U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: December 31, 1999
[ ] TRANSITION REPORT PURSUANT SECTION 13 OF 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________________ to ________________
Commission file number 0-27953
GOLDEN RIVER RESOURCES INC.
(Exact name of small business issuer as specified in its charter)
NEVADA 98-0187538
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
2420 PANDOSY STREET, KELOWNA, BRITISH COLUMBIA, CANADA V1Y 1T8
(Address of principal executive offices)
(250) 717-1049
(Issuer's telephone number)
NOT APPLICABLE
(Former name, former address and former fiscal year, if changed
since last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the last practicable date:
17,005,072 SHARES OF COMMON STOCK, $.001 PAR VALUE, AS OF
DECEMBER 31, 1999
Transitional Small Business Disclosure Format (check one); Yes No X
1
<PAGE>
Consolidated Financial Statements of
GOLDEN RIVER RESOURCES INC.
(An Exploration Stage Enterprise)
Six month period ended, December 31, 1999
(Unaudited - Prepared by Management)
2
<PAGE>
GOLDEN RIVER RESOURCES INC.
(An Exploration Stage Enterprise)
Consolidated Balance Sheet
$ United States
December 31, 1999 and 1998
(Unaudited - Prepared by Management)
_______________________________________________________________________________
1999 1998
_______________________________________________________________________________
ASSETS
Current Assets
Cash $ 8,561 $ 90,757
Prepaid expense 4,688 -
_______________________________________________________________________________
13,249 90,757
Capital assets, net of amortization 9,915 -
Mineral properties 348,396 543,624
_______________________________________________________________________________
$ 371,560 $ 634,381
_______________________________________________________________________________
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities $ 140,570 $ 13,536
Due to shareholders 22,228 97,473
Shares to be issued for cash - 498,832
_______________________________________________________________________________
162,798 609,841
Long term debt (note 2) 100,233 -
Stockholders' Equity
Capital stock 1,672,475 469,994
Deficit accumulated during the
exploration stage (1,568,914) (462,677)
Accumulated other comprehensive income 4,968 17,223
_______________________________________________________________________________
108,529 24,540
_______________________________________________________________________________
$ 371,560 $ 634,381
_______________________________________________________________________________
These financial statements include all adjustments necessary so as to not make
them misleading.
On behalf of the Board:
"Roger D. Watts
__________________________ Director
"R. Bruce Manery:
__________________________ Director
3
<PAGE>
GOLDEN RIVER RESOURCES INC.
(An Exploration Stage Enterprise)
Consolidated Statement of Loss
$ United States
Six month period ended December 31, 1999 and 1998
(Unaudited - Prepared by Management)
<TABLE>
<CAPTION>
_______________________________________________________________________________________________________________________
From Inception
(June 13, 1997)
to December 31, 1999 1999 1998
_______________________________________________________________________________________________________________________
<S> <C> <C> <C>
Expenses
Amortization $ 1,794 $ 562 $ -
Consulting fees 18,886 16,065 38,268
Exploration of mineral properties 358,379 42,406 78,974
General and administrative 84,370 21,978 14,507
Management fees 125,308 - 12,593
Option payments to acquire mineral
Properties written off 534,214 - -
Professional fees 228,836 44,465 28,650
Travel and promotion 217,127 28,355 34,916
_______________________________________________________________________________________________________________________
( 1,568,914) (153,831) (207,908)
_______________________________________________________________________________________________________________________
Loss $ (1,568,914) $ (153,831) $ (207,908)
_______________________________________________________________________________________________________________________
Weighted average number of shares 6,918,865 15,376,079 3,469,808
Earnings per share $ (0.23) $ (0.01) $ (0.06)
_______________________________________________________________________________________________________________________
</TABLE>
These financial statements include all adjustments necessary so as not to make
them misleading.
4
<PAGE>
GOLDEN RIVER RESOURCES INC.
(An Exploration Stage Enterprise)
Consolidated Statement of Stockholders' Equity and Comprehensive Income
$ United States
Six month period ended December 31, 1999
(Unaudited - Prepared by Management)
<TABLE>
<CAPTION>
_________________________________________________________________________________________________________________________________
Deficit
Accumulated Accumulated
During the Other Total
CAPITAL STOCK Exploration Comprehensive Stockholders
Shares Income Stage Income Equity
_________________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Golden River Balance, June 30, 1999 14,822,872 $ 1,567,475 $ (1,415,083) $ 5043 $ 157,435
Loss - - (153,831) - (153,831)
Foreign currency translation adjustment - - - (75) (75)
Issued for services 750,000 193,220 - - 193,220
Share issue costs 1,182,200 (118,220) - - (118,220)
Shares issued pursuant to Mineral Property
agreement @ $.12 per share 250,000 30,000 - - 30,000
_________________________________________________________________________________________________________________________________
Balance December 31, 1999
(Unaudited) 17,005,072 $ 1,672,475 $ (1,568,914) $ 4968 $ 108,529
_________________________________________________________________________________________________________________________________
</TABLE>
These financial statements include all adjustments necessary so as to not make
them misleading.
5
<PAGE>
GOLDEN RIVER RESOURCES INC.
(An Exploration Stage Enterprise)
Consolidated Statement of Cash Flows
$ United States
Six month period ended December 31, 1999 and 1998
(Unaudited - Prepared by Management
<TABLE>
<CAPTION>
_______________________________________________________________________________________________________
From Inception
(June 13, 1997)
to December 31, 1999 1999 1998
_______________________________________________________________________________________________________
<S> <C> <C> <C>
Loss $ (1,568,914) $ (153,831) $ (207,908)
Cash flows from operating activities:
Items not involving cash:
Amortization 1,794 562 -
Option payments to acquire mineral
Properties written off 534,214 - -
Accounts payable and accrued liabilities 80,242 (5,999) (23,244)
Other changes in non-cash operating
Working capital 17,541 11,571 92,472
________________________________________________________________________________________________________
(935,123) (147,697) (138,680)
Cash flows from investing activities:
Purchase of capital assets (11,748) (1,049) -
Option payments on mineral properties (822,610) - (297,602)
________________________________________________________________________________________________________
(834,358) (1,049) (297,602)
Cash flows from financing activities:
Proceeds from long term debt 100,233 100,233 -
Proceeds from share subscriptions - - 498,832
Issuance of capital stock 903,971 - 6,614
Proceeds from realization of assets aquired from
the business combination with Golden River 769,589 - -
________________________________________________________________________________________________________
1,773,793 100,233 505,446
Foreign currency translation adjustment 4,249 (75) 8,795
________________________________________________________________________________________________________
Increase (decrease) in cash 8,561 (48,588) 77,959
Cash position, beginning of period - 57,149 12,798
________________________________________________________________________________________________________
Cash position, end of period $ 8,561 $ 8,561 $ 90,757
________________________________________________________________________________________________________
</TABLE>
These financial statements include all adjustments necessary so as to not make
them misleading.
6
<PAGE>
GOLDEN RIVER RESOURCES INC.
(An Exploration Stage Enterprise)
Notes to Consolidated Financial Statements
$ United States
Six month period ended December 31, 1999 and 1998
(Unaudited - Prepared by Management)
________________________________________________________________________________
1. SIGNIFICANT ACCOUNTING POLICIES:
A) TRANSLATION OF FINANCIAL STATEMENTS
The Company's subsidiary, Rob Roy Resources Ltd., operates in Canada and
its operation are conducted in Canadian currency.
These consolidated statements are presented in United States currency for
the convenience of readers accustomed to United States Currency. The method
of translation applied is as follows:
i) Monetary assets and liabilities are translated at the rate of exchange
in effect at the balance sheet date, being US $1.00 per Cdn $1.4721.
ii) Non-monetary assets and liabilities are translated at the rate of
exchange in effect at the date transaction occurred.
iii) Revenues and expenses are translated at the exchange rate in effect at
the transaction date.
iv) The net adjustment arising from the translation is recorded as a
separate component of stockholders' equity called "Accumulated other
comprehensive income".
B) LOSS PER SHARE
Loss per share has been calculated using the weighted average number of
common shares outstanding during the period. The effect of the contingent
stock issues pursuant to the La Mexicana agreement, and the stock options
issued during the period (note 3) have not been included in the computation
because to do so would be anti-dilutive.
2. LONG TERM DEBT:
The long term debt is demand in nature, does not bear interest and has no
fixed terms of repayment.
3. STOCK OPTION PLAN:
During 1999, the Company adopted a stock option plan whereby directors,
officiers and employees of the Company were granted the right to subscribe
for up to 10% of the issued and outstanding shares of the Company at prices
to be fixed at the time the options are granted. Options issued pursuant to
the Plan have a vesting period of three months, and expire five years from
the date of issue. The Company applies APB Opinion NO. 25 in accounting for
its stock option plan and, accordingly, no compensation cost is recognized
for its stock options in these financial statements.
During the period ended December 31, 1999, the Company issued 1,450,000
common share stock options. These stock options have an exercise price of
$0.10 per share, a vesting date of December 23, 1999 and expire on
September 23, 2004.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Effective March 10, 1999, the Company completed the acquisition of 100% of the
outstanding common shares of Rob Roy Resources Inc. ("Rob Roy"). As the Rob Roy
shareholders obtained effective control of the Company through the exchange of
their shares of Rob Roy for shares of the Company, the acquisition has been
accounted for in these consolidated financial statements as a reverse
acquisition. Consequently, the consolidated statements of loss and deficit and
changes in cash flows reflect the results from operations and changes in
financial position of Rob Roy, the legal subsidiary, for the year ended June 30,
1999 combined with those of the Company, the legal parent, from the date of
acquisition on March 10, 1999, in accordance with generally accepted accounting
principles for reverse acquisitions. In addition, the comparative figures are
those of Rob Roy, the legal subsidiary.
The Company's fiscal year end is June 30. The following is a summary of certain
selected financial information for the six months ended December 31, 1999, the
fiscal year ended June 30, 1999, and the period from its date of incorporation
to June 30, 1998. Reference should be made to the financial statements attached
to this registration statement to put the following summary in context. All
dollar figures referred to in this section relating to the Company are listed in
US dollars unless otherwise noted.
<TABLE>
<CAPTION>
INCEPTION (JUNE 13,
SIX MONTHS ENDED YEAR ENDED 1997) TO JUNE 30,
DECEMBER 31, 1999 JUNE 30, 1999 1998 (UNAUDITED)
<S> <C> <C> <C>
- ------------------------------ ----------------------------- ------------------------------ -----------------------------
Revenues -- -- --
- ------------------------------ ----------------------------- ------------------------------ -----------------------------
(Loss) from
continuing operations $ (153,831) $ (1,160,315) $ (254,769)
- ------------------------------ ----------------------------- ------------------------------ -----------------------------
(Loss) per common
share $ (0.01) $ (0.15) $ (0.13)
- ------------------------------ ----------------------------- ------------------------------ -----------------------------
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1999 JUNE 30, 1999 JUNE 30, 1998
- ------------------------------ ----------------------------- ------------------------------ -----------------------------
<S> <C> <C> <C>
Working capital
(deficiency) $ (149,549) $ (170,390) $ (28,983)
- ------------------------------ ----------------------------- ------------------------------ -----------------------------
Total assets $ 371,560 $ 391,193 $ 258,820
- ------------------------------ ----------------------------- ------------------------------ -----------------------------
Long-term obligations $ 100,233 -- --
- ------------------------------ ----------------------------- ------------------------------ -----------------------------
</TABLE>
RESULTS OF OPERATIONS
The Company's level of activity was lower during the six months ended December
31, 1999, as compared to the previous period. The Company focused its efforts on
attaining reporting issuer status during the six months December 31, 1999. Such
status is necessary in order to have the Company's common stock quoted on the
OTC Bulletin Board. Little exploration work was conducted on the Mexicana
property.
8
<PAGE>
Accordingly, exploration expenses decreased by 46% from those of the previous
period, while general and administrative expenses and professional fees
increased by 51% and 55%, respectively.
Due to the lack of any revenues, and the cumulative losses of $1,415,084
incurred through June 30, 1999, and $1,568,914 through December 31, 1999, there
is a substantial doubt about the Company's ability to continue as a going
concern, as noted in the report of the independent auditors on the Company's
financial statements. The Company requires additional financing to continue
operations and to undertake the exploration programs described below. If it is
unable to obtain such financing, it may be unable to continue operations or
engage in the exploration programs.
FINANCIAL CONDITION
Since inception, the Company's capital resources have been limited. The Company
has had to rely upon the sale of equity securities for cash required to fund the
administration of the Company. From its inception through December 31, 1999, the
Company has raised $903,971 from the sale of its Common Stock. Since the Company
does not expect to generate any revenues in the near future, it will have to
continue to rely upon sales of equity and debt securities to raise capital. It
follows that there can be no assurance that financing, whether debt or equity,
will always be available to the Company in the amount required at any particular
time or for any particular period or, if available, that it can be obtained on
terms satisfactory to the Company.
At December 31, 1999, the Company had a working capital deficiency of $149,549,
as compared to a deficiency of $170,390 at June 30, 1999.
PLAN OF OPERATION
In addition to option payments of $5,000 due toward the January 1, 2000
installment , the Company is required to invest a total of $300,000 on or before
June 12, 2000 on work commitments. The Company plans to conduct a Phase 1
regional geochemical survey over the La Mexicana property at a cost of
approximately $19,000. The Phase 1 program will be followed by a Phase 2 program
at a cost of approximately $77,000. The Company does not presently have the
funds available for either the Phase 1 or Phase 2 program and will have to raise
additional funds by way of debt or equity in order to finance same. It does not
have any arrangements for such funding at present. If the Company were unable to
raise the funds necessary to satisfy the option payment and work commitment
requirements, the Company would seek an extension from the optionor of the
Mexicana I property.
In addition to the property obligations described in the preceding paragraph,
the Company has only normal trade obligations. The officers and directors of the
Company and the persons to whom the long-term debt of $100,233 is owed, have not
given the Company a fixed date for repayment.
As of December 31, 1999, the Company had approximately $8,500 cash on hand,
which will be sufficient to satisfy its cash requirements for the next six
months of minimal operations. The
9
<PAGE>
Company would be able to maintain an office, but would not be able to undertake
the exploration programs on the property, make any option payments, or service
any existing debt. The Company does not intend to hire any more full-time
employees over the next 12 months. Subject to the availability of funds the
Company will hire additional employees and consultants on a part-time basis in
order to carry out its proposed work programs. The Company does not intend to
make any purchases of plant or equipment over the next 12 months.
If the Transmeridian transaction should be completed, the Company would be
required to arrange for a private placement in the minimum amount of $2,000,000
to cover immediate working capital and project costs. Since the Company has just
started its due diligence work on Transmeridian, management does not know
whether the acquisition will be consummated or when closing would occur.
Accordingly, the Company has not made any plans with respect to a proposed
private placement.
YEAR 2000 READINESS DISCLOSURE
The Year 2000 issue refers to the inability of computer and other information
technology systems to properly process date and time information due to the
programming of a two digit year rather than a four digit year. The risk is that
a system will recognize the digits "00" as 1900 rather than the year 2000, or
that the system may not recognize "00" as a year at all. As a result, computers
and embedded processing systems may be at risk of malfunctioning, particularly
during the transition from 1999 to 2000.
The Company has completed its assessment of the impact of Year 2000 issues on
its business operations. The Year 2000 issue may affect the Company in four
principal areas including: (1) computer systems such as personal computers,
operating systems, business software, and application software including
accounting systems, technical support software and administration software; (2)
field assets (primarily embedded systems) such as programmable logic controllers
and equipment control panels; (3) other systems such as telephones, photocopiers
and facsimile machines; and (4) third-party suppliers and service providers such
as banks and insurance companies.
To date, the Company has implemented and tested its computer software and
hardware for Year 2000 compliance and has concluded that its hardware and
software is Year 2000 compliant.
The Company's Year 2000 program is designed to reduce the Company's risk of
material losses due to the Year 2000 issue. Management does not anticipate any
material adverse effect from the Year 2000 issue; however, the Company cannot be
certain that it will not suffer material adverse effects in the event that third
parties upon which the Company is dependent are unable to resolve their Year
2000 issues.
10
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not Applicable.
ITEM 2. CHANGES IN SECURITIES
In November 1999, the Company issued 1,182,200 shares of Common Stock
to 67849 Capital Ltd. as payment for services valued at $118,220. In
addition, the Company issued 250,000 shares to Ing. Cuitlahuac Rangel
Alcaraz valued at $30,000, pursuant to the obligations set forth in the
amended Option Agreement on the La Mexicana property. The Company
relied upon the exemption from registration contained in Section 4(2)
of the Securities Act of 1933. No underwriters were used and no
underwriting commissions were paid.
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
Not Applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A) EXHIBITS
REGULATION CONSECUTIVE
S-B NUMBER EXHIBIT PAGE NUMBER
2.1 Offer to Purchase (1) N/A
3.1 Articles of Incorporation (1) N/A
3.2 Bylaws (1) N/A
10.1 Mexicana I Agreement dated as of February 12, 1998 (1) N/A
10.2 La Lajita Agreement dated as of February 12, 1998 (1) N/A
10.3 1999 Stock Option Plan (1) N/A
11
<PAGE>
REGULATION CONSECUTIVE
S-B NUMBER EXHIBIT PAGE NUMBER
10.4 Agreement with Transmeridian Exploration Inc., as
amended (1) N/A
10.5 Letter of Intent with OREX Gold Mines Corporation (1) N/A
10.6 Mexicana I Agreement dated as of November 12, 1999 (1) N/A
27 Financial Data Schedule
- -----------------------
1) Incorporated by reference to the exhibits filed with the Registration
Statement on Form 10-SB, File No. 0-27953
B) REPORTS ON FORM 8-K:
None.
12
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
GOLDEN RIVER RESOURCES INC.
(Registrant)
Date: February 17, 2000 By: /S/ ROBERT BRUCE MANERY
---------------------------------------
Robert Bruce Manery, Secretary
(Principal financial officer)
13
<PAGE>
Exhibit 27
Financial Data Schedule
14
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE UNAUDITED
CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE SIX MONTHS ENDED DECEMBER
31, 1999, AND THE NOTES THERETO, WHICH MAY BE FOUND ON PAGES 2 THROUGH 7 OF THE
COMPANY'S FORM 10-QSB, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-01-1999
<PERIOD-END> DEC-31-1999
<EXCHANGE-RATE> 1
<CASH> 8,561
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 13,249
<PP&E> 11,709
<DEPRECIATION> 1,794
<TOTAL-ASSETS> 371,560
<CURRENT-LIABILITIES> 162,798
<BONDS> 100,233
0
0
<COMMON> 1,672,475
<OTHER-SE> (1,563,946)
<TOTAL-LIABILITY-AND-EQUITY> 371,560
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 153,831
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (153,831)
<INCOME-TAX> 0
<INCOME-CONTINUING> (153,831)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (153,831)
<EPS-BASIC> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
