UNITED STATES 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 December 31, 1998
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)
Registrant's telephone number, including area code 604-687-4432
Securities registered under Section 12(b) of the Securities Exchange Act of
1934: None
Securities registered pursuant to Section 12 (g) of the Securities Exchange Act
of 1934:
Title of each class Name of each exchange on
which registered
Common stock, par value $0.001 per share NASD OTC Bulletin Board
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Security Exchange Act of
1934 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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-B is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part 111 of this Form 10-KSB or any
amendment to this Form 10-KSB. [X]
Revenue for the fiscal year ended December 31, 1998 was $Nil
The aggregate market value of the Registrant's voting common Stock held by
non-affiliates was $2,214,411 as of March 31, 1999. There were 11,231,494 shares
of the registrant's Common Stock outstanding as of March 31, 1999.
Documents incorporated by reference herein: None
Transitional Small Business disclosure format (check one); YES [ ] NO [ X ]
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AURORA GOLD CORPORATION
This annual report contains statements that plan for or anticipate the
future and are not historical facts. In this Report these forward looking
statements are generally identified by words such as "anticipate", "plan",
"believe", "expect", "estimate", and the like. Because forward looking
statements involve future risks and uncertainties, these are factors that could
cause actual results to differ materially from the estimated results. These
risks and uncertainties are detailed in Item 1. "Business", Item 2.
"Properties", Item 6. "Management's Discussion and Analysis of Financial
Condition and Results of Operations" Item 7 "Financial Statements", Item 12
"Certain Relationships and Related Transactions".
The Private Securities Litigation Reform Act of 1995, which provides a
"safe harbor" for such statements, may not apply to this Report.
ITEM 1. BUSINESS
(A) GENERAL
Aurora Gold Corporation (the "Company" or "Aurora") was incorporated under
the laws of the State of Delaware on October 10, 1995, under the name "Chefs
Acquisition Corp." Initially formed for the purpose of engaging in the food
preparation business, it redirected its business efforts in late 1995 following
a change of control, which occurred on October 30, 1995, to the acquisition,
exploration and, if warranted, the development of mineral resource properties.
The Company changed its name to Aurora Gold Corporation on August 20, 1996 to
more fully reflect its business activities.
Since its redirection, the Company's activities have been limited primarily
to the acquisition of rights to certain mineral properties and the
implementation of preliminary exploration programs on these properties in which
it has acquired an interest. See "Item 2. Description of Property."
The Company is engaged in the location, acquisition, exploration and, if
warranted, development of mineral resource properties. All of the mineral
properties in which the Company has an interest or a right to acquire an
interest in are currently in the exploration stage. None of the properties have
a known body of ore. The Company's primary objective is to explore for gold,
silver, base metals and industrial minerals and, if warranted, to develop those
existing mineral properties. Its secondary objective is to locate, evaluate, and
acquire other mineral properties, and to finance their exploration and
development either through equity financing, by way of joint venture or option
agreements or through a combination of both.
Currently, the Company's activities are centred in Canada, Guatemala and
the United States of America.
The Company is in the process of assessment of its properties for
exploration and over the course of the next twelve months, to initiate warranted
exploration programs to further explore and develop each property held. None of
the Company's properties contain any known reserves.
The Company's common stock is traded on the NASD's OTC Bulletin Board.
The Company has not declared or paid dividends on its shares since incorporation
and does not anticipate doing so in the near future.
The Company's offices are located at 1505 - 1060 Alberni Street, Vancouver,
British Columbia Canada V6E 4K2.
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(B) SIGNIFICANT DEVELOPMENTS IN FISCAL 1998 AND SUBSEQUENT EVENTS
In fiscal 1998, the Company raised $250,000 through the issuance of 200,000
common shares at a price of $1.25 per share. In November 1998, a $50,000
Promissory note (including accrued interest) was converted into 71,667 shares at
a price of $0.75 per share. In December 1998, a $100,000 Promissory note
(including accrued interest) was converted into 143,333 shares at a price of
$0.75 per share. Amounts owing to a director of $68,697 were settled with the
issuance of 96,105 common shares in December 1998. The conversion rates were
based on the quoted market price at the date of conversion. In fiscal 1999,
amounts owing to a director of $60,555 were settled in January 1999 with the
issuance of 50,000 common shares.
On June 4, 1998, the Company voluntarily filed Form 10-SB with the
Securities and Exchange Commission ("SEC") in the United States to register its
common stock. Included in the filing were the audited financial statements of
the Company for the years ended December 31, 1997 and 1996 prepared in
accordance with accounting principles generally accepted in the United States.
On August 10, 1998, the SEC issued its first comments on the content of the
Company's filing. The SEC requested the Company change its accounting policy
with respect to the capitalization of exploration costs to comply with the
Commission's interpretation of the accounting for exploration costs in the
mining industry.
The Company amended its policy concerning mineral exploration costs to
record as an expense in the period, incurred costs relating to the Company's
exploration activities. Previously the costs were capitalized until the
properties were determined to be impaired based on the evaluation of management.
The change in accounting policy was adopted retroactively and accordingly, prior
year's operations have been restated to account for the write-off of exploration
costs previously deferred. The Company's 1997 financial statements were amended
to decrease assets and increase the net loss by $45,900 or $0.01 per share. The
change in accounting for mineral exploration costs means that exploration costs
will be charged to income until such time that proven reserves are established.
From that time forward, the Company will capitalize all costs to the extent that
future cash flow from the reserves equals or exceeds the costs deferred. The
company will not capitalise, at that time, costs previously written off, as
there is no supporting guidance in accounting principles.
It is the Company's understanding that after the Company changes its
accounting for mineral exploration costs in its 1998 financial statements and
1998 10-KSB filing, the SEC Staff will have no more comments on the Form 10-SB
filing.
Agreement dated July 28, 1998 (the Guatemala Agreement July 28, 1998). The
parties to the agreement of July 28, 1998 are the Company and Minera Montagua
S.A. Under the terms of the agreement Minera Montagua S.A. has agreed to act as
agent for Aurora Gold Corporation, drop the applications to the Guatemala
government for exploration licenses for the following four (4) concessions;
Atitlan, Carmona, El Rejon and El Triunfo and to make applications to the
Guatemala government for approval of exploration licenses for the following six
concessions: Aguas Calientes, Apantes, Valenton 1, La Esperanza, Miramundo and
Tesoro at no additional cost to Aurora's existing package of Guatemala mineral
concessions. Aurora will assume the payment of all fees and be responsible for
maintaining the title to all the concessions in accordance with Guatemala mining
law. In July 1997, the Company retained, pursuant to written agreements, Minera
Montagua S.A. to act as its agent in Guatemala. During the fourth quarter of
1998, Minera Montagua S.A.'s services as agent for the Company was terminated
and Oscar E. Rivera, the Company's legal representative in Guatemala, agreed to
act as the Company's agent in Guatemala.
The Company made application to the Guatemalan government for fifteen
mineral exploration licenses and one mineral reconnaissance license, of which
ten mineral exploration licenses were granted during the fiscal year. At
December 31, 1998 five mineral exploration
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licenses and one mineral reconnaissance license were pending awaiting government
approval. As a consequence of the results of the geological reconnaissance,
sampling of rock outcrops and stream sediment sampling which was carried out in
1998 and the first quarter of 1999, it was decided to surrender six exploration
licenses (January 1999) and withdraw four applications (February 1999). The
Company retains four exploration licenses on which work is continuing, and has
pending applications for one mineral exploration license and one mineral
reconnaissance license.
Option Agreement dated November 18, 1998 on the Totem Talc property between
Aurora Gold Corporation and the property's Joint Venture owners, United
Catalyst, Inc. and Getchell Gold Corporation. The Totem Talc property consists
of 10 unpatented lode claims, covering approximately 206 acres, and is located
near Metaline Falls in Pend Oreille County, Washington, approximately 100 miles
north of Spokane. The Agreement calls for Aurora to pay the Joint Venture $5,000
on or before, May 18, 1999 in addition to the initial payment of $1,000 already
made. Aurora Gold commits to expenditures of $5,000 by May 18, 1999 and an
additional $50,000 by November 18, 1999 on further development of the project
through market studies, geological and engineering work, claims maintenance and
the like. On December 15, 1999 Aurora commits to pay the Joint Venture a further
total of $400,000 commencing with $100,000 on that date and subsequent payments
of $100,000 on December 15, 2000 and $200,000 on December 15, 2001.
In February 1999, the Company acquired, by staking, a high grade limestone
property three (3) square kilometres (741 acres) located on the north shore of
Kumealon Inlet, 54 kilometres South-Southeast of Prince Rupert, B.C. Canada.
(C) EXPLORATION AND DEVELOPMENT
The Company conducts exploration activities from it headquarters in
Vancouver, Canada. The Company owns or controls unpatented mining claims, and,
mineral concessions in Guatemala and the United States of America. The Company's
strategy with respect to reserve replacement is to concentrate its efforts on
(1) existing operations where an infrastructure already exists, (2) other
properties presently being developed and advanced-stage exploration properties
that have been identified as having potential for additional discoveries, (3)
advanced-stage exploration acquisition opportunities, and (4) grass-roots
exploration opportunities. The Company is currently concentrating its
exploration activities in Guatemala and the United States of America. The
Company is also examining other exploration properties in Canada, Mexico and
North Africa.
Exploration expenses in Guatemala totalled $148,744 during fiscal 1998
(1997 - $45,900) in addition to the $37,942 (1997 - $30,499) in mineral property
acquisition costs. At December 31, 1998 only ten of the mineral exploration
concession licenses had been granted to the Company.
Exploration expenses in the United States with respect to the Totem Talc
property totalled $11,418 during fiscal 1998 (1997 - $Nil).
Research and development expenditures of $47,314 (1997 - $73,429) were
spent on project research and development in fiscal 1998.
All of the Company's properties are in the exploration stages only and
are without a known body of commercial ore. Development of these properties will
only follow if satisfactory exploration results are obtained. Mineral
exploration and development involves a high degree of risk and few properties
that are explored are ultimately developed into producing mines. There is no
assurance that the Company's mineral exploration and development activities will
result in any discoveries of commercial bodies of ore. The long-term
profitability of the Company's operations will be in part directly related to
the cost and success of its exploration programs, which may be affected by a
number of factors.
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(D) EMPLOYEES
Prior to November 1998 the Company had 5 full time employees and 3 part
time employees. As of February 28, 1999, there were 3 full time employees and
three part time employees.
(E) REGULATION OF MINING ACTIVITY
Aurora's interests in its projects will be subject to various laws and
regulations concerning development, production, taxes, labour standards,
environmental protection, mine safety and other matters. In addition, new laws
or regulations governing operations and activities could have a material adverse
impact on Aurora.
(F) FOREIGN COUNTRIES AND REGULATORY REQUIREMENTS
Aurora has mineral interests located in Guatemala and the United States of
America. There are significant political risks involving the Company's
investment in Guatemala.
Mineral exploration, development and mining activities on its interests may
be affected in varying degrees by political stability, and the policies of other
nations in respect of these countries. Any changes in regulations or shifts in
political conditions are beyond the control of the Company and may adversely
affect its business. Operations may be affected in varying degrees by government
laws and regulations or the interpretations thereof, including those with
respect to export controls, expropriation of property, employment, land use,
water use, environmental legislation and mine safety. Operations may be also
affected in varying degrees by political and economic instability, confiscatory
taxation, restriction on currency conversions, imports and sources of supplies,
the expropriation of private enterprises, economic or other sanctions imposed by
other nations, terrorism, military repression, crime, and extreme fluctuations
in currency exchange rates and high inflation and make it more difficult for the
Company to raise funds for the development of its mineral interests in such
developing countries.
(G) COMPETITION
Many companies are engaged in the exploration and development of mineral
properties. The company encounters strong competition from other mining
companies in connection with the acquisition of properties producing or capable
of producing gold, silver and industrial minerals. Many of these companies have
substantially greater technical and financial resources than Aurora and thus the
company may be at a disadvantage with respect to some of its competitors.
The marketing of minerals is affected by numerous factors, many of which
are beyond the control of the company. Such factors include the price of the
mineral in the marketplace, imports of minerals from other nations, the
availability of adequate refining and processing facilities, the price of fuel,
electricity, labour, supplies and reagents and the market price of competitive
minerals. In addition, sale prices for many commodities are determined by world
market forces or are subject to rapid and significant fluctuations that may not
necessarily be related to supply or demand or competitive conditions that in the
past have affected such prices. Significant price movements in mineral prices
over short periods of time may be affected by numerous factors beyond the
control of the Company, including international economic and political trends,
expectations of inflation, currency exchange fluctuations (specifically, the
U.S. dollar relative to other currencies), interest rates and global or regional
consumption patterns, speculative activities and increased production due to
improved mining and production methods. The effect of these factors on the price
of minerals and, therefore, the economic viability of any of the Company's
projects cannot accurately be predicted. As the Company is in the development
stage, the above factors have had no material impact on operations or income.
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(H) ENVIRONMENTAL REGULATIONS
All phases of the Company's operations in Guatemala and the United States
of America are subject to environmental regulations. Environmental legislation
in Guatemala and the United States of America is evolving in a manner which will
require stricter standards and enforcement, increased fines and penalties for
non-compliance, more stringent environmental assessments of proposed projects
and a heightened degree of responsibility for companies and their officers,
directors and employees. Although the Company believes it is in compliance with
all applicable environmental legislation, there is no assurance that future
changes in environmental regulation, if any, will not adversely affect the
Company's operations.
(I) MINING RISKS AND INSURANCE
Mineral exploration involves many risks, which even a combination of
experience, knowledge and careful evaluation may not be able to overcome.
Operations in which the Company has a direct or indirect interest will be
subject to all type of hazards and risks or unexpected formations, cave-ins,
pollution, all of which could result in work stoppages, damages to property, and
possible environmental damages. The Company does not have general liability
insurance covering its operations and does not presently intend to obtain
liability insurance as to such hazards and liabilities. Payment of any
liabilities therefore could have a materially adverse effect upon the Company's
financial condition.
ITEM 2. DESCRIPTION OF PROPERTY
All of the Company's properties are in the preliminary exploration stage and do
not contain any known body of ore.
The Company's exploration activities are presently in Canada, Guatemala and
the United States of America.
(A) CANADA:
In February 1999, the Company acquired, by staking, a high grade limestone
property three (3) square kilometres (741 acres) located on the north shore of
Kumealon Inlet, 54 kilometres south-southeast of Prince Rupert, B.C. Canada.
This developed property is highlighted by consistence of purity and
whiteness of the limestone zone outcropping along the southwest shore of
Kumealon Lagoon. The zone is comprised mostly of white, recrystallized, fine to
course grained limestone, striking 150 degrees and can be traced for at least
1200 meters. The zone is estimated to have an average stratigraphic thickness of
180 meters. Chip samples taken across the zone averaged 55.06% CaO, 2.11%
insolubles and 43.51% ignition loss. The zone is estimated to contain 19 million
tonnes of high-grade limestone over a strike length of 1200 meters, with an
average width of 180 meters and an average height above water of 30 meters.
The Company plans a complete geological investigation in connection with an
extensive bedrock-sampling program in 1999.
(B) GUATEMALA:
In Guatemala, the Company's rights are working interests in Guatemala
mineral exploration concession licenses and mineral reconnaissance licenses. In
July 1997, the Company retained, pursuant to written agreements, Minera Montagua
S.A. to act as its agent in Guatemala. During the fourth quarter of 1998, Minera
Montagua S. A.'s services as agent for the Company was terminated
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and Oscar E. Rivera, the Company's legal representative in Guatemala, agreed to
act as the Company's agent in Guatemala.
The mineral exploration concession license confers on the titleholder the
exclusive right to locate, study, analyze and evaluate the deposits that have
been granted, within the licenses' territorial limits and to unlimited depth in
the subsoil. The mineral reconnaissance license confers to the titleholder the
exclusive rights to identify and locate possible areas for exploration, within
the license's territorial limits and to unlimited depth in the subsoil.
During 1998, the Company applied for fifteen (15) mineral exploration
licenses and one (1) mineral reconnaissance license. The sixteen (16) mineral
concession licenses encompass a number of gold and silver mines that were
operated in Guatemala which date as far back as 1657.
During 1998 the following ten (10) mineral exploration concession licenses
were granted by the Guatemala government to the company, Miramundo (April 20,
1998), El Rancho (April 20, 1998), Monjitas (April 28, 1998), Los Angeles (May
5, 1998), Los Cipreces (May 5, 1998), Chiyax (May 5, 1998), Apantes (July 16,
1998), Jicaro (July 16, 1998), Valenton 1 (August 3, 1998) and Aguas Calientes
(August 3, 1998). At December 31, 1998 five (5) mineral exploration concession
licenses, Barranquillo, Bola de Oro, La Esperanza, La Union and El Tesoro 1 and
one (1) mineral reconnaissance license, San Diego were pending, awaiting
Guatemala government approval.
All the Company's concessions are located within the South Volcanic Belt in
Guatemala, which is considered to be the geological setting with the greatest
mineral potential in the country. The Volcanic Province is represented by a
Quaternary chain of active volcanoes to the south and Tertiary igneous rocks to
the north. In the Tertiary area, ignimbrites and rhyolites crop out, as well as
acidic tuffs and several intrusives. Gold-silver deposits are expected to be
found in granites and in quartz veins within the tuffs. The epithermal type of
precious and basic metallic deposits and the presence of lithofilic elements are
associated with the geology of this area. In the eastern part of the volcanic
province, the most common mineralogy is pyrite and arsenopyrite with
chalcopyrite, covelite and native gold as associated minerals, and it is related
to epithermal processes associated with intrusive igneous bodies. Important
deposits of copper-lead-zinc-silver, gold-silver and lead-zinc mineralization
occur in veins located in fractures within Tertiary volcanic rocks, typical
features of epithermal deposits filling fissures that originated from tensional
stresses. The mineralization consists mainly of zinc sulfides, lead-silver and
copper with calcite and quartz as gangue minerals. Other deposits of economic
importance are formed by a series of iron oxide bodies. It is important to note
that most of this province has not yet been explored and evaluated, but it is
one of the more important zones of interest due to its favorable geological
environment for mineralization.
During fiscal 1998, the Company carried out programs of geological
reconnaissance, sampling of rock outcrops and sampling of stream sediments, on
the mineral exploration concession licenses at Aguas, Apantes, Chiyax, El
Rancho, Jicaro, Los Angeles, Los Cipreces, Miramundo, Monjitas and Valenton 1.
In addition, similar programs were completed on five (5) properties for which
applications for mineral exploration concession licenses were pending,
specifically Barranquillo, Bola de Oro, La Esperanza, La Union and El Tesoro 1.
As a consequence of the results of these programs, it was decided to surrender
six mineral exploration concession licenses (January 1999) and withdraw four
applications (February 1999).
The Company retains a portfolio of four (4) mineral exploration concession
licenses, Aguas Calientes, Apantes, Jicaro and Valenton 1 and has pending
applications for one (1) mineral exploration concession license, La Esperanza
and one (1) mineral reconnaissance license, San Diego.
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During 1999, the Company will complete exploration programs, involving
field mapping, sampling of outcrops, sampling of stream sediments, and soil
geochemistry, on the following mineral exploration concession licenses and
mineral reconnaissance license areas:
Aguas Calientes - Mineral Exploration Concession License:
The Aguas Calientes mineral exploration concession is located in the
department of Sacatepequez in western Guatemala, some 30 kilometers
southwest of Guatemala City. It covers an area of 99 square
kilometers.
Apantes - Mineral Exploration Concession License:
The Apantes mineral exploration concession is located in the Jutiapa
and Jalapa departments of eastern Guatemala 130 kilometers east of
Guatemala City. It covers an area of 88 square kilometers. The area is
located within tertiary volcanic rocks in contact with several pockets
of redbeds.
Jicaro - Mineral Exploration Concession License:
The Jicaro mineral exploration concession is located in the El
Progreso department of eastern Guatemala, some 80 kilometers east of
Guatemala City. It covers an area of 90 square kilometers. The geology
of the region is characterized by the presence of several rock types,
including intrusives, tertiary rhyolites and redbeds of the Cretaceous
age and is marked by the presence of the Montagua Fault, the largest
east-west structure in Guatemala.
Valenton 1 - Mineral Exploration Concession License:
The Valenton 1 mineral exploration concession is located in the
Guatemala and Baja Verapaz departments in central Guatemala 20
kilometers north of Guatemala City. It covers an area of 25 square
kilometers. The mineral exploration concession is located within
metamorphic rocks extremely close to the Montagua Fault system in a
zone of great geological complexity, which may control mineralization.
La Esperanza - Application pending for Mineral Exploration Concession
License:
The La Esperanza mineral exploration concession is located in the
Zacapa department in eastern Guatemala some 115 kilometers east of
Guatemala City. It covers an area of 40 square kilometers. The vein
system within metamorphic rocks consists of a set of large bulk quartz
veins outcropping in some cases for up to 500 meters with an average
width of 1.5 meters. The quartz veins contain sulfides in the form of
galena, chalcopyrite, pyrite, native copper and some copper oxides.
Veins outcrop along a four-kilometer long area. Some breccia type
veins are also found to the east of the system.
San Diego - Application pending for Mineral Reconnaissance License:
The San Diego is a mineral reconnaissance concession located in the
Zacapa and Chiquimula departments in eastern Guatemala, some 150
kilometers east of Guatemala City. As a mineral reconnaissance
concession, it covers a larger area than a mineral exploration
concession, namely 800 square kilometers. The main feature of the
mineral reconnaissance concession is the fact that it completely
surrounds the El Pato gold and silver mineral reserve, which is the
best understood exploration project in Guatemala to date.
Geologically, because of its size this mineral reconnaissance
concession contains several geological settings. Most important is the
presence of the Montagua Fault to the North and the Chiguimula Pluton
(intrusive) on the eastern half of the concession.
As a result of the results of the work programs of geological
reconnaissance, and sampling of rock outcrops and stream sediments conducted
during fiscal 1998 and early 1999 the following mineral exploration concession
licenses were dropped in January and February 1999:
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Barranquillo - Mineral Exploration Concession License (application
withdrawn February 1999):
The Barranquilla mineral exploration concession is located in the El
Progreso department in eastern Guatemala, some 70 kilometers east of
Guatemala City. It covers an area of 96 square kilometers. The geology
of the concession is very similarly to that found in the Jicaro
concession, which bounds Barranquilla to the east.
Bola de Oro - Mineral Exploration Concession License (application withdrawn
February 1999):
The Bola de Oro mineral exploration concession is located in the
Chimaltenango department in western Guatemala some 60 kilometers west
of Guatemala City. It covers an area of 110 square kilometers. The
mineral exploration concession is located within the territory
volcanic belt of Central Guatemala.
Chiyax - Mineral Exploration Concession License (dropped January 1999):
The Chiyax mineral exploration concession is located in the
Totonicapan department of western Guatemala some 210 kilometers
northwest of Guatemala City. It covers an area of 48 square
kilometers. The geology of the area is very similar to that found at
the Los Cipreces area due to their proximity.
El Rancho - Mineral Exploration Concession License (dropped January 1999):
The El Rancho mineral exploration concession is located in the El
Progreso and Zacapa departments in eastern Guatemala, some 95
kilometers east of Guatemala City. It covers an area of 90 square
kilometers. Geology is very similar to that found in the El
Barranquillo and Jicaro mineral exploration concessions, although El
Rancho, is closest to the Montagua Valley and fault.
Los Angeles 1 - Mineral Exploration Concession License (dropped January
1999)
La Union 1 - Mineral Exploration Concession License (application withdrawn
February 1999):
The Los Angeles 1 and La Union 1 mineral exploration concessions are
both located in the Zacapa department in eastern Guatemala close to
the Honduras border. They cover an area of 180 square kilometers.
Geographically the area is located on Paleozoic metamorphic rocks in
contact with an intrusive body and tertiary volcanic terrain. The Los
Angeles 1 and La Union 1 area correspond to one mineral exploration
concession but were divided in order to avoid an extremely large
mineral exploration concession.
Los Cipreces - Mineral Exploration Concession License (dropped January
1999):
The Los Cipreces mineral exploration concession is located in the
Totonicapan department in western Guatemala, 200 kilometers west of
Guatemala City. It covers and area of 56 square kilometers.
Geologically the area is located within the tertiary volcanic terrain
close to several igneous bodies. It is important to recognize that the
Montagua Fault is lost when it comes into contact with the tertiary
volcanic rocks in the this particular area. It can be inferred that
the Fault was buried but is still capable of controlling
mineralization in the area in later tectonic events.
Miramundo - Mineral Exploration Concession License (dropped January 1999):
The Miramundo mineral exploration concession is located in the Jutiapa
department in eastern Guatemala some 130 kilometers east of Guatemala
City. It covers an area of 45 square kilometers. The area is located
on tertiary volcanic terrain.
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Monjitas - Mineral Exploration Concession License (dropped January 1999):
The Monjitas mineral exploration concession is located in the
mountains of central Guatemala some 10 kilometers east of Guatemala
City, and covers a total area of 20 square kilometers. This area is
marked by the presence of an N-S fault, which is the eastern border of
the Asuncion Valley. Tertiary volcanic rocks are predominant in the
area. Several outcrops of silicified, oxidized and altered volcanic
rocks have been located.
Tesoro - Mineral Exploration Concession License (application withdrawn
February 1999):
The Tesoro mineral exploration concession is located in the Zacapa
department in eastern Guatemala next to the border with Honduras, some
175 kilometers east of Guatemala City. It covers an area of
approximately 50 square kilometers. The exact area has not been
calculated yet since the eastern limit of the mineral exploration
concession is the borderline between Guatemala and Honduras and has an
irregular shape. Geologically it is similar to the La Union and Los
Angeles concessions due to their proximity. The mineral exploration
concession is located on tertiary volcanic and intrusive rocks.
The Company is actively examining and pursuing other mineral
properties and prospects in Guatemala and will either acquire or file
application for mineral exploration concession licenses and/or mineral
reconnaissance concession licenses when promising properties are
identified.
(C) UNITED STATES OF AMERICA:
The Totem Talc property is located near Metaline Falls, Pend Oreille
County, Washington, approximately 100 miles north of Spokane. The total Mineral
Resources, categorized as Combined Indicated and Inferred, are estimated as 2.22
million tons at a grade of 45.9% talc above a cut-off grade of 20% talc.
Included in the total are Mineral Resources for two high grade areas, the
Southwestern and Northeastern Areas, which are estimated to contain 861,000 tons
at a grade of 60.2% talc above a cutoff grade of 50% talc. The mineralization in
the Southwestern and Northeastern Areas is in the three most prominent and
adjacent zones, and is amenable to extraction by open pit mining with low
stripping ratios.
The revised estimate of Mineral Resources represent increases of 71% in
tonnage, and 2.27 % in talc grade above those previously reported by Aurora as
provided by the Joint venture owners. The increases are mainly attributable to
modifications in the geological interpretations with extensions both vertically
and horizontally, and the fact that the previously reported Mineral Resources
were confined by a preliminary open pit design.
The Totem Talc property, consists of ten unpatented lode claims, covering
approximately 206 acres, and is held under option by Aurora in an agreement with
the joint venture owners, United Catalysts Inc. and Getchell Gold Corporation.
The Company is currently considering strategies for advancing the
development of the property based on the conclusions and recommendations in the
report provided by the international firm of consultants responsible for the
re-estimation of the Mineral Resources.
ITEM 3. LEGAL PROCEEDINGS
The company is not party to any litigation, and has no knowledge of any
pending or threatened litigation against it.
10
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None
PART 11
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
(a) The Common Stock of the Company has been quoted on the OTC Bulletin
Board since December 5, 1996. The following table sets forth the high
and low bid prices for the Common Stock for the calendar quarters
indicated as reported by the OTC bulletin Board for the last two
years. These prices represent quotations between dealers without
adjustment for retail markup, markdown or commission and may not
represent actual transactions.
- --------------------------------------------------------------------------------
First Quarter Second Quarter Third Quarter Fourth Quarter
- --------------------------------------------------------------------------------
1998 - High $2.860 $2.125 $1.547 $1.125
- --------------------------------------------------------------------------------
1998 - Low 1.750 0.938 0.672 0.687
- --------------------------------------------------------------------------------
1997 - High 3.500 4.500 3.601 3.375
- --------------------------------------------------------------------------------
1997 - Low 1.400 2.870 2.500 1.250
- --------------------------------------------------------------------------------
(b) As of December 31, 1998, there were 788 holders of record of the
Common Stock.
(c) There were no Common Stock cash dividends paid in 1998 or 1997. The
amount and frequency of cash dividends are significantly influenced by
metal prices, operating results and the Company's cash requirements.
The Registrant has issued securities in the manner set forth below without
registration under the Securities Act of 1933, as amended (the "Act").
On May 12, 1998, the Company issued 200,000 shares at a price of $1.25
per share for an aggregate consideration of $250,000 pursuant to Rule
504 of Regulation D;
In December 1998, amounts owing to a director of $37,196 were settled
with the issuance of 54,100 common shares;
In December 1998, amounts owing to a director of $31,501 were settled
with the issuance of 42,005 common shares and
In December 1998, the Company settled promissory notes payable of
$150,000 with the issuance of 215,000 shares (including 15,000 shares
issued in lieu of interest on the indebtedness).
In January 1999, amounts owing to a director of $60,555 were settled
with the issuance of 50,000 common shares.
Except for 200,000 shares issued pursuant to Rule 504, such shares are
"restricted securities," as that term is defined in the rules and regulations
promulgated under the Securities Act of 1933, as amended, subject to certain
restrictions regarding resale. Certificates evidencing all of the
above-referenced securities have been stamped with a restrictive legend and will
be subject to stop transfer orders.
11
<PAGE>
The Registrant believes that each of the above-referenced transaction was
exempt from registration under the Act, pursuant to Section 4(2) of the Act and
the rules and regulations promulgated thereunder as a transaction by an issuer
not involving any public offering.
ITEM 6. MANAGEMENT'S' DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION
(A) GENERAL
The Company is a mineral exploration company based in Vancouver, Canada
engaged in the exploration of base, precious metals and industrial minerals
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 mining properties throughout the world with the
objective of acquisitions, exploration and development.
In addition to Guatemala and United States of America, primary regions
under investigation by the Company include Argentina, Canada, Egypt, Mexico,
North Africa, 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.
The Company had no material revenues during fiscal 1998 and 1997. Income
during fiscal 1998 and 1997 was the result of interest earned on funds raised,
as the Company has no mineral properties in production. All funds raised in
fiscal 1998 and 1997 were used in the exploration and development of the
Company's properties.
During the next 12 months the Company needs to raise additional funds
through equity offerings and/or debt borrowing to meet its
administrative/general operating expenses, to conduct work on its exploration
properties, to meet its obligations under the Totem Talc agreement (see Item 1
Business - Significant Developments in Fiscal 1998 and Subsequent Events -
Option agreement dated November 18, 1998) and to further develop the Company
through the possible acquisition or joint venturing of additional mineral
properties either in the exploration or development stage. Additional employees
will be hired on a consulting basis as required by the exploration projects.
(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.
In Fiscal 1998, the Company raised $250,000 through the issuance of 200,000
common shares at a price of $1.25 per share. In November of 1998, a $50,000
Promissory Note (including accrued interest) was converted into 71,667 shares at
a price of $0.75 per share. In December 1998, a $100,000 Promissory Note
(including accrued interest) was converted into 143,333 shares at a price of
$0.75 per share. The conversion rates were based upon the quoted market price at
the date of conversion. In fiscal 1999, amounts
12
<PAGE>
owing to a director of $60,555 were settled in January 1999 with the issuance of
50,000 common shares.
(C) FINANCIAL INFORMATION
(a) Twelve Months Ended December 31, 1998 (Fiscal 1998) versus Twelve
Months Ended December 31, 1997 (Fiscal 1997).
Net loss for the twelve months ended December 31, 1998 increased by
$535,724 over the twelve months ended December 31, 1997 due primarily to:
(1) Stockholder and public relations expenses increased by $6,062
($47,402 - twelve months ended December 31, 1998, $41,340 -
twelve months ended December 31, 1997).
(2) Legal and accounting fees decreased by $28,265 ($43,190 - twelve
months ended December 31, 1998, $71,455 - twelve months ended
December 31, 1997).
(3) Consulting fees decreased by $46,378 ($Nil - twelve months ended
December 31, 1998, $46,378 - twelve months ended December 31,
1997).
(4) Office and miscellaneous fees decreased by $61,584 ($12,825 -
twelve months ended December 31, 1998, $74,409 - twelve months
ended December 31, 1997). During 1998, the Company was able to
reduce general administration expenses by cost sharing resources
with four other junior resource companies.
(5) Travel expenses decreased by $14,892 ($14,025 - twelve months
ended December 31, 1998, $28,917 - twelve months ended December
31, 1997).
(6) Exploration expenses decreased by $8,039 (See Item 1. Business -
Exploration and Development and Note 3. Of the Financial
Statements - Mineral Properties and Exploration Expenses
($207,476 - twelve months ended December 31, 1998, $215,515 -
twelve months ended December 31, 1997). On June 4, 1998, the
Company filed a Form 10-SB Registration Statement with the US
Securities and Exchange Commission. At the request of the Staff
of the SEC (see Item 1. Business Significant Developments in
Fiscal 1998 and Subsequent Events) the Company has amended its
accounting policy to charge to expense all exploration costs as
incurred. Future costs will continue to be charged to income
until such time that proven reserves are established. From that
time forward, the Company will capitalise all costs to the extent
that future cash flow from reserves equals or exceeds the costs
deferred. Certain other 1997 financial statement amounts have
been restated to conform to the 1998 presentation.
(7) For the twelve months ended December 31, 1998, the Company
recorded stock option compensation expense of $691,000 ($Nil -
twelve months ended December 31, 1997).
(b) Twelve Months Ended December 31, 1997 ("Fiscal 1997") versus Twelve
Months Ended December 31, 1996 ("Fiscal 1996").
Net loss in Fiscal 1997 increased by $254,672 over Fiscal 1996 to
$615,880 as compared to $361,208 in Fiscal 1996, due primarily to
(1) The Company's write off-of certain mineral properties in the
amount of $39,410 and exploration expenditures of $215,515 (See
Note 3. of the Financial Statements - Mineral Properties and
Exploration Expenses and Item 6. Management
13
<PAGE>
Discussion and analysis of Financial Conditions and Results of
Operations - B Financing - Note (6) Twelve months ended December
31, 1998 vs. twelve months ended December 31, 1997 for change in
accounting policy and restatement of certain 1997 figures);
(2) Increased legal and accounting fees of $19,200 ($71,455 in Fiscal
1997 as compared to $52,225 in Fiscal 1996); and
(3) Increased payments to consultants ($46,378 in Fiscal 1997 as
compared to $7,255 in Fiscal 1996).
(D) FINANCIAL CONDITION AND LIQUIDITY
At December 31, 1998, the Company had cash and cash equivalents of $68,326
(December 31, 1997 - $122,921) and working capital of $47,746 (December 31, 1997
- - $66,381) respectively. Total liabilities as of December 31, 1998 were $20,580
as compared to $68,866 on December 31, 1997, a decrease of $48,286. During 1998,
net proceeds from the issuance of common stock were $250,000 (December 31, 1997
- - $745,158). In Fiscal 1998 investing activities consisted of additions to
mineral properties $38,942 (1997 - $30,499), notes receivable $20,000 (1997 -
Nil) and purchase of fixed assets Nil (1997 - $16,842). Net loss for the year
increased $535,724 to $1,151,604 (December 31, 1997 - $615,880). Accounts
receivable decreased $12,326 to $Nil (December 31, 1997 - $12,326). In fiscal
1998 mineral properties of $Nil (December 31, 1997 - $39,410) were written off.
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. While
the Company may attempt to generate additional working capital through the
operation, development, sale or possible joint venture development of its
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 by June 30, 1999. The Company is using independent consultants to
oversee the Year 2000 project as well, as to perform certain remediation
efforts. In
14
<PAGE>
addition, progress on the Year 2000 project is also monitored by senior
management, and reported to the Board of Directors. 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) NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, Statement of Financial Accounting Standards No. 133 (SFAS
133), "Accounting for Derivative Instruments and Hedging Activities" was issued.
SFAS 133 established accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts (collectively referred to as derivatives), and for hedging activities.
It requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those instruments
at fair value. SFAS 133 is effective for all fiscal quarters of fiscal years
beginning after June 15, 1999, however, earlier application of all of the
provisions of this statement is encouraged as of the beginning of any fiscal
quarter. Historically, the Company has not entered into derivatives contracts
either to hedge existing risks or for speculative purposes. Accordingly, the
Company does not expect adoption of the new standards on January 1, 2000 to
affect its financial statements.
In April 1998, Statement of Position 98-5 (SOP 98-5), "Reporting on the
Costs of Start-up Activities" was issued. SOP 98-5 provides guidance on the
financial reporting of start-up costs and organizations costs. It requires costs
of start-up and organizational expenses to be expensed as incurred, as well as
the recognition of a cumulative effect of a change in accounting principle for
retroactive application of the standard. SOP 98-5 is effective for fiscal years
beginning after December 15, 1998, although earlier application is encouraged.
The Company does not anticipate that adoption of the new standard will
significantly affect costs capitalized in 1998 and year's prior.
ITEM 7. FINANCIAL STATEMENTS
See ITEM 13 of this Report for information with respect to the financial
statements filed as a part hereof, including financial statements filed
pursuant to the requirements of this ITEM 7.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
None
15
<PAGE>
PART 111.
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS:
The following table lists the names and positions of the executive
officers and directors of the Company as of March 31, 1999. All executive
officers and directors have been elected and appointed to serve until their
successors are elected and qualified. Additional information regarding the
business experience, length of time served in each capacity and other matters
relevant to each individual are set forth below the table.
Name Position
- ---- --------
David E. Jenkins Founder, President and Director since October
1995. President of Patagonia Gold Corporation and
Director of Eurasia Gold Fields, Inc. President of
Data Logic Marketing Corporation, 1989 to current.
Investment advisor for Paine Webber, Inc. and
Blythe Eastman Dillon Inc., 1983 to 1989.
John A. A. James Vice President and Director since October 1996.
President of JAMine Inc. (James Askew Associates,
Inc.) since 1988. President and Director of Mirage
Resource Corporation from 1994 to 1997. Extensive
international experience in exploration, mine
development, construction and management from
1968.
Antonino G. Cacace Director since October 1995. A Founder and current
Managing Director of Stelax Industries in the
United Kingdom.
A. Cameron Richardson Controller since October 1997, & Secretary since
April 1998. 1992 to 1997 held the following
accounting positions Attwood Gold Corporation,
Controller; Royalstar Resources Ltd., Controller;
Goldrush Casino and Mining Corporation,
Controller; 1981 to 1992 International Corona
Corporation
There are no family relationships between any of the executive officers.
COMPLIANCE WITH SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE, OF
THE EXCHANGE ACT OF 1934
Section 16 (a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange commission
(the "SEC"). Officers, directors and greater than ten percent shareholders are
required by SEC regulation to furnish the Company with copies of all Section 16
(a) forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons, the Company believes
that during the fiscal year ended December 31, 1998 all filings requirements
applicable to its officers, directors and greater than ten percent beneficial
owners were complied with.
16
<PAGE>
ITEM 10. EXECUTIVE COMPENSATION
(A) General
The following table sets forth information concerning the compensation of
the named executive officers for each of the registrant's last three completed
fiscal year:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Annual Compensation Long-Term Compensation
--------------------------------- -----------------------------------------------------
Awards Payments
------------------------ -------------------------
Securities
Other Under- All
Annual Restricted Lying other
Name And Compen- Stock Options/ LTIP Compen-
Principal Position Year Salary Bonuses Sation Award(s) SARs Payouts sation
($) ($) ($) ($) (=) ($) ($)
(a) (b) (c) (d) (e) (f) (g) (h) (i)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
David Jenkins 1998 60,000 -0- -0- None 500,000 None -0-
President and --------------------------------------------------------------------------------------------------------
Director 1997 60,000 -0- -0- None None None -0-
--------------------------------------------------------------------------------------------------------
1996 60,000 -0- -0- None None None -0-
--------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
John A A. James 1998 -0- -0- -0- None 200,000 None -0-
Vice President and --------------------------------------------------------------------------------------------------------
Director 1997 34,713 -0- -0- None None None -0-
--------------------------------------------------------------------------------------------------------
1996 -0- -0- -0- None None None -0-
--------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Cameron Richardson 1998 9,946 -0- -0- None 25,000 None -0-
Controller and --------------------------------------------------------------------------------------------------------
Secretary 1997 2,000 -0- -0- None None None -0-
========================================================================================================
1996 -0- -0- -0- None None None -0-
====================================================================================================================================
</TABLE>
Effective January 1, 1998, none of the Company's officers or directors were
party to an employment agreement with the Company. Prior to January 1, 1998
Mr. Jenkins had been party to a written agreement. Mr. Jenkins, in his
capacity as president of the Company, receives a monthly salary of $5,000.
Directors and/or officers receive expense reimbursement for expenses
reasonably incurred on behalf of the Company.
(B) Options/SAR Grants Table
The following table sets forth information concerning individual grants of
stock options (whether or not in tandem with stock appreciation rights ("SARs")
and freestanding SARs made during the last completed fiscal year to each of the
named executive officers;
17
<PAGE>
- --------------------------------------------------------------------------------
OPTION/SAR GRANTS IN 1997(1) AND 1998 FISCAL YEARS
(Individual Grants)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Percent Of
Number of Total Options/
Securities SARs Granted
Underlying To Employees Exercise Or
Option/SARs In Fiscal Base Price
Name Granted (#) Year ($/Sh) Expiration Date
(a) (b) (c) (d) (e)
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
David Jenkins 200,000 17.3% $0.01 06/26/03
200,000 17.3% 0.75 09/09/03
100,000 8.7% 0.75 12/11/03
John James 100,000 8.7% $0.01 06/26/03
50,000 4.3% 0.75 09/09/03
50,000 4.3% 0.75 12/11/03
Cameron Richardson 25,000 2.2% $0.75 09/09/03
- -------------------------------------------------------------------------------------------------
</TABLE>
(1) No options were awarded in 1997.
(C) Aggregated Option/SAR Exercises and Fiscal Year-End Option/SAR Value Table
The following table sets forth information concerning each exercise of
stock options (or tandem SARs) and freestanding SARs during the last completed
fiscal year by each of the named executive officers and the fiscal year-end
value of unexercised options and SARs, on an aggregated basis:
- --------------------------------------------------------------------------------
AGGREGATED OPTION/SAR EXERCISE IN LAST FISCAL YEAR AND FY-END
OPTION/SAR VALUES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number of
Securities Value Of
Underlying Unexercised
Unexercised In-The-Money
Shares Options/SARs Options/SARs
Acquired Value At FY-End($) At FY-End($)
On Exercise Realized Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable
(a) (b) (c) (d) (e)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
David Jenkins None None 500,000 210,500
- -----------------------------------------------------------------------------------------------------------
John James None None 200,000 99,000
- -----------------------------------------------------------------------------------------------------------
Cameron Richardson None None 25,000 3,125
- -----------------------------------------------------------------------------------------------------------
</TABLE>
(D) Long-Term Incentive Plans ("LTIP") Awards Table
The Company does not have a Long-term Incentive Plan.
18
<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below sets forth information, as of March 31, 1999 with respect
to beneficial ownership of the Company's Common Stock by each person known by
the Company to be the beneficial owner of more than 5% of its outstanding Common
Stock, by each director of the Company, by Named Executive Officer and by all
officers and directors of the Company as a group. Unless otherwise noted, each
shareholder has sole investment and voting power over the shares owned.
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of March 31, 1999 by (i) each person
who is known by the Company to own beneficially more than five percent (5%) of
the Company's outstanding Common Stock; (ii) each of the Company's directors and
officers; and (iii) all directors and officers of the Company as a group. As at
March 31, 1999, there were 11,231,494 shares of Common Stock issued and
outstanding.
Name of Shares of Common Approximate
Beneficial Stock Beneficially Percentage
Owner Owned Owned
----- ----- -----
Globe Entertech Ltd.(1) 2,000,000 16.7%
P.O. Box 209
Providencials,
Turk & Caicos Islands, BWI
Carrington International Limited(1) 630,000 5.3%
Suite 2402
Bank of America Tower
12 Harcourt Road
Central, Hong Kong
Officers and Directors
- ----------------------
David E. Jenkins 596,105(2) 5.0%
1505-1060 Alberni Street
Vancouver, B.C. Canada V6E 4K2
Antonino G. Cacace 8,333 *
Crud-y-Gloyat
Carswell Bay
Swansea Wales, U.K.
John James (3) 258,000(3) 2.2%
2055 South Ingalls Way,
Lakewood, Colorado
U.S.A. 80227
A. Cameron Richardson 25,000(4) *
1505-1060 Alberni Street
Vancouver, B.C. Canada V6E 4K2
Officers and Directors (4 persons) 887,438(5) 7.4%
(1) None of the officers and directors of the Company are affiliated with
either Globe Entertech Ltd. and/or Carrington International Limited.
19
<PAGE>
(2) Includes options to purchase up to 500,000 shares of common stock. See
"Item 10. Executive Compensation."
(3) Includes options to purchase up to 200,000 shares of common stock. See
"Item 10. Executive Compensation."
(4) Includes options to purchase up to 25,000 shares of common stock. See "Item
10. Executive Compensation."
(5) Includes options to purchase up to 725,000 shares of common stock. See
"Item 10. Executive Compensation."
o Less than 1%.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The proposed business of the Company raises potential conflicts of
interests between the Company and certain of its officers and directors.
Certain of the directors of the Company are directors of other mineral
resource companies and, to the extent that such other companies may participate
in ventures in which the Company may participate, the directors of the Company
may have a conflict of interest in negotiating and concluding terms regarding
the extent of such participation. In the event that such a conflict of interest
arises at a meeting of the directors of the Company, a director who has such a
conflict will abstain from voting for or against the approval of such
participation or such terms. In appropriate cases, the Company will establish a
special committee of independent directors to review a matter in which several
directors, or Management, may have a conflict. From time to time, several
companies may participate in the acquisition, exploration and development of
natural resource properties thereby allowing for their participation in larger
programs, involvement in a greater number of programs and reduction of the
financial exposure with respect to any one program. It may also occur that a
particular company will assign all or a portion of its interest in a particular
program to another of these companies due to the financial position of the
company making the assignment. In determining whether the Company will
participate in a particular program and the interest therein to be acquired by
it, the directors will primarily consider the potential benefits to the Company,
the degree of risk to which the Company may be exposed and its financial
position at that time. Other than as indicated, the Company has no other
procedures or mechanisms to deal with conflicts of interest. The Company is not
aware of the existence of any conflict of interest as described herein.
Directors and/or officers will receive expense reimbursement for expenses
reasonably incurred on behalf of the Company.
Included in accounts payable at December 31, 1998 is $3,475 (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 $37,196 in payables to a director was settled through the
issue of 54,100 shares at a cost of $0.6875 per share. On December 11, 1998
$15,000 in payables to a director was settled through the issue of 20,000 shares
at a cost of $0.7500 per share. On December 18, 1998 $16,501 in payables to a
director was settled through the issue of 22,005 shares at a cost of $0.7500 per
share. The conversion rates were based on the quoted market prices at the date
of conversion. In January 1999, amounts owing to a director of $60,555 were
settled with the issuance of 50,000 common shares.
20
<PAGE>
The Company does not pay a fee to its outside, non-officer directors. The
Company believes that consulting fees and reimbursement for operating expenses
paid to corporations owned by directors are comparable to amounts that would
have been paid to at arms length third party providers of such services.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a)(1) FINANCIAL STATEMENTS - Reference is made to the Financial Statements
appearing on pages F-1, through F-19
(a)(2) Financial Statement Schedules - See Index to Financial Statements,
page 22
(a)(3) EXHIBITS
3.1 Certificate of Incorporation*
3.2 Certificate of Amendment to the Certificate of Incorporation*
3.3 Certificate of Restoration and Renewal of Certificate of
Incorporation*
3.4 Amended and Restated By-laws*
10.1 Agreement dated July 18, 1997 between The Company and Minera Montagua,
S.A.*
10.2 Agreement dated August 16, 1997 between the Company and Minera
Montagua, S.A.*
10.3 Agreement dated November 3, 1997 between the Company and Minera
Montagua, S.A.*
10.4 Agreement dated July 28, 1998 between the Company and Minera Montagua,
S.A.*
10.5 Agreement dated August 24, 1998 with Jorge Mario Rios Munoz. *
10.6 Agreement dated November 18, 1998 between the Company and United
Catalyst, Inc. and Getchell Gold Corporation.
10.7 Agreement dated February 23, 1999 between the Company and Gregory G.
Crowe
21.1 List of subsidiaries of the Registrant.
27.1 Financial Data Schedule
- ----------
* Previously Filed
21
<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: April 12, 1999 BY: /s/ David Jenkins
-------------- --------------------------------
David Jenkins
Director and President
Date: April 12, 1999 BY: /s/ John A.A. James
-------------- --------------------------------
John A.A. James
Director and Vice-President
(a)(1) THE FOLLOWING FINANCIAL STATEMENTS REQUIRED TO BE INCLUDED IN ITEM 8
ARE LISTED BELOW
INDEX TO FINANCIAL STATEMENTS
Financial Statements Page
-------------------- ----
Report of Independent Accountants F-3
Consolidated Balance Sheets F-4
Consolidated Statements of Stockholders' Equity F-5
Consolidated Statements of Operations F-6
Consolidated Statements of Cash Flows F-7
Summary of Significant Accounting Policies F-8
Notes to the Consolidated financial Statements F-12 to F-19
Financial Statement Schedules *
*Financial Statement Schedules have been omitted as not applicable
22
<PAGE>
Exhibit 10.6 Agreement dated November 18, 1998 between the company and United
Catalyst, Inc. and Getchell Gold corporation
United Catalyst Inc.
Girdler, CCI and Houdry Catalysts
P.O. Box 32370 Telephone: 502-634-7200
Louisville, KY 40232 USA Telex: 204190, 204239
Fax: 502-637-3732
November 18, 1998
Mr. David E. Jenkins
President
Aurora Gold Corporation
Suite 1505
1060 Alberni Street
Vancouver, British Columbia
Canada V6E 4K2
Re: Totem Talc Property
Dear Mr. Jenkins:
This letter will set forth the terms and conditions under which the Totem Talc
Joint Venture (the "Joint Venture"), consisting of Getchell Gold Corporation, as
successor in interest in the Joint Venture to FRM Minerals, Inc., and United
Catalysts Inc. ("UCI") will sell to Aurora Gold Corporation ("Aurora") certain
unpatented mining claims (the "Claims") that are owned or controlled by the
Joint Venture relating to the property in Pend Oreille County, Washington,
commonly known as the Totem Talc Property. The Claims are described in detail on
Exhibit A attached to this letter. UCI is authorized by the Joint Venture to act
as agent for the Joint Venture in connection with the sale of the Claims to
Aurora.
1. Aurora has tendered to UCI as agent for the Joint Venture a check in the
amount of $1,000 as a non-refundable earnest money (option) payment to
induce the Joint Venture to remove the Claims from the marketplace for six
(6) months from the date of this letter agreement. Upon receipt of a copy
of this letter agreement signed on behalf of Aurora, UCI will deposit this
check and the Joint Venture will not solicit or accept any offer to
purchase the Claims during such six (6) month period. Upon execution of
this letter agreement, Aurora will spend $10,000 prior to the end of eight
(8) months from the date of this letter agreement on the Claims or on
furthering the project through market studies, engineering or geological
work claims maintenance, and the like.
2. At the end of six (6) months from the date of this letter agreement, Aurora
will pay to UCI as agent for the Joint Venture an additional non-refundable
earnest month (option) payment in the amount of $5,000 to induce the Joint
Venture to continue to remove the Claims from the marketplace until the
earlier of (i) termination of this letter agreement by the Joint Venture as
provided in number 5 below, or (ii) payment by Aurora in full of the
Purchase Price as provided in number 4 below. Upon receipt of such $5,000
payment, the Joint Venture will not solicit or accept any offer to purchase
the Claims during such period.
23
<PAGE>
3. At the end of eight (8) months from the date of this letter agreement,
Aurora will spend $50,000 during the next four (4) months on the Claims or
on furthering the project through market studies, engineering or geological
work, claims maintenance, and the like. Any funds spent as provided in
number 1 above in excess of the $10,000 commitment stated in number 1 can
be counted toward the $50,000 commitment.
4. At the end of thirteen (13) months from the date of this letter agreement,
Aurora will pay UCI as agent for the Joint Venture the amount of $400,000
as the purchase price for the Claims. This payment will be in addition to
any monies Aurora spends on the Claims and the option payments as provided
in numbers 1, 2, and 3 above. The payment of the purchase price will be
spread out over a three year period. Aurora will pay $100,000 on December
15, 1999, $100,000 on December 15, 2000, and $200,000 on December 15, 2001.
The Joint Venture will provide to Aurora a Quit Claim Deed to the Claims,
in recordable from, upon payment of the final installment.
5. Any failure on the part of Aurora to meet the payment commitment of $5,000
in number 2 above or the purchase price installments totaling $400,000 in
number 4 above or to demonstrate the expenditure of $60,000 as mentioned in
numbers 1 and 3 above will give the Joint Venture the right to terminate
this letter agreement, by notice in writing from UCI to Aurora. Aurora
shall have the opportunity to cure the failure within the period of 30 days
after receipt of UCI's notice. If Aurora fails to cure the failure to UCI's
reasonable satisfaction, the Joint Venture shall have the right to give a
final notice of termination in writing from UCI to Aurora. Upon such final
notice of termination being given, all rights of Aurora in and to the
Claims will cease. In this event, Aurora will return any and all
information that it received from UCI about the Claims and will, in
addition, give to UCI as agent for the Joint Venture all information that
Aurora has developed pertaining to the Claims during the term that Aurora
had the right to purchase the Claims.
6. Upon request after signature of this letter agreement, (A) UCI will make
available to Aurora all information of whatever nature in the possession of
UCI or Getchell that pertains to the Claims, it being understood that
neither UCI nor Getchell makes any representations or warranties, express
or implied, regarding the accuracy or completeness of such information or
regarding the state or status of titles to the Claims; and (B) Aurora will
provide the UCI a copy of receipts substantiating the expenditure of funds
totaling $60,000 on the Claims or furthering the Project as provided in
numbers 1 and 3 above.
7. Aurora agrees that, in consideration of the rights granted to it pursuant
to this Agreement, Aurora will indemnify and hold harmless the Joint
Venture, UCI, Getchell, and their respective officers, directors, employees
and agents from and against any and all liabilities, costs, claims,
damages, and expenses (including but not limited to reasonable attorney's
fees and expenses) incurred by any of them as a result of any and all
claims, demands, actions, proceedings, investigations, or lawsuits filed by
any party, including any governmental agency, that are based upon or arise
out of the Claims and/or the past, current or future condition of the
Claims of the Totem Talc Property. The indemnification provided by Aurora
under the preceding sentence shall include, but shall not be limited to,
any such claims, demands, etc., that arise out of or are based on alleged
damage to the environment. Aurora also agrees to conduction all of its
operations and activities on the Claims in compliance with all applicable
laws, rules and regulations; and to not create or permit the creation of
any liens or encumbrances on the Claims.
24
<PAGE>
If this letter agreement is acceptable to Aurora, please sign in the space
provided below.
Sincerely yours,
UNITED CATALYSTS INC., as agent for the
TOTEM TALC JOINT VENTURE
By: /s/ RICHARD POWER
---------------------------------
Title: LAND MANAGER
---------------------------------
ACCEPTED:
AURORA GOLD CORPORATION
By: /s/ DAVID JENKINS
---------------------------------
Title: PRESIDENT
---------------------------------
Date: NOVEMBER 20, 1998
---------------------------------
25
<PAGE>
Exhibit A 244076
Charles Cordalis
P.O. Box 927
Newport, WA 99156
CERTIFICATE OF FILING
OF ANNUAL MAINTENANCE FEES
FOR UNPATENTED MINING CLAIMS
KNOW ALL MEN BY THESE PRESENTS, that I, the undersigned subscriber, do depose
and say:
That a maintenance fee of $100.00 per claim, necessary to hold same under mining
laws of the United States and the State of Washington for and during the
assessment year ending September 1, 1999, has been paid to the United States
Government for the benefit of each of the following named contiguous lode mining
claims:
Situated in Secs. 14 and 23, T39N, R44E, Pend Oreille County, Washington. The
"Lode Claim Location Notice" or "Lode Mining Claim Location Certificate" forms
for these claims are recorded as follows:
<TABLE>
<CAPTION>
Pend Oreille County
Washington
Date Date Recordation BLM
Claim Name Located Recorded Book Page Serial No.
<S> <C> <C> <C> <C> <C> <C>
TT 1/10/85 2/4/85 61 826 ORMC 81562
TT #1 1/10/85 2/4/85 61 827 ORMC 81563
TT #2 1/10/85 2/4/85 61 828 ORMC 81564
TT #3 1/10/85 2/4/85 61 829 ORMC 81565
TT #4 1/10/85 2/4/85 61 830 ORMC 81566
TT #5 1/10/85 2/4/85 61 831 ORMC 81567
TT #6 1/10/85 2/4/85 61 832 ORMC 81568
TT #7 7/5/88 7/14/88 78 1387 ORMC 105442
TT #8 7/5/88 7/14/88 78 1388 ORMC 105443
TT *9 7/5/88 7/14/88 78 1389 ORMC 105444
</TABLE>
The total maintenance fee paid for these ten claims for the assessment year
equals $1,000.00 and has been paid to the necessary Bureau of Land Management
office.
The names and addresses (mailing address and current residence) of the owner(s)
or claimant(s) of these claims at whose instance the above expenditure was made
and who hold these claims for valuable mineral content is:
United Catalysts, Inc.
Performance Minerals Group
P.O. Box 32370
Louisville, Kentucky 40232
244076 143-288
26
<PAGE>
244076
The names of the person, corporation, or contractors who has filed the rental
fees is:
Charles Cordalis
Consulting Geologist
P.O. Box 927
Newport, Washington 99156
Filed this 16 day of July, 1998 By: /s/ Charles Cordalis, Agent
--------------------
State of Washington )
) ss
County of Pend Oreille )
This instrument was acknowledged before me this 16 day of July, 1998 by /s/
Charles Cordalis as Agent of United Catalysts, Inc.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial Seal the
day and year first above written.
/s/ Christine Mylan
- -------------------
Notary Public
Address: Newport
6-4-99
My commission expires
244076 143-289
27
<PAGE>
Aurora Gold Corporation
(A development stage enterprise)
Consolidated Financial Statements
December 31, 1998
(Expressed in U.S. Dollars)
F-1
<PAGE>
================================================================================
Aurora Gold Corporation
(A development stage enterprise)
- --------------------------------------------------------------------------------
Table of Contents
Report of Independent Accountants
Consolidated Financial Statements
Balance Sheets
Statement of Stockholders' Equity
Statements of Operations
Statements of Cash Flows
Summary of Significant Accounting Policies
Notes to the Consolidated Financial Statements
F-2
<PAGE>
================================================================================
Report of Independent Accountants
- --------------------------------------------------------------------------------
To The Board of Directors and Stockholders
Aurora Gold Corporation
(A development stage enterprise)
We have audited the Consolidated Balance Sheets of Aurora Gold Corporation (A
development stage enterprise) as at December 31, 1998 and 1997, the Consolidated
Statements of Stockholders' Equity for the years ended December 31, 1998 and
1997 and the Consolidated Statements of Operations and Cash Flows for the period
from October 10, 1995 (inception) to December 31, 1998 and for the years ended
December 31, 1998 and 1997. These financial statements 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 auditing standards generally accepted
in the United States. 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. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the Company as at December 31, 1998
and 1997 and the results of its operations and its cash flows for the period
from October 10, 1995 (inception) to December 31, 1998 and for the years ended
December 31, 1998 and 1997 in conformity with generally accepted accounting
principles in the United States.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern, which contemplates, among
other things, the realization of assets and the satisfaction of liabilities in
the normal course of business. As discussed in Note 1 to the financial
statements, the Company has incurred a loss from operations and lacks liquidity
which raises substantial doubt about its ability to continue as a going concern.
Management's plans concerning these matters are described in Note 1. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
As discussed in Note 9, the financial statements have been restated to reflect
the effect of the change in accounting for exploration expenses.
"BDO Dunwoody LLP"
Vancouver, Canada
January 19, 1999 CHARTERED ACCOUNTANTS
F-3
<PAGE>
================================================================================
Aurora Gold Corporation
(A development stage enterprise)
Consolidated Balance Sheets
(Expressed in U.S. Dollars)
<TABLE>
<CAPTION>
December 31 1998 1997
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current
Cash $ 68,326 $ 122,921
Non-trade accounts receivable 12,326
--------------------------
68,326 135,247
Fixed assets (Note 2) -- 18,662
Notes receivable (Note 3) 20,000 --
Mineral property costs (Note 3) 69,441 30,499
Organization costs (Note 4) 4,607 6,909
--------------------------
$ 162,374 $ 191,317
==========================================================================================
Liabilities and Stockholders' Equity
Liabilities
Current
Accounts payable and accrued liabilities $ 20,580 $ 68,866
--------------------------
Stockholders' equity
Share capital
Authorized
50,000,000 common shares, par value $0.001 per share
Issued
11,181,494 (1997 - 10,670,389) common shares 11,181 10,670
Additional paid-in capital 2,259,305 1,088,869
Deficit accumulated during the development stage (2,128,692) (977,088)
--------------------------
141,794 122,451
--------------------------
$ 162,374 $ 191,317
==========================================================================================
</TABLE>
The accompanying summary of significant accounting policies and notes form an
integral part of these financial statements.
Approved by the Board:
/s/ David Jenkins /s/ John A.A. James
-------------------------- --------------------------
Director Director
F-4
<PAGE>
================================================================================
Aurora Gold Corporation
(A development stage enterprise)
Consolidated Statement of Stockholders' Equity
(Expressed in U.S. Dollars)
<TABLE>
<CAPTION>
For the years ended December 31, 1998 and 1997
- ------------------------------------------------------------------------------------------------------------------------------
Deficit
Accumulated
Common Stock Additional during the Total
------------------------ Paid-In development Stockholders'
Shares Amount Capital stage Equity
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance,
January 1, 1997 9,920,389 $ 9,920 $ 344,461 $ (361,208) $ (6,827)
Issuance of common Stock
For cash in
March 1997 at
$1.00 per
share (less issue
costs of $4,842) 750,000 750 744,408 -- 745,158
Net loss for the
year (Note 9) -- -- -- (615,880) (615,880)
-----------------------------------------------------------------------------------
Balance, December 31, 1997 10,670,389 10,670 1,088,869 (977,088) 122,451
Issuance of common
stock
For cash in May
1998 at $1.25 per share 200,000 200 249,800 -- 250,000
For settlement
of indebtedness
(Note 7) 311,105 311 229,636 -- 229,947
Grant of options to
employees and
directors (Note 5) -- -- 518,900 -- 518,900
Grant of options to
consultants (Note 5) -- -- 172,100 -- 172,100
Net loss for the year -- -- -- (1,151,604) (1,151,604)
-----------------------------------------------------------------------------------
Balance, December 31, 1998 11,181,494 $11,181 $2,259,305 $(2,128,692) $ 141,794
=============================================================================================================================
</TABLE>
The accompanying summary of significant accounting policies and notes form an
integral part of these financial statements.
F-5
<PAGE>
================================================================================
Aurora Gold Corporation
(A development stage enterprise)
Consolidated Statements of Operations
(Expressed in U.S. Dollars)
<TABLE>
<CAPTION>
October 10
1995 Twelve-months ended
(inception) to December 31
December 31 -----------------------------
1998
(cumulative) 1998 1997
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
General and administrative expenses
Consultants $ 53,633 $ -- $ 46,378
Depreciation and amortization 17,255 6,515 6,923
Interest, bank charges and foreign exchange 19,924 16,112 4,487
Office and miscellaneous, net of recoveries 123,768 12,825 74,409
Professional fees - legal 128,340 36,789 49,296
- accounting 38,560 6,401 22,159
Rent and other 55,738 13,719 16,828
Salaries and wages 219,424 72,708 49,440
Shareholder relations, advertising and
Promotion 107,082 47,402 41,340
Stock option compensation (Note 5) 691,000 691,000 --
Transfer agent, listing and filing fees 45,949 16,538 23,267
Travel 50,265 14,025 28,917
Telephone 42,462 12,959 15,506
-------------------------------------------------
1,593,400 946,993 378,950
Less interest income 20,860 2,865 17,995
-------------------------------------------------
1,572,540 944,128 360,955
Exploration expenses (Note 3) 516,742 207,476 215,515
Write off of mineral property costs (Note 3) 39,410 -- 39,410
-------------------------------------------------
Net loss for the period $ 2,128,692 $ 1,151,604 $615,880
===================================================================================================================================
Loss per share
Basic and diluted $ (0.11) $ (0.06)
============================
Weighted average common shares outstanding
Basic and diluted 10,800,784 10,515,988
============================
</TABLE>
The accompanying summary of significant accounting policies and notes form an
integral part of these financial statements.
F-6
<PAGE>
================================================================================
Aurora Gold Corporation
(A development stage enterprise)
Consolidated Statements of Cash Flows
(Expressed in U.S. Dollars)
<TABLE>
<CAPTION>
October 10
1995 Twelve-months ended
(inception) to December 31
December 31 -----------------------------
1998
(cumulative) 1998 1997
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash provided (used) by:
Operating activities
Net loss for the period $(2,128,692) $(1,151,604) $(615,880)
Adjustment to reconcile net loss to net cash used
in operating activities
Depreciation and amortization 17,255 6,515 6,923
Write off of mineral properties 39,410 -- 39,410
Compensation on stock options 691,000 691,000 --
Expenses satisfied with common stock 79,947 53,772 --
Changes in assets and liabilities
Decrease in accounts receivable -- 12,326 39,038
Increase (decrease) in accounts payable 20,580 (22,111) (65,036)
----------------------------------------------------
(1,280,500) (410,102) (595,545)
----------------------------------------------------
Investing activities
Purchase of fixed assets (24,800) -- (16,842)
--
Mineral property costs (108,851) (38,942) (30,499)
Notes receivable (20,000) (20,000) --
Proceeds on disposal of fixed assets 14,449 14,449 --
Incorporation costs (11,511) -- --
----------------------------------------------------
(150,713) (44,493) (47,341)
----------------------------------------------------
Financing activities
Proceeds from the issuance of common stock 1,349,539 250,000 745,158
Repayment of notes payable -- -- (50,000)
Proceeds from notes and advances payable 150,000 150,000 --
----------------------------------------------------
1,499,539 400,000 695,158
----------------------------------------------------
Increase (decrease) in cash for the period 68,326 (54,595) 52,272
Cash, beginning of period -- 122,921 70,649
----------------------------------------------------
Cash, end of period $ 68,326 $ 68,326 $ 122,921
=====================================================================================================================
</TABLE>
The accompanying summary of significant accounting policies and notes form an
integral part of these financial statements.
F-7
<PAGE>
================================================================================
Aurora Gold Corporation
(A development stage enterprise)
Summary of Significant Accounting Policies
(Expressed in U.S. Dollars)
December 31, 1998 and 1997
- --------------------------------------------------------------------------------
Basis of Consolidation These consolidated financial statements include
the accounts of the Company and its wholly-owned
subsidiaries Aurora Gold, S.A. and Aurora Gold
(BVI) Ltd. All intercompany transactions and
balances have been eliminated.
Principles of Accounting These financial statements are stated in US
dollars and have been prepared in accordance with
accounting principles generally accepted in the
United States.
Certain 1997 financial statement amounts have been
restated to conform to the 1998 presentation. The
Company has amended its accounting policy to
charge to expense all exploration costs as
incurred. Future costs will continue to be charged
to expense until such time that proven reserves
are established. From that time forward, the
Company will capitalize all costs to the extent
that future cash flow from reserves equals or
exceeds the costs deferred.
Fixed Assets Depreciation is based on the estimated useful
lives of the assets and is computed using the
straight-line method of depreciation. Fixed assets
were recorded at cost less accumulated
amortization. Depreciation was provided over the
following periods:
Computer equipment - two years
Office equipment
and furniture - five years
Mineral Properties and
Exploration Expenses Exploration costs are charged to operations as
incurred as are normal development costs until
such time that proven reserves are discovered. At
December 31, 1998 and 1997, the Company did not
have proven reserves. Costs of initial acquisition
of mineral rights and concessions are capitalized
until the properties are abandoned or the right
expires.
Exploration activities conducted jointly with
others are reflected at the Company's
proportionate interest in such activities.
Reclamation and
Decommissioning Costs Costs related to site restoration programs are
accrued over the life of the project.
F-8
<PAGE>
================================================================================
Aurora Gold Corporation
(A development stage enterprise)
Summary of Significant Accounting Policies - Continued
(Expressed in U.S. Dollars)
December 31, 1998 and 1997
- --------------------------------------------------------------------------------
Foreign Currency
Transactions Foreign currency accounts are translated into U.S.
dollars as follows:
At the transaction date, each asset, liability,
revenue and expense is translated into U.S.
dollars by the use of the exchange rate in effect
at that date. At the year end, monetary assets and
liabilities are translated into U.S. dollars by
using the exchange rate in effect at that date.
The resulting foreign exchange gains and losses
are included in operations.
Organization Costs The Company capitalized all costs directly
incurred in its formation. These costs are being
amortized on a straight-line basis over five
years.
Accounting Estimates The preparation of financial statements in
conformity with generally accepted accounting
principles requires management to make estimates
and assumptions that affect the reported amounts
of assets and liabilities and disclosure of
contingent assets and liabilities at the date of
the financial statements and the reported amounts
of revenues and expenses during the reporting
period. Actual results could differ from those
estimates.
Fair Value of Financial
Instruments The respective carrying value of certain
on-balance-sheet financial instruments
approximated their fair values. These financial
instruments include cash, non-trade accounts and
notes receivable and accounts payable and accrued
liabilities. Fair values were assumed to
approximate carrying values for these financial
instruments, except where noted, since they are
short term in nature and their carrying amounts
approximate fair values or they are receivable or
payable on demand. Management is of the opinion
that the Company is not exposed to significant
interest, credit, or currency risks arising from
these financial instruments.
F-9
<PAGE>
================================================================================
Aurora Gold Corporation
(A development stage enterprise)
Summary of Significant Accounting Policies - Continued
(Expressed in U.S. Dollars)
December 31, 1998 and 1997
- --------------------------------------------------------------------------------
Income Taxes The Company has adopted Statement of Financial
Accounting Standards ("SFAS") No. 109, which
requires the Company to recognize deferred tax
liabilities and assets for the expected future tax
consequences of events that have been recognized
in the Company's financial statements or tax
returns. Under this method, deferred tax
liabilities and assets are determined based on the
difference between the financial statement
carrying amounts and tax bases of assets using
enacted rates in effect in the years in which the
differences are expected to reverse.
Loss per Share Loss per share is computed using the weighted
average number of shares outstanding during the
year. Effective for the year ended December 31,
1997, the Company adopted SFAS No. 128, "Earnings
per share". Diluted loss per share is equal to the
basic loss per share because common stock
equivalents consisting of 1,155,000 stock options
outstanding at December 31, 1998 are
anti-dilutive.
New Accounting
Pronouncements In June 1998, the Financial Accounting Standards
Board issued SFAS No. 133, Accounting for
Derivative Instruments and Hedging Activities.
SFAS No. 133 requires companies to recognize all
derivatives contracts as either assets or
liabilities on the balance sheet and to measure
them at fair value. If certain conditions are met,
a derivative may be specifically designated as a
hedge, the objective of which is to match the
timing of gain or loss recognition on the hedging
derivative with the recognition of (i) the changes
in the fair value of the hedged asset or liability
that are attributable to the hedged risk or (ii)
the earnings effect of the hedged forecasted
transaction. For a derivative not designated as a
hedging instrument, the gain or loss is recognized
in income in the period of change. SFAS No. 133 is
effective for all fiscal quarters of fiscal years
beginning after June 15, 1999.
Historically, the Company has not entered into
derivatives contracts either to hedge existing
risks or for speculative purposes. Accordingly,
the Company does not expect adoption of the new
standards on January 1, 2000 to affect its
financial statements.
F-10
<PAGE>
================================================================================
Aurora Gold Corporation
(A development stage enterprise)
Summary of Significant Accounting Policies - Continued
(Expressed in U.S. Dollars)
December 31, 1998 and 1997
- --------------------------------------------------------------------------------
New Accounting
Pronouncements - Continued In April 1998, the American Institute of Certified
Public Accountants issued Statement of Position
98-5, "Reporting on the Costs of Start-Up
Activities" ("SOP 98-5") which provides guidance
on the financial reporting of start-up costs and
organization costs. It requires costs of start-up
activities and organization costs to be expensed
as incurred. SOP 98-5 is effective for fiscal
years beginning after December 15, 1998 with
initial adoption reported as the cumulative effect
of a change in accounting principle. Adoption of
this standard will not have a material effect on
the financial statements.
Reclassifications Certain comparative amounts have been restated to
conform with the current period's financial
statement presentation.
F-11
<PAGE>
================================================================================
Aurora Gold Corporation
(A development stage enterprise)
Notes to the Consolidated Financial Statements
(Expressed in U.S. Dollars)
December 31, 1998 and 1997
- --------------------------------------------------------------------------------
1. Nature of Business and Going Concern
The Company was formed on October 10, 1995 under the laws of the State of
Delaware and is in the business of exploration and development of mineral
properties. The Company has not yet determined whether its properties
contain mineral resources that may be economically recoverable.
These financial statements have been prepared in accordance with generally
accepted accounting principles applicable to a going concern which
contemplates the realization of assets and the satisfaction of liabilities
and commitments in the normal course of business. The general business
strategy of the Company is to acquire mineral properties either directly or
through the acquisition of operating entities. The continued operations of
the Company and the recoverability of mineral property costs is dependent
upon the existence of economically recoverable reserves, confirmation of
the Company's interest in the underlying mineral claims, the ability of the
Company to obtain necessary financing to complete the development and upon
future profitable production. The Company has incurred recurring operating
losses and requires additional funds to meet its obligations and maintain
its operations. Management's plans in this regard are to raise equity
financing as required. These conditions raise substantial doubt about the
Company's ability to continue as a going concern. These financial
statements do not include any adjustments that might result from this
uncertainty.
- --------------------------------------------------------------------------------
2. Fixed Assets
1998 1997
--------------------------------------------
Accumulated Accumulated
Cost Depreciation Cost Depreciation
--------------------------------------------
Furniture $ -- $ -- $ 5,229 $ 350
Computer equipment -- -- 11,554 4,695
Office equipment -- -- 8,017 1,093
--------------------------------------------
-- -- 24,800 6,138
--------------------------------------------
Cost less accumulated
depreciation $ -- $18,662
============================================
F-12
<PAGE>
================================================================================
Aurora Gold Corporation
(A development stage enterprise)
Notes to the Consolidated Financial Statements
(Expressed in U.S. Dollars)
December 31, 1998 and 1997
- --------------------------------------------------------------------------------
3. Mineral Properties and Exploration Expenses
Mineral property costs consist of:
1998 1997
Guatemala $ 68,441 $ 30,499
Totem Talc 1,000 --
--------------------
$ 69,441 $ 30,499
====================
Mineral exploration expenses consist of:
Cape Breton Mineral Claims
Exploration expenditures, end of year $113,786 $113,786
Exploration expenditures, beginning of year 113,786 17,600
--------------------
Expenditures for the year -- 96,186
--------------------
Guatemala Mineral Claims
Exploration expenditures, end of year 194,644 45,900
Exploration expenditures, beginning of year 45,900 --
--------------------
Expenditures for the year 148,744 45,900
--------------------
Totem Talc
Exploration expenditures during the year and end of
Year 11,418 --
--------------------
General exploration 47,314 73,429
--------------------
Total $207,476 $215,515
====================
a) During 1997, the Company abandoned its Cape Breton and Northwest
Territories mineral claims resulting in a write off of $39,410.
F-13
<PAGE>
================================================================================
Aurora Gold Corporation
(A development stage enterprise)
Notes to the Consolidated Financial Statements
(Expressed in U.S. Dollars)
December 31, 1998 and 1997
- --------------------------------------------------------------------------------
3. Mineral Properties and Exploration Expenses - Continued
b) Guatemala Mineral Claims
Under the terms of an agreement dated July 7, 1997, as revised
November 3, 1997, between Minera Montagua S.A. ("Montagua") and the
Company, Montagua has agreed to act as agent for the Company and apply
to the Guatemala Government on the Company's behalf for four mineral
exploration licenses covering the following four Guatemala mineral
concessions: El Triunfo, El Rejon, Bola de Oro and Carmona. Upon
completion of the Company's due diligence and the Guatemala Government
approval of the four mineral explorations licenses, Montagua will
receive 1,500 common shares of the Company per mineral exploration
concession granted by the Guatemala Government for a total of 6,000
common shares. The Company will assume the payment of all fees and
will be responsible for maintaining the title to all the concessions
in accordance with Guatemala mining law. In 1997, the Company paid
$5,000 to Montagua as required pursuant to the agreement.
Under the terms of an agreement dated August 16, 1997, as revised
November 3, 1997, between Montagua and the Company, Montagua has
agreed to act as agent for the Company and apply to the Guatemala
Government on the Company's behalf for further mineral exploration
licenses covering the following eight Guatemala mineral concessions:
Los Cipreces, Chiyax, Los Angeles, La Union, Barranquilla, El Rancho,
Jicaro and Monjitas and two mineral reconnaissance concessions:
Atitlan and San Diego. Upon the completion of the Company's due
diligence and the Guatemala Government approval of the eight mineral
exploration licenses and two reconnaissance licenses, Montagua will
receive 1,500 common shares of the Company per mineral
exploration/reconnaissance concession granted by the Guatemala
government for a total of 15,000 common shares. Aurora will assume the
payment of all fees and be responsible for maintaining the title to
all the concessions in accordance with Guatemala mining law. In 1997,
the Company paid $5,000 to Montagua as required pursuant to the
agreement.
In November 1997, the Company advanced a further $20,000 for locating
additional concessions.
Under the terms of an agreement dated July 28, 1998 between the
Company and Montagua, Montagua has agreed to act as agent for the
Company and drop applications to the Guatemala Government for
exploration licenses for the following four concessions: Atitlan,
Carmona, El Rejon and El Triunfo and to make applications to the
Guatemala Government for approval of exploration licenses for the
following six concessions: Aguas Calientes, Apantes, Valenton I, La
Esperanza, Miramundo and Tesoro at no additional cost to Aurora's
existing package of Guatemala mineral concessions. Aurora will assume
the payment of all fees and be responsible for maintaining the title
to all the concessions in accordance with Guatemala mining law.
F-14
<PAGE>
================================================================================
Aurora Gold Corporation
(A development stage enterprise)
Notes to the Consolidated Financial Statements
(Expressed in U.S. Dollars)
December 31, 1998 and 1997
- --------------------------------------------------------------------------------
3. Mineral Properties and Exploration Expenses - Continued
Each distinct mineral deposit per mineral concession acquired by the
Company will be subject to a Net Smelter Return ("NSR") royalty equal
to 1% of the NSR royalty payable to the Government of Guatemala.
In July 1997, the Company retained, pursuant to written agreements,
Montagua to act as its agent in Guatemala. During the fourth quarter
of 1998, Montagua's services as agent for the Company were terminated
and the Company's legal representative in Guatemala agreed to act as
the Company's agent in Guatemala.
The Company has advanced $20,000 to the two principals of Montagua
under notes receivable. The notes receivable do not bear interest.
c) Totem Talc Property
The Total Talc property consists of ten unpatented lode claims,
covering approximately 206 acres and is held under option by the
Company in an agreement dated November 1998 with the joint venture
owners, United Catalysts Inc. and Getchell Gold Corporation. The Totem
Talc property is located near Metaline Falls, Pend Oreille County,
Washington, approximately 100 miles north of Spokane.
The Agreement calls for the Company to pay the joint venture $5,000 on
or before May 18, 1999 in addition to the initial payment of $1,000
already made. The Company also commits to expenditures of $5,000 by
May 18, 1999 and an additional $50,000 by November 18, 1999 on further
development of the project. On December 15, 1999 Aurora commits to pay
the joint venture a further total of $400,000 commencing with $100,000
on that date with the subsequent payments of $100,000 on December 15,
2000 and $200,000 on December 15, 2001. The Company expects to finance
the 1999 payment out of the proceeds of future equity issuances.
- --------------------------------------------------------------------------------
4. Organization Costs
1998 1997
Cost $ 11,511 $ 11,511
Less accumulated amortization (6,904) (4,602)
---------------------------
$ 4,607 $ 6,909
===========================
F-15
<PAGE>
================================================================================
Aurora Gold Corporation
(A development stage enterprise)
Notes to the Consolidated Financial Statements
(Expressed in U.S. Dollars)
December 31, 1998 and 1997
- --------------------------------------------------------------------------------
5. Stock Options
In 1997, the Company's Board of Directors approved a stock option plan
("the Plan") to offer an inducement to obtain services of key employees,
directors and consultants of the Company. The maximum number of shares
issuable under the Plan in any calendar year shall be an amount equal to
15% of the issued and outstanding common stock on January 1 of each year.
Under the Plan, the exercise price of an incentive stock option must be at
least equal to 100% of the fair market value of the common stock on the
date of grant (110% of fair market value in the case of options granted to
employees who hold more than 10% of the Company's capital stock on the date
of grant). The exercise price of a non-qualified stock option must not be
less than the par value of a share of the common stock on the date of the
grant. The term of an incentive or non-qualified stock option is not to
exceed five years.
The Company applies Accounting Principles Board ("APB") No. 25 "Accounting
for Stock Issued to Employees" and related interpretations in accounting
for stock options. Under APB 25, when the exercise price of the Company's
stock options equals the market price of the underlying stock on the date
of grant, no compensation expense is recognized.
Pro-forma information regarding Net Loss and Loss per Share is required
under SFAS 123, and has been determined as if the Company had accounted for
its stock options under the fair value method of SFAS 123. The weighted
average fair value of options granted in 1998 was $0.79. The fair value of
these options was estimated at the date of grant using a Black-Scholes
option pricing model with the following weighted average assumptions: no
dividends, a risk-free interest rate of 5.45%, volatility factor of the
expected market price of the Company's common stock of 91% and a weighted
average expected life of the option of 30 months.
Under the accounting provisions of SFAS 123, the Company's Net Loss and
Loss per Share would have been reduced to the pro-forma amounts indicated
below:
As Reported Pro-forma
---------------------------
1998
Net loss for the year $1,151,604 $1,161,604
Loss per share - basic and diluted $0.11 $0.11
F-16
<PAGE>
================================================================================
Aurora Gold Corporation
(A development stage enterprise)
Notes to the Consolidated Financial Statements
(Expressed in U.S. Dollars)
December 31, 1998 and 1997
- --------------------------------------------------------------------------------
5. Stock Options - Continued
A summary of the status of the Company's stock options as of December 31,
1998 and the changes during the year then ended is presented.
December 31, 1998
------------------------
Weighted Average
Shares Exercise Price
------------------------
Outstanding at beginning of year -- --
Granted 1,155,000 $ 0.43
-----------------------
Outstanding and exercisable at end of year 1,155,000 $ 0.43
========================
Weighted average fair value of options granted
during the year $ 0.79
=========
Expense for the options granted in 1998 was in respect of the following:
Employees
and Directors Consultants Total
--------------------------------------
Consulting fees $124,050 $ -- $124,050
Legal fees -- 117,922 117,922
Salaries and wages 266,301 -- 266,301
Exploration expenses 128,549 54,178 182,727
--------------------------------------
$518,900 $172,100 $691,000
=======================================
The expense related to the grant of options to employees and directors
consists of the difference between the exercise price and the market value
of the Company's common stock at the grant date. Compensation expense for
options granted to consultants is determined using the Black Scholes option
pricing model.
Stock options outstanding at December 31, 1998 are as follows:
Number Exercise Price Expiry
-----------------------------------------------------
505,000 $0.01 June 2003
450,000 $0.75 September 2003
200,000 $0.75 December 2003
---------
1,155,000
=========
F-17
<PAGE>
================================================================================
Aurora Gold Corporation
(A development stage enterprise)
Notes to the Consolidated Financial Statements
(Expressed in U.S. Dollars)
December 31, 1998 and 1997
- --------------------------------------------------------------------------------
5. Stock Options - Continued
No stock options were granted prior to 1998.
- --------------------------------------------------------------------------------
6. Related Party Transactions
Related party transactions not disclosed elsewhere in these financial
statements include:
a) Included in accounts payable is $3,475 (1997 - $45,532) due to
directors and a company controlled by a director in respect of
salaries, consulting fees and reimbursement for operating expenses.
b) During the year, consulting fees, salaries and wages of $70,681 (1997
- $97,276) were paid or are payable to directors or companies
controlled by directors.
c) In 1997, non-trade accounts receivable were due from companies sharing
a common director, were without interest and were due on demand.
d) In September 1998, fixed assets of $14,449 were sold for their book
value to a director. The Company is renting these assets back on a
month-to-month basis.
Except as otherwise noted, these transactions are recorded at the exchange
amount, being the value established and agreed to by the related parties.
- --------------------------------------------------------------------------------
7. Non Cash Investing and Financing Activities
Amounts owing to a director of $68,697 were settled in December 1998 with
the issuance of 96,105 common shares. Also in November and December 1998,
the Company settled promissory notes payable of $150,000 with the issuance
of 215,000 shares (including 15,000 shares issued in lieu of interest on
the indebtedness) of common stock. The conversion of indebtedness was done
at the following prices:
Conversion
Indebtedness Price Shares
----------------------------------------------
$ 37,193 $0.6875 54,100
192,754 $0.75 257,005
--------- -------
$229,947 311,105
==============================================
The carrying value of the indebtedness approximated the fair value of the
common shares issued.
F-18
<PAGE>
================================================================================
Aurora Gold Corporation
(A development stage enterprise)
Notes to the Consolidated Financial Statements
(Expressed in U.S. Dollars)
December 31, 1998 and 1997
- --------------------------------------------------------------------------------
8. Income Taxes
a) The Company has net losses for tax purposes totalling approximately
$1,917,000 which may be applied against future taxable income.
Accordingly, there is no tax expense for the years ended December 31,
1998 and 1997. The potential tax benefits arising from these losses
have not been recorded in the financial statements. The Company
evaluates its valuation allowance requirements on an annual basis
based on projected future operations. When circumstances change and
this causes a change in management's judgement about the realizability
of deferred tax assets, the impact of the change on the valuation
allowance is generally reflected in current operations.
The right to claim these losses expires as follows:
2011 $ 360,000
2012 567,000
2018 990,000
----------
$1,917,000
----------
b) The tax effects of temporary differences that give rise to the
Company's deferred tax asset are as follows:
1998 1997
Tax loss carryforwards $ 651,780 $ 315,370
Fixed assets -- 1,517
Mineral exploration expenses 70,061 15,606
Valuation allowance (721,841) (332,493)
---------------------------
$ -- $ --
===========================
- --------------------------------------------------------------------------------
9. Adjustment of Prior Year Results
Effective for the 1998 fiscal year, the Company charges all costs of
exploration to operations in the year incurred. Previously, such costs were
capitalized until the properties were determined to be impaired based on
the evaluation of management. This change has been applied on a retroactive
basis. Accordingly, prior year's operations have been restated to account
for the write-off of costs previously deferred. The net loss reported in
1997 has been increased while total assets were reduced by $45,900 or $0.01
per share.
The change in accounting for mineral exploration costs was done to comply
with Securities and Exchange Commission interpretations of the accounting
for exploration costs in the mining industry.
F-19
EXHIBIT 10.7 Agreement dated February 23, 1999 between the Company and Gregory
G. Crowe
GREGORY G. CROWE
Box 253
Bowen Island, B.C. Canada
V0N 1G0
Telephone: (604) 947-0435
Facsimile: (604) 947-0125
E-mail: [email protected]
February 23, 1999
Aurora Gold Corporation
Suite 1505- 1060 Alberni Street,
Vancouver, B.C. Canada
V6E 4K2
Attention: Mr. David Jenkins
Re: Mineral Title - Claim Name: KUMEALON
Dear Sir,
This letter will confirm that I, Gregory G. Crowe, am a nominee of Aurora
Gold Corporation (the "Company"), a Delaware Corporation and that I am holding
in trust and for the exclusive benefit of Aurora Gold Corporation the following
Mineral Title, Tenure Number - 367630, Claim Name - KUMEALON, Owner Number -
105842, Owner Percent - 100%, Map Number - 103H13W, Mining Division - 19 Skeena,
Units - 12, Tag Number - 236438.
This letter will also confirm that I, Gregory G. Crowe, am a representative
and agent for the Company in British Columbia, Canada.
Yours truly,
/s/ Gregory G. Crowe, M.Sc, P.Geo, P.Geol
- -----------------------------------------
Accepted this 23rd day of February, 1999
Name: /s/ David Jenkins
-----------------
Company: Aurora Gold Corporation
Position: President
28
EXHIBIT 21.1 SUBSIDIARIES OF THE COMPANY
SUBSIDIARIES OF THE COMPANY
Percentage of Voting
Name Jurisdiction of Incorporation Securities Owned
- ---- ----------------------------- --------------------
Aurora Gold (BVI) Limited The British Virgin Islands 100 (a)
Aurora Gold, S. A. Guatemala 100 (a)
(a) Included in the consolidated financial statements filed herein.
29
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 68,326
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 68,326
<PP&E> 69,441
<DEPRECIATION> 0
<TOTAL-ASSETS> 162,374
<CURRENT-LIABILITIES> 20,580
<BONDS> 0
0
0
<COMMON> 11,181
<OTHER-SE> 130,613
<TOTAL-LIABILITY-AND-EQUITY> 162,374
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,151,604
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,151,604)
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<INCOME-CONTINUING> (1,151,604)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,151,604)
<EPS-PRIMARY> (0.11)
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</TABLE>
