UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to ______________
Commission file number 0-24393
AURORA GOLD CORPORATION
(Exact name of small business issuer as
specified in its charter)
Delaware 13-3945947
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
1505 - 1060 ALBERNI STREET, VANCOUVER B.C. CANADA V6E 4K2
(Address of principle executive offices)
(604) 687-4432
(Issuer's Telephone Number)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15 (d) of the Exchange Act during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
YES [X] NO [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
Check, whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15 (d) of the Exchange Act after the distribution of
securities under a plan confirmed by court.
YES [ ] NO [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 10,870,384 shares of Common Stock
were outstanding as of June 30, 1998.
Transitional Small Business Disclosure Format (check one);
YES [ ] NO [X]
<PAGE>
AURORA GOLD CORPORATION
Statements contained in the quarterly report that are not historical facts are
forward-looking statements as that term is defined in the Private securities
Litigation Reform Act of 1995. Such forward-looking statements are subject to
risks and uncertainties, which could cause actual results to differ materially
from the estimated results. Such risks and uncertainties are detailed in filings
with the Securities and Exchange Commission.
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PAGE
----
Balance Sheet 3
Statement of Operations and Accumulated Deficit 4
Statement of Stockholders' Equity 5
Statement of Cash Flows 6
Notes to Financial Statements 7
2
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<TABLE>
<CAPTION>
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Aurora Gold Corporation
Balance Sheet
(Expressed in U.S. Dollars) September 30, September 30,
1998 1997
For the Periods Ended (Unaudited) (Unaudited)
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current
Cash and cash equivalents $ 935 $ 304,209
Non-trade accounts receivable 20,000 --
-------------------------------
20,935 304,209
Fixed assets -- 18,625
Mineral properties and exploration expenditures 229,135 20,474
Organizational costs 5,010 7,484
-------------------------------
$ 255,080 $ 350,792
- ---------------------------------------------------------------------------------------
Liabilities and Stockholders' Surplus (Deficiency)
Liabilities
Current
Accounts payable $ 33,758 $ 50,140
Notes payable -- --
-------------------------------
33,758 50,140
-------------------------------
Stockholders' deficiency,
Share Capital
Authorized
50,000,000 common shares, par value $0.001
Issued
10,924,484 (1997 - 10,670,384) 10,924 10,670
Paid in capital 1,375,811 1,088,869
Deficit (1,165,413) (798,887)
-------------------------------
221,322 300,652
-------------------------------
$ 255,080 $ 350,792
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</TABLE>
The accompanying notes are an integral part of these financial statements.
3
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<TABLE>
<CAPTION>
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Aurora Gold Corporation
Statements of Operations and Accumulated Deficit
(Expressed in U.S. Dollars) September 30, September 30,
1998 1997
For the Nine Month Periods Ended (Unaudited) (Unaudited)
- ----------------------------------------------------------------------------------------
<S> <C> <C>
Administration expenses
Amortization $ 6,112 $ 4,938
Transfer agents, listing and filing fees 11,063 22,671
Shareholder relations, advertising and
promotions 27,103 62,311
Salaries and wages 55,757 30,062
General and administrative 10,226 16,678
Professional fees (legal and accounting) 28,755 52,070
Consultants 13,237 58,980
Rent and other 9,287 13,703
Travel 13,078 14,451
Property development and examinations 47,887 29,240
Telephone and communications 10,154 8,584
-------------------------------------
Loss before other items 232,659 313,688
Other income (expenses)
Interest income 2,634 14,295
Interest expense and foreign exchange (4,200) (2,373)
-------------------------------------
(1,566) 11,922
Net loss for the period before
write-off of mineral properties 234,225 301,766
Write-off of mineral properties -- 135,913
-------------------------------------
Net loss for the period 234,225 437,679
Accumulated deficit, beginning of period 931,188 361,208
-------------------------------------
Accumulated deficit, end of period $ 1,165,413 $ 798,887
- ----------------------------------------------------------------------------------------
Loss per Share
- basic and diluted $ (0.02) $ (0.04)
- ----------------------------------------------------------------------------------------
Weighted average common shares outstanding 10,774,657 10,463,766
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</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
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Aurora Gold Corporation
Statements of Cash Flows
(Expressed in U.S. Dollars)
September 30, September 30,
1998 1997
For the Nine Month Periods Ended (Unaudited) (Unaudited)
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Cash provided (used) by:
Operating activities
Net loss for the period $(234,225) $(437,679)
Adjustments to reconcile net loss to net cash
used in operating activities
Amortization 6,112 4,938
------------------------------
(228,113) (432,741)
Changes in assets and liabilities
Decrease in accounts payable (35,108) (138,477)
Decrease (Increase) in accounts receivable (7,674) 1,364
------------------------------
(270,895) (569,854)
------------------------------
Financing activities
Proceeds from the issuance of common stock 250,000 795,158
Issuance of common stock for debt 37,196 --
Notes payable -- (50,000)
------------------------------
287,196 745,158
------------------------------
Investing activities
Purchase of fixed assets -- (15,395)
Proceeds from sale of fixed assets 14,449 --
Mineral properties (152,736) 73,651
------------------------------
(158,287) 58,256
------------------------------
Increase (decrease) in cash for the period (121,986) 233,560
Cash, beginning of period 122,921 70,649
------------------------------
Cash, end of period $ 935 $ 304,209
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</TABLE>
The accompanying notes are an integral part of these financial statements.
5
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<TABLE>
<CAPTION>
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Aurora Gold Corporation
Statements of Stockholder's Equity
(Expressed in U.S. Dollars)
(Unaudited)
For the nine months ended September 30, 1998
- ----------------------------------------------------------------------------------------------------------------------------------
Common Stock Additional Total
-------------------------------- Paid-In Accumulated Stockholder's
Shares Amount Capital Deficit Equity
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Issued for debt 11,461,150 $ 11,461 $ -- $ -- $ 11,461
----------------------------------------------------------------------------------------------
Balance, January 1, 1996 11,461,150 11,461 -- -- 11,461
Adjustment for reverse
stock split (7,640,766) (7,641) 7,641 -- --
Issuance of common stock
For cash 5,800,000 5,800 334,120 -- 339,920
For mineral properties 300,000 300 2,700 -- 3,000
Net loss for the year (361,208) (361,208)
----------------------------------------------------------------------------------------------
Balance, December 31, 1996 9,920,384 9,920 344,461 (361,208) (6,827)
Issuance of common stock
For cash 750,000 750 744,408 -- 745,158
Net loss for the year (569,980) (569,980)
----------------------------------------------------------------------------------------------
Balance, December 31, 1997 10,670,384 10,670 1,088,869 (931,188) 168,351
Issuance of common stock
For cash 200,000 200 249,800 -- 250,000
For debt settlement 54,100 54 37,142 -- 37,196
Net loss for the period (234,225) (234,225)
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Balance, September 30, 1998 10,924,484 $ 10,924 $ 1,375,811 $(1,165,413) $ 221,322
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</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
1. Nature of Business and Going Concern
The Corporation was formed on October 10, 1995 under the laws of the State
of Delaware as Chef's Acquisition Corp. and is a development stage company.
On May 20, 1996, the Corporation changed its name to Aurora Gold
Corporation. The Company is in the business of developing mineral
properties.
In the opinion of management, the accompanying unaudited interim financial
statements contain all the material adjustments consisting only of normal
recurring adjustments necessary to present fairly the financial position,
the results of operations and the cash flows of the Company for the interim
period. Users of financial information produced for the interim periods are
encouraged to refer to the notes contained in the Annual Report when
viewing interim financial results. The results for the nine-month period
ended September 30, 1998 are not necessarily indicative of the result to be
expected for the year.
2. Fixed Assets
1998
Cost:
Furniture $ 5,229
Computer equipment 11,554
Office equipment 8,017
--------
24,800
Less accumulated
Depreciation 10,351
--------
Net book value $ 14,449
========
In September 1998, the fixed assets were sold for their book value to a
director of the Company.
3. Mineral Properties and Exploration Expenditures
Guatemala Mineral claims
Acquisition costs $ 30,499
Exploration expenditures 198,636
---------
$ 229,135
=========
4. Organizational costs
Cost $ 11,511
Accumulated amortization 6,501
---------
$ 5,010
=========
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5. Stockholder's Surplus (Deficiency)
Common Stock
Shares Amount
------------ ------------
Balance, December 31, 1997 10,670,384 $ 10,670
Issuance of common stock
For cash 200,000 200
For debt settlement 54,100 54
------------ ------------
10,924,484 $ 10,924
------------ ------------
Additional paid in Capital
Balance, December 31, 1997 $ 1,088,869
Issuance of common stock
For cash 249,800
For debt settlement 37,142
------------
$ 1,375,811
------------
Accumulated Deficit
Balance, December 31, 1997 $ (931,188)
Net loss for the period (234,225)
------------
$ (1,165,413)
------------
Total shareholders' Equity $ 221,322
------------
6. Related Party transactions
(a) Included in accounts payable is $ 2,279 (December 31, 1997 - $45,532)
due to directors and a corporation controlled by a director in respect
of salaries, consulting fees and reimbursement for operating expenses.
On September 29, 1998 $37,142 in payables to a director was settled
through the issue of 54,100 shares at a cost of $0.6875 per share.
(b) During the period ended September 30, 1998 consulting fees, salaries
and wages of $ 51,538 (December 31, 1997 -$97,276) were paid or are
payable to directors or corporations controlled by directors.
7. Loss Per Share
Loss per share was computed by dividing the net loss for the period by the
weighted average number of shares of common stock outstanding during the
period. At September 30, 1998 10,774,657 (September 30, 1997 - 10,463,766).
8. Non-Cash Transactions
(a) Organizational costs of $11,461 were paid by former directors during
1995; these former directors received 3,820,383 shares in respect of
these expenses.
(b) During 1996, the Company issued 300,000 shares at $0.01 as part of the
acquisition cost of a mineral property.
(c) During 1997, the Company wrote off its Northwest Territories Mineral
Properties in the amount of $21,810 and wrote off its Cape Bretton
Mineral Properties in the amount of $113,786.
8
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The above non-cash transactions have not been included in the Statement of
Cash Flows.
9. Commitments
The Company entered into a management contract with the President of the
Company in 1997. The contract requires the Company to pay management fees
totaling $5,000 per month together with an annual performance bonus. The
contract can be terminated by either party with three months notice. This
management contract was terminated on January 1, 1998.
10. Subsequent Events
On October 15th 1998, the Company secured a loan facility for $50,000. This
loan facility is in the form of a Promissory Note and bears interest at the
Citibank (New York City, USA) prime rate plus one percent. The loan is
repayable within fourteen days of receipt of a written demand from the
lender for repayment of the Facility.
ITEM 2. MANAGEMENT'S' DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
A. General
The Company is a mineral exploration company based in Vancouver, Canada engaged
in the exploration of base and precious metals worldwide. The Company was
incorporated under the laws of the State of Delaware on October 10, 1995, under
the name "Chefs Acquisition Corp." and is a development stage company. The
Company had limited operations for the year ended December 31, 1995.
Since commencement of its exploration operations in 1996, the Company has
undertaken a review of potential world mining properties with the objective of
acquisitions, exploration and development.
In addition to Guatemala, primary regions under investigation by the Company
include Argentina, Canada, Egypt, Mexico, United States of America, West Africa
and South Africa.
The management of the Company has developed the following exploration
objectives, the acquisition of properties with large scale potential, to
minimize capital costs on leases or concessions, the acquisition of properties
adjacent or in close proximity to recent discoveries of large scale mineral
reserves, to be the first-in staking where possible, secured repatriation on
mineral rights and royalties and to establish joint ventures and/or partnerships
with established companies that possess the resources to complete mine
development. All of the Company's properties are in the preliminary exploration
stage without any presently known body of ore.
B. Financing
In Fiscal 1997, the Company raised $750,000 through the issuance of 750,000
common shares at a price of $1.00 per share versus $355,000 in Fiscal 1996. In
May 1998, the Company raised $250,000 through the issuance of 200,000 common
shares at a price of $1.25 per share.
9
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C. Financial Information
Nine Months Ended September 30, 1998 versus Nine Months Ended September 30, 1997
Net loss for the nine months ended September 30, 1998 decreased by $203,454 over
the nine months ended September 30, 1997, due primarily to:
(1) The Company's write off of certain mineral properties in the amount of
$135,913 in the nine months ended September 30, 1997.
(2) Stockholder and public relations expenses decreased by $35,208
($27,103 - nine months ended September 30, 1998, $62,311 - nine months
ended September 30, 1997).
(3) Legal and accounting fees decreased by $23,315 ($28,755 - nine months
ended September 30, 1998, $52,070 - nine months ended September 30,
1997).
(4) Consulting fees decreased by $45,743 ($13,237 - nine months ended
September 30, 1998, $58,980 - nine months ended September 30, 1997).
(5) Property development and examination expenses increased by $18,647
($47,887 - nine months ended September 30, 1998, $29,240 - nine months
ended September 30, 1997).
D. Financial Condition
As of September 30, 1998 the Company had cash and cash equivalents of $935.
The Company does not have sufficient working capital to (i) pay its
administrative and general operating expenses through December 31, 1999 and (ii)
to conduct its preliminary exploration programs. Without cash flow from
operations, it may need to obtain additional funds (presumably through equity
offerings and/or debt borrowing) in order, if warranted, to implement additional
exploration programs on its properties. Failure to obtain such additional
financing may result in a reduction of the Company's interest in certain
properties or an actual foreclosure of its interest. The Company has no
agreements or understandings with any person as to such additional financing.
None of the Company's properties has commenced commercial production and the
Company has no history of earnings or cash flow from its operations. The company
presently does not have sufficient financial resources to undertake all of its
currently planned exploration and development programs. The further exploration
and the potential development of any ore deposits found on the Company's
exploration license depends upon the Company's ability to obtain financing
through any or all of the joint venturing of properties, debt financing, equity
financing or other means. There is no assurance that the Company will be
successful in obtaining the required financing. Failure to obtain additional
financing on a timely basis could cause the Company to forfeit its interest in
such properties and reduce or terminate its operations. The Company has no
understanding or agreements with any person regarding such additional funding
requirements. The Company's auditor has indicated in its 1997 Annual Report that
"the Company has incurred a loss from operations and lacks current liquidity
which raises substantial doubt about its ability to pay current liabilities, and
therefore continue as a going concern." Even if the results of exploration are
encouraging, the Company may not have sufficient funds to conduct the further
exploration that may be necessary to determine whether or not a commercially
mineable deposit exists on any property. While the Company may attempt to
generate additional working capital through the operation, development, sale or
possible joint venture development of its
10
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properties, there is no assurance that any such activity will generate funds
that will be available for operations.
The Company has not declared or paid dividends on its shares since incorporation
and does not anticipate doing so in the foreseeable future.
E. Year 2000 Issues
The "Year 2000 problem", as it has come to be known, refers to the fact that
many computer programs use only the last two digits to refer to a year, and
therefore recognize a year that begins with "20" as instead beginning with "19".
For example, the year 2000 would be read as being the year 1900. If not
corrected, this problem could cause many computer applications to fail or create
erroneous results.
The Company has modified and tested all the critical applications of its
information technology ("IT"), the result of which is that all such critical
applications are now Year 2000 compliant. The Company believes that virtually
all of the non-critical applications of its IT are or will be made Year 2000
compliant prior to January 1, 1999. The Company's analysis and program is
directed by its or others with whom it transacts business, internal IT
personnel. The total amount of the payments made to date and to be made
hereafter to such independent consultant are not expected to be material. Based
on the Company's analysis to date, the Company believes that its material non-IT
systems are either Year 2000 compliant, or do not need to be made Year 2000
compliant in order to continue to function in substantially the same manner in
the Year 2000. The Company intends to continue its analysis of whether its
non-IT systems require any Year 2000 remediation. The Company's Year 2000
compliance work has not caused, nor does the Company expect that it will cause,
a deferral on the part of the Company of any material IT or non-IT projects.
However, there can be no assurance that any of the Company's vendors or others,
with whom it transacts business, will be Year 2000 compliant prior to such date.
The company is unable to predict the ultimate affect that the Year 2000 problem
may have upon the Company, in that there is no way to predict the impact that
the problem will have nation-wide or world-wide and how the Company will in turn
be affected, and, in addition, the company cannot predict the number and nature
of its vendors and customers who will fail to become Year 2000 compliant prior
to January 1, 2000. Significant Year 2000 difficulties on the part of vendors or
customers could have a material adverse impact upon the Company. The Company
intends to monitor the progress of its vendors and customers in becoming Year
2000 compliant. The Company has not to date formulated a contingency plan to
deal with the potential non-compliance of vendors and customers, but will be
considering whether such a plan would be feasible.
F. Forward Looking Statements
The Form 10-QSB includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act. Any
statements that express or involve discussions with respect to predictions,
expectations, beliefs, plans, projections, objectives, assumptions or future
events or performance (often, but not always, using words or phrases such as
"expects" or "does not expect", "is expected", "anticipates" or "does not
anticipate", "plans", "estimates" or "intends", or stating that certain actions,
events or results "may", "could", "would", "might" or "will" be taken, occur or
be achieved) are not statements of historical fact and may be "forward looking
statements". Forward-looking statements are based on expectations, estimated and
projections at the time the statements are made that involve a number of risks
and uncertainties which could cause actual results or events to differ
materially from those presently anticipated. These include, but are not limited
to, the risks of mining industry (for example, operational risks of exploring
for, developing and producing crude oil and natural gas, risks and uncertainties
involving geology of mineral deposits, the uncertainty of reserve estimates and
11
<PAGE>
estimates relating to production volumes, cost and expense projections,
potential cost overruns and health, safety and environmental risks), risks
relating to the Company's properties (for example, lack of operating history and
transportation), fluctuations in mineral prices and exchange rates and
uncertainties resulting from potential delays or changes in plans with respect
to exploration or development projects or capital expenditures. Although the
Company believes that the expectations reflected in such forward-looking
statements are reasonable; it can give no assurance that such expectations will
prove to have been correct.
PART 11. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is not party to any litigation, and has no knowledge of
any pending or threatened litigation against it.
ITEM 2. Changes in Securities and Use of Proceeds
Not Applicable
ITEM 3. Defaults Upon Senior Securities
Not Applicable
ITEM 4. Submission of Matters to a Vote of Security Holders
Not Applicable
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
None.
(b) Reports on Form 8-K
None.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunder duly authorized.
Date: November 5, 1998 BY: /s/ David Jenkins
-----------------------
David Jenkins
Director and President
Date: November 5, 1998 BY: /s/ John A.A. James
-----------------------
John A.A. James
Director and Vice-President
13
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 935
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 935
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 255,080
<CURRENT-LIABILITIES> 33,758
<BONDS> 0
0
0
<COMMON> 10,924
<OTHER-SE> 210,398
<TOTAL-LIABILITY-AND-EQUITY> 255,080
<SALES> 0
<TOTAL-REVENUES> 2,634
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 232,659
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,200
<INCOME-PRETAX> (234,225)
<INCOME-TAX> 0
<INCOME-CONTINUING> (234,225)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (234,225)
<EPS-PRIMARY> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
