<PAGE>2
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) August 30, 1999
PINNACLE RESOURCES, INC.
(Exact name of registrant as specified in its charter)
WYOMING 84-1414869
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification Number
7345 E. Peakview Avenue, Englewood, Colorado 80111
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 771-8100
<PAGE>3
Item 1. Changes in Control of Registrant - None
Item 2. Acquisition or Disposition of Assets.
On August 30, 1999, the Registrant acquired all of the issued and
outstanding shares of Plateau Resources (Pty) Ltd, a South African
corporation in exchange for 1,500,000 Common Shares of the Registrant.
Plateau Resources (Pty) Ltd. is in the business of exploring and
developing a platinum/palladium ore body on a 19,000 acre prospect on
which it has obtain prospecting rights from the South African
government. The issuance of the 1,500,000 Common Shares of the
Registrant represents 26% of its issued and outstanding Common Shares
but did not represent a change in control of the Registrant.
Item 3. Bankruptcy or Receivership. None.
Item 4. Changes in Registrant's Certifying Accountant. None.
Item 5. Other Events. None
Item 6. Resignation of Registrant's Directors. None
Item 7. Financial Statements and Exhibits.
(a) Financial statements of businesses acquired.
Report of the independent auditors
To the member of Plateau Resources (Proprietary) Limited
We have audited the financial statements of Plateau Resources
(Proprietary) Limited set out on Pages 4 to 9 for the year ended 30
June 1999. These financial statements are the responsibility of the
company's directors. Our responsibility is to express an opinion on
these financial statements based on our audit.
Scope
We conducted our audit in accordance with statements of South African
Auditing Standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance that 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,
Assessing the accounting principals used and significant estimates made
by management, and
Evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
Audit opinion
In our opinion, the financial statements fairly present, in all
material respects, the financial position of the company at 30 June
1999, and the results of its operations and cash flows for the year
then ended in accordance with generally accounting practice, and in the
manner required by the Companies Act.
Going concern
Without qualifying our opinion, we draw attention to note 4 in the
financial statements whereby the shareholder has subordinated its loan
in favour of the creditors of the company until such time as the assets
of the company fairly valued, exceed its liabilities.
KPMG, Inc.
Registered Accountants and Auditors
Per C Smit
Partner
29 November 1999
<PAGE>4
Plateau Resources (Proprietary) Limited
Directors' report
For the year ended 30 June 1999
The directors have pleasure in presenting their report for the year
ended 30 June 1999.
Business activities and operations
The company's principal business activity is that of obtaining mining
rights, mining concessions and mining grants and the mining and
marketing of some and all facts thereto.
Reason for the preparation of these financial statements
Plateau Resources (Proprietary) Limited's financial year end is 28
February. The financial statements for the year ended 30 June 1999
have been prepared for the filing of the consolidated financial
information of Pinnacle Resources Inc. (the holding company) with the
United States Securities Exchange Commission.
Translation to United States Dollars
For reporting purposes, on the instruction of Pinnacle Resources Inc.,
the financial statements have been prepared in United States Dollars.
The functional currency for these financial statements is the South
African Rand. The balance sheet was converted at the closing exchange
rate, and the income statement and cash flow statement at the average
exchange rate for the period. The difference arising on the
translation was transferred to a foreign currency translation reserve.
General review of activities
The business and operational actives of the company are being conducted
on a satisfactory basis. The results of the company and the state of
its affairs for the period under review are set out in the attached
financial statements and do not require any further comment.
Share capital
The company's authorised and issued share capital remained unchanged
during the period under review.
Directors
The following were directors of the company during the period under
review:
GR Gamble (USA)
JWJ Davenport (UK)
A Strauss (resigned 7 April 1998)
Address
Business address Postal Address
95 Merino Avenue P.O. Box 1712
City Deep Bedfordview
South Africa South Africa
2049 2008
Holding company
The company's holding company is Plateau Resources International
Limited, Inc., a company incorporated in the Cayman Islands.
<PAGE>5
Plateau Resources (Proprietary) Limited
Balance Sheet
At 30 June 1999
Note 30 June 30 June
1999 1998
$ $
Assets
Fixed assets 5 1017 -
Current assets 47751 71804
Current account-associated company 7 31807 24228
Account receivable 6 3229 4162
VAT receivable 5332 86
Bank and cash 7383 43328
Total assets 48768 71804
Equity and liabilities
Share capital 2 894 894
Accumulated loss (161205) (97992)
Non-distributable reserve 3 21841 19849
Non-current liability
Shareholder's loan 4 185727 147987
Trade and other payables 1556 1066
Total equity and liabilities 48768 71804
<PAGE>6
Plateau Resources (Proprietary) Limited
Income Statement
At 30 June 1999
Note 30 June 30 June
1999 1998
$ $
Net expenditure for the year
Before taxation (63258) (39648)
Taxation 8 - -
Net expenditure for the year (63258) (39648)
Accumulated expenditure at
The beginning of the year (97992) (58344)
Accumulated expenditure at
the end of the year (161250) (97992)
<PAGE>7
Plateau Resources (Proprietary) Limited
Cash flow statement
At 30 June 1999
Note 30 June 30 June
1999 1998
$ $
Cash utilised by exploration
Activities 9.1 (76364) (33773)
Interest received 911 925
Interest paid (6) -
Net cash outflow from
Exploration activities (75459) (32848)
Cash flows from investing
Activities (1251) -
Increase in shareholders loan (42015) (75036)
Increase in share capital - 872
Net (decrease)/increase in
Bank and cash (36695) 43060
Bank and cash at the beginning
Of the year 43328 347
Translation adjustment to
Bank and cash (1250) (79)
Bank and cash at the end
Of the year 7383 43328
<PAGE>8
Plateau Resources (Proprietary) Limited
Notes to the financial statements
At 30 June 1999
1. Accounting policy
The financial statements are prepared on the historical cost basis, and
incorporate the following accounting policy which is consistent with
the adopted in the previous year.
1.1 Fixed assets
Depreciation is calculated to write-off the cost of fixed assets on the
straight line basis over their expected useful lives.
30 June 30 June
1999 1998
$ $
2. Share Capital
Authorised
4000 ordinary shares of R1 each 894 894
Issued
4000 ordinary shares of R1 each 894 894
3. Non-distributable reserve
Balance at the beginning
Of the year 19849 291
Movement in foreign
Currency translation reserve 1992 19558
Balance at the end
Of the year 21841 19849
Reserve comprises -
Foreign currency reserve
Relating to the translation
To US Dollars 21841 19849
4. Shareholder's loan
this loan is unsecured, interest free and has no fixed repayment
terms
185727 147987
The shareholder has subordinated its loan in favour of the creditors of
the company until such time as the assets of the company fairly valued,
exceed its liabilities.
5. Fixed assets
Equipment
Net book value at the
Beginning of the year - -
Acquisitions 1251 -
Depreciation (234) -
Net book value at the
End of the year 1017 -
6. Account receivable
This amount constitutes a loan to the director GR Gamble. The loan is
interest free and no terms of repayment have been set. The loan has
been set off against the shareholder's loan effective 31 October 1999.
7. Current account - associated company
This amount constitutes loans to Vanadium and Magnetite Exploration and
Development Company South Africa (Proprietary) Limited. The loan is
interest free and not terms of repayment have been set. The loan has
been set off against the shareholder's loan effective 31 October 1999.
<PAGE>9
8. Taxation
The company has estimated unredeemed capital expenditure of $154495
(1998 - $90200) and a computed tax loss of $ nil (1998 $ nil) which may
be set off against future taxable income.
30 June 30 June
1999 1998
$ $
9. Notes to the cash flow statement
9.1 Cash utilised by exploration
activities
Expenditure before interest
And taxation (63163) (40573)
Adjustments for
Depreciation 234 -
Translation adjustment (242) 6374
Operating expenditure before
Working capital changes (64171) (34199)
Decrease in account receivable 813 -
Increase in VAT receivable (5249) (86)
Increase in trade and other
Payables 522 512
Increase in current account
Associated company (8279) -
(76364) (33773)
<PAGE>10
Plateau Resources (Proprietary) Limited
Detailed income statement
At 30 June 1999
30 June 30 June
1999 1998
$ $
Revenue 911 8670
Interest received 911 925
Write off of loan - 7745
Expenditure 64169 48318
Accounting fees 520 613
Advertising and promotions (33) 41
Application fees - 845
Bank charges 182 402
Consultation fees 16510 20652
Courier and postage 73 218
Depreciation 234 -
Drafting 879 1930
Drilling expenses 33402 -
Entertainment expenses 106 947
General (income)/expenses (1662) 2059
Interest paid 6 -
Legal fees - 3458
License 3 -
Motor vehicle expenses 4164 730
Printing and stationery 277 1602
Prospectus fees - 1342
Rent 5033 12088
Research expenses 1313 -
Staff welfare - 8
Subscriptions 42 -
Telephone 682 967
Travel and accommodation 2438 416
Net expenditure for the year (63258) (39648)
Accumulated expenditure at the
Beginning of the year (97992) (58344)
Accumulated expenditure for the year (161250) (97992)
(b) Pro forma financial information.
Pinnacle Resources, Inc.
Unaudited Pro Forma Combined Financial Information
On August 30, 1999 the Company acquired 100 % of the outstanding shares
of Plateau Resources, Ltd. (South African Corporation) (Plateau) in
exchange for 1,500,000 shares of the Company's common stock valued at
$375,000.
The unaudited pro forma combined balance sheet and pro forma combined
statement of operations gives affect to the acquisition of the Plateau
by Pinnacle as of and for the year ended June 30, 1999. The unaudited
combined statement of operations is presented as if the acquisition had
occurred on July 1, 1998.
The unaudited pro forma combined financial information should be read
in conjunction with the separate audited financial statements and notes
thereto of each of the companies included in the pro forma as of and
for the year ended June 30, 1999.
These unaudited pro forma combined statements are not necessarily
indicative of results of operations had the acquisition occurred on
July 1, 1998., nor of the results to be expected in the future.
The following footnotes should be read in understanding pro forma
adjustments to the unaudited pro forma consolidated statements:
<PAGE>11
(a) Adjustment to reflect the $ 375,000 asset purchase and assumption
of liabilities of Plateau; $513,515 allocated to goodwill. Pinnacle
issued 1,500,000 shares of common stock to Plateau with a fair market
value of $.25 per share at the date of closing in exchange for 100% or
4,000 shares of Plateau stock outstanding.
(b) Adjustment to recognize amortization on the goodwill over a 60
month period ($102,703).
(c) Adjustment to revise the weighted average common shares outstanding
and basic loss per share for the 1,500,000 shares issued in the
acquisition.
The unaudited combined financial statements do not show pro forma
benefit for income taxes. The benefit from net operating losses has
been offset by the establishing of a valuation allowance equal to the
deferred tax asset derived from net operating losses. The valuation
allowance offsets the net deferred tax asset for which there is no
assurance of recovery.
<PAGE>12
Pinnacle Resources,Inc
Proforma Balance Sheet
June 30, 1999
<TABLE>
<CAPTION>
Pinnacle Plateau Proforma
Resources Resources Proforma Consolidated
Inc. Limited AJE's Balances
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash $145 $7,383 $7,528
Note Receivable and Related Accrued Interest 32,286 0 32,286
(Less Allowance for Uncollectible Amounts of $48,776) 0
Related Party Receivables 0 31,807 31,807
Accounts Receivable 0 3,229 3,229
Tax Refund Receivable 0 5,332 5,332
Investment in Subsidiary 375,000 0 (375,000) 0
Total Current Assets 407,431 47,751 (375,000) 80,182
Fixed Assets 0 1,017 0 1,017
Goodwill 0 0 513,515 513,515
Accumulated Amortization 0 0 (102,703) (102,703)
Net Goodwill 0 0 410,812 410,812
Long-term Portion of Note Receivable
and Related Accrued Interest 100,000 0 0 100,000
TOTAL ASSETS $507,431 $48,768 $35,812 $592,011
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Current Liabilities
Current Portion Of Note Payable $100,000 $0 $100,000
Accounts Payable 15,800 1,556 17,356
Accrued Interest 6,425 0 6,425
0
Total Current Liabilities 122,225 1,556 0 123,781
0
Long-Term Portion Of Note Payable - SH Loans 0 185,727 0 185,727
0
TOTAL LIABILITIES 122,225 187,283 0 309,508
SHAREHOLDERS' EQUITY
Preferred Stock , $.01 Par Value
Authorized 2,000,000 Shares; Issued
And Outstanding -0- Shares 0 0 0
Common Stock 58 894 (894) 58
Capital Paid In Excess Of
Par Value Of Common Stock 526,442 0 526,442
Non Distributable Reserve 21,841 (21,841) 0
Retained Earnings (Deficit) Accumulated During The
Development Stage (141,294) (161,250) 58,547 (243,997)
TOTAL SHAREHOLDERS' EQUITY 385,206 (138,515) 35,812 282,503
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $507,431 $48,768 $35,812 $592,011
</TABLE>
<PAGE>13
Pinnacle Resources,Inc
Proforma Statement of Operaitons
June 30, 1999
<TABLE>
<CAPTION>
Pinnacle Plateau Proforma
Resources Resources Proforma Consolidated
Inc. Limited AJE's Balances
<S> <C> <C> <C> <C>
Revenue $0 $0 $0
Expenses:
Amortization 0 0 102,703 102,703
General & Administrative 7,511 2,106 9,617
Legal and Accounting 5,647 0 5,647
Salaries 9,600 0 9,600
Telephone 919 0 919
Travel 24,377 0 24,377
0
Total 48,054 2,106 102,703 152,863
(Loss) Before Other Income (48,054) (2,106) (102,703) (152,863)
Other Income (Expense)
Write Down of Notes Receivable and
Related Accrued Interest (48,776) 0 (48,776)
Interest Income 25,638 0 25,638
Interest (Expense) (5,000) 0 (5,000)
Total (28,138) 0 0 (28,138)
Net (Loss) ($76,192) ($2,106) ($102,703) ($181,001)
Basic (Loss) Per Common Share ($0.01) ($0.53) ($0.03)
Weighted Average Common Shares Outstanding 5,278,333 4,000 5,278,333
</TABLE>
Exhibits.
Item 8. Change in Fiscal Year. None
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the
registrant has duly caused this report to be signed on its behalf by
the undersigned here unto duly authorized.
Pinnacle Resources, Inc. (Registrant)
By: /s/ Glen R. Gamble, President
----------------------------
Glen R. Gamble
Date: January 3, 2000
