UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended March 31, 2000
[_] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT
For the transition period from ___________________ to ___________________
Commission file number 0-26531
PATAGONIA GOLD CORPORATION
(Exact name of small business issuer as specified in its charter)
Florida 65-0401897
(State or other jurisdiction of incorporation (IRS Employer Identification No.)
or organization)
1505 - 1060 ALBERNI STREET, VANCOUVER B.C. CANADA V6E 4K2
(Address of principal executive offices)
(604) 687-4432
(Issuer's Telephone Number)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15 (d) of the Exchange Act during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
YES [X] NO [_]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS
Check, whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15 (d) of the Exchange Act after the distribution of
securities under a plan confirmed by court.
YES [ ] NO [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 13,000,000 shares of Common Stock
were outstanding as of March 31, 2000.
Transitional Small Business Disclosure Format (check one);
YES [_] NO [X]
<PAGE>
PATAGONIA GOLD CORPORATION
This quarterly 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 Part 1 - Financial Information - Item 1.
"Financial Statements", Item 2. "Management's Discussion and Analysis or Plan of
Operation".
The Private Securities Litigation Reform Act of 1995, which provides a
"safe harbor" for such statements, may not apply to this Report.
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PAGE
------
Consolidated Balance Sheets 3
Consolidated Statements of Stockholders' Equity 4
Consolidated Statements of Operations 5
Consolidated Statements of Cash Flows 6
Notes to the Consolidated Financial Statements 7-11
<PAGE>
PATAGONIA GOLD CORPORATION
(An exploration stage enterprise)
Consolidated Balance Sheets - (Unaudited)
March 31, 2000 and December 31, 1999
(Expressed in US Dollars)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
2000 1999
- -----------------------------------------------------------------------------------------
ASSETS
<S> <C> <C>
Current
Cash $ 5,473 $ 22,913
Receivables 14 7
Investments (Note 3) 1,250,738 921,332
--------------------------
1,256,225 944,252
Mineral property costs (Note 4) 12,250 12,250
- -----------------------------------------------------------------------------------------
Total assets $ 1,268,475 $ 956,502
- -----------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Current
Accounts payable and accrued liabilitie $ 38,000 $ 35,000
Notes payable (Note 5) 87,179 76,879
- -----------------------------------------------------------------------------------------
Total liabilities 125,179 111,879
- -----------------------------------------------------------------------------------------
Stockholders' Equity
Share capital,
Authorized (Note 6)
50,000,000 common shares, par value $0.001 each
1 Issued
13,000,000 common shares (1997 - 13,000,000) 13,000 13,000
Additional paid in capital 1,827,000 1,827,000
Accumulated deficit (655,901) (625,168)
Accumulated other comprehensive income (loss)
Unrealized (loss) gains on securities available for sale (40,803) (370,209)
--------------------------
1,143,296 844,623
- -----------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 1,268,475 $ 956,502
- -----------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
PATAGONIA GOLD CORPORATION
(An exploration stage enterprise)
<TABLE>
<CAPTION>
Consolidated Statements of Stockholders' Equity
Three months ended March 31, 2000 and the years ended December 31, 1999 and 1998 (Unaudited)
(Expressed in US Dollars)
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulated
Compre- Other
Common Stock Additional hensive Compre- Total
------------------------ Paid-In Income Accumulated hensive Stockholder's
Shares Amount Capital (loss) Deficit Income (loss) Equity
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1998 13,000,000 $ 13,000 $ 1,827,000 $ -- $ (28,577) $ 151,673 $ 1,963,096
- -----------------------------------------------------------------------------------------------------------------------------------
Net loss for the year -- -- -- (135,708) (135,708) -- (135,708)
Change in unrealized gains -- -- -- 98,086 -- 98,086 98,086
- -----------------------------------------------------------------------------------------------------------------------------------
Total comprehensive income -- -- -- (37,622) (135,708) 98,086 (37,622)
- -----------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1998 13,000,000 13,000 1,827,000 (164,285) 249,759 1,925,474
- -----------------------------------------------------------------------------------------------------------------------------------
Net loss for the year -- -- -- (460,883) (460,883) -- (460,883)
Change in unrealized loss -- -- -- (619,968) -- (619,968) (619,968)
- -----------------------------------------------------------------------------------------------------------------------------------
Total comprehensive income -- -- -- (1,080,851) (460,883) (619,968) (1,080,851)
- -----------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1999 13,000,000 13,000 1,827,000 (625,168) (370,209) 844,623
- -----------------------------------------------------------------------------------------------------------------------------------
Net loss for the period -- -- -- (30,733) (30,733) -- (30,733)
Change in unrealized loss -- -- -- 329,406 -- 329,406 329,406
- -----------------------------------------------------------------------------------------------------------------------------------
Total comprehensive income -- -- -- 298,673 (30,733) 329,406 298,673
- -----------------------------------------------------------------------------------------------------------------------------------
Balance, March 31, 2000 13,000,000 $ 13,000 $ 1,827,000 $ (655,901) $ (40,803) $ 1,143,296
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
PATAGONIA GOLD CORPORATION
(An exploration stage enterprise)
Consolidated Statements of Operations
Three months ended March 31, 2000 and 1999 (Unaudited)
(Expressed in US Dollars)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Three months
March 31 Ended
1993 (inception) March 31
to March 31 ----------------------------------
2000 2000 1999
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
General and administrative expenses
Administration and general $ 54,910 $ 9,843 $ 3,845
Professional fees - accounting and legal 71,659 1,255 9,220
Salaries and consulting fees 96,959 18,463 11,767
- --------------------------------------------------------------------------------------------------------------
223,528 29,561 24,832
Exploration expenses 152,419 1,135 5,142
Writedown of mineral property costs 297,000 -- --
- --------------------------------------------------------------------------------------------------------------
672,947 30,696 29,974
- --------------------------------------------------------------------------------------------------------------
Less: Income (loss)
Interest income 33,529 84 397
Dividend income 2,835 -- --
Realized gain (loss) on sale of investments (1,875) -- --
Interest expense (14,793) (121) (186)
Foreign exchange loss (2,650) -- --
- --------------------------------------------------------------------------------------------------------------
17,046 (37) 211
- --------------------------------------------------------------------------------------------------------------
Net loss for the period (655,901) $ (30,733) $ (29,763)
- --------------------------------------------------------------------------------------------------------------
Loss per share $ (0.00) $ (0.00)
- --------------------------------------------------------------------------------------------------------------
Weighted average shares outstanding 13,000,000 13,000,000
- --------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements
5
<PAGE>
PATAGONIA GOLD CORPORATION
(An exploration stage enterprise)
Consolidated Statements of Operations
Three months ended March 31, 2000 and 1999 (Unaudited)
(Expressed in US Dollars)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
March 31, Three months
1993 (inception) Ended
to December 31 March 31
--------------------------------
2000 2000 1999
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from (used in)
operating activities
Net loss for the period $ (655,901) $ (30,733) $ (29,763)
Adjustments to reconcile net loss to net
cash used in operating activities:
- realized loss (gain on sale of investments (1,875) -- --
- writedown of mineral properties 297,000 -- --
- ------------------------------------------------------------------------------------------------------------------------------------
(360,776) (30,733) (29,763)
Changes in assets and liabilities
- decrease (increase) in accounts receivable (14) (7) (113)
- increase (decrease) in accounts payable 38,000 3,000 1,184
- ------------------------------------------------------------------------------------------------------------------------------------
(322,790) (27,740) (28,692)
- ------------------------------------------------------------------------------------------------------------------------------------
Cash flows from (used in)
investing activities
Purchase of available for sale securities (2,178,119) -- --
Proceeds on sale of available-for-sale securities 888,453 -- --
Mineral property costs (12,250) -- --
- ------------------------------------------------------------------------------------------------------------------------------------
(1,301,916) -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities
Proceeds from issuance of common stock 1,540,000 -- --
Proceeds from notes payable 90,179 10,300 --
- ------------------------------------------------------------------------------------------------------------------------------------
1,630,179 10,300 --
- ------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash for the period 5,473 (17,440) (28,692)
Cash, beginning of period -- 22,913 73,651
- ------------------------------------------------------------------------------------------------------------------------------------
Cash, end of period $ 5,473 $ 5,473 $ 44,959
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
Notes to Interim Consolidated Financial Statements (Unaudited)
1. Nature of Business and Going Concern
The Company was incorporated under the laws of the State of Florida on
March 31, 1993 and is in the business of exploration and development of
mineral properties. On October 13, 1997, the Company changed its name to
Patagonia Gold Corporation.
The Company was inactive until June 30, 1997, when it entered into a share
exchange agreement with the shareholders of Patagonia Gold Mines Ltd.
("PGM"), an inactive company incorporated in 1994 under the laws of
Bermuda, whereby the Company acquired all issued and outstanding share of
PGM in exchange for 5,500,000 common shares of the Company. There were no
operations of the companies prior to June 30, 1997. At the conclusion of
the transaction, the former shareholders of PGM controlled the Company and,
thus, the transaction has been accounted for as a reverse acquisition of
the Company by PGM. Consistent with accounting principles governing the
accounting for reverse acquisitions, these consolidated financial
statements are accounted for as a continuation of the legal subsidiary.
The acquisition was recorded using the purchase method. As the net book
value of the Company at the date of the acquisition was $Nil, a nominal
value has been assigned to shares issued pursuant to the share exchange
agreement.
Also on July 30, 1997, the Company acquired mineral properties in Argentina
in exchange for the issuance of 3,000,000 common shares. The mineral
properties were valued at $300,000. During the year ended December 31,
1999, the Company determined that the carrying value of the Argentinean
mineral properties exceeded the future projected cash flows from the
mineral properties. Consequently, the mineral properties were written down
to their estimated fair value of $3,000.
The recovery of the amounts shown for interests in mineral properties is
dependent upon the discovery of economically recoverable reserves or
proceeds from the disposition thereof, confirmation of the Company's
interest in the underlying mineral claims, the ability of the Company to
obtain financing to complete development of the properties and on future
profitable operations.
2. Significant Accounting Policies
(a) Basis of Consolidation
These consolidated financial statements, prepared in accordance with
accounting principles generally accepted in the United States, include
the accounts of the Company and its wholly-owned subsidiary, Patagonia
Gold Mines Ltd., a company incorporated in 1994 under the laws of
Bermuda. Significant inter-company accounts and transactions have been
eliminated.
(b) Cash and Cash Equivalents
Cash equivalents are comprised of certain highly liquid instruments
with a maturity of three months or less when purchased. There were no
cash equivalents as of March 31, 2000.
(c) 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.
From that time forward, the Company will capitalize all costs to the
extent that future cash flow from reserves equals or exceeds the
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<PAGE>
costs deferred. As at March 31, 2000 and December 31, 1999, the
Company did not have proven reserves. Cost 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.
Costs related to site restoration programs are accrued over the life
of the project.
(d) Investments
Available-for-sale securities are carried at fair market value with
unrealised holding gains and losses included in stockholders' equity.
Realized gains and losses are determined on an average cost basis when
securities are sold.
(e) Concentration of Credit Risk
The Company places its cash and cash equivalents with high credit
quality financial institutions. The Company routinely maintains
balances in a financial institution beyond the insured amount. As of
March 31, 2000 the Company had $ nil in a bank beyond insured limits.
(f) 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 period 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.
(g) Advertising Expenses
The Company expenses advertising costs as incurred. Total advertising
costs charged to expenses for the three months ended March 31, 2000
and 1999 were $Nil and $Nil, respectively.
(h) Impairment
Certain long-term assets of the Company are reviewed when changes in
circumstances require as to whether their carrying value has become
impaired, pursuant to guidance established in Statement of Financial
Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed of".
Management considers assets to be impaired if the carrying value
exceeds the future projected cash flows from related operations
(undiscounted and without interest charges). If impairment is deemed
to exist, the assets will be written down to fair value.
(i) 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 and assumptions.
8
<PAGE>
(j) 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, receivables, investments 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.
(k) Income Taxes
The Company has adopted Statement of Financial Accounting Standards
(SFAS") No. 109, "Accounting for Income Taxes", 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 using the
liability method. Under this method, deferred tax liabilities and
assets are determined based on the temporary differences between the
financial statement and tax bases of assets and liabilities using
enacted tax rates in effect in the years in which the differences are
expected to reverse.
(l) 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".
(m) Comprehensive Income
In 1998, the Company adopted SFAS No. 130, "Reporting Comprehensive
Income", which establishes standards for reporting and display of
comprehensive income, its components and accumulated balances. The
Company is disclosing this information on its Statement of
Stockholders' Equity. Comprehensive income comprises equity except
those resulting from investments by owners and distributions to
owners. SFAS No. 130 did not change the current accounting treatments
for components of comprehensive income.
(n) 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 in 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, 2000.
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, 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-activities and organization costs to be expensed as incurred.
SOP 98-5 is effective for
9
<PAGE>
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 has no material effect on the financial
statements.
3. Investments
Investments consist of available-for-sale securities and are summarized as
follows:
Gross Gross
unrealized unrealized Market
Cost gains losses value
---------------------------------------------------------------------------
March 31, 2000
Equity securities $1,291,541 $ 224,943 $ 265,746 $1,250,738
===========================================================================
December 31, 1999
Equity securities $1,291,541 $ 22,434 $ 392,643 $ 921,332
===========================================================================
Unrealised losses totalling $73,440 (December 31, 1999 - $7,949) relate to
investments held by the Company's Bermuda subsidiary and are not subject to
income tax.
4. Mineral Property Costs
(a) Argentina
Mineral concessions in the Province of La Rioja, Argentina, are as
follows:
o Piloncho 1, Sierra de Chepes
o Piloncho 2, Sierra de Chepes
o Piloncho 20, Sierra de Chepes
o Piloncho 21, Sierra de Chepes
o Carmelita 16, Sierra de Chepes
o Carmelita 17, Sierra de Chepes
o Carmelita 18, Sierra de Chepes
(b) Guatamala
On October 1, 1999, the Company entered into an agreement that gives
the Company the right to earn a 50% interest in the San Diego Mineral
Exploration Reconnaissance Licence by paying:
o A $9,250 acquisition fee (paid); and
o $18,617 towards the Phase I exploration program.
5. Notes Payable
Loans payable are unsecured, non-interest bearing and are due on demand.
6. Share Capital
On April 9, 1997, the Company amended its Articles of Incorporation to
provide for the authorization of 50,000,000 common shares at $0.001 par
value. Previously, the authorized capital was 200 common shares of no par
value.
10
<PAGE>
Also, on April 9, 1997, the Company forward split its common stock 5,000:1,
thus increasing the number of issued and outstanding common shares from 200
shares to 1,000,000 shares. This split has been reflected retroactively in
these financial statements. Income
7. Taxes
(a) The Company has estimated net losses for tax purposes to December 31,
1999, totalling approximately $614,000, which may be applied against
future taxable income. Accordingly, there is no tax expense charged to
the Statement of Operations for the years ended December 31, 1999 and
1998. 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 income.
The right to claim these losses is expected to expire as follows:
2008 $ 10,000
2012 16,000
2018 128,000
2019 460,000
---------------------------------
$614,000
=================================
(b) The tax effects of temporary differences that give rise to the
Company's deferred tax asset (liability) are as follows:
1999 1998
----------------------------------------------------------------------
Tax loss carry forwards $ 157,000 $ 52,000
Valuation allowance (157,000) (52,000)
----------------------------------------------------------------------
$ -- $ --
======================================================================
No tax effect haseen recorded on the accumulated other comprehensive
income unrealized gains on securities available-for-sale due to the
existence of U.S. tax loss carry forwards.
8. Comparative Figures
Certain 1999 comparative figures have been reclassified to conform with the
financial statement presentation adopted for 2000.
9. Related Party Transactions
Related party transactions not disclosed elsewhere in these financial
statements for the three months ended March 31, 2000, include salaries of
$10,000 (1999 - $Nil), which were paid to a director of the Company and
were charged to operations in 2000.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
(A) General
Patagonia Gold Corporation (the "Company" or "Patagonia") was incorporated
under the laws of the State of Florida on March 31, 1993, under the name "Cayman
Purchasing & Supply, Inc." The
11
<PAGE>
Company was inactive until it redirected its business efforts in mid 1997
following a change of management, which occurred on June 25, 1997, to the
acquisition, exploration and, if warranted, the development of mineral resource
properties. The Company changed its name to Patagonia Gold Corporation on
October 13, 1997 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.
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 Mineral Reserves. 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 centered in Argentina and
Guatemala.
During 1999 and the first quarter of 2000, the Company conducted initial
exploration programs for gold mineralization on its properties in Argentina and
Guatemala.
In Guatemala, the Company entered into a joint venture agreement with
Aurora Gold Corporation in October 1999 to conduct initial mineral exploration
on the San Diego Exploration Reconnaissance Licence. The licence was granted to
Aurora Gold Corporation in September 1999. Initial exploration work begun in
1999 continued during the first quarter of 2000.
None of the Company's properties contain any known Mineral 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.
(B) Significant developments during the first quarter of 2000
In October 1999 the Company entered into a joint venture with Aurora Gold
Corporation for preliminary exploration of the San Diego reconnaissance license
located in Guatemala. The reconnaissance licence covers 800 square kilometers.
An exploration program funded by Patagonia Gold Corporation commenced on the
most prospective areas during the last quarter of 1999 and continued during the
first quarter of 2000.
(C) Financial Information
Three Months Ended March 31, 2000 versus Three Months Ended March 31, 1999
For the three months ended March 31, 2000 the Company recorded a loss of $30,733
or $0.00 per share, compared to a loss of $29,763 or $0.00 per share in 1999.
General and administrative expenses - For the three months ended March 31, 2000
the Company recorded general and administrative expenses of $9,843, compared to
$3,845 in 1999.
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Professional fees - accounting and legal - For the three months ended March 31,
2000 the Company recorded accounting and legal fees of $1,255, compared to
$9,220 in 1999. The 1999 costs reflect the costs associated with the preparation
and filing of the Company's Form 10-SB Registration Statement.
Exploration expenditures - For the three months ended March 31, 2000 the Company
recorded exploration expenses of $1,135, compared to $5,142 in 1999.
(D) Financial Condition and liquidity
At March 31, 2000, the Company had cash of $5,473 (1999 - $44,959) and
working capital of $1,131,046 (1999 - $1,490,622) respectively. Total
liabilities as of March 31, 2000 were $125,179 as compared to $17,037 on March
31, 1999, an increase of $108,142. During the three months ended March 31, 2000
financing activities consisted of the following, proceeds from notes and
advances payable $10,300 (1999 - $0). For the three months ended March 31, 2000
investing activities consisted $0 (1999 - $0). The Company recorded a loss for
the three months ended March 31, 2000 of $30,733, or $0.00 per share, compared
to a loss of $29,763 ($0.00 per share) in 1999.
The Company has sufficient working capital to (i) pay its administrative
and general operating expenses through December 31, 2000 and (ii) to conduct
preliminary exploration programs. However, 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 Year 2000 compliant. The
Company is using independent consultants to oversee the Year 2000 project as
well, as to perform certain remediation efforts. In 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. New
equipment and software was installed during the third and fourth quarters of
1999. 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'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.
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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 formulated a
contingency plan to deal with the potential non-compliance of vendors and
customers.
As of April 30, 2000 the Company has not experienced any year 2000 problems
nor has any of the Company's vendors or others with whom it transacts business.
PART 11. OTHER INFORMATION
ITEM 1. Legal Proceedings
The Company is not party to any litigation, and has no knowledge of any
pending or threatened litigation against it.
ITEM 2. Changes in Securities
Not Applicable
ITEM 3. Defaults Upon Senior Securities
Not Applicable
ITEM 4. Submission of Matters to a Vote of Security Holders
Not Applicable
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
3.1 Article of Incorporation of Cayman Purchasing & Supply, Inc. *
3.2 Company By-laws for Cayman Purchasing & Supply, Inc. *
3.3 Notice of reinstatement for Cayman Purchasing & Supply, Inc. *
3.4 Amendment to the Articles of Incorporation of Cayman Purchasing
& Supply, Inc. *
14
4
<PAGE>
3.5 Notice of filing of Amendment to the Articles of Incorporation
of Cayman Purchasing & Supply, Inc. *
3.6 Notice of filing of Amendment to the Articles of Incorporation
of Cayman Purchasing & Supply, Inc. changing its name to Patagonia
Gold Corporation *
10.1 Agreement dated July 30, 1997 between The Company and
Carrington International Limited *
10.2 Joint Venture Agreement between the Company and Aurora Gold Corporation *
27.1 Financial Data Schedule
- --------
* Previously Filed
(b) Reports on Form 8-K
None.
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 30, 2000 BY: /s/ David Jenkins
---------------------------
David Jenkins
Director and President
Date: April 30, 2000 BY: /s/ Cosme M. Beccar Varela
--------------------------
Cosme M. Beccar Varela
Director
15
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<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
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0
0
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