UNITED STATES
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, 2006
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 0-12809
GOLDEN CHIEF RESOURCES, INC.
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(Exact name of small business issuer as specified in its charter)
State of Kansas 48-0846635
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(State or other jurisdiction of (IRS Employer
incorporation or organization) I. D. Number)
896 N. Mill Street, Suite 203 Lewisville, Texas 75057
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(Address of principal executive offices)
(972) 219-8585
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(Issuer's telephone number, including area code)
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
There were 275,136,360 shares of common stock, No Par Value,
outstanding as of June 30, 2006.
Transitional Small Business Disclosure Format (check one); Yes [ ] No [X]
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Golden Chief Resources Inc.
Balance Sheets
(Unaudited)
June 30 September 30
2006 2005
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A S S E T S
- -----------
Current assets:
- ---------------
Cash $ 2,239 $ 7,093
Accounts receivable -- --
Advances to related parties 6,000 20,768
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Total current assets 8,239 27,861
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Property & equipment
- --------------------
Producing oil & gas property, net of depletion $ 157,311 $ --
Furniture & fixtures, net of depreciation 24,000 --
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Total 181,311 --
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Other assets
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Non-producing oil & gas properties 95,000 254,304
Montgomery pipeline 34,789 34,789
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Total 129,789 289,093
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Total assets $ 319,339 $ 316,954
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L I A B I L I T I E S and S T O C K H O L D E R S' E Q U I T Y / (D E F I C I T)
- --------------------------------------------------------------------------------
Current liabilities
- -------------------
Accounts payable 33,963 19,108
Accounts payable - related party 6,350 --
Stock payable -- 365,724
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Total current liabilities 40,313 384,832
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Stockholders' equity/(deficit)
- ------------------------------
Common stock, no par value
authorized 500,000,000 shares; 267,836,360
and 243,019,960 issued and outstanding
Additional paid-in capital 5,250,281 4,712,607
Accumulated deficit (4,971,255) (4,780,485)
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Total stockholders' equity/(deficit) 279,026 (67,878)
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Total liabilities and stockholders' equity/(deficit) $ 319,339 $ 316,954
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Golden Chief Resources, Inc.
Statements of Operations
For Three and Nine Months Ended June 30, 2006 and 2005
Three Months Nine Months
2006 2005 2006 2005
---- ---- ---- ----
(Unaudited) (Unaudited)
Revenue
Oil and gas $ -- $ -- $ 6,905.00 $ --
Other income -- -- -- --
------------- ------------- ------------- -------------
Total Revenue -- -- 6,905.00 --
Cost of Revenues
Lease operating expenses 7,552 3,500 37,413 3,500
Depletion -- -- 1,991 --
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Total Cost of Revenues 7,552 3,500 39,404 3,500
Gross Profit (7,552) (3,500) (32,499) (3,500)
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Operating Expenses
Depreciation 750 -- 1,000 --
Personnel costs -- --
Consulting fees 6,000 16,900 23,500 122,900
Professional fees 17,929 2,500 29,089 2,500
Public relations 175 960 15 960
Travel 2,046 2,031 5,149 3,301
Rent 4,275 4,375 11,400 8,015
Other 22,224 6,966 87,167 13,716
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Total Operating Expenses 53,399 33,732 157,320 151,392
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Income from Operations (60,951) (37,232) (189,819) (154,892)
Other Income/(Expenses)
Gain/(loss) on sale of investments -- -- -- --
Unrealized gain on investments -- -- -- --
Interest income -- -- -- --
------------- ------------- ------------- -------------
Income before income taxes (60,951) (37,232) (189,819) (154,892)
Income taxes -- -- -- --
------------- ------------- ------------- -------------
Net Income (60,951) (37,232) (189,819) (154,892)
============= ============= ============= =============
Earnings per Share $ (0.00) (0.00) (0.00) (0.00)
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Weighted Average Shares Outstanding 271,036,360 249,520,177 265,728,138 224,559,199
============= ============= ============= =============
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Golden Chief Resources, Inc.
Statements of Cash Flows
For the Nine Months Ended June 30, 2006 & 2005
(Unaudited)
2006 2005
---- ----
Cash Flows from Operating Activities:
Net (Loss) $(189,819) $(154,892)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation 1,000 --
Depletion 1,991 --
Stock Issued for Services -- 95,000
Change in assets and liabilities:
Decrease(increase) in:
Accounts receivable -- --
Advances to related parties (14,768) --
Accounts Payable 14,855 (22,019)
Related party accounts payable 6,350 --
Accrued expenses -- (5,000)
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Net Cash Used in Operating Activities (180,391) (86,911)
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Cash Flows from Financing Activities:
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Proceeds of stock sales 175,537 93,779
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Net Cash Used In Financing Activities 175,537 93,779
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Net Increase (Decrease) in Cash (4,854) 6,868
Cash -Beginning of year 7,093 225
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Cash -End of period $ 2,239 $ 7,093
========= =========
Supplementary Disclosure:
Cash Paid for Interest $ -- $ --
Cash Paid for Taxes
Non-cash transactions:
Value of shares Issued for:
Consulting $ 95,000
Investing activities -- --
Acquisition of furniture and fixtures $ 25,000 --
Acquisition of oil & gas properties -- $ 129,789
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Golden Chief Resources, Inc.
Notes to Financial Statements
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited financial statements of Golden Chief Resources, Inc.
(Golden Chief) have been prepared in accordance with accounting principles
generally accepted in the United States of America for interim financial
statements and with the instructions to Form 10-QSB and Regulation S-B for the
three and nine month periods ended June 30, 2006 and 2005 and reflect, in the
opinion of management, all adjustments, which are of a normal and recurring
nature, necessary for a fair presentation of the results for such periods. The
foregoing financial statements do not include all information and footnotes
required by accounting principles generally accepted in the United States of
America for complete financial statements. However, except as disclosed herein,
there has been no material change in the information disclosed in the notes to
financial statements for the year ended September 30, 2005 included in Golden
Chief's Annual Report on Form 10-KSB filed with the Securities and Exchange
Commission. The interim unaudited financial statements should be read in
conjunction with the annual financial statements and accompanying notes.
Operating results for the three and nine months ended June 30, 2006 are not
necessarily indicative of the results that may be expected for the year ended
September 30, 2006.
New Accounting Standards
In December 2004, the FASB issued SFAS No.123R, "Accounting for Stock-Based
Compensation" ("SFAS No. 123R"). SFAS No.123R establishes standards for the
accounting for transactions in which an entity exchanges its equity instruments
for goods or services. This Statement focuses primarily on accounting for
transactions in which an entity obtains employee services in share-based payment
transactions. SFAS No.123R requires that the fair value of such equity
instruments be recognized as expense in the historical financial statements as
services are performed. Prior to SFAS No.123R, only certain pro forma
disclosures of fair value were required. Golden Chief adopted SFAS No. 123R as
of October 1, 2005. The adoption of this standard had no effect on the financial
statements of Golden Chief.
NOTE 2 - ACCOUNTING POLICIES
Property and equipment are carried at cost. Depreciation of property and
equipment is provided using the straight-line method at rates based on the
following estimated useful lives:
Estimated
Classification Useful Life
-------------- -----------
Furniture and fixtures 10 Years
Computer equipment 5 Years
The cost of asset additions and improvements that extend the useful lives of
property and equipment are capitalized. Routine maintenance and repair items are
charged to current operations. The original cost and accumulated depreciation of
asset dispositions are removed from the accounts and any gain or loss is
reflected in the statement of operations in the period of disposition.
Accumulated depreciation as of June 30, 2006 amounted to $1,000.
NOTE 3 - COMMON STOCK
During the three month period ended June 30, 2006, Golden Chief issued 7,500,000
shares of common stock for cash of $45,000.
During the three months ended March 31, 2006, Golden Chief issued:
o 2,850,000 shares of common stock for cash of $60,000.
o 2,500,000 shares for the acquisition of furniture and fixtures valued
at $25,000.
o During the three months ended December 31, 2005, Golden Chief issued:
1,842,000 shares of common stock for cash of $41,000.
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NOTE 4 - SUBSEQUENT EVENT
In July and August 2006, Golden Chief sold 300,000 shares of common stock for
$3,000 to one investor. On July 31, 2006 the Company's directors re-aligned the
officer slate with Mr. B. Fred Oden, III being appointed president and Mr. M. H.
McIlvain moving to the Executive Vice President position. On August 9, 2006 the
Company's Board of Directors dismissed Malone & Bailey, PC as its independent
auditors and engaged Turner, Stone & Company, LLC as its independent auditors.
Item 2: Management's Discussion and Analysis of Financial Condition and Results
of Operations.
General:
During the current quarter the Company raised $45,000 from existing shareholders
who purchased 7,500,000 shares of our common stock. We continued production of
the Lindley lease in Kansas, but there were no sales from the lease during the
quarter.
Golden Chief continued to examine and evaluate the non-producing oil and gas
properties located in south east Kansas with the expectation of securing
adequate financing to enhance and exploit the reserves. This process will
probably continue through our fourth fiscal quarter.
During the nine months ended June 30, 2006, we raised $175,537 from existing
shareholders who purchased 13,640,000 shares of our common stock. The proceeds
were used to satisfy certain obligations and to fund operations during the
current year.
Liquidity and Capital Resources:
During the current quarter, our capital resources were extremely limited. Our
prospects will depend entirely on Golden Chief's ability to secure future
financing and develop additional producing oil & gas properties.
Assets as of June 30, 2006 amounted to $319,340, consisting primarily of the
producing and non-producing oil & gas leases and the Montgomery County gas
pipeline.
During the nine months ended June 30, 2006, Golden Chief raised $175,537 in
capital from existing shareholders.
Results of Operations:
During the three months ended June 30, 2006, Golden Chief had no oil & gas
production revenues. Lease operating expenses and depletion for the three months
ended June 30, 2006 amounted to $7,552 resulting in a loss on oil & gas
operations of $7,552 for the quarter and $39,404 for the nine months ended June
30,2006.
General & administrative expenses amounted to $53,399 for the three months ended
June 30, 2006, an increase of $19,667 from the comparable period in the prior
year. Our net loss for the three months ended June 30, 2006 amounted to $60,951,
an increase of $23,719 over the comparable quarter of the prior year and
resulting in a loss from operations of $189,819 for the nine month period ended
June 30, 2006. Our net loss from operations for the nine month period ended June
30, 2005 amounted to $154,892.
The Company expects to continue to evaluate and prepare a plan for the
improvement of our properties, and when funds become available move the
properties into a productive state. The Company reported no revenues during the
current quarter.
Subsequent Events:
In July and August 2006, Golden Chief sold 300,000 shares of common stock for
$3,000 to one investor. On July 31, 2006 the Company's directors re-aligned the
officer slate with Mr. B. Fred Oden, III being appointed president and Mr. M. H.
McIlvain moving to the Executive Vice President position. On August 9, 2006 the
Company's Board of Directors dismissed Malone & Bailey, PC as its independent
auditors and engaged Turner, Stone & Company, LLC as its independent auditors.
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Disclosure Regarding Forward-Looking Statements:
Where this Form 10-QSB includes "forward-looking" statements within the meaning
of Section 27A of the Securities Act, we desire to take advantage of the "safe
harbor" provisions thereof. Therefore, the Company is including this statement
for the express purpose of availing itself of the protections of such safe
harbor provisions with respect to all of such forward-looking statements. The
forward-looking statements in this Form 10-QSB reflect our current views with
respect to future events and financial performance. These forward-looking
statements are subject to certain risks and uncertainties that could cause
actual results to differ from those anticipated. In this Form 10-QSB, the words
"anticipates," "believes, "expects," "intends," "future" and similar expressions
identify forward-looking statements. We undertake no obligation to publicly
revise these forward-looking statements to reflect events or circumstances that
may arise after the date hereof. All subsequent written and oral forward-looking
statements attributable to us or persons acting on our behalf are expressly
qualified in their entirety by this section.
PART II. OTHER INFORMATION
Item 2. Changes in Securities
During the three month period ended June 30, 2006, Golden Chief issued 7,500,000
shares of common stock for cash of $45,000.
Item 3. Controls and Procedures
(a) Evaluation of disclosure controls and procedures.
Our Chief Executive Officer and Chief Financial Officer (collectively the
"Certifying Officers") maintain a system of disclosure controls and procedures
that is designed to provide reasonable assurance that information, which is
required to be disclosed, is accumulated and communicated to management timely.
Under the supervision and with the participation of management, the Certifying
Officers evaluated the effectiveness of the design and operation of our
disclosure controls and procedures (as defined in Rule [13a-14(c)/15d-14(c)]
under the Exchange Act) within 90 days prior to the filing date of this report.
Based upon that evaluation, the Certifying Officers concluded that our
disclosure controls and procedures are effective in timely alerting them to
material information relative to our company required to be disclosed in our
periodic filings with the SEC. The Certifying Officers concluded that our
disclosure controls and procedures are also effective to ensure that information
required to be disclosed by the Company in reports that it files under the
Exchange act is recorded, processed, summarized and reported within the time
periods specified in the rules and forms of the SEC.
(b) Changes in internal controls.
Our scope of internal control is intended to extend to policies, procedures,
processes, systems, activities, initiatives, and endeavors required of a company
with our transactions, expenses, and operations. To this end, management has
made changes to internal controls and procedures, including corrective actions
with regard to significant deficiencies or material weaknesses identified in the
Company's audit for the period ending September 30, 2005 and the years ended
September 30, 2004 and 2003, respectively. As of this date, it is the belief of
management that, given the Company's operations, our revised disclosure controls
and procedures will be effective.
Item 4. Submission of Matters to a Vote of Securities Holders
No matters have been submitted to a vote of the securities holders during the
current quarter.
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Item 6. Exhibits and Reports on Form 8-K
A filing on Form 8K was made on August 2, 2006 notifying that the Company's
board of directors had re-aligned the officer slate with Mr. B. Fred Oden, III
being appointed President and Mr. M. H. McIlvain moving to the Executive Vice
President position
SIGNATURES
In accordance with Section 13 or 15 (d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
GOLDEN CHIEF RESOURCES, INC.
Date: September 25, 2006 /s/M. H. MCILVAIN
--------------------------------
By: M. H. McIlvain, Executive Vice-President
and Chief Financial Officer
8