SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED MARCH 31, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number: 0-29260
TIMEBEAT.COM ENTERPRISES, INC.
(F/K/A AGC AMERICAS GOLD CORP.)
(Name of small business issuer in its charter)
PROVINCE OF YUKON, CANADA 54-1118334
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
580 HORNBY STREET, SUITE 200, VANCOUVER, BRITISH COLUMBIA V6C 3B6 CANADA
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (604) 689-4771
Securities registered under Section 12(b) of the Exchange Act: NONE
Securities registered under Section 12(g) of the Exchange Act:
COMMON STOCK, NO PAR VALUE
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to the filing requirements for the past 90 days. Yes ___ No _X_
Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure will be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB.[ ]
Issuer's revenues for its most recent fiscal year: CDN$207,522
Aggregate market value of the voting stock held by non-affiliates of the
registrant as of October 5, 2000: $6,465,241 (See Item 5)
Number of shares outstanding of registrant's common stock, no par value,
as of October 25, 2000: 16,217,202 (See Item 11)
Documents incorporated by reference: NONE
Transitional Small Business Disclosure Format (check one): Yes ___ No _X_
Exhibit index on consecutive page 24 Page 1 of 54 Pages
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PART I
CURRENCY AND EXCHANGE RATES
Unless otherwise indicated, all dollar amounts in this report are in Canadian
dollars. The following table sets forth (i) the rates of exchange for one
Canadian dollar ("Cdn") expressed in one U.S. dollar at the end of each calendar
year; (ii) the average exchange rates in effect on the last day of each month
during each calendar year; and (iii) the high and low exchange rates during each
calendar year.
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Rate At End Of Period: 0.6925 0.6504 0.7239 0.7300 0.7323
Average Rate Of Period: 0.6730 0.6740 0.7318 0.7332 0.7285
High Rate of Period: 0.6925 0.7105 0.7472 0.7524 0.7532
Low Rate of Period: 0.6535 0.6340 0.7155 0.7219 0.7009
</TABLE>
Exchange rates are based upon the noon buying rate in New York City for cable
transfers in foreign currencies as certified for custom purposes by the U.S.
Federal Reserve Bank of New York. The noon exchange rate on October 20, 2000,
reported by the U.S. Federal Reserve Bank of New York was $0.6614(US$1.00 =
Cdn$1.5119).
FORWARD LOOKING STATEMENTS
Under the "safe harbor" provisions of the Private Securities Litigation Reform
Act of 1995 (the "PSLRA"), we caution readers regarding forward looking
statements found in this report and in any other statement made by, or on our
behalf, whether or not in future filings with the Securities and Exchange
Commission. Forward looking statements are statements not based on historical
information and which relate to future operations, strategies, financial results
or other developments. Forward looking statements are necessarily based upon
estimates and assumptions that are inherently subject to significant business,
economic and competitive uncertainties and contingencies, many of which are
beyond our control and many of which, with respect to future business decisions,
are subject to change. These uncertainties and contingencies can affect actual
results and could cause actual results to differ materially from those expressed
in any forward looking statements made by or on our behalf. We disclaim any
obligation to update forward looking statements. Readers should also understand
that under Section 27A(b)(2)(D) of the Securities Act, and Section 21E(b)(2)(D)
of the Securities Exchange Act, the "safe harbor" provisions of the PSLRA do not
apply to statements made in connection with an initial public offering.
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ITEM 1. DESCRIPTION OF BUSINESS.
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INTRODUCTION
Unless the context otherwise requires, the terms "we", "our" and "us" refers to
Timebeat.com Enterprises, Inc.
We have two separate business divisions: (1) we are a mineral exploration
company exploring for gold and silver worldwide; and (2) we own and operate
Internet Web sites which primarily cater to people who have an interest in fine
watches, jewelry, clothing, high-end gift and other luxury items.
BACKGROUND
We were incorporated under the name Ocean Marine Technologies Inc. in the
Province of British Columbia, Canada on May 23, 1986. We initially focused our
business on the potential use of a research motor vehicle named Ocean Explorer
I. We intended to use this vessel in developing technology which would minimize
the growth and spread of the Zebra Mussels in the Great Lakes. We borrowed funds
from Ecofab Plastic Covers Ltd. and Caulfied Consultants Inc., and our loans
were secured by a mortgage against the Ocean Explorer I. We were unable to repay
the loans and Ecofab Plastic Covers Ltd. and Caulfied Consultants Inc. obtained
a judgment against us in the amount of $263,000. Ecofab Plastic Covers Ltd. and
Caulfied Consultants Inc. subsequently agreed to accept the Ocean Explorer I "as
is, where is", along with all of its liabilities, as full satisfaction of the
judgment. Due to a number of circumstances, we decided to abandon our initial
focus.
We then entered into negotiations to possibly acquire several different
companies. The first company was in the business of extracting nickel and other
metallic elements from industrial plating wastes. The second company had a
patented welding technology. After conducting our due diligence review of these
companies, we decided not to finalize the acquisitions. We have no further
obligations relating to these possible acquisitions.
MINERAL EXPLORATION ACTIVITIES
In early 1993, we entered into the mineral exploration business to acquire,
explore, and if warranted, develop mineral properties. On May 17, 1994, we
changed our name to AGC Americas Gold Corp. to reflect our involvement in
mineral exploration. We have acquired and subsequently abandoned several mineral
properties in pursuit of our business. Our current mineral properties are not in
production and, consequently, we have no current operating income or cash flow
from these properties. We are in the exploration stage and have not generated
any revenues from exploration activities. Our material acquisitions are as
follows:
* JD GOLD-SILVER PROPERTY. Under an agreement with Energex Minerals Ltd.,
dated October 8, 1993, and amended October 13, 1993, we acquired 24
gold and silver claims in the Toodoggone area of the Omineca Mining
Division in the Province of British Columbia, Canada, in exchange for
payment of $45,000 and the issuance of 125,000 shares of common stock,
with a deemed value of $0.25 per share. Energex Minerals Ltd. initially
retained a 15% net profit interest in the claims. We also paid George
F. Nicholson a finder's fee of $7,625 by issuing him 30,500 shares of
common stock at a deemed value of $0.25 per share.
We subsequently acquired the 15% net profit interest from Energex
Minerals Ltd. for payment of $12,500 and the issuance of 100,000 shares
of common stock. So long as the property is not in production, we are
also required to pay Energex Minerals Ltd. a fixed annual royalty prior
to December 31st of $3,588. As of the date of this filing, we have paid
all annual royalties to Energex Minerals Ltd.
In 1995, 1996 and 1997, we acquired other claims surrounding the JD
Gold-Silver property by staking property which was not previously
owned. In British Columbia, Canada, mineral claims are acquired by
staking under terms of the Mineral Tenure Act. A mineral claim or lease
conveys to the holder the right to all minerals available at the time
of disposition under the terms of the Mineral Tenure Act. Claims are
established by positioning claim posts (or "staking") along the
boundaries of the claims in the field. To date, we have paid all fees
and performed all work requirements under the Mineral Tenure Act.
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* KAD PROPERTY I AND II. Under an agreement dated July 7, 1994 with
Floralynn Investments Ltd., we acquired two mineral claims comprising
the KAD I and II property, which represents approximately 2,470.9
acres. The mineral claims may include gold, silver, copper, lead,
and/or zinc. The KAD I and II property is located in the Omineca Mining
Division of British Columbia, and is part of and contiguous with the JD
Gold-Silver property. We acquired the KAD I and II property for payment
of $10,000 and the issuance of 100,000 shares of common stock, at a
deemed price of $0.50 per share.
* ARC PROPERTY. By an agreement dated April 13, 1995 with David Ford, we
acquired a 100% interest in the mineral claims known as the Arc 1,2,3,
and 4 Mineral Claims located in the Omineca Mining Division of British
Columbia. We paid David Ford $8,000 and issued him 100,000 shares of
common stock at a deemed value of $2.27 per share. We also paid John
Nicholson a finder's fee of 10,000 shares of common stock at deemed
value of $2.16 per share. In the year ended March 31, 1999, we chose to
abandon the property and wrote off all costs associated with the
property.
* AL AND LAWYERS PROPERTIES. By a letter of intent dated December 6, 1996
with Cheni Resources Inc., we received the right to earn an undivided
100% interest in the AL and Lawyers properties comprising 22,645 acres
in the Omineca Mining Division, and located 12 kilometers south of the
JD Gold-Silver Property. The property may contain gold, silver, copper
and other minerals. In exchange for this right, we are required to (1)
make annual lease payments on or before December 31st of $18,000 to the
Government of British Columbia, (2) issue 400,000 shares of common
stock to Cheni Resources Inc., in separate amounts of 300,000 and
100,000 shares, (3) pay Cheni Resources Inc. $10,000, and (4) incur
$500,000 in exploration expenditures on the property. We have fully
performed our obligations and paid Cheni Resources Inc. $30,000 in lieu
of issuing 100,000 shares of common stock.
Accordingly, we own an undivided 100% interest in the AL and Lawyers
properties subject to the following royalty interests: the AL property
remains subject to a 7% initial production royalty and a 0.25% net
smelter royalty interest on mined and milled in excess of 250,000 tons
payable to Cameron Scott and Barry Price; both properties are subject
to the an aggregated 15% net profit royalty payable to Kinross Gold
Corporation, Energex Minerals Ltd., and Cheni Resources Inc; and the
Lawyer property remains subject to a 2% net smelter royalty payable to
Cheni Resources Inc. (1.9%) and Meota Resources Corp. (0.1%). Cheni
Resources Inc. is responsible for all reclamation required from
activities performed up to December 6, 1999.
* MOOSE PROPERTY. Under an agreement dated January 10, 1996 with Energex
Minerals Ltd., we acquired a 75% interest in a group of mineral claims
called the "Moose Property" located in the Omineca Mining Division,
British Columbia. In exchange for the acquisition, we issued 100,000
shares of common stock and paid the agreed upon $250,000 in exploration
expenditures by January 10, 1999. Our acquisition was also subject to a
1% net smelter royalty payable to Cameron Scott, a 1% net smelter
royalty payable to Petra Gem Exploration of Canada Ltd., and a 15% net
profit return payable to Energex Minerals Ltd.
On June 14, 1996, we entered into another agreement with Energex
Minerals Ltd. and acquired the remaining 25% interest in the Moose
Property, the 15% net profit return, and an assignment by Energex of
its option to acquire a 50% interest in the AL Mineral claims located
in the Omineca Mining Division. In exchange for this acquisition,
Energex received 100,000 shares of our common stock.
During fiscal year ended March 31, 1999, we abandoned the Moose
Property and wrote off all associated costs.
JOINT VENTURE WITH ANTARES MINING AND EXPLORATION CORPORATION
In August 1997, we entered into a joint venture agreement with Antares Mining
and Exploration Corporation, Toronto, Canada. Under the agreement, we granted
Antares Mining and Exploration Corporation the right to earn up to a 55%
interest in our JD Gold-Silver, AL, Lawyers and Moose properties by spending
$5,000,000 on exploration work on the properties. An additional 5% interest
could have been acquired by Antares Mining
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Exploration Corporation for payment of $4,500,000. From August 1997 to July
1999, Antares Mining and Exploration Corporation spent approximately $4,200,000
on the properties, earning an approximate 47% interest in each property. In July
1999, we entered into an agreement with Antares Mining and Exploration
Corporation to re- acquire the interest for payment of $150,000. We made the
payment and Antares Mining and Exploration Corporation no longer owns any
interest in the properties. We have no further obligations relating to Antares
Mining and Exploration Corporation.
COMPETITION
The mining industry is intensely competitive and we compete with other companies
that have greater resources. Many of these companies have greater financial
resources, operational experience and technical capabilities than we have. We
may encounter increasing competition from other companies in our effort to
acquire mineral properties, seek joint venture partners, and/or hire experienced
mining professionals. Such companies may be able to pay more for productive
mining properties and exploratory prospects, and to define, evaluate, bid for
and purchase a greater number of properties and prospects than our financial or
human resources permit. Our ability to acquire additional properties and to
discover mineral reserves in the future will be dependent upon our ability to
evaluate and select suitable properties and to consummate transactions in a
highly competitive environment. There is no assurance that we will be able to
effectively compete against such companies.
INTERNET WEB SITES DIVISION
The Internet has emerged as a global communications medium to deliver and share
information and to conduct business electronically. International Data
Corporation, a company that forecasts worldwide information technology market
trends, estimates that the number of web users worldwide will grow from
approximately 144 million users in 1998 to 602 million users by the end of 2003.
The dramatic growth in the number of Internet users has led to the proliferation
of information and services available on the Internet, including e-commerce,
e-mail, financial services, news and other content. We chose to enter this
market in March 1999.
INTERNET WEB SITE TIMEBEAT.COM
On March 5, 1999, we entered into a letter of intent with Watch Central
Corporation and Timebeat.com Inc., our wholly owned non-public subsidiary which
we incorporated in the Sate of Nevada on March 17, 1999. Under the letter of
intent, we paid Watch Central Corporation US$50,000 in exchange for its services
to design, develop, beta test and implement an e-commerce Web site that would
market, sell and repair fine gold jewelry and watches. We also pay Watch Central
Corporation US$3,000 a month for consulting services and US$2,000 a month for
rent. Watch Central Corporation subsequently became an affiliate as Alexander
Vileshin is an officer and director for us and Watch Central Corporation. In
September 1999, we re-incorporated in the Yukon Territory, Canada, and changed
our name to Timebeat.com Enterprises, Inc. to reflect our new e-commerce focus.
In November 1999, we launched our Web site, www.timebeat.com.
INTERNET WEB SITE WATCHZONE.NET
In December 1999, in order to increase content and awareness of
WWW.TIMEBEAT.COM, we acquired our second Web site, WWW.WATCHZONE.NET. Under an
agreement dated December 14, 1999, we acquired the Web site and all related
assets from Watchzone.net. Inc., a Colorado corporation. In exchange for the
acquisition, we gave certain watches and jewelry valued at US$10,988. Each
member of the management of Watchzone.net Inc. also signed a two year agreement
to provide consulting services to us in exchange for options, a percentage of
all advertising generated by the Watchzone.net banner advertising program, and
the right to purchase any new watch each year for actual dealer cost. Also, if
Timebeat.com Inc., our wholly-owned subsidiary, ceases to do business any time
before December 14, 2001, then we agreed to transfer the Web site and related
assets back to the management of Watchzone.net Inc.
WWW.WATCHZONE.NET is an informational Web site which allows consumers the
ability to gather and exchange information in chat forums and from existing
publications, news and press releases, manufacturer's literature, and
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product demonstrations and evaluations. Although we do receive some revenue from
advertising sales, the primary purpose of WWW.WATCHZONE.NET is to increase
awareness of WWW.TIMEBEAT.COM.
CUSTOMERS
We market our Web sites to a broad range of customers that vary in age and
geographic location. To date, we have had limited sales to a limited number of
customers. Our e-commerce Web site, WWW.TIMEBEAT.COM, targets the affluent
consumer and avid watch collector. Our informational Web site,
WWW.WATCHZONE.NET, is also for the avid watch collector and enthusiast. By
cross-promoting our Web sites, we hope to increase our customer base.
KEY ALLIANCES AND RELATIONSHIPS
We intend to establish additional relationships with a number of companies to
accelerate the adoption of our brand name and our services. We believe that
establishing strategic relationships will facilitate our brand awareness and
provide early access to emerging technologies and new customers. Some of our
existing relationships include the following:
WWW.TIMEBEAT.COM: We have an agreement with TrafficResults.com to
assist us in establishing our presence in key word searches; Dealtime,
which is an independent comparison shopping service that lists products
and prices from our competitors; and Wedding Network, which is a
comprehensive wedding resource Web site designed to assist couples in
planning weddings.
TECHNOLOGY
The Internet and electronic commerce markets are characterized by rapid
technological change, changes in user and customer requirements, frequent new
service and product introductions embodying new technologies, and the emergence
of new industry standards and practices that could render our existing Web site
and technology obsolete. Our performance will depend, in part, on our ability to
continue to enhance our existing services, develop new technology that addresses
the increasingly sophisticated and varied needs of its prospective customers,
license leading technologies, and respond to technological advances and emerging
industry standards and practices on a timely and cost-effective basis. The
development of our Web site and other proprietary technology entails significant
technical and business risks. We may not be successful in using new technologies
effectively or adapting our web site or other proprietary technology to customer
requirements or to emerging industry standards. If we were to be unable to adapt
to changing technologies, our business, results of operations, and financial
condition could be materially and adversely affected.
PROTECTION OF TECHNOLOGY
Our ability to compete depends upon our proprietary systems and technology.
While we rely or intend to rely on trademark, trade secret, copyright law,
confidentiality agreements, and technical measures to protect our proprietary
rights, we believe that the technical and creative skills of our personnel,
continued development of our proprietary systems and technology, brand name
recognition, and reliable Web site maintenance are more essential in
establishing and maintaining a leadership position and strengthening our brand.
Despite efforts to protect our proprietary rights, unauthorized parties may
attempt to duplicate aspects of our services or to obtain and use information
that we regard as proprietary. Policing unauthorized use of our proprietary
rights is difficult. Effective trademark, service mark, copyright, and trade
secret protection may not be available in every country in which our services
are made available online.
In addition, we may become involved in litigation in the future to enforce or
protect our intellectual property rights or to defend against claims or
infringement or invalidity. As part of our confidentiality procedures, we
generally enter into agreements with our employees and consultants and limit
access to our trade secrets and technology. We cannot assure you that these
steps will prevent misappropriation of technology or that the agreements entered
into for that purpose would be enforceable. Misappropriation of our intellectual
property or potential litigation could have a material adverse effect on its
business, results of operations, and financial condition.
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RESEARCH AND DEVELOPMENT
We concentrate our research and development activities on services and updating
our Web sites. To enhance our existing services, to introduce new services, and
to update the technology and features on our Web sites, we focus on developing
our services by offering new features and products, while enhancing existing
features.
SALES AND MARKETING
We believe that the importance of brand recognition will increase as more
companies engage in commerce over the Internet. Development and awareness of the
Timebeat.com brand will depend largely on our ability to allocate effectively
our resources to successfully develop and implement effective advertising and
marketing efforts. We will not be successful in promoting and maintaining our
brand if customers do not perceive us as an effective channel for purchases. Our
failure to develop our brand sufficiently would have a material adverse effect
on our business, results of operations, and financial condition.
The markets for luxury and premium products which are offered on our Web sites
are highly seasonal, with a disproportionate amount of sales occurring during
the fourth quarter of the calendar year. In addition, quarterly results may vary
from year to year due to the timing of new product introductions, orders and
sales, advertising expenditures, promotional periods and shipments. Accordingly,
comparisons of our quarterly information and results of operation may not be
indicative of our overall annual performance.
COMPETITION
The e-commerce and Web site industries on the Internet are intensely
competitive, highly fragmented and rapidly changing. There are many individuals
and companies which are engaged in these businesses, some of which are very
large, companies with substantial capabilities and long-term earning records. We
expect to experience increasing competition from potential competitors. Barriers
to entry into Internet-based companies are low and development by others of new,
improved or modified programs and/or services could make our products and/or
services obsolete. We may be at a competitive disadvantage since we must compete
with these individuals and companies, most of which have greater financial
resources and larger technical staffs than we have. We must, therefore,
continuously improve our services and develop new services and/or products in
order to be competitive. We may not have sufficient resources to undertake the
research and development necessary to remain competitive in this industry. There
can be no assurance that we will be successful in our operations.
EMPLOYEES
As of October 30, 2000, we had 12 permanent part-time employees and a number of
part-time seasonal contractors and consultants. None of our employees is covered
by a collective bargaining agreement. We believe our relations with our
employees are good.
PRINCIPAL OFFICES
Our corporate headquarters are located in Vancouver, Canada, where we occupy
approximately 800 square feet under a lease that expires in August 2001. We pay
rent to an affiliate of $850 a month, and we believe our relationship with our
affiliated-landlord is good.
ITEM 2. DESCRIPTION OF PROPERTY.
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Our material property is the JD Gold-Silver Property. The JD Gold-Silver
Property consists of 33 mineral claims on approximately 25,203 acres. The JD
Gold-Silver Property is located in the Toodoggone area of the Omineca Mining
District of north-central British Columbia, Canada, and is approximately 180
miles north of the town of Smithers. The property lies within the Omineca
Mountains in N.T.S. 94E/06 and is centered on 57 26' N 127 09' W. We have an
additional 48,926 acres in the adjacent Moose, Al, METS, and Lawyers claim
blocks.
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The JD Gold-Silver property is located in the central part of a
northwest-trending, 50 x 20 mile belt of early Jurassic volcanic rocks known as
the Toodoggone Formation (Carter, 1972) . The Toodoggone Formation is a
Sub-Aerial Pyroclastic Assemblage of Andesitic to Dacite composition which hosts
a number of gold-silver deposits. These deposits occur as fissure veins, Quartz
Stockwork, Breccia Zones, and zones of Silicification. Principal Ore Minerals
include Argentite, Electrum, native gold, and silver and lesser Chalcopyrite,
Galena, and Sphalerite.
At present, the JD Gold-Silver Property is accessible only by helicopter off the
northern end of the Omineca Mining District access road near the Lawyers Mine
site. A cat track off a spur road north from the mine access road was used to
move heavy equipment into the site. The property area during the summer of 1996
was serviced twice daily by fixed wing aircrafts based out of Prince George
using the nearby 5,300 feet Sturdee gravel strip which is capable of handling
aircraft up to the size of a Hercules. Fuel and heavy equipment are trucked in
from Fort St. James to the end of the road, and weekly supplies were flown in
from Smithers. Rock samples and personnel were also moved by scheduled flights
to and from Prince George.
The main area of drilling is called the Finn Zone, and is located in a
previously disturbed area at an elevation of 5,200 - 5,900 feet. The area
consists of rounded hills with steep talus and overburden covered slopes. Some
permanent ice is present on the property. The Finn Zone is linked to the
campsite by cat track. The use of helicopters and ATVs limit terrain disturbance
in areas outside of the previous disturbances. A D-6 Caterpillar Tractor is used
for transport and move our drills. Operations are based out of a 16 person camp
which is located in an alpine meadow just at tree line and is equipped with a
satellite telephone and fax modem.
GEOLOGY
The JD Gold-Silver property is located within the Omineca Mountain Range, and is
comprised of a series of northwest southeast trending lower to middle Jurassic
rocks; the older Black Lake Batholith to the east, and the overlying Toodoggone
Formation (in particular the Metsantan Member) to the west. Three members of the
Toodoggone Formation have been noted in the property area.
The Lower Jurassic McClair Creek Member consists of intermediate flows with
related flow Breccias and lesser Lapilli and ash tuffs. Mappable units also
include Andesitic feldspar-hornblende Porphyry, flow Breccia, and minor beds of
Lapilli, ash, and crystal tuff. These rocks are overlain stratigraphically by
more massive intermediate flows of the Tuff Peak Member. The younger Tuff Peak
rocks are compositional and texturally similar to the McClair Member.
The Tuff Peak Member consists of largely feldspar-hornblende Porphyry with minor
biotite. The flow Breccias show similar composition to the Porphytic flows.
Lapilli, ash and, crystal tuff beds occur less frequently here than in the
McClair.
The property is dominantly underlain by rocks from the Metsantan Member, which
consists mainly of massive Porphyritic Andesitic flows and tuff Breccias, with
minor interbeds of ash to Lapilli tuffs, and locally important meter thick beds
of reworked Volcaniclastics and Pyroclastics. Previous work had categorized
these lithological units as belonging to the McClair Creek and Tuff Peak
members. The consistency and homogeneity of the units indicate a probably
continuous suite of rocks more resembling those of the Metsantan, but may still
a maintain a coeval relationship with the McClair Creek Member, with possible
interfingering.
Along the eastern edge of the property along a north northwest to south
southeast trending fault contact is the Black Lake Stock, a medium to coarse
grained granodiorite to quartz monzonite. The Black Lake Stock is part of the
Black Lake Batholith.
Three major fault sets have been recognized; these trend northwest southeast,
east-west, and north-south. All have near vertical dips, but locally shallow to
40 to 50 to the north and or northeast. Faults appear to be mostly normal or
extensional with a local minor strike slip component. Locally major slump
faulting with some 40 meters of vertical displacement can affect blocks several
hundred meters in length and width.
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The Low Angle Thrust Fault (LAW) is a highly porous Volcaniclastic/Pyroclastic
horizon. This bed varies in thickness from less than one to five meters, has
been traced along strike for several kilometers, and dips at 10 to 20 to the
north. The LAW appears to pinch out to the east beneath the ridge that separates
the Gumbo and Finn zones. A second horizon some 20 meters lower extends for
another three hundred odd meters to the east and hosts the central zone of the
Finn zone mineralization. It too appears to pinch out or is faulted off, but a
third horizon, another 20 to 30 meters lower, extends further to the east,
ending abruptly along a faulted contact with the Black Lake stock. It is still
uncertain whether these horizons are one in the same having been truncated by
normal faulting, or are distinct lithological horizons. The latter seems the
most probable case due to the distinct changes in over and underlying
lithologies when moving from west to east.
Alteration associated with the mineralization around the Finn and Gumbo zones
has resulted in the feldspars in the andesite Porphyry flows above the Finn Zone
(Hanging Wall) being altered to a pink color and below (Footwall) to a white
color. This provided an easy logging tool but is realized to be an alteration
feature and not a lithological guide.
Most mineralization encountered to date on the property appears associated with
this porous volcaniclastic horizon and the east-west sub-vertical fault corridor
that is some 500 meters wide and extends at least 700 meters along strike. This
Epithermal type mineralization and related alteration varies from west to east;
with a dominantly yellow white chloritic/kaolinitic clay alteration with minor,
less than 10%, associated sulfides (Gumbo) giving way to a dominantly silicified
zone with increased sulfide content, greater than 10% (Finn), to a mostly grey
green chloritic clay zone with minor sulfides (Footwall to the Finn). Dominant
sulfides include pyrite, with lessor amounts of Chalcopyrite, Galena, and
Sphalerite. In the central part of the Finn Zone sulfides approach near massive
levels.
A deeper second brittle type fracture Breccia zone cemented mostly with
carbonate and weaker sulfide mineralization, has been recognized and appears to
envelope the main silicified zone of the Finn and to extend eastward. Fractures
appear to be extensional, dominantly sub-vertical, but with a conjugate
sub-horizontal set.
During the 1996 drill season, a second style of mineralization was encountered
at depth, and approaching the Black Lake stock along the eastern edge of the
property. A possible deep seated Porphyry system exists with a strong and
pervasive epidote/Sericite alteration halo. Sulfide mineralization is dominated
by Galena and Sphalerite, with lessor Chalcopyrite. Pyrite is rare. The halo
appears fairly extensive and has been traced for over 100 meters in depth and
along several hundred meters between drill fences. The intensity of alteration
increases towards the east approaching the stock.
A generalized lithological cross section across the property from west to east
would include the following:
Unit 1. Porphyritic Andesitic flows (unit 1) composed of 1-20 %
plagioclase (as 1 -3 mm. grains), 1-10% hornblende, 1 % apatite, some
magnetite. This unit is generally massive and more fine grained, with a
matrix altered a chloritic light grey to grey green/blue green.
Feldspars are dominantly altered white to beige white with varying
amounts of kaolinite, Sericite and carbonate. Occasional meter thick
interbeds of flow Breccia (unit la ) with sub-rounded bombs and angular
fragments less than 20 cm. of unit 1, can occur throughout. Underlying
it all are a series of Lapilli, ash and crystal tuffs/flows (unit 1b)
that can be altered a dark chloritic blue green, but are dominantly
stained a reddish maroon with disseminated hematite. To the west this
unit hosts the deeper carbonate cemented Breccia Zones. To the east, it
becomes increasing bleached and epidotized.
Unit 2. Porphyritic Andesitic flows (unit 2) composed of 10-20 %
plagioclase (as 2-5 mm. grains), 1-5% hornblende, +/- biotite. Matrix
is very fine grained and altered a chloritic green grey. Feldspars are
dominantly stained an orange to salmon pink by disseminated hematite.
This interval is usually but not always overlain by a flow Breccia
(unit 2a) of similar composition, with sub-rounded to sub-angular bombs
and fragments less than 50 cm. of unit 2. Underlying both are Lapilli,
ash and crystal tuff/flows (unit 2b) usually characterized by maroon
hematite stained matrix.
9
<PAGE>
Unit 6. Pyroclastic/Volcaniclastic flows and agglomerates (unit 6)
consisting of sub-rounded to sub- angular fragments mostly less than 1
to 5 cm. are scattered throughout. They form beds less than 10 cm. to
several meters thick. With strong alteration and associated
mineralization, these porous beds, cross cut by sub-vertical fractures,
appear to have acted as conduits for mineralizing fluids driven by a
deep Porphyry system
HISTORY OF TOODOGGONE AREA
The JD Gold-Silver property is located in the Toodoggone area. The Toodoggone
area over the last two decades has been an actively explored area of British
Columbia for gold and silver deposits. Deposits in the area have ranged from
gold-rich Porphyry-style deposits, to deep-seated precious and base metal
bearing stockwork and veins, to near-surface replacement type gold
mineralization. Several styles of mineralization have been identified in the
Toodoggone River Area of which the most important are Epithermal precious and
base metal deposits related to volcanic processes associated with the eruption
of Toodoggone formation volcanic rocks. Known deposits occur as fissure veins,
Quartz Stockwork, Breccia Zones, and areas of Silicification in which principal
Ore minerals include Argentite, Electrum, native gold, silver, and lesser
Chalcopyrite, Galena, and Sphalerite. Alteration suites are typical of
Epithermal environments with an inner zone of intense Silicification, clay
minerals and locally Alunite, grading outward to Sericite and clay minerals,
chlorite, epidote, and pyrite. Work Assessment filings for the Toodoggone area
are held by the Ministry of Mines of British Columbia and are public
information.
PREVIOUS EXPLORATION ON JD GOLD-SILVER PROPERTY
The area which now consists of the JD Gold-Silver property was initially staked
by Sumac Mines Ltd. in 1971 following a reconnaissance geochemical survey. This
early work consisted of soil and rock geochemistry, geophysical surveys (induced
polarization, self potential and magnetometer), geological mapping, hand
trenching, and one 400 f t. (122 m.) diamond drill hole. This work was focused
on several gossans to ascertain porphyry style mineralization.
The property was then explored by Energex Minerals Ltd. and Kidd Creek Mines
Ltd. under an option between 1974 to 1988. The property was one of three claim
groups held by Energex Minerals Ltd. and received modest exploration efforts,
which included prospecting, geological mapping, soil and rock sampling,
trenching, and 16 diamond drill holes totaling 6,000 feet.
The property was allowed to lapse and was re-staked in 1978 by T.C. Scott and
Petra-Gem Exploration. Energex Minerals Ltd. carried out a program of
prospecting, trenching, and sampling. Within a year Energex Minerals Ltd. had
farmed the property out to Texasgulf Canada Ltd. Texasgulf Canada Ltd.
thereafter became Kidd Creek Mines Ltd. Kidd Creek Mines Ltd. explored the
property between 1979 to 1984, carrying out geological mapping, geochemical and
geophysical Surveys (induced polarization and magnetometer), trenching, and 15
diamond drill holes totaling 6,233 feet ( 1900 m). This work outlined a number
of zones but failed to indicate the desired high grade tonnage objective of a
million tons. Drilling at the Gumbo zone intersected mineralization which
appeared limited in tonnage by topography being at the crest of a ridge. Energex
Minerals Ltd. resumed work on the property in 1988 carrying out backhoe
trenching, geological mapping, and soil and rock geochemistry.
OUR EXPLORATION ACTIVITY
We acquired the property in 1993. In 1994, we performed detailed geological
mapping, soil and rock sampling, induced polarization surveys, and drilled 32
diamond drill holes totaling 6,800 feet. Our program resulted in the discovery
of the Finn zone. Seventeen holes partially outlined a tabular, shallow-dipping
body with an average width of 45 feet. Markedly higher grades were present in
both the hangingwall and footwall of the zone. In 1995, we completed a program
of geological mapping, which induced polarization surveys and 104 diamond drill
holes totaling 28,592 feet. The program was principally focused on defining the
Finn zone with additional exploration work on the EOS, Wolf, and Creek zones.
10
<PAGE>
In 1996 we completed a delineation drilling program on the Finn zone consisting
of 58 diamond drill holes totaling 19,998 feet. Additional induced polarization
and magnetometer surveys were also completed over the Finn zone. The 1996
program focused on the definition of the Finn Zone and adjacent areas. We
believe that the Gumbo zone appears to be the western extension of the Finn. In
1996, a total of 218 holes were competed on the Finn zone area totaling 65,773
feet. The zone has been tested over a strike length of 1,600 feet to a vertical
depth 500 feet. The Finn zone appears to be a tabular body with a average true
thickness of 45 feet. Much of the drilling has been done on 50 feet centers to
prove up the grade which is sometimes erratic in the Toodoggone area deposits.
Other drilling has been done at much wider spacing. A zone 200 feet below the
Finn has also been located but only thirteen holes have been completed. A third
zone may also be present at depth. The Finn zone is characterized by a central
silicified high sulfide content zone which averages 0.132 oz. Au/Ton over a
strike length of 700 feet. Lower grade mineralization occurs as an envelope
around the zone and in sub-vertical fracture systems which cut the zone. Overall
grade of this disseminated Porphyry style mineralization appears in the order of
0.050 oz. Au/Ton.
The Central Finn zone has a shallow dip to the north as shown on Drawing
A97-065-06. This sample section (11+35W) shows the zone has a high grade core
surrounded by an envelope of low grade gold mineralization. Over printing both
are disseminated to near massive sulfides over wide intervals. Hole JD96-144
returned 0.257 oz. Au/Ton, 2.61 oz. Ag/Ton, 0.25% Cu, 1.70% Pb and 4.47% Zn over
5.0 m. A number of other holes with similar high base metal values occur within
the Central Finn zone. The silicified envelope appears much wider where sub-
vertical fracturing is present. None of the holes on this section were deep
enough to intersect the zones below the Finn.
Mineralization in the footwall is characterized by local extreme auto
brecciation cemented by epidote and carbonate with local major concentrations of
Galena, Sphalerite, and Chalcopyrite. Fine grained pyrite is disseminated
throughout the zones. The lower zones were intersected in holes 67, 103, 104,
107, 108, and 167, 168, 169, 170, 171, 172, and 173. Grades range from 0.245 oz.
Au/Ton to very low grade. Mineralization is more in character with a Porphyry
style mineralization.
The Finn zone occurs within a horizontal to shallow dipping altered and
Brecciated high porosity zone which now appears to be an unconformity with a
regolith type deposit paleosoil. This zone was previously believed to be a LAW.
New exposures and examination of drill core indicate the only structures present
are high angle and the LAW does not exist and is not a structural feature but is
a high porosity lithological feature that has been highly altered. The Finn zone
is now placed within the Metsantan Member of the Lower Volcanic Cycle of the
Toodoggone Formation. On the property the Metsantan member consists of massive
andesite flows with minor amounts of flow Breccia and tuffaceous units.
The exposure on surface of Epithermal gold deposits appears structurally
controlled and related to a large Porphyry system. Prior exploration activities
by third parties initially focused on the shallow epitherrmal style
mineralization discovered in 1994. Current drilling has defined a much larger
envelope of disseminated mineralization over significant widths. Mineralization
appears on a regional scale to be related to the Black Lake Batholith which
likely intrudes the property at depth and stretches to the west-northwest 15 km.
Our assays in 1994 were fire assayed FA/AA, and where warranted by
mineralization, were subject to gravometric assays. Our assays in 1995, 1996,
and 1997 were fire assayed (FA/AA) except, where warranted by mineralization,
were further assayed using metallic screen analysis. Initial fire assays and
metallic screen assays were undertaken by Ecotech Laboratories of Kamloops of
British Columbia, and metallic screen assays and check or duplicate fire assays
were undertaken by Loring Laboratories of Calgary, Alberta.
ITEM 3. LEGAL PROCEEDINGS.
--------------------------------------------------------------------------------
Except for the following, there are no legal proceedings pending and, to the
best of our knowledge, there are no legal proceedings contemplated or
threatened: a claim has been made against us by our previous landlord for rent
in the amount of $21,008. We are disputing the claim, and the amount of loss
cannot be reasonably estimated. We
11
<PAGE>
have not accrued an amount in our financial statements, and any loss will be
accounted for in the period in which the loss can be reasonably estimated.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
--------------------------------------------------------------------------------
Not Applicable.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
--------------------------------------------------------------------------------
Our common stock is traded on the over-the-counter bulletin board ("OTCBB")under
the symbol "TMBTF", and on the Canadian Venture Stock Exchange f/k/a the
Vancouver Stock Exchange under the symbol "TBE". We were cleared for trading on
the OTCBB on June 3, 1994, and received our first quote in April 1998. We were
de-listed in April 1999, and we voluntarily became a reporting company in
October 1999, at which time we were again cleared for trading on the OTCBB. The
following table sets forth the range of high and low closing bid quotations of
our common stock for each fiscal quarter since April 1998:
<TABLE>
Bid or Trade Prices
(U.S. $)
<CAPTION>
1999 FISCAL YEAR HIGH LOW
<S> <C> <C>
Quarter Ending 06/30/98............................................ $0.50 $0.375
Quarter Ending 09/39/98............................................ $0.437 $0.14
Quarter Ending 12/31/98............................................ $0.20 $0.10
Quarter Ending 03/31/99............................................ $0.80 $0.11
2000 FISCAL YEAR HIGH LOW
Quarter Ending 06/30/99............................................ n/a n/a
Quarter Ending 09/30/99............................................ n/a n/a
Quarter Ending 12/31/99............................................ $1.50 $0.51
Quarter Ending 03/31/00............................................ $2.00 $0.75
</TABLE>
The above quotations reflect inter-dealer prices, without retail mark-up,
mark-down, or commission and may not necessarily represent actual transactions.
During the last two fiscal years, we have not declared cash dividends on our
common stock and we do not anticipate that dividends will be paid in the
foreseeable future.
As of October 5, 2000, the closing price for our common stock on the OTCBB was
$0.45.
As of October 25, 2000, there were 138 record holders of our common stock, of
which 123 were registered in the names of person or companies with an address in
the United States.
12
<PAGE>
The following table sets forth the range of high and low closing bid quotations
of our common stock on the Canadian Venture Stock Exchange for each calendar
quarter since 1995:
<TABLE>
Bid or Trade Prices
(Cdn $)
<CAPTION>
1995 FISCAL YEAR HIGH LOW
<S> <C> <C>
Quarter Ending 06/30/94............................................ n/a n/a
Quarter Ending 09/30/94............................................ n/a n/a
Quarter Ending 12/31/94............................................ n/a n/a
Quarter Ending 03/31/95............................................ $1.75 $1.06
<CAPTION>
1996 FISCAL YEAR HIGH LOW
<S> <C> <C>
Quarter Ending 06/30/95............................................ $3.25 $1.15
Quarter Ending 09/30/95............................................ $5.50 $1.10
Quarter Ending 12/31/95............................................ $1.50 $0.60
Quarter Ending 03/30/96............................................ $2.30 $1.10
<CAPTION>
1997 FISCAL YEAR HIGH LOW
<S> <C> <C>
Quarter Ending 06/30/96............................................ $2.52 $1.40
Quarter Ending 09/30/96............................................ $2.24 $1.10
Quarter Ending 12/31/96............................................ $1.44 $0.70
Quarter Ending 03/30/97............................................ $1.45 $0.87
<CAPTION>
1998 FISCAL YEAR HIGH LOW
<S> <C> <C>
Quarter Ending 06/30/97............................................ $1.29 $0.79
Quarter Ending 09/30/97............................................ $1.15 $0.66
Quarter Ending 12/31/97............................................ $0.90 $0.50
Quarter Ending 03/30/98............................................ $0.89 $0.56
<CAPTION>
1999 FISCAL YEAR HIGH LOW
<S> <C> <C>
Quarter Ending 06/30/98............................................ $0.80 $0.65
Quarter Ending 09/30/98............................................ $0.92 $0.20
Quarter Ending 12/31/98............................................ $0.39 $0.12
Quarter Ending 03/30/99............................................ $1.05 $0.16
<CAPTION>
2000 FISCAL YEAR HIGH LOW
<S> <C> <C>
Quarter Ending 06/30/99............................................ $1.58 $0.55
Quarter Ending 09/30/99............................................ $3.44 $1.39
Quarter Ending 12/31/99............................................ $2.95 $0.85
Quarter Ending 03/30/00............................................ $3.05 $1.50
</TABLE>
As of October 30, 2000 the closing price for our common stock on the Canadian
Venture Stock Exchange was Cdn$ 0.99.
13
<PAGE>
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
--------------------------------------------------------------------------------
SELECTED FINANCIAL DATA
The balance sheet and income statement data shown below were derived from our
audited consolidated financial statements. The data is stated in Canadian
dollars ("Cdn") and our audited consolidated financial statements were prepared
in accordance with Canadian generally accepted accounting principles ("Canadian
GAAP"). You should read this data in conjunction with the following Management's
Discussion and Analysis or Plan of Operation, as well as our consolidated
financial statements and notes thereto, included elsewhere in this filing.
<TABLE>
<CAPTION>
Year Year Year Year Year
Ended Ended Ended Ended Ended
3/31/00 3/31/99 3/31/98 3/31/97 3/31/96
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
CANADIAN GAAP
Revenue $279,658 $14,530 $16,376 $15,783 $9,231
Net Loss ($692,305) ($602,648) ($452,909) ($756,131) ($484,027)
Loss Per Share (1)<F2> ($0.04) ($0.04) ($0.04) ($0.06) ($0.05)
Actual Outst. Shrs.*<F1> 16,217,202 $14,052,917 13,907,917 12,305,417 10,400,977
Dividends nil nil nil nil nil
Total Assets(2)<F3> $6,351,263 $5,114,545 $5,633507 $4,718,666 $3,486,574
Shareholder Equity $6,065,466 $5,018,146 $5,588,664 $4,684,265 $3,387,128
Deferred Exploration
Costs (2)<F3> $4,947,942 $4,990,630 $5,000,551 $4,286,957 $2,604,746
<CAPTION>
U.S. GAAP
<S> <C> <C> <C> <C> <C>
Weighted Ave Shares*<F1> 15,645,918 13,933,067 12,912,753 11,264,584 10,152,860
Net Loss ($5,080,680) ($592,727) ($1,166,503) ($2,753,342) ($2,974,588)
Loss Per Share (1)<F2> ($0.32) ($0.04) ($0.09) ($0.24) ($0.29)
Total Assets(2)<F3> $1,403,321 $123,915 $632,956 $431,709 $881,828
Shareholder Equity $1,117,524 $27,516 $588,093 $397,308 $782,382
Deferred Exploration
Costs(s) nil nil nil nil nil
<FN>
<F1>
* Stock Options, Warrants, and other similar instruments are considered to be
common stock equivalents at all times. However, as the inclusion of common stock
equivalents have the effect of decreasing the loss per share, common stock
equivalents are excluded from the Net Loss Per Share computation.
<F2>
(1) Under Canadian GAAP, shares issued with escrow restrictions are recorded at
the issue price and are not revalued upon release from escrow. Under U.S. GAAP,
escrow shares which are released upon us meeting certain performance criteria
are considered to the contingently issuable. These shares are excluded from the
weighted average shares calculation and the difference between the fair value of
the shares at the time of their release from escrow and the shares original
issue price is accounted for as a compensation expense at the time the shares
are released from escrow.
<F3>
(2) Under Canadian GAAP all exploration expenses related to mineral properties
and areas of geological interest are deferred until the properties to which they
relate are placed into production sold or abandoned. Under U.S. GAAP these
exploration costs are not capitalized but expensed as incurred.
</FN>
</TABLE>
TRANSLATION OF FOREIGN CURRENCIES
Our monetary assets and liabilities that are denominated in foreign currencies
are translated at the rate of exchange at the balance sheet date. Non-monetary
assets and liabilities are translated at exchange rates prevailing at the
14
<PAGE>
transaction date. Revenue and expenses are translated at the average rate.
Exchange gains and losses arising on translation are included in our statement
of operations.
GENERAL
We were incorporated in the Province of British Columbia, Canada on May 23,
1986. In September 1999, we re- incorporated in the Yukon Territory, Canada. We
have two separate business divisions: (1) we are a mineral exploration company
exploring for gold and silver worldwide; and (2) we own and operate Internet
e-commerce Web sites which primarily cater to people who have an interest in
fine watches, jewelry, high-end gift and other luxury items.
We are a exploration stage company in the business of acquiring, exploring, and
if warranted, developing mineral properties primarily located in British
Columbia, Canada. We have acquired and subsequently abandoned several mineral
properties in pursuit of our business. Our current mineral properties are not in
production and, consequently, we have no current operating income or cash flow
from these properties. We defer all exploration costs relating to our properties
and areas of geological interest until the properties are placed in production,
sold or abandoned.
We are in the development stage in our Internet e-commerce division and have
generated minimal revenues. Revenue from the sale of fine gold jewelry and
watches is recognized when the goods are shipped and received. Cost of goods
sold is comprised exclusively of the acquisition cost of the merchandise sold
inclusive of any import duties. Our inventory is valued at the lower of cost and
net realizable value.
We have an accumulated deficit of $7,444,697 for our fiscal year ended March 31,
2000. We have suffered losses from operations, require additional financing, and
need to continue our exploration activities and the development of our Internet
e-commerce business. Ultimately we need to generate sufficient revenues and
successfully attain profitable operations. Our present business operations do
not generate sufficient revenues to cover our expenses. We cannot provide
assurance that our business operations will be able to do so.
RESULTS OF OPERATIONS
FISCAL YEAR ENDED MARCH 31, 2000
In 2000, we continued to focus our efforts on our Internet business division. In
September 1999, we re- incorporated in the Yukon Territory, Canada, and changed
our name from AGC Americas Gold Corp. to Timebeat.com Enterprises, Inc., to
reflect our Internet focus. In November 1999, we launched WWW.TIMEBEAT.COM, and
in December 1999, we acquired WWW.WATCHZONE.NET in order to increase content and
awareness of WWW.TIMEBEAT.COM.
In February 2000, we began beta testing an online auction component on
www.timebeat.com. Through Watch Central, an affiliate of us, we are ascertaining
the possibility of offering European watch experts who would inspect and
refurbish, if necessary, all watches placed for auction and provide an
industry-leading extended warranty program for each item. We believe this may
provide a level of consumer protection which is not offered by the major auction
sites on the Internet. Our objective is to provide a unique service and to
charge fees for those value- added services. The online auction component would
be designed to appeal to all watch collectors, and in particular those visiting
our site at www.watchzone.net. We intend to launch our action services during
the next fiscal year.
As a result of Internet e-commerce Web site at www.timebeat.com, we generated
revenues of $207,522 in 2000. These were our only revenues since inception in
1986. The revenues consisted of products sales and is net of sales or
promotional discounts. The revenues were offset by cost of goods sold of
$205,364, leaving a gross margin of $2,158. The cost of goods sold consisted
primarily of the cost of the products, and includes such items as inbound and
outbound shipping costs. Due to our limited operating history and the
seasonality of our sales, we are unable to estimate future sales or trends at
this time with any reasonable degree of certainty.
15
<PAGE>
Our general and administrative expenses were $709,599 in 2000, compared to
$250,963 in 1999. We expense administration expenditures in the year incurred.
The increase in expenses were generally attributable to the development and
operation of our Web sites and include advertising ($126,505); consulting fees
($120,127); salaries and wages ($35,439); travel, marketing and investor
relations ($135,178); and Web site development ($59,299). With regards to our
investor relations, in June 1999 we entered into an investor relations agreement
with National Financial Communications. Under the agreement, we are required to
pay a monthly fee of US $5,000 plus expenses. The agreement had an initial term
of one year and was extended on a month to month basis subsequent to the fiscal
year end.
Our total assets increased $1,263,718 or 24% from $5,114,545 in 1999 to
$6,351,263 in 2000. Our total liabilities were $285,797 in 2000, compared to
$96,399 in 1999. Our shareholders' equity in 2000 was $6,065,466, as compared to
$5,018,146 in 1999, which represented an increase of $1,047,320 or 20%.
FISCAL YEAR ENDED MARCH 31, 1999
During 1999, we continued to pursue the acquisition of additional projects in
order to diversify properties. Our efforts were focused on finding additional
acquisitions in Latin America, the Western United States and British Columbia.
As a result, we terminated the Joint Venture Agreement between ourselves and
Antares Mining and Exploration Corporation, and performed no further exploration
work except for technical reports which summarized the 1998 summer program. In
1999, we also pursued business opportunities which were unrelated to mineral
exploration. Under a letter of intent with Watch Central Corporation dated March
5, 1999, Watch Central Corporation agreed to design, develop, beta test and
implement an e-commerce Web site that would market, sell and repair fine gold
jewelry and watches.
Our general and administrative costs were $250,963 in 1999, compared to $432,878
in 1998. The decrease of $181,915 or 43% was primarily attributable to the
following increases and decreases in categories of expenses related to the Joint
Venture Agreement between ourselves and Antares Mining and Exploration
Corporation: a decrease of $94,667 in travel and promotion fees, a decrease of
$17,312 in legal fees, an increase of $30,350 in management fees, and a decrease
of $35,377 in office, secretarial and administration fees. These differences
were a result of shifting our operating focus from promotion of our existing
exploration properties to pursuing other business opportunities.
Our total assets decreased $518,962 or 9.2% from $5,633,507 in 1998 to
$5,114,545 in 1999. Our total liabilities were $96,399 in 1999, compared to
$44,863 in 1998. Our shareholders' equity in 1999 was $5,018,146, compared to
$5,588,644 in 1998, which represented a decrease of $570,498 or 10.2%.
FISCAL YEAR ENDED MARCH 31, 1998
During our fiscal year 1998, we continued to focus our attention on the
exploration of our properties which were subject to the Joint Venture Agreement
between ourselves and Antares Mining and Exploration Corporation. As a direct
result of the agreement, we spent a total of $3,317,571 in 1998, as compared to
$1,360,495 in 1997.
Our general and administrative costs were $432,878 in 1998, as compared to
$474,506 in 1997. The decrease of $41,628 or 8.7% was comprised primarily of
increases and decreases in the following categories directly related to the
exploration of our JD Gold-Silver property: a decrease of $33,900 in consulting
fees, an increase of $13,223 in legal fees, and a decrease of $15,250 in
management fees.
Our total assets were $4,718,666 in 1997, as compared to $5,633,507 in 1998,
which represented an increase of $914,841 or 19.3%. Our total liabilities also
increased from $34,401 in 1997 to $44,863 in 1998. Our shareholders' equity
increased by $904,379 from $4,684,265 in 1997 to $5,588,644 in 1998.
16
<PAGE>
LIQUIDITY
Cash used in our operating activities during 2000 was $738,606, compared to
$212,130 in 1999, and $416,408 in 1998. The increase in outgoing cash flows from
1999 to 2000 was attributable to an increase in receivables ($119,461 compared
to $31,745), inventory ($121,906 compared to $0), and accounts payable ($189,398
compared to $51,536). This was offset by cash provided by financing activities
of $1,739,625 in 2000, $12,150 in 1999, and $1,041,788 in 1998. Cash used in
investing activities for the same periods were $192,368, $184,716, and $434,852,
respectively. Cash used in investing activities for 2000 consisted of
expenditures on mineral properties, acquisition of capital assets and restricted
term deposits. At March 31, 2000, we had a working capital surplus of $879,051,
compared to $18,431 in 1999. The increased working capital surplus resulted from
the sale of common stock during the 2000 fiscal year with proceeds of
$1,749,325.
At the present time, we anticipate satisfying our cash requirements by
generating additional revenues and seeking funding through additional public or
private placements, inventory financing, or a combination of these options. Our
inability to generate revenue and/or raise additional capital to fund our
operations through the remainder of this year and through the next fiscal year
would have a detrimental effect on the our viability and capability to pursue
our two business divisions. Our ability to raise cash through the sale of
additional equity may be difficult depending upon market conditions and other
factors, and if available could result in additional dilution to our
shareholders. In addition, we will, from time to time, consider the acquisition
of or investment in complementary businesses, products, services and
technologies which might impact our liquidity requirement or cause us to issue
additional equity or debt securities.
CAPITAL ASSETS
Our capital assets are recorded at cost and are amortized over their estimated
useful lives. We use a declining balance method per annum as follows: office
equipment 30%, computer equipment 30%, and computer software 30%. As of March
31, 2000, our total cost of assets was $41,885, with total net book value of
$33,473. This consisted of cost of office equipment $10,403, with net book value
of $8,966; cost of computer equipment $26,893, with net book value of $21,028;
and cost of computer software $4,589, with net book value of $3,479.
CANADIAN INCOME TAXES
As of March 31, 2000, we had non-capital losses carried forward for Canadian tax
purposes of approximately $3,358,000. We also had various resource expenditure
pools for Canadian tax purposes amounting to approximately $4,500,000 that may
be carried forward indefinitely and applied against taxable income of future
years.
PLAN OF OPERATION
MINERAL EXPLORATION
Due to the current price of gold, we anticipate that only a minimal amount of
work will be conducted on our properties during the next twelve months. We have
no foreseeable plans for our properties other than to maintain the leases and to
carry out reclamation work. We estimate the cost of reclamation to be
approximately $100,000. We do not anticipate that we will purchase any
significant equipment for exploration activities during this time period. We
anticipate retaining the services of contractors and other third parties to
assist us in our exploration activities. These contractors and other third
parties generally use their own equipment and labor and, therefore, we do not
anticipate hiring any employees for exploration activities during the next
twelve months.
Our current and future exploration activities, if any, are subject to various
federal, state and local environmental laws and regulations. These laws and
regulations govern the protection of the environment, prospecting, exploration,
development, production, taxes, labor standards, occupational health, mine
safety, toxic substances and other matters. We expect to be able to comply with
these laws and do not believe that compliance will have a material adverse
effect on our competitive position. We intend to obtain all licenses and permits
required by all
17
<PAGE>
applicable regulatory agencies in connection with our exploration and
reclamation activities. We intend to maintain standards of compliance consistent
with contemporary industry practice.
INTERNET WEB SITES
During the fiscal year ended 2000, we enter into a number of agreements and
alliances which had a positive impact on our Web sites' traffic. To date,
however, they have not yet impacted sales. We believe this may be due in part to
the seasonal nature of luxury items and because www.watchzone.net, which
generated most of the traffic, is not an e-commerce site.
For the next twelve months, we intend to focus our resources and efforts on
increasing sales and traffic on our Internet Web sites. We will continue our
effort to provide superior service, extended product warranties, establish a
high placement with the various search engines, create brand awareness with the
intent to leverage that awareness by launching additional Web sites, and to
expand into other areas which may offer a higher gross profit margin potential.
In an effort to increase sales in the short-term, we intend to complete our
unique auction service to differentiate our Web site from other luxury Web sites
which sell comparable items. We also believe that an auction service will appeal
to our existing the customers. In the long-term, we will focus on establishing
additional strategic alliances and continuing our marketing and advertising to
accelerate the adoption of our brand name and services. We do not expect to
purchase any significant equipment during the next twelve months, nor do we
expect to hire a significant number of employees during that time period.
ADDITIONAL FUNDING
As of March 31, 2000, we had a working capital surplus of $879,051. Although we
anticipate a minimal amount of work on our exploration properties during the
next twelve months, exploration and reclamation are capital intensive. The cost
to complete our objectives relating to the Web sites and our ongoing operation
costs are also extensive. For these reasons, we believe we have sufficient
working capital for the next nine (9) months.
As a result, we will need external financing implement our plan of operations.
Sources of external financing may include bank borrowings and joint ventures,
but will most likely be accomplished through future debt and equity offerings.
We cannot assure that financing will be available to us on acceptable terms, or
at all. Our failure to obtain additional financing when needed could result in
delay or the indefinite postponement of one or both of our business divisions,
and the possible loss of your entire investment in us.
ITEM 7. FINANCIAL STATEMENTS.
--------------------------------------------------------------------------------
Please refer to the pages beginning with F-1.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
--------------------------------------------------------------------------------
Not Applicable.
18
<PAGE>
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
--------------------------------------------------------------------------------
EXECUTIVE OFFICERS AND DIRECTORS
The officers and directors of the Company are:
<TABLE>
<CAPTION>
NAME AGE TITLE(S)
---- --- --------
<S> <C> <C>
Alexander Vileshin 37 Chief Executive Officer, President
and Director since August 1999
Thomas L. Crom III 44 Director since September 1996
Secretary since August 1999
Michele Albo 40 Director since August 1999
</TABLE>
Our directors are elected by the shareholders and our officers are appointed
annually by our board of directors. Vacancies in our board are filled by the
board itself. Our officers and directors receive no compensation for their
services. Set forth below are brief descriptions of the recent employment and
business experience of our officers and directors.
ALEXANDER VILESHIN, CHIEF EXECUTIVE OFFICER, PRESIDENT AND DIRECTOR. Mr.
Vileshin has over 18 years experience in the watch industry. From February 1981
through July 1995, Mr. Vileshin was employed by Tourneau, Inc., located in New
York, New York, which is an international watch and jewelry retailer. Mr.
Vileshin started with Tourneau, Inc. as a watch technician and left in 1995 as
Vice-President in charge of Estate Sales. He was responsible for all estate and
used watch purchases and managed over 70 individuals in three departments which
had annual sales in excess of US $15 million. From 1995 until present, Mr.
Vileshin has served as Vice-President, Marketing & Creative Development for
Joseph Edwards Inc., which is based in New York City. At Joseph Edwards Inc.,
Mr. Vileshin is responsible for marketing, sales, purchasing, inventory control
and management information systems. He was also responsible for the design,
supervision and building of their flagship store in New York City. Mr. Vileshin
attended Queens College, a school of computer science in New York City for two
years and did not receive a degree. He also attended technical and trade
education in courses offered by Rolex USA, Ebel, Bulova School, NAWC and Baume &
Mercier.
THOMAS L. CROM III, SECRETARY AND DIRECTOR. Thomas Crom is currently a director
of three public U.S. companies: Dragon Diamond Corp., a mineral exploration
company with offices in Payson, Arizona, Anthem Inc., a non-active corporation
with offices in Payson, Arizona, and Popmachine.com Corp., a Web site that
focuses on the music industry with offices in Payson, Arizona. Mr. Crom earned a
Bachelor of Science in Commerce with a major in business from Santa Clara
University in 1977, and a Masters of Science from Golden Gate University in
1983. Since 1993, Mr. Crom has been a self-employed consultant and provided
services to the mining industry as well as other public companies. From 1989 to
1993 he served in various senior management positions with other public
companies.
MICHELE ALBO, DIRECTOR. Ms. Albo earned an Bachelor of Arts from the State
University at Buffalo in 1982. Ms. Albo has over 15 years experience in the
watch and jewelry industry. From 1989 through 1997, Ms. Albo was a manager at
Tourneau, Inc. in the watch accessories division which had annual revenues in
excess of US $5,000,000 per year. She was responsible for inventory,
distribution and importing, and hiring, training and supervising a staff of 40
individuals. From 1997 to present, Ms. Albo has been a self employed consultant
to the watch and jewelry industry.
19
<PAGE>
CONFLICTS OF INTEREST
Members of our management are associated with other firms involved in a range of
business activities. Consequently, there are potential inherent conflicts of
interest in their acting as officers and directors of our company. Insofar as
the officers and directors are engaged in other business activities, we
anticipate they will devote only a minor amount of time to our affairs.
Our officers and directors are now and may in the future become shareholders,
officers or directors of other companies which may be formed for the purpose of
engaging in business activities similar to us. Accordingly, additional direct
conflicts of interest may arise in the future with respect to such individuals
acting on behalf of us or other entities. Moreover, additional conflicts of
interest may arise with respect to opportunities which come to the attention of
such individuals in the performance of their duties or otherwise. We do not
currently have a right of first refusal pertaining to opportunities that come to
our attention and may relate to our business operations.
Our officers and directors are, so long as they are our officers or directors,
subject to the restriction that all opportunities contemplated by our plan of
operation which come to their attention, either in the performance of their
duties or in any other manner, will be considered opportunities of, and be made
available to us and the companies that they are affiliated with on an equal
basis. A breach of this requirement will be a breach of the fiduciary duties of
the officer or director. If we or the companies in which the officers and
directors are affiliated with both desire to take advantage of an opportunity,
then said officers and directors would abstain from negotiating and voting upon
the opportunity. However, all directors may still individually take advantage of
opportunities if we should decline to do so. Except as set forth above, we have
not adopted any other conflict of interest policy with respect to such
transactions.
As of March 31, 2000, we did not have any standing audit, nominating, or
compensation committees of our board of directors.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Until the fiscal year ended March 31, 2000, we were considered a "foreign
private issuer" and filed reports with the Securities and Exchange Commission on
that basis. As a "foreign private issuer," we were not subject to certain
sections of the Securities Exchange Act of 1934, including Section 16.
Beginning with this annual report on Form 10-KSB for the fiscal year ended March
31, 2000, we are no longer filing as a "foreign private issuer." Accordingly, we
are subject to Section 16. Section 16(a) of the Securities Exchange Act of 1934
requires our officers and directors, and persons who own more than 10% of a
registered class of our equity securities, to file reports of ownership and
changes in ownership with the Securities and Exchange Commission. Officers,
directors and greater than 10% percent shareholders are required by SEC
regulation to furnish us with copies of all Section 16(a) forms they file. To
our knowledge, these reports have not been filed.
ITEM 10. EXECUTIVE COMPENSATION.
--------------------------------------------------------------------------------
EXECUTIVE COMPENSATION
The following table sets forth information the remuneration for our officers and
directors during the last three fiscal years:
20
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING
NAME OF INDIVIDUAL Capacities in Which AGGREGATE WARRANTS & OPTIONS
OR IDENTITY OF GROUP REMUNERATION WAS RECEIVED REMUNERATION GRANTED
-------------------- ------------------------- ------------ -------
<S> <C> <C> <C>
Alexander Vileshin Director & President $46,090 (1)<F1> 800,000
Michele Albo Director $23,700 (2)<F2> 450,000
Thomas L. Crom III Director & Secretary $50,607(3)<F3> 600,000
<FN>
<F1>
(1) Under an agreement dated March 5, 1999 with Watch Central Corporation,
a company controlled by Mr. Vileshin, Watch Central Corporation
provides consulting services in exchange for US$3,000 per month, plus
reasonable expenses. In addition, we pay Watch Central Corporation
US$2,000 per month in rent. We paid Watch Central Corporation a total
of $46,090 during the fiscal year 2000.
<F2>
(2) Under an oral agreement with Ms. Albo, she provides consulting services
in exchange for a compensation based on her time not to exceed US$1,500
per month, plus reasonable expenses. We paid Ms. Albo a total of
$23,700 during the fiscal year 2000.
<F3>
(3) Under an oral agreement with Mr. Crom III, he provides consulting
services in exchange for compensation based on his time which ranges
between US$1,000 to US$3,500 per month, plus reasonable expenses. We
paid Mr. Crom III a total of $24,435 during the fiscal year 2000, a
total of $26,172 in 1999.
</FN>
</TABLE>
Other than the above, we do not pay monetary compensation to our officers and
directors, nor do we compensate our directors for attendance at meetings. We do
reimburse our officers and directors for reasonable expenses incurred during the
course of their performance. There are no employment agreements with any of our
executive officers, and we have no longer-term incentive or medical
reimbursement plans. We anticipate offering some form of incentive-based
monetary compensation in the future.
STOCK OPTION PLANS
On August 20, 1999, we established a new stock option plan. Under the plan, our
board of directors may from time to time grant up to 2,750,000 options to
purchase shares of our common stock. The options may be granted to our officers,
directors, employees or consultants. The maximum term of any option is five
years, and the exercise price may not be less than the closing price on The
Canadian Venture Exchange on the last trading day preceding the grate date,
subject to any allowable discount, or $0.10 per share. As of March 31, 2000, we
granted a total of 2,481,000 options, leaving 269,000 options available under
the plan. All options granted prior to August 20, 1999 were rolled into the new
stock option plan.
The following table provides certain option, warrant and rights information
(whether vested or not) as to the officers and directors individually, and as a
group, as of March 31, 2000:
<TABLE>
<CAPTION>
TITLE OF NUMBER OF DATE EXERCISE PRICE
NAME OF HOLDER SECURITIES SECURITIES OF GRANT IN CDN $ EXPIRATION DATE
-------------- ---------- ---------- -------- -------- ---------------
<S> <C> <C> <C> <C> <C>
Alexander Vileshin Options 314,000 03/05/99 $0.77 03/05/04
Director & President 50,000 06/01/99 $1.03 06/01/04
436,000 09/30/99 $1.78 09/30/04
Michele Albo Options 100,000 08/16/99 $1.73 08/16/04
Director 350,000 09/30/99 $1.78 09/30/04
Thomas L. Crom Options 600,000 08/16/99 $2.58 08/16/04
Director & Secretary
Officers & directors as a group Options 1,850,000
(3 persons)
</TABLE>
21
<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
--------------------------------------------------------------------------------
The following table sets forth information, as of October 25, 2000, with respect
to the beneficial ownership of our common stock by each person known by us to be
the beneficial owner of more than five percent of the outstanding common stock
and by our directors and officers, both individually and as a group:
<TABLE>
<CAPTION>
BENEFICIAL OWNERS SHARES OWNED BENEFICIALLY PERCENT OF CLASS(1)<F1>
<S> <C> <C>
CDS & CO (NCI) 5,955,181 36.7%
P.O. Box 1038 STN A
25 The Esplande
Toronto, Ontario M5W 1G5
Canada
CEDE & CO. 9,397,790 57.9%
P.O. Box 20
Bowling Green Station
New York, New York 10004
Thomas L. Crom III 635,000(2)<F2> 3.8%
P.O. Box 9
Payson, Arizona 85547-0009
Michele Albo 515,000(3)<F3> 3.1%
2720 Hancock Creek Road
West Palm Beach, Florida 33411
Alexander Vileshin 831,500(4)<F4> 4.9%
235 E. 40th Street, Apt. 34II
New York, New York 10016
Officers and Directors as a group 1,981,500(5)<F5> 11.0%
(3 persons)
------------------
<FN>
<F1>
(1) Percentages are based on 16,217,202 shares of common stock
outstanding as of October 25, 2000. Where the persons listed on this
table have the right to obtain additional shares of common stock
within 60 days from October 25, 2000, these additional shares are
deemed to be outstanding for the purpose of computing the percentage
of class owned by such persons, but are not deemed to be outstanding
for the purpose of computing the percentage of any other person.
<F2>
(2) Includes 600,000 shares issuable upon exercise of stock options.
<F3>
(3) Includes 450,000 shares issuable upon exercise of stock options.
<F4>
(4) Includes 800,000 shares issuable upon exercise of stock options.
<F5>
(5) Includes 1,850,000 shares issuable upon exercise of stock options.
</FN>
</TABLE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
--------------------------------------------------------------------------------
Other than as disclosed below, none of our present directors, officers or
principal shareholders, nor any family member of the foregoing, nor, to the best
of our information and belief, any of our former directors, senior officers or
principal shareholders, nor any family member of such former directors, officers
or principal shareholders, has or had any material interest, direct or indirect,
in any transaction, within the two years prior to the date of this report, or in
any proposed transaction which has materially affected or will materially affect
us.
HENRY MEYER, FORMER PRESIDENT AND CHIEF EXECUTIVE OFFICER. In February 1998,
invoices totaling $87,962 were discovered to have been improperly submitted and
paid a company controlled by Mr. Meyer. We disallowed those
22
<PAGE>
invoices, Mr. Meyer resigned, and the money was subsequently returned to us. We
have since implemented financial controls which require the approval of at least
two directors or officers before our checks can be issued.
DONALD NICHOLSON, FORMER DIRECTOR AND CHIEF EXECUTIVE OFFICER. Under an
agreement dated March 5, 1998, MTI Holdings, a company controlled by Mr.
Donaldson, provides management services in exchange for $5,000 per month, plus
reasonable expenses. As of March 31, 2000, we have paid a total of $78,300.
ROBERT G. MCMORRAN, FORMER DIRECTOR. Under an agreement dated August 27, 1998,
Malaspina Consultants Inc., a company controlled by Mr. McMorran, provides
accounting, administrative, investor relations and financial consulting services
in exchange for $4,000 per month, plus reasonable expenses. We also pay
Malaspina Consultants Inc. $850 per month as rent. As of March 31, 2000, we have
paid a total of $83,485.
The following table provides certain option information of Robert
McMorran as of March 31, 2000:
<TABLE>
<CAPTION>
NUMBER OF SHARES GRANT DATE EXERCISE PRICE EXPIRATION DATE
---------------- ---------- -------------- ---------------
<S> <C> <C> <C>
64,000 09/30/99 Cdn$0.76 09/30/04
</TABLE>
ALEXANDER VILESHIN, DIRECTOR, PRESIDENT AND CEO. Under an agreement dated March
5, 1999, Watch Central Corporation, a company controlled by Mr. Vileshin,
provides consulting services in exchange for US$3,000 per month, plus reasonable
expenses. We also pay Watch Central Corporation US$2,000 per month as rent. We
have paid a total of $46,090 during fiscal year 2000.
The following table provides certain option information of Mr. Vileshin
as of March 31, 2000:
<TABLE>
<CAPTION>
NUMBER OF SHARES GRANT DATE EXERCISE PRICE EXPIRATION DATE
---------------- ---------- -------------- ---------------
<S> <C> <C> <C>
314,000 03/05/99 Cdn$0.77 03/05/04
50,000 06/01/99 Cdn$1.03 06/01/04
436,000 09/30/99 Cdn$1.78 09/30/04
</TABLE>
WATCH CENTRAL CORPORATION. On March 5, 1999, we entered into a letter of intent
with Watch Central Corporation and Timebeat.com Inc., our wholly owned
non-public subsidiary which we incorporated in the Sate of Nevada on March 17,
1999. Under the letter of intent, we paid Watch Central Corporation U.S.$50,000
in exchange for its services to design, develop, beta test and implement an
e-commerce Web site that would market, sell and repair fine gold jewelry and
watches. We also pay Watch Central Corporation U.S.$3,000 a month for consulting
services and U.S.$2,000 a month for rent. Watch Central Corporation subsequently
became an affiliate as Alexander Vileshin is an officer and director of us and
Watch Central Corporation.
THOMAS L. CROM III, DIRECTOR AND SECRETARY. Under an oral agreement, Mr. Crom
III provides consulting services in exchange for compensation based on his time
which ranges between US$1,000 to US$3,500 per month, plus reasonable expenses.
We have paid Mr. Crom III a total of $24,435 during fiscal year 2000, and a
total of $26,172 in 1999.
The following table provides certain option information of Mr. Crom III
as of March 31, 2000:
<TABLE>
<CAPTION>
NUMBER OF SHARES GRANT DATE EXERCISE PRICE EXPIRATION DATE
---------------- ---------- -------------- ---------------
<S> <C> <C> <C>
600,000 09/30/99 Cdn$0.76 09/30/04
</TABLE>
MICHELLE ALBO, DIRECTOR. Under an oral agreement, Ms. Albo provides consulting
services in exchange for compensation based on her time not to exceed US$1,500
per month, plus reasonable expenses. We have paid Ms. Albo a total of $23,700
during fiscal year 2000.
23
<PAGE>
The following table provides certain option information of Ms. Albo as
of March 31, 2000:
<TABLE>
<CAPTION>
NUMBER OF SHARES GRANT DATE EXERCISE PRICE EXPIRATION DATE
---------------- ---------- -------------- ---------------
<S> <C> <C> <C>
100,000 08/16/99 Cdn$1.73 08/16/04
350,000 09/30/99 Cdn$1.78 09/30/04
</TABLE>
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
--------------------------------------------------------------------------------
<TABLE>
(A) EXHIBITS:
<CAPTION>
REGULATION CONSECUTIVE
S-B NUMBER EXHIBIT PAGE NUMBER
<S> <C> <C>
3.1 Certificate of Name Change and Ordinary and Special Resolution. n/a(1)<F1>
3.2 Certificate of Incorporation and Memorandum. n/a(1)<F1>
4.1 VSE acceptance dated January 3, 1996 of Private Placement announced n/a(1)<F1>
October 25, 1994.
4.2 VSE acceptance dated January 9, 1996 of Private Placement announced n/a(1)<F1>
November 5, 1995 and November 23, 1996.
4.3 VSE acceptance dated June 6, 1997 of Private Placement announced n/a(1)<F1>
February 2, 1997.
4.4 Sample Purchase Warrants. n/a(1)<F1>
4.5 Sample Purchase Options. n/a(1)<F1>
10.1 Letter Agreement dated October 10, 1993 between the Company and n/a(1)<F1>
Energex Minerals Ltd. regarding the JD Property (Amendment).
10.2 Agreement dated July 7, 1994 between the Company and Floralynn n/a(1)<F1>
Investments Ltd.
10.3 Letter Agreement dated September 30, 1994 between the Company and n/a(1)<F1>
Energex Minerals Ltd.
10.4 Letter Agreement dated April 13, 1995 between the Company and David n/a(1)<F1>
Ford.
10.5 Consulting Agreement dated September 15, 1995 between the Company and n/a(1)<F1>
Founder's Group Management Ltd.
10.6 Agreement dated January 10, 1996 between the Company and Energex n/a(1)<F1>
Minerals Ltd.
10.7 Agreement dated June 14, 1996 between the Company and Energex Minerals n/a(1)<F1>
Ltd.
10.8 Agreement dated December 6, 1996 between the Company and Cheni n/a(1)<F1>
Resources Inc. and Meota Resources Corp.
10.9 Joint Venture Agreement dated August 1, 1997 between the Company and n/a(1)<F1>
Antares Mining and Exploration Corporation.
10.10 Minerals Property Earn-In Agreement dated July 17, 1997 n/a(1)<F1>
between the Company and Antares Mining and
Exploration Corporation.
24
<PAGE>
<CAPTION>
REGULATION CONSECUTIVE
S-B NUMBER EXHIBIT PAGE NUMBER
<S> <C> <C>
10.11 1994 Drilling Results. n/a(1)<F1>
10.12 1995 Drilling Results. n/a(1)<F1>
10.13 1996 Drilling Results. n/a(1)<F1>
10.14 Maps of the Company's Properties. n/a(1)<F1>
10.15 Flow-Through Funding and Renunciation Agreement dated May 10, 1996 n/a(1)<F1>
between the Company and Henry A. Meyer.
10.16 Flow-Through Funding and Renunciation Agreement dated May 10, 1996 n/a(1)<F1>
between the Company and John Peterson.
10.17 Flow-Through Funding and Renunciation Agreement dated May 10, 1996 n/a(1)<F1>
between the Company and Kenneth A. Thompson.
10.18 Flow-Through Funding and Renunciation Agreement dated December 21, n/a(1)<F1>
1995 between the Company and Sandy Lynn Gammon.
10.19 Flow-Through Funding and Renunciation Agreement dated December 21, n/a(1)<F1>
1995 between the Company and Lorraine McWilliams.
10.20 Flow-Through Funding and Renunciation Agreement dated December 21, n/a(1)<F1>
1995 between the Company and Thomas Mitchell.
10.21 Flow-Through Funding and Renunciation Agreement dated December 21, n/a(1)<F1>
1995 between the Company and Janet Thompson.
10.22 Flow-Through Funding and Renunciation Agreement dated December 21, n/a(1)<F1>
1995 between the Company and Olza Tien.
10.23 Stock Option Plan dated August 29, 1999. (2)<F2>
10.24 Letter of Intent dated March 5, 1999, between the Company, Watch Central (2)<F2>
Corporation and Timebeat.com Inc.
10.25 Agreement dated December 14, 1999 between the Company, Watchzone.net (2)<F2>
Inc., the management of Watchzone.net Inc., and Timebeat.com Inc.
27 Financial Data Schedule 53
---------------------
<FN>
<F1>
(1) Incorporated by reference to our Annual Report on Form 20-F for the fiscal year ended March 31, 1999, file
no. 0-29260.
<F2>
(2) To be filed by amendment.
</FN>
</TABLE>
(B) REPORTS ON FORM 8-K: None.
25
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
TIMEBEAT.COM ENTERPRISES, INC.
Dated: October 30, 2000 By: /s/ Alexander Vileshin
-------------------------------
Alexander Vileshin, President
In accordance with the Securities Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
Chief Executive Officer, President and
Director (Principal Executive and
/s/ Alexander Vileshin Accounting Officer) October 30, 2000
---------------------------------------------------------
Alexander Vileshin
Director, Secretary and Principal
/s/ Thomas L. Crom Financial Officer October 30, 2000
---------------------------------------------------------
Thomas L. Crom
/s/ Michele Albo Director October 30, 2000
---------------------------------------------------------
Michele Albo
</TABLE>
26
<PAGE>
TIMEBEAT.COM ENTERPRISES INC.
(formerly AGC Americas Gold Corp.)
CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian dollars)
F-1
<PAGE>
AUDITORS' REPORT
To: The Shareholders of
Timebeat.Com Enterprises Inc.
(Formerly AGC Americas Gold Corp.)
We have audited the consolidated balance sheet of TIMEBEAT.COM ENTERPRISES INC.
(FORMERLY AGC AMERICAS GOLD CORP.) as at March 31, 2000 and March 31, 1999 and
the consolidated statements of operations, deficit, cash flows and consolidated
changes in shareholders' equity (deficiency) for the years ended March 31, 2000,
March 31, 1999 and March 31, 1998 and for the period from April 1, 1993 to March
31, 2000. These financial statements, expressed in Canadian dollars, are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with Canadian generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the Company as at March 31, 2000
and March 31, 1999 and the results of its operations, cash flows and changes in
shareholders' equity (deficiency) for the years ended March 31, 2000, March 31,
1999 and March 31, 1998 and for the period from April 1, 1993 to March 31, 2000
in accordance with Canadian generally accepted accounting principles. As
required by British Columbia Company Act, we report that, in our opinion, these
principles have been applied on a consistent basis.
Canadian generally accepted accounting principles vary in certain significant
respects from accounting principles generally accepted in the United States.
Application of accounting principles generally accepted in the United States
would have affected results of operations for each of the years in the three
year period ended March 31, 2000 and assets and shareholders' equity as at March
31, 2000 and March 31, 1999 to the extent summarized in Note 13 to the financial
statements.
/s/ CAMPBELL, SAUNDERS & CO.
CAMPBELL SAUNDERS & CO.
CHARTERED ACCOUNTANTS
Vancouver, B.C.
August 14, 2000
COMMENTS BY AUDITORS' FOR U.S. READERS ON
CANADIAN-U.S. REPORTING DIFFERENCE
In the United States, reporting standards for auditors require the addition of
an explanatory paragraph (following the opinion paragraph) when the financial
statements are affected by conditions and events that cast substantial doubt on
the Company's ability to continue as a going concern, such as those described in
Note 1. Our report to the shareholders is expressed in accordance with Canadian
Reporting standards which do not permit a reference to such events and
conditions in the auditor's report when these are adequately disclosed in the
financial statements.
/s/ CAMPBELL, SAUNDERS & CO.
CAMPBELL SAUNDERS & CO.
CHARTERED ACCOUNTANTS
Vancouver, B.C.
August 14, 2000
F-2
<PAGE>
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING
The accompanying financial statements and related data are the responsibility of
management. Management is responsible for ensuring that the financial statements
are prepared in accordance with generally accepted accounting principles.
The integrity of the financial reporting process is also the responsibility of
management. Management maintains systems of internal controls designed to
provide reasonable assurance that transactions are authorized, assets are
safeguarded, and reliable financial information is produced. Management selects
accounting principles and methods that are appropriate to the Company's
circumstances, and makes decisions affecting the measurement of transactions in
which estimates or judgements are required to determine the amounts reported.
The Board of Directors is responsible for ensuring that management fulfils its
responsibilities for financial reporting. The Board has responsibility for
reviewing and approving the financial statements.
The Audit Committee has responsibility for reviewing the annual financial
statements and the external auditors' report and recommending the annual
financial statements to the board of directors for approval.
The external auditors audit the financial statements annually on behalf of the
shareholders. The external auditors have free access to management, and the
Audit Committee.
/s/Thomas Crom
-------------------------
Thomas Crom III, Director
F-3
<PAGE>
TIMEBEAT.COM ENTERPRISES INC.
(FORMERLY AGC AMERICAS GOLD CORP.)
(EXPRESSED IN CANADIAN DOLLARS)
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
As at March 31, 2000 and 1999 2000 1999
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 861,299 $ 52,648
Accounts receivable 181,643 62,182
Inventory 121,906 -
------------------------------------------------------------------------------------------------------------------------
1,164,848 114,830
Restricted term deposits (Note 3) 205,000 -
Deferred exploration costs (Note 4 and Schedules) 4,947,942 4,990,630
Capital assets (Note 5) 33,473 9,085
------------------------------------------------------------------------------------------------------------------------
$ 6,351,263 $ 5,114,545
========================================================================================================================
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities $ 285,797 $ 96,399
------------------------------------------------------------------------------------------------------------------------
CONTINGENCIES AND COMMITMENTS (NOTE 7)
NATURE AND CONTINUANCE OF OPERATIONS (NOTE 1)
SHAREHOLDERS' EQUITY
Capital stock (Note 6) 13,510,163 11,770,538
Common shares, no par value
2000, 100,000,000 authorized, 16,217,202 issued
1999, 100,000,000 authorized, 14,052,917 issued
Deficit (7,444,697) (6,752,392)
------------------------------------------------------------------------------------------------------------------------
6,065,466 5,018,146
------------------------------------------------------------------------------------------------------------------------
$ 6,351,263 $ 5,114,545
========================================================================================================================
</TABLE>
Approved by the Directors:
/s/ Thomas L. Crom /s/ Michele Albo
Director Director
F-4
<PAGE>
TIMEBEAT.COM ENTERPRISES INC.
(FORMERLY AGC AMERICAS GOLD CORP)
(EXPRESSED IN CANADIAN DOLLARS)
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS'
EQUITY (DEFICIENCY)
<TABLE>
<CAPTION>
COMMON
SHARES
NUMBER OF ISSUED AND DEFICIT
SHARES FULLY PAID ACCUMULATED TOTAL
<S> <C> <C> <C> <C>
BALANCE-MARCH 31, 1993 11,774,415 $3,488,844 $(4,037,827) $ (548,983)
Shares issued during the year - - - -
Share issue costs - (31,485) - (31,485)
Loss for the year - - (94,044) (94,044)
------------------------------------------------------------------------------------------------------------------------------
BALANCE-MARCH 31, 1994 11,774,415 3,457,359 (4,131,871) (674,512)
==============================================================================================================================
May 17, 1994 cancelled prior to share
consolidation former performance
and principal's escrow shares (3,637,500) - - -
------------------------------------------------------------------------------------------------------------------------------
May 17, 1994 share consolidation of
5 (old) for 1 (new) (6,509,532) - - -
------------------------------------------------------------------------------------------------------------------------------
Issued for cash
On exercise of agents warrants 344,000 86,000 - 86,000
On exercise of options 190,000 107,000 - 107,000
By way of statement of material facts 1,840,000 460,000 - 460,000
For performance escrow shares 375,000 3,750 - 3,750
By way of private placements 1,421,300 737,278 - 737,278
------------------------------------------------------------------------------------------------------------------------------
4,170,300 1,394,028 - 1,394,028
Issued for fiscal agency fees 120,000 37,025 - 37,025
Issued for acquisition of mineral
properties 355,500 145,875 - 145,875
Issued for settlement of debt 637,486 473,615 - 473,615
Issued for finders fee 20,000 11,000 - 11,000
------------------------------------------------------------------------------------------------------------------------------
Total issued during the year 5,303,286 2,061,543 - 2,061,543
Share issue costs - (109,095) - (109,095)
------------------------------------------------------------------------------------------------------------------------------
5,303,286 1,952,448 - 1,952,448
------------------------------------------------------------------------------------------------------------------------------
Loss for the year - - (324,806) (324,806)
------------------------------------------------------------------------------------------------------------------------------
BALANCE-MARCH 31, 1995 6,930,669 5,409,807 (4,456,677) 953,130
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
F-5
<PAGE>
TIMEBEAT.COM ENTERPRISES INC.
(FORMERLY AGC AMERICAS GOLD CORP)
(EXPRESSED IN CANADIAN DOLLARS)
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS'
EQUITY (DEFICIENCY)
<TABLE>
<CAPTION>
COMMON
SHARES
NUMBER OF ISSUED AND DEFICIT
SHARES FULLY PAID ACCUMULATED TOTAL
<S> <C> <C> <C> <C>
Issued for cash
On exercise of agents warrants 6,000 1,500 - 1,500
On exercise of options 744,100 551,456 - 551,456
On exercise of warrants 1,011,250 505,037 - 505,037
By way of private placements 1,590,700 1,559,142 - 1,559,142
---------------------------------------------------------------------------------------------------------------------------
3,352,050 2,617,135 - 2,617,135
Issued for acquisition of mineral
properties 110,000 237,600 - 237,600
Issued for finders fees 8,258 12,800 - 12,800
---------------------------------------------------------------------------------------------------------------------------
Total issued during the year 3,470,308 2,867,535 - 2,867,535
Share issue costs - (84,659) - (84,659)
---------------------------------------------------------------------------------------------------------------------------
3,470,308 2,782,876 - 2,782,876
---------------------------------------------------------------------------------------------------------------------------
Loss for the year - - (484,027) (484,027)
---------------------------------------------------------------------------------------------------------------------------
BALANCE-MARCH 31, 1996 10,400,977 8,192,683 (4,940,704) 3,251,979
===========================================================================================================================
Issued for cash
On exercise of options 342,900 333,204 - 333,204
On exercise of warrants 556,150 497,156 - 497,156
By way of private placements 805,390 1,071,949 - 1,071,949
---------------------------------------------------------------------------------------------------------------------------
1,704,440 1,902,309 - 1,902,309
Issued for acquisition of mineral
properties 200,000 296,000 - 296,000
---------------------------------------------------------------------------------------------------------------------------
Total issued during the year 1,904,440 2,198,309 - 2,198,309
Share issue costs - (9,892) - (9,892)
---------------------------------------------------------------------------------------------------------------------------
1,904,440 2,188,417 - 2,188,417
---------------------------------------------------------------------------------------------------------------------------
Loss for the year - - (756,131) (756,131)
---------------------------------------------------------------------------------------------------------------------------
BALANCE-MARCH 31, 1997 12,305,417 10,381,100 (5,696,835) 4,684,265
===========================================================================================================================
Issued for cash
By way of private placements 1,250,000 1,062,000 - 1,062,000
Issued for finders fees 152,500 152,500 - 152,500
Issued for acquisition of mineral
Properties 200,000 208,000 - 208,000
----------------------------------------------------------------------------------------------------------------------------
Total issued during the year 1,602,500 1,422,500 - 1,422,500
Share issue costs - (65,212) - (65,212)
----------------------------------------------------------------------------------------------------------------------------
1,602,500 1,357,288 - 1,357,288
----------------------------------------------------------------------------------------------------------------------------
Loss for the year - - (452,909) (452,909)
----------------------------------------------------------------------------------------------------------------------------
BALANCE-MARCH 31, 1998 13,907,917 11,738,388 (6,149,744) 5,588,644
============================================================================================================================
</TABLE>
F-6
<PAGE>
TIMEBEAT.COM ENTERPRISES INC.
(FORMERLY AGC AMERICAS GOLD CORP)
(EXPRESSED IN CANADIAN DOLLARS)
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS'
EQUITY (DEFICIENCY)
<TABLE>
<CAPTION>
COMMON
SHARES
NUMBER OF ISSUED AND DEFICIT
SHARES FULLY PAID ACCUMULATED TOTAL
<S> <C> <C> <C> <C>
Issued for cash
On exercise of options 45,000 12,150 - 12,150
Issued for acquisition of mineral
properties 100,000 20,000 - 20,000
---------------------------------------------------------------------------------------------------------------------------
Total issued during the year 145,000 32,150 - 32,150
---------------------------------------------------------------------------------------------------------------------------
Loss for the year - - (602,648) (602,648)
---------------------------------------------------------------------------------------------------------------------------
BALANCE-MARCH 31, 1999 14,052,917 11,770,538 (6,752,392) 5,018,146
===========================================================================================================================
Issued for cash
On exercise of options 988,000 721,500 - 721,500
On exercise of warrants 738,000 681,580 - 681,580
On private placement 438,285 336,545 - 336,545
---------------------------------------------------------------------------------------------------------------------------
Total issued during the year 2,164,285 1,739,625 - 1,739,625
---------------------------------------------------------------------------------------------------------------------------
Loss for the year - - (692,305) (692,305)
---------------------------------------------------------------------------------------------------------------------------
BALANCE-MARCH 31, 2000 16,217,202 $13,510,163 $(7,444,697) $6,065,466
===========================================================================================================================
</TABLE>
F-7
<PAGE>
TIMEBEAT.COM ENTERPRISES INC.
(FORMERLY AGC AMERICAS GOLD CORP.)
(EXPRESSED IN CANADIAN DOLLARS)
CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
<TABLE>
<CAPTION>
Cumulative Years ended March 31,
---------------------------------------------------------------------------------------------------------------------------------
1994-2000 2000 1999 1998
(Note 1)
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUE
Sales $ 207,522 $ 207,522 $ - $ -
----------------------------------------------------------------------------------------------------------------------------------
COSTS OF GOODS SOLD 205,364 205,364 - -
----------------------------------------------------------------------------------------------------------------------------------
GROSS MARGIN 2,158 2,158 - -
----------------------------------------------------------------------------------------------------------------------------------
GENERAL AND ADMINISTRATIVE EXPENSES
Advertising 126,505 126,505 - -
Amortization 10,195 5,667 2,054 855
Audit and accounting 100,863 10,300 13,003 22,750
Brochures and printing 84,396 - 662 18,694
Consulting (Note 8(b)) 357,669 120,127 17,720 26,100
Foreign exchange loss 17,507 17,682 - -
Interest and bank charges 19,055 1,167 557 647
Legal 218,511 21,593 30,570 47,882
Management fees (Note 8(b)) 256,685 76,835 75,100 44,750
Office, secretarial and administration 257,123 22,589 34,894 70,271
Rent 195,724 38,614 16,207 34,598
Salaries and wages 35,439 35,439 - -
Telephone, fax and utilities 147,974 20,863 16,816 25,305
Transfer agent and regulatory fees 128,941 17,741 15,044 18,023
Travel, marketing and investor relations 744,739 135,178 28,336 123,003
Website development 59,299 59,299 - -
----------------------------------------------------------------------------------------------------------------------------------
2,760,625 709,599 250,963 432,878
----------------------------------------------------------------------------------------------------------------------------------
LOSS BEFORE OTHER ITEMS (2,758,467) (707,441) (250,963) (432,878)
OTHER ITEMS
Interest income 72,438 15,136 14,530 16,376
Deferred exploration costs written-off (692,906) - (366,215) (36,407)
Settlement of dispute (27,764) - - -
----------------------------------------------------------------------------------------------------------------------------------
NET LOSS (3,406,699) (692,305) (602,648) (452,909)
DEFICIT - BEGINNING OF PERIOD (4,037,827) (6,752,392) (6,149,744) (5,696,835)
----------------------------------------------------------------------------------------------------------------------------------
DEFICIT - END OF PERIOD $ (7,444,526) $ (7,444,697) $(6,752,392) $ (6,149,744)
==================================================================================================================================
LOSS PER SHARE $ (0.044) $ (0.043) $ (0.035)
==================================================================================================================================
WEIGHTED AVERAGE NUMBER OF SHARES 15,645,918 13,933,067 12,912,753
==================================================================================================================================
</TABLE>
F-8
<PAGE>
TIMEBEAT.COM ENTERPRISES INC.
(FORMERLY AGC AMERICAS GOLD CORP.)
(EXPRESSED IN CANADIAN DOLLARS)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Cumulative Years ended March 31,
----------------------------------------------------------------------------------------------------------------------------------
1994-2000 2000 1999 1998
(NOTE 1)
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES
Net loss $ (3,406,699) $ (692,305) $ (602,648) $ (452,909)
Items not affecting cash
Amortization 10,195 5,667 2,054 855
Deferred exploration costs written-off 692,606 - 366,215 36,407
----------------------------------------------------------------------------------------------------------------------------------
(2,703,898) (686,638) (234,379) (415,647)
Cash provided by (used for) changes in working
capital items (Note 9(a)) (115,987) (51,968) 22,249 (761)
----------------------------------------------------------------------------------------------------------------------------------
(2,819,885) (738,606) (212,130) (416,408)
----------------------------------------------------------------------------------------------------------------------------------
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES
Proceeds on issuance of common shares (Note 9(b)) 8,736,947 1,749,325 12,150 1,062,000
Share issue costs (204,218) (9,700) - (20,212)
Decrease in due to related parties (160,615) - - -
Increase in loans and other payables 158,550 - - -
----------------------------------------------------------------------------------------------------------------------------------
8,530,664 1,739,625 12,150 1,041,788
----------------------------------------------------------------------------------------------------------------------------------
CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES
Proceeds on sale of capital assets 23,306 - - -
Expenditures on mineral properties - net (Note (4,715,873) (47,312) (336,294) (434,501)
9(b))
Acquisition of capital assets (43,840) (30,056) (8,422) (351)
Restricted term deposits (115,000) (115,000) 160,000 -
----------------------------------------------------------------------------------------------------------------------------------
(4,851,407) (192,368) (184,716) (434,852)
----------------------------------------------------------------------------------------------------------------------------------
CHANGE IN CASH AND CASH EQUIVALENTS 859,372 808,651 (384,696) 190,528
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 1,927 52,648 437,344 246,816
----------------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 861,299 $ 861,299 $ 52,648 $ 437,344
==================================================================================================================================
</TABLE>
SUPPLEMENTAL DISCLOSURE FOR NON-CASH OPERATING, INVESTING AND FINANCING
ACTIVITIES (NOTE 9).
F-9
<PAGE>
TIMEBEAT.COM ENTERPRISES INC.
(FORMERLY AGC AMERICAS GOLD CORP.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2000, 1999 AND 1998
-----------------------------------------
(Expressed in Canadian Dollars)
1. NATURE OF OPERATIONS
The Company was a dormant enterprise that was reactivated during the year ended
March 31, 1994 to undertake exploration stage activities. The disclosure of
cumulative amounts required under United States accounting principles is from
the inception of the exploration stage activities following reactivation and is
for the years ended March 31, 1994 to March 31, 2000, inclusive.
In March 1999, the Company executed a letter of intent with Watch Central
Corporation ("WCC") of New York City pursuant to which WCC agreed to design,
develop, beta test and implement an E-commerce website that markets, sells and
repairs fine gold jewelry and watches. The website is owned by Timebeat.com
Inc., a private Nevada company, wholly-owned by the Company.
The Company expects that for the near term its operating activities will be
primarily focused on this new business venture. The Company intends to maintain
ownership of its mineral property portfolio to the extent possible pending an
eventual upturn in commodities markets and junior resource markets.
The Company's principal business activities have included exploring its mineral
properties and during the year ended March 31, 2000 were diversified to include
participation in an Internet e-commerce venture, Timebeat.com Inc. These
consolidated financial statements of the Company have been prepared on the basis
of accounting principles applicable to a going concern which assumes the
realization of assets and discharge of liabilities in the normal course of
business. The Company's ability to continue as a going concern is dependent upon
the existence of economically recoverable reserves, the ability of the Company
to obtain additional financing for general working capital purposes and to
complete development of its mineral properties and other business ventures and
upon its ability to attain profitable operations. These consolidated financial
statements do not give effect to any adjustments that would be necessary should
the Company not be able to continue as a going concern.
The Company incurred a net loss of $692,305 for the year ended March 31, 2000
and as at March 31, 2000 had working capital of $879,051. As at March 31, 2000
the Company had an accumulated deficit of $7,444,697.
2. SIGNIFICANT ACCOUNTING POLICIES
These financial statements are prepared in accordance with accounting principles
generally accepted in Canada which differ in some respects from those in the
United States. These differences as they relate to these financial statements
are set out in Note 13. The following is a summary of the significant accounting
policies followed by the Company.
F-10
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2000, 1999 AND 1998
-----------------------------------------
(Expressed in Canadian Dollars)
2. SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company and
its 100% owned subsidiary Timebeat.com Inc. The subsidiary was incorporated in
March 1999 and commenced operations in April 1999.
TRANSLATION OF FOREIGN CURRENCIES
The monetary assets and liabilities of the Company that are denominated in
foreign currencies are translated at the rate of exchange at the balance sheet
date. Revenue and expenses are translated at the average rate. Exchange gains
and losses arising on translation are included in the statement of operations.
The Company's foreign subsidiary is integrated with the Company and translated
using the temporal method. Under this method, monetary assets and liabilities
are translated at the rate of exchange at the balance sheet date. Non- monetary
assets and liabilities are translated at exchange rates prevailing at the
transaction date. Income and expenses are translated at rates which approximate
those in effect on transaction dates. Gains and losses arising from restatement
of foreign currency monetary assets and liabilities at each period end are
included in earnings.
INVENTORY
Inventory is valued at the lower of cost and net realizable value.
CAPITAL ASSETS
Capital assets are recorded at cost and are amortized over their estimated
useful lives as follows:
Declining balance method Per Annum
Office equipment 20%
Computer equipment 30%
Computer software 30%
ADMINISTRATION EXPENDITURES
Administration expenditures are expensed in the year incurred.
DEFERRED EXPLORATION COSTS
The Company defers all exploration and development costs relating to mineral
properties and areas of geological interest until the properties to which they
relate are placed into production, sold or abandoned.
F-11
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2000, 1999 AND 1998
-----------------------------------------
(Expressed in Canadian Dollars)
2. SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
If production commences, these costs will be transferred to "producing mines",
exploration and development costs and amortized over proven reserves against
earnings on the unit-of-production method.
The amounts shown for the deferred exploration costs represent costs incurred to
date and are not intended to reflect present or future values.
USE OF ESTIMATES
The Company uses estimates in preparing these consolidated financial statements
based on the best information available at the balance sheet date. These
estimates are reviewed and adjusted regularly to ensure that such estimates are
reasonable. The estimates included in the consolidated balance sheets,
statements of operations and deficit and cash flows will vary with actual
results.
INCOME TAXES
The Company accounts for income taxes under the liability method. Under this
method current income taxes are recognized for the estimated income taxes
payable for the current year. Future income tax assets and liabilities are
recognized for temporary differences between the tax and accounting bases of
assets and liabilities as well as the benefit of losses available to be carried
forward to future years for tax purposes that are likely to be realized.
FINANCIAL INSTRUMENTS
The Company's financial instruments consist of cash, accounts receivable and
accounts payable and accrued liabilities. Unless otherwise noted, it is
management's opinion that the Company is not exposed to significant interest,
currency or credit risks arising from these financial instruments. The fair
value of these financial instruments approximate their carrying values, unless
otherwise noted.
REVENUE RECOGNITION
Revenue from the sale of fine gold jewellery and watches is recognized when the
goods are shipped and invoiced.
SHARE OPTION PLAN
The Company has a share option plan as described in Note 6 (c). No compensation
expense is recognized for this plan when shares or share options are issued
pursuant to the plan. Consideration paid for shares on exercise of the share
options is credited to share capital.
LOSS PER SHARE
Loss per share is calculated based on the weighted average number of common
shares issued and outstanding during each year. Fully diluted loss per share is
not presented as the exercise of warrants and options is anti-dilutive.
F-12
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2000, 1999 AND 1998
-----------------------------------------
(Expressed in Canadian Dollars)
2. SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
CASH AND CASH EQUIVALENTS
The Company considers to be cash equivalents all highly liquid debt instruments
purchased having a maturity of three months or less.
ENVIRONMENTAL PROTECTION AND REHABILITATION COSTS
Liabilities related to environmental protection and rehabilitation costs are
accrued and charged to income when their likelihood of occurrence is
established.
3. RESTRICTED TERM DEPOSITS
2000 1999
--------------------------------------------
Restricted term deposits $ 205,000 $ -
============================================
The restricted term deposits relate to funds placed on deposit in favour of the
Province of British Columbia with respect to possible future reclamation costs
for the Company's mineral properties. Management estimates the maximum amount of
such costs to be $100,000 and is seeking release of the excess amount bonded.
4. DEFERRED EXPLORATION COST
Deferred exploration costs comprise the following:
2000 1999
---------------------------------
Properties located in the Toodoggone area,
British Columbia $ 7,760,395 $ 7,683,071
Less: Expenditures recovered (2,812,453) (2,692,441)
---------------------------------
$ 4,947,942 $ 4,990,630
=================================
AGREEMENT WITH ANTARES MINING AND EXPLORATION CORPORATION
Pursuant to an agreement dated June 10, 1997, between the Company and Antares
Mining and Exploration Corporation ("Antares"), Antares had an option to acquire
up to a 60% interest in all of the mineral interests in British Columbia held by
the Company.
During the year ended March 31, 2000 the Company reached an agreement with
Antares whereby in exchange for the Company paying $150,000 cash (paid) to
Antares, Antares waived all of its right, title and interest in the Company's
mineral interests in British Columbia as well as any outstanding balances owed
to it by the Company.
F-13
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2000, 1999 AND 1998
-----------------------------------------
(Expressed in Canadian Dollars)
5. DEFERRED EXPLORATION COSTS (CONT'D)
The Company's mineral interests comprise:
a) The J.D. Gold Silver claims located in the Omineca Minin Division in the
Province of British Columbia. The Company is required to pay Energex
Minerals Ltd. an annual royalty of $3,588.
b) The Al and certain of the original Lawyers claims both located in the
Omineca Mining Division in the Province of British Columbia. These claims
remain subject to the following interests.
Al Claims
a) Cameron Scott and Barry Price each as to a 7% interest i the initial
production royalty, and each as to a 0.25% NSR interest in respect of tons
mined and milled in excess of 250,000 tons;
b) Kinross Gold Corporation or Energex Minerals Ltd. or a combination thereof
as to an aggregate 15% NPR;
c) Cheni as to a 1.5% NSR.
and certain of the original
Lawyers Claims
a) a 2% NSR payable to Cheni as to 1.9% and to Meota as to 0.1%.
5. CAPITAL ASSETS
Capital assets comprise the following:
<TABLE>
<CAPTION>
2000 1999
Accumulated Net Book Net Book
Cost Amortization Value Value
<S> <C> <C> <C> <C>
Office equipment $ 10,403 $ 1,437 $ 8,966 $ 621
Computer equipment 26,893 5,865 21,028 6,571
Computer software 4,589 1,110 3,479 1,893
-------------------------------------------------------------------
$ 41,885 $ 8,412 $ 33,473 $ 9,085
===================================================================
</TABLE>
F-14
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2000, 1999 AND 1998
-----------------------------------------
(Expressed in Canadian Dollars)
6. CAPITAL STOCK
Capital stock comprises the following:
(a) Authorized:
100,000,000 Common shares without par value at March 31, 1999, 1998 and
1997.
Number Total Amount
Issued: 16,217,202 $ 13,510,163
========== ============
Included in the issued shares at March 31, 2000 are nil (1999 - nil) performance
shares held in escrow.
Basis for assigning amounts to non-cash issuance of capital stock:
Shares issued for non-cash consideration (for fiscal agency fees, for
acquisition of mineral properties, for settlement of debt, for finders
fees) are assigned amounts based on the estimated fair market value of the
Company's shares at the time the agreement was entered into to settle the
amount by issuance of shares in the Company.
(b) Warrants
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
AVERAGE AVERAGE
WARRANTS EXERCISE WARRANTS EXERCISE PRICE
OUTSTANDING PRICE $/SHARE OUTSTANDING $/SHARE
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
At April 1, 1999 700,000 0.92 At April 1, 1998 1,505,390 1.39
Issued 438,285 0.91 - -
Exercised (738,000) 0.92 - -
Expired - - (805,390) 1.53
-----------------------------------------------------------------------------------------------------
At March 31, 2000 400,285 0.91 At March 31, 1999 700,000 0.92
=====================================================================================================
</TABLE>
F-15
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2000, 1999 AND 1998
-----------------------------------------
(Expressed in Canadian Dollars)
6. CAPITAL STOCK (CONT'D)
(c) Stock Option Plan
During the year ended March 31, 2000 the Company established a share purchase
option plan (the "Plan") whereby the board of directors may from time to time
grant options aggregating up to 2,750,000 shares of the Company to directors,
officers, employees or consultants. The maximum term of any option granted is
five years or less. The exercise price of an option may not be less than the
closing price on The Canadian Venture Exchange on the last trading day preceding
the grant date, subject to any allowable discount, or $0.10 per share.
As at March 31, 2000, options to purchase up to 269,000 shares remained
available to be granted under the Plan. During the year ended March 31, 2000,
the Company granted options for shares pursuant to the Plan.
A summary of the Company's options at March 31, 2000 and 1999 and the changes
for the years ending on those dates is presented below:
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
OPTIONS AVERAGE OPTIONS AVERAGE
OUTSTANDING EXERCISE PRICE OUTSTANDING EXERCISE PRICE
AND EXERCISABLE $/SHARE AND EXERCISABLE $/SHARE
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
At April 1, 1999 1,359,000 0.74 April 1, 1998 1,114,000 0.90
Granted 2,110,000 1.96 954,000 0.72
Exercised (988,000) 0.73 (45,000) 0.27
Expired/Cancelled - - (664,000) 0.97
---------------------------------------------------------------------------------------------------------
At March 31, 2000 2,481,000 1.79 March 31, 1999 1,359,000 0.74
=========================================================================================================
</TABLE>
Options to acquire common shares have been granted and are outstanding and
exercisable at year-end to employees, consultants, officers and directors of the
Company as follows:
NUMBER OF
COMMON SHARES OPTION PRICE EXPIRY DATE
-------------------------------------------------------------
100,000 $0.77 March 5, 2003
304,000 $0.77 March 8, 2004
50,000 $1.03 June 1, 2004
100,000 $1.73 July 14, 2004
700,000 $2.58 August 16, 2004
1,060,000 $1.78 September 30,2004
167,000 $1.10 December 15, 2004
-------------
2,481,000
=============
Subsequent to the year end the Company granted and repriced certain stock
options (Note 11).
F-16
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2000, 1999 AND 1998
-----------------------------------------
(Expressed in Canadian Dollars)
7. CONTINGENCIES AND COMMITMENTS
a) A claim has been made against the Company for $21,008 for rent relating to
termination of the Company's lease for its previous office premises. The
Company is disputing the claim. The amount of the loss cannot be reasonably
estimated. Accordingly no amount has been accrued in the financial
statements. Any loss will be accounted for in the period in which the loss,
if any, can reasonably be estimated.
b) At present the Company is not aware of any liability related to
environmental protection and rehabilitation costs. However, due to the
nature of the Company's business there is no assurance that such liability
will not arise in the future.
8. RELATED PARTY TRANSACTIONS
a) In February, 1998 invoices totaling $87,962 were discovered to have been
improperly submitted and paid to Henry A. Meyer, who was the President and
CEO of the Company at that time. The Board of Directors disallowed these
invoices and the money was subsequently repaid - $70,000 was repaid before
March 31, 1998 and the remaining $17,962 was repaid as at June 16, 1998.
Henry A. Meyer resigned on February 28, 1998.
b) During the year ended March 31, 2000 the Company paid $17,500 (1999 -
$48,300; 1998 - $12,500) in management fees to a company controlled by
Donald Nicholson, a former director; $57,085 (1999 - $26,400, 1998 - nil)
to a company controlled by Robert G. McMorran, a former director; and
$46,090 (1999 - nil; 1998 - nil) to a company controlled by Alex Vileshin,
President and director. Also during the year ended March 31, 2000, the
Company paid $24,435 (1999 - $26,172; 1998 - nil) in consulting fees to
Thomas L. Crom, a director, and $23,700 (1999 - nil; 1998 - nil) to Michele
Albo, a director.
9. SUPPLEMENTAL DISCLOSURES WITH RESPECT TO CASH FLOWS
a) Cash provided by (used for) changes in working capital items comprises the
following:
Year ended March 31,
----------------------------------------------------
2000 1999 1998
Receivables $ (119,460) $ (31,745) $ (22,071)
Inventory (121,906) - -
Deposits and prepaids - 2,458 10,848
Accounts payable 189,398 51,536 10,462
----------------------------------------------------
$ (51,968) $ 22,249 $ (761)
====================================================
F-17
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2000, 1999 AND 1998
-----------------------------------------
(Expressed in Canadian Dollars)
9. SUPPLEMENTAL DISCLOSURES WITH RESPECT TO CASH FLOWS (CONT'D)
b) Non-cash transactions include the following:
<TABLE>
<CAPTION>
CUMULATIVE YEAR ENDED MARCH 31,
1994-2000 --------------------------------------------
(Note 1) 2000 1999 1998
<S> <C> <C> <C> <C>
Capital stock issued for non-cash consideration
For acquisition of mineral properties $ 1,014,975 $ - $ 20,000 $ 315,500
For debt settlement 473,615 - - -
Reduction in exploration expenditures
payable to Antares Mining and
Exploration Corporation in exchange
for restricted term deposit (90,000) (90,000) - -
--------------------------------------------------------------
$ 1,398,590 $ (90,000) $ 20,000 $ 315,500
==============================================================
</TABLE>
10. INCOME TAXES AND FLOW-THROUGH SHARES
a) As at March 31, 2000 the Company has non-capital losses carried forward for
Canadian tax purposes of approximately $3,358,000 available for deduction
against future years' taxable income. These non-capital losses expire as
follows:
2007 $ 275,000
2006 286,000
2005 406,000
2004 455,000
2003 475,000
2002 317,000
2001 1,144,000
-----------
$3,358,000
===========
As at March 31, 2000 the Company has various resource expenditure pools
amounting to approximately $4,500,000 that may be carried forward
indefinitely and applied against taxable income of future years.
At March 31, 2000 the Company has net capital losses of approximately
$160,000 which may be carried forward indefinitely and applied against
capital gains of future years.
The possible income tax benefits of these losses have no been reflected in
the consolidated financial statements.
F-18
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2000, 1999 AND 1998
-----------------------------------------
(Expressed in Canadian Dollars)
10. INCOME TAXES AND FLOW-THROUGH SHARES (CONT'D)
b) At March 31, 1999 the Company had issued warrants entitling the holders to
acquire additional flow-through common shares. During the year ended March
31, 2000 these warrants were exercised but not as flow-through shares (Note
6).
Flow-through funding occurs when a Company renounces to investors who
purchase its shares a specified amount of the Company's Canadian
exploration expenses, deemed Canadian exploration expenses, Canadian
development expenses and Canadian oil and gas property expenses. The effect
of the renunciation is that the Company loses the ability to deduct these
expenses against future years taxable income. The investors are allowed to
deduct on their own tax returns the specified amount of expenses that the
Company has renounced to the investors. When flow-through funding occurs
the Company enters into an agreement with investors in terms of which,
amongst other things, the Company commits to spend the amount it has agreed
to renounce to the investors on a programme of expenditures which qualify
for renunciation to the investors.
For flow-through agreements entered into in 1995 or for expenditures
incurred to February, 1997 the Company could only renounce to investors
qualifying expenditures incurred after the date of the renunciation
agreement and only after the expenditures had been incurred. For
flow-through agreements entered into after 1995, also only expenditures
incurred after the date of the agreement are eligible for renunciation but
the Company may make the renunciation to investors before the qualifying
expenditures are actually incurred. If the Company fails to incur the
qualifying expenditures before the end of the following calendar year it
will be liable for a non-refundable tax calculated based on a specified
formula.
If the Company fails to incur the qualifying expenditures before the end of
the third year, the investors will be disallowed the deduction on their own
tax returns.
The Company has only renounced to investors with whom it has entered into
flow-through funding agreements, expenditures after they have been
incurred.
A summary of the Company's flow-through funding is as follows:
<TABLE>
<CAPTION>
Years ended March 31,
--------------------------------------------------------
2000 1999 1998
--------------------------------------------------------
<S> <C> <C> <C>
Balance of renunciation commitments carried forward $ - $ - $ -
Amount of renunciations committed to investors
through flow-through funding agreements - - 258,000
Expenses incurred which qualify for renunciation and
were renounced to investors - - (258,000)
---------------------------------------------------------
Commitment to incur expenses eligible for renunciation
carried forward $ - $ - $ -
=========================================================
</TABLE>
F-19
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2000, 1999 AND 1998
-----------------------------------------
(Expressed in Canadian Dollars)
11. SUBSEQUENT EVENTS
Subsequent to year end, the Company granted to certain consultants 380,000 stock
options at an exercise price of $0.76 per share and 50,000 stock options at an
exercise price of $1.15 per share. Of these stock options 300,000 have not yet
received regulatory acceptance. All stock options expire five years after the
date of grant.
Also subsequent to year end, the directors and certain consultants of the
Company tendered 750,000 previously granted stock options to the Company for
cancellation. Concurrent with such cancellation of stock options, the Company
applied to The Canadian Venture Exchange to reprice 1,110,000 previously granted
stock options to $0.76 per share. Regulatory acceptance has not yet been
received.
12. SEGMENTED INFORMATION
As detailed in Note 1, the Company has two business segments, the business of
exploration mineral properties, which is located in British Columbia, Canada and
the business, located in the United States of America, of selling and repairing
fine gold jewelry and watches through an E-commerce Website.
Segmented information comprises the following:
Canada USA Total
----------------------------------------------
Current assets $ 627,105 $ 537,743 $1,164,848
--------------------------------------------------------------------------------
Restricted term deposits 205,000 - 205,000
--------------------------------------------------------------------------------
Deferrred exploration costs 4,947,942 - 4,947,942
--------------------------------------------------------------------------------
Capital assets 6,702 26,771 33,473
--------------------------------------------------------------------------------
Current liabilities 22,914 262,883 285,797
--------------------------------------------------------------------------------
Revenue - 207,522 207,522
Cost of goods sold - 205,364 205,364
--------------------------------------------------------------------------------
Gross margin - 2,158 2,158
General and administration 334,260 375,339 709,599
Other items (15,136) - (15,136)
--------------------------------------------------------------------------------
Net Loss $319,124 $ 373,181 $ 692,305
================================================================================
F-20
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2000, 1999 AND 1998
-----------------------------------------
(Expressed in Canadian Dollars)
13. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES OF AMERICA GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES
These financial statements have been prepared in accordance with generally
accepted accounting principles in Canada (Canadian GAAP) which in these
financial statements, conform in all material respects with those in the United
States (U.S. GAAP), except as follows:
a) Under Canadian GAAP shares issued with escrow restrictions are recorded at
their issue price and are not revalued upon release from escrow. Under U.S.
GAAP escrow shares which are released upon the Company meeting certain
performance criteria are considered to be contingently issuable. These
shares are excluded from the weighted average shares calculation and the
difference between the fair value of the shares at the time of their
release from escrow and the shares original issue price (being the market
price at that time) is accounted for as a compensation expense at the time
the shares are released from escrow. During the year ended March 31, 1996,
187,500 common shares were released from escrow and during the year ended
March 31, 1997, 187,500 common shares were released from escrow.
b) Under Canadian GAAP all exploration expenses relating to mineral properties
and areas of geological interest are deferred until the properties to which
they relate are placed into production, sold or abandoned. Under U.S. GAAP
these costs are not capitalized but expensed as incurred.
c) Significant components of the Company's Canadia deferred income tax assets
under United States generally accepted accounting principles disclosure
requirements are:
<TABLE>
<CAPTION>
2000 1999 1998
-------------------------------------------------
<S> <C> <C> <C>
Deferred tax assets
Net operating loss $126,000 $ 129,000 $ 190,000
Additions to resource and other pool balances (8,740) 160,000 240,000
-------------------------------------------------
Total deferred tax assets before
Allowance 117,260 289,000 430,000
Valuation allowance for deferred
Tax assets (117,260) (289,000) (430,000)
-------------------------------------------------
Total deferred tax assets $ - $ - $ -
=================================================
</TABLE>
d) Loss per share
UnderCanadian generally accepted accounting principles the calculation of
basic loss per share is calculated using the weighted average number of
common shares outstanding during the year. Under United States generally
accepted accounting principles basic loss per share is calculated using the
weighted average number of shares outstanding during the year. This
weighted average number of common shares outstanding excludes any shares
that remain in escrow, but may be earned out based on the Company meeting
certain performance criteria. No shares were held in escrow for the years
ended March 31, 1998, March 31, 1999 and March 31, 2000.
F-21
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2000, 1999 AND 1998
-----------------------------------------
(Expressed in Canadian Dollars)
13. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES OF AMERICA GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES (CONT'D)
e) Stock-based Compensation
The United States Financial Accounting Standards Board has issued Statement
of Financial Accounting Standards No. 123 ("SFAS No. 123"), "Accounting for
Stock-based Compensation", which became effective for fiscal years
beginning after December 15, 1995. This statement encourages, but does not
require companies to record the compensation cost for stock-based employee
compensation plans at fair value at the grant date. The Company has chosen
to adopt SFAS No. 123 in accounting for its stock option plan. Canadian
generally accepted accounting principles do not require the reporting of
any stock based compensation expense in the Company's financial statements.
The fair value of the options granted during the years ended March 31,
2000, March 31, 1999 and March 31, 1998 was estimated at the date of grant
using the Black-Scholes option pricing model with the following weighted
average assumptions:
March 31, March 31, March 31,
2000 1999 1998
Expected life 5 years 2 years 2 years
Risk-free interest rate 5.5% 5.5% 5.5%
Volatility 158%-186% 82%-99% 70%-170%
The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which are fully transferable.
In addition, option valuation models require the input of highly subjective
assumptions including the expected stock price volatility. The Company's
employee stock options are not traded and changes in the subjective input
assumptions can materially affect fair value estimates. In management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of employee stock options at the grant date.
f) Statement of Financial Accounting Standards No. 121 (the statement), issued
March, 1995 requires that long- lived assets and certain identifiable
intangibles to be held and used by an entity be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. In performing the review for
recoverability, the Company should estimate future cash flows expected to
result from the asset and its eventual disposition. If the sum of the
expected future cash flows (undiscounted and without interest charges) is
less than the carrying amount of the asset, an impairment loss is
recognized. Otherwise, an impairment loss is not recognized. The statement
is effective for financial statements for fiscal years beginning after
December 15, 1995. Earlier application is encouraged. Restatement of
previously issued financial statements is not permitted. Impairment losses
resulting from the application of the statement should be reported in the
period in which the recognition criteria are first applied and met.
F-22
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2000, 1999 AND 1998
-----------------------------------------
(Expressed in Canadian Dollars)
13. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES OF AMERICA GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES (CONT'D)
The Company's long lived assets are deferred exploration costs (March 31,
2000 - $4,947,942) and capital assets (March 31, 2000 - $33,473). Under
U.S. GAAP exploration costs on mineral properties are expensed (see (b)
above) and this results in the total amount of $4,947,942 in expenditures
on mineral properties being written-off for U.S. GAAP purposes. Application
of the statement will accordingly not have a material effect on the
Company's financial statements based on the carrying amounts of the long
lived assets as at March 31, 2000.
g) Under SFAS 109 for flow-through funding shares issued by the Company (see
Note 10(b), under U.S. GAAP the difference between the proceeds from the
shares issued as flow-through shares and the fair value of the shares
issued without the flow-through feature is recorded as a liability at the
date the shares are sold by the Company.
As these funds, which are restricted and required to be spent on expenses
qualifying for renunciation to investors, are spent the liability is
reversed to income in a similar manner to a monetization of tax benefits.
The Company has issued all its flow-through shares at the market price of
its shares without the flow-through feature and therefore no liability as
detailed above is required to be recorded.
As at March 31, 1998, March 31, 1999 and March 31, 2000 the Company had
incurred sufficient qualifying expenditures to cover all renunciation
expenditures to investors and there was no balance of funds restricted and
required to be spent for renunciation purposes.
h) Comprehensive income
In June 1997, the Financial Accounting Standards Board ( FASB") issued SFAS
No. 130 "Reporting Comprehensive Income". SFAS No. 130 establishes
standards for the reporting and display of comprehensive income and its
components (revenues, expenses, gains and losses). The purpose of reporting
comprehensive income is to present a measure of all changes in
shareholders' equity that result from recognized transactions and other
economic events of the period, other than transactions with owners in their
capacity as owners. SFAS No. 130 is effective for financial statements
issued for periods beginning after December 15, 1997. There are no
comprehensive income and its components adjustments for the years ended
March 31, 1998, 1999 and 2000.
F-23
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2000, 1999 AND 1998
-----------------------------------------
(Expressed in Canadian Dollars)
13. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES OF AMERICA GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES (CONT'D)
The impact of the above differences between Canadian and United States generally
accepted accounting principles on the net loss is as follows:
<TABLE>
<CAPTION>
Cumulative For the Years March 31,
1994 - 2000 ------------------------------------------------------
(Note 1) 2000 1999 1998
<S> <C> <C> <C> <C>
Net loss - Canadian GAAP $ (3,406,870) $ (692,305) $ (602,648) $ (452,909)
Increase in compensation expense resulting from
release of 187,500 common shares from escrow
on July 28, 1995 (issue price $0.01, fair value of
Common shares on date of release $3.70)(a) (691,875) - - -
Increase in compensation expense resulting from
release of 187,500 common shares from escrow
on August 2, 1996 (issue price $0.01, fair value
of common shares on date of release $1.69) (a) (315,000) - - -
Deferred exploration costs written-off for
Canadian GAAP (b) 692,906 - 366,215 36,407
Compensation expense on granting
of stock options (e) (4,431,063) (4,431,063) - -
Deferred exploration costs recovered (b) 90,000 90,000 - -
Deferred exploration costs incurred (b) (5,730,848) (47,312) (356,294) (750,001)
----------------------------------------------------------------------
$(13,792,750) $ (5,080,680) $ (592,727) $ (1,166,503)
======================================================================
</TABLE>
F-24
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2000, 1999 AND 1998
-----------------------------------------
(Expressed in Canadian Dollars)
13. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES OF AMERIC GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES (CONT'D)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MARCH 31,
-------------------------------------------------------------
2000 1999 1998
<S> <C> <C> <C>
Primary loss per share - U.S. GAAP (a) $ (0.32) $ (0.043) $ (0.090)
=============================================================
Weighted average shares outstanding - U.S. GAAP (a) 15,645,918 13,933,067 12,912,753
-------------------------------------------------------------
</TABLE>
The impact of the above differences between Canadian and United States generally
accepted accounting principles on capital stock and accumulated deficit is as
follows:
<TABLE>
<CAPTION>
AS AT MARCH 31, 2000 AS AT MARCH 31, 1999
<S> <C> <C>
Total assets - Canadian GAAP $ 6,351,263 $ 5,114,545
Deferred exploration costs (b) (4,947,942) (4,990,630)
------------------------------------------------------
Total assets - U.S. GAAP $ 1,403,321 $ 123,915
------------------------------------------------------
</TABLE>
The impact of the above differences between Canadian and United States generally
accepted accounting principles on capital stock and accumulated deficit is as
follows:
<TABLE>
<CAPTION>
AS AT MARCH 31, 2000 AS AT MARCH 31, 1999
<S> <C> <C>
Capital stock - Canadian GAAP $ 13,510,163 $ 11,770,538
Increase in capital stock on revaluation of share released
from escrow as detailed (a) 1,006,875 1,006,875
Compensation expense on granting stock options (e) 4,431,063 -
---------------------------------------------------
Capital stock - U.S. GAAP $ 18,948,101 $ 12,777,413
===================================================
</TABLE>
<TABLE>
<CAPTION>
CUMULATIVE AS AT MARCH 31, AS AT MARCH 31,
1994 - 2000 2000 1999
(Note 1)
<S> <C> <C> <C>
Deficit - Canadian GAAP $ 3,406,870 $ 7,444,697 $ 6,752,392
Deferred exploration costs written-off (b) 4,947,942 4,947,942 4,990,630
Compensation expense on granting options (e) 4,431,063 4,431,063 -
Increase in deficit resulting from increase in compensation
expense on revaluation of shares from escrow
as detailed above (a) 1,006,875 1,006,875 1,006,875
=============================================================
Deficit - U.S. GAAP $ 13,792,750 $ 17,830,577 $ 12,749,897
=============================================================
</TABLE>
F-25
<PAGE>
SCHEDULE OF DEFERRED EXPLORATION COSTS
YEARS ENDED MARCH 31, 2000 AND 1999
(EXPRESSED IN CANADIAN DOLLARS)
<TABLE>
<CAPTION>
Canadian Properties subject to Agreement with Antares Mining and
Exploration Corporation (Note 4(a))
-----------------------------------------------------------------
-----------------------------------------------------------------
2000 1999
<S> <C> <C>
BALANCE - BEGINNING OF YEAR $ 4,990,630 $ 5,000,551
------------------------ -------------------------
ACQUISITION COSTS 30,000 20,000
----------------------- ------------------------
EXPENDITURES DURING THE YEAR
Assay and geochemical analysis - 10,306
Accommodation and meals - 10,041
Drafting, maps and reports - 5,709
Drilling - 77,456
Equipment rental - 10,573
Exploration taxes and fees 10,250 13,100
Geological research & consulting 730 62,955
Helicopters & aircrafts - 39,004
Miscellaneous 28 6,506
Satellite and telecommunication - 9,686
Shipping - 1,182
Travel and transportation - 21,956
Wages and benefits - 47,820
----------------------- -----------------------
11,008 316,294
----------------------- -----------------------
Reduction in exploration expenditures payable to
Antares Mining and Exploration Corporation (90,000) 80,000
British Columbia mining exploration
Refundable tax credit 6,304 (60,000)
Deferred exploration costs written-off - (366,215)
----------------------- -----------------------
(83,696) (346,215)
----------------------- -----------------------
BALANCE - END OF YEAR $ 4,947,942 $ 4,990,630
======================= =======================
</TABLE>
F-26
<PAGE>
Exhibit 27
Financial Data Schedule
53
<PAGE>
