U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF
1934 FOR THE QUARTERLY PERIOD ENDED
SEPTEMBER 30, 2003
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: 0-26101
GOLDEN SPIRIT MINERALS LTD.
(Formerly Known as 2U ONLINE.COM, INC.)
(Exact name of registrant as specified in its charter)
DELAWARE 52-2132622
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1288 Alberni Street, Suite 806, Vancouver, V6E 4R8
British Columbia, Canada
(Address of registrant's principal executive offices) (Zip Code)
604.664.0499
(Registrant's Telephone Number, Including Area Code)
==============================================================================
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practical date September 30, 2003, there were
40,754,289 post forward split shares of the issuer's $.0001 par value common
stock issued and outstanding.
==============================================================================
<table>
<caption>
<s> <c> <c>
INDEX
Page
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements.....................................................F1-F13
Item 2. Management's Discussion and Analysis or Plan of Operation.................2-7
Item 3. Controls And Procedures....................................................8
Part II. OTHER INFORMATION
Item 1. Legal Proceedings..........................................................9
Item 2. Changes in Securities and Use of Proceeds................................. 9
Item 3. Defaults Upon Senior Securities............................................9
Item 4. Submission of Matters to a Vote of Security Holders........................9
Item 5. Other Information......................................................... 14
Item 6. Exhibits and Reports on Form 8-K...........................................14
SIGNATURES...........................................................................14
CERTIFICATION........................................................................16
=================================================================================
</table>
GOLDEN SPIRIT MINERALS LTD.
(Formerly 2U Online.Com, Inc.)
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
<table>
<caption>
<s> <c> <c>
September 30, 2003 December 31, 2002
------------------ -----------------
ASSETS (unaudited)
CURRENT ASSETS
Cash $ - $ 1
Accounts Receivable 393 233
Available for sale securities 32,750 68,611
Current portion of prepaid Service Contract(Note 3) 144,500 59,500
------- ------
177,643 128,345
PREPAID SERVICE CONTRACTS (Note 3) 76,715 64,464
FURNITURE AND EQUIPMENT, net of depreciation 11,015 14,212
OTHER INTANGIBLE ASSETS 1 1
--------- ----------
$ 265,374 $ 207,022
========= ==========
CURRENT LIABILITIES
Bank Overdraft $ 1,164 $ -
Accounts payable and accrued liabilities 124,213 122,844
Due to related parties (Note 5) 197,120 220,412
--------- ---------
$ 322,497 343,256
========= =========
GOING CONCERN (Note 1)
STOCKHOLDERS' EQUITY (CAPITAL DEFICIENCY)
CAPITAL STOCK (Note 4)
Common stock, $.0001 par value, 100,000,000
shares authorized 5,007 4,055
40,754,289 (2002 - 12,164,250)
shares issued and outstanding
Additional paid-in capital 9,065,966 8,157,618
Deficit accumulated during the development stage (9,089,187) (8,304,739)
Accumulated other comprehensive income (loss) (38,909) 6,832
------------ -----------
(57,123) (136,234)
$ 265,374 $ 207,022
=========== ============
The accompanying notes are an integral part of these consolidated financial statements.
</table>
F-1
GOLDEN SPIRIT MINERALS LTD.
(Formerly 2U Online.Com, Inc.)
(A Development Stage Company)
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<table>
<caption>
<s> <c> <c> <c> <c> <c>
Cumulative
Three Three Nine Nine from
Months Months Months Months January 1,
ended ended ended ended 1996 to
September September September September September
30, 2003 30, 2002 30, 2003 30, 2002 30, 2003
---------- ---------- ---------- ---------- ----------
REVENUES
Processing Fees $ - $ - $ - $ - $ 98,425
Sale of Oil & Gas Interest - - - - 47,510
Interest Income - - - - 2,927
------------ ----------- --------- --------- -------------
- - - - 148,853
------------ ----------- --------- --------- --------------
GENERAL AND ADMINISTRATIVE EXPENSES
Advertising and marketing - - - - 55,305
Consulting fees 75,292 41,375 366,725 71,125 1,288,425
Consulting fee-Stock based
Compensation 47,800 - 218,500 - 472,169
Loss on settlement of debt - - 50,000 - 139,500
Depreciation 1,066 1,523 3,197 4,568 29,979
Investor relations 7,292 - 34,375 12,395 383,640
Management fees 6,000 6,000 28,000 18,000 350,654
Office and general 6,255 25,133 24,063 48,883 282,110
Professional fees 5,313 3,513 55,822 12,489 333,038
Travel and accommodation - - 2,927 - 147,158
Wages and benefits 250 - 4,409 1,439 113,505
Website development costs - - - - 346,682
Write-down of URLs - - - - 1,659,192
Write-down of technology license - - - - 2,055,938
Write-off of other assets - - - - 145,186
-------- ------- -------- ------- ---------
149,268 77,544 788,018 168,899 7,801,481
LOSS BEFORE THE FOLLOWING: (149,268) (77,544) (788,018) (168,899) (7,652,628)
EQUITY LOSS FROM AVALON GOLD CORP. - (39,637) - (700,153) (1,394,280)
WRITE DOWN OF INVESTMENT IN AVALON - (283,541) - 40,795 (313,301)
GAIN ON SALE OF SECURITIES 3,570 - 3,570 - 11,022
MINORITY INTEREST IN CARDSTAKES' LOSS - - - - 479,978
------------ ----------- ----------- --------- -------------
NET LOSS FOR THE PERIOD (145,698) $ (400,722) $ (784,448) $ (828,257) $(8,869,209)
============ =========== =========== ========== =============
BASIC NET LOSS PER SHARE $ (0.00) $ (0.01) $ (0.02) $ (0.03)
============ =========== =========== ==========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING 38,396,637 31,597,500 32,174,397 31,597,500
The accompanying notes are an integral part of these interim consolidated
financial statements.
</table>
F-2
GOLDEN SPIRIT MINERALS LTD.
(Formerly 2U Online.Com, Inc.)
(A Development Stage Company)
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<table>
<caption>
<s> <c> <c> <c>
Cumulative
Nine Months ended Nine Months ended from January 1,
September 30, September 30, 1996 to
2003 2002 September 30,
------------ ------------ ---------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss for the period $ (784,448) $ (828,257) $ (8,869,209)
Adjustments to reconcile net loss to
net cash from operating activities:
depreciation 3,197 4,568 29,979
non-cash consulting fees 316,725 44,625 1,045,717
loss on settlement of debt 50,000 - 149,500
non-cash management fees 10,000 12,395 234,000
non-cash investors relations fees 34,375 - 331,868
non-cash professional fees 36,500 - 36,500
stock-based compensation 218,500 - 472,169
non-cash component of URL write-down - - 1,214,192
write-down of technology license - 700,153 2,055,938
write-off of website development costs - 313,301 126,876
equity loss from Avalon Gold Corporation. - (354,096) 1,394,280
write down of investment in Avalon Gold Corporation. - - 313,301
Gain on sale of securities (3,570) - (11,022)
minority interest in Cardstakes'loss - - (479,978)
------------ ------------ ------------
(118,721) (107,311) (1,955,889)
net changes in working capital items (296,578) 60,949 40,448
------------ ------------ ------------
CASH USED IN OPERATING ACTIVITIES (333,946) 46,362 (1,915,441)
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of marketable securities (16,150) - (16,150)
Deposit - - (75,000)
Technology license - - (135,938)
Acquisition of furniture and equipment - - (32,696)
Website development costs - - (126,876)
Other intangible assets - - (5,189)
Proceeds from sale of shares of Avalon Gold Corp. 9,840 40,363 82,932
Cash acquired on acquisition of Cardstakes.com, Inc. - - 210,000
------------ ------------ ------------
CASH FLOWS FROM (USED) INVESTING ACTIVITIES (6,130) 40,363 (98,917)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Bank Ocerdraft 1,164 6,841 1,164
Net Advances (to) from related parties 27,292 (6,449) 111,394
Net proceeds on sale of common stock 311,800 - 1,901,800
------------ ------------ ------------
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES 340,256 392 2,014,358
------------ ------------ ------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS - (5,607) -
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD - 5,607 -
------------ ------------ ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ - $ - $ -
============ ============ ============
</table>
During the nine month period September 30, 2003, the Company issued 1,950,000
common shares for prepaid consulting, investor relations and investment banking
service contracts valued at $195,000 (Refer to Note 3) and 100,000 common shares
for payment of outstanding management fees to two directors valued at $10,000.
During the nine month period ended September 30, 2003, the Company issued
2,500,000 shares with a fair value of $150,000 in settlement of $100,000 of
consulting fees. Refer to Notes 4 and 6 The accompanying notes are an integral
part of these interim consolidated financial statements.
F-3
GOLDEN SPIRIT MINERALS LTD.
(formerly 2UOnline.com, Inc.)
(A Development Stage Company)
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2003
(Unaudited)
NOTE 1 - NATURE OF OPERATIONS AND BASIS OF PRESENTATION
The Company was incorporated on September 13, 1993 in the State of Delaware as
Power Direct, Inc. On January 31, 2000 the Company changed its name to 2U
Online.com, Inc to reflect management's decision to shift the Company's focus
from oil and gas exploration and development to internet-based business
development. On October 8, 2003, the Company changed its name to Golden Spirit
Minerals Ltd.
The consolidated financial statements have been prepared on the basis of a going
concern which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. The Company has incurred losses
since inception and at September 30, 2003 had a working capital deficiency of
$144,854 and a capital deficiency of $57,123. The Company and its subsidiaries
are in the development stage, have not generated substantial revenues or
completed development of any commercially acceptable products or services to
date and further significant losses are expected to be incurred in developing
its business. Accordingly, these factors raise substantial doubt regarding the
ability of the Company to continue as a going concern. The recoverability of
the carrying value of assets and ability of the Company to continue as a going
concern is dependent on raising additional capital and ultimately on generating
future profitable operations. Refer to Note 6.
Unaudited Interim Financial Statements
The accompanying unaudited interim consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB of Regulation S-
B. They do not include all information and footnotes required by generally
accepted accounting principles for complete financial statements. However,
except as disclosed herein, there have been no material changes in the
information disclosed in the notes to the financial statements for the year
ended December 31, 2002 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 those financial
statements included in the Form 10-KSB. In the opinion of Management, all
adjustments considered necessary for a fair presentation, consisting solely of
normal recurring adjustments, have been made. Operating results for the nine
months ended September 30, 2003 are not necessarily indicative of the results
that may be expected for the year ending December 31, 2003.
F-4
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The financial statements include the accounts of the Company and its
subsidiaries, a 59% interest in Cardstakes.com (incorporated on February 19,
1999 and currently inactive), a 100% interest in PD Oil & Gas, Inc. (inactive),
and a 100% interest in Cardstakes.com Enterprises Ltd. (inactive).
Use of Estimates and Assumptions
Preparation of the Company's financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures. Accordingly,
actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all liquid investments, with an original maturity of three
months or less when purchased, to be cash equivalents.
Website Development Costs
The Company accounts for website development costs in accordance with EITF 00-02
whereby preliminary website development costs are expensed as incurred. Upon
achieving technical viability and adequate financial resources to complete
development, the company capitalizes all direct costs relating to the website
development. Ongoing costs for maintenance and enhancement are expensed as
incurred. Capitalized costs will be amortized on a straight-line basis over five
years commencing upon substantial completion and commercialization of the
website.
Financial Instruments
The Company's financial instruments include cash and cash equivalents,
marketable equity securities and accounts payable. The fair values of these
financial instruments approximate their carrying values. The fair value of the
Company's marketable equity securities is estimated based on their market value.
Management believes that the fair value of its accounts payable approximates its
carrying value.
F-5
Furniture and Equipment
Furniture and equipment is carried at acquisition cost less accumulated
depreciation on a 30% declining balance basis.
Intangible Assets
Intangible assets consist of acquisition costs of Universal Resource Locators
("URL's"). The Company has adopted the provision of the Statement of Financial
Accounting Standards No. 142 ("SFAS 142"), "Goodwill and Intangible Assets",
which revises the accounting for purchased goodwill and intangible assets.
Under SFAS 142, goodwill and intangible assets with indefinite lives will no
longer be amortized and will be tested for impairment annually. The
determination of any impairment would include a comparison of estimated future
operating cash flows anticipated during the remaining life with the net carrying
value of the asset as well as a comparison of the fair value to book value of
the Company.
Effective January 1, 2002, the Company adopted the provisions of SFAS 142 which,
upon adoption, requires the Company to make an initial determination as to
whether an impairment of its intangible assets has occurred as a result of
adopting this new accounting policy. As a result of applying this impairment
test the Company determined that there was no initial impairment to the value of
the URL's however, as of December 31, 2002, the Company had determined that the
URL's are not expected to generate significant revenue in the future and, as a
result, has written down the carrying value of the URL's to $1.
Foreign Currency Translation
The financial statements are presented in United States dollars. In accordance
with Statement of Financial Accounting Standards No. 52, "Foreign Currency
Translation", foreign denominated monetary assets and liabilities are translated
to their United States dollar equivalents using foreign exchange rates which
prevailed at the balance sheet date. Revenue and expenses are translated at
average rates of exchange during the year. Related translation adjustments are
reported as a separate component of stockholders' equity, whereas gains or
losses resulting from foreign currency transactions are included in results of
operations.
Income Taxes
The Company follows the liability method of accounting for income taxes. Under
this method, future tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
balances. Future tax assets and liabilities are measured using enacted or
substantially enacted tax rates expected to apply to the taxable income in the
years in which those differences are expected to be recovered or settled. The
effect on future tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the date of enactment or
substantive enactment. A valuation allowance is provided for deferred tax
assets if it is more likely than not that the Company will not realize the
future benefit, or if the future deductibility is uncertain.
F-6
Net Loss per Common Share
Basic earnings per share includes no dilution and is computed by dividing income
available to common stockholders by the weighted average number of common shares
outstanding for the period. Dilutive earnings per share reflect the potential
dilution of securities that could share in the earnings of the Company. The
accompanying presentation is only of basic loss per share as the potentially
dilutive factors are anti-dilutive to basic loss per share.
Marketable Equity Securities
The Company follows the equity method of accounting for its long-term
investments in which it holds less than 50% of the investee's voting shares and
over which it exercises significant influence. Under this method, the Company
records its shares of the earnings or losses of the investee. Management
reviews the carrying value of these investments on a quarterly basis to
determine if their carrying value has been impaired. Declines in value that are
other than temporary are recognized by writing down the investment to its
estimated recoverable amount.
Marketable Equity Securities, cont.
The Company's other investments consist of marketable equity securities which
are available-for-sale and as such, their carrying value is adjusted to market
at the end of each quarter. As required by SFAS 130, unrealized gains and
losses on these investments are recorded as a component of accumulated other
comprehensive income and are recorded as a component of net income when
realized. However, if there is a permanent decline in the available-for-sale
securities, this adjustment is taken into income in the period.
Stock-based compensation
In December 2002, the Financial Accounting Standards Board issued Financial
Accounting Standard No. 148, "Accounting for Stock-Based Compensation -
Transition and Disclosure" ("SFAS No. 148"), an amendment of Financial
Accounting Standard No. 123 "Accounting for Stock-Based Compensation" ("SFAS No.
123"). The purpose of SFAS No. 148 is to: (1) provide alternative methods of
transition for an entity that voluntarily changes to the fair value based method
of accounting for stock-based employee compensation, (2) amend the disclosure
provisions to require prominent disclosure about the effects on reported net
income of an entity's accounting policy decisions with respect to stock-based
employee compensation, and (3) to require disclosure of those effects in interim
financial information. The disclosure provisions of SFAS No. 148 were effective
for the Company for the year ended December 31, 2002.
F-7
The Company has elected to continue to account for stock-based employee
compensation arrangements in accordance with the provisions of Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees",
("APB No. 25") and comply with the disclosure provisions of SFAS No. 123 as
amended by SFAS No. 148 as described above. In addition, in accordance with
SFAS No. 123 the Company applies the fair value method using the Black-Scholes
option-pricing model in accounting for options granted to consultants. Under APB
No. 25, compensation expense is recognized based on the difference, if any, on
the date of grant between the estimated fair value of the Company's stock and
the amount an employee must pay to acquire the stock. Compensation expense is
recognized immediately for past services and pro-rata for future services over
the option-vesting period.
The following table illustrates the pro forma effect on net income (loss) and
net income (loss) per share as if the Company had accounted for its for stock-
based employee compensation using the fair value provisions of SFAS No. 123
using the assumptions as described in Note 4:
<table>
<caption>
<s> <c> <c> <c>
Nine months ended Nine months ended
September 30, 2003 September 30, 2002
--------------------------------------------------
Net income (loss) for the period As reported $ (784,448) $ (828,257)
SFAS 123 compensation expense Pro-forma (117,100) -
------------- -------------
Net loss for the period Pro-forma (901,548) $ (828,257)
============ ==============
Pro-forma basic net loss per share Pro-forma $ (0.03) $ (0.03)
============ =============
</table>
The Company accounts for equity instruments issued in exchange for the receipt
of goods or services from other than employees in accordance with SFAS No. 123
and the conclusions reached by the Emerging Issues Task Force in Issue No.
96-18, "Accounting for Equity Instruments That Are Issued to Other Than
Employees for Acquiring or in Conjunction with Selling Goods or Services" ("EITF
96-18"). Costs are measured at the estimated fair market value of the
consideration received or the estimated fair value of the equity instruments
issued, whichever is more reliably measurable. The value of equity instruments
issued for consideration other than employee services is determined on the
earlier of a performance commitment or completion of performance by the provider
of goods or services as defined by EITF 96-18.
F-8
The Company has also adopted the provisions of the Financial Accounting
Standards Board Interpretation No.44, Accounting for Certain Transactions
Involving Stock Compensation - An Interpretation of APB Opinion No. 25 ("FIN
44"), which provides guidance as to certain applications of APB 25. FIN 44 is
generally effective July 1, 2000 with the exception of certain events occurring
after December 15, 1998.
Recent Accounting Pronouncements
In July 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards No. 141 ("SFAS 141"), "Business Combinations",
which eliminates the pooling method of accounting for business combinations
initiated after June 30, 2001. In addition, SFAS 141 addresses the accounting
for intangible assets and goodwill acquired in a business combination. This
portion of SFAS 141 is effective for business combinations completed after June
30, 2001. The adoption of SFAS 141 has not had a material impact on the
Company's financial position or results of operations.
In July 2001, the FASB issued Statement of Financial Accounting Standards No.
142 ("SFAS 142"), "Goodwill and Intangible Assets", which revises the accounting
for purchased goodwill and intangible assets. Under SFAS 142, goodwill and
intangible assets with indefinite lives will no longer be amortized and will be
tested for impairment annually or whenever events or circumstances indicate that
the estimated fair value is less than the related carrying value as determined
on a reporting unit basis. SFAS 142 is effective for fiscal years beginning
after December 15, 2001. The adoption of SFAS 142 resulted in an impairment
provision for intangible assets of $35,188 recorded in the fourth quarter of
2002.
NOTE 3 - SERVICE CONTRACTS
On January 28, 2000, the Company entered into an agreement with Palisades
Financial Ltd., with a 5-year term, whereby Palisades will provide investment-
banking services to the Company (valued at $297,500) in exchange for 35,000 pre-
forward split restricted shares of the Company's common stock.
On January 10, 2003, the Company entered into agreements with:
1. Compte de Sierge Accomodative Corp., a private company, for a two and
one-half year term, whereby Compte will provide investment-banking services to
the Company (valued at $50,000) in exchange for 500,000 pre-forward split
restricted shares of the Company's common stock. The consultant will provide
such services and advice to the Company in business development, business
strategy and corporate image. In addition, the consultant will assist the
Company in developing, studying and evaluating acquisition proposals in Europe.
2. Y.E.N.N. Asset Management, a private company controlled by a significant
shareholder, for a two and one-half year term, whereby Y.E.N.N. will provide
investment-banking services to the Company (valued at $50,000) in exchange for
500,000 pre-forward split restricted shares of the Company's common stock. The
consultant will provide such services and advice to the Company in business
development, business strategy and corporate image. In addition, the consultant
will assist the Company in developing, studying and evaluating acquisition
proposals in North and South America.
3. Inter-Orient Investments Ltd., a private company controlled by a
significant shareholder, for a two year term, whereby Inter-Orient will provide
investment-banking services to the Company (valued at $50,000) in exchange for
500,000 pre-forward split restricted shares of the Company's common stock. The
investment banker will provide access to investors and ongoing funding for the
Company's investments.
4. Asiatic Management Consultants Ltd., a private company controlled by a
significant shareholder, for a two and one-half year term, whereby Asiatic will
provide investment-banking services to the Company (valued at $25,000) in
exchange for 250,000 pre-forward split restricted shares of the Company's common
stock. The consultant will provide such services and advice to the Company in
business development, business strategy and corporate image. In addition, the
consultant will assist the Company in developing, studying and evaluating
acquisition proposals in the Far East.
5. HBK Investments Services Ltd., a private company controlled by an
employee, for a two year term, whereby HBK will provide investor relations
services to the Company (valued at $20,000) in exchange for 200,000 pre-forward
split restricted shares of the Company's common stock. The investor relations
individual will provide such services as researching, editing and generating a
company profile, technical chart analysis, relaying the Company's business
perspectives and distribution of corporate updates, including press releases.
At September 30, 2003 the prepaid portion of the above described service
contracts totaled $221,215, of which $144,500 is current.
NOTE 4- CAPITAL STOCK
The Company's capitalization is 100,000,000 common shares with a par value of
$.0001 per share.
Reverse Stock Split
On January 2, 2003, the Company declared a one-for-ten reverse stock split of
all of the outstanding common stock, without any change in par value of the
shares of common stock. Shareholder approval was obtained to effect the reverse
stock split which became effective on January 8, 2003. On that date, the
authorized capital was 100,000,000 common shares with a par value of $0.0001,
with 4,054,750 post reverse-split shares issued and outstanding.
Forward Stock Split
The Company's authorized common capital stock consists of 100,000,000 shares of
common stock with $0.0001 par value per share, of which 13,584,763 were issued
and outstanding. On September 23, 2003, the Board of Directors declared a
three-for-one forward stock split of all the Company's outstanding common stock
in accordance with the provisions of Section 242 of the General Corporation Law
of Delaware, without any change in par value for the shares of common stock.
The Company's capitalization of 100,000,000 shares with a par value of $0.0001
per share remains the same after the split as it was before the split.
Shareholder approval required to effect the forward stock split was obtained
pursuant to Section 222 of the General Corporation Law of the State of Delaware.
Effective October 2, 2003 the Company filed a Certificate with the Secretary of
State of Delaware authorizing the three-for-one forward stock split.
Unless otherwise noted, all references to common stock, common shares
outstanding, average numbers of common shares outstanding and per share amounts
in these Financial Statements and Notes to Financial Statements prior to the
effective date of the forward stock split have been restated to reflect the
three-for-one forward stock split on a retroactive basis.
On January 10, 2003, the Company entered into agreements with various private
companies controlled by significant shareholders, with two and one-half year
terms, whereby these companies will provide investment-banking services to the
Company (valued at $125,000) in exchange for the issuance of 1,250,000 pre-
forward split restricted shares of the Company's common stock. (See Note 3)
On January 10, 2003, the Company entered into an agreement with a private
company controlled by a significant shareholder and a private company controlled
by an employee, with two year terms, whereby these companies will provide
investor relations services to the Company (valued at $70,000) in exchange for
the issuance of 700,000 pre-forward split shares of the Company's common stock.
(See Note 3)
On January 10, 2003, the Company issued 100,000 pre-forward split restricted
shares of the Company's common stock to two directors for services valued at
$10,000.
On January 14, 2003, the Company reached an agreement to acquire the "Miss
Beverly Hills" entity from Atlantis Cay Ltd. in consideration for the issuance
of 10,000,000 pre-forward split restricted shares of the Company's common stock
to Atlantis Cay Ltd. and its agents. The Company was not provided with the
necessary data and information about the "Miss Beverly Hills" entity in a timely
manner, as required by the agreement, nor was it satisfied with the proposed
terms of transfer of all rights of ownership. On February 4, 2003, at a Special
Meeting of the Board, it was decided not to proceed with this acquisition.
Accordingly, the 10,000,000 pre-forward split restricted shares were reacquired
for no consideration, returned to treasury and cancelled.
On January 21, 2003, the Company issued 5,000,000 shares of pre-forward split
common stock at a price of $0.04 per share representing a 33.33% discount to the
estimated fair value of $.06 per share in settlement of outstanding and ongoing
consulting fees and services totalling $200,000. Of the 5,000,000 pre-forward
split shares issued, 2,500,000 were issued to parties related to the "Miss
Beverly Hills" acquisition, 830,000 were issued to two significant shareholders
for consulting services and 320,000 were issued to two employees for consulting
services. The Company registered these pre-forward split shares for trading by
way of an S-8 Registration Statement filed on January 21, 2003. In February,
2003, pursuant to the termination of the agreement with Atlantis Cay Ltd.,
2,500,000 pre-forward-split shares issued were reacquired for no consideration,
returned to treasury and cancelled. The fair value of the 2,500,000 pre-forward
split shares that remained issued in settlement of services totalling $100,000,
exceeded the outstanding debts by an amount of $50,000. This amount is recorded
as a loss on settlement of debt in the first quarter of 2003.
On January 21, 2003, the Company filed a Registration Statement on Form S-8 to
cover 2,000,000 shares of pre-forward split common stock to be issued pursuant
to the Company's 2003 Stock Incentive and Option Plan (the "Plan"). During the
period the Company granted options under the Plan to acquire a total of
2,000,000 pre-forward split shares of the Company's common stock at a price of
$0.06 per share being the market value as at the date of grant. Of the total
number of options granted, 1,505,000 were granted to consultants for which a
consulting expense of $90,300 was recorded during the period representing the
fair value of the options. The fair value was estimated using the Black-Scholes
option pricing model assuming an expected life of 10 years, a risk-free interest
rate of 3% and an expected volatility of 205%.
A fair value of $29,700 for the 495,000 pre-forward split options granted to
directors and employees, as disclosed on a pro-forma basis in Note 2, was
estimated using the Black-Scholes option pricing model assuming an expected life
of 10 years, a risk-free interest rate of 3% and an expected volatility of 205%.
On June 9, 2003, the Company filed a Registration Statement on Form S-8 to cover
3,000,000 pre-forward split shares of common stock to be issued pursuant to the
Company's 2003 Stock Incentive and Option Plan (the "Plan"). During the period
the Company granted options under the Plan to acquire a total of 2,300,000 pre-
forward split shares of the Company's common stock at a price of $0.07 per share
and 700,000 pre-forward split shares of the Company's common stock at a price of
$0.08 per share being the market values as at the date of grant. Of the total
number of options granted, 1,750,000 were granted to consultants for which a
consulting expense of $128,200 was recorded during the period representing the
fair value of the options. The fair value was estimated using the Black-Scholes
option pricing model assuming an expected life of 5 years, a risk-free interest
rate of 3% and an expected volatility of 248%.
A fair value of $87,400 for the 1,250,000 pre-forward split options granted to
directors and employees, as disclosed on a pro-forma basis in Note 2, was
estimated using the Black-Scholes option pricing model assuming an expected life
of 5 years, a risk-free interest rate of 3% and an expected volatility of 248%.
During the period, the Company issued 250,000 pre-forward split common shares on
the exercise of 250,000 options. In March 2003, an optionee failed to comply
with the stock option agreement and as a result, 50,000 pre-forward split common
shares were reacquired, returned to treasury and cancelled.
The following table summarizes the Company's stock option activity:
<table>
<caption>
<s> <c> <c> <c>
Weighted Average
Weighted Average Remaining Contractual
Number of Options Exercise Price Life
---------------------------------------------------------
Balance, December 31, 2002 - - -
Granted 5,000,000 $ .07 -
Exercised (4,980,000) .06 -
========================================================
Balance, September 30, 2003 20,000 $ .07 5.0 years
Refer to Note 6.
</table>
NOTE 5 - RELATED PARTY TRANSACTIONS
During the nine months ended September 30, 2003, the Company issued 100,000 pre-
forward split shares to two directors for outstanding management fees totalling
$10,000.
During the nine months ended September 30, 2003, companies controlled by a
significant shareholder earned $78,997 (2002 - $29,750) pursuant to an
investment banking services contracts (See Note 3).
During the nine months ended September 30, 2003, a company controlled by an
employee earned $6,248 pursuant to an investor relations services contract (See
Note 3).
In January 2003 the Company issued a total of 2,500,000 pre-forward split common
shares to employees and consultants in settlement of outstanding management and
consulting fees totalling $100,000. Of the 2,500,000 pre-forward split common
shares issued, 830,000 were issued to two significant shareholders and 320,000
were issued to two employees for consulting services. The fair value of the
shares issued exceeded the outstanding debts by an amount of $50,000, which has
been recorded as a loss on settlement of debt.
At September 30, 2003 a total of $183,138 (2002 - $167,016) is owing to Avalon
Gold Corporation (previously Iceberg Brands Corporation) for cash advances.
These advances are non-interest bearing and are being repaid periodically from
the sale of securities held by Golden Spirit Minerals Ltd.
At September 30, 2003, a total of $13,984 is owing to a shareholder for cash
advances. This amount is non-interest bearing and has no specific terms of
repayment.
During the nine months ended September 30, 2003, the Company incurred expenses
for office rent of $12,990 (2002 - $12,022) and management fees of $18,000 (2002
- - $18,000) to a Company controlled by an employee.
See Notes 3, 4 and 6.
NOTE 6 - SUBSEQUENT EVENTS
Forward Stock Split
Effective October 2, 2003 the Company filed a Certificate with the Secretary of
State of Delaware authorizing a three-for-one forward stock split. Refer to
Note 4.
Name Change
The shareholders approved the change of the Company's name from 2U Online.com,
Inc. to "Golden Spirit Minerals Ltd." in accordance with Section 242 of the
General Corporation Law of Delaware. On October 2, 2003 the Company filed a
Certificate of Amendment to its Articles of Incorporation with the Secretary of
State of Delaware changing its name to Golden Spirit Minerals Ltd..
On October 10, 2003, the Company filed a Registration Statement on Form S-8 to
cover 11,091,667 shares of common stock to be issued, 5,000,000 pursuant to the
Company's 2003 Stock Incentive and Option Plan and 6,091,667 to be issued for
debt in the amount of $5,750 and for services valued at $177,000, to be
performed in the last quarter of the year.
Subsequent to the October 2, 2003 forward split, a total of 2,586,275 shares of
common stock were issued at $0.03 per share on the exercise of incentive stock
options granted in connection with the October 10, 2003 Form S-8 Registration
Statement for proceeds of $77,588.
Acquisition of Mining Claims
On October 10, 2003 the Company entered into an agreement with Ester Creek Gold
Company ("Ester Creek"), a private Nevada cooperative, to acquire from Ester
Creek 90% ownership of the Ester Creek Gold properties (the "Mining Claims")
located approximately eight miles northeast of Fairbanks, Alaska. Under the
terms of the agreement Ester Creek retains a 10% interest in the Mining Claims.
The Mining Claims are located in and around Ester Creek over an area of
approximately 2,320 acres (4 square miles). In October 2003 the Company paid
$3,000 and issued 450,000 restricted shares to Ester Creek Gold Company and will
pay a further $3,500 per month for twelve months for a total of $45,000 in cash
to acquire the property. Under the terms of the agreement the Company has
agreed to give Ester Creek a contract to do a certain portion of the actual work
programs and to supervise other work programs. The Company will be required to
perform work on all claims to keep them in good standing and management
currently plans are to spend approximately $100,000 developing the Mining Claims
in the next year.
F-13
ITEM 2. Plan of Operation
This following information specifies certain forward-looking statements of
management of the company. Forward-looking statements are statements that
estimate the happening of future events and are not based on historical fact.
Forward-looking statements may be identified by the use of forward-looking
terminology, such as "may", "shall", "will", "could", "expect", "estimate",
"anticipate", "predict", "probable", "possible", "should", "continue", or
similar terms, variations of those terms or the negative of those terms. The
forward-looking statements specified in the following information have been
compiled by our management on the basis of assumptions made by management and
considered by management to be reasonable. Our future operating results,
however, are impossible to predict and no representation, guaranty, or warranty
is to be inferred from those forward-looking statements.
The assumptions used for purposes of the forward-looking statements specified in
the following information represent estimates of future events and are subject
to uncertainty as to possible changes in economic, legislative, industry, and
other circumstances. As a result, the identification and interpretation of data
and other information and their use in developing and selecting assumptions from
and among reasonable alternatives require the exercise of judgment. To the
extent that the assumed events do not occur, the outcome may vary substantially
from anticipated or projected results, and, accordingly, no opinion is expressed
on the achievability of those forward-looking statements. No assurance can be
given that any of the assumptions relating to the forward-looking statements
specified in the following information are accurate, and we assume no obligation
to update any such forward-looking statements.
Our Background. 2UOnline.com, Inc., formerly Power Direct, Inc., was
incorporated in the State of Delaware on September 13, 1993, and we maintain our
principal executive offices at 1288 Alberni Street, Suite 806, Vancouver,
British Columbia, Canada V6E 4N5. Our offices in the United States are located
at 999 3RD AVE, Suite 3800, Seattle, Washington 98104.
2
We changed our name from Power Direct, Inc., to 2UOnline.com, Inc. by filing a
Certificate of Amendment to our Certificate of Incorporation on January 31,
2000. We also changed our trading symbol from "PWDR" to "TWOU" in order to
reflect our decision to shift our focus from oil and gas production to Internet-
related activities. Our symbol was then changed to "TWOUE". On or about April
18, 2000, we were removed from the Over-the-Counter Bulletin Board ("OTCBB") for
failure to comply with NASD Rule 6530, which requires any company listed on the
OTCBB to be current in its public reporting obligations pursuant to the
Securities and Exchange Act of 1934. The Company was re-instated on the OTCBB on
October 7, 2002 under the symbol "TWOU". Our most recent symbol is "GSPM",
pursuant to our name change to Golden Spirit Minerals Ltd., effective October 8,
2003.
We were originally incorporated to engage in any lawful act or activity for
which corporations may be organized under the General Corporation Law of
Delaware. We were inactive from September 13, 1993, through November 1998, when
we began the process of identifying potential business interests, including, but
not necessarily limited to, interests in oil and natural gas producing
properties.
Our Business. Our initial focus was on the development of oil and natural gas
properties. In this regard, we purchased interests in two properties; one in
the United States and one in Canada. In or around December 1999, we decided to
review the focus of our business, primarily the direction we would take with our
various oil and gas projects. We decided that maintaining interests in oil and
gas producing properties should no longer be our focus. Due to the growth of the
Internet, we decided to pursue Internet-related activities. We determined that
Internet-related activities would provide a positive revenue stream sooner than
oil and gas producing activities.(See Item 5D-Subsequent Events)
Our Internet Activities. Online Casting Agency. In addition to the Internet
activities of our subsidiary, CardStakes.com, Inc. (described below), we are
currently developing our own websites aimed at the Far East markets We will
utilize programs such as Macromedia Generator, Custom Java Servlets and
Microsoft SQL Server to develop our online presence. Our current project is an
Online Casting Agency designed to connect talent with casting agents and
producers. The casting portal will be delivered over the Internet using
Macromedia Flash Content. Web developers use Flash to create beautiful resizable
and extremely small and compact navigation interfaces, technical illustrations,
long-form animations and other dazzling effects for Web sites and other Web-
enabled devices. Graphics and animation created with Flash technology provide a
positive experience for the audience. We believe that Flash sites are more
attractive than those using traditional Web technologies. We also believe that
Flash technology offers a more compelling experience than static HTML. Web sites
designed in Flash playback full-screen on all monitor sizes and consistently
across multiple platforms making content interaction for Web users feel more
familiar.
3
The Talent Directory will give both the experienced and the aspiring
model/actor/entertainer unique opportunities to have his or her photo appear
before the professionals who are continually in search of talent and fresh new
faces. For a yearly subscription fee, an industry professional will be able to
post his or her name, specifications, experience, training and special skills
and a scan up to nine (9) high resolution photos to be stored in the talent
database on our proposed website. We anticipate that the content of the Talent
Directory will be offered free to agents, film producers, photographers, casting
directors, model/talent agencies, television stations/networks, newspapers,
fashion magazines, and many other prospective employers to help fulfill their
hiring needs. The revenue source will come exclusively from the subscription
fees paid by the aspiring professional.
To fulfill the requirements of this project, we plan to contract out our in-
house development team to provide the necessary programming and database design
skills needed during the development phase. Once development of this project
has been completed, we will be providing the client with web hosting, e-mail and
any necessary technical support services needed for day-to-day operations of the
site. To date, the project is substantially complete and we require funding in
order to effectively market the site. The launching of this project is dependant
on our ability to raise operating funds. If we are not able to raise operating
funds, we will not be able to effectively launch the website portal. To date, we
have not been able to raise the operating funds and as as such, the project has
not been launched.
Cardstakes.com, Inc. websites
On April 28,1999, we entered into a licensing agreement with Compte De Sierge
Accommodative Corp., a Panama corporation, whereby we acquired the worldwide
right to utilize their Greeting Card software on the CardStakes.com website in
exchange for 6,000,000 shares of our stock. Once operational, customers of
CardStakes.com will be able to send animated, personally customized, virtual
cards over the Internet for free with or without a purchase from one of our
websites (described below). The greeting card will contain a scratch and win
ticket that offers discounts and/or coupons. The recipient will have 30 days,
from the date sent, to view and review his/her card as many times as they wish.
After the initial 30 day period, the card will be deleted unless the recipient
becomes a member of the Cardstakes.com website prior to the 30th day. Membership
on the CardStakes.com website is free. Cardstakes.com will rely on advertising
on its website to generate revenue. CardStakes.com has not entered into any
advertising relationships as its website is not yet operational. CardStakes.com
anticipates that it will begin selling advertising space on its website shortly
after the website becomes operational.
4
Our URL's. A Universal Resources Locator ("URL") is the address of a page on the
World Wide Web. Every web page has an URL that identifies it, and which provides
enough information for a computer connected to the Internet to locate it. In
order to participate in the rapidly growing and lucrative business of the
Internet and because we believe that certain URL's have value, we entered into
the following URL purchase agreements to eventually create a network of internet
locations:
On July 15, 1999, we purchased superstakes.com, supercard.com, and
chinastakes.net from J&S Overseas Holdings in exchange for cash and warrants.
On September 1, 1999, we purchased e-cardlotto.net and cardlotto.net from Holm
Investment Ltd, a Canadian corporation in exchange for warrants.
On November 19, 1999, we purchased thankyou2u.com, homeaccents2u.com, and
necessities2u.com from May Joan Liu in exchange for shares of our common stock.
On November 24, 1999, we purchased gaming2u.com, weddings2u.com,
essentials2u.com, and theorient2u.com from CardTek (International) Holdings
Ltd., a Gibraltar corporation, in exchange for shares of our common stock.
On November 25, 1999, we purchased things2u.com and arrangements2u.com from
Richard Angelo Holmes in exchange for shares of our common stock.
On November 25, 1999, we purchased website2u.com and gourmet2u.com from
Cybermall Consulting Services Ltd., a Bahamian corporation in exchange for
shares of our common stock.
As of December 31, 2002, these websites had generated no revenues and we wrote
down the carrying value ($35,189) of these intangible assets to a nominal value
of $1, due to uncertainty of realization.
Our Websites. We have various planned websites which are not yet operational. We
plan to utilize the URL's we purchased to establish various websites. We
anticipate that our websites, once fully developed, will offer products such as
jewels, flowers, chocolates and original art. We anticipate that revenue will be
generated from the sale of products at our websites.
Since neither CardStakes' websites nor ours are operational, we are not earning
revenues or currently offering or selling any products over our websites. We
anticipate that the websites will be operational after the updates are completed
and we are able to acquire another merchant account and secure additional
funding. Until we are able to acquire another merchant account (there is no
guarantee that we will be able to acquire another merchant account), our
websites and the Cardstakes.com website will remain down.
5
Investment in Avalon Gold Corporation
Avalon Gold Corporation (formerly Precise Life Sciences Ltd.) Avalon Gold
Corporation was formed under the laws of the State of Nevada on November 29,
1983 under the General Corporation Law of Nevada. Avalon Gold Corporation
presently owns small interests in oil and gas properties located in Wyoming and
California. Avalon Gold Corporation recently changed its name from Precise Life
Sciences Ltd. in recognition that it will pursue business opportunities in the
field of quick service restaurants. Avalon Gold Corporation is a public company
that trades on the NASD OTCBB under the symbol "IBGB".
During the fourth quarter of 2002, Iceberg issued shares of its common stock
from treasury resulting in a significant reduction of the Company's equity
interest in Iceberg to approximately 4%. As a result of the significant
reduction of the Company's interest in Iceberg, the Company has reclassified its
investment in Iceberg from an equity investment to available-for-sale securities
whereby its investment is carried at the stated market value. As at September
30, 2003, the Company owns 170,101 shares of Avalon Gold Corporation. The
President and a Director of the Company is the Secretary and a Director of
Iceberg
Proposed Acquisition of Biozone Laboratories, Inc.
On April 22, 2003, the Company signed a memorandum of understanding to acquire
Biozone Laboratories, Inc., of Pittsburg, California, an integrated specialty
pharmaceutical company focused on innovative methods of drug delivery. For the
past 13 years, BioZone has produced and manufactured technologically-advanced
brand name and generic pharmaceutical products using its proprietary
technologies.
The general terms of the agreement are as follows:
1. Pursuant to a definitive agreement being in place and the completion of
an audit of the financial statements of Biozone, the Company will issue
19,000,000 restricted shares of common stock to Biozone in exchange for 100%,
but not less 91%, of Biozone. In addition, another 13,500,000 restricted shares
of common stock will be issued to Biozone upon certain sales benchmarks being
met.
2. Pursuant to a definitive agreement being in place, the Company has
agreed to pay $500,000 to Biozone and raise up to $1,500,000 over certain time
periods to fund the development of Biozone.
At present, the Company is electing to focus its business interests in the
mining sector (See Item 5-Other Information-Subsequent Events), and will
not be pursuing the proposed BioZone acquisition.
6
Our Subsidiary- CardStakes.com, Inc. Our subsidiary, Cardstakes.com, Inc. was
inactive during the nine months ending September 30, 2003, except for the
maintenance required to its websites described above.
Our Subsidiary - PD Oil & Gas, Inc. Our subsidiary, PD Oil & Gas, Inc., was
inactive during the nine months ending September 30,2003.
Our Subsidiary - CardStakes.com Enterprises Ltd. Our subsidiary, CardStakes.com
Enterprises Ltd., was inactive during the nine months ending September 30, 2003.
Liquidity and Capital Resources.
For the nine months ended September 30, 2003, we had total assets of $265,374
including $32,750 in available for sale securities (see Avalon Gold Corporation
above), and $144,500 as the current portion of $76,715 in prepaid service
contracts. We also held $11,015 in depreciated furniture and equipment and $1
for other intangible assets (see URL's above). The cash and equivalents
constitute our present sources of liquidity. At September 30, 2003, we had total
current liabilities of $322,497 of which $1,164 was represented by a bank
overdraft, $124,213 was accounts payable and accrued liabilities and $197,120
was due to related parties. At September 30, 2003, we had $177,643 in current
assets and $322,497 in total current liabilities. At September 30, 2003, current
liabilities exceeded current assets by $144,854.
We are not aware of any trends, demands, commitments or uncertainties that will
result in our liquidity decreasing or increasing in any material way. We do not
believe that our available cash is sufficient to pay our day-to-day
expenditures, therefore, we rely on management to provide the necessary funds to
pay these day-to-day expenditures. We have one other external source of
liquidity, that being the sale of our common stock.
No assurance can be given, however, that we will have access to additional cash
in the future, or that funds will be available on acceptable terms to satisfy
our case requirements.
Results of Operations. We have not yet realized any significant revenue from
operations. For the third quarter ending September 30, 2003, we had $149,268 in
general and administrative expenses including, but not limited to, expenses for
consulting fees, management fees, investor relations and office and general
expenses. Our operating expenses for the corresponding period in 2002 were
$77,544. The increase in operating expenses was primarily due an increase in
consulting fees. Net losses from operations for the third quarter ending
September 30, 2003, were $145,698 being the general and administrative expenses
and stock based compensation. Our net loss for the corresponding period in 2002
was $400,722. The decrease in loss for the third quarter ending September 30,
2003 compared to the third quarter ending September 30, 2002 was primarily due
to the decrease in investment loss from Avalon Gold. We have incurred net losses
of $8,869,209 since our inception on September 13, 1993.
7
Our Plan of Operation for the Next Twelve Months. We do not expect to realize
any significant revenue from operations in the next twelve months. Our plan of
operation is materially dependent on our ability to generate revenues. Since
neither CardStakes' websites nor ours are operational, we are not earning
revenues or currently offering or selling any products over our websites. We
anticipate that the websites will be operational after the updates are completed
and we are able to acquire a merchant account. Until we are able to acquire
another merchant account, our websites and the Cardstakes.com website will
likely remain down.
We will require additional cash to implement our business strategies, and for
payment of increased operating expenses and our monthly rent of $2,050.00. We
anticipate that we will need to raise additional capital within the next 12
months in order to continue as a going concern. Such additional capital may be
raised through additional public or private financings, as well as borrowing and
other resources. To the extent that additional capital is raised through the
sale of equity or equity-related securities, the issuance of securities could
result in dilution to our stockholders. There can be no assurance that
additional funding will be available on favorable terms, if at all. If adequate
funds are not available within the next twelve months, we may be required to
curtail our operations significantly or to obtain funds through arrangements
with collaborative partners or others that may require us to relinquish rights
to certain of our assets.
We do not anticipate any significant research and development within the next
twelve months, nor do we anticipate that we will lease or purchase any
significant equipment within the next twelve months. We do not anticipate a
significant change in the number of our employees within the next twelve months,
nor are we aware of any material commitment or condition that may affect our
liquidity within the next twelve months.
ITEM 3 Controls and Procedures
(a) Within 90 days prior to the filing date of this report, with the
participation of the Company's management, the Company's President and Chief
Executive Officer and Vice President - Finance and Chief Financial Officer,
evaluated the effectiveness of the Company's disclosure controls and procedures
in accordance with Rule 13a-14 of the Securities Exchange Act of 1934 (the
"Exchange Act"). Based upon that evaluation, the President and Chief Executive
Officer and Vice President - Finance and Chief Financial Officer concluded that
the Company's disclosure controls and procedures are effective in providing
reasonable assurance 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 period specified in the Commission's rules and
procedures.
(b) Changes in Internal Controls. There were no significant changes in the
Company's internal controls or in other factors that could significantly affect
these controls subsequent to the date of the evaluation.
8
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities.
During the third quarter ended September 30, 2003, the Company issued pre-
forward common stock as follows:
<table>
<caption>
<s> <c> <c> <c> <c>
July 16, 2003 - common stock issued for exercise of stock options at $0.07 225,000 22 15,728 $15,750
July 17, 2003 - common stock issued for exercise of stock options at $0.07 150,000 15 10,485 10,500
July 28, 2003 - common stock issued for exercise of stock options at $0.07 75,000 8 5,242 5,250
August 1, 2003 - common stock issued for exercise of stock options at $0.07 300,000 30 20,970 21,000
August 8,2003- common stock issued for exercise of stock options at $0.07 100,000 10 6,990 7,000
August11,2003- common stock issued for exercise of stock options at $0.07 275,000 27 19,223 19,250
August14,2003- common stock issued for exercise of stock options at $0.07 50,000 5 3,495 3,500
August14,2003- common stock issued for exercise of stock options at $0.08 550,000 55 43,945 44,000
August29,2003- common stock issued for exercise of stock options at $0.08 150,000 15 11,985 12,090
August29,2003- common stock issued for exercise of stock options at $0.07 50,000 5 3,495 3,500
</table>
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to Vote of Security Holders
None
9
Item 5. Other Information
A. Security Ownership of Management
<table>
<caption>
<s> <c> <c> <c>
Name of Address of Amount of Shares % of Outstanding
Beneficial Holder Beneficial Holder Beneficially Owned Common Stock
- ---------------------------------------------------------------------------------------------
Robert Waters 2025-1388 W. Georgia St 150,000 0.36%
Vancouver, BC V7T 1A8
Robert Klein 4540 Woodgreen Place 150,000 0.36%
West Vancouver, BC V7S 2S6
</table>
Directors' Compensation. During the third quarter ended September 30, 2003,
the Company incurred $Nil in management fees to directors.
Stock Based Compensation. During the third quarter ending September 30, 2003,
$47,800 in stock based compensation was recorded in our financial statements.
Stock based compensation is an estimate of the intrinsic value placed in respect
to stock options granted to officers, directors, employees and an estimate of
the fair value of stock options granted to consultants using the Black-Sholes
option pricing model We do expect further stock based compensation in 2003.
10
B. Security Ownership of Certain Beneficial Holders of ten percent or more
<table>
<caption>
<s> <c> <c> <c>
Name of Address of Amount of Shares % of Outstanding
Beneficial Holder Beneficial Holder Beneficially Owned Common Stock
- ---------------------------------------------------------------------------------------------
Common Stock CEDE & Co. (1)
The Depository Trust Co.
P.O. Box 222 Bowling Green Station
New York, New York 10274 28,057,695 68.097 %
(1) According to the NOBO List, there are no holders of more than 10% of our
issued and outstanding shares.
</table>
C. Certain Relationships and Related Party Transactions
During the nine months ended September 30, 2003, the Company issued 100,000 pre-
forward split common shares to two directors for outstanding management fees
totaling $10,000.
During the nine months ended September 30, 2003, companies controlled by a
significant shareholder earned $78,977 (2002 - $29,750) pursuant to investment
banking services contracts .
During the nine months ended September 30, 2003, a company controlled by an
employee earned $6,248 (2002 - $Nil) pursuant to an investor relations services
contract.
In January 2003 the Company issued a total of 2,500,000 pre-forward split common
shares to employees and consultants in settlement of outstanding management and
consulting fees totaling $100,000. Of the 2,500,000 pre-forward split common
shares issued, 830,000 were issued to two significant shareholders and 320,000
were issued to two employees for consulting services. The fair value of the
shares issued exceeded the outstanding debts by an amount of $50,000, which has
been recorded as a loss on settlement of debt.
At September 30, 2003 a total of $183,138 (2002 - $167,016) is owing to Avalon
Gold Corporation for cash advances. These advances are non-interest bearing and
are being repaid periodically from the sale of securities held by Golden Spirit.
At September 30, 2003, a total of $13,984 is owing to two shareholders for cash
advances. This amount is non-interest bearing and has no specific terms of
repayment.
During the nine months ended September 30, 2003, the Company incurred expenses
for office rent of $12,990 (2002 - $12,022) and management fees of $18,000 (2002
- - $18,000) to a Company controlled by an employee.
11
D. Subsequent Events
Forward Stock Split. The Registrant's authorized common capital stock consists
of 100,000,000 shares of common stock with $0.0001 par value per share, of
which 13,584,763 were issued and outstanding. On September 23, 2003, the Board
of Directors declared a Three for One forward stock split of all the
Registrant's outstanding common stock in accordance with the provisions of
Section 242 of the General Corporation Law of Delaware, without any change in
par value for the shares of common stock. The Registrant's capitalization of
100,000,000 shares with a par value of $0.0001 per share remains the same after
the split as it was before the split. Shareholder approval required to effect
the forward stock split was obtained pursuant to Section 222 of the General
Corporation Law of the State of Delaware and on October 2, 2003 the Registrant
filed a Certificate with the Secretary of State of Delaware authorizing the
Three for One forward stock split.
Name Change. The Registrant announces that a majority of the shares entitled
to vote on such matters, approved the change of Registrant's name from 2U
Online.com, Inc. to "Golden Spirit Minerals Ltd." in accordance with Section 242
of the General Corporation Law of Delaware. On October 2, 2003 the Registrant
filed a Certificate of Amendment to its Articles of Incorporation with the
Secretary of State of Delaware changing its name to Golden Spirit Minerals Ltd..
On October 10, 2003, the Company filed a Registration Statement on Form S-8 to
cover 11,091,667 shares of common stock to be issued, 5,000,000 pursuant to the
Company's 2003 Stock Incentive and Option Plan and 6,091,667 to be issued for
debt in the amount of $5,750 and for services valued at $177,000 to be performed
in the fourth quarter of the year.
Subsequent to October 2, 2003, a total of 2,586,275 shares of common stock were
granted and issued at $0.03 per share on the exercise of incentive stock options
for proceeds of $77,588.
Acquisition of Mining Claims. On October 10, 2003 the Company entered into an
agreement with Ester Creek Gold Company ("Ester Creek"), a private Nevada
cooperative, to acquire from Ester Creek 90% ownership of the Ester Creek Gold
properties (the "Mining Claims") located approximately eight miles northeast of
Fairbanks, Alaska. Under the terms of the agreement Ester Creek retains a 10%
interest in the Mining Claims. The Mining Claims are located in and around
Ester Creek over an area of approximately 2,320 acres (4 square miles). In
October 2003 the Company paid $3,000 and issued 450,000 restricted shares to
Ester Creek Gold Company and will pay a further $3,500 per month for twelve
months for a total of $45,000 in cash to acquire the property. Under the terms
of the agreement the Company has agreed to give Ester Creek a contract to do a
certain portion of the actual work programs and to supervise other work
programs. The Company will be required to perform work on all claims to keep
them in good standing and management currently plans are to spend approximately
$100,000 developing the Mining Claims in the next year.
12
E. Description of Property.
Property held by the Company. As of the dates specified in the following table,
we held the following property in the following amounts:
September 30, 2003 December 31, 2002 December 31, 2001
-----------------------------------------------------
Property and
Cash Equivalents <$1,164.00> $1.00 $5,607.00
We define cash equivalents as all highly liquid investments with a maturity of 3
months or less when purchased. We do not presently own any interests in real
estate or own any inventory or equipment.
Item 6. Exhibits and Reports on Form 8-K
Index to Exhibits
(a) Exhibits
Exhibit 99.1 - Section 302 Amended Certification of Periodic Report of the Chief
Executive Officer.
Exhibit 99.2 - Section 302 Amended Certification of Periodic Report of the Chief
Financial Officer.
(b) Reports on Form 8-K:
None
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, we
have duly caused this Registration Statement on Form 10-QSB/A to be signed on
our behalf by the undersigned; thereunto duly authorized, in the City of
Vancouver, British Columbia, Canada, on December 05, 2003.
Golden Spirit Minerals Ltd.
a Delaware corporation
/s/: R. Klein
By: ______________
Robert Klein
Its: President
14
<table>
<caption>
<s> <c> <c>
CERTIFICATION OF PERIODIC AMENDED REPORT
I, Robert Klein, President and Chief Executive Officer of Golden Spirit Minerals
Ltd., a Delaware Corporation (the "Company"), certify, pursuant to Section 302
of the Sarbanes- Oxley Act of 2002, 18 U.S.C. Section 1350, that:
1. I have reviewed this amended quarterly report on Form 10-QSB/A for the
period ended September 30, 2003 of Golden Spirit Minerals Ltd.
2. Based on my knowledge, this amended quarterly report does not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period covered by
this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this amended quarterly report, fairly present in all
material respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this quarterly
report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a - 14 and 15d - 14) for the registrant and we have:
a. designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
b. evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing
date of this amended quarterly report (the "Evaluation Date"); and
c. presented in this amended quarterly report our conclusions about
the effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a. All significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability
to record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b. Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
amended quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Date: December 05, 2003
/s/ Robert Klein
- ---------------
Robert Klein
President and Chief Executive Officer
15
CERTIFICATION OF PERIODIC AMENDED REPORT
I, Robert Waters, Director and Chief Financial Officer of Golden Spirit
Minerals Ltd., a Delaware Corporation (the "Company"), certify, pursuant to
Section 302 of the Sarbanes- Oxley Act of 2002, 18 U.S.C. Section 1350, that:
1. I have reviewed this quarterly report on Form 10-QSB for the period
ended September 30, 2003 of Golden Spirit Minerals Ltd.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a - 14 and 15d - 14) for the registrant and we have:
a. designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
b. evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing
date of this quarterly report (the "Evaluation Date"); and
c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a. All significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability
to record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b. Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: December 05, 2003
/s/ Robert Waters
--------------
Robert Waters
Director and Chief Financial Officer
</table>
16