ---------------------------------------------------------------------------------------------------------------
Balance, June 30, 1999 14,822,872 $1,537,475 $ - $(1,711,359) $ 12,922 $(160,962)
Issued for services 1,932,200 1,932 191,288 - - 193,220
(Note 4(a))
Compensation cost of
options issued to
non-employees - - 78,700 - - 78,700
Shares issued pursuant
to Mineral Property
agreement (Note 4b)) 250,000 250 29,750 - - 30,000
- ---------------------------------------------------------------------------------------------------------------
17,005,072 1,539,657 299,738 (1,711,359) 12,922 140,958
Comprehensive income:
Loss - - - (498,087) - (498,087)
Foreign currency
translation
adjustment - - - - (1,079) (1,079)
- ---------------------------------------------------------------------------------------------------------------
Comprehensive loss - - - (498,087) (1,079) (499,166)
- ---------------------------------------------------------------------------------------------------------------
Balance March 31, 2000
(Unaudited) 17,005,072 $1,539,657 $299,738 $(2,209,446) $ 11,843 $(358,208)
===============================================================================================================
See accompanying notes to consolidated financial statements.
5
GOLDEN RIVER RESOURCES INC.
(An Exploration Stage Enterprise)
Consolidated Statement of Cash Flows
$ United States
Nine month period ended March 31, 2000 and 1999 (Unaudited - Prepared by
Management)
====================================================================================================
From Inception Nine months Nine Months
(June 13, 1997) Ended March 31, Ended March 31,
to March 31, 2000 2000 1999
- ----------------------------------------------------------------------------------------------------
Loss $(2,209,446) $(498,087) $(627,070)
Cash flows from operating activities:
Items not involving cash:
Amortization 2,595 1,363 1,065
Option payments to acquire mineral
properties 60,000 30,000 30,000
Compensation cost of options issued
to non-employees 78,700 78,700 -
Consulting fees paid with share
consideration 118,220 118,220 -
Accounts payable and accrued liabilities 141,998 42,249 (16,590)
Other changes in non-cash operating
working capital 4,361 11,898 -
- ----------------------------------------------------------------------------------------------------
(1,803,572) (215,657) (612,595)
Cash flows from investing activities:
Purchase of capital assets (12,467) (1,049) (5,739)
Cash flows from financing activities:
Proceeds from interim financing 75,000 75,000 -
Proceeds from debt 100,233 100,233 -
Issuance of capital stock 903,971 - 15,399
Proceeds from realization of assets
acquired from the business
combination with Golden River 739,589 - 739,589
- ----------------------------------------------------------------------------------------------------
1,818,793 175,233 754,988
Foreign currency translation adjustment 11,843 (1,079) (15,612)
- ----------------------------------------------------------------------------------------------------
Increase (decrease) in cash 14,597 (42,552) 121,042
Cash position, beginning of period - 57,149 12,798
- ----------------------------------------------------------------------------------------------------
Cash position, end of period $ 14,597 $ 14,597 $ 133,840
====================================================================================================
Supplementary Information
Interest paid - - -
Income taxes paid - - -
Non-cash investing and financing activities
Common shares issued under mineral
property agreements $ 60,000 $ 30,000 $ 30,000
Common shares issued for services 193,220 193,220 -
====================================================================================================
See accompanying notes to consolidated financial statements.
6
GOLDEN RIVER RESOURCES INC.
(An Exploration Stage Enterprise)
Notes to Consolidated Financial Statements
$ United States
Nine month period ended March 31, 2000 and 1999
(Unaudited - Prepared by Management)
================================================================================
1. SIGNIFICANT ACCOUNTING POLICIES:
(a) In the opinion of management, all adjustments (consisting of normal
recurring items) necessary for the fair presentation of these
unaudited financial statements in conformity with generally accepted
accounting principles have been made.
(b) The Company's subsidiary, Rob Roy Resources Ltd., operates in Canada
and its operations are conducted in Canadian currency.
These consolidated statements are presented in United States currency.
The method of translation applied is as follows:
i) Assets and liabilities are translated at the rate of exchange in
effect at the balance sheet date, being US $1.00 per Cdn $1.465
at March 31, 2000;
ii) Revenues and expenses are translated at the exchange rate in
effect at the transaction date; and
iii) The net adjustment arising from the translation is recorded as a
separate component of stockholders' equity called "Cumulative
translation adjustment" which is included in "Accumulated other
comprehensive income."
(c) Loss per share
Loss per share has been calculated using the weighted average number
of common shares outstanding during the period. The effect of the
contingent stock issues pursuant to the La Mexicana agreement (note
4), and the stock options issued during the period (note 5) have not
been included in the computation because to do so would be
anti-dilutive.
2. DEBT:
The debt represents advances made to the Company by shareholders who,
individually, own less than 5% of the outstanding shares of the Company.
The advances do not bear interest, have no fixed terms of repayment and are
not pursuant to a written agreement.
3. INTERIM FINANCING PAYABLE:
On January 24, 2000, the Company signed an interim financing agreement with
an unrelated party for $75,000. The financing under the agreement is
repayable in full by July 24, 2000, bears interest at 8% and is guaranteed
by two Directors of the Company. In conjunction with signing the agreement,
the lender received 150,000 common shares of the Company from a shareholder
who owns less than 5% of the Company.
7
GOLDEN RIVER RESOURCES INC.
(An Exploration Stage Enterprise)
Notes to Consolidated Financial Statements
$ United States
Nine month period ended March 31, 2000 and 1999
(Unaudited - Prepared by Management)
================================================================================
4. ISSUANCE OF COMMON STOCK:
a) For services
During the nine months ended March 31, 2000, the Company received
consulting services from an unrelated party with respect to securing
investors, outside the United States, in the Company's common stock.
On November 17, 1999, pursuant to a subscription agreement dated
September 23, 1999, these services were paid for with the issuance of
1,182,200 common shares at a price of $0.10 per share, being the
market value of the common stock at that date. The value of the shares
issued, aggregating $118,220, was equivalent to the fair value of the
services provided.
The Company also issued 750,000 common shares during the period in
consideration for similar consulting services received prior to June
30, 1999. The value of these services, aggregating $75,000, was
accrued in the accounts of the Company at June 30, 1999 and is
equivalent to the market value of the shares issued during the period.
The aggregate of the 1,182,200 common shares and the 750,000 common
shares equals the 1,932,200 common shares disclosed as issued in the
period in the consolidated statement of stockholders' deficiency and
comprehensive income.
b) Mineral property
During the nine months ended March 31, 2000, the Company issued
250,000 shares at $0.12 per share, being the market value of the stock
at the date of issue. The shares were issued pursuant to the terms of
the La Mexicana option agreement as disclosed in note 7 b) to the June
30, 1999 audited consolidated financial statements. The terms of the
options agreement require the issuance of an additional 500,000 common
shares prior to March 10, 2002.
5. STOCK OPTION PLAN:
During 1999, the Company adopted a stock option plan whereby directors,
officers and employees of the Company were granted the right to subscribe
for up to 10% of the issued and outstanding shares of the Company at prices
to be fixed at the time the options are granted. Options issued pursuant to
the Plan have a vesting period of three months, and expire five years from
the date of issue. The Company applies APB Opinion NO. 25 in accounting for
its employee stock option plan whereby compensation cost is recorded only
to the extent that the market price exceeds the exercise price at the date
of grant and, accordingly, no compensation cost is recognized for its stock
options in these financial statements. Options granted to non-employees
will be accounted for at their fair value at the date of grant.
During the period ended March 31, 2000, the Company issued 1,450,000 common
share stock options. These stock options have an exercise price of $0.10
per share, a vesting date of December 23, 1999 and expire on September 23,
2004.
Of these options, 1,050,000 were granted to non-employees. The fair value
of $78,700 of these options has been determined using the Black Scholes
Method using the expected life to be the life of the options, volatility
factor of 95%, risk free rate of 5.5% and no assumed dividend rate, and has
been included in the determination of the loss for the period.
8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Effective March 10, 1999, the Company completed the acquisition of 100% of the
outstanding common shares of Rob Roy Resources Inc. ("Rob Roy"). As the Rob Roy
shareholders obtained effective control of the Company through the exchange of
their shares of Rob Roy for shares of the Company, the acquisition has been
accounted for in these consolidated financial statements as a reverse
acquisition. Consequently, the consolidated statements of loss and deficit and
changes in cash flows reflect the results from operations and changes in
financial position of Rob Roy, the legal subsidiary, for the year ended June 30,
1999 combined with those of the Company, the legal parent, from the date of
acquisition on March 10, 1999, in accordance with generally accepted accounting
principles for reverse acquisitions. In addition, the comparative figures are
those of Rob Roy, the legal subsidiary.
The Company's fiscal year end is June 30. The following is a summary of certain
selected financial information for the nine months ended March 31, 2000, the
fiscal year ended June 30, 1999, and the period from its date of incorporation
to June 30, 1998. Reference should be made to the financial statements attached
to this registration statement to put the following summary in context. All
dollar figures referred to in this section relating to the Company are listed in
US dollars unless otherwise noted.
- ------------------------------------------------------------------------------------
Inception(June 13,
Nine Months ended Year ended 1997) to June 30,
March 31, 2000 June 30, 1999 1998 (unaudited)
- ------------------------------------------------------------------------------------
Revenues
(Loss) from
continuing operations $(498,087) $(1,202,151) $(509,208)
(Loss) per common
share $ (0.03) $ (0.15) $ (0.26)
- ------------------------------------------------------------------------------------
March 31, 2000 June 30, 1999 June 30, 1998
- ------------------------------------------------------------------------------------
Working capital
(deficiency) $(367,322) $ (170,390) $ (28,983)
Total assets $ 28,072 $ 72,797 $ 12,798
Long-term obligations $ -- $ -- $ --
- ------------------------------------------------------------------------------------
RESULTS OF OPERATIONS
During the nine months ended March 31, 2000, the Company incurred a loss of
$498,087 due to expenditures for consulting fees ($212,985), exploration of
mineral properties ($42,390), professional fees ($89,917), travel and promotion
($49,843), and general and administrative ($31,622). In addition, the Company
incurred $30,000 in option payments to acquire mineral properties. This compares
to a loss of $627,070 for the nine months ended March 31, 1999, with the most
significant expenditure being $346,735 in option payments to acquire mineral
properties.
9
Due to the lack of any revenues, and the cumulative losses of $1,711,359
incurred through June 30, 1999, and $2,209,446 through March 31, 2000, there is
a substantial doubt about the Company's ability to continue as a going concern,
as noted in the report of the independent auditors on the Company's financial
statements. The Company requires additional financing to continue operations and
to undertake the exploration programs described below. If it is unable to obtain
such financing, it may be unable to continue operations or engage in the
exploration programs.
FINANCIAL CONDITION
Since inception, the Company's capital resources have been limited. The Company
has had to rely upon the sale of equity securities for cash required to fund the
administration of the Company. From its inception through March 31, 2000, the
Company has raised $730,823, net of share issuance costs from the sale of its
Common Stock. In addition, 850,000 shares have been issued for mineral property
options and 200,000 shares have been issued for services. Since the Company does
not expect to generate any revenues in the near future, it will have to continue
to rely upon sales of equity and debt securities to raise capital. It follows
that there can be no assurance that financing, whether debt or equity, will
always be available to the Company in the amount required at any particular time
or for any particular period or, if available, that it can be obtained on terms
satisfactory to the Company.
At March 31, 2000, the Company had a working capital deficiency of $367,322. The
increase was due primarily to the loss incurred during the nine months then
ended.
PLAN OF OPERATION
In addition to option payments of $5,000 due toward the January 1, 2000
installment , the Company is required to invest a total of $300,000 on or before
June 12, 2000 and $1,000,000 on or before February 12, 2001 on work commitments.
The Company must also issue 750,000 shares of Common Stock by March 2002. The
Company issued the minimum of 250,000 shares by February 12, 2000, leaving
500,000 shares to be issued by March 2002. The Company plans to conduct a Phase
1 regional geochemical survey over the La Mexicana property at a cost of
approximately $19,000. The Phase 1 program will be followed by a Phase 2 program
at a cost of approximately $77,000. The Company does not presently have the
funds available for either the Phase 1 or Phase 2 program and will have to raise
additional funds by way of debt or equity in order to finance same. It does not
have any arrangements for such funding at present. See Part I - Item 3.
Description of Property, below, for more detail on the proposed work programs of
the Company. If the Company were unable to raise the funds necessary to satisfy
the option payment and work commitment requirements, the Company would seek an
extension from the optionor of the Mexicana I property. There is no assurance
that the Company would be able to obtain an extension. If the Company defaulted
in its obligations, the option agreement would be terminated and the Company
would lose everything of value paid for the property.
In addition to the property obligations described in the preceding paragraph,
the Company has only normal trade obligations. As of March 31, 2000, these trade
obligations were $188,818, of which
10
approximately $93,000 was outstanding for more than 90 days. The officers and
directors of the Company and the persons to whom debt of $100,233 is owed, have
not given the Company a fixed date for repayment. The persons to whom the
$100,233 is owed are shareholders who own less than 5% of the outstanding shares
of the Company. The advances do not bear interest, have no fixed terms of
repayment, and are not pursuant to a written agreement.
As of March 31, 2000, the Company had approximately $14,600 cash on hand.
Pursuant to an interim financing agreement dated January 24, 2000, the Company
borrowed $75,000 from an unrelated party. These proceeds have satisfied the
Company's cash requirements through April, 2000. The interim financing bears
interest at 8%, is due in full by July 24, 2000, and is guaranteed by R. Bruce
Manery and Roger Watts, officers and directors of the Company. The Company will
need to obtain additional funds through loans of this sort or the sale of its
equity securities to maintain its operations. The Company would be able to
maintain an office, but would not be able to undertake the exploration programs
on the property, make any option payments, or service any existing debt. The
Company does not intend to hire any more full-time employees over the next 12
months. Subject to the availability of funds the Company will hire additional
employees and consultants on a part-time basis in order to carry out its
proposed work programs. The Company does not intend to make any purchases of
plant or equipment over the next 12 months.
If the Transmeridian transaction should be completed, the Company would be
required to arrange for a private placement in the minimum amount of $2,000,000
to cover immediate working capital and project costs. Since the Company has just
started its due diligence work on Transmeridian and no progress has been made in
recent months, management does not believe that the acquisition of Transmeridian
is probable. Accordingly, the Company has not made any plans with respect to a
proposed private placement.
11
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not Applicable.
ITEM 2. CHANGES IN SECURITIES
Not Applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
ITEM 5. OTHER INFORMATION
Not Applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A) EXHIBITS
REGULATION CONSECUTIVE
S-B NUMBER DOCUMENT PAGE NO.
2.1 Offer to Purchase (1)<F1> N/A
3.1 Articles of Incorporation (1)<F1> N/A
3.2 Bylaws (1)<F1> N/A
10.1 Mexicana I Agreement dated as of February 12, 1998 (1)<F1> N/A
10.2 La Lajita Agreement dated as of February 12, 1998 (1)<F1> N/A
10.3 1999 Stock Option Plan (1)<F1> N/A
10.4 Agreement with Transmeridian Exploration Inc., as amended (1)<F1> N/A
10.5 Letter of Intent with OREX Gold Mines Corporation (1)<F1> N/A
10.6 Mexicana I Agreement dated as of November 12, 1999 (1)<F1> N/A
10.7 Interim Financing Agreement (1)<F1> N/A
21 Subsidiaries of the Registrant (1)<F1> N/A
27 Financial Data Schedule<F1> 14
12
<FN>
(1)<F1> Incorporated by reference to the exhibits filed with the Registration Statement on Form 10-SB, File No.
0-27953
</FN>
B) REPORTS ON FORM 8-K:
None.
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.
GOLDEN RIVER RESOURCES INC.
(Registrant)
Date: May 11, 2000 By: /s/Robert Bruce Manery
--------------------------------
Robert Bruce Manery, Secretary
(Principal financial officer)
Exhibit 27
Financial Data Schedule