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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 2000
[ ] 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 0-22905
GOLDEN PHOENIX MINERALS, INC.
(Exact Name of Registrant as specified in its charter)
Minnesota |
41-1878178 |
(State or other jurisdiction |
(I.R.S. Employer |
of incorporation or organization) |
Identification Number) |
3595 Airway Dr. Suite 405 Reno, Nevada 89511
(Address of Principal Executive Offices) (Zip Code)
(775) 853-4919
Registrant's telephone number, including area code:
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 12months (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
The number of shares outstanding of the Registrant's Common Stock as of May 10, 2000 was 25,734,643.
Transitional Small Business Disclosure Format (check one): Yes No X
GOLDEN PHOENIX MINERALS, INC.INDEX
Page |
|
Number |
|
| PART I Financial Information | |
Item 1 Financial Statements |
|
Condensed Consolidated Balance Sheets as of March 31, 2000 and December 31, 1999. |
3 |
Condensed Consolidated Statements of Operations during the Development Stage for the Three Months Ended March 31, 2000 and 1999, and Inception (June 2, 1997) to March 31, 2000 |
4 |
Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2000and 1999, and Inception (June 2, 1997) to March 31, 2000. |
5 |
Notes to Condensed Consolidated Financial Statements. |
6 |
Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations |
6-9 |
Item 3. Changes in Securities and Use of Proceeds |
9 |
| PART II Other Information | |
Item 6 Exhibits and Reports on Form 8-K |
9 |
| SIGNATURE | 10 |
GOLDEN PHOENIX MINERALS, INC.
(A Development Stage Company)
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, 2000 AND DECEMBER 31, 1999
(Unaudited)
ASSETS
March 31, 2000 |
December 31, 1999 |
|
Current Assets |
||
Cash |
$ 146,552 |
$ 4,306 |
Prepaid expenses |
1,905 |
2,100 |
Employee advances |
23,247 |
25,679 |
Stock subscriptions receivable |
6,000 |
6,000 |
Total Current Assets |
177,704 |
38,085 |
Options |
25,000 |
25,000 |
Joint venture |
1,050,000 |
1,050,000 |
Mining properties and claims |
212,291 |
212,291 |
Property and equipment, net of accumulated depreciation of $35,365 at March 31, 2000 and $32,327 at December 31, 1999 |
41,266 | 42,701 |
Organization costs, net of accumulated amortization of $635 at March 31, 2000 and $577 at December 31, 1999 |
520 | 578 |
Deferred exploration costs |
238,377 |
64,217 |
Deferred tax assets, net of valuation allowance |
- |
- |
Total Assets |
$1,745,158 |
$1,432,872 |
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|||
March 31, 2000 |
December 31, 1999 |
||
Current Liabilities |
|||
Accounts payable |
$ 134,811 |
$ 222,626 |
|
Accrued liabilities |
132,689 |
132,772 |
|
Current portion of long term debt |
6,709 |
- |
|
Current portion of capital lease obligations |
3,771 |
4,875 |
|
Amounts due to stockholders |
422,100 |
422,100 |
|
Accrued interest stockholder loans |
39,275 |
46,279 |
|
Total Current Liabilities |
739,355 |
828,652 |
|
Long-term Liabilities |
|||
Capital lease obligations |
7,050 |
7,680 |
|
Convertible notes payable |
445,000 |
- |
|
Accrued interest, convertible notes payable |
10,496 |
- |
|
Total Liabilities |
1,201,901 |
836,332 |
|
Stockholders’ Equity |
|||
Preferred stock, no par value, 50,000,000 shares authorized and 500,000 shares issued and outstanding at March 31, 2000 and December 31, 1999 |
2,000 | 2,000 | |
Common stock, no par value, 150,000,000 shares authorized, 25,666,656 and 24,573,940 issued and outstanding at March 31, 2000 and December 31, 1999, respectively (including 6,717,995 of 144 restricted shares for organizational services) |
4,615,554 | 4,470,122 | |
Additional paid-in capital |
50,000 |
50,000 |
|
Deficit accumulated during the development stage |
(4,124,297) |
(3,925,582) |
|
Total Stockholders’ Equity |
543,257 |
596,540 |
|
Total Liabilities and Stockholders’ Equity |
$ 1,745,158 |
$ 1,432,872 |
|
The Accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements
GOLDEN PHOENIX MINERALS, INC.
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
DURING THE DEVELOPMENT STAGE
FOR THE THREE MONTHS ENDED MARCH 31, 2000, AND 1999
AND INCEPTION (JUNE 2, 1997) TO MARCH 31, 2000
(Unaudited)
Cumulative During Development Stage |
Three Months Ended March 31, 2000 |
Three Months Ended March 31, 1999 |
|
Revenues |
|||
Joint venture |
$ 34,400 |
$ - |
$ 3,000 |
Options |
2,000 |
- |
- |
Property and claims |
3,000 |
||
39,400 |
- |
3,000 |
|
Expenses |
|||
Exploration |
2,157,923 |
44,112 |
287,706 |
General and administrative |
1,942,065 |
149,702 |
49,641 |
4,099,988 |
193,814 |
337,347 |
|
Loss from Operations |
(4,060,588) |
(193,814) |
(334,347) |
Other Income (Expense) |
|||
Interest income |
270 |
- |
- |
Interest expense |
(132,675) |
(29,169) |
(16,898) |
Gain on sale of stock in affiliate |
10,016 |
- |
- |
Gain (loss) on sale of fixed assets |
2,551 |
- |
(1,400) |
Other income |
12,588 |
2,036 |
3 |
Other expense |
(1,290) |
- |
(207) |
Rent Income |
30,132 |
7,533 |
- |
Loss Before Provision for Income Taxes |
(4,138,996) |
(213,414) |
(352,849) |
Income Tax |
|||
Current |
- |
- |
- |
Deferred |
- |
- |
(71) |
- |
- |
(71) |
|
Net Loss Before Extraordinary Item |
(4,138,996) |
(213,414) |
(352,920) |
Extraordinary Item- Gain on Extinguishment of Debt (Net of Income Tax of $0) |
14,699 |
14,699 |
- |
Net Loss |
$(4,124,297) |
$(198,715) |
$(352,920) |
Basic and Diluted Net Loss per Common |
|||
Share Before Extraordinary Gain |
$(0.23) |
$(0.01) |
$(0.02) |
Extraordinary Gain on Extinguishment of Debt |
0.001 |
0.001 |
0.000 |
Basic and Diluted Net Loss per Common Share |
(0.23) |
(0.01) |
(0.02) |
Shares Used in Computing Basic and |
|||
Diluted Shares |
17,642,135 |
25,146,062 |
19,624,897 |
The Accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements
GOLDEN PHOENIX MINERALS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 and 1999
AND INCEPTION (JUNE 2, 1997) TO MARCH 31, 2000
(Unaudited)
Cumulative During Development Stage |
Three Months Ended March 31, 2000 |
Three Months Ended March 31, 1999 |
|
Cash Flows From Operating Activities |
|||
Net Loss |
$(4,124,297) |
$(198,715) |
$(352,920) |
Adjustments to reconcile net loss to net cash used in operating activities |
|||
Depreciation and amortization |
48,870 |
3,096 |
3,767 |
Gain (Loss) on sale of fixed assets |
(2,551) |
- |
1,400 |
| Common stock issued for goods and services | 985,379 |
75,432 |
318,365 |
Preferred stock issued for goods and services |
2,000 |
- |
- |
(Increase) Decrease in accounts receivable |
(23,247) |
2,432 |
(4,469) |
(Increase) Decrease in prepaid expenses |
(1,906) |
195 |
5,660 |
Increase (Decrease) in accounts payable |
151,520 |
(81,106) |
(47,296) |
Increase (Decrease) in accrued liabilities |
182,460 |
3,409 |
22,546 |
(Increase) in incorporation costs |
(1,155) |
- |
- |
Fixed assets exchanged for goods and services |
55,982 |
- |
- |
(Increase) in options |
(25,000) |
- |
- |
Deferred income tax expense |
- |
- |
71 |
(Increase) in deferred exploration costs |
(238,378) |
(174,160) |
- |
Net Cash (Used) in Operating Activities |
(2,990,323) |
(369,417) |
(52,876) |
Cash Flows From Investing Activities |
|||
Purchase of property and equipment |
(170,863) |
(1,603) |
- |
Proceeds from fixed asset sales |
34,965 |
- |
1,965 |
Purchase of mining properties and claims |
(212,291) |
- |
- |
Purchase of joint venture |
(550,000) |
- |
- |
| Net Cash Provided (Used) by Investing Activities | (898,189) |
(1,603) |
1,965 |
Cash Flows From Financing Activities |
|||
Proceeds from convertible notes payable |
445,000 |
445,000 |
- |
Principal payments on capital lease obligations |
(6,213) |
(1,734) |
- |
Proceeds from notes payable – stockholders |
623,400 |
- |
10,000 |
Payments on notes payable – stockholders |
(6,300) |
- |
- |
Payments on long-term debt |
(116,887) |
- |
- |
Net proceeds from sale of common stock |
3,096,064 |
70,000 |
50,000 |
Net Cash Provided by Financing Activities |
4,035,064 |
513,266 |
60,000 |
Net Increase in Cash |
146,552 |
142,246 |
9,089 |
Cash at Beginning of Period |
- |
4,306 |
2,437 |
Cash at End of Period |
$ 146,552 |
$ 146,552 |
$ 11,526 |
Supplemental Disclosure of Cash Flow Information |
|||
Cash paid for interest |
42,016 |
15,400 |
|
Cash paid for income taxes |
- |
- |
- |
The Accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements
GOLDEN PHOENIX MINERALS, INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2000
(Unaudited)
Note 1. Interim Financial Statement Policies and Disclosures
The interim, unaudited, condensed financial statements of GOLDEN PHOENIX MINERALS, INC. (the "Company") included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally required in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.
In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ending March 31, 2000 are not necessarily indicative of the results that may be expected for the year ending December 31, 2000. These financial statements should be read in conjunction with the financial statements and notes thereto for the period ended December 31, 1999. The accounting policies set forth in the audited financial statements are the same as the accounting policies utilized in the preparation of these financial statements except as modified for appropriate interim presentation.
Note 2 - Supplemental Cash Flows Information
Certain non-cash investing and financing transactions are not included in the Statements of Condensed Consolidated Cash Flows. These include, for the first three months of 2000, the issuance of 392,716 restricted common shares, valued at $75,395, in settlement of debt.
Item 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Section 21E of the Securities Exchange Act of 1934 provides a "safe harbor" for forward-looking statements. Certain information included herein contains statements that are forward-looking, such as statements regarding management's expectations about future production and development activities as well as other capital spending, financing sources and the effects of regulation. Such forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, such results may differ from those expressed in any forward-looking statements made herein. These risks and uncertainties include, but are not limited to, those relating to the market price of metals, production rates, production costs, the availability of financing, the ability to obtain and maintain all of the permits necessary to put and keep properties in production, development and construction activities and dependence on existing management. The Company cautions readers not to place undue reliance on any such forward-looking statements, and such statements speak only as of the date made.
RESULTS OF OPERATIONS
No operational revenue has been generated thru March 31, 2000. All Company activities have been directed toward exploration/development activities on our two key properties. The Company has exploration properties in Nevada and royalty interest in Alaska. The royalty interest will be a value to the Company if any of the Alaskan properties are taken to production.
The Company entered into an agreement on August 21, 1997 with J. D. Welsh & Associates to purchase an interest in a mineral property, situated in Mineral County, Nevada, known as the Borealis property ("Borealis Property"). The Company purchased 65% of Welsh’s leasehold interest in Borealis during 1998. The purchase was stopped at 65% due to economic constraints on our operating capital. The Company, along with J. D. Welsh & Associates signed a simple joint operating agreement on December 31,1999 which also increased the Company's interest to 68% and defined other relationships. Subsequent to the signing of the simple joint venture agreement J. D. Welsh has optioned his 32% interest in the Borealis Property to Newmex Minerals, Inc. an Alberta based company.
Exploration costs have been incurred in connection with just the properties in Nevada. These costs have been incurred for drilling, the location of mining claims, and field examinations to determine the potential occurrence of economic mineralization on the different properties. Other exploration costs include the compilation of historic data on the properties to assist in the evaluation of the properties and the planning of further exploration.
Operating expenses totaled $193,814 for the first quarter of 2000, compared to $337,347 for 1999. The decrease is due primarily to a cutback in personnel and related overhead expenses resulting from the lack of capital resources. One other factor is the capitalization of exploration costs as deferred expenses. These changes resulted in a net loss of $198,715 for 2000, compared to a net loss of $352,920 for the same period in 1999.
RECENT DEVELOPMENTS
Borealis
Fieldwork at the Borealis Property has found that the gold mineralization on the large property is driven by at least four different silica-rich hydrothermal systems. Main stage gold mineralization follows an early barren silicification event in each of these hydrothermal systems. This feature, along with recognition of several other important ore controls, has identified several new areas that have excellent discovery potential and which remain to be drilled.
The five resource studies completed to date, Borealis, Freedom Flats, Graben, Polaris and East Ridge have identified a minimum of 27,526,600 tons averaging 0.048 ounces gold per ton containing 1,308,000 ounces of gold and 0.23 ounces of silver per ton containing 6,142,500 ounces of silver. Furthermore, in the five target areas studied, numerous areas of open mineralization were evident and the overall resource will increase once step-out drilling is performed.
All mineralization reported to date is measured and indicated from drill hole cross sections. The following table summarizes this new work
TABLE 3: Golden Phoenix Calculated Gold and Silver Resources (1999) |
|||||
Measured |
Tons |
Au Grade |
Au Oz |
Ag Grade |
Ag Oz |
Graben |
6,404,000 |
0.060 |
433,600 |
0.210 |
1,363,400 |
Freedom |
1,702,000 |
0.063 |
107,800 |
0.053 |
989,800 |
| Borealis | 2,896,000 |
0.042 |
122,300 |
0.022 |
630,500 |
| Polaris | 1,540,000 |
0.024 |
37,000 |
0.410 |
630,000 |
| East Ridge | 5,923,500 |
0.018 |
109,000 |
0.112 |
664,900 |
Indicated |
Tons |
Au Grade |
Au oz |
Ag Grade |
Ag Oz |
Graben |
5,934,000 |
0.067 |
394,700 |
0.200 |
1,176,000 |
Freedom |
723,000 |
0.050 |
36,100 |
0.550 |
399,500 |
Borealis |
1,569,000 |
0.033 |
51,100 |
0.180 |
288,400 |
Polaris |
711,300 |
0.02 |
14,400 |
||
East Ridge |
123,800 |
0.016 |
2,000 |
||
Totals |
27,526,600 |
0.048 |
1,308,000 |
0.23 |
6,142,500 |
The Company is moving forward with work plans for the 2000 exploration and development program. This work will consist of continuing the resource study into three new areas, conducting new geophysical surveys and reinterpreting several older geophysical surveys, step-out and confirmation drilling, and determining the permitting requirements for a new mining operation.
Contact
The Company initiated the 1999 drilling program in late December of 1999 and completed it late January 2000. Sixteen holes were drilled for a total of 5,035 feet into the Banner zone and three previously untested targets. Nine of these holes were drilled into the western portion of the Banner zone, while seven holes tested the Brooklyn, Allan and Bluebird targets to the north and east of the Banner zone.
Overall, drill assays returned good to excellent results from the western extension of the Banner zone and the previously undrilled Brooklyn and Bluebird targets. Overall, mineralization was extended another 400 feet to the west along the Banner mineralized zone, which is now over 4000 feet in strike length. Highlights of the Banner drilling program include hole #3 which returned 140 feet of 0.37% copper beginning at 90 feet, and hole #11 with 90 feet of 0.32% copper starting at the surface. In the newly discovered Brooklyn zone, hole #6 intercepted 85 feet of 1.02% copper beginning at 15 feet and hole #7 returned 215 feet of 0.504% copper beginning at 10 feet. Both holes contained additional mineralized intervals deeper in the holes. In the new Bluebird zone, hole #15 returned 50 feet of 0.41% copper beginning at the surface. This hole and nearby hole #16, which contained numerous short intervals of copper mineralization, suggests that Bluebird could develop into a significant resource with further drilling.
Metallurgical work was completed from samples taken from two other targets found three miles to the west and one mile to the southwest. Samples from several mine dumps were collected, crushed, and placed into separate leach columns. A weak sulfuric acid solution was circulated and measured for 63 days, which resulted in projected recoveries of 88% in one sample and 82% in the second. These results suggest that copper mineralization hosted in granodiorite rocks can be readily leached. This work provides strong support for drilling in these highly prospective areas.
Channel sampling of all the old trenches is nearing completion and new metallurgical work is currently underway. The company plans to incorporate this new work into a revised resource assessment of the Banner zone in the coming few months. The company expects this work to add significant copper resource to the Banner deposit once a new resource study is completed during the second quarter of 2000.
Cirque
The Cirque property is located in the Bonnifield District, 80 miles south of Fairbanks, Alaska. The Company originally located the property in 1997 and in early 1998 joint ventured the property with Camnor Resources of Vancouver, British Columbia. They assumed the role of manager of the venture and made certain commitments to earn into the property. As of March 20, 2000 Camnor notified Golden Phoenix that they were terminating their interests in the property and were returning it to Golden Phoenix. We are currently seeking a new joint venture partner for this property. All of the assessment work and fees for the project have been met for the year 2000.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2000, the company had $146,552 in cash. A significant portion of the working capital is allocated to the Contact copper and Borealis Property. The Borealis Property lease payments are $4,080 per month. Payments to the end of March 31, 2000 total $12,240. The total Contact payments are $6,500 per month, which are divided as $2,500 for F. W. Lewis Inc. lease and $4,000 for the International Enexco joint venture. The total payments for the first quarter of 2000 are $19,500. The payments are payable in cash.
The ability of the Company to satisfy the cash requirements of its exploration, development and operations will be dependent upon future financing. The Company anticipates that additional financing will be obtained, although no assurance can be made that funds will be available on terms acceptable to the Company. See "OUTLOOK" below.
INVESTING AND FINANCING ACTIVITIES
The Company is investigating potential financing sources and is in discussions with potential joint venture partners. In 1999 the Company negotiated a stock option agreement wherein it has been receiving $20,000 per month in cash, enough to meet its basic operating needs.
The Company is currently offering a convertible debt Private Placement to raise approximately $1.3 million. The total amount to be raised may change, based on varying conversion prices set from time to time during the offering period. The offering is a 5-year note, paying 12% per annum interest on a minimum investment of $10,000. The Company may call the notes at any time prior to maturity. In that event, the note holders have thirty days to decide whether to accept cash payment or convert the note to common stock. Principal and interest on the note can be converted into shares at any time during the five year note period, at the option of the note holders. The conversion price was $0.20 per share for the first $445,000 received during the first quarter and is currently set at $0.30 per share. No assurance can be given that the Company will obtain all of the financing required to maintain its property positions.
YEAR 2000 ASSESSMENT
The Company has encountered no Year 2000 computer related problems.
OUTLOOK
The Company will issue a significant number of common shares of Golden Phoenix Minerals, Inc. to cover the option agreement as well as meet its contractual property payments for the Contact property. The Company will also need to raise additional financing to fund its exploration, development and operations.
Item 3. Changes in Securities and use of Proceeds
Recent Sales of Unregistered Securities
Following is a summary of sales of unregistered securities for the first quarter of 2000. All securities were issued as restricted common shares, which are subject to Rule 144 of the Securities and Exchange Commission. Generally, Rule 144 requires shareholders to hold the shares for a minimum of one year before sale. In addition, officers, directors and more than 10% shareholders are further restricted in their ability to sell such shares. There have been no underwriters of these securities and no commissions or underwriting discounts have been paid.
| First quarter 2000 | Shares Issued | Value Received |
| Private placement for cash | 700,000 | $ 70,000 |
| Conversion of debt | 392,716 | 75,395 |
| Total first quarter 2000 | 1,092,716 | $145,395 |
The above transactions qualified for exemption from registration under Sections 3(b) or 4(2) of the Securities Act of 1933. Private placements for cash were non-public transactions. The Company believes that all such investors are either accredited or, either alone or with their purchaser representative, have such knowledge and experience in financial and business matters that they are capable of evaluating the merits and risks of the prospective investment.
PART II OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
(b) No reports were filed on Form 8-K during the three-month period ended March 31, 2000
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
GOLDEN PHOENIX MINERALS, INC.
Date: May 11, 2000 By: /s/ Michael R. Fitzsimonds
Michael R. Fitzsimonds
President and Director
(Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated.
Date: May 11, 2000 By: /s/ Michael R. Fitzsimonds
Michael R. Fitzsimonds
President and Director
(Principal Executive, Financial and
Accounting Officer)
|
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