UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB/A
AMENDMENT NO. 3
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
UNDER SECTION 12(B) OR (G) OF THE SECURITIES EXCHANGE ACT OF 1934
GOLDEN RIVER RESOURCES INC.
(Name of Small Business Issuer in its Charter)
NEVADA 98-0187538
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
2420 PANDOSY STREET, KELOWNA, BRITISH COLUMBIA,
CANADA, V1Y 1T8 (Address of principal
executive offices)
Issuer's Telephone Number: (250) 717-1049
Securities to be registered under Section 12(b) of the Act:
NONE
Securities to be registered under Section 12(g) of the Act:
COMMON STOCK, $.001 PAR VALUE
(Title of class)
<PAGE>
PART 1
ITEM 1. DESCRIPTION OF BUSINESS
CORPORATE HISTORY
As used herein, the term "Company" refers to Golden River Resources Inc., a
corporation incorporated under the laws of Nevada. The Company is engaged in the
exploration of its precious mineral resource property. The Company indirectly,
through subsidiaries, owns an interest in a mineral property located in Durango
State, Mexico. This interest is comprised of an option to acquire an interest in
a mineral property in consideration of cash payments, share issuances and
exploration expenditures.
The Company was incorporated under the laws of the State of Nevada on June 17,
1997. The Company has one subsidiary: Rob Roy Resources Inc. ("Rob Roy"), all of
the shares of which are owned directly by the Company. Rob Roy owns all of the
shares of La Mexicana Resources S.A. de C.V. ("La Mexicana"). The Company,
through its subsidiaries, is engaged in the acquisition and exploration of a
precious mineral property.
In May 1998, the Company completed a private placement of 3,568,000 shares of
its Common Stock, resulting in gross proceeds of $35,680. In June 1998, the
Company sold 200,000 shares of Common Stock for gross proceeds of $10,000. In
December 1998, the Company sold 1,800,000 shares of Common Stock for gross
proceeds of $90,000.
On March 10, 1999, the Company completed the purchase of all of the issued and
outstanding shares of Rob Roy, a non-reporting company incorporated in British
Columbia, Canada, on June 13, 1997. The Company issued, on a one-for-one basis,
6,454,872 shares of its Common Stock (the "Takeover Shares") in exchange for
6,454,872 common shares without par value of Rob Roy. Certificates for 15% of
the Takeover Shares issued to Rob Roy's shareholders were subject to a
restrictive legend which expired on May 11, 1999; certificates for an additional
15% of the Takeover Shares were subject to a restrictive legend which expired on
September 11, 1999; and the certificates for the balance of 70% of the Takeover
Shares are subject to a restrictive legend expiring on January 11, 2000.
After the completion of the purchase, Rob Roy became a subsidiary of the
Company. Rob Roy owns 100% of the shares of La Mexicana, a company incorporated
pursuant to the laws of Mexico on February 12, 1998. La Mexicana is a company
engaged in the acquisition and exploration of a natural resource property
located in the area of Durango, Mexico. Rob Roy does not have an interest in any
other companies.
The Company engaged in two other private placements of Common Stock: 2,000,000
shares for gross proceeds of $700,000 in April 1999 and 750,000 shares in
September 1999 to satisfy an obligation to pay for services.
On October 13, 1999, the Company entered into an agreement with Peter Holstein,
on behalf of himself and all other shareholders of Transmeridian Exploration
Inc., a British Virgin Islands company engaged in oil and gas exploration
("Transmeridian"), to purchase all of the issued and outstanding shares of
Transmeridian by issuing shares of Common Stock of the Company. The number of
shares issued is to be determined by the net asset value of the oil and gas
properties owned by Transmeridian at the closing date divided by $5.00 for
proven reserves and $10.00 for probable reserves. An independent and certified
oil and gas valuator is to be engaged to value the Transmeridian assets.
Consummation of the acquisition of Transmeridian is subject to several
conditions, including satisfactory due diligence of Transmeridian, its net asset
value, and its principals; execution of a formal purchase agreement; approval of
the transaction by the shareholders
<PAGE>
of the Company; the furnishing of financial statements by Transmeridian which
will meet the requirements of the Securities and Exchange Commission; and the
execution of a satisfactory employment agreement with Peter Holstein. If the
acquisition is completed, the Company will use its reasonable best efforts to
change its name to "Transmeridian Exploration Inc.", and to arrange for a
private placement in the minimum amount of $2,000,000 to cover immediate working
capital and project costs. Also upon closing, Peter Holstein will have the right
to designate four persons for appointment to the board of directors of the
Company. 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. If the acquisition were to occur, the
Company would be entering into a different line of business, oil and gas
exploration, which entails risks different from those encountered in the mining
industry. Further, if the acquisition were to occur, the Company would also face
the risk of doing business in Russia, Kazakhstan, and Turkmenistan. As of March
29, 2000, no progress has been made by the Company towards the proposed
acquisition of Transmeridian.
On October 25, 1999, the Company entered into a nonbinding letter of intent with
OREX Gold Mines Corporation to use its method for processing gold ores.
Management anticipates that the process may be useful in connection with the
Mexicana I property if the Company's exploration work on the property yields
promising results. The OREX method is apparently one that is non-toxic, as
opposed to the conventional cyanide leaching method. The Company is still
investigating this method. The parties have not yet negotiated any terms of a
working relationship.
MINING OPERATIONS AND RISKS
The mining property is an exploration property and does not have any proven
mineral reserves. Should mineral reserves be discovered on the property, it is
anticipated that the minerals would be predominately gold and silver. See Part I
- - Item 3. Description of Property below. Development of the mining property will
only follow upon obtaining satisfactory results from an exploration program.
Exploration for and the development of natural resources involve a high degree
of risk and few properties which are explored are ultimately developed into
producing properties. There is no assurance that the Company's exploration
activities will result in any discoveries of commercial bodies of ore. The long
term profitability of the Company's operations will be in part directly related
to the cost and success, if any, of its exploration programs, which may be
affected by a number of factors. Additional substantial risks exist should the
Company undertake any type of development work.
Exploration for natural resources involves many risks, which even a combination
of experience, knowledge, and careful evaluation may not be able to overcome.
Operations in which the Company has a direct or indirect interest will be
subject to all the hazards and risks normally incident to exploration for
resources, any of which could result in work stoppages, damage to persons or
property, and possible environmental damage. Although the Company has or will
obtain liability insurance in an amount which it considers adequate, the nature
of these risks is such that liabilities might exceed policy limits, the
liabilities and hazards might not be insurable risks, or the Company might not
elect to insure itself against such liabilities due to the high premium costs or
other reasons, in which event the Company could incur significant costs that
could have a material adverse effect upon its financial condition.
All phases of the Company's operations are subject to environmental regulation.
Generally, environmental legislation is evolving in a manner which will require
stricter standards and enforcement, increased fines and penalties for
non-compliance, more stringent environmental assessments of proposed projects,
and a heightened degree of responsibility for companies and their officers,
directors, and employees. There is no assurance that future changes in
environmental
3
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regulation, if any, will not adversely affect the Company's operations.
Environmental permits are not required for the proposed Phase 1 and 2
exploration programs on the La Mexicana property. Before drilling and any major
surface disturbance, it will be necessary to file a report on the flora of the
area. For mine development, it would be necessary to obtain state and municipal
approval with similar, but less stringent requirements than in the United States
or Canada. Given the early stage of exploration, it is premature to discuss the
specifics of the environmental permitting process, since the size, type, and
existence of an ore body has not been defined, and there is no assurance that an
ore body will be located on the property.
Although the Company has or intends to obtain title opinions for any concessions
in which it has or will acquire a material interest, there is no guarantee that
title to such concessions will not be challenged or impugned. In some countries,
the system for recording title to the rights to explore, develop, and mine
natural resources is such that a title opinion provides only minimal comfort
that the holder has title. Also, in many countries claims have been made and new
claims are being made by aboriginal peoples that call into question the rights
granted by the governments of these countries.
The Company's revenues, if any, are expected to be in large part derived from
the extraction and sale of base and precious metals such as gold and silver. The
price of those commodities has fluctuated widely, particularly in recent years,
and is affected by numerous factors beyond the Company's control including
international, economic, and political trends, expectations of inflation,
currency exchange fluctuations, interest rates, global or regional consumptive
patterns, speculative activities, and increased production due to new extraction
developments and improved extraction and production methods. The effect of these
factors on the price of base and precious metals, and therefore the economic
viability of the Company's exploration project, cannot accurately be predicted.
There are many individuals and companies that are engaged in the mining
business. Some of which are very large, established mining companies with
substantial capabilities and long earning records. The Company may be at a
competitive disadvantage in acquiring mining properties or in purchasing,
leasing, or obtaining mining equipment since it must compete with these
individuals and companies, most of which have greater financial resources and
larger technical staffs than the Company. There can be no assurance that the
Company will be successful in prospecting for or acquiring additional mining
claims or leases, or in arranging for their exploration.
Water is essential in all phases of the exploration and development of mineral
properties and the milling of any ore obtained as a result. It is used in such
processes as exploration drilling, leaching, placer mining, dredging, testing,
and hydraulic mining. Furthermore, any water that may be found will be subject
to acquisition pursuant to state, federal and foreign water law, and its use
will be subject to regulation pursuant to local, state, federal and foreign
water quality standards. Management does not expect any significant difficulties
with respect to this matter. Water sufficient for mining purposes is available
on the La Mexicana concession.
MINERAL INDUSTRY OF MEXICO
The Mexican government commenced privatization efforts in the late part of the
1980's. The Mining Law of 1992 generally encourages domestic investment and
foreign participation in the mining industry. The Mining Law permits direct
investment, with up to 100% of equity, in exploration works and activities and
allows, through a 30-year trust mechanism, up to 100% foreign participation in
mineral production.
In addition, in 1989 Mexico reduced the corporate income tax to 35% and in 1991
eliminated the mineral production tax.
4
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Government approval is not required for the proposed Phase 1 work program on the
La Mexicana project. An environmental assessment report must be filed for the
specific areas disturbed in Phase 2. This will be done when these areas are
outlined. The filing of the environmental assessment report is a minor expense
in the overall budget. Besides an operating license, it will be necessary to
obtain permits for water well usage, water discharge, land use, explosives, and
hazardous materials handling. The Company is not aware of any major
environmental or regulatory issues that might impede its exploration efforts on
the La Mexicana property. See Part I - Item 3. Description of Property below.
EMPLOYEES
As of the date of this registration statement, the Company employs two people
full-time at its Kelowna office and technical staff to carry out its projects in
Mexico on an as-needed basis, including the President of the Company, David St.
Clair Dunn, P. Geo.
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. 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, since inception 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 nine months ended March 31, 2000, 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, 1997)
NINE MONTHS ENDED YEAR ENDED JUNE 30, 1997) TO JUNE 30,
MARCH 31, 2000 1999 1998 (UNAUDITED)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues -- -- --
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(Loss) from
continuing operations $ (498,087) $ (1,202,151) $ (509,208)
- -------------------------------------------------------------------------------------------------------------------
(Loss) per common
share $ (0.03) $ (0.15) $ (0.26)
- -------------------------------------------------------------------------------------------------------------------
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MARCH 31, 2000 JUNE 30, 1999 JUNE 30, 1998
- -------------------------------------------------------------------------------------------------------------------
Working capital
(deficiency) $ (367,322) $ (170,390) $ (28,983)
- -------------------------------------------------------------------------------------------------------------------
Total assets $ 28,072 $ 72,797 $ 12,798
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Long-term obligations $ -- -- --
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</TABLE>
5
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RESULTS OF OPERATIONS
The Company's level of activity was substantially higher during the fiscal year
ended June 30, 1999, as compared to the previous period. Expenses were
$1,202,151 for 1999 as compared to $509,208 for 1998. The most significant
increases were in the areas of exploration of mineral properties ($245,210) due
to the drill program undertaken on the La Lajita property, professional fees
($152,065) primarily due to the legal and accounting expenses incurred with the
acquisition of Rob Roy, and travel and promotion ($136,384) due to travel to
Mexico and financial public relations work. Additionally, the Company wrote-off
$576,050 in 1999 upon its decision to abandon the La Lajita property. After
completing the exploration program on the La Lajita property, the Company
decided to terminate its option. The Company made option payments of $534,214,
issued 350,000 shares valued at $17,500, and incurred exploration expenditures
in excess of $300,000 prior to terminating its option in September 1999.
From June to July, 1999, a 943.9-meter diamond drilling program was carried out
on the La Lajita property in the area recommended by the Company's consulting
geologists as having the highest possibility of containing an open pittable
precious metals resource. The results obtained by the Company in September 1999
revealed that the drilling did not outline sufficient mineralization (material
containing minerals of value) at high enough grades to continue exploration of
the property. While underground mining targets with good potential remain on the
property, they do not fit the Company's corporate objectives.
During the nine months ended March 31, 2000, the Company incurred a loss of
$498,087 due to expenditures for consulting fees ($212,985), exploration of
mineral properties ($42,390), professional fees ($89,917), travel and promotion
($49,843), and general and administrative ($31,622). In addition, the Company
incurred $30,000 in option payments to acquire mineral properties. This compares
to a loss of $627,070 for the nine months ended March 31, 1999, with the most
significant expenditure being $346,735 in option payments to acquire mineral
properties.
Due to the lack of any revenues, and the cumulative losses of $1,711,359
incurred through June 30, 1999, and $2,209,446 through March 31, 2000, 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 March 31, 2000, the
Company has raised $730,823, net of share issuance costs from the sale of its
Common Stock. In addition, 850,000 shares have been issued for mineral property
options and 200,000 shares have been issued for services. 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 June 30, 1999, the Company had a working capital deficiency of $170,390, as
compared to $28,983 at June 30, 1998. The increase in the working capital
deficiency can be attributed to the cash outlays for payments on mineral
properties and mineral property exploration made during the fiscal year ended
June 30, 1999. The cash outlays were as follows:
6
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<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Option Payments on
Mineral Properties
Including Value Exploration
Property Added Taxes Expenditures Total
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
La Lajita $372,294 $245,210 $617,504
- -------------------------------------------------------------------------------------------------------------------
La Mexicana $204,294 -- $204,294
- -------------------------------------------------------------------------------------------------------------------
$576,588 $245,210 $821,798
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
Other than as described under "Properties of La Mexicana", the Company does not
have any interest in any properties.
At March 31, 2000, the Company had a working capital deficiency of $367,322. The
increase was due primarily to the loss incurred during the nine months then
ended.
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 and $1,000,000 on or before February 12, 2001 on work commitments.
The Company must also issue 750,000 shares of Common Stock by March 2002. The
Company issued the minimum of 250,000 shares by February 12, 2000, leaving
500,000 shares to be issued by March 2002. 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. See Part I - Item 3.
Description of Property, below, for more detail on the proposed work programs of
the Company. 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. There is no assurance
that the Company would be able to obtain an extension. If the Company defaulted
in its obligations, the option agreement would be terminated and the Company
would lose everything of value paid for the property.
In addition to the property obligations described in the preceding paragraph,
the Company has only normal trade obligations. As of March 31, 2000, these trade
obligations were $188,818, of which approximately $93,000 was outstanding for
more than 90 days. The officers and directors of the Company and the persons to
whom debt of $100,233 is owed, have not given the Company a fixed date for
repayment. The persons to whom the $100,233 is owed are shareholders who own
less than 5% of the outstanding shares of the Company. The advances do not bear
interest, have no fixed terms of repayment, and are not pursuant to a written
agreement.
As of March 31, 2000, the Company had approximately $14,600 cash on hand.
Pursuant to an interim financing agreement dated January 24, 2000, the Company
borrowed $75,000 from an unrelated party. These proceeds have satisfied the
Company's cash requirements through April 2000. The interim financing bears
interest at 8%, is due in full by July 24, 2000, and is guaranteed by R. Bruce
Manery and Roger Watts, officers and directors of the Company. The Company will
need to obtain additional funds through loans of this sort or the sale of its
equity securities to maintain its operations. The 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.
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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 and no progress has been made in
recent months, management does not believe that the acquisition of Transmeridian
is probable. 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.
ITEM 3. DESCRIPTION OF PROPERTY
PROPERTY SUMMARY
La Mexicana, a wholly owned subsidiary of Rob Roy, acquired options to purchase
rights to certain mineral properties in Mexico pursuant to certain agreements
described below. La Mexicana's main focus had been on the La Lajita and Mexicana
1 properties located near Durango, Mexico. After performing a drill program on
the La Lajita property, the Company decided that the La Lajita property did not
warrant any further work and terminated its option on that property in September
1999.
TERMS OF OPTION ON MEXICANA 1
La Mexicana has entered into an agreement in writing (the "Alcaraz Agreement")
dated February 12, 1998 and amended as of November 12, 1999, with ING.
Cuitlahuac Rangel Alcaraz ("Alcaraz"), an arm's length party, to acquire the
right and option to purchase an undivided 70% interest in the Mexicana I
property located near Durango, Mexico. The option must be exercised by February
12, 2001. The Alcaraz Agreement requires the following payments, share issuances
and exploration expenditures:
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<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
REQUIREMENT STATUS
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C>
a) US$25,000 on or before the execution of the Alcaraz Agreement Paid
- ------------------------------------------------------------------------------------------------------------------------------
b) US$25,000 upon execution of the Alcaraz Agreement Paid
- ------------------------------------------------------------------------------------------------------------------------------
c) US$50,000 on January 1, 1998 and every six months thereafter January 1, 1998; July 1, 1998;
until February 12, 2001, or until a positive bankable feasibility January 1, 1999; and July 1, 1999
study is completed, whichever is the earliest to occur* payments made, and $45,000 of the
January 1, 2000 payment made
- ------------------------------------------------------------------------------------------------------------------------------
d) 250,000 shares upon the approval of the Alcaraz Agreement by Issued March 1999
any regulatory authority having jurisdiction
- ------------------------------------------------------------------------------------------------------------------------------
e) a further 750,000 shares of the Company within three years of 250,000 shares issued prior to
the issuance under paragraph (d) above, with a minimum of February 12, 2000; 500,000 shares
250,000 shares to be issued by February 12, 2000 not due for issuance
- ------------------------------------------------------------------------------------------------------------------------------
f) a minimum amount of US$1,500,000 shall be invested on work Not due
commitments, according to the following budget schedule:
US$300,000 on or before June 12, 2000, and US$1,000,000 on or
before February 12, 2001
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*While the Agreement states that payments are to be made in August and February
of each year, in practice, Alcaraz has expected, and the Company has paid,
installments in January and July of each year.
La Mexicana shall also be responsible for the payment of value added tax of 15%
on property payments and for mining taxes required to keep the property in good
standing.
Alcaraz is the beneficial and registered concessionaire of 100% of the
Exploration Mining Concession of the Mexicana 1 lot. During the term of this
Agreement the Company has the exclusive right to explore the Property, subject
to the Company obtaining appropriate surface rights and governmental
authorizations.
The Alcaraz Agreement provides that after the exercise of the option, Alcaraz
and the Company shall either become co-concessionaires of the Property or
incorporate a new company that shall acquire the title to the Property.
MEXICANA 1 GROUP OF CLAIMS
LOCATION, ACCESS, PHYSIOGRAPHY AND POPULATION
Mexicana 1 property is located in the Municipality of Pueblo Nuevo, State of
Durango, Mexico. The property consists of 20,477 hectares in three adjoining
rectangular blocks.
Road access to the property is from El Salto on Highway 40 south, 50 kilometers
to La Puerta, then southwest 10 kilometers to Cofradia, then 28 kilometers (2.5
hours) on a dirt track east to Los Naranjos. The western part of the Property
can be accessed from the state of Sinola to the town of La Escondida, just
inside the western edge of the property. The rest of the property is covered by
networks of well-used trails.
Elevations on the property range from 290 meters on the San Antonio de Animas
River in the southwestern corner of the property, to 2,520 meters in the
northeast corner.
See the map on the following page.
9
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[Map of area].
10
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HISTORY AND PREVIOUS WORK
The only previous work seen was the La Mexicana excavations or workings. These
consist of two adits (horizontal or nearly horizontal passages driven from the
surface for the working of a mine) driven approximately five meters on narrow
quartz veins on the west side of the arroyo of the Los Naranjos River. The
Mexicana I monument is located in front of these workings, about 1.0 kilometers
down the Los Naranjos River northwest of Los Naranjos. There are artisinal
workers working the river gravels on a small scale, especially on the junction
of the Arroyo of the Los Naranjos River and the Arroyo of the San Antonio de
Animas River.
PROPERTY GEOLOGY
The Mexicana 1 property lies within the Sierra Madre Occidental Geological
province, which is a 1200 kilometer long north-west trending belt of volcanic
rocks 200 to 300 kilometers wide. Regional, northwest trending faults (breaks in
rocks with noticeable movement or displacement of the rocks on either side of
the break) are common throughout the province.
Gold mineralization in the area is found mainly in epithermal to mesothermal
quartz veins and stockworks associated with caldera (collapsed volcano)
complexes. Radiating faults, concentric ring faults, and particularly, their
junctions in the caldera, are favorable areas for mineralization.
The Mexicana 1 property covers an approximately 15.0 meter diameter caldera,
centered three kilometers west-northwest of Los Naranjos, on the San Antonio de
Animas River. A granitic intrusion (a body of igneous rock formed below the
surface)was observed in this area.
Two major structures were observed on the property and can be traced on
satellite photographs. One structure trends 50 kilometers northwest through Los
Naranjos. The Los Naranjos River follows part of this structure. The second
structure trends east-northeast and can be traced for 55 kilometers. The San
Antonio de Animas River follows this structure for 15 kilometers from two
kilometers above its junction with Los Naranjos River to the west-southwest. The
junction of these structures is a very prospective area. It lies on the eastern
boundary of Mexicana 1 property.
WORK PROGRAMS
The Company has not conducted any exploration on the Mexicana 1 property.
Subject to the availability of funds, the Company plans to conduct a systematic
regional mineral exploration program, consisting of regional scale stream
geochemical sampling and rock sampling to test the area in the first quarter of
2000. The following table outlines the proposed budget for the La Mexicana
property for the first quarter of 2000:
<TABLE>
<CAPTION>
PROPOSED BUDGET FOR LA MEXICANA (IN US $):
PHASE 1
<S> <C>
Research: Government mining and geological information and claim status..................$ 1,950
Regional geochemical and examination of showings
Geologist: 20 days @ $338.50/day................................ 6,770
Assistant: 15 days @ $118.50/day................................ 1,778
Vehicle: 15 days @ $68/day.................................... 1,020
Travel: 2 @ $677............................................. 1,354
Room and board: 30 days @ $34/day.................................... 1,020
Assays: 300 samples @ $10/sample............................. 3,000
Communication: ..................................................... 339
11
<PAGE>
Expendables: ..................................................... 339
Report preparation ..................................................... 677
Contingency: ..................................................... 753
-------------
Total Phase 1....................................................................................$ 19,000
-------------
PHASE 2 (Geological mapping, geochemical surveys, trenching and detailed sampling)
Geologist: 40 days @ $338.50/day................................$ 13,540
Assistants: 2 for 30 days @ $135/day............................. 8,100
Vehicle: 2 for 30 days @ $68/day.............................. 4,080
Travel: 3 @ $677............................................. 2,031
Room and board: 90 days @ $47/day.................................... 4,230
Assays: 2,100 @ $10/sample................................... 21,000
Communications: ..................................................... 1,693
Expendables: ..................................................... 2,640
Local labor: 4 for 15 days @ $27/day.............................. 1,620
Mules: 4 for 15 days @ $27/day.............................. 1,620
Backhoe or small cat: 20 days @ $339/day................................... 6,780
Mob or demob for equipment..................................................... 1,354
Report preparation: ..................................................... 1,354
Contingency: ..................................................... 6,958
-------------
Total Phase 2....................................................................................$ 77,000
-------------
TOTAL PHASES 1 AND 2.............................................................................$ 96,000
=============
</TABLE>
LA LAJITA
La Mexicana entered into an agreement (the "Fuerte Mayo Agreement") dated
February 12, 1998 with Fuerte Mayo S.A. de C.V. ("Fuerte Mayo"), an arm's length
party, to acquire the right and option to purchase an undivided 60% interest in
the La Esperanza, Guadalupe and Ampl. de Guadalupe mining Lots and the Santa
Nino and Dos Hermanos mining lots located near Durango, Mexico.
An initial program of 943.9 meters of diamond drilling in 13 holes was carried
out by Britton Hermanos, S.A. de C.V. under the supervision of Company personnel
from April to June 1999.
After completing the exploration program on the La Lajita property, the Company
decided to terminate its option since the drilling did not outline an open
pittable resource of sufficient size to meet the Company's objectives. The
Company paid acquisition costs $492,500, issued 350,000 shares and incurred
exploration expenditures in excess of $300,000 on the La Lajita property prior
to terminating its option.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 31, 2000, the outstanding Common
Stock of the Company owned or of record or beneficially by each person who owned
of record, or was known by the Company to own beneficially, more than 5% of the
Company's Common Stock, and the name and shareholdings of each Officer and
Director and all Officers and Directors as a group.
12
<PAGE>
PERCENTAGE OF
NAME SHARES OWNED COMMON STOCK
OWNED(1)
DAVID ST. CLAIR DUNN(2)(3) 100,000 0.58%
1154 Marine Drive
Gibsons, British Columbia
Canada V0N 1V1
ROBERT BRUCE MANERY(2)(4) 182,658 1.06%
2420 Pandosy Street
Kelowna, British Columbia
Canada V1Y 1T8
ROGER WATTS(2)(4) 195,200 1.06%
200-537 Leon Avenue
Kelowna, British Columbia
Canada V1Y 2A9
BRIAN F.J. TROWBRIDGE 800,000 4.70%
Box 209, Chancery Court
Leeward Highway
Turks and Caicos
West Indies
ALL OFFICERS & DIRECTORS 477,858 2.75%
AS A GROUP(6)
- --------------------------------------------------------------------------------
(1) This table is based on 17,005,072 shares of Common Stock outstanding on
March 31, 2000. If a person listed on this table has the right to obtain
additional shares of Common Stock within sixty (60) days from March 31,
2000, the additional shares are deemed to be outstanding for the purpose of
computing the percentage of class owned by such person, but are not deemed
to be outstanding for the purpose of computing the percentage of any other
person.
(2) These individuals are the officers and directors of the Company and may be
deemed to be "parents" of the Company as that term is defined in the rules
and regulations promulgated under the federal securities laws.
(3) Includes options to purchase 100,000 shares of Common Stock. See Part I -
Item 6. Executive Compensation.
(4) Includes options to purchase 150,000 shares of Common Stock. See Part I -
Item 6. Executive Compensation.
(5) These shares are owned of record by Mischcorp Ltd.
(6) Includes options to purchase 400,000 shares of Common Stock. See Part I -
Item 6. Executive Compensation.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The following table sets forth the name, age, and position of each officer and
director of the Company. No director of the Company has been a director or
officer of a company registered under the 1934 Act. Further, no directors or
officers, promoters or control persons of the Company have in the past five
years been involved in any bankruptcy, criminal proceedings or securities
infractions.
13
<PAGE>
- --------------------------------------------------------------------------------
NAME AGE POSITION
David St. Clair Dunn 47 President, Director
Robert Bruce Manery 52 Vice-President Corporate Development,
Secretary, Director
Roger Watts 54 Chairman of the Board, Director
- --------------------------------------------------------------------------------
All directors of the Company have served since April 7, 1999. The officers were
elected on April 7, 1999, and will serve for one year or until their respective
successors are elected and qualified.
DAVID ST. CLAIR DUNN - PRESIDENT, DIRECTOR
Self-Employed consulting geologist. Vice President of Exploration and director
from April 1998 to April 1999 of ESM Resources Ltd., Vancouver, British
Columbia, a company engaged in mineral exploration. Director of Hyperion
Resources Corp. from September 1997 to December, 1998, Vancouver, British
Columbia, a mineral exploration company. Vice President Exploration of
Consolidated Silver Tusk Mines Ltd., Vancouver, British Columbia, from May 1997
to December 1997. From November 1993 to November 1996 was the vice president and
a director of Pioneer Metals Corp., Vancouver, British Columbia. From May 1990
to May 1993 was a consulting geologist to various public companies. Mr. Dunn is
a registered professional geoscientist with the British Columbia Association of
Professional Engineers and Geoscientists. He graduated from the University of
British Columbia in Vancouver, with a Bachelor of Science degree in geology.
ROBERT BRUCE MANERY - VICE-PRESIDENT CORPORATE DEVELOPMENT, SECRETARY,
DIRECTOR
Since April 1975 has been the President of RB Graphics Canada Inc., Kelowna,
British Columbia, an advertising and marketing company involved in the marketing
of international trade shows. Also President of One of a Kind Incorporated, a
company involved in the marketing of syndicated radio shows in North America
(the Champ) and the marketing of international art and wine exposes from May
1991 to present. Mr. Manery does not have any previous mining experience.
ROGER WATTS - CHAIRMAN OF THE BOARD OF DIRECTORS
Barrister and Solicitor. Senior partner with the law firm of Salloum, Doak,
Kelowna, British Columbia, since 1990
ITEM 6. EXECUTIVE COMPENSATION
The following table sets forth information for all persons who have served as
the chief executive officer of the Company since its inception in June 1997:
14
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
---------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------------------------------------------------
OTHER
ANNUAL RESTRICTED SECURITIES
NAME AND COMPEN- STOCK UNDERLYING LTIP ALL OTHER
PRINCIPAL SALARY BONUS SATION AWARD(S) OPTIONS/ PAYOUTS COMPEN-
POSITION YEAR ($) ($) ($) ($) SARS(#) ($) SATION($)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
David St. Clair 1999 -0- -0- -0- -0- -0- -0- $18,333
Dunn, President (1)
- --------------------------------------------------------------------------------------------------------------------
David Parsons, 1999 -0- -0- -0- -0- -0- -0- -0-
President (2)
- --------------------------------------------------------------------------------------------------------------------
Ryan Barnard, 1999 -0- -0- -0- -0- -0- -0- -0-
President 1998 -0- -0- -0- -0- -0- -0- -0-
(3)
- --------------------------------------------------------------------------------------------------------------------
Nolan Moss, 1998 -0- -0- -0- -0- -0- -0- -0-
President (4)
</TABLE>
(1) Mr. Dunn has been the President since April 7, 1999. The amount paid was
for geological work.
(2) Mr. Parsons was the President from December 18, 1998 to April 7, 1999.
(3) Mr. Barnard was the President from April 3, 1998 to December 18, 1998.
(4) Mr. Moss was the President from June 17, 1997 to April 3, 1998.
OPTIONS GRANTED DURING THE MOST RECENTLY COMPLETED FISCAL YEAR
During the fiscal year ended June 30, 1999, the Board of Directors of the
Company adopted a stock option plan, whereby directors, officers 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 of
grant. No options were granted under this plan during the fiscal year ended June
30, 1999. On September 23, 1999, the Company granted stock options to purchase
1,450,000 shares of Common Stock exercisable at a price of $0.10 per share for 5
years. On September 22, 1999, the average of the bid prices was $0.115. Pursuant
to the terms of the plan, the option price for non-qualified options is to be no
less than 85% of fair market value as of date of grant. Accordingly, the options
were granted with an option price of $0.10 per share. The following officers and
directors were granted non-qualified stock options:
---------------------------------------------------------
OPTIONEE NUMBER OF OPTIONS GRANTED
---------------------------------------------------------
Roger Watts 150,000
---------------------------------------------------------
Bruce Manery 150,000
---------------------------------------------------------
David St. Clair Dunn 100,000
---------------------------------------------------------
The options vest December 23, 1999 and expire September 23, 2004.
PLANS AND OTHER COMPENSATION
The Company paid management fees of $55,618 to Bruce Manery and Roger Watts
during the year ended June 30, 1999.
15
<PAGE>
No "Long Term Incentive Plan" has been instituted by the Company and none are
proposed at this time. Accordingly, there is no LTIP Awards Table set out in
this registration statement. The Company does not have a "Compensation
Committee".
No pension plans or retirement benefit plans have been instituted by the Company
and none are proposed at this time.
PROPOSED COMPENSATION
The Company anticipates it will pay to David St. Clair Dunn, its president,
compensation of $30,000 during the current fiscal year for geological work to be
billed at his customary rates. Bruce Manery and Roger Watts are each paid
Cdn.$3,500 per month as management fees.
In addition to the foregoing, officers and directors are also entitled to the
reimbursement of all reasonable business expenses.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
At June 30, 1999 and March 31, 2000, $12,190 and $22,229, respectively, were
owed to officers and directors of the Company for management fees.
On January 24, 2000, the Company borrowed $75,000 from a non-affiliated third
party for a period of six months with interest at 8% per annum. The loan was
guaranteed by Robert Bruce Manery and Roger Watts, officers and directors of the
Company. The lender received 150,000 shares of Common Stock from a shareholder
of the Company (who owns less than 5% of the shares of the Company) as
consideration for making the loan to the Company.
ITEM 8. DESCRIPTION OF SECURITIES
The authorized share capital of the Company consists of 50,000,000 shares of
Common Stock at $0.001 par value and 1,000,000 shares of preferred stock
("Preferred Stock") at $0.01 par value. As at March 31, 2000, the Company has
a total of 17,005,072 shares of Common Stock issued and outstanding and no
shares of Preferred Stock issued and outstanding.
COMMON STOCK
Holders of Common Stock are entitled to one vote per share for each share held
of record on all matters submitted to a vote of stockholders. Holders of Common
Stock do not have cumulative voting rights, and therefore the holders of a
majority of the shares of Common Stock voting for the election of directors may
elect all of the Company's Directors standing for election. Subject to
preferences that may be applicable to the holders of outstanding shares of
Preferred Stock, if any, the holders of Common Stock are entitled to receive
such lawful dividends as may be declared by the Board of Directors. In the event
of a liquidation, dissolution or winding up of the affairs of the Company,
whether voluntary or involuntary, and subject to the rights of the holders of
outstanding shares of Preferred Stock, if any, the holders of shares of Common
Stock shall be entitled to receive pro rata all of the remaining assets of the
Company available for distribution to its stockholders. The Common Stock has no
preemptive, redemption, conversion or subscription rights. All outstanding
shares of Common Stock are fully paid and non-assessable. The issuance of Common
Stock or of rights to purchase Common Stock could have the effect of making it
more difficult for a third party to acquire, or of discouraging a third party
from attempting to acquire, a majority of the outstanding voting stock of the
Company.
16
<PAGE>
PREFERRED STOCK
The Articles of Incorporation of the Company authorize the board of Directors to
issue, by resolution, 1,000,000 shares of Preferred Stock, in classes, having
such designations, preferences, rights and limitations and on such terms and
conditions as the board of Directors may from time to time determine, including
the rights, if any, of the holders of such Preferred Stock with respect to
voting, dividends, redemptions, liquidation and conversion. As at March 31,
2000, no classes of Preferred Stock have been designated and no shares have been
issued.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON
EQUITY AND OTHER SHAREHOLDER MATTERS
The Company's Common Stock is quoted on the OTC Bulletin Board system of the
National Association of Securities Dealers with the symbol GDRV. The Company's
Common Stock was quoted on the OTC-BB from January 15, 1999 to December 1, 1999.
Since December 2, 1999, the Common Stock has been quoted on the "pink sheets."
The following table lists the high and low bid prices quoted on the OTC-BB of
the National Association of Securities Dealers and pink sheets of the National
Quotation Bureau for shares of the Company's Common Stock for each of the fiscal
quarters since the Company's stock was first quoted.
- --------------------------------------------------------------------------------
FISCAL QUARTER ENDED HIGH BID LOW BID
- --------------------------------------------------------------------------------
March 31, 1999 $0.5100 $0.3400
- --------------------------------------------------------------------------------
June 30, 1999 $0.5100 $0.3125
- --------------------------------------------------------------------------------
September 30, 1999 $0.4375 $0.0900
- --------------------------------------------------------------------------------
December 31, 1999 $0.2900 $0.0100
- --------------------------------------------------------------------------------
March 31, 2000 $0.2800 $0.0800
- --------------------------------------------------------------------------------
On May 3, 2000, the high and low bid prices were $0.14 and $0.12, respectively.
The high and low bid quotations reflect inter-dealer prices, without retail
mark-up, mark-down or commission and may not represent actual transactions.
The Company's Common Stock is issued in registered form and the following
information is taken from the records of American Securities Transfer and Trust
Inc., of 12039 W. Alameda Parkway, Suite Z-2, Lakewood, Colorado 80228, the
registrar and transfer agent for the Common Stock.
On November 16, 1999, the shareholders' list for the Company's Common Stock
showed 150 registered shareholders and 15,572,874 shares outstanding.
The Company has not paid dividends in the past and it does not expect to have
the ability to pay dividends in the near future. If the Company generates
earnings in the future, it expects that they will be retained to finance further
growth and, when appropriate, retire debt. The Directors of the Company will
determine if and when dividends should be declared and paid in the future based
on the Company's financial position at the relevant time. All of the Company's
shares are entitled to an equal share in any dividends declared and paid.
17
<PAGE>
ITEM 2. LEGAL PROCEEDINGS
The officers and directors of the Company certify that to the best of their
knowledge, neither the Company nor any of its officers and directors are parties
to any legal proceeding or litigation. Further, the officers and directors know
of no threatened or contemplated legal proceedings or litigation. None of the
officers and directors has been convicted of a felony and none have been
convicted of any criminal offense, felony or misdemeanor relating to securities
or performance in corporate office. To the best knowledge of the officers and
directors, no investigations of felonies, misfeasance in office or securities
investigations are either pending or threatened at this time.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
There have been no changes in or disagreements with accountants on accounting
and financial disclosure.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
Set forth below is information regarding the issuance and sales of securities of
the Company, without registration, since its inception in June 1997. No such
sales involved the use of an underwriter and no commissions were paid in
connection with the sale of any securities.
(a) During the period from the date of formation of the Company on June 17,
1997 to June 30, 1998, the Company issued 3,768,000 shares of Common
Stock. 3,568,000 shares were issued at a price of $0.01 per share (for
an aggregate of $35,680) in a private placement which took place from
April 29, 1998 to June 9, 1998, to 39 persons associated with the
founder of the Company, Ryan Barnard. 200,000 shares were issued at a
price of $0.05 per share (for an aggregate of $10,000) in a private
placement which took place from June 16, 1998 to June 22, 1998, to
Tecumseth Holdings Ltd. and Twilight Enterprises JLK Ltd. The higher
price was deemed to be justified due to certain developments among Rob
Roy, the Company, and the Mexicana I property. Specifically, on May 27,
1998, the Company obtained an assignment of the option agreement from
La Mexicana. Thus, if the then proposed acquisition of Rob Roy were to
fail, the Company would still have an option on the Mexicana I property
and would not have to rely on the efforts of Rob Roy or its subsidiary,
La Mexicana. The Company relied upon the exemption from registration
contained in Section 504 of Regulation D of the Securities Act of 1933,
as amended.
(b) In January and March 1999, a total of 600,000 shares of Common Stock
were issued as part of the Company's option payments for the La
Mexicana and La Lajita properties. The shares were valued at $0.05 per
share ($30,000 aggregate value). The Company relied upon the exemption
contained in Rule 504 with respect to 250,000 of these shares and
350,000 shares were issued in reliance on Section 4(2).
(c) In December 1998 and January 1999, 200,000 shares were issued to
Twilight Enterprises JLK Ltd. for services valued at $0.05 per share
($10,000 aggregate value) and 1,800,000 shares were sold for $0.05 per
share ($90,000 aggregate value) to Cannonbridge Capital Corp., Brian
Trowbridge, and Mischcorp Ltd. in reliance on the exemption from
registration contained in Rule 504. The price of $0.05 per share was
based on the last sale transactions described in paragraphs (a) and (b)
above.
18
<PAGE>
(d) In connection with the takeover of Rob Roy in March 1999, 6,454,872
shares were issued in exchange of the Rob Roy shares. The Company
relied upon Regulation S with respect to 4,518,410 of these shares and
1,936,462 shares were issued in reliance on the exemption contained in
Rule 504 of Regulation D.
(e) In April 1999, the Company sold 2,000,000 shares at $0.35 per share
($700,000 aggregate value) to Messina Holdings Ltd. and 67849 Capital
Ltd. pursuant to the exemption from registration contained in Rule 504.
The subscription agreements were entered into just prior to the
commencement of trading of the Company's shares in January 1999. The
closing bid price on January 20, 1999 was $.40 per share. From January
20, 1999 through April 30, 1999, the closing bid prices for the Common
Stock ranged from $0.38 to $0.50.
(f) In September 1999, the Company issued 750,000 shares at $0.10 per share
($75,000 aggregate value) to Twilight Enterprises JLK Ltd. for services
rendered pursuant to the exemption from registration contained in
Section 4(2).
(g) In November 1999, the Company issued 250,000 shares at $0.12 per share
($30,000 aggregate value) as required under the terms of the amended
option agreement to acquire the Mexicana I property. See Part I, Item
3. Description of Property. The shares were issued in reliance on the
exemption from registration contained in Section 4(2).
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 78.7502 of the General Corporation Law of Nevada and Article VI of the
Company's Articles of Incorporation permit the Company to indemnify its officers
and directors and certain other persons against expenses in defense of a suit to
which they are parties by reason of such office, so long as the persons
conducted themselves in good faith and the persons reasonably believed that
their conduct was in the Company's best interests or not opposed to the
Company's best interests, and with respect to any criminal action or proceeding,
had no reasonable cause to believe their conduct was unlawful. Indemnification
is not permitted in connection with a proceeding by or in the right of the
corporation in which the officer or director was adjudged liable to the
corporation or in connection with any other proceeding charging that the officer
or director derived an improper personal benefit, whether or not involving
action in an official capacity.
PART F/S
FINANCIAL STATEMENTS
The audited financial statements of the Company for the fiscal year ended June
30, 1999, with comparative figures to June 30, 1998 are attached hereto as pages
F-1 to F-13. Effective March 10, 1999, the Company completed the acquisition of
100% of the outstanding common shares of 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, since inception 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 unaudited financial statements of the Company as of and for the nine months
ended March 31, 2000 are attached hereto as pages F-14 to F-20.
19
<PAGE>
PART III
The following exhibits are included with this registration statement:
REGULATION
S-B NUMBER DOCUMENT
2.1 Offer to Purchase(1)
3.1 Articles of Incorporation(1)
3.2 Bylaws(1)
10.1 Mexicana I Agreement dated as of February 12, 1998(1)
10.2 La Lajita Agreement dated as of February 12, 1998(1)
10.3 1999 Stock Option Plan(1)
10.4 Agreement with Transmeridian Exploration Inc., as amended
(1)
10.5 Letter of Intent with OREX Gold Mines Corporation(1)
10.6 Mexicana I Agreement dated as of November 12, 1999(1)
10.7 Interim Financing Agreement(1)
21 Subsidiaries of the Registrant(1)
27 Financial Data Schedule(2)
(1) Filed previously
(2) Incorporated by reference to the exhibits to the registrant's quarterly
report on Form 10-QSB for the fiscal quarter ended March 31, 2000 (File No.
0-27953).
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
GOLDEN RIVER RESOURCES INC.
Date: May 22, 2000 By: /S/ ROBERT BRUCE MANERY
-----------------------------------
Robert Bruce Manery, Secretary
20
<PAGE>
Consolidated Financial Statements of
GOLDEN RIVER RESOURCES INC.
(An Exploration Stage Enterprise)
Year ended June 30, 1999
F-1
<PAGE>
AUDITORS' REPORT TO THE DIRECTORS
We have audited the accompanying consolidated balance sheet of Golden River
Resources Inc. and subsidiaries, an exploration stage enterprise, as at June 30,
1999 and the consolidated statements of loss, stockholders' equity and
comprehensive income and cash flows for the year then ended. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether 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. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above, present
fairly, in all material respects, the financial position of the Company and
subsidiaries as at June 30, 1999 and the results of their operations and their
cash flows for the year then ended in accordance with generally accepted
accounting principles in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As shown in the consolidated financial
statements, the Company, to date, has generated no revenues and has cumulative
losses since inception of $1,711,359. These factors, among others, as discussed
in Note 2 a), raise substantial doubt about the Company's ability to continue as
a going concern. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty. Management intends to pursue
further financing to fund ongoing operations.
signed "KPMG LLP"
Kelowna, Canada
September 7, 1999, except as to note 11 which is as of September 23, 1999 and
note 7 b) which is as of November 12, 1999.
F-2
<PAGE>
GOLDEN RIVER RESOURCES INC.
(An Exploration Stage Enterprise)
Consolidated Balance Sheet
June 30, 1999, and 1998
$ United States
<TABLE>
<CAPTION>
==============================================================================================================
1999 1998
(Unaudited)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets
Cash $ 57,149 $ 12,798
Prepaid expense 6,220 -
---------------------------------------------------------------------------------------------------------
63,369 12,798
Capital assets (note 4) 9,428 -
- --------------------------------------------------------------------------------------------------------------
$ 72,797 $ 12,798
==============================================================================================================
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities
Accounts payable and accrued liabilities $ 146,569 $ 36,780
Due to shareholders (note 5) 12,190 5,001
Shares to be issued for services (note 6) 75,000 -
- --------------------------------------------------------------------------------------------------------------
233,759 41,781
Stockholders' Deficiency
Capital stock (note 6) 1,537,475 463,380
Deficit accumulated during the exploration stage (1,711,359) (509,208)
Accumulated other comprehensive income
Cumulative translation adjustment 12,922 16,845
- --------------------------------------------------------------------------------------------------------------
(160,962) (28,983)
Commitments (note 7)
Subsequent events (note 11)
- ---------------------------------------------------------------------------------------------------------------
$ 72,797 $ 12,798
===============================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
On behalf of the Board:
/s/ "Roger D. Watts"
- ------------------------- Director
/s/ "R. Bruce Manery"
- ------------------------- Director
F-3
<PAGE>
GOLDEN RIVER RESOURCES INC.
(An Exploration Stage Enterprise)
Consolidated Statement of Loss
Year ended June 30, 1999, and from inception on June 13, 1997 to June 30, 1998
$ United States
<TABLE>
<CAPTION>
==============================================================================================================
From Inception
(June 13, 1997)
to June 30, 1999 1999 1998
(Unaudited) (Unaudited)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Expenses
Amortization $ 1,232 $ 1,232 $ -
Consulting fees 2,821 - 2,821
Exploration of mineral properties 315,973 245,210 70,763
General and administrative 62,393 35,592 26,801
Option payments to acquire mineral properties 830,489 576,050 254,439
Professional fees 184,371 152,065 32,306
Management fees 125,308 55,618 69,690
Travel and promotion 188,772 136,384 52,388
- ---------------------------------------------------------------------------------------------------------------
Loss $ 1,711,359 $ 1,202,151 $ 509,208
===============================================================================================================
Weighted average number of shares 4,850,475 8,032,055 1,964,786
Loss per share $ (0.35) $ (0.15) $ (0.26)
===============================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
GOLDEN RIVER RESOURCES INC.
(An Exploration Stage Enterprise)
Consolidated Statement of Stockholders' Equity and Comprehensive Income
Year ended June 30, 1999, and from inception on June 13, 1997 to June 30, 1998
$ United States
<TABLE>
<CAPTION>
===================================================================================================================
Deficit
Accumulated Accumulated
During the Other Total
Capital Stock Exploration Comprehensive Stockholders
Shares Amount Stage Income Equity
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Issued for cash at Cdn $0.01
(US $0.007) per share 750,000 $ 5,115 $ - $ - $ 5,115
Issued for cash at Cdn $0.25
(US $0.17) per share 2,687,634 458,265 - - 458,265
- -------------------------------------------------------------------------------------------------------------------
3,437,634 463,380 - - 463,380
Comprehensive income:
Loss - - (509,208) - (509,208)
Foreign currency
translation adjustment - - - 16,845 16,845
- -------------------------------------------------------------------------------------------------------------------
Comprehensive income (loss) - - (509,208) 16,845 (492,363)
- -------------------------------------------------------------------------------------------------------------------
Rob Roy balance, June 30, 1998
(Unaudited) 3,437,634 463,380 (509,208) 16,845 (28,983)
Issued for cash at Cdn $0.25
(US $0.17) per share 3,017,238 515,591 - - 515,591
Share issue costs - (161,740) - - (161,740)
Adjustment to record business
combination with Golden River 8,368,000 720,244 - - 720,244
- -------------------------------------------------------------------------------------------------------------------
14,822,872 1,537,475 (509,208) 16,845 1,045,112
Comprehensive income:
Loss - - (1,202,151) - (1,202,151)
Foreign currency translation
adjustment - - - (3,923) (3,923)
- -------------------------------------------------------------------------------------------------------------------
Comprehensive loss - - (1,202,151) (3,923) (1,206,074)
- -------------------------------------------------------------------------------------------------------------------
Balance June 30, 1999 14,822,872 $1,537,475 $ (1,711,359) $ 12,922 $ (160,962)
===================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
GOLDEN RIVER RESOURCES INC.
(An Exploration Stage Enterprise)
Consolidated Statement of Cash Flows
Year ended June 30, 1999, and from inception on June 13, 1997 to June 30, 1998
$ United States
<TABLE>
<CAPTION>
===============================================================================================================
From Inception
(June 13, 1997)
to June 30, 1999 1999 1998
(Unaudited) (Unaudited)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Cash spent on mineral property exploration $ (315,973) $ (245,210) $ (70,763)
Cash paid to suppliers and management (471,453) (329,228) (142,225)
Option payments to acquire mineral properties (800,489) (546,050) (254,439)
Interest paid - - -
Income taxes paid - - -
- ----------------------------------------------------------------------------------------------------------------
(1,587,915) (1,120,488) (467,427)
Cash flows from investing activities:
Purchase of capital assets (11,418) (11,418) -
Cash flows from financing activities:
Issuance of capital stock 903,971 440,591 463,380
Proceeds from realization of net assets acquired
from the business combination with Golden
River 739,589 739,589 -
- ----------------------------------------------------------------------------------------------------------------
1,643,560 1,180,180 463,380
Foreign currency translation adjustment of cash
balances 12,922 (3,923) 16,845
- ----------------------------------------------------------------------------------------------------------------
Increase in cash 57,149 44,351 12,798
Cash, beginning of period - 12,798 -
- ----------------------------------------------------------------------------------------------------------------
Cash, end of period $ 57,149 $ 57,149 $ 12,798
================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
GOLDEN RIVER RESOURCES INC.
(An Exploration Stage Enterprise)
Notes to Consolidated Financial Statements (page 1)
Year ended June 30, 1999
$ United States
================================================================================
1. NATURE OF OPERATIONS:
Golden River Resources Inc. ("Golden River" or the "Company") was
incorporated on June 17, 1997 under the laws of Nevada and its principal
business activity is mineral property exploration and development. Prior to
the Company's business combination with Rob Roy Resources Inc. ("Rob
Roy")(note 3), the Company was a shell corporation with no operations since
inception. Rob Roy was incorporated on June 13, 1997 under the laws of
British Columbia, Canada.
The Company, through mineral property option agreements (note 7), is in the
process of exploring and developing mineral properties and has not yet
determined whether these properties contain mineral reserves that are
economically recoverable.
Title to mineral properties involves certain inherent risks due to the
difficulties of determining the validity of certain claims as well as the
potential for problems arising from the frequently ambiguous conveyancing
history characteristic of many mining properties. The Company has
investigated title to all of the mineral properties to which it has an
option to acquire an interest and, to the best of its knowledge, title to
all of these properties is in good standing. The properties in which the
Company has committed to earn an interest are located in Durango, Mexico
and the Company is therefore relying on title opinion by legal counsel who
are basing such opinions on the laws of Durango.
2. SIGNIFICANT ACCOUNTING POLICIES:
a) Going concern
These financial statements have been prepared on the going concern
basis, which assumes the realization of assets and liquidation of
liabilities in the normal course of business. As shown in the
consolidated financial statements, to date, the Company has generated
no revenues and has cumulative losses since inception of $1,711,359.
In addition, as noted in note 7 b), the Company is committed to
significant payments pursuant to a mineral property option agreement.
These factors, among others, raise substantial doubt about the
Company's ability to continue as a going concern. The Company's
ability to continue as a going concern is dependent on its ability to
generate future profitable operations and receive continued financial
support from its shareholders and other investors. Management intends
to pursue further financing to fund ongoing operations.
F-7
<PAGE>
GOLDEN RIVER RESOURCES INC.
(An Exploration Stage Enterprise)
Notes to Consolidated Financial Statements (page 2)
Year ended June 30, 1999
$ United States
================================================================================
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
b) Basis of presentation and consolidation:
The consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries. All significant
intercompany balances and transactions have been eliminated.
Effective March 10, 1999, the Company completed the acquisition of
100% of the outstanding common shares of 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 of Rob Roy has been accounted for in these consolidated
financial statements as a reverse acquisition. Consequently, the
consolidated statements of loss, stockholders' equity and
comprehensive income and cash flows reflect the results from
operations and cash flows of Rob Roy, the legal subsidiary, for the
year ended June 30, 1999, combined with those of Golden River, the
legal parent, from acquisition on March 10, 1999, in accordance with
generally accepted accounting principles for reverse acquisitions.
Amounts prior to March 10, 1999 are those of Rob Roy.
In the opinion of management, all adjustments (consisting only of
normal recurring items) necessary for the fair presentation of the
unaudited 1998 comparative figures, for the period from inception on
June 13, 1997 to June 30, 1998, in conformity with generally accepted
accounting principles have been made.
c) Translation of Financial Statements
The Company's subsidiary, Rob Roy Resources Ltd., operates in Canada
and its operations are conducted in Canadian currency.
These statements have been translated into United States dollars. 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 $1.4630.
ii) Non-monetary assets and liabilities are translated at the rate of
exchange in effect at the date the transaction occurred.
iii) Expenses are translated at the exchange rate in effect at the
transaction date.
iv) The net adjustment arising from the translation is recorded in a
separate component of stockholders' equity called "Cumulative
translation adjustment" which is included in "Acumulated other
comprehensive income".
d) Use of 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 disclosures 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.
F-8
<PAGE>
GOLDEN RIVER RESOURCES INC.
(An Exploration Stage Enterprise)
Notes to Consolidated Financial Statements (page 3)
Year ended June 30, 1999
$ United States
================================================================================
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
e) Financial instruments
The fair values of cash and accounts payable and accrued liabilities
approximate their carrying values due to the relatively short periods
to maturity of these instruments. It is not possible to determine the
fair value of amounts due to shareholders as a maturity date is not
determinable. The maximum credit risk exposure for all financial
assets is the carrying amount of that asset.
f) Capital assets
Capital assets are stated at cost. Amortization is provided using the
following methods and annual rates which are intended to amortize the
cost of assets over their estimated useful life:
======================================================================
Asset Method Rate
----------------------------------------------------------------------
Furniture and equipment Declining balance 20%
Computer equipment Declining balance 30%
----------------------------------------------------------------------
Amortization is provided at one-half the annual rates in the year of
acquisition.
g) Mineral properties
All costs associated with acquiring and exploring mineral properties
are expensed as incurred until such time as economic proven reserves
can be established.
h) 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 (note 7(b)) and stock options issued
subsequent to June 30, 1999 (note 11), have not been included in the
computation because to do so would be anti-dilutive.
i) Accounting standards change
In June, 1998, the Financial Accounting Standards Board issued SFAS
no. 133, "Accounting for Derivative Instruments and Hedging
Activities." Management is in the process of reviewing this new
standard. Adoption of this statement is not expected to have a
significant impact on the results of operations or financial position.
j) Stock option plan
During 1999, the Company adopted a stock option plan whereby
directors, officers 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.
F-9
<PAGE>
GOLDEN RIVER RESOURCES INC.
(An Exploration Stage Enterprise)
Notes to Consolidated Financial Statements (page 4)
Year ended June 30, 1999
$ United States
================================================================================
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
j) Stock option plan (continued)
The Company applies APB Opinion No. 25 in accounting for its employee
stock option plan whereby compensation cost is recorded only to the
extent that the market price exceeds the exercise price at the date of
grant and, accordingly, no compensation cost will be recognized for
its stock options in the financial statements. Options granted to
non-employees will be accounted for at their fair value at the date of
grant.
3. BUSINESS COMBINATION:
Effective March 10, 1999, Golden River and Rob Roy executed their business
combination agreement. Golden River issued 6,454,872 common shares to the
shareholders of Rob Roy in consideration for all of the issued and
outstanding common shares of Rob Roy on the basis of one common share of
Golden River for each common share of Rob Roy. As the former shareholders
of Rob Roy obtained effective control of the Company through the share
exchange, this transaction has been accounted for in these financial
statements as a reverse acquisition and the purchase method of accounting
has been applied. Under reverse acquisition accounting, Rob Roy is
considered to have acquired Golden River with the results of Golden River's
operations included in the consolidated financial statements from the date
of acquisition.
Rob Roy is considered the continuing entity and consequently, the amounts
prior to March 10, 1999 are those of Rob Roy.
Prior to the business combination with Rob Roy, Golden River was deemed a
shell corporation with no operations since inception on June 17, 1997.
Equity financing was raised prior to March 10, 1999 in anticipation of the
business combination. Accordingly, the acquisition has been recorded at the
fair value of the tangible net assets of Golden River at the date of
acquisition. The acquisition details are as follows:
Net assets acquired
Cash $ 34,761
Share subscriptions receivable 514,500
Due from related party 267,174
Current liabilities (96,191)
---------------------------------------------------------------------------
Consideration given for net assets acquired 720,244
Common shares issued $ 720,244
===========================================================================
Proforma results for periods prior to the acquisition have not been
provided as such results would not be significantly different from those
reported.
The amount due from related party was receivable from Rob Roy Resources
Ltd. and has been eliminated upon consolidation of the Company and Rob Roy.
The share subscriptions receivable were collected subsequent to the
business combination on March 10, 1999.
F-10
<PAGE>
GOLDEN RIVER RESOURCES INC.
(An Exploration Stage Enterprise)
Notes to Consolidated Financial Statements (page 5)
Year ended June 30, 1999
$ United States
================================================================================
4. CAPITAL ASSETS:
===========================================================================
1999 Accumulated Net book
Cost amortization Value
Furniture and equipment $ 6,668 $ 667 $ 6,001
Computer equipment 4,031 604 3,427
---------------------------------------------------------------------------
$ 10,699 $ 1,271 $ 9,428
===========================================================================
5. DUE TO SHAREHOLDERS:
The amount due to shareholders is unsecured and without interest or stated
terms of repayment.
6. CAPITAL STOCK:
a) Authorized:
50,000,000 common shares with a par value of $0.001 per share
1,000,000 preferred shares with a par value of $0.01 per share
b) As at June 30, 1999, 7,115,678 common shares were subject to hold
periods under which the holder's right to sell such shares is
restricted.
c) During 1999, the Company received services for which it agreed to
issue 750,000 Common shares at the fair market value of $0.10 per
share. The shares were issued subsequent to June 30, 1999.
7. COMMITMENTS:
a) La Lajita
Pursuant to an option agreement with an effective date of July 1,
1997, as evidenced in writing on February 12, 1998, the Company
acquired an option to earn a 60% interest in five mineral claims
located in the Municipality of Pueblo Nuevo, State of Durango, Mexico.
The agreement required periodic option payments, the issuance of
capital stock and a commitment to undertake minimum exploration
expenditures on the properties over a term of three years.
To June 30, 1999, the Company made option payments in the aggregate
amount of $534,214, including the prepayment of $75,000 due July 1,
1999, and 350,000 shares at an agreed price of $0.05 per share, and
incurred exploration expenditures in excess of $300,000 with respect
to the properties.
Subsequent to June 30, 1999, the Company elected to abandon the La
Lajita properties.
F-11
<PAGE>
GOLDEN RIVER RESOURCES INC.
(An Exploration Stage Enterprise)
Notes to Consolidated Financial Statements (page 6)
Year ended June 30, 1999
$ United States
================================================================================
7. COMMITMENTS (CONTINUED):
b) La Mexicana
Pursuant to an option agreement with an effective date of July 1,
1997, as evidenced in writing on February 12, 1998, the Company
acquired an option to earn a 70% interest in mineral claims located in
the Municipality of Pueblo Nuevo, State of Durango, Mexico. The
agreement requires the following:
o an initial payment of $50,000;
o $50,000 semi-annually commencing January 1, 1998 until February
12, 2001, or until a positive bankable feasibility study is
completed, whichever is the earliest to occur;
o the issuance of 250,000 common shares at an agreed price of $0.05
per share on the effective date that the Company became listed on
a recognized quotation system (being March 10, 1999); and
o the issuance of a further 250,000 shares at an agreed price of
$0.05 per share on each of September 10, 1999, March 10, 2000 and
September 20, 2000.
In addition, under the terms of the agreement, the Company must make
exploration expenditures on the claims in the amount of $300,000 by June
30, 1998, $500,000 by June 30, 1999 and $700,000 by June 30, 2000. The
Company is also responsible for the payment of any value added taxes on the
property.
As at June 30, 1999, the Company has made option payments in the aggregate
amount of $307,500, including prepayment of the $50,000 payment due July 1,
1999 and $45,000 on account of the payment due January 1, 2000, but has
only made nominal exploration expenditures of the nature outlined in the
agreement. However, effective November 12, 1999 the Company signed an
amended agreement which revises the terms of the original agreement as
follows:
o the Company must make exploration expenditures on the claims in the
amount of $300,000 by June 12, 2000 and $1,200,000 by February 12,
2001; and
o the Company must issue 750,000 common shares prior to March 10, 2002
with a minimum of 250,000 shares issued by February 12, 2000.
8. RELATED PARTY TRANSACTIONS:
During the year, the Company paid or accrued management fees of $55,618
(1998 - $69,690) to Directors of the Company.
9. COMPARATIVE FIGURES:
Certain of the comparative figures have been restated to conform with the
presentation adopted in the current year.
F-12
<PAGE>
Golden River Resources Inc.
(An Exploration Stage Enterprise)
Notes to Consolidated Financial Statements (page 7)
Year ended June 30, 1999
$ United States
================================================================================
10. STATEMENT OF CASH FLOWS:
Cash flows from operating activities prepared under the indirect method are
as follows:
<TABLE>
<CAPTION>
================================================================================================================
From inception
(June 13, 1997) to
June 30, 1999 1999 1998
(Unaudited)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Loss $ (1,711,359) $ (1,202,151) $ (509,208)
Non cash items
Amortization 1,232 1,232 -
Shares issued pursuant to mineral
property agreements 30,000 30,000 -
Accounts payable and accrued liabilities 86,242 49,462 36,780
Other changes in non-cash working capital 5,970 969 5,001
- ----------------------------------------------------------------------------------------------------------------
$ (1,587,915) $ (1,120,488) $ (467,427)
================================================================================================================
</TABLE>
11. SUBSEQUENT EVENTS:
Subsequent to June 30, 1999, the Company received a loan in the amount of
$60,350. The loan is unsecured, does not bear interest and has no fixed
terms of repayment.
On September 23, 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.
12. THE YEAR 2000 ISSUE:
The Year 2000 Issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize
the year 2000 as 1900 or some other date, resulting in errors when
information using year 2000 dates is processed. In addition, similar
problems may arise in some systems which use certain dates in 1999 to
represent something other than a date. The effects of the Year 2000 Issue
may be experienced before, on, or after January 1, 2000, and, if not
addressed, the impact on operations and financial reporting may range from
minor errors to significant systems failure which could affect an entity's
ability to conduct normal business operations. It is not possible to be
certain that all aspects of the Year 2000 Issue affecting the entity,
including those related to the efforts of customers, suppliers, or other
third parties, will be fully resolved.
F-13
<PAGE>
Consolidated Financial Statements of
GOLDEN RIVER RESOURCES INC.
(An Exploration Stage Enterprise)
Nine month period ended, March 31, 2000
(Unaudited - Prepared by Management)
F-14
<PAGE>
GOLDEN RIVER RESOURCES INC.
(An Exploration Stage Enterprise)
Consolidated Balance Sheet
$ United States
March 31, 2000 and June 30, 1999
<TABLE>
<CAPTION>
===========================================================================================
March 31, June 30,
2000 1999
(Unaudited - Prepared
by Managment)
- -------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current Assets
Cash $ 14,597 $ 57,149
Prepaid expense 4,361 6,220
- -------------------------------------------------------------------------------------------
18,958 63,369
Capital assets, net of amortization 9,114 9,428
- -------------------------------------------------------------------------------------------
$ 28,072 $ 72,797
===========================================================================================
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities
Accounts payable and accrued liabilities $ 188,818 $ 146,569
Due to shareholders 22,229 12,190
Shares to be issued for services - 75,000
Debt (note 2) 100,233 -
Interim financing payable (note 3) 75,000 -
- -------------------------------------------------------------------------------------------
386,280 233,759
Stockholders' Deficiency
Capital stock 1,539,657 1,537,475
Additional paid in capital 299,738 -
Deficit accumulated during the exploration stage (2,209,446) (1,711,359)
Accumulated other comprehensive income 11,843 12,922
- -------------------------------------------------------------------------------------------
(358,208) (160,962)
- -------------------------------------------------------------------------------------------
$ 28,072 $ 72,797
===========================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
On behalf of the Board:
Roger D. Watts Director
- --------------------------------
R. Bruce Manery Director
- --------------------------------
F-15
<PAGE>
GOLDEN RIVER RESOURCES INC.
(An Exploration Stage Enterprise)
Consolidated Statement of Loss
$ United States
Nine month period ended March 31, 2000 and 1999 (Unaudited - Prepared by
Management)
<TABLE>
<CAPTION>
========================================================================================================
From Inception Nine Months Nine Months
(June 13, 1997) Ended March 31, Ended March 31,
to March 31, 2000 2000 1999
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Expenses
Amortization $ 2,595 $ 1,363 $ 1,065
Consulting fees 215,806 212,985 -
Exploration of mineral properties 358,363 42,390 52,489
General and administrative 94,015 31,622 27,869
Management fees to related parties 165,275 39,967 41,277
Option payments to acquire mineral
Properties 860,489 30,000 346,735
Professional fees 274,288 89,917 75,790
Travel and promotion 238,615 49,843 81,845
- --------------------------------------------------------------------------------------------------------
2,209,446 498,087 627,070
- --------------------------------------------------------------------------------------------------------
Loss $(2,209,446) $ (498,087) $ (627,070)
========================================================================================================
Weighted average number of shares 7,878,612 16,104,134 5,776,710
Earnings per share $ (0.28) $ (0.03) $ (0.11)
========================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
F-16
<PAGE>
GOLDEN RIVER RESOURCES INC.
(An Exploration Stage Enterprise)
Consolidated Statement of Stockholders' Deficiency and Comprehensive Income
$ United States
Nine month period ended March 31, 2000 and 1999 (Unaudited - Prepared by
Management)
<TABLE>
<CAPTION>
===============================================================================================================
Deficit
Accumulated Accumulated
Capital Stock Additional During the Other Total
------------------------- Paid-In Exploration Comprehensive Stockholders
Shares Amount Capital Stage Income Equity
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance, June 30, 1999 14,822,872 $1,537,475 $ - $(1,711,359) $ 12,922 $(160,962)
Issued for services 1,932,200 1,932 191,288 - - 193,220
(Note 4(a))
Compensation cost of
options issued to
non-employees - - 78,700 - - 78,700
Shares issued pursuant
to Mineral Property
agreement (Note 4b)) 250,000 250 29,750 - - 30,000
- ---------------------------------------------------------------------------------------------------------------
17,005,072 1,539,657 299,738 (1,711,359) 12,922 140,958
Comprehensive income:
Loss - - - (498,087) - (498,087)
Foreign currency
translation
adjustment - - - - (1,079) (1,079)
- ---------------------------------------------------------------------------------------------------------------
Comprehensive loss - - - (498,087) (1,079) (499,166)
- ---------------------------------------------------------------------------------------------------------------
Balance March 31, 2000
(Unaudited) 17,005,072 $1,539,657 $299,738 $(2,209,446) $ 11,843 $(358,208)
===============================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
F-17
<PAGE>
GOLDEN RIVER RESOURCES INC.
(An Exploration Stage Enterprise)
Consolidated Statement of Cash Flows
$ United States
Nine month period ended March 31, 2000 and 1999 (Unaudited - Prepared by
Management)
<TABLE>
<CAPTION>
====================================================================================================
From Inception Nine months Nine Months
(June 13, 1997) Ended March 31, Ended March 31,
to March 31, 2000 2000 1999
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Loss $(2,209,446) $(498,087) $(627,070)
Cash flows from operating activities:
Items not involving cash:
Amortization 2,595 1,363 1,065
Option payments to acquire mineral
properties 60,000 30,000 30,000
Compensation cost of options issued
to non-employees 78,700 78,700 -
Consulting fees paid with share
consideration 118,220 118,220 -
Accounts payable and accrued liabilities 141,998 42,249 (16,590)
Other changes in non-cash operating
working capital 4,361 11,898 -
- ----------------------------------------------------------------------------------------------------
(1,803,572) (215,657) (612,595)
Cash flows from investing activities:
Purchase of capital assets (12,467) (1,049) (5,739)
Cash flows from financing activities:
Proceeds from interim financing 75,000 75,000 -
Proceeds from debt 100,233 100,233 -
Issuance of capital stock 903,971 - 15,399
Proceeds from realization of assets
acquired from the business
combination with Golden River 739,589 - 739,589
- ----------------------------------------------------------------------------------------------------
1,818,793 175,233 754,988
Foreign currency translation adjustment 11,843 (1,079) (15,612)
- ----------------------------------------------------------------------------------------------------
Increase (decrease) in cash 14,597 (42,552) 121,042
Cash position, beginning of period - 57,149 12,798
- ----------------------------------------------------------------------------------------------------
Cash position, end of period $ 14,597 $ 14,597 $ 133,840
====================================================================================================
Supplementary Information
Interest paid - - -
Income taxes paid - - -
Non-cash investing and financing activities
Common shares issued under mineral
property agreements $ 60,000 $ 30,000 $ 30,000
Common shares issued for services 193,220 193,220 -
====================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
F-18
<PAGE>
GOLDEN RIVER RESOURCES INC.
(An Exploration Stage Enterprise)
Notes to Consolidated Financial Statements
$ United States
Nine month period ended March 31, 2000 and 1999
(Unaudited - Prepared by Management)
================================================================================
1. SIGNIFICANT ACCOUNTING POLICIES:
(a) In the opinion of management, all adjustments (consisting of normal
recurring items) necessary for the fair presentation of these
unaudited financial statements in conformity with generally accepted
accounting principles have been made.
(b) The Company's subsidiary, Rob Roy Resources Ltd., operates in Canada
and its operations are conducted in Canadian currency.
These consolidated statements are presented in United States currency.
The method of translation applied is as follows:
i) Assets and liabilities are translated at the rate of exchange in
effect at the balance sheet date, being US $1.00 per Cdn $1.465
at March 31, 2000;
ii) Revenues and expenses are translated at the exchange rate in
effect at the transaction date; and
iii) The net adjustment arising from the translation is recorded as a
separate component of stockholders' equity called "Cumulative
translation adjustment" which is included in "Accumulated other
comprehensive income."
(c) 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 (note
4), and the stock options issued during the period (note 5) have not
been included in the computation because to do so would be
anti-dilutive.
2. DEBT:
The debt represents advances made to the Company by shareholders who,
individually, own less than 5% of the outstanding shares of the Company.
The advances do not bear interest, have no fixed terms of repayment and are
not pursuant to a written agreement.
3. INTERIM FINANCING PAYABLE:
On January 24, 2000, the Company signed an interim financing agreement with
an unrelated party for $75,000. The financing under the agreement is
repayable in full by July 24, 2000, bears interest at 8% and is guaranteed
by two Directors of the Company. In conjunction with signing the agreement,
the lender received 150,000 common shares of the Company from a shareholder
who owns less than 5% of the Company.
F-19
<PAGE>
GOLDEN RIVER RESOURCES INC.
(An Exploration Stage Enterprise)
Notes to Consolidated Financial Statements
$ United States
Nine month period ended March 31, 2000 and 1999
(Unaudited - Prepared by Management)
================================================================================
4. ISSUANCE OF COMMON STOCK:
a) For services
During the nine months ended March 31, 2000, the Company received
consulting services from an unrelated party with respect to securing
investors, outside the United States, in the Company's common stock.
On November 17, 1999, pursuant to a subscription agreement dated
September 23, 1999, these services were paid for with the issuance of
1,182,200 common shares at a price of $0.10 per share, being the
market value of the common stock at that date. The value of the shares
issued, aggregating $118,220, was equivalent to the fair value of the
services provided.
The Company also issued 750,000 common shares during the period in
consideration for similar consulting services received prior to June
30, 1999. The value of these services, aggregating $75,000, was
accrued in the accounts of the Company at June 30, 1999 and is
equivalent to the market value of the shares issued during the period.
The aggregate of the 1,182,200 common shares and the 750,000 common
shares equals the 1,932,200 common shares disclosed as issued in the
period in the consolidated statement of stockholders' deficiency and
comprehensive income.
b) Mineral property
During the nine months ended March 31, 2000, the Company issued
250,000 shares at $0.12 per share, being the market value of the stock
at the date of issue. The shares were issued pursuant to the terms of
the La Mexicana option agreement as disclosed in note 7 b) to the June
30, 1999 audited consolidated financial statements. The terms of the
options agreement require the issuance of an additional 500,000 common
shares prior to March 10, 2002.
5. STOCK OPTION PLAN:
During 1999, the Company adopted a stock option plan whereby directors,
officers 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 employee stock option plan whereby compensation cost is recorded only
to the extent that the market price exceeds the exercise price at the date
of grant and, accordingly, no compensation cost is recognized for its stock
options in these financial statements. Options granted to non-employees
will be accounted for at their fair value at the date of grant.
During the period ended March 31, 2000, 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.
Of these options, 1,050,000 were granted to non-employees. The fair value
of $78,700 of these options has been determined using the Black Scholes
Method using the expected life to be the life of the options, volatility
factor of 95%, risk free rate of 5.5% and no assumed dividend rate, and has
been included in the determination of the loss for the period.
F-20
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