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 DECEMBER 31, 2005
[ ] 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.
----------------------------
(Exact name of small business issuer as specified in its charter)
State of Kansas 48-0846635
--------------- ----------
(State or other jurisdiction of (IRS Employer
incorporation or organization) I. D. Number)
896 N. Mill Street, Suite 203, Lewisville, Texas 75057
(Address of principal executive offices)
(972) 219-8585
(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 253,934,360 shares of common stock, No Par Value,
outstanding as of December 31, 2005.
Transitional Small Business Disclosure Format (check one); Yes [ ] No [X]
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PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
Golden Chief Resources Inc.
Balance Sheets
(Unaudited)
A S S E T S December 31 September 30
- ----------- 2005 2005
------------- -------------
Current assets:
- ---------------
Cash $ 4,680 $ 7,093
Accounts receivable 3,159 --
Advances to related parties -- 20,768
------------- -------------
Total current assets 7,839 27,861
------------- -------------
Fixed assets:
- -------------
Oil & gas properties, producing 159,304 --
Less: Depletion 982 --
------------- -------------
158,322 --
Oil & gas properties, non-producing 95,000 254,304
Montgomery pipeline 34,789 34,789
------------- -------------
Total fixed assets 288,111 289,093
------------- -------------
Total assets $ 295,950 $ 316,954
============= =============
L I A B I L I T I E S and S T O C K H O L D E R S' D E F I C I T
- --------------------------------------------------------------------
Current liabilities
- -------------------
Accounts payable 18,028 19,109
Accounts payable - related party 6,350 --
Stock payable 212,614 365,724
------------- -------------
Total current liabilities 236,992 384,833
------------- -------------
Stockholders' deficit
- ---------------------
Common stock, no par value
authorized 500,000,000 shares; 253,934,360
and 243,019,960 issued and outstanding 4,907,667 4,713,557
Accumulated deficit (4,848,709) (4,781,436)
------------- -------------
Total stockholders' deficit 58,958 (67,879)
------------- -------------
Total liabilities and stockholders' deficit $ 295,950 $ 316,954
============= =============
2
Golden Chief Resources, Inc.
Statements of Operations
For Three Month Periods Ended December 31, 2005 and 2004
(Unaudited)
2005 2004
------------- -------------
Revenue
Oil and gas production $ 3,564 $ --
------------- -------------
Cost of Revenues
Lease operating expenses 16,131 --
Depletion 982 --
------------- -------------
Total Cost of Revenues 17,113 --
General & administrative expenses 53,724 935,724
------------- -------------
Total Operating Expenses 70,837 935,724
------------- -------------
Net loss $ (67,273) $ (935,724)
============= =============
Basic & Diluted Net Loss Per Share $ (0.00) $ (0.00)
============= =============
Weighted Average Shares Outstanding 253,653,334 157,666,622
============= =============
3
Golden Chief Resources Inc.
Statement of Changes in Stockholders' Equity
For the Three Month Period Ended December 31, 2005
(Unaudited)
Additional Total
Common Stock Paid in Accumulated Stockholders'
Shares Capital Deficit Equity
------------ ------------ ------------ ------------
Balance September 30, 2005 243,019,960 $ 4,713,557 $ (4,781,436) $ (67,879)
------------ ------------ ------------ ------------
Shares issued for:
Stock Payable 10,174,400 175,610 175,610
Cash 740,000 18,500 18,500
Net loss (67,273) (67,273)
------------ ------------ ------------ ------------
Balance December 31, 2005 253,934,360 $ 4,907,667 $ (4,848,709) $ 58,958
============ ============ ============ ============
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Golden Chief Resources, Inc.
Statement of Cash Flows
For the Three Month Periods Ended December 31, 2005 & 2004
(Unaudited)
Cash Flows from Operating Activities: 2005 2004
- ------------------------------------- --------- ---------
Net Loss $ (67,273) $ (95,724)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depletion 982 --
Stock Issued for Services -- 95,000
Change in assets and liabilities:
Accounts receivable (3,159) --
Accounts payable (1,081) (3,365)
Accounts payable to related parties 6,350 (5,000)
Advances to related parties 20,768
--------- ---------
Net Cash Used in Operating Activities (43,413) (9,089)
--------- ---------
Cash Flows from Financing Activities:
- -------------------------------------
Proceeds of stock sales 41,000 9,000
--------- ---------
Net Cash Provided by Financing Activities 41,000 9,000
--------- ---------
Net Increase (Decrease) in Cash (2,413) (89)
Cash -Beginning of year 7,093 225
--------- ---------
Cash -End of year $ 4,680 $ 136
========= =========
Supplementary Disclosure:
- -------------------------
Cash Paid for Interest $ -- $ --
Cash Paid for Taxes
Non-cash transactions:
- ----------------------
Shares Issued for:
Acquisition of oil and gas properties -- 95,000
Stock Payable 153,110
5
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 month periods ended December 31, 2005 and 2004 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
consolidated financial statements for the year ended September 30, 2005 included
in the Company'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 months ended December 31, 2005 are not
necessarily indicative of the results that may be expected for the year ending
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 - STOCK PAYABLE
During the three months ending December 31, 2005, Golden Chief agreed to issue
16,574,400 shares of common stock to various investors. The shares were valued
at $365,724. 7,502,000 shares were not issued as of December 31, 2005 and are
reflected as a stock payable of $212,614.
NOTE 3 - COMMON STOCK
During the three months ending December 31, 2005, Golden Chief issued: 1,842,000
shares of common stock for cash of $41,000.
NOTE 4 - SUBSEQUENT EVENT
During the quarter ending March 31, 2006, we raised $60,000 from existing
shareholders who purchased 2,850,000 shares of our common stock. The Company
also finalized an agreement whereby certain office equipment and furniture
valued at $25,000 were acquired for the issuance of 2,500,000 shares of common
stock.
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Item 2: Management's Discussion and Analysis of Financial Condition and Results
of Operations.
General:
The Company was able to put the Lindley lease on production during the quarter,
but equipment and weather problems slowed this activity. The Company also
changed transfer agents, appointing Routh Stock Transfer, Inc. of Plano, Texas
as its transfer agent (see Part II Item 6).
During the year ago quarter, Golden Chief entered into a transaction with
International Royalty and Oil Co. (IROC) of Dallas, Texas, a company controlled
by two directors of Golden Chief to acquire certain non-producing oil and gas
properties located in southeastern Kansas in exchange for the issuance of 96,000
000 shares of our common stock to the shareholders of International Royalty and
Oil Co. The properties need a certain amount of remedial work in order to return
to production and we estimate the need for up to $500,000 to achieve full
production and resume a gas injection project on one of the leases. IROC was
endeavoring to provide a further lease as of September 1, 2005, but until they
can resolve certain problems pertaining to their title to the property they will
be unable to deliver the lease to us. We also agreed to hire a financial advisor
and a brokerage firm to provide assistance in seeking additional capital and aid
in the establishment of an orderly market for our shares. We agreed to issue
5,000,000 shares to the financial advisor and 2,000,000 shares to the brokerage
firm for these services.
Pursuant to the transaction with International Royalty and Oil Co., two new
directors were added,: J. Fred Oden and Hugh Fowler. Mr. Hewitt and Mr. Landrum
resigned from the board at that meeting, and Mr. McIlvain was then elected our
president with Mr. Oden elected vice president and Mr. Fowler elected secretary.
This action was effective on December 16, 2004.
Capital Resources:
During the current quarter, our capital resources were extremely limited. Our
prospects will depend entirely on our ability to secure future financing.
The assets as of December 31, 2005 totaled $295,950, consisting primarily of the
non-producing leases acquired in the transaction with International Royalty and
Oil Co., along with the producing lease acquired from Sabine Operating Services
in September 2005.
Revenues and Expenses:
During the current quarter, we incurred significant operating expenses. Most of
the operating expenses were for compensation for the oil and gas properties,
which were secured by the issuance of our common stock to related parties.
Production from the Lindley lease began during the quarter and the Company
reported revenues of $3,564 for the quarter. Operations on the Lindley continue,
but equipment and weather problems resulted in lower than anticipated
performance.
During the quarter a year ago, we reported no revenues.
Loss on oil & gas operations amounted to $13,549 for the three months ended
December 31, 2005. Total operating expense amounted to $70,837 for the three
months ended December 31, 2005, a reduction of $864,887 from the same period in
the prior year resulting primarily form reduced issuances of stock for services.
Liquidity:
Net cash used in operations for the three months ended December 31, 2005
amounted to $43,413 as compared to $9,089 for the comparable period of the prior
year. The increase resulted primarily from cash payments for operating expenses.
Cash provided from financing activities for the three month period ended
December 31, 2005 amounts to $41,000 and consisted of cash proceeds from common
stock issuances.
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Subsequent Events:
During the quarter ending March 31, 2006, we raised $60,000 from existing
shareholders who purchased 2,850,000 shares of our common stock. The Company
also finalized an agreement whereby certain office equipment and furniture
valued at $25,000 were acquired for the issuance of 2,500,000 shares of common
stock.
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, we are 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
There were no changes in securities during the current quarter.
ITEM 3. CONTROLS AND PROCEDURES.
a) Evaluation of Disclosure Controls and Procedures. As of December 31,
2005, the Company's management carried out an evaluation, under the
supervision of the Company's Chief Executive Officer and Chief
Financial Officer of the effectiveness of the design and operation of
the Company's system of disclosure controls and procedures pursuant to
the Securities and Exchange Act, Rule 13a-15(e) and 15d-15(e) under
the Exchange Act). Based upon that evaluation, the Chief Executive
Officer and Chief Financial Officer concluded that the Company's
disclosure controls and procedures were not effective, as of the date
of their evaluation, for the purposes of recording, processing,
summarizing and timely reporting material information required to be
disclosed in reports filed by the Company under the Securities
Exchange Act of 1934. Our auditors proposed material adjustments
related to the issuance of stock for services, among others, which
have been recorded by the Company. The Company is working to improve
our accounting expertise to eliminate such adjustments in the future.
b) Changes in internal controls. There were no changes in internal
controls over financial reporting, known to the Chief Executive
Officer or Chief Financial Officer that occurred during the period
covered by this report that has materially affected, or is likely to
materially effect, the Company's internal control over financial
reporting.
Item 4. Submission of Matters to a Vote of Securities Holders
No matters were submitted to a vote of the securities holders during the current
quarter.
Item 6. Exhibits and Reports on Form 8-K
A report on Form 8-K was filed on October 19, 2005 notifying that the Registrant
had appointed Routh Stock Transfer, Inc. of Plano, Texas as its transfer agent
replacing Fidelity Transfer Company of Salt Lake City, Utah.
Exhibits
8
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: May 15, 2006 /s/ M. H. MCILVAIN
------------------------------------
By: M. H. McIlvain, President
and Chief Financial Officer
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