FORM 10-QSB/A
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the nine month period ended: March 31, 2000
Or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 0-27791
APOLO GOLD, INC.
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
NEVADA applied for
------------------------- ---------------------
(State of incorporation) (IRS Employer ID No.)
1458 - 409 Granville Street
Vancouver, BC V6C 1T2
--------------------------------------------------
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code: (604) 687-4150
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities 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 No X
As of May 16, 2000, the Registrant had 17,573,580 Shares of Common Stock
outstanding.
Transitional Small Business Disclosure Format (check one: Yes No X
<PAGE>
Part I Financial Information
APOLO GOLD, INC.
( A Development Stage Company)
Balance Sheets
March 31 June 30
2000 1999
(Unaudited)
--------- ---------
ASSETS
CURRENT ASSETS
Cash $ 6,759 $ 10,143
Accounts receivable - -
Deposit - 50,000
--------- ---------
Total current assets 6,759 60,143
--------- ---------
FIXED ASSETS
Property 157,500
Equipment 245,765 4,100
Less accumulated depreciation (8,234) (34)
--------- ---------
Total Fixed Assets 395,031 4,066
--------- ---------
TOTAL ASSETS $ 401,790 $ 64,209
========= =========
LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Loans payable $ - $ 5,000
Shareholder advance - 50,000
Officer payable 135,549 189,859
---------- ---------
Total current liabilities 135,549 244,859
---------- ---------
TOTAL LIABILITIES 135,549 244,859
---------- ---------
COMMITMENTS AND CONTINGENCIES - -
---------- ---------
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, 200,000,000 shares authorized, $0.001
par value; 17,573,580, and 12,942,250 shares
issued and outstanding, respectively 17,573 12,942
Additional paid-in-capital 1,160,023 796,489
Stock subscriptions receivable - (250,000)
Accumulated deficit during developmental stage (911,355) (740,081)
--------- ----------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) 266,241 (180,650)
--------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 401,790 $ 64,209
========= ==========
The accompanying notes are an intergral part of these financial statements
2
<PAGE>
APOLO GOLD, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
From
March 18, 1997
Three Months Ended Nine Months Ended (Inception) to
------------------------------- ----------------------------------
March 31, March 31, March 31, March 31, March 31
2000 1999 2000 1999 2000
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
-------------- --------------- --------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
REVENUES $ - $ - $ - $ 38,021 $ 38,021
COST OF REVENUES - - - - -
-------------- --------------- --------------- -------------- -------------
GROSS PROFIT - - - 38,021 38,021
-------------- --------------- --------------- -------------- -------------
EXPENSES
Mineral property exploration expenses - 9,735 70,760 32,349 661,973
Consulting and professional fees 15,600 - 60,392 - 183,992
General and administrative expenses 19,531 896 40,122 52,218 103,411
-------------- --------------- --------------- -------------- -------------
TOTAL EXPENSES 35,131 10,631 171,274 84,567 949,376
-------------- --------------- --------------- -------------- -------------
NET LOSS FROM OPERATIONS (35,131) (10,631) (171,274) (46,546) (911,355)
INCOME TAXES - - - - -
-------------- --------------- --------------- -------------- -------------
NET LOSS $ (35,131) $ (10,631) (171,274) $ (46,546) $ (911,355)
============== =============== =============== ============== =============
NET LOSS PER COMMON SHARE,
BASIC AND DILUTED $ NIL $ NIL NIL $ NIL $ (0.1)
============== =============== =============== ============== =============
WEIGHTED AVERAGE NUMBER OF
COMMON STOCK SHARES OUTSTANDING,
BASIC AND DILUTED 16,665,757 16,665,757 11,823,591 11,823,591 16,109,115
============== =============== =============== ============== =============
</TABLE>
The accompanying notes are an intergral part of these financial statements
3
<PAGE>
APOLO GOLD, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
Accumulated
Common Stock Additional Stock Deficit during Total
Number Paid-In Subscriptions Development Stockholders'
of Shares Amount Capital Receivable Stage Equity
------------------------ ---------- ------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance
March 18, 1997 - $ - $ - $ - $ - $ -
Issuance of shares at $0.01
per share for services 4,600,000 4,600 41,400 - - 46,000
Issuance of shares at $0.01
per share for note 5,400,000 5,400 48,600 (54,000) - -
Issuance of shares at $0.25
per share for cash 1,377,800 1,378 343,073 - - 344,451
Net loss for the year ended
December 31, 1997 - - - - (320,282) (320,282)
---------- -------- -------- ---------- ---------- --------
Balance,
December 31, 1997 11,377,800 11,378 433,073 (54,000) (320,282) 70,169
Issuance of shares at
approximately $0.25
per share for cash 140,000 140 34,608 - - 34,748
Payment of stock subscriptions
in exchange for services - - - 54,000 - 54,000
---------- -------- --------- --------- ---------- ----------
Balance forward 11,517,800 $ 11,518 $ 467,681 $ - $ (320,282) $ 158,917
---------- -------- --------- --------- ---------- ----------
</TABLE>
The accompanying notes are an intergral part of these financial statements
4
<PAGE>
APOLO GOLD, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
Accumulated
Common Stock Additional Stock Deficit during Total
Number Paid-In Subscriptions Development Stockholders'
of Shares Amount Capital Receivable Stage Equity
------------------------- ------------ ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance brought forward 11,517,800 $ 11,518 $ 467,681 $ - $ (320,282) $ 158,917
Issuance of shares at $0.25
per share for note 1,000,000 1,000 249,000 (250,000) - -
Net loss for the year ended
December 31, 1998 - - - - (319,632) (319,632)
---------- --------- ---------- -------- ---------- ---------
Balance, December 31, 1998 12,517,800 12,518 716,681 (250,000) (639,914) (160,715)
Issuance of shares at $0.12
to $0.25 per share for cash 324,450 324 78,908 - - 79,232
Issuance of shares at $0.01
per share for equipment 100,000 100 900 - - 1,000
Net loss for the year ended
June 30, 1998 - - - - (100,167) (100,167)
---------- ------- --------- -------- ----------- ---------
Balance, June 30, 1999 12,942,250 12,942 796,489 (250,000) (740,081) (180,650)
---------- ------- --------- -------- ----------- ---------
Issuance of shares at $0.001
for cash 3,500,000 3,500 31,500 - - 35,000
Issuance of shares at $0.01
for services 170,000 170 1,530 - - 1,700
Issuance of shares at $0.35
for cash 163,363 163 57,014 57,177
Issuance of shares at $0.35 90,151 90 31,463 31,553
for equipment
Issuance of shares at $0.35
for cash 508,961 509 177,626 178,135
Issuance of shares at $0.25
for services 50,000 50 12,450 12,500
Issuance of shares at $0.35
for cash and debt 142,855 143 49,857 50,000
Issuance of shares at $0.35
for services 6,000 6 2,094 2,100
Payment of subscriptions rec. 250,000 250,000
Net loss for the nine months
ended March 31, 2000 - - - - (171,274) (171,274)
--------- ------- ------- ------- -------- --------
Balance, March 31, 2000 $ 17,573,580 $ 17,573 1,160,023 - (911,355) 266,241
========== ======= ========== ======= ========= ========
</TABLE>
The accompanying notes are an intergral part of these financial statements
5
<PAGE>
APOLO GOLD, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
From
Nine months Nine months March 18, 1997
Ending Ending (Inception) to
March 31, 2000 March 31, 1999 March 31, 2000
(Unaudited) (Unaudited) (Unaudited)
---------------- ------------------- ----------------
Cash flows from operating activities:
<S> <C> <C> <C>
Net loss (171,274) $ (46,546) (911,355)
Adjustments to reconcile net loss
to net cash used by operating activities:
Depreciation 8,200 34 8,234
Consulting and professional fees paid
by issuance of stock 16,300 1,000 117,300
Decrease (increase) in:
Deposits - - (50,000)
Increase (decrease) in:
accounts receivable - - -
Short term notes payable (5,000) - 992
Shareholder advance - - 50,000
Officer payable (54,310) 20,518 135,549
--------- -------- --------
Net cash provided (used)by operating activities (206,084) (24,994) (649,280)
--------- -------- --------
Cash flows from investing activities:
Property payment (107,500) - (107,500)
Purchase of equipment (210,113) - (214,213)
--------- -------- ---------
Net cash provided (used) by investing acitivites: (317,613) - (321,713)
Cash flows from financing activities:
Proceeds from collection of subscriptions rec. 250,000 - 250,000
Proceeds from sale of common stock 270,313 34,748 727,752
------- ------- --------
Net cash provided by financing activities: 520,313 34,748 977,752
------- ------- --------
Increase (Decrease) in Cash (3,384) $ 9,754 6,759
</TABLE>
The accompanying notes are an intergral part of these financial statements
6
<PAGE>
APOLO GOLD, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
From
Nine months Nine months March 18, 1997
Ended Ending (Inception) to
March 31, 2000 March 31, 1999 March 31
(Unaudited) (Unaudited) 2000
--------------- --------------- ------------------
<S> <C> <C> <C>
Increase (decrease) in cash - brought forward$ (3,384) $ 9,754 $ 6,759
Cash, beginning of period 10,143 389 -
-------- -------- -------
Cash, end of period $ 6,759 $ 10,143 $ 6,759
======== ======== =======
Supplemental disclosures:
Interest paid - $ - $ -
======== ======== =======
Income taxes paid - $ - $ -
======== ======== =======
Non-cash investing and financing activities:
Common stock issued for services 16,300 $ 1,000 $ 47,000
Common stock subscriptions paid for by services - $ 54,000 $ 54,000
Common stock issued for equipment 31,553 $ - $ 56,553
Common stock issued for debt 50,000 $ 992 $ 50,992
</TABLE>
The accompanying notes are an intergral part of these financial statements
7
<PAGE>
APOLO GOLD, INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
March 31, 2000
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Apolo Gold, Inc. (the Company) was incorporated in March of 1997 under the laws
of the state of Nevada primarily for the purpose of acquiring and developing
mineral properties. The Company has been in the development stage since its
inception. The Company conducts operations primarily from its offices in
Vancouver, British Columbia, Canada. The Company has formed a subsidiary
corporation in Venezuela. Although this entity has had no financial
transactions, the Company expects to use this subsidiary to acquire a Venezuelan
mining property.
On May 20, 1999, the Company entered into an agreement to purchase Apologold
C.A. (a Venezuelan company). Under the agreement, Apolo expects to acquire all
of the outstanding common stock minus one share of Apologold. Apolo will account
for the acquisition as a purchase of Apologold because the shareholders of Apolo
controlled operations after the acquisition. See Note 6.
The Company changed its year-end to June 30.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies of Apolo Gold, Inc. is presented
to assist in understanding the Company's financial statements. The financial
statements and notes are representations of the Company's management, which is
responsible for their integrity and objectivity. These accounting policies
conform to generally accepted accounting principles and have been consistently
applied in the preparation of the financial statements.
Accounting Method
- -----------------
The Company's financial statements are prepared using the accrual method of
accounting.
Basic and Diluted Loss Per Share
- --------------------------------
Loss per share was computed by dividing the net loss by the weighted average
number of shares outstanding during the period. The weighted average number of
shares was calculated by taking the number of shares outstanding and weighting
them by the amount of time that they were outstanding. Basic and diluted loss
per share was the same, as there were no common stock equivalents outstanding.
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
8
<PAGE>
APOLO GOLD, INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
March 31, 2000
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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.
Mineral Properties
- ------------------
Costs of acquiring, exploring and developing mineral properties are capitalized
by project area. Costs to maintain the mineral rights and leases are expensed as
incurred. When a property reaches the production stage, the related capitalized
costs will be amortized, using the units of production method on the basis of
periodic estimated ore reserves. Mineral properties are periodically assessed
for impairment of value and any losses are charged to operations at the time of
impairment.
Should a property be abandoned, its capitalized costs are charged to operations.
The Company charges to operations the allocable portion of capitalized costs
attributable to properties sold. Capitalized costs are allocated to properties
sold based on the proportion of claims sold to the claims remaining within the
project area.
Cash and Cash Equivalents
- -------------------------
For purposes of the statement of cash flows, the Company considers all
short-term debt securities purchased with a maturity of three months or less to
be cash equivalents.
Impaired Asset Policy
- ---------------------
The Company reviews its long-lived assets quarterly to determine if any events
or changes in circumstances have transpired which indicate that the carrying
value of its assets may not be recoverable. At March 31, 2000, the Company had
written off amounts expended for its Panama operations. (Notes 4 and 6.)
Provision for Taxes
- -------------------
At March 31, 2000, the Company has a net operating loss of approximately
$911,000, which may be offset against future taxable income through 2019. No
provisions for taxes or tax benefit from net operating loss carryforwards has
been reported in the financial statements as the Company will probably continue
to experience operating losses during its development stage and it is currently
unknown if the carryforwards will expire unused.
Derivative Instruments
- ----------------------
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This new standard establishes accounting
and reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. It requires
that an entity recognizes all derivatives as either assets or liabilities in the
balance sheet and measures those instruments at fair value.
9
<PAGE>
APOLO GOLD, INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
March 31, 2000
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Derivative Instruments (continued)
At March 31, 2000, the Company has not engaged in any transactions that would be
considered derivative instruments or hedging activities.
Compensated Absences
- --------------------
As the Company is still in the development stage, it currently does not have a
policy regarding accruals of compensated absences. The Company intends to
expense these costs as incurred.
Fair Value of Financial Instruments
- -----------------------------------
The carrying amounts for cash, marketable securities, accounts receivable,
accounts payable, notes payable and accrued liabilities approximate their fair
value.
Concentration of Risk
- ---------------------
The Company maintains its cash accounts in primarily one commercial bank in
Vancouver, British Columbia, Canada. The Company's cash account is a business
checking account maintained in United States dollars, which totaled $6,759 at
March 31, 2000. This account is not insured.
NOTE 3 - MINERAL PROPERTIES
Venezuela
- ---------
In May 1999, the Company entered into an agreement to purchase a 100% minus 1
share interest in Apologold C.A. (a Venezuelan Company). The agreement was
finalized subsequent to the date of these financial statements. (Note 6.) Under
the terms of the agreement, the Company acquired control over all rights for the
exploitation of alluvial diamonds and gold in a mining concession called Codsa
13 located in the jurisdiction of Gran Sabana Autonomous Municipality, State of
Bolivar, Venezuela.
Panama
- ------
In October 1997, the Company entered into an agreement to purchase a 99%
interest in Golden Cycle of Panama, Inc. (a Panamanian company). Under terms of
the agreement, the Company would assume all profits and expenses for operating
Golden Cycle's mine located at the Conception River Basin, Calovebora Township,
District of Santa Fe, Province of Veraguas, Republic of Panama. Although
expenditures have been made on the property through March 31, 2000 and core
samples have been promising, operations have been abandoned due to nondelivery
of the shares of Golden's stock. The Company is attempting to restore the
agreement to its original terms (Note 6) and all amounts expended for the
venture have been charged to operations as incurred.
10
<PAGE>
APOLO GOLD, INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
March 31, 2000
NOTE 4 - PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost. Major additions and improvements
are capitalized. Minor replacements, maintenance and repairs that do not
increase the useful lives of the assets are expensed as incurred. Depreciation
of property and equipment is being calculated using the straight-line method
over the expected useful lives of the assets. Depreciation expense for the nine
months ended March 31, 2000 approximated $8,200.
NOTE 5 - COMMON STOCK
During 1997, the Company issued 10,000,000 shares of common stock to directors
for services rendered and stock subscriptions receivable. The shares were valued
at $0.01 per share, which was the deemed fair market value of the shares on the
date of issuance.
During 1998, services were performed by directors in payment of stock
subscriptions receivable. These services were valued at $54,000. The Company
also issued 1,000,000 shares of common stock for stock subscriptions receivable,
valued at $0.25 per share, which is the fair market value of the shares on the
date of issuance. This amount was fully paid in September 1999.
During 1999, the Company issued 100,000 shares of common stock in exchange for
services. The shares were valued at $0.01 per share, which is the fair market
value of the shares on the date of issuance.
As part of a purchase agreement, the Company has agreed to issue 50,000 shares
of common stock to Mohammed Youssef Merhi, and 3,500,000 shares of common stock
as a finder's fee to AML Diamond and Gold Exp., Inc. The stock is to be issued
at $0.01 per share. (Note 6.)
NOTE 6 - COMMITMENTS AND CONTINGENCIES
Apologold C.A. (a Venezuelan Company)
- -------------------------------------
In May 1999, the Company entered into an agreement to purchase a 100% minus one
share interest in Apologold, C.A. (a Venezuelan company) for $3,500,000 plus
royalties and common stock. As of March 31, 2000, the Company has paid a $50,000
cash deposit towards finalization of this agreement. The deposit will be applied
towards the total purchase price with an additional $50,000 paid on November 15,
1999. The remaining balance of the purchase price will be paid as follows:
1. A 10% royalty from net production and an additional 2.5% of net production
profit
11
<PAGE>
APOLO GOLD, INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
March 31, 2000
NOTE 6 - COMMITMENTS AND CONTINGENCIES (continued)
Apologold C.A. (a Venezuelan Company) (continued)
will be applied towards the total purchase price until full payment of the
purchase price is achieved.
2. An additional 10% royalty from net production will be paid to Goldma C.A.
(a Venezuelan company) as payment for rent and operational and technical
assistance.
3. 50,000 shares of the Company's common stock will be issued at a $0.01 per
share to Mohammed Youssef Merhi of Goldma C.A. (a Venezuelan company).
4. The Company will also issue 3,500,000 shares of its common stock at $0.01
per share to AML Diamond and Gold Exp., Inc. in full payment of a finder's
fee. (Note 5.)
Upon completion of the agreement, the Company will acquire all the rights and
control of Apologold C.A., (a Venezuelan Company) which includes mineral
properties as described in Note 4.
Golden Cycle of Panama, Inc. (a Panamanian Company)
- ---------------------------------------------------
In October 1997, the Company entered into an agreement to purchase a 99%
interest in Golden Cycle of Panama, Inc. (a Panamanian Company). The agreement
called for a 6% royalty from gold production or minimum payments of $15,000
until May 1998, at which time the minimum payment increased to $20,000 until a
total of $5,000,000 had been paid. In addition, the Company was to make a
payment of approximately $97,000 for payment of Golden's outstanding debts. The
Company made payments as agreed, however, the shares of common stock of Golden
were never delivered. Further development of the mineral properties has been
suspended pending restoration of this agreement to its original standing.
Management does not expect to receive Golden's stock and has charged all
expenditures to operations as incurred. See Note 3.
NOTE 7 - RELATED PARTY
As of June 30, 1999, the Company has received a $50,000 cash advance from a
director. The advance, which is noninterest-bearing and uncollateralized, is
expected to be repaid once the Company enters the operating stage.
12
<PAGE>
APOLO GOLD, INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
March 31, 2000
NOTE 7 - RELATED PARTY (continued)
The officer payable liability is $189,859 at March 31, 2000. These amounts arise
from expenses by officers in Panama and Venezuela for development and
operations.
The Company leases office facilities in Vancouver, British Columbia, Canada from
an officer. The lease is classified as a month to month tenancy and provides for
quarterly payments of $500. During the nine months ended March 31, 2000, lease
payments totaled $1,000.
NOTE 8 - SUBSEQUENT EVENTS
As described in Note 6, the Company is completing a purchase agreement for a
100% minus one share interest in Apologold C.A. (a Venezuelan Company). (Note
6.)
The Company is continuing efforts to restore a purchase agreement for a 99%
interest in Golden Cycle of Panama, Inc. to its original standing. Management
does not expect to receive Golden's common stock as originally agreed. (Note 6.)
NOTE 9 - GOING CONCERN
As shown in the financial statements, the Company incurred a net loss of
$171,274 for the nine months ended March 31, 2000 and has an accumulated deficit
of $911,355 since inception.
The Company is actively seeking additional capital and management believes that
properties can ultimately be developed to enable the Company to continue its
operations. However, there are inherent uncertainties in mining operations and
management cannot provide assurances that it will be successful in its
endeavors. Furthermore, the Company is in the development stage, as it has not
realized any significant revenues from its planned operations.
These factors indicate that the Company may be unable to continue in existence.
The financial statements do not include any adjustments related to the
recoverability and classification of recorded assets, or the amounts and
classification of liabilities that might be necessary in the event the Company
cannot continue existence. Management plans to attract additional investment
capital and believes that significant and imminent private placements will
generate sufficient cash for the Company to operate for the next few years.
13
<PAGE>
APOLO GOLD, INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
March 31, 2000
NOTE 10 - YEAR 2000 ISSUES
The Company has modified its business technologies to be ready for the Year
2000. Critical data processing systems have been reviewed and the Company does
not expect a significant effect on internal operations. However, like other
companies, Apolo Gold, Inc. could be adversely affected if the computer systems
its suppliers or customers use do not properly process and calculate
date-related information and data for the period surrounding and including
January 1, 2000. This is commonly known as the "Year 2000" issue. Additionally,
this issue could impact non-computer systems and devices such as production
equipment, elevators, etc. The costs related to Year 2000 compliance are
expensed as incurred.
14
<PAGE>
Item 2 - Management's discussion and analysis or Plan of Operation
THE FOLLOWING ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION OF
THE COMPANY SHOULD BE READ IN CONJUNCTION WITH THE CONSOLIDATED FINANCIAL
STATEMENTS, INCLUDING THE NOTES THERETO, OF THE COMPANY CONTAINED ELSEWHERE IN
THIS FORM 10-QSB.
OVERVIEW
Apolo Gold, Inc. (the Company) was incorporated in March 1997 under the laws of
the State of Nevada for the purpose of financing and operating the gold and
diamond mining concession in Venezuela acquired by the Company's subsidiary,
Compania Minera Apologold, C.A., a Venezuelan corporation.
On May 18, 1999, the Venezuelan subsidiary, Compania Minera Apologold, C.A.
(Venezuelan Company), entered into an agreement with Empresa Proyectos Goldma,
C.A. to acquire the alluvial diamond and gold mining concession named Codsa 13,
located in the Gran Sabana Autonomous Municipality, State of Bolivar, Venezuela
for a total consideration of $3,500,000US (2,086,000,000 Bolivars). A down
payment of $50,000 was made on or about May 30, 1999 and additional payments
totaling $107,000 have also been made to March 31, 2000. The Venezuelan Company
agreed to establish at least one mining concession with a minimum production of
1,000 cubic meters per day within one year from the date of authentication of
the purchase agreement with the Venezuelan government. The agreement was first
authenticated with the Venezuelan government on May 18, 1999 and the Company
will be in production during the month of May 2000.
All equipment necessary for the commencement of the operation on the above
mentioned concession in Venezuela has been shipped to Venezuela and been
assembled. The production facility is currently being tested with production
commencing in May, 2000.
Once production has commenced, the Venezuela Subsidiary agreed to monthly
payments in an amount equal twenty percent of the gross production from the
mining operation. Fifty percent of the monthly payment (10% of the gross
production) is to be credited as payment on the purchase price and fifty percent
is to be applied as rental payment on mining equipment and technical assistance.
The Venezuela Subsidiary agreed that within one year from the date of
authentication of the purchase agreement with the Venezuelan authorities, the
amount of the monthly payment is to be at least $10,000 even if production is
insufficient to pay the minimum amount. All payments to the Seller may be paid
in US dollars, gold and diamonds as priced in Venezuela and shares in the
Company, as selected by the Seller in any combination thereof. The agreement
further requires the payment of a royalty to the Seller in the amount of 2.5% of
the annual net profits of the concession. This royalty is payable as long as
there is production on the property. There is also a royalty payable to the
government of Venezuela of 4% of gross production. The agreement also requires
that an existing mining operation by the Seller may continue and that until the
entire purchase price has been paid, the Seller may continue to conduct
exploration and testing.
15
<PAGE>
RESULTS OF OPERATIONS
There are no revenues in the quarter ending March 31, 2000, as the equipment
necessary to commence operations did not arrive in Venezuela until April 2000.
During the nine months ending March 31, 2000, the Company incurred expenses of
$171,274, which are summarized as follows:
Mineral property exploration expenses $70,760
Consulting and professional fees 60,392
General and administrative expenses 40,122
--------
$171,274
========
In addition to expenses above, the Company expended the sum of $210,113 towards
the purchase of mining equipment and $107,000 towards property payments owing.
Payment included issuance of 90,151 shares of common stock at $0.35 per share.
The Company has carefully controlled its expenses to date and at March 31, 2000
had cash on hand of $6,759. It plans to continue to raise funds as necessary by
either sale of common stock or loans from associates. It has sufficient cash on
hand or access to cash to conduct its operations at this stage of its
development. It has no liabilities to third parties. Its liabilities are to
existing shareholders of the company.
The Company has no employees in its parent company other than officers and
employees consultants where necessary in its subsidiary company in Venezuela. It
fully intends to hire employees as it prepares for production. It intends to
employ about 20 people in the mining operation in Venezuela.
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its development stage to date by way of sale of common
stock and with funds borrowed from a director of the Company.
At March 31, 2000, the Company had 17,573,580 shares of common stock outstanding
and has raised a total of $1,177,597. In addition to the sale of common stock,
the Company reduced loans from a director by $117,500 at March 31, 2000 to
$72,359
The Company recognizes that it will need additional capital during the next year
as it commences production at the concession site. It will endeavor to obtain
additional cash through the sale of common stock or from loans on terms and
conditions acceptable to it.
The Company has sufficient cash to finance its operations at this stage of its
development. It has no liabilities other than to officers and directors, and has
the resources necessary to commence operation in Venezuela.
16
<PAGE>
Part II - Other Information
Item 1 - Legal Proceedings: There are no proceedings to report.
Item 2. - Changes in Securities: None
Item 3. - Default Upon Senior Securities: There are no defaults to report.
Item 4. - Submission of Matters to a Vote of Security Holders: None.
Item 5. - Other Information: None
Item 6. - Exhibits and Reports on Form 8-K: none
17
<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, thereunto duly authorized.
APOLO GOLD, INC.
Dated: May 19, 2000
/s/MARTIAL H. LEVASSEUR
- -----------------------
Martial H. Levasseur, President, Secretary-Treasurer Director
18
<PAGE>
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<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> AUG-01-1999
<PERIOD-END> MAR-31-2000
<CASH> 6,759
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6,759
<PP&E> 403,265
<DEPRECIATION> (8,234)
<TOTAL-ASSETS> 401,790
<CURRENT-LIABILITIES> 135,549
<BONDS> 0
0
0
<COMMON> 17,573
<OTHER-SE> 248,668
<TOTAL-LIABILITY-AND-EQUITY> 401,790
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 171,274
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (171,274)
<INCOME-TAX> 0
<INCOME-CONTINUING> (171,274)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (171,274)
<EPS-BASIC> .01
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