Golden Chief Resources, Inc.
896 N. Mill Street, #203
Lewisville, Texas 75057
972 219-8585
June 9, 2006
United States Securities and Exchange Commission
Attn: April Sifford, Branch Chief
Attn: Shannon Buskirk, Division of Corporation Finance
Washington, D.C. 20549
Re: Golden Chief Resources, Inc.
Form 10-KSB/A for fiscal year ended June 30, 2005 Filed May 1, 2006
File No. 000-12809
Dear Ms. Sifford,
We have reviewed your comment letter dated May 30, 2006 and ask that you see our
responses included herewith.
General
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1. SEC Comment: Please provide a statement acknowledging the items listed
in the closing comments section at the end of this letter.
Golden Chief Response:
o Golden Chief acknowledges that it is responsible for the
adequacy and accuracy of the disclosures in the filing;
o Golden Chief acknowledges that staff comments or changes to
disclosures in response to staff comments do not foreclose
the Commission from taking any action with respect to the
filing; and
o Golden Chief acknowledges that the company may not assert
staff comments as a defense in any proceeding initiated by
the Commission or any person under the federal securities
laws of the United States.
Form 10-KSB/a for the Fiscal Year Ended September 30, 2005
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General
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2. SEC Comment: The filing of the amended Form 10-KSB on May 1, 2006
should be clearly marked and identified as an amendment to the
previous filing made on March 20, 2006. Please revise your document to
clearly identify the filing as "Form 10-KSB/A" and include disclosure
within the filing that summarizes the nature, location and reasons for
the change made from the original filing.
Golden Chief Response:
Golden Chief has marked the filing as Form 10-KSB/A Amendment No. 1 on
the facing sheet. Additionally, the financial statements included in
the Form 10-KSB/A Amendment No. 1 submitted herewith include a new
footnote, Note 2, which identifies the financial statements' changes
from the original filing as reclassifications and highlights those
changes including the nature, location and reasons for the changes
made from the original filing.
Item 8A
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3. SEC Comment: Please amend your filing to provide the information
required by items 307 and 308 of Regulation S-B. Tell us how you
considered the effect of the revisions made to your report, which
required filling an amendment, on your conclusions regarding the
effectiveness of your disclosure controls and procedures.
Golden Chief Response:
Golden Chief has added Items 8A. Controls and Procedures and 8B. Other
Information under Item 8. in the revised Form 10-KSB/A Amendment No. 1
included herein. The disclosures included in Item 8A. explain how
Golden Chief considered the effect of the revisions made to its report
which required filling an amendment and on its conclusions regarding
the effectiveness of its disclosure controls and procedures.
Financial Statements
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4. SEC Comment: We note you have made revisions to the classification of
certain amounts within the financial statements and to the disclosures
within the footnotes. Tell us why you have not labeled the financial
statements and footnotes as revised. Tell us what consideration your
auditors have given to updating the audit reports to acknowledge these
revisions.
Golden Chief Response:
The financial statements included in the Form 10-KSB/A Amendment No. 1
submitted herewith include a new footnote, Note 2, which identifies
the financial statements' changes from the original filing as
reclassifications and highlights those changes including the nature,
location and reasons for the changes made from the original filing.
Our independent registered accounting firm who audited these financial
statements, Malone & Bailey, PC , have considered these
reclassifications and the potential impact on the readers of the
financial statements and have come to the conclusion, with which we
concur, that because the reclassifications are not material to
previously reported financial position or results of operations they
do not raise the reclassifications to the level of a restatement which
would require an update to their original audit report.
Statements of Operations, page F-4
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5. SEC Comment: We note you have reclassified a portion of the amount
previously classified as other expense to stock for services in your
revised statements of operations in response to comment 4 of our
letter dated April 13, 2006. however, we were unable to identify where
you have expanded your footnote disclosures to describe the nature of
this amount. We note your disclosure in note 4; however, it remains
unclear how the amounts disclosed in your footnote sum to the amount
classified as stock for services. Please revise your footnote
disclosures to address the remaining balance of stock for services and
to clarify how these individual issuances listed for the fiscal year
ended September 30, 2005 relate to the total balance reflected in the
statements of operations.
Golden Chief Response:
Golden Chief has made another reclassification of $28,694 from stock
for services expense to other expense in the Form 10-KSB/A Amendment
No. 1 submitted herewith. In addition, footnote 4 has been expanded to
include a table of stock transaction issued for services which now
agrees with the statement of operations as well as the statement of
cash flows and the statement of changes in stockholders deficit.
Statement of Changes in Stockholders' Deficit, page F-5
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6. SEC Comment: Please remove the "$" from the final total as of
September 30, 2005 in the "Common Stock Shares" column as this amount
refers to the number of shares outstanding. In addition, please remove
the 243,019,960 from the September 30, 2005 column on your balance
sheet on page F-3 as it appears this number of shares should have been
reflected within the line item description for common stock.
Golden Chief Response:
Golden Chief removed the "$" from the final total as of September 30,
2005 in the "Common Stock Shares". In addition, Golden Chief removed
the 243,019,960 from the September 30, 2005 column on its balance
sheet on page F-3.
Statements of Cash Flows, page F-6
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7. SEC Comment: Please revise your statement of cash flows or tell us
what comprises the difference between the $906,036 stock issued for
services during the fiscal year ended September 30, 2005 as presented
in your statement of cash flows and the $935,000 balance of stock for
services in your statement of operations for the fiscal year ending
September 30, 2005.
Golden Chief Response:
Golden Chief has made a reclassification of $28,694 from stock for
services expense to other expense in the Form 10-KSB/A Amendment No. 1
submitted herewith. In addition, footnote 4 has been expanded to
include a table of stock transaction issued for services which now
agrees with the statement of operations as well as the statement of
cash flows and the statement of changes in stockholders deficit.
Note 1 - Summary of Significant Accounting Policies, page F-7
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Oil & gas properties, page F-7
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8. SEC Comment: Tell us why you have not recorded any depreciation
expense related to the Montgomery Pipeline. It appears this asset
should be depreciated over its estimated useful life.
Golden Chief Response:
Golden Chief follows the policy of beginning to depreciate property &
equipment on the date the asset is available for use, which is when
the asset is in the location and condition necessary to operate as
intended. The Montgomery pipeline is not in condition to operate as
intended as it requires testing and inspection before it will be
available for use.
Golden Chief has expanded its accounting policy footnote in the Form
10-KSB/A Amendment No. 1 submitted herewith to include a policy for
capitalization of property and equipment as well as a policy with
respect to depreciation. This disclosure includes the above noted
policy and discloses why no depreciation has been recorded on the
Montgomery Pipeline.
Stock-Based Compensation, page F-9
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9. SEC Comment: We noted your expanded disclosures in response to comment
7 of our letter dated April 13, 2006. However, we are unable to find
the pro forma disclosures that you refer to in the revised footnote,
as required by SFAS 123, paragraph 45(c). In addition, please expand
Note 4 to include the additional disclosures required by paragraphs 47
& 48 of SFAS 123.
Golden Chief Response:
Golden Chief did not include any pro-forma disclosure of the impact of
reflecting options on the fair value as no options were granted,
modified or awarded for the years ended December 31, 2005 or 2004.
This information was added to the accounting policy footnote related
to stock-based compensation as well as Note 5 which details stock
option activity in the Form 10-KSB/A Amendment No. 1 submitted
herewith.
Additionally, in the Form 10-KSB/A Amendment No. 1 submitted herewith,
Golden Chief has added the disclosures required by paragraphs 47 & 48
of SFAS 123 to Note 5 related to stock options.
Note 7 - Related Party Transactions, page F-11
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10. SEC Comment: We note you have revised your disclosure, in response to
comment 10 of our letter dated April 13, 2006, relating to the
purchase of the oil and gas property in Montgomery County, Kansas to
state the carrying value approximates fair value at the time of
purchase. However, your disclosures relating to the purchases of two
oil & gas leases and a gas gathering system continue to state the
purchase is accounted for at carry over basis. Tell us how you
determined that the carry over basis of these assets acquired was a
better approximation of the assets' fair value than the fair value of
the stock issued as consideration.
Golden Chief Response:
The properties acquired for shares were all either non-producing oil
and gas properties or in one instance an existing natural gas pipeline
which was not in use. Golden Chief acquired the prior owners' cost
basis information and relied upon this data. The fair value of the
shares issued for the properties approached $1,000,000, an amount
which we feel would be significantly inflated from either the carry
over basis or any attempt at "fair value" based on our experience in
the industry.
Exhibits 31.1 and 32.1
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11. SEC Comment: Your response letter filed May 1, 2006 did not include a
response to our comment12 of our letter dated April 13, 2006. We
therefore reissue the comment: In your amended certifications, please
revise the enumeration in Exhibit 31.1 to be consistent with the
presentation denoted in Regulation S-B, Section 601 (B)(31).
Golden Chief Response:
Golden Chief has revised in the Form 10-KSB/A Amendment No. 1
submitted herewith the enumeration in Exhibit 31.1 to be consistent
with the presentation denoted in Regulation S-B, Section 601 (B)(31).
12. SEC Comment: Please update the date of the certifications to coincide
with the date the amended report is filed.
Golden Chief Response:
Golden Chief has updated the date of the certifications to coincide
with the date the amended report is filed.
Form 10-QSB for the Quarterly Period Ending December 31, 2005
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Note 1, Basis of Presentation, page 6
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New Accounting Standards, page 6
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13. SEC Comment: We note your disclosure that the adoption of SFAS 123R
had no effect on the financial statements. Please tell us how you made
this determination considering the stock options you have outstanding
that were previously accounted for in accordance with APB 25.
Golden Chief Response:
SFAS 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.
This Statement requires a public entity to measure the cost of
employee services received in exchange for an award of equity
instruments based on the grant-date fair value of the award (with
limited exceptions). That cost will be recognized over the period
during which an employee is required to provide service in exchange
for the award--the requisite service period (usually the vesting
period).
This Statement is for public entities that file as small business
issuers as of the beginning of the first interim or annual reporting
period that begins after December 15, 2005 and applies to all awards
granted after the required effective date and to awards modified,
repurchased, or cancelled after that date.
Golden Chief determined that SFAS 123R had no effect on its financial
statements as no options were granted, modified or awarded for the
periods ended December 31, 2005 or 2004. This information was added to
the accounting policy footnote related to stock-based compensation as
well as Note 5 which details stock option activity in the Form
10-KSB/A Amendment No. 1 submitted herewith.
Exhibit 31.1
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14. SEC Comment: In future filings, please revise your certification to
refer onto to "report" and not "quarterly report" in section 2 through
5. The wording of the certification should not deviate form the
standard wording at Regulation S-B, Section 601(B)(31).
Golden Chief Response:
Golden Chief will revise future certifications to refer only to
"report" and not quarterly report.
We believe that the above addresses the questions raised in the letter of
comment, but if you have further questions please let us know.
Golden Chief Resources, Inc.
Sincerely,
/S/ M. H. McIlvain
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M. H. McIlvain
President