SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2)
[X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant toss.240.14a-11(c) orss.240.14a-12
GOLDEN RIVER RESOURCES INC.
(Name of Registrant As Specified in its Charter)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
1) Title of each class of securities to which transaction
applies: Common Stock
2) Aggregate number of securities to which transaction applies:
14,955,475
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined): $0.07 (average of the bid and asked prices as
of 10/23/00)
4) Proposed maximum aggregate value of transaction: $1,046,883.20
5) Total fee paid: $209.38
[X ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
GOLDEN RIVER RESOURCES INC.
2420 PANDOSY STREET
KELOWNA, BRITISH COLUMBIA V1Y 1T8 CANADA
(250) 717-1049
Dear Golden River Resources Stockholder:
You are cordially invited to attend a special meeting of stockholders of Golden
River Resources Inc. ("Golden River" or the "Company") to be held on December 2,
2000, at 10:30 a.m., local time, at 2420 Pandosy Street, Kelowna, British
Columbia. At the special meeting, you will be asked:
(1) to consider and vote upon the Share Exchange Agreement, dated as of
October 30, 2000, by and among the security holders of Columbus
Networks Corporation, Columbus Networks Corporation, and the Company,
providing for the acquisition of all of the issued and outstanding
shares of Columbus Networks Corporation by the Company (the
"Acquisition");
(2) to consider and vote upon a 1-for-4 reverse split of the issued and
outstanding shares of the Company's common stock (the "Stock Split");
(3) to consider and vote upon Articles of Amendment to the Articles of
Incorporation of the Company changing the name of the Company to
Columbus Networks Corporation (the "Name Change"); and
(4) to transact such other business as properly may come before the meeting.
In June of this year, the board of directors decided to abandon its option to
acquire a mining property in Mexico after it determined that it would be too
difficult to raise the capital necessary to carry out the proposed work program,
given the depressed gold exploration market.
In August, the board of directors decided to enter into a new direction with a
high tech business. That company, known as Columbus Networks Corporation, had a
strong record in the Canadian Education Recruitment business and was looking at
expanding quickly into the American market where over 16,000 school districts
present a sizeable marketing opportunity for Columbus' exciting Internet
recruitment service. The board of directors interviewed some of Columbus'
clients and was pleased with the responses. The board believes that Columbus has
great potential.
The board of directors has determined that the terms and conditions of the
Acquisition are fair too, and in the best interests of the Golden River
stockholders. In reaching its decision, the board of directors considered, among
other things, Columbus' sector specific market for e-recruitment business in the
education field in North America. The directors of Golden River had an
opportunity to meet locally with Columbus' directors and staff, and got
first-hand knowledge of this very exciting way of providing an inexpensive
recruitment service to school boards. The
<PAGE>
potential profit line on this service is most interesting, and the Canadian
school boards currently using the service are profoundly pleased with the
results to date.
The proposed Acquisition is an important decision for Golden River and its
stockholders. The Acquisition cannot occur unless, among other things, the
Acquisition agreement is approved by the holders of a majority of the
outstanding shares of Golden River common stock entitled to vote at the special
meeting. The accompanying proxy statement explains the proposed Acquisition and
provides specific information concerning the special meeting. We encourage you
to read this entire document carefully.
Whether or not you plan to attend the special meeting, please take the time to
vote on the proposal submitted by completing and mailing the enclosed proxy card
to us. Please sign, date, and mail your proxy card indicating how you wish to
vote. If you fail to return your proxy card, the effect will be a vote against
the Acquisition.
Sincerely,
/s/ ROGER WATTS
Roger Watts
Chairman of the Board
The Acquisition and other matters voted upon have not been approved or
disapproved by the Securities and Exchange Commission (the "SEC") or any state
securities regulators nor has the SEC or any state securities regulator passed
upon the fairness or merits of the Acquisition or upon the accuracy or adequacy
of the information contained in this proxy statement. Any representation to the
contrary is unlawful.
This proxy statement is dated November 4, 2000, and is first being mailed to
Golden River stockholders on or about November 6, 2000 to stockholders of record
of October 6, 2000 (the "Record Date").
<PAGE>
GOLDEN RIVER RESOURCES INC.
2420 PANDOSY STREET
KELOWNA, BRITISH COLUMBIA V1Y 1T8 CANADA
(250) 717-1049
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 2, 2000
TO THE SHAREHOLDERS OF GOLDEN RIVER RESOURCES INC.
PLEASE TAKE NOTICE that a Special Meeting of Shareholders of Golden River
Resources Inc. (the "Company") will be held at 2420 Pandosy Street, Kelowna,
British Columbia, Canada, on Saturday, December 2, 2000, at 10:30 a.m., local
time, or at any adjournments thereof, for the following purposes:
(1) to consider and vote upon the Share Exchange Agreement, dated as of
October 30, 2000, by and among the security holders of Columbus
Networks Corporation, Columbus Networks Corporation, and the Company,
providing for the acquisition of all of the issued and outstanding
shares of Columbus Networks Corporation by the Company (the
"Acquisition");
(2) to consider and vote upon a 1-for-4 reverse split of the issued and
outstanding shares of the Company's common stock (the "Stock Split");
(3) to consider and vote upon Articles of Amendment to the Articles of
Incorporation of the Company changing the name of the Company to
Columbus Networks Corporation (the "Name Change"); and
(4) to transact such other business as properly may come before the meeting.
The board of directors has determined that the terms and conditions of the
Acquisition are fair to, and in the best interests of, the Company's
shareholders and unanimously recommends that you vote "FOR" the Acquisition.
Only shareholders of record owning shares of the Corporation's $0.001 par value
common stock at the close of business on October 6, 2000, will be entitled to
vote at the meeting. The transfer books of the Company will not be closed.
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. PLEASE INDICATE ON
THE ENCLOSED PROXY WHETHER YOU PLAN TO ATTEND THE MEETING. IN ANY EVENT, PLEASE
MARK, SIGN, DATE, AND RETURN THE ENCLOSED PROXY TO INSURE YOUR SHARES ARE
REPRESENTED AT THE MEETING. YOU MAY VOTE IN PERSON IF YOU ATTEND THE MEETING
EVEN THOUGH YOU HAVE EXECUTED AND RETURNED A PROXY.
By order of the Board of Directors:
Robert Bruce Manery, Secretary
Kelowna, British Columbia
November 4, 2000
<PAGE>
GOLDEN RIVER RESOURCES INC.
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 2, 2000
INTRODUCTION
This Proxy Statement will be first sent or given to holders of common stock of
Golden River on or about November 6, 2000, in connection with a Special Meeting
of Shareholders to be held at 2420 Pandosy Street, Kelowna, British Columbia,
Canada, on Saturday, December 2, 2000, at 10:30 a.m., local time (the "Special
Meeting"). The purposes of the Special Meeting will be:
(1) to consider and vote upon the Share Exchange Agreement, dated as of
October 30, 2000, by and among the security holders of Columbus
Networks Corporation, Columbus Networks Corporation, and Golden River
(the "Exchange Agreement"), providing for the acquisition of all of the
issued and outstanding shares of Columbus Networks Corporation by
Golden River (the "Acquisition");
(2) to consider and vote upon a 1-for-4 reverse split of the issued and
outstanding shares of Golden River's common stock (the "Stock Split");
(3) to consider and vote upon Articles of Amendment to the Articles of
Incorporation of Golden River changing the name of the company to
Columbus Networks Corporation (the "Name Change"); and
(4) to transact such other business as properly may come before the meeting.
Columbus Networks Corporation ("Columbus") is engaged in the business of
providing sector-specific electronic recruitment services to educators, school
districts, universities, and private educational employers in the education
system of Canada.
On October 23, 2000, the board of directors of Golden River approved the terms
of the Acquisition pursuant to the Exchange Agreement. Those basic terms involve
the issuance of such number of shares of Golden River common stock to the
shareholders of Columbus, so that after such issuance, Golden River will own
Columbus as its wholly-owned subsidiary, the current shareholders of Columbus
will hold 70% of the outstanding shares of Golden River common stock, and the
current shareholders and option holders of Golden River will retain 30%
ownership of the outstanding shares of Golden River common stock, prior to the
issuance of shares for brokerage fees. The percentage calculations per the
Exchange Agreement are based on a fully diluted basis. The fully diluted basis
considers the options holders and holders of preferred stock of both companies
as if they had exercised or converted to common stock all of such securities.
However, it does not factor in the issuance of shares of common stock and
warrants recently sold by Golden River. Upon closing the Acquisition, the
Exchange Agreement requires Golden River to amend its Articles of Incorporation
to change its name to Columbus Networks Corporation. To decrease the number of
outstanding shares of Golden River post-Acquisition Closing, the Exchange
Agreement requires a 1-for-4 reverse stock split of the current
Golden River Resources Inc. Proxy Statement - Page 1
<PAGE>
issued and outstanding shares of Golden River common stock to take effect before
the Acquisition Closing.
The Acquisition gives the shareholders of Golden River the potential opportunity
for increased share value. This increase is anticipated because of the high
growth e-business market in which Columbus participates.
Effective October 30, 2000, Golden River and Columbus executed the definitive
Exchange Agreement. Golden River anticipates that the Acquisition will be
consummated on or about December 8, 2000, subject to Golden River obtaining the
requisite shareholder approval. The board of directors and shareholders of
Columbus have given their approval of the Acquisition subject to the terms of
the Exchange Agreement. The Golden River board of directors who hold
approximately 2.7% of the outstanding shares of Golden River common stock have
given their approval and indicated their intention to vote in favor of the
Acquisition, and all related transactions, subject to the terms of the Exchange
Agreement. Final Closing of the transaction will be publicly announced by Golden
River and updated information, if any, concerning the transaction will be
provided in a Form 8-K to be filed by Golden River after closing.
TABLE OF CONTENTS
PAGE
INTRODUCTION..................................................................1
SUMMARY TERM SHEET............................................................4
>> TRANSACTION PARTIES..................................................5
>> THE TRANSACTION......................................................5
>> DATE, TIME AND PLACE OF THE SPECIAL MEETING..........................5
>> STOCKHOLDERS ENTITLED TO VOTE........................................5
>> VOTE REQUIRED........................................................6
>> PURPOSE AND REASON FOR THE SPECIAL MEETING...........................6
>> RECOMMENDATION OF GOLDEN RIVER BOARD OF DIRECTORS;
REASONS FOR THE ACQUISITION; FAIRNESS................................7
>> INTERESTS OF CERTAIN PERSONS IN THE ACQUISITION......................7
>> CLOSING AND CONDITIONS OF THE ACQUISITION............................7
>> TERMINATION OF THE EXCHANGE AGREEMENT................................7
>> EFFECTS OF THE ACQUISITION...........................................7
>> THE ACQUISITION CONSIDERATION........................................8
>> FEDERAL INCOME TAX CONSEQUENCES......................................8
>> ACCOUNTING TREATMENT.................................................8
>> DISSENTERS' RIGHTS...................................................8
QUESTIONS AND ANSWERS ABOUT THE ACQUISITION...................................9
Golden River Resources Inc. Proxy Statement - Page 2
<PAGE>
WHO CAN ANSWER YOUR QUESTIONS................................................10
CAUTIONARY STATEMENT CONCERNING FORWARD LOOKING STATEMENTS...................10
THE SPECIAL MEETING..........................................................11
TIME, PLACE AND DATE.........................................................11
PURPOSE OF THE MEETING.......................................................11
RECORD DATE AND VOTING AT THE SPECIAL MEETING................................11
VOTES REQUIRED...............................................................12
SOLICITATION AND PROXY SOLICITOR.............................................12
REVOCATION AND USE OF PROXIES................................................12
ADJOURNMENTS OR POSTPONEMENTS................................................13
PRINCIPAL SECURITY HOLDERS...................................................13
THE ACQUISITION OF COLUMBUS NETWORKS CORPORATION.............................15
RECOMMENDATION OF THE GOLDEN RIVER BOARD OF DIRECTORS........................15
REASONS FOR THE RECOMMENDATION OF THE GOLDEN RIVER BOARD.....................15
ACCOUNTING TREATMENT.........................................................16
EXCHANGE AGREEMENT...........................................................16
REGULATORY APPROVALS.........................................................18
ACQUISITION CONSIDERATION....................................................18
CERTAIN CONSEQUENCES OF THE ACQUISITION......................................19
MANAGEMENT OF GOLDEN RIVER FOLLOWING ACQUISITION CLOSING.....................20
CHANGE IN CORPORATE OFFICES..................................................20
CHANGE IN SENIOR MANAGEMENT..................................................20
CHANGE IN BOARD OF DIRECTORS.................................................20
BACKGROUND INFORMATION ON GOLDEN RIVER.......................................22
INTERESTS OF CERTAIN PERSONS IN THE ACQUISITION..............................22
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT..................22
BACKGROUND INFORMATION ON COLUMBUS...........................................24
GENERAL......................................................................24
COLUMBUS' PRODUCTS...........................................................25
THE MARKET FOR COLUMBUS' SERVICES............................................26
COLUMBUS' STATED BUSINESS OBJECTIVES.........................................27
ADMINISTRATION...............................................................28
SUMMARY OF FINANCIAL OPERATIONS..............................................28
DISCUSSION AND ANALYSIS OF COLUMBUS' OPERATIONS..............................29
MANAGEMENT...................................................................32
PRO FORMA INFORMATION........................................................35
Golden River Resources Inc. Proxy Statement - Page 3
<PAGE>
COMPARATIVE PER SHARE DATA...................................................35
THE STOCK SPLIT..............................................................36
REASONS FOR THE PROPOSED REVERSE STOCK SPLIT.................................36
EFFECTS OF APPROVAL OF THE REVERSE STOCK SPLIT...............................37
PROCEDURE FOR IMPLEMENTING THE REVERSE SPLIT.................................37
FEDERAL INCOME TAX EFFECTS OF THE STOCK SPLIT................................38
MORE INFORMATION.............................................................38
PROPOSALS OF SHAREHOLDERS FOR 2001 ANNUAL MEETING............................38
OTHER MATTERS................................................................38
INCORPORATION BY REFERENCE...................................................38
Appendix A: Exchange Agreement
Appendix B: Golden River Form 10-KSB for the fiscal year ended June 30, 2000
Appendix C: Columbus audited financial statements for the period ended June 30,
2000
Appendix D: Golden River Unaudited Pro Forma Consolidated Financial Information
SUMMARY TERM SHEET
Throughout this proxy statement the term "Acquisition" means the Acquisition
between Columbus Networks Corporation, a British Columbia corporation
("Columbus"), and Golden River Resources Inc., a Nevada corporation ("Golden
River"), with Columbus being the acquired entity. The term "Exchange Agreement"
means the Share Exchange Agreement dated as of October 30, 2000, by and among
the security holders of Columbus Networks Corporation, Columbus Networks
Corporation, and Golden River. A copy of the Exchange Agreement is attached as
Appendix A to this proxy statement.
This summary highlights selected information included in this proxy statement.
This summary may not contain all of the information that is important to you.
For a more complete understanding of the Acquisition and the other information
contained in this proxy statement, you should read this entire proxy statement
carefully, as well as the additional documents to which it refers.
IN ADDITION TO CERTAIN OTHER MATTERS WHICH WILL BE VOTED ON, THE ACQUISITION IS
OF GREAT IMPORTANCE TO THE STOCKHOLDERS OF GOLDEN RIVER BECAUSE, IF THE
ACQUISITION AND EXCHANGE OF SHARES IS CONSUMMATED, THE STOCKHOLDER'S EQUITY
INVESTMENT IN GOLDEN RIVER WILL BE DILUTED FOR AN EQUITY INVESTMENT IN COLUMBUS.
ACCORDINGLY, STOCKHOLDERS ARE URGED TO READ AND CAREFULLY CONSIDER THE
INFORMATION SUMMARIZED BELOW AND PRESENTED ELSEWHERE IN THIS PROXY STATEMENT.
Golden River Resources Inc. Proxy Statement - Page 4
<PAGE>
>> TRANSACTION PARTIES
Golden River Resources Inc. is a publicly-traded company which had been
engaged in the acquisition and exploration of a precious mineral
property. It is now seeking a new business opportunity. The principal
executive offices of Golden River are located at 2420 Pandosy Street,
Kelowna, British Columbia V1Y 1T8 Canada, where its telephone number is
(250) 717-1049. See "Background Information on Golden River."
Columbus Networks Corporation is a privately-held company engaged in
the business of providing sector-specific electronic recruitment
services to educators, school districts, universities, and private
educational employers in the education system of Canada. The principal
executive offices of Columbus are located at 100 - 1295 Stevens Road,
Kelowna, British Columbia V1Y 2S9 Canada, where its telephone number is
(250) 769-8099. See "Background Information on Columbus."
>> THE TRANSACTION
The Acquisition of Columbus will be effected as a stock exchange
whereby the shareholders of Columbus will receive shares of Golden
River and Columbus will become a wholly-owned subsidiary of Golden
River. Columbus shareholders, as a group, will end up with 70%
ownership of the equity of Golden River on a fully-diluted basis,
assuming exercise of all Golden River options, but prior to the
issuance of shares for brokerage fees and shares sold in a recent
private placement. Golden River will change its name to "Columbus
Networks Corporation" effective at closing (the "Name Change"). As part
of the Acquisition, Golden River will effect a 1-for-4 reverse split of
its common stock effective upon Acquisition closing (the "Stock
Split"). On a fully-diluted basis current Golden River shareholders and
option holders, after issuance of shares to Columbus shareholders, will
hold 30% of the fully-diluted Golden River common stock, prior to the
issuance of shares for brokerage fees and shares sold in a recent
private placement. See "The Acquisition of Columbus Networks
Corporation."
>> DATE, TIME AND PLACE OF THE SPECIAL MEETING
The special meeting of Golden River shareholders will be held on
Saturday, December 2, 2000, at 10:30 a.m., local time, at 2420 Pandosy
Street, Kelowna, British Columbia (the "Special Meeting"). See "The
Special Meeting - Time, Place and Date."
>> STOCKHOLDERS ENTITLED TO VOTE
Only Golden River stockholders of record as of the close of business on
October 6, 2000 (the "Record Date") are entitled to notice of and to
vote at the Special Meeting. See "The Special Meeting - Record Date and
Voting at the Special Meeting."
Golden River Resources Inc. Proxy Statement - Page 5
<PAGE>
>> VOTE REQUIRED
Under Nevada law, the approval of all matters relating to the
Acquisition, including the Stock Split and the Name Change, requires
the affirmative vote of the holders of a majority of the Golden River
common stock outstanding and entitled to vote. Golden River anticipates
that all current Golden River directors and officers will vote their
shares of Golden River common stock to approve the Acquisition, Stock
Split, and Name Change. As of October 6, 2000, the directors and
officers of Golden River beneficially owned 2.7% of the outstanding
shares of Golden River Common stock. See "Introduction" and "The
Special Meeting - Votes Required."
>> PURPOSE AND REASON FOR THE SPECIAL MEETING
This Proxy Statement is being furnished to the holders of outstanding
shares of Golden River common stock in connection with the solicitation
of proxies to authorize the Acquisition and included transactions. You
are asked to read carefully the information herein and return your
signed proxy to Golden River, if you are in favor of the Acquisition
and the included transactions.
Your proxy is solicited for the following actions:
(1) to consider and vote upon the Share Exchange Agreement, dated as of
October 30, 2000, by and among the security holders of Columbus
Networks Corporation, Columbus Networks Corporation, and Golden River,
providing for the acquisition of all of the issued and outstanding
shares of Columbus Networks Corporation by Golden River (the
"Acquisition");
(2) to consider and vote upon a 1-for-4 reverse split of the issued and
outstanding shares of Golden River's common stock (the "Stock Split");
(3) to consider and vote upon Articles of Amendment to the Articles of
Incorporation of Golden River changing the name of the company to
Columbus Networks Corporation (the "Name Change"); and
(4) to transact such other business as properly may come before the meeting.
In the event that the Acquisition and its included transactions are not
approved and authorized by Golden River shareholders, the future of
Golden River is in serious doubt. Not only would Golden River
shareholders miss the opportunity to participate in the exciting
industry in which Columbus operates, which is characterized by higher
growth rates than those experienced by the mineral resources
exploration industry, but we would continue to exist without any
business operations. Such existence would be limited. In the absence of
our closing the Acquisition, it is most likely that we would continue
to search for another business opportunity for some period of time.
However, Golden River would be dependent upon related party loans to
sustain its existence. See "The Acquisition of Columbus Networks
Corporation."
Golden River Resources Inc. Proxy Statement - Page 6
<PAGE>
>> RECOMMENDATION OF GOLDEN RIVER BOARD OF DIRECTORS; REASONS FOR THE
ACQUISITION; FAIRNESS
The board of directors of Golden River has duly approved and executed
the Exchange Agreement and recommends a vote in favor of it in the
belief that the Acquisition is in the best interest of Golden River
stockholders. Before giving this approval, the Golden River board
reviewed a number of factors, including the terms of the Exchange
Agreement and information regarding the financial condition,
operations, and prospects of Columbus. See "The Acquisition of Columbus
Networks Corporation - Recommendation of Board of Directors" and " -
Reasons for the Recommendation of the Golden River Board."
>> INTERESTS OF CERTAIN PERSONS IN THE ACQUISITION
The interests of certain members of the management of Golden River
could be different than those of other Golden River shareholders. Mr.
Roger Watts will serve on the new board of directors under the terms of
the Exchange Agreement. Mr. Bruce Manery, an officer and director of
Golden River, could be offered employment with Columbus after the
closing. See "Interests of Certain Persons in the Acquisition."
>> CLOSING AND CONDITIONS OF THE ACQUISITION
The Acquisition shall become effective at such time as the Acquisition
and the included transactions are approved by the Golden River
shareholders and the conditions precedent for closing the Exchange
Agreement have been either satisfied or waived. See Appendix A and "The
Acquisition of Columbus Networks Corporation - Exchange Agreement."
>> TERMINATION OF THE EXCHANGE AGREEMENT
The Exchange Agreement may be terminated by either Golden River or
Columbus prior to the Acquisition closing under certain circumstances.
See "The Acquisition of Columbus Networks Corporation - Exchange
Agreement - Termination" and Appendix A.
>> EFFECTS OF THE ACQUISITION
After closing the Acquisition, Columbus will become a wholly-owned
subsidiary of Golden River and the corporate name of Golden River will
be changed to Columbus Networks Corporation. All members of the current
Golden River board of directors, other than Mr. Roger Watts, will
resign effective at the Acquisition closing, and Columbus will
reconstitute the board of directors as specified in the Exchange
Agreement and in this Proxy Statement. The corporate offices of Golden
River will be moved to the offices of Columbus, which are also located
in Kelowna, British Columbia. See "The Acquisition of Columbus Networks
Corporation - Certain Consequences of the Acquisition" and "Management
of Golden River Following Acquisition Closing."
Golden River Resources Inc. Proxy Statement - Page 7
<PAGE>
>> THE ACQUISITION CONSIDERATION
Pursuant to the Exchange Agreement, Columbus shareholders will receive
on a pro rata basis, determined by their percent ownership of the
outstanding common stock of Columbus, shares of Golden River common
stock constituting 70% of the post-Acquisition fully-diluted shares of
Golden River common stock, prior to the issuance of shares for
brokerage fees and shares sold in a recent private placement. The stock
exchange encompassed by the Exchange Agreement contemplates the
issuance of shares of Golden River common stock in excess of the
current number of outstanding shares of common stock and will dilute
current shareholders of Golden River common stock and option holders to
30% fully-diluted ownership post-Acquisition, prior to the issuance of
shares for brokerage fees and shares sold in a recent private
placement. See "The Acquisition of Columbus Networks Corporation -
Acquisition Consideration" and Appendix A.
>> FEDERAL INCOME TAX CONSEQUENCES
The Acquisition and the included transactions contemplated in
connection therewith have been structured with the intent that they be
tax-free to Golden River, Columbus, and the holders of Columbus stock
for US federal income tax purposes. Assuming that the Acquisition
constitutes a tax-free reorganization for US federal income tax
purposes, no gain or loss will be recognized by Golden River, current
stockholders of Golden River or Columbus in connection with the
Acquisition and the included transactions contemplated in connection
therewith. This treatment may not apply to particular categories of
holders of Columbus stock or holders outside the United States. In
addition, there may be relevant foreign, state, local, or other tax
consequences, none of which are described above. Columbus stockholders
are urged to consult their tax advisors to determine the specific tax
consequences of the Acquisition, including the applicability and effect
of foreign, state, local, and other tax laws.
>> ACCOUNTING TREATMENT
The Acquisition will be accounted for as a purchase of net monetary
assets of Golden River by Columbus. See "The Acquisition of Columbus
Networks Corporation - Accounting Treatment."
>> DISSENTERS' RIGHTS
Under Nevada law, because Golden River is a publicly traded corporation
on the OTC Bulletin Board, the common stockholders have no dissenters'
rights of appraisal. See "The Special Meeting - Record Date and Voting
at the Special Meeting."
Golden River Resources Inc. Proxy Statement - Page 8
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE ACQUISITION
WHY SHOULD GOLDEN RIVER ACQUIRE COLUMBUS?
At this time, Golden River has no business operations. The Golden River board of
directors believes that the business of Columbus presents significant potential
for growth, not currently available to Golden River.
WHAT WILL HAPPEN TO COLUMBUS AFTER THE ACQUISITION?
If the Acquisition is approved by Golden River, Columbus will become a
wholly-owned subsidiary of Golden River.
ARE THERE RISKS TO BE CONSIDERED?
The Acquisition is contingent upon, among other things, stockholder approval and
governmental approvals. If any of these or other conditions are not satisfied,
or for some other reason the transaction does not close, Golden River must
continue to search for a business opportunity.
IF MY SHARES OF GOLDEN RIVER COMMON STOCK ARE HELD IN "STREET NAME" BY MY
BROKER, WILL MY BROKER VOTE MY SHARES FOR ME?
No. The law does not allow your broker to vote your shares of Golden River
common stock on the Acquisition at the Special Meeting without your direction.
You should follow the instructions from your broker on how to vote your shares.
Shares that are not voted because you do not instruct your broker are called
"broker non-votes," and will have the effect of a vote "AGAINST" the
Acquisition.
IF I SEND IN MY PROXY CARD BUT DO NOT INDICATE MY VOTE, HOW WILL MY SHARES BE
VOTED?
If you sign and return your proxy card but do not indicate how to vote your
shares at the Special Meeting, the shares represented by your proxy will be
voted "FOR" the Proposals.
WHAT IF I DON'T RETURN MY PROXY CARD?
Since it takes a majority of the shares outstanding to approve the Proposals,
not returning your proxy card is the same as voting "AGAINST" the Acquisition.
WHAT SHOULD I DO NOW TO VOTE AT THE SPECIAL MEETING?
Sign, mark, and mail your proxy card indicating your vote on the Acquisition in
the enclosed return envelope as soon as possible, so that your shares of Golden
River common stock can be voted at the Special Meeting.
MAY I CHANGE MY VOTE AFTER I MAIL MY PROXY CARD?
Yes. You may change your vote at any time before your proxy is voted at the
Special Meeting. You can do this in three ways:
Golden River Resources Inc. Proxy Statement - Page 9
<PAGE>
o You can send Golden River a written statement that you revoke your
proxy, which to be effective must be received prior to the vote at the
Special Meeting;
o You can send Golden River a new proxy card prior to the vote at the
Special Meeting, which to be effective must be received by Golden River
prior to the vote at the Special Meeting; or
o You can attend the Special Meeting and vote in person. Your attendance
alone will not revoke your proxy. You must attend the Special Meeting
and cast your vote at the Special Meeting.
Send any revocation of a proxy or new proxy card to the attention of the
Corporate Secretary at Golden River, 2420 Pandosy Street, Kelowna, British
Columbia V1Y 1T8, Canada. If your shares are held in street name, you must
follow the directions provided by your broker to vote your shares or to change
your instructions.
WHO CAN ANSWER YOUR QUESTIONS
If you have more questions about the Acquisition or would like additional copies
of the proxy statement, you should contact:
Golden River Resources Inc.
2420 Pandosy Street
Kelowna, British Columbia V1Y 1T8 Canada
Attention: Bruce Manery, Corporate Secretary
(250) 717-1049
CAUTIONARY STATEMENT CONCERNING FORWARD LOOKING STATEMENTS
This proxy statement and the documents to which we refer you to in this proxy
statement contain forward-looking statements. In addition, from time to time, we
or our representatives may make forward-looking statements orally or in writing.
We base these forward-looking statements on our expectations and projections
about future events, which we derive from the information currently available to
us. Such forward-looking statements relate to future events or our future
performance, including:
o Our financial performance and projections; and
o Our business prospects and opportunities.
You can identify forward-looking statements by those that are not historical in
nature, particularly those that use terminology such as "may," "will," "should,"
"expects," "anticipates," "contemplates," "estimates," "believes," "plans,"
"projected," "predicts," "potential," or "continue" or the negative or these or
similar terms.
Golden River Resources Inc. Proxy Statement - Page 10
<PAGE>
Forward-looking statements are only predictions. The forward-looking events
discussed in this proxy statement, the documents to which we refer you and other
statements made from time to time by us or our representatives, may not occur,
and actual events and results may differ materially and are subject to risks,
uncertainties and assumptions about us. We are not obligated to update publicly
or revise any forward-looking statement, whether as a result of uncertainties
and assumptions, the forward-looking events discussed in this proxy statement,
the documents to which we refer you, and other statements made from time to time
by us or our representatives, might not occur.
THE SPECIAL MEETING
TIME, PLACE AND DATE
We are furnishing this proxy statement to Golden River stockholders in
connection with the solicitation of proxies by the Golden River board of
directors for use at a special meeting of stockholders of Golden River to be
held on December 2, 2000, at 10:30 a.m., local time, at 2420 Pandosy Street,
Kelowna, British Columbia, or any adjournment or postponement thereof, pursuant
to the enclosed Notice of Special Meeting of Stockholders.
PURPOSE OF THE MEETING
At the special meeting, holders of Golden River common stock of record as of the
close of business on October 6, 2000 will be eligible:
(1) to consider and vote upon the Share Exchange Agreement, dated as of
October 30, 2000, by and among the security holders of Columbus
Networks Corporation, Columbus Networks Corporation, and Golden River,
providing for the acquisition of all of the issued and outstanding
shares of Columbus Networks Corporation by Golden River (the
"Acquisition");
(2) to consider and vote upon a 1-for-4 reverse split of the issued and
outstanding shares of Golden River's common stock (the "Stock Split");
(3) to consider and vote upon Articles of Amendment to the Articles of
Incorporation of Golden River changing the name of the company to
Columbus Networks Corporation (the "Name Change"); and
(4) to transact such other business as properly may come before the meeting.
RECORD DATE AND VOTING AT THE SPECIAL MEETING
The board of directors has fixed the close of business on October 6, 2000, as
the record date for the determination of the stockholders entitled to notice of,
and to vote at, the special meeting and any adjournments and postponements of
the special meeting. On that day, there were 17,791,661 shares of Golden River
common stock outstanding, which shares were held by approximately
Golden River Resources Inc. Proxy Statement - Page 11
<PAGE>
156 stockholders of record. Holders of Golden River common stock are entitled to
one vote per share.
One-third of the issued and outstanding shares of Golden River common stock on
the record date, represented in person or by proxy, will constitute a quorum for
the transaction of business at the special meeting. If a quorum is not present,
the special meeting may be adjourned from time to time, until a quorum is
present. Abstentions and broker non-votes are counted as present for purposes of
determining the presence of a quorum at the special meeting for the transaction
of business.
Any stockholder of Golden River has the right to vote against approval of the
Acquisition and the Acquisition Agreement. However, under Nevada law, because
Golden River is a publicly-traded corporation, Golden River stockholders have no
statutory dissenters' rights of appraisal.
VOTES REQUIRED
Approval of any Proposal requires the affirmative vote of holders of a majority
of the outstanding shares of Golden River common stock entitled to vote at the
special meeting. A failure to vote, abstention from voting, or a broker non-vote
will have the same legal effect as a vote cast against approval of any Proposal.
Brokers, and in many cases nominees, will not have discretionary power to vote
on the proposals to be presented at the special meeting. Accordingly, beneficial
owners of shares must instruct their brokers or nominees how to vote their
shares at the special meeting.
SOLICITATION AND PROXY SOLICITOR
Golden River will bear all expenses of the solicitation of proxies in connection
with this proxy statement, including the cost of preparing and mailing this
proxy statement. Golden River will reimburse brokers, fiduciaries, custodians,
and their nominees for reasonable out-of-pocket expenses incurred in sending
this proxy statement and other proxy materials to, and obtaining instruction
relating to such materials from, beneficial owners of Golden River common stock.
Golden River stockholder proxies may be solicited by directors, officers, and
employees of Golden River in person or by telephone, facsimile, or by other
means of communications. However, they will not be paid for soliciting proxies.
REVOCATION AND USE OF PROXIES
The enclosed proxy card is solicited on behalf of the Golden River board of
directors. A stockholder giving a proxy has the power to revoke it at any time
before it is exercised by (1) delivering a written notice revoking the proxy to
Golden River before the vote at the special meeting; (2) executing a proxy with
a later date and delivering it to Golden River before the vote at the special
meeting; or (3) attending the special meeting and voting in person. Any written
notice of revocation should be delivered to the attention of the Corporate
Secretary at Golden
Golden River Resources Inc. Proxy Statement - Page 12
<PAGE>
River, 2420 Pandosy Street, Kelowna, British Columbia V1Y 1T8, Canada.
Attendance at the special meeting without casting a ballot will not, by itself,
constitute revocation of a proxy.
Subject to proper revocation, all shares of Golden River common stock
represented at the special meeting by properly executed proxies received by
Golden River will be voted in accordance with the instructions contained in such
proxies. Executed, but unmarked, proxies will be vote "FOR" approval of the
Proposals.
ADJOURNMENTS OR POSTPONEMENTS
Although it is not expected, the special meeting may be adjourned or postponed
for the purpose of soliciting additional proxies. Any adjournment or
postponement of the special meeting may be made without notice, other than by an
announcement made at the special meeting, by approval of the holders of a
majority of the votes present in person or represented by proxy at the special
meeting, whether or not a quorum exists. Any signed proxies received by Golden
River will be voted in favor of an adjournment or postponement of the special
meeting in these circumstances, unless either a written note on the proxy
delivered by the stockholder directs otherwise or the stockholder has voted
against the Acquisition Agreement. Thus, proxies voting against the Acquisition
Agreement will not be used to vote for adjournment of the special meeting for
the purpose of providing additional time to solicit votes to approve the
Acquisition Agreement. Any adjournment or postponement of the special meeting
for the purpose of soliciting additional proxies will allow Golden River
stockholders who have already sent in their proxies to revoke them at any time
prior to their use.
PRINCIPAL SECURITY HOLDERS
The following table sets forth information, as October 6, 2000, with respect to
the beneficial ownership of Golden River's Common stock by each person known by
Golden River to be the beneficial owner of more than five percent of the
outstanding Common stock and by directors and officers of Golden River, both
individually and as a group:
SHARES OWNED
BENEFICIAL OWNERS BENEFICIALLY AND PERCENT OF CLASS(1)
OF RECORD
CEDE & CO.(2) 9,016,213 50.68%
P.O. Box 20
Bowling Green Station
New York, NY 10004
67849 CAPITAL LTD. 1,182,200 6.64%
Box 209, Chancery Court
Leeward Highway Providenciales
Turks & Caicos, West Indies
Golden River Resources Inc. Proxy Statement - Page 13
<PAGE>
SHARES OWNED
BENEFICIAL OWNERS BENEFICIALLY AND PERCENT OF CLASS(1)
OF RECORD
DAVID ST. CLAIR DUNN(3)(4) 100,000 0.56%
1154 Marine Drive
Gibsons, British Columbia
Canada V0N 1V1
ROBERT BRUCE MANERY(3)(5) 195,200 1.09%
2420 Pandosy Street
Kelowna, British Columbia
Canada V1Y 1T8
ROGER D. WATTS(3)(5) 195,200 1.09%
200-537 Leon Avenue
Kelowna, British Columbia
Canada V1Y 2A9
Officers and directors as a group 490,400 2.70%
(3 persons)(6)
(1) This table is based on 17,791,661 shares of common stock outstanding on
October 6, 2000. If a person listed on this table has the right to obtain
additional shares of common stock within sixty (60) days from October 6,
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) CEDE & Co. holds the shares in nominee name on behalf of broker-dealer
firms.
(3) These individuals are the officers and directors of Golden River and may be
deemed to be "parents" of Golden River as that term is defined in the rules
and regulations promulgated under the federal securities laws.
(4) Includes options to purchase 100,000 shares of common stock.
(5) Includes options to purchase 150,000 shares of common stock.
(6) Includes options to purchase 400,000 shares of common stock.
CHANGES IN CONTROL
No arrangements are known to Golden River, including any pledge by any person of
securities of Golden River, the operation of which may, at a subsequent date,
result in a change in control of Golden River.
Golden River Resources Inc. Proxy Statement - Page 14
<PAGE>
THE ACQUISITION OF COLUMBUS NETWORKS CORPORATION
BACKGROUND OF THE OFFER AND THE ACQUISITION
In June of this year, the board of directors decided to abandon its option to
acquire a mining property in Mexico after it determined that it would be too
difficult to raise the capital necessary to carry out the proposed work program,
given the depressed gold exploration market.
In August, the board of directors decided to enter into a new direction with a
high tech business. That company, known as Columbus Networks Corporation, had a
strong record in the Canadian Education Recruitment business and was looking at
expanding quickly into the American market where over 16,000 school districts
present a sizeable marketing opportunity for Columbus' exciting Internet
recruitment service. Management of Columbus believes that its expansion plans
can be accelerated if it had publicly-traded stock that could be used to finance
its business plan.
The board of directors interviewed some of Columbus' clients and was pleased
with the responses. The board believes that Columbus has great potential.
In October 2000, Golden River and Columbus completed negotiations and determined
that a 30/70 split of the post-transaction equity of Golden River was an
acceptable and fair deal for the shareholders of both parties. The Exchange
Agreement was signed effective October 30, 2000. The Exchange Agreement is
binding, subject to the satisfaction of specified closing conditions.
RECOMMENDATION OF THE GOLDEN RIVER BOARD OF DIRECTORS
On October 23, 2000, the board of directors of Golden River unanimously approved
and adopted the Exchange Agreement to authorize the transactions contemplated
thereby, and determined that the Exchange Agreement and the transactions
included therein, the Acquisition, the Stock Split, and the Name Change, are in
the best interest of Golden River and Golden River's shareholders. The Golden
River board recommends that Golden River's shareholders approve and adopt the
Acquisition, including the Stock Split, Exchange Agreement, and Name Change, by
so marking, executing, and timely returning the proxies.
REASONS FOR THE RECOMMENDATION OF THE GOLDEN RIVER BOARD
In approving the Exchange Agreement and the transactions included therein, and
recommending that holders of shares of Golden River common stock approve and
adopt the Acquisition, Stock Split, and the Name Change, the Golden River board
considered a number of factors, including, but not limited to, the following:
o The familiarity of the Golden River board with the financial condition,
results of operations, business, and prospects of Golden River, current
economic and market conditions generally.
Golden River Resources Inc. Proxy Statement - Page 15
<PAGE>
o That Golden River's financial condition, results of operations,
business, and prospects have been substantially affected by its
inability to pursue acquisitions in the mining industry. It is doubtful
that Golden River is strong enough to carry its operations forward or
sustain itself if this Acquisition is not consummated.
o The acquisition of Columbus gives the shareholders of Golden River the
opportunity to participate in a high growth industry.
o A review by Golden River management of a range of alternative
strategies that might be pursued, the possible values that might be
achieved through those strategies, and the Golden River board's
conclusion that these alternative strategies entailed increased risk
and, in any event, were unlikely to result in greater value to Golden
River or its shareholders than the Acquisition of Columbus on the terms
specified in the Exchange Agreement.
The foregoing discussion of the information and factors considered and given
weight by the Golden River board is not intended to be exhaustive. In view of
the variety of factors considered in connection with its evaluation of the
Exchange Agreement and the transactions included therein, the Golden River board
did not find it practicable to, and did not, quantify or otherwise assign
relative weights to the specific factors considered in reaching its
determination. In addition, individual members of the Golden River board may
have given different weights to different factors.
ACCOUNTING TREATMENT
The Acquisition will be accounted for as a purchase of net monetary assets of
Golden River by Columbus in accordance with generally accepted accounting
principles. The Acquisition is a reverse purchase of the assets and liabilities
of Golden River by Columbus. The accounting treatment applied in the reverse
acquisition differs from the legal form of the transaction and the continuing
legal entity is Golden River.
EXCHANGE AGREEMENT
The following is a summary of the material provisions of the Exchange Agreement
by and among the shareholders of Columbus, Columbus, and Golden River. This
summary does not purport to be complete and is qualified in its entirety by
reference to the definitive Exchange Agreement, which is attached as Appendix A.
EXCHANGE AND PURCHASE OF SHARES
On the terms and subject to the conditions set forth in the Agreement, at the
closing Golden River shall assign, transfer, and deliver to Columbus
shareholders, in their pro rata percentages based upon their percentage
ownership of Columbus common stock pre-closing, a number of shares of Golden
River common stock which equals 70% of the number of shares of fully-diluted
outstanding Golden River common stock post-closing, prior to the issuance of
shares for brokerage fees and shares sold in a recent private placement. The
pre-closing holders of Golden
Golden River Resources Inc. Proxy Statement - Page 16
<PAGE>
River common stock shall retain their shares which, immediately following the
issuance of Golden River common stock to Columbus shareholders in connection
with the closing of the Acquisition shall constitute 30% of the fully-diluted
shares of Golden River common stock post-closing, prior to the issuance of
shares for brokerage fees and shares sold in a recent private placement.
CLOSING
The "Closing" shall mean the consummation of the exchange of shares of Golden
River common stock and shares of Columbus common stock, as well as the
consummation of any other transactions which are included in the Exchange
Agreement and required to occur at or before Closing. Closing is anticipated to
occur no later than December 8, 2000.
REPRESENTATIONS AND WARRANTIES
The Agreement contains various customary representations and warranties of the
parties thereto, without limitation, representations (i) by Golden River and
Columbus as to their respective corporate status, capitalization, accuracy of
financial statements, the authorization and the enforceability of the Agreement
against each such party, absence of legal proceedings, the absence of certain
changes or events concerning their respective businesses since June 30, 2000,
certain tax matters, certain employee benefit and pension plan matters, quality
of assets, certain labor matters, insurance matters and the absence of material
adverse changes with respect to their material contracts, and (ii) by Golden
River as to its compliance concerning SEC filings. The representations and
warranties contained in the Exchange Agreement will survive the Closing.
COVENANTS
The Exchange Agreement contains various customary covenants of the parties
thereto. A description of certain of these covenants follows:
o Preservation of Representations and Warranties. Until Closing, Golden
River and Columbus covenant to do or cause to be done all such acts and
things as may be required to ensure the continued material accuracy of
the representations and warranties made by each.
o Examination. Until Closing, each of Golden River and Columbus agrees to
permit the other to examine and inspect its respective books, records,
accounts, and files and to furnish to the other such information as may
be reasonably requested from time to time.
CONDITIONS PRECEDENT TO OBLIGATIONS OF GOLDEN RIVER AND COLUMBUS TO CONSUMMATE
THE EXCHANGE AGREEMENT
The obligation of Golden River and Columbus to consummate the transactions as
contemplated by the Exchange Agreement are subject to the fulfillment and
satisfaction at Closing of, among other things, each of the following conditions
precedent, any or all of which may be waived in
Golden River Resources Inc. Proxy Statement - Page 17
<PAGE>
whole or in part at or prior to the Closing by the other party.
o Representations and Warranties. The representations and warranties of
each of the parties made in the Exchange Agreement shall be true and
correct in all material respects at the Closing.
o Covenants and Agreement. Each of Golden River, the Columbus
shareholders, and Columbus shall have performed and complied with all
obligations on its respective part to be performed at or before the
Closing.
o Approvals. The board of directors and shareholders of Golden River and
the Columbus board of directors shall have approved the Exchange
Agreement.
o No Injunction or Prohibition. At the Closing time, no action or
proceeding at law or in equity shall be pending or threatened by any
person to enjoin or prohibit the acquisition by Golden River of
Columbus shares or the right of Golden River to conduct its operations
or to carry on its business as it has been conducted or carried on in
the past.
TERMINATION
The Agreement may be terminated and the exchange of stock contemplated hereby
may be abandoned at any time prior to the Closing, whether before or after
approval by the Golden River shareholders: (i) by the Columbus shareholders if
(A) there has been a material breach of a representation or warranty on the part
of Golden River; (B) Golden River has failed to fulfill an obligation under the
Exchange Agreement; (C) the Golden River board has failed to approve the
Exchange Agreement; or (D) an action or proceeding shall be pending and
threatened to enjoin or prohibit the Acquisition or the right of Golden River to
carry on its business; or (ii) by Golden River if (A) there has been a material
breach of a representation or warranty on the part of Columbus or the Columbus
shareholders; (B) Columbus or the Columbus shareholders have failed to fulfill
an obligation under the Exchange Agreement; or (C) the Columbus board has failed
to approve the Acquisition.
REGULATORY APPROVALS
Except for the exemption from registration under applicable securities laws in
connection with the issuance of Golden River common stock to the Columbus
shareholders, Golden River is not aware of any federal or state regulatory
requirements to be complied with in connection with the Acquisition.
ACQUISITION CONSIDERATION
Pursuant to the Exchange Agreement, Columbus shareholders will receive on a pro
rata basis, determined by their percent ownership of the outstanding common
stock of Columbus, shares of Golden River common stock constituting 70% of the
post-Acquisition fully-diluted shares of Golden River common stock, prior to the
issuance of shares for brokerage fees and shares sold in a recent private
placement. The stock exchange encompassed by the Exchange Agreement contemplates
the issuance of shares of Golden River common stock in excess of the current
Golden River Resources Inc. Proxy Statement - Page 18
<PAGE>
number of outstanding shares of common stock and will dilute current
shareholders of Golden River common stock and option holders to 30%
fully-diluted ownership post-Acquisition, prior to the issuance of shares for
brokerage fees and shares sold in a recent private placement.
The authorized share capital of Golden River consists of 50,000,000 shares of
common stock at $0.001 par value and 1,000,000 shares of preferred stock at
$0.01 par value. Immediately prior to Closing, Golden River will have a total of
18,795,101 shares of common stock issued and outstanding and no shares of
preferred stock issued or 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 Golden River'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 Golden River,
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
Golden River 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.
PREFERRED STOCK
Golden River's Articles of Incorporation 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 of the date of
this proxy statement, no classes of preferred stock have been designated and no
shares have been issued.
CERTAIN CONSEQUENCES OF THE ACQUISITION
Effective upon the Closing, Golden River will take the steps necessary to file
Articles of Amendment to its Articles of Incorporation to change its name to
Columbus Networks Corporation. All of the current officers and directors of
Golden River will resign their positions except for Roger Watts who will remain
as a director, and members of Columbus management will be appointed officers and
directors of Golden River. The offices of Columbus in Kelowna, British Columbia
will become the new corporate headquarters for Golden River post-Closing.
Golden River Resources Inc. Proxy Statement - Page 19
<PAGE>
MANAGEMENT OF GOLDEN RIVER FOLLOWING ACQUISITION CLOSING
Following the Acquisition Closing, certain changes will be made in the
management of Golden River. These changes include the following:
CHANGE IN CORPORATE OFFICES
The corporate offices of Golden River will be transferred from 2420 Pandosy
Street, Kelowna, British Columbia V1Y 1T8, to Suite 100, 1295 Stevens Road,
Kelowna, British Columbia V1Z 2S9.
CHANGE IN SENIOR MANAGEMENT
Upon Closing, all of the current Golden River officers will resign and the
following persons shall be appointed:
Dan Collins - President and CEO
Tom Beadman - Vice President, Network Systems
Scott McLean - Vice President
Greg Shannon - Corporate Secretary
For information on these individuals, see "Background Information on Columbus -
Management."
CHANGE IN BOARD OF DIRECTORS
Upon Closing, all members of the current board of directors except Mr. Roger
Watts will resign. The other members of the new board of directors will consist
of Dan Collins, Tom Beadman, Scott McLean, Greg Shannon, Mervyn Weiss, and Vern
Berg. For information on Roger Watts, see Appendix B: Golden River's Form
10-KSB.
DAN COLLINS. Mr. Collins is a 1986 graduate of the Business Development Program
at the British Columbia Institute of Technology. He served for seven years as a
business development coordinator with the provincial government providing small
communities and towns throughout British Columbia with business assistance's,
training and expertise. He has served as a lecturer, facilitator, trainer and
guest speaker on business development for the provincial and federal governments
for a number of years and has also worked with First Nations bands and small
business development. In 1988, the Honorable Grace McCarthy awarded Mr. Collins
a medal for his contribution to business development in British Columbia. He was
responsible for the creation and design of several government small business
publications, including "Export BC". He also designed and developed a 350-page
small business facilitation manual "Starting a Successful Business". In relation
to the education sector, Mr. Collins served as school board trustee in School
District No. 28 (Quesnel) from 1994 to 1997 and as a result has in depth
knowledge of school board operations.
Golden River Resources Inc. Proxy Statement - Page 20
<PAGE>
TOM BEADMAN. Mr. Beadman has been involved in the computer industry since the
early 1990s. In 1997, he became the Program Coordinator for the Computer Tech
and Disabled Entrepreneur Program of the Community Futures Development
Corporation ("CFDC") in Williams Lake, B.C.. He is a former board member of the
Learning Disabilities Association of B. C. and also co-chaired the B. C.
Provincial Task Force for Entrepreneurs with Disabilities. Mr. Beadman has
trained people on business and the Internet and co-wrote a business manual that
is currently being used by the CFDC as a training manual for their clients.
SCOTT MCLEAN. Mr. McLean is a graduate of the Canadian Securities Institute and
has spent the last twelve years as a senior investment advisor/stockbroker. His
expansive securities experience has enabled him to actively participate in
numerous financings from seed capital and private placement stages through to
the initial public offering. In 1996, Mr. McLean became a founding member of the
Okanagan Venture Network helping small companies seek alternative financings,
where he remains a current director. Mr. McLean is a registered representative.
GREG SHANNON. Mr. Shannon is a barrister and solicitor practicing at Miller
Thomson LLP in Calgary, Alberta. He is a lawyer in both Canada and the United
States and has practiced in the areas of taxation, business law, securities law
and sports and entertainment law. After completing his legal training both in
the United States and Canada, he practiced with a tax and securities firm in
Laguna Hills, California. In 1993, he returned to Canada and practiced in
Kelowna, British Columbia, until recently moving to Alberta. Mr. Shannon has
extensive involvement in contract negotiations including cross-border ventures;
structuring financings for both private and public companies in high tech,
industrial and mining sections; and off-shore tax planning for corporations and
professional athletes. Mr. Shannon has acted as counsel for various non-profit
organizations in British Columbia, Alberta and the United States and for various
high tech and emerging enterprises. He has lectured at numerous seminars on
cross-border tax and estate planning and various corporate finance topics. Since
1996, Mr. Shannon has been a director and the Vice-Chair of the Canadian Council
of Better Business Bureaus. Mr. Shannon has also recently founded The Calgary
Enterprise Forum Society.
MERVYN WEISS. Mr. Weiss is a graduate of the Canadian Securities Institute, and
worked as a securities advisor from 1964 to 1974 in Ontario, Canada. In 1975, he
moved to Kelowna, British Columbia, where he has participated in raising funds
and arranging financing for several venture start-up companies, as well as oil
and gas, mining and building development throughout British Columbia and
Alberta.
VERN BERG. Mr. Berg is currently Superintendent of Schools in Penticton, British
Columbia, and is a noted leader in human resources and employee relations.
Streamlining procedures to become more efficient and cost-effective while
creating the best possible learning environment for students has always been the
highest priority in his endeavors. He has served in this position since
September 1999.
Golden River Resources Inc. Proxy Statement - Page 21
<PAGE>
BACKGROUND INFORMATION ON GOLDEN RIVER
Information with respect to Golden River, including audited financial statements
for the two-year period ended June 30, 2000, and its management can be obtained
from the Golden River Annual Report on Form 10-KSB for the year ended June 30,
2000, attached as Appendix B, and which report is incorporated herein by
reference.
INTERESTS OF CERTAIN PERSONS IN THE ACQUISITION
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of October 6, 2000 unless
otherwise stated in the footnotes regarding shares of Golden River common stock
that will be beneficially owned upon the Closing of the Acquisition under the
terms of the Exchange Agreement by (i) each person known by Golden River to be
the beneficial owner of more than 5% of the outstanding Golden River common
stock on the Record Date, (ii) each of the pre-Closing Golden River officers and
directors, (iii) all pre-Closing Golden River officers and directors as a group,
(iv) each person known by Golden River to be the beneficial owner of more than
5% of outstanding pre-Closing shares of Columbus, (v) each of the proposed
post-Closing Golden River officers and directors and beneficial holders of more
than 5% of outstanding post-Closing Golden River common stock, and (vi) all
post-Closing Golden River officers and directors as a group. Except as otherwise
indicated, Golden River believes, based on information furnished by such owners,
that the beneficial owners of the Golden River common stock listed below will
have sole investment and voting power with respect to such shares, subject to
community property laws where applicable. The number of shares shown in the
table reflect the proposed 1-for-4 reverse stock split.
<TABLE>
<CAPTION>
PERCENTAGE PERCENTAGE
AMOUNT OF OF AMOUNT OF OF
COMMON STOCK OUTSTANDING COMMON STOCK OUTSTANDING
BENEFICIALLY COMMON BENEFICIALLY COMMON
OWNED PRE- STOCK PRE- OWNED POST- STOCK POST-
NAME AND ADDRESS CLOSING CLOSING (1)<F1> CLOSING CLOSING (2)<F2>
<S> <C> <C> <C> <C>
67849 Capital Ltd. 295,550 6.64% 295,550 1.50%
Box 209, Chancery Court
Leeward Highway Providenciales
Turks & Caicos, West Indies
David St. Clair Dunn(3)<F3> 25,000 0.56% 25,000 0.13%
1154 Marine Drive
Gibsons, British Columbia
Canada V0N 1V1
Robert Bruce Manery(4)<F4> 48,000 1.09% 48,800 0.25%
2420 Pandosy Street
Kelowna, British Columbia
Canada V1Y 1T8
Roger D. Watts(4)<F4> 48,800 1.09% 48,800 0.05%
200-537 Leon Avenue
Kelowna, British Columbia
Canada V1Y 2A9
Golden River Resources Inc. Proxy Statement - Page 22
<PAGE>
PERCENTAGE PERCENTAGE
AMOUNT OF OF AMOUNT OF OF
COMMON STOCK OUTSTANDING COMMON STOCK OUTSTANDING
BENEFICIALLY COMMON BENEFICIALLY COMMON
OWNED PRE- STOCK PRE- OWNED POST- STOCK POST-
NAME AND ADDRESS CLOSING CLOSING (1)<F1> CLOSING CLOSING (2)<F2>
International Seafarers Association Ltd. 916,666 4.66%
Chancery Court
Providenciales
Turks and Caicos Islands,
British West Indies
Alistar Rickards 2,083,334 10.60%
16 Aspen Grove
Upminster Essex
England RM142HZ
Dan Collins (5)<F5> 4,256,404 21.66%
100 - 1295 Stevens Road
Kelowna, British Columbia
Canada V1Y 2S9
Tom Beadman(5)<F5> 2,429,392 12.36%
100 - 1295 Stevens Road
Kelowna, British Columbia
Canada V1Y 2S9
Scott McLean(5)<F5> 845,559 4.30%
100 - 1295 Stevens Road
Kelowna, British Columbia
Canada V1Y 2S9
Greg Shannon 28,609 0.15%
3000-700 - 9th Avenue, S.W.
Calgary, Alberta
Canada T2P 3V4
Mervyn Weiss 286,091 1.46%
Merv-Co Holdings Ltd.
6353 Renfrew
Peachland, British Columbia
Canada V0H 1X0
Vern Berg, Superintendent of Schools 286,091 1.46%
Bircress Corporation
#11, 7701 Okanagan Landing Road
Vernon, British Columbia
Canada V1H 1L3
All pre-Closing Golden River officers 122,600 2.53% 122,600 0.62%
and directors as a group (3 persons)(6)<F6>
All post-Closing Golden River officers 48,800 1.03% 8,180,946 41.53%
and directors as a group (7 persons)(4)<F4>
-------------------
<FN>
<F1>
(1) Based on 4,698,775 shares of common stock outstanding pre-Closing. If a
person listed on this table has the right to obtain additional shares of
common stock within sixty (60) days from October 6, 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.
Golden River Resources Inc. Proxy Statement - Page 23
<PAGE>
<F2>
(2) Based on 19,654,250 shares of common stock outstanding post-Closing. If
a person listed on this table has the right to obtain additional shares
of Common Stock within sixty (60) days from October 6, 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.
<F3>
(3) Includes options to purchase 25,000 shares of common stock.
<F4>
(4) Includes options to purchase 37,500 shares of common stock.
<F5>
(5) Held of record by a family trust.
<F6>
(6) Includes options to purchase 100,000 shares of common stock.
</FN>
</TABLE>
BACKGROUND INFORMATION ON COLUMBUS
Information with respect to Columbus, including audited financial statements for
the fiscal period ended June 30, 2000, are attached as Appendix C, and
incorporated by reference.
GENERAL
Established in 1997, Columbus is currently a privately owned Kelowna-based
company in the business of providing sector-specific electronic recruitment
services to educators, school districts, universities and private educational
employers in the education system of Canada. The business now being carried on
by Columbus was originally conceived and implemented by a partnership comprised
of three of Columbus' principals, being Dan Collins, Tom Beadman, Scott McLean.
The partnership (Columbus Communications) rolled over its assets into a
corporation effective December 15, 1999.
Services include on-line resume services, job postings, a bookstore, electronic
application forms as well as other related services that meet the needs of the
client. Columbus intends to expand the scope of services within the ECN by
adding unique entry portals for students, teachers and employers. These portals
will be distinctive storefronts to other resources, services and features that
will benefit both the employer and educators.
The EDUCATION CANADA NETWORK is currently the number one ranked education
employment opportunities network in Canada and is endorsed by over 25
educational associations and government/ corporate agencies. In the past 3
months, the ECN has more than doubled in size to 215 members across Canada and
is growing at a rate of 10-15 new members each month. Columbus Networks will be
introducing their two (2) newest sites, the Education America Network and the
Global ESL Network in mid-September.
There are approximately 120 countries around the world that access the ECN on a
daily basis and Columbus anticipates meeting the demand for educators throughout
the world by expanding its services into the U.S. as well as globally through an
aggressive marketing strategy.
Golden River Resources Inc. Proxy Statement - Page 24
<PAGE>
As of October 24, 2000, the ECN website has had 220,000 unique visitors from 122
countries during the last 12 months.
COLUMBUS' PRODUCTS
Columbus specializes in the development of educational electronic recruitment
web sites including:
EDUCATION CANADA NETWORK
EDUCATION AMERICA NETWORK
GLOBAL ESL NETWORK
Columbus is able to provide its clients/customers with a high quality, cost
effective and efficient alternative to recruiting educators to fill job
vacancies, based on a unique dynamic use of technology and the Internet.
Columbus SELLS MEMBERSHIP services, which include:
JOB POSTINGS. Columbus currently handles the placement of all job postings
placed on the ECN. Each membership entitles the employer to unlimited postings
throughout the year. In the past 48 months over 5,625 jobs have been posted in
the ECN. Over the next month this entire process will be automated and then
ultimately handed over to the employers to run themselves. Numerous school
districts and private employers are awaiting this feature.
RESUME SEARCHES. A fully automated feature of the ECN, EAN and GEN, the Resume
Registry handles all posted resumes as well as all resume search functions by
employers. The dynamic new interface and easy-to-use search mechanism allow even
non-experienced Internet users to handle the system with ease. A simple click of
the mouse can call up hundreds or thousands of resumes in a matter of seconds.
The quality and integrity of this database is assured by having resumes removed
that have not been updated within a three-month period.
JOB ALERTS. Daily e-mails are sent out to all resume holders to alert them about
new job postings that have been posted on the ECN. This is another function that
will soon be fully automated. Job seekers will have options available to them to
customize which job alerts they get and from which province. For example, it is
possible for a teacher to specify that they only want to receive secondary math
postings from British Columbia and Ontario and the job alert function will email
them all the pertinent details of such a posting that matches their pre-set
criteria immediately upon it being posted.
CLIENT & TECHNICAL SERVICES. Members are provided with a toll free 1-800 number
in which they can call at anytime for support on everything from job posting
assistance to resume search help.
Columbus provides FREE SERVICES to educators, which include:
Golden River Resources Inc. Proxy Statement - Page 25
<PAGE>
POSTING OF A RESUME. All visitors to the ECN, EAN AND GEN have the opportunity
to post, edit, renew, or delete their own personalized resume 24 hours a day.
Additional features to be added will include the ability to apply to postings
with the simple click of their mouse. This feature will automatically pull the
job seekers resume directly out of the Resume Registry and Student Registry, and
submit it into the electronic mailbox of that particular employer.
FAST FIND SEARCH ENGINE. This unique search engine will allow job seekers to
search for any posting across Canada, United States or the world that matches
their qualifications or experience in less than five seconds. The advantage of
this search function is that to do this by any other means or method would
result in buying every newspaper in each country. Using the Columbus' system, a
job seeker can conduct the search from home, the school, or any other location
in seconds using the Internet.
THE MARKET FOR COLUMBUS' SERVICES
In 1998, Forrester Research reported that 17% of Fortune Global 500 companies
used the Internet for recruiting. A year later, 45% of Fortune Global 500
companies actively recruited online. It is estimated by Forrester that by 2003
employers will spend $1.7 billion on e-recruiting services, which is up from
$105 million in 1998. [Source: Fortune Magazine, July 1999].
Industry growth in e-recruitment as a whole is expected to be unprecedented in
the next 5 to 10 years. The July 1999 issue of Windows Magazine states that,
"AMERICAN EMPLOYERS SPENT APPROXIMATELY $108 MILLION DOLLARS ON JOB POSTINGS ON
THE INTERNET AND EXPECTS THIS FIGURE TO RISE TO $5 BILLION DOLLARS ANNUALLY". It
went on to state that "by the year 2004, that as many as 98% of all employers
will do some form of advertising on electronic job posting sites". The highlight
of the article was that it identified that those e-recruitment networks and job
posting web sites that focused on specific sectors (e. g., EDUCATION, health,
law) rather than careers in general would see the highest growth potential.
Recent teacher supply and demand studies in Ontario, Australia, New Zealand,
United States and the U. K. are forecasting a teacher shortage crisis. The
implications of teacher shortages will, therefore, not be confined to Canada in
coming years.
The following provides excerpts from studies that summarize some major points
related to teacher supply and demand around the world:
Ontario(1):
o Over 41,000 or about one-quarter of Ontario teachers will retire by
2003, increasing to over 78,000 or almost half of the provinces
teaching force by 2008.
United States(2):
o United States facing largest teacher shortage in its history
---------------------
(1) Ontario College of Teachers Supply and Demand Model
(2) Article published in the American publication Phi Delta Kappan
Golden River Resources Inc. Proxy Statement - Page 26
<PAGE>
o U. S. secretary of education expects demand for additional teachers to
reach 200,000 per year for next 10 years with first time teachers
accounting for between one-half to two-thirds of them.
Australia(3):
o Aging teaching force expected to result in increased teacher losses
related to retirement averaging about 3,000 teachers over the period
ending in 2004.
United Kingdom(4):
o $25 million hardship fund is available from the Department for
Education and Employment for those in subjects where teacher shortage
exists, at the secondary level.
o $325 million being offered in short-term to boost recruitment
American school districts are currently receiving funds - a total of $1.2
billion - that will enable them to recruit, hire, and train new teachers for the
1999-2000 school year. This is just the first installment of an initiative that
is anticipated to provide $12.4 billion5 over 7 years to help schools hire
100,000 new teachers. The appropriation for fiscal year 2000 is 1.3 billion.
COLUMBUS' STATED BUSINESS OBJECTIVES
Columbus' key business objective is to expand and build on its current market
share in Canada and expand into the United States. Work is already in progress
to expand the ECN model into the U. S. and world markets by mid-September, 2000.
As an important component in its marketing strategy, Columbus intends to use
educational associations and organizations around the world as marketing/
development channels to achieve its business and marketing objectives.
Columbus aims to:
o Increase the number of clients in the Education Canada Network;
o Develop the Education America Network for the United States;
o Develop the Global ESL Network
o Develop education networks for Korea, the United Kingdom, Japan and
other countries that are all connected to one world wide network;
o Provide clients/ customers with an efficient, cost-effective
recruitment tool;
o Maintain customer service levels of the highest standard; and
o Increase its revenue base by developing additional on-line resources/
services for educators
---------------------
(3) November 1998 study commissioned by the Australian Council of Deans
of Education
(4) United Kingdom Department for Education and Employment
(5) U.S. Department of Education
Golden River Resources Inc. Proxy Statement - Page 27
<PAGE>
Columbus' four primary objectives over the next 24 months are: (1) Generate and
develop a revenue model to assure that Columbus becomes profitable and
self-sustainable by March 2001; (2) to achieve an 80%market share in Canada and
a 10% market share in the U. S. by April 2002; (3) Continue to develop services
that meet the needs of our clients on a global scale; (4) to achieve national
brand name recognition of our networks in Canada, the U. S. and the world.
ADMINISTRATION
The estimated aggregate monthly administration costs that will be incurred in
order for Columbus to achieve its stated business objectives is $31,459.00 per
month.
The following is a breakdown of the costs of monthly administration disclosed
above including any anticipated variations:
Salaries $19,309
Rent and Office $3,500
Telephone/Fax $400
Professional Fees $5,000
Automotive $1,750
Regulatory/Transfer Agent $1,500
-------
Total $31,459
=======
These costs will increase significantly during the calendar 2000 as Columbus
adds to its sales force and technical support staff. See "Columbus' Stated
Business Objectives."
SUMMARY OF FINANCIAL OPERATIONS
The following tables set out selected financial information about Columbus - its
Balance Sheet as at June 30, 2000, Statements of Operations and Deficit for the
period ended June 30, 2000, representing Columbus' first year of operation, and
for Columbus Communications (a Partnership) for the periods July 1, 1998 to June
30, 1999 and July 1, 1999 to December 15, 1999. Columbus was inactive until
December 1, 1999 so its first year of operation includes seven active months.
The completed financial statements of Columbus are attached as Appendix C to
this Proxy Statement.
BALANCE SHEET OF COLUMBUS
(audited)
JUNE 30, 2000
ASSETS
Current Assets $45,050
Property and Equipment 51,271
Website Development 19,790
--------
Total Assets $116,111
========
Golden River Resources Inc. Proxy Statement - Page 28
<PAGE>
LIABILITIES
Current Liabilities $ 60,399
Subscription for shares 1,689
Share Capital 293,178
Deficit (241,191)
Cumulative translation adjustment 2,036
----------
Total Liabilities and Equity $ 116,111
==========
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
FOR THE PERIODS ENDED JUNE 30, 2000(1), June 30, 1999(2) and December 15, 1999(2)
PERIOD FROM
YEAR ENDED JULY 1, 1999 TO YEAR ENDED
JUNE 30, 2000 DECEMBER 15, JUNE 30,
(1)<F1> 1999(2)<F2> 1999 (2)<F2>
<S> <C> <C> <C>
REVENUES $39,947 $53,850 $83,217
Travel, conferences and 48,860 8,710 16,826
promotion
Amortization 5,694 1,071 1,837
Inducement fee 18,996
Professional fees 18,858 733 993
Wages and benefits 137,098 -
Website development 2,558 16,488 20,990
Other costs 49,074 7,833 11,312
OPERATING COSTS 281,138 34,835 51,958
NET PROFITS (LOSS) $(241,191) $19,015 $31,259
<FN>
(1)<F1> for Columbus - audited
(2)<F2> for Predecessor Business - Columbus Communications - unaudited
</FN>
</TABLE>
DISCUSSION AND ANALYSIS OF COLUMBUS' OPERATIONS
The following sets forth a discussion and analysis of the operating results and
financial condition of Columbus for the year ended June 30, 2000. This
discussion and analysis should be read in conjunction with the audited financial
statements of Columbus included and attached to this Proxy Statement as Appendix
C.
Golden River Resources Inc. Proxy Statement - Page 29
<PAGE>
OPERATIONS
In the fiscal year ended June 30, 2000 Columbus derived aggregate revenues of
$39,947, incurred aggregate expenses of $281,138 and incurred a net loss of
$241,191. During the five and one half month period ended December 15, 1999
Columbus Communications derived aggregate revenues of $53,850, incurred
aggregate expenses of $34,835 and incurred net income of $19,015. During the
year ended June 30, 1999 Columbus Communications derived aggregate revenues of
$83,217, incurred aggregate expenses of $51,958 and incurred a net income of
$31,259
REVENUE. The revenues for the fiscal year ended June 30, 2000 are comprised
primarily of membership fee revenue earned from subscribers to the Education
Canada Network, net of a revenue sharing fee of approximately 60% paid to CASA,
and management fees of $12,773 earned from CASA. CASA assists with establishing
the subscriber base of Columbus. As of July 1, 2000 Columbus will be paying an
annual fixed fee of approximately $14,000 in place of the revenue sharing
arrangement previously in place. Revenue sharing fees for the fiscal period
ended June 30, 2000 were approximately $35,000.
The deferred revenue as at June 30, 2000 of $25,115 is comprised primarily of
membership fees received at June 30, 2000 that pertain to the subscription
period July 1, 2000 to June 30, 2001. A further $122,000 of annual subscription
fees were billed in July and August 2000.
OPERATING EXPENSES.
o Travel, conferences and promotion - A significant amount of travel and
attending at conferences took place in the year ended June 30, 2000 to
establish contacts with potential subscribers and arrange financing.
o Amortization - This expense includes amortization of website
development costs incurred in the current year.
o Professional fees - These expenses include fees for services to
Columbus' legal counsel and accountants and relate primarily to interim
financial reporting and consulting.
o Wages and benefits - These expenses include wages for management,
office administration and website planning and maintenance.
The operating expenses of Columbus Communications do not include any
remuneration to the partners for their services in connection with the operation
of the business or development of the Education Canada Network.
Golden River Resources Inc. Proxy Statement - Page 30
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES AND FINANCIAL POSITION
In the past Columbus Communications satisfied its working capital and capital
expenditure requirements from a combination of partners' contributions and cash
flow from operations. Columbus has satisfied its working capital and capital
expenditure requirements primarily from equity financing.
The following is a summary of the cash flows of Columbus and Columbus
Communications for the periods ended as noted:
<TABLE>
<CAPTION>
PERIOD FROM JULY
1, 1999 TO YEAR ENDED
CASH FLOW DATA YEAR ENDED DECEMBER 15, JUNE 30,
CASH FLOW SOURCES (USES) JUNE 30, 2000 (1)<F1> 1999(2)<F2> 1999 (2))<F2>
<S> <C> <C> <C>
Operating Activities $(188,987) $14,835 $21,370
Investing Activities (76,753) (9,857) (1,578)
Capital Requirements
before Financing
Activities (265,740) 4,978 19,792
Financing Activities 295,690 (4,978) (29,035)
Foreign currency
translation adjustment 2,036 - -
Net increase (decrease) in Cash 31,986 - (9,243)
Cash, Beginning of period - - 9,243
Cash, End of Period $ 31,986 $ - $ -
-
---------------
<FN>
1)<F1>for Columbus - audited
(2)<F2>for Predecessor Business - Columbus Communications - unaudited
</FN>
</TABLE>
The investing activities of Columbus for the year ended June 30, 2000 comprise
of the acquisition of property and equipment, the Education Canada Network
website including all related contracts and website development costs
capitalized.
The financing activities of Columbus for the year ended June 30, 2000 comprise
primarily of the receipt of cash from the subscription for shares.
As at October 24, 2000, the Corporation had cash on hand of Cdn.$114,371.
Management expects future cash flows for the following year to be derived from:
o membership fees for subscribing to the Education Canada Network, the bulk
of which is expected to be received during the quarter ended October 31,
2000 from renewal of subscriptions existing at June 30, 2000;
o advertising fees expected to be charged for advertising on the Education
Canada Network; and
Golden River Resources Inc. Proxy Statement - Page 31
<PAGE>
o equity financing in connection with the Transaction pursuant to the Share
Exchange Agreement as described in this Proxy Statement.
FINANCIAL POSITION
As at June 30, 2000 Columbus:
o had current liabilities in excess of current assets, of $15,349, however
current liabilities include unearned revenue representing membership fees
received that will be recognized as revenue over the subscription term.
o had no long-term borrowings; and
o is not in arrears on the payment of dividends, interest or principal
payments on borrowing.
CAPITAL RESOURCES
Management expects to fund ongoing operations from membership fees of
approximately $122,000 invoiced subsequent to the June 30, 2000 period end,
further membership fees from new subscribers and the expected issuance of share
capital by Columbus before and by GDRV subsequent to Transaction pursuant to the
Share Exchange Agreement as described in this Proxy Statement.
MANAGEMENT
Directors, officers and senior employees of Columbus are:
DAN COLLINS, President/CEO
Mr. Collins is a 1986 graduate of the Business Development Program at the
British Columbia Institute of Technology. He served for seven years as a
business development coordinator with the provincial government providing small
communities and towns throughout British Columbia with business assistance's,
training and expertise. He has served as a lecturer, facilitator, trainer and
guest speaker on business development for the provincial and federal governments
for a number of years and has also worked with First Nations bands and small
business development. In 1988, the Honorable Grace McCarthy awarded Mr. Collins
a medal for his contribution to business development in British Columbia. He was
responsible for the creation and design of several government small business
publications, including "Export BC". He also designed and developed a 350-page
small business facilitation manual "Starting a Successful Business". In relation
to the education sector, Mr. Collins served as school board trustee in School
District No. 28 (Quesnel) from 1994 to 1997 and as a result has in depth
knowledge of school board operations.
Golden River Resources Inc. Proxy Statement - Page 32
<PAGE>
SCOTT MCLEAN, Vice President/CFO
Mr. McLean is a graduate of the Canadian Securities Institute and has spent the
last twelve years as a senior investment advisor/stockbroker. His expansive
securities experience has enabled him to actively participate in numerous
financings from seed capital and private placement stages through to the initial
public offering.
In 1996, Mr. McLean became a founding member of the Okanagan Venture Network
helping small companies seek alternative financings, where he remains a current
director. Mr. McLean is a registered representative.
THOMAS BEADMAN, Vice President/Director - Client/Network Services (Canada)
Mr. Beadman has been involved in the computer industry since the early 1990s. In
1997, he became the Program Coordinator for the Computer Tech and Disabled
Entrepreneur Program of the Community Futures Development Corporation ("CFDC")
in Williams Lake, B.C.. He is a former board member of the Learning Disabilities
Association of B. C. and also co-chaired the B. C. Provincial Task Force for
Entrepreneurs with Disabilities.
Mr. Beadman has trained people on business and the Internet and co-wrote a
business manual that is currently being used by the CFDC as a training manual
for their clients.
GREG SHANNON - Proposed Corporate Secretary and Director
Mr. Shannon is a barrister and solicitor practicing at Miller Thomson LLP in
Calgary, Alberta. He is a lawyer in both Canada and the United States and has
practiced in the areas of taxation, business law, securities law and sports and
entertainment law.
After completing his legal training both in the United States and Canada, he
practiced with a tax and securities firm in Laguna Hills, California. In 1993,
he returned to Canada and practiced in Kelowna, British Columbia, until recently
moving to Alberta. Mr. Shannon has extensive involvement in contract
negotiations including cross-border ventures; structuring financings for both
private and public companies in high tech, industrial and mining sections; and
off-shore tax planning for corporations and professional athletes. Mr. Shannon
has acted as counsel for various non-profit organizations in British Columbia,
Alberta and the United States and for various high tech and emerging
enterprises.
He has lectured at numerous seminars on cross-border tax and estate planning and
various corporate finance topics. Since 1996, Mr. Shannon has been a director
and the Vice-Chair of the Canadian Council of Better Business Bureaus. Mr.
Shannon has also recently founded The Calgary Enterprise Forum Society.
Golden River Resources Inc. Proxy Statement - Page 33
<PAGE>
MIKE SPROULE, Director - Client/Network Services (U.S. & International)
Mr. Sproule is a graduate of Wilfrid Laurier University with a Bachelor of Arts
in Economic and Political Science (1992). He is also a candidate for a Master of
Art in International Studies from the University of Northern British Columbia
(2000). Mr. Sproule is an entrepreneurial individual who for the past five years
has been involved in a number of businesses including a neighborhood pub in
Victoria and a consulting company, which assisted individuals in planning and
setting up small business ventures.
Included in his entrepreneurial activities, Mr. Sproule has extensive knowledge
in small business development on the Internet including business planning, web
design/ maintenance and web site marketing. Mr. Sproule's efforts have been
recognized nationally with the receipt of two awards: the Young Navigator's IT
Entrepreneur Award (1999) and 2nd runner-up in the CIBC-ACE National Student
Entrepreneur of the Award (1997).
IAN BRADSHAW, Customer Relations (Client/Network Services - Canada)
Over the past 3 years, Mr. Bradshaw has been involved as a contractor to the
Canadian School Board Association (CSBA) in various capacities. Most recently he
has been involved in working with such corporations as Microsoft, Northern and
Indian Affairs, NRCAN, SchoolNet, Canadian Aerospace Program, Geotext on behalf
of the CSBA in raising monies. He will work closely with the Director of
Client/Network Services in Canada and brings experience and knowledge to
Columbus in the ongoing development of the Canadian market.
RAYMOND LAMBE, Programmer
Mr. Lambe began web site development and programming six years ago while
attending Memorial University in Newfoundland. He worked in a variety of
computer related fields, including computer technician, ISP administration/
support, web site development and application, and CGI and console programming.
For the past three years he has worked as a web developer/ programmer for the
Newfoundland and Labrador Heritage web site. Mr. Lambe provides Columbus with a
unique advantage in the market place by having our own in-house developers.
GEEKIYANAGE DULEEPA WIJAYAWARDHANA, Web/ Graphic Designer
Mr. Wijayawardhana holds a B. C. (Hons) degree in German/ History and an M. A.
degree in History from Memorial University in Newfoundland. During his
university career at Memorial, Mr. Wijayawardhana was Editor-in-Chief (1994-95)
and Production Manager (1993-94) of the Muse student newspaper and Editor/
Designer of the Cap and Gown Yearbook (1995). In 1996, he was awarded the Birks
Medal for Student Leadership and Involvement and the University Medal for
Academic Excellence in German. He has been working as a graphic/ layout designer
for the last 8 years and as a web developer for the last 6 years. For the last
two to three years Mr. Wijayawardhana worked with the Newfoundland and Labrador
Heritage Web Site Project as a web/ multimedia designer. In 1999, he formed a
partnership with Raymond Lambe under
Golden River Resources Inc. Proxy Statement - Page 34
<PAGE>
"DigitalRnD" in order to work on web sites and solutions on a freelance basis.
Like Mr. Lambe, Mr. Wijayawardhana provides Columbus with a distinct advantage
of being able to do all design work in-house.
CHARLA MOSS, Web/ Graphic Designer
Ms. Moss began her studies at the University of Calgary where she received a
Bachelor of Fine Arts and recently finished a post-graduate program in
Interactive Multimedia at Sheridan College in Ontario. In 1996 Charla traveled
to Honduras, Central America to teach children's programs. She later worked on a
campus-wide fundraiser to raise funds for Honduras after the devastation of
Hurricane Mitch. Multimedia became a focus in her studies in 1997. Since then,
Charla has developed projects such as an interactive game for children to aid
them in problem solving, a website for Montclair Bottled Water, as well as an
online restaurant. Charla will be working on the animated tours for our web
sites as well as an interactive promotional CD for educational employers around
the world.
In addition to the individuals listed above, Columbus has three (3) other
employees that play an important role in the day-to-day operations. JENNETTA
HOBSON, Office Manager, handles all administrative duties for the entire office.
GLENNA LENNOX and CHRISTINE GERLISTCH, Client Services Representatives, provide
support services (includes job postings) to all our network customers. It is
anticipated that an additional five (5) CSR will be hired to meet the demands
placed on the company by the addition of the Education America and Global ESL
Networks.
PRO FORMA INFORMATION
Golden River and Columbus Unaudited Pro Forma Consolidated Financial Information
is attached hereto as Appendix D.
COMPARATIVE PER SHARE DATA
The following table presents historical data for Golden River and Columbus and
pro forma per share data giving effect to the Acquisition on the basis described
in the notes to the pro forma combined condensed financial statements included
elsewhere herein. The table should be read in conjunction with the historical
financial statements of Golden River and Columbus and the pro forma financial
statements included elsewhere herein. Historical per share information for
Golden River gives effect to the proposed 1-for-4 reverse stock split, since
approval of the reverse stock split is necessary to effect the Acquisition. The
"Columbus Equivalent" data has been determined by multiplying the "Columbus
Historical" data by .6322, which is the number of shares of Columbus common
stock to be exchanged for each post-reverse split share of Golden River common
stock received by the Columbus shareholders. See the Golden River Unaudited Pro
Forma Consolidated Financial Information attached hereto as Appendix D.
Golden River Resources Inc. Proxy Statement - Page 35
<PAGE>
<TABLE>
<CAPTION>
GOLDEN RIVER COLUMBUS COLUMBUS
HISTORICAL HISTORICAL EQUIVALENT
YEAR ENDED YEAR ENDED YEAR ENDED PRO FORMA
JUNE 30, 2000 JUNE 30, 2000 JUNE 30, 2000 COMBINED
<S> <C> <C> <C> <C>
Net loss $0.14 $0.06 $0.04 $0.04
Cash dividends -- -- -- --
</TABLE>
<TABLE>
<CAPTION>
COLUMBUS
GOLDEN RIVER COLUMBUS EQUIVALENT PRO FORMA
JUNE 30, 2000 JUNE 30, 2000 JUNE 30, 2000 COMBINED
<S> <C> <C> <C> <C>
Book value $ (0.06) $0.00 $0.00 $0.01
</TABLE>
THE STOCK SPLIT
The board of directors has proposed, subject to shareholder approval, to effect
a 1-for-4 reverse stock split whereby every four (4) shares of Golden River's
currently outstanding shares of common stock will be exchanged for one share of
common stock. There are presently 18,795,101 shares outstanding, and the reverse
split would reduce this number to approximately 4,698,775 shares. The reverse
split will not alter the number of shares of common stock authorized for
issuance, which will remain at 50,000,000 shares.
REASONS FOR THE PROPOSED REVERSE STOCK SPLIT
In addition to the reverse stock split being a condition precedent to the
consummation of the Acquisition of Columbus, Golden River management is
proposing the reverse stock split for the following reasons: management believes
a reverse stock split will (1) reduce the number of outstanding shares of common
stock and thereby make available shares of common stock with which to acquire
assets into Golden River; and (2) help raise the trading price of Golden River's
common stock. In discussions by the Golden River's executive officers with
members of the brokerage and banking industries, Golden River has been advised
that the brokerage firms might be more willing to evaluate Golden River's
securities as a possible investment opportunity for their clients and may be
more willing to act as a market maker in Golden River's securities if the price
range for Golden River's common stock were higher. Management believes that
additional interest by the investment community in Golden River's stock, of
which there can be no assurance, is desirable.
Golden River management of also believes that existing low trading prices of
Golden River's common stock may have an adverse impact upon the current level of
the trading market for the common stock. In particular, brokerage firms often
charge higher commissions for transactions involving low-priced stocks than they
would for the same dollar amount of securities with a higher per share price.
Some brokerage firms will not recommend purchases of low-priced stocks to their
clients or make a market in such stock, which tendencies may adversely affect
the
Golden River Resources Inc. Proxy Statement - Page 36
<PAGE>
liquidity for current shareholders and Golden River's ability to obtain
additional equity financing.
EFFECTS OF APPROVAL OF THE REVERSE STOCK SPLIT
Theoretically, the market price of Golden River's common stock should increase
approximately 4-fold following the proposed reverse stock split. It is hoped
that this will result in a price level which will overcome the reluctance,
policies, and practices of broker-dealers described above and increase interest
in Golden River's common stock by investors. Shareholders should note that the
effect of the reverse stock split upon the market price for Golden River's
common stock cannot be accurately predicted. Further, there can be no assurance
that the per share market price of the post-split common stock will trade at a
price 4 times the price of the pre-split common stock or, if it does, that the
price can be maintained at that level for any period of time.
On October 23, 2000, the closing bid and asked prices of Golden River's common
stock were $0.06 and $0.08 per share, respectively, as reported by the OTC
Bulletin Board. The foregoing quotation reflects inter-dealer prices, without
retail mark-up mark-down, or commission and may not represent actual
transactions.
Management, by implementing a reverse stock split, does not intend to "take the
company private" by decreasing the number of shareholders of Golden River.
Management does not believe that a 1-for-4 reverse stock split would result in
any shareholders being eliminated or closed out as a result of holding less than
one share after the reverse stock split. Approximately 35 shareholders as of
October 6, 2000, have a number of shares not evenly divisible by 4. As disclosed
below, Golden River will round to the nearest whole share instead of issuing
fractional shares resulting from the reverse stock split.
PROCEDURE FOR IMPLEMENTING THE REVERSE SPLIT
If this proposal is adopted by the shareholders, four (4) shares of pre-split
common stock will be exchanged for each share of post-split common stock. Shares
of post-split common stock may be obtained by surrendering certificates
representing shares of pre-split common stock to Golden River's transfer agent,
Computershare Investor Services, (formerly American Securities Transfer, Inc.),
12039 W. Alameda Parkway, Suite Z-2, Lakewood, Colorado 80228 (the "Transfer
Agent"). To determine the number of shares of post-split common stock issuable
to any record holder, the total number of shares represented by all of the
certificates issued in the name of that record holder held in each account as
set forth on the records of the Transfer Agent on the date upon which the
reverse split becomes effective will be divided by 4. Upon surrender to the
Transfer Agent of the share certificate(s) representing shares of pre-split
common stock and the applicable transfer fee, which presently is $20 per new
certificate issued payable by the holder, the holder will receive a share
certificate representing the appropriate number of shares of post-split common
stock. If the division described above results in a quotient which contains a
fraction, Golden River will round to the nearest whole share instead of issuing
a fractional share. Shareholders are not required to exchange their certificates
of pre-split Common stock for post-
Golden River Resources Inc. Proxy Statement - Page 37
<PAGE>
split common stock. It is anticipated that the reverse split will be effected
immediately following receipt of the necessary shareholder approval.
FEDERAL INCOME TAX EFFECTS OF THE STOCK SPLIT
Holders of common stock will not be required to recognize any gain or loss if
the reverse stock split is effected. The tax basis of the aggregate shares of
post-split common stock received by present shareholders will be equal to the
basis of the aggregate shares of the pre-split common stock exchanged therefor.
The holding period for shares of post-split common stock will include the
holding period of the pre-split common stock when calculated for purposes of
taxation or sales under Rule 144 of the Rules and Regulations promulgated under
the Securities Act of 1933, as amended (the "Securities Act"). Rule 144 requires
that "restricted securities," as defined in Rule 144, be held at least two years
before routine sales can be made in accordance with the provisions of the Rule.
Rule 144 provides that shares issued in a reverse stock split are deemed to have
been held from the date of acquisition of the shares involved in the reverse
stock split.
MORE INFORMATION
Holders are urged to review the information contained in Appendix B - Golden
River's Form 10-KSB for the fiscal year ended June 30, 2000. Representatives of
KPMG LLP, the principal accountants, are not expected to be present at the
Special Meeting.
PROPOSALS OF SHAREHOLDERS FOR 2001 ANNUAL MEETING
Proposals of shareholders intended to be presented at the 2001 Annual
Shareholders' meeting must be received by the corporate secretary, Golden River
Resources Inc., 2420 Pandosy Street, Kelowna, British Columbia, V1Y 1T8 Canada,
prior to June 30, 2001.
OTHER MATTERS
Management of Golden River knows of no other matters to be acted upon at the
Special Meeting. However, as to any other business that may properly come before
the Special Meeting, the proxy holders intend to vote the proxies in respect
thereof in accordance with the recommendation of the board of directors.
INCORPORATION BY REFERENCE
Golden River's annual report for the fiscal year ended June 30, 2000 on Form
10-KSB is incorporated by reference herein. Copies of this report are available,
without charge, upon written request to Bruce Manery, Corporate Secretary,
Golden River Resources Inc., 2420 Pandosy Street, Kelowna, British Columbia V1Y
1T8 Canada, and is annexed hereto as Appendix B.
Golden River Resources Inc. Proxy Statement - Page 38
<PAGE>
APPENDIX A
EXCHANGE AGREEMENT
<PAGE>
SHARE EXCHANGE AGREEMENT
BY AND AMONG:
THOSE SECURITYHOLDERS OF COLUMBUS NETWORKS
CORPORATION AS INDICATED
ON SCHEDULE "A" HERETO
and
COLUMBUS NETWORKS CORPORATION
and
GOLDEN RIVER RESOURCES INC.
Dated Effective
October 30, 2000
<PAGE>
TABLE OF CONTENTS
SCHEDULE "A" - COLUMBUS NETWORKS CORPORATION SECURITYHOLDERS -
COLUMBUS NETWORKS CORPORATION SHARES AND GOLDEN RIVER
RESOURCES INC. SHARES TO WHICH THEY ARE ENTITLED
SCHEDULE "B" - AUDITED FINANCIAL STATEMENTS OF GOLDEN RIVER RESOURCES INC.
AS AT JUNE 30, 2000
SCHEDULE "C" - LEASE
SCHEDULE "D" - EMPLOYMENT AGREEMENTS
SCHEDULE "E" - LIST OF OFFICERS/DIRECTORS
SCHEDULE "F" - BANK ACCOUNT
SCHEDULE "G" - INTELLECTUAL PROPERTY
SCHEDULE "H" - LETTERS OF CREDIT
SCHEDULE "I" - LIST OF MOTOR VEHICLES
SCHEDULE "J" - MATERIAL CONTRACTS
SCHEDULE "K" - LIST OF CUSTOMER ACCOUNTS
SCHEDULE "L" - INSURANCE POLICIES
SCHEDULE "M" - LITIGATION PENDING
SCHEDULE "N" - AUDITED FINANCIAL STATEMENTS OF COLUMBUS NETWORKS
CORPORATION AS AT JUNE 30, 2000
<PAGE>
SHARE EXCHANGE AGREEMENT
THIS AGREEMENT made effective October 30, 2000.
AMONG:
THE SECURITYHOLDERS OF COLUMBUS NETWORKS CORPORATION, AS INDICATED ON
SCHEDULE "A" ATTACHED HERETO (collectively, the "CNC Securityholders",
and in the singular, a "CNC Securityholder")
AND:
COLUMBUS NETWORKS CORPORATION, a body corporate incorporated under the
laws of the Province of British Columbia ("CNC")
AND:
GOLDEN RIVER RESOURCES INC., a body corporate incorporated under the
laws of the State of Nevada and trading on The Over The Counter
Bulletin Board ("OTCBB") (the "GDRV")
WITNESSES THAT:
WHEREAS:
A. CNC, on behalf of the CNC Securityholders, and GDRV have entered into
a Letter of Intent dated August 15, 2000 respecting the share exchange
transaction herein contemplated;
B. Each of the CNC Securityholders beneficially owns the number of CNC
Shares set forth opposite their names in Schedule "A";
C. The CNC Securityholders, CNC and GDRV desire to effect the exchange of
the CNC Shares for GDRV Shares, upon the terms and conditions and in the amounts
as set forth herein; and
D. The Principal as (hereinafter defined) is prepared to make certain
representations, warranties and covenants for and on behalf of the CNC
Securityholders.
NOW THEREFORE in consideration of the payment by each of the parties
hereto of the sum of $10.00 to the other parties, and other good and valuable
consideration the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
ARTICLE 1 - INTERPRETATION
1.1 DEFINITIONS
In this Agreement and the recitals hereto, the following words and
phrases have the following respective meanings:
(a) "Act" means the SECURITIES ACT (British Columbia), as from time to
time amended and supplemented;
(b) "Agreement" means this agreement and all amendments made hereto by
written agreement amongst the CNC Securityholders, CNC and GDRV;
-2-
<PAGE>
(c) "Business Day" means any day other than a Saturday, Sunday or a
statutory holiday in the City of Kelowna, British Columbia;
(d) "Closing" means the completion of all transactions and matters under
this Agreement to occur on or before the Closing Time;
(e) "Closing Time" means at such time as the terms and conditions set out
in this Agreement have been met and satisfied;
(f) "CNC Financial Statements" means the financial statements for CNC
attached as Schedule "N";
(g) "CNC Shares" means all of the issued and outstanding Class "A" and
Class "B" Common Shares in the capital of CNC, as set forth in
Schedule "A", to be transferred to GDRV under this Agreement;
(h) "Constating Documents" means with respect to GDRV or CNC, as the case
may be, the Memorandum, Articles of Incorporation and By-laws pursuant
to which such corporation was incorporated, together with any and all
amendments to such memorandum and articles;
(i) "Information Circular" means that certain information circular or
Proxy Statement of GDRV relating to the Special General Meeting of
Shareholders where , INTER ALIA the Reverse Take-over, will receive
consideration by all of the shareholders of GDRV;
(j) "Intellectual Property" means with respect to CNC, all right and
interest to all patents, patents pending, inventions, know-how, any
operating or identifying name or registered or unregistered trademarks
and tradenames, all computer programs, licensed end-user software,
source codes, products and applications (and related documentation and
materials) and other works of authorship (including notes, reports,
other documents and materials, magnetic, electronic, sound or video
recordings and any other work in which copyright or similar right may
subsist) and all copyrights (registered or unregistered) therein,
industrial designs (registered or unregistered), franchises, licences,
authorities, restrictive covenants or other industrial or intellectual
property used in or pertaining to CNC including the items described in
Schedule "G" and all lists of customers, documents, records,
correspondence and other information pertaining to CNC;
(k) "Lease" means the lease agreement dated December 13, 1999, between CNC
and Fort Management & Holding Co. Ltd.;
(l) ""OTCBB" means the over the counter bulletin board electronic market
in the U.S.;
(m) "Person" means and includes any individual, corporation, partnership,
firm, joint venture, syndicate, association, trust, government,
government agency or board or commission or authority, and any other
form of entity or organization;
(n) "Principal" means Dan Collins, being a senior officer of CNC;
(o) "Principal Securities" has the meaning set forth in the Act;
(p) "Proxy Statement" has the same meaning as "Information Circular";
(q) "GDRV Financial Statements" means, collectively, the financial
statements of GDRV, attached as Schedule "B";
-3-
<PAGE>
(r) "GDRV Shares" means the fully paid and non-assessable Common Shares,
in the capital of GDRV to be issued in exchange for the CNC Shares;
(s) "Transfer Agent" means Computershare Investor Services, of Denver,
Colorado;
(t) "US '33 Act" means the SECURITIES ACT of 1933 (United States), as from
time to time amended and supplemented; and
(u) "US '34 Act" means the SECURITIES ACT of 1934 (United States), as from
time to time amended and supplemented.
1.2 HEADINGS
The division of this Agreement into Articles and Sections and the
insertion of headings are for convenience of reference only and shall not affect
the construction or interpretation of this Agreement. The terms "this
Agreement", "hereof ", "hereunder" and similar expressions refer to this
Agreement and not to any particular Article, Section or other portion hereof and
include any agreement supplemental hereto. Unless something in the subject
matter or context is inconsistent therewith, references herein to Articles and
Sections are to Articles and Sections of this Agreement.
1.3 EXTENDED MEANINGS
In this Agreement, unless the context requires otherwise, words
importing the singular number only shall include the plural and vice-versa,
words importing the masculine gender shall include the feminine and neuter
genders and vice versa, and words importing persons shall include individuals,
partnerships, associations, trusts, unincorporated organizations and
corporations.
1.4 ACCOUNTING PRINCIPLES
Wherever in this Agreement reference is made to a calculation to be
made in accordance with generally accepted accounting principles, such reference
shall be deemed to be to the generally accepted accounting principles from time
to time approved by the American Institute of Certified Public Accountants, or
any successor institute, applicable as at the date on which such calculation is
made or required to be made in accordance with generally accepted accounting
principles.
1.5 CURRENCY
All references to currency herein are to lawful money of Canada.
1.6 SCHEDULES
The following are the Schedules annexed hereto and incorporated by
reference and deemed to be part hereof:
Schedule "A" - Columbus Networks Corporation Securityholders - Columbus
Networks Corporation Shares and Golden River Resources
Inc. Shares to which they are entitled
Schedule "B" - Audited Financial Statements of Golden River Resources
Inc. as at June 30, 2000
Schedule "C" - Lease
Schedule "D" - Employment Agreements
Schedule "E" - List of Officers/Directors
Schedule "F" - List of Bank Accounts
Schedule "G" - Intellectual Property
Schedule "H" - Letters of Credit
-4-
<PAGE>
Schedule "I" - List of Motor Vehicles
Schedule "J" - Material Contracts
Schedule "K" - List of Customer Accounts
Schedule "L" - Insurance Policies
Schedule "M" - Litigation Pending
Schedule "N" - Audited Financial Statements of Columbus Networks
Corporation as at June 30, 2000
ARTICLE 2 - AGREEMENT TO EXCHANGE
2.1 CNC SECURITY
(a) The CNC Securityholders shall transfer the CNC Securityholder's entire
right, title and interest in and to all of such CNC Securityholder's
CNC Shares (being the number set opposite the CNC Securityholder's
name in Schedule "A") to GDRV in consideration of the issuance by GDRV
to the CNC Securityholder of the number of GDRV Shares set opposite
the CNC Securityholder's name in Schedule "A", upon and subject to the
terms and conditions hereof for an aggregate of 14,955,475 post
roll-back common shares of GDRV, or such other amounts as may be
adjusted herein, all subject to GDRV shareholder approval and CNC
shareholder approval. It is the intention of the parties that the
number of GDRV shares issued to CNC shareholders represent 70% of the
issued and outstanding shares of GDRV at closing, excluding any shares
sold by GDRV pursuant to Section 8.1 hereof; and
(b) Certificates or evidence of certificates being held in escrow, shall
be issued and allotted amongst the CNC Securityholders as set forth
and provided for in Schedule "A" attached hereto and shall be
delivered by GDRV to the CNC Securityholders at Closing against
delivery to GDRV of certificates evidencing the CNC Shares, duly
endorsed for transfer to GDRV.
2.2 GDRV SECURITY
GDRV agrees to issue and/or reserve for issuance GDRV Shares to CNC
Securityholders, as fully paid and non-assessable Common Shares, in
consideration of the transfer of CNC Shares by CNC Securityholders to GDRV, all
in the numbers and to the names specified in Schedule "A". Additionally, GDRV
agrees to reserve for issuance Common Shares in respect of proposed stock
options as agreed to among the directors of both CNC and GDRV.
2.3 OTHER SECURITY
If and to the extent that a CNC Securityholder has any absolute,
contingent, optional, pre-emptive or other right to acquire any securities in
the capital of the CNC, that CNC Securityholder shall be conclusively deemed, as
and from Closing, to have transferred the same to the GDRV to the fullest extent
permitted by law, and to otherwise hold the same in trust for and at the
direction of the GDRV.
2.4 CLOSING
(a) The sale and transfer of the CNC Shares and issuance of the GDRV
Shares shall be completed on the Closing Date at the offices of GDRV's
solicitors, Dill, Dill, Carr, Stonbraker & Hutchings in Denver,
Colorado (via counterpart closing);
(b) Notwithstanding anything herein contained, the closing of the
transactions contemplated by this Agreement shall be closed, if
necessary, in escrow on the Closing Date;
(c) The CNC Securityholders acknowledge that the GDRV Shares to be issued
in exchange for the CNC Shares will be issued pursuant to exemptions
from the registration and prospectus
-5-
<PAGE>
disclosure requirements under the US '33 Act and the Act, and will be
subject to a "hold period" during which such shares may not be traded
except pursuant to another exemption or exemptions. The CNC
Securityholders further acknowledge that the certificates representing
the GDRV Shares will bear a legend disclosing the "hold period" and,
in the case of GDRV Shares held by residents of the United States a
further legend disclosing that the shares have not been registered in
the United States.
ARTICLE 3 - REPRESENTATIONS, WARRANTIES AND COVENANTS
3.1 REPRESENTATIONS AND WARRANTIES REGARDING CNC
Effective both at the date hereof and at the Closing Time, the
Principal and CNC jointly and severally represent and warrant to GDRV that:
(a) Except as disclosed in Schedule "A", each CNC Securityholder is not a
non-resident of Canada for the purposes of the INCOME TAX ACT
(Canada), as amended;
(b) Except as disclosed in Schedule "A", each CNC Securityholder is the
sole, full and absolute legal and beneficial owner of and has good and
marketable title to the CNC Shares set opposite his/her name in
Schedule "A", and the said CNC Shares are fully paid and
non-assessable, and are free and clear of liens, charges,
encumbrances, pledges, mortgages, hypothecations and adverse claims,
of any and all nature whatsoever, including without limitation
options, pre-emptive rights and other rights of acquisition, in favour
of any Person, whether conditional or absolute;
(c) Each CNC Securityholder has due and sufficient right and authority to
enter into this Agreement on the terms and conditions set forth and to
transfer the registered, legal and beneficial title and ownership of
his or her CNC Shares to GDRV;
(d) This Agreement constitutes a valid and binding obligation of each CNC
Securityholder;
(e) The CNC Shares are not subject to any voting trust or similar
arrangement;
(f) The Principal has the full authority and capacity required to enter
into this Agreement and perform his obligations hereunder;
(g) CNC is duly incorporated and validly subsisting under the laws of
British Columbia and is registered or qualified to carry on business
in all jurisdictions where the nature of its assets or its business
requires such registration or qualification;
(h) The entry into and performance of this Agreement by CNC has been duly
authorized by the directors of CNC;
(i) The entry into and performance of this Agreement by CNC will not
result in the violation of any applicable law, the Constating
Documents of CNC, any court or administrative judgment or order or any
indenture, license or agreement which CNC is a party to or bound by,
and CNC has full right and authority to enter into and perform this
Agreement on the terms contained herein;
(j) The authorized capital of CNC is one hundred twenty five million
(125,000,000) Shares and divided as follows:
(i) one hundred million (100,000,000) Class "A" Common Shares without
par value;
(ii) one million (1,000,000) Class "B" Common Shares without par
value;
-6-
<PAGE>
(iii)one million (1,000,000) Class "C" Common Shares without par
value;
(iv) one million (1,000,000) Class "D" Common Shares without par
value;
(v) one million (1,000,000) Class "E" Preferred Shares with a par
value of One Hundred ($100.00) Dollars each;
(vi) ten million (10,000,000) Class "F" Preferred Shares with a par
value of One ($0.01) Cent each;
(vii)ten million (10,000,000) Class "G" Preferred Shares with a par
value of One ($0.01) Cent each; and
(viii) one million (1,000,000) Class "H" Preferred Shares with a par
value of One ($0.01) Cent each;
of which the total number of CNC Shares, set out in Schedule "A" have
been issued, or will be issued as of Closing, as fully paid and
non-assessable.
(k) There are no outstanding securities of CNC which are convertible into
CNC Shares and there are no outstanding options or rights to subscribe
for or receive the issuance of any Securities in the capital of CNC
except as set forth in Schedule "A";
(l) the CNC Shares will represent as at the Closing all of the issued and
outstanding shares in the capital of CNC and no Person will, as at the
Closing, have any agreement or option, present or future, contingent,
absolute or capable of becoming an agreement or option or which with
the passage of time or the occurrence of any event could become an
agreement or option:
(i) to require CNC or any CNC Securityholder to:
(A) allot or issue any further or other share in its capital or
any other security convertible or exchangeable into any
share in its capital, or
(B) convert or exchange any security into or for any share its
capital, or
(ii) to require CNC to purchase, redeem or otherwise acquire any
issued and outstanding share in its capital;
(m) The CNC Financial Statements have been prepared in accordance with
generally accepted accounting principles and present fairly the
assets, liabilities (whether accrued, absolute, contingent or
otherwise) and the financial condition of CNC as at the date thereof;
(n) Except for: (i) liabilities which are disclosed, reflected or
adequately provided for in the CNC Financial Statements, or which need
not be disclosed, reflected or adequately provided for in the CNC
Financial Statements under generally accepted accounting principles;
and (ii) liabilities incurred in the ordinary course of business after
the date of the CNC Financial Statements; CNC has no absolute or
contingent liabilities which are material to its affairs, business,
prospects, operations or condition, financial or otherwise;
(o) since the date of CNC Financial Statements:
(iii)CNC has carried on its business in the ordinary and normal
course of its business;
-7-
<PAGE>
(iv) there has not been any changes in the condition or operations of
the business, assets or financial affairs of CNC which are,
individually or in the aggregate, materially adverse;
(v) there has not been any damage, destruction or loss, labour
trouble or other event, development or condition, of any
character (whether or not covered by insurance) which is not
generally known or which has not been disclosed to GDRV, which
has or may materially and adversely affect the business,
properties, assets or future prospects of CNC; and
(vi) no capital expenditures (which, for greater certainty does not
include repair and maintenance expenditures in the ordinary
course of the routine daily affairs of CNC) which, in the
aggregate, exceed $50,000, have been authorized, committed or
made by CNC;
(p) at Closing, the issued share capital of CNC, together with the names
and the number, class and kind of shares held by each of the CNC
Securityholders, will be as set out in Schedule "A";
(q) Schedule "G" contains an accurate and complete description of all CNC
Intellectual Property. The Intellectual Property does not infringe the
rights of any other Person;
(r) CNC has good and marketable title to all of its Intellectual Property,
assets, properties, interests in properties, real and personal,
including those reflected in the CNC Financial Statements or which
have been acquired since the date of the latest CNC Financial
Statements (except for those which have been transferred, sold or
otherwise disposed of in the ordinary and normal course of business),
free and clear of all encumbrances, and none of CNC's properties or
assets is in the possession of or under the control of any other
person;
(s) CNC has no equipment, other than personal property or fixtures in the
possession or custody of CNC which, as of the date hereof, is leased
or is held under license or similar arrangement;
(t) except for the real property leases set out in Schedule "C" and the
contracts of employment set out in Schedule "D", CNC is not party to
or bound by any material contract, whether oral or written other than
the contracts and agreements listed in Schedule "J";
(u) the contracts and agreements set out in Schedule "J":
(i) are all in full force and effect and unamended;
(ii) no material default exists in respect thereof on the part of
either CNC or any other party thereto;
(iii)do not involve a CNC Securityholder or non-arm's length party
except where described; and
(iv) none of the CNC Securityholders is aware of any intention on the
part of any other party thereto to terminate or materially alter
any such contract or agreement;
(v) CNC has no consulting or employment contracts, whether written or
otherwise, except for those set out in Schedule "D";
(w) CNC has no pension plans;
(x) all amounts required to be withheld for taxes by CNC from payments
made to any present or former shareholder, officer, director,
non-resident creditor, employee, associate or consultant
-8-
<PAGE>
has been withheld and paid on a timely basis to the proper
governmental body pursuant to applicable legislation;
(y) CNC has no obligation of guarantee with respect to any obligation of
any other Person;
(z) CNC has no obligation of indemnity or contingent or indirect
obligation with respect to any obligation of any other Person
(including any obligation to service the debt of or otherwise acquire
an obligation of any other Person or to supply funds to, or otherwise
maintain any working capital or other balance sheet condition of any
other Person);
(aa) to the best of the knowledge of CNC and the Principal Shareholder,
there is not presently outstanding against CNC any judgment, decree,
injunction, rule or order of any court, governmental department,
commission, agency, instrumentality or arbitrator;
(bb) CNC maintains, and has maintained, insurance in force against loss on
such assets, against such risks, in such amounts and to such limits,
as is in accordance with prudent business practices prevailing in its
line of business and having regard to the location, age and character
of its properties and assets and has complied fully with all
requirements of such insurance, including the prompt giving of any
notice of any claim or possible claim thereunder, and all such
insurance has been and is with insurers CNC believes to be
responsible;
(cc) CNC:
(i) has duly filed or caused to be filed in a timely manner:
(A) all federal and provincial income tax returns and election
forms and the tax returns of any other jurisdiction required
to be filed and all such returns and forms have been
completed accurately and correctly in all respects; and
(B) all Workers' Compensation Board returns, corporation capital
tax returns, and other reports and information required to
be filed with all applicable government authorities,
agencies or regulatory bodies,
(ii) has paid all taxes (including all federal, provincial and local
taxes, assessments or other imposts in respect of its income,
business, assets or property) and all interest and penalties
thereon with respect to CNC, for all previous years and all
required quarterly instalments due for the current fiscal year
has been paid; and
(iii)has provided adequate reserves for all taxes for the periods
covered by, and such reserves are reflected in, the CNC Financial
Statements;
and there is no agreement, waiver or other arrangement providing for
an extension of time with respect to the filing of any tax return, or
payment of any tax, governmental charge or deficiency by CNC nor is
there any action, suit, proceeding, investigation or claim now
threatened or pending against CNC in respect of, or discussions
underway with any governmental authority relating to, any such tax or
governmental charge or deficiency;
(dd) CNC has made all elections required to be made pursuant to Part III of
the INCOME TAX ACT in connection with any distributions by CNC and all
such elections were true and correct and in the prescribed form and
were made within the prescribed time periods;
(ee) CNC is and has been since its incorporation, a "Canadian-controlled
private corporation" within the meaning of such term under the INCOME
TAX ACT;
-9-
<PAGE>
(ff) CNC has not filed with the Minister of National Revenue any agreement
or form pursuant to subsection 125(3) of the INCOME TAX ACT for its
current taxation year and CNC has never carried on business as a
member of a partnership;
(gg) to the best of the knowledge of CNC and the Principal Shareholder, CNC
does not have and does not use any service mark, tradename, or
trademark except as disclosed as part of the Intellectual Property;
(hh) neither CNC nor the Principal Shareholder have any specific
information relating to CNC which is not generally known or which has
not been disclosed to GDRV and which if known could reasonably be
expected to have a materially adverse effect on the value of the CNC
Shares;
(ii) Schedule "F" is a true and complete list showing the name of each
bank, trust company or similar institution in which CNC has accounts
or safe deposit boxes, the identification numbers of each such account
or safe deposit box, the names of all persons authorized to draw
thereon or to have access thereto and the number of signatories
required on each account;
(jj) Schedule "F" also includes a list of all non-bank account numbers,
codes, and business numbers used by CNC for purposes of remitting tax,
dues, assessments or other fees;
(kk) Except as specifically disclosed to GDRV in writing, there are no
actions, suits or proceedings (whether or not purportedly against or
on behalf of CNC), having or reasonably capable of having a material
adverse effect on CNC or its assets, outstanding, pending or
threatened by or against or affecting CNC or its assets at law or in
equity or before or by any federal, provincial, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality;
(ll) The corporate records and Minute Book of CNC contain complete and
accurate minutes of all meetings of CNC's board of directors and
shareholders held since its incorporation and signed copies of all
resolutions and bylaws passed or confirmed by the directors or
shareholders other than at a meeting. All such meetings were duly
called and held and CNC has kept and maintained such corporate records
as are required under the COMPANY ACT (British Columbia), which
records accurate complete and up to date in all respects;
(mm) CNC utilizes no product warranties, guarantees or product return
policies; and
(nn) Schedule "C" through "N" contain all material information for each
particular Schedule listed therein and there are no omissions of
material information by CNC.
3.2 REPRESENTATIONS AND WARRANTIES OF GDRV
Effective both as at the date hereof and as at the Closing Time, GDRV
represents and warrants to each CNC Securityholder and to CNC that:
(a) GDRV is duly incorporated and validly subsisting and is registered or
qualified to carry on business in all jurisdictions where the nature
of its assets or its business require such registration or
qualification;
(b) The entry into and performance of this Agreement by GDRV has been duly
authorized by the directors of GDRV;
(c) Subject to approval by the shareholders of GDRV, the entry into and
performance of this Agreement by GDRV will not result in the violation
of any applicable law, the Constating Documents of GDRV, any court or
administrative judgment or order or any indenture
-10-
<PAGE>
or agreement which GDRV is a party to or bound by, and GDRV has full
right and authority to enter into and perform this Agreement on the
terms contained herein;
(d) GDRV is in all respects in good standing with and up to date as
regards all filings and procedures required by the OTCBB and GDRV is
not in default of any filing or reporting issuer requirements under
the Act or the US '34 Act, or any regulations pursuant thereto;
(e) GDRV is authorized to issue up to 50,000,000 Common Shares of which
18,795,101 GDRV Shares with $0.001 par value are issued as fully paid
and non-assessable as of October 20, 2000 and 1,700,000 options
granted to its officers and directors at an exercise price of $0.10
per common share, for a fully diluted amount of 20,495,101 GDRV
shares;
(f) There are no outstanding rights obligations or entitlements requiring
the issuance of any additional GDRV Shares other than as disclosed in
the Schedules hereto and in the Information Circular;
(g) The common shares of GDRV are listed for trading on the OTCBB;
(h) Except for: (i) liabilities which are disclosed, reflected or
adequately provided for in the GDRV Financial Statements, or which
need not be disclosed, reflected or adequately provided for in the
GDRV Financial Statements under U.S. generally accepted accounting
principles; and (ii) liabilities incurred in the ordinary course of
business after the date of the GDRV Financial Statements; GDRV has no
absolute or contingent liabilities which are material to its affairs,
business, prospects, operations or condition, financial or otherwise;
(i) Except as specifically disclosed to CNC in writing, there are no
actions, suits or proceedings (whether or not purportedly against or
on behalf of GDRV), and having or reasonably capable of having a
material adverse effect on GDRV or its assets, outstanding, pending or
threatened by or against or affecting GDRV at law or in equity or
before or by any federal, provincial, municipal or other governmental
department, commission, board, bureau, agency or instrumentality;
(j) GDRV holds all licenses, authorizations and permits required by law in
relation to the business carried on by GDRV and the business of GDRV
is in compliance with all applicable laws;
(k) GDRV is a "Non-Canadian" as defined in the INVESTMENT CANADA ACT
(Canada); and
(l) The GDRV Shares to be issued to the CNC Securityholders pursuant to
Section 2.1 of this Agreement shall, upon issuance, be duly and
validly issued as fully paid and non-assessable shares in the capital
of GDRV, and will, upon issuance, be duly listed for trading on the
OTCBB, subject to:
(i) satisfaction of conditions on issuance; and
(ii) the "hold period" specified by U.S. laws by the Act and any other
applicable securities regulations;
3.3 SURVIVAL
The representations and warranties set forth in Section 3.1 and 3.2
and shall continue in full force and effect for a period of one (1) year from
the date of Closing.
If no claim shall have been made hereunder prior to expiry of such
survival period against a party hereto with respect to any incorrectness in or
breach of any representation or warranty contained herein,
-11-
<PAGE>
the party making the representation or warranty in this Agreement shall have no
further liability hereunder with respect to any such representation or warranty.
ARTICLE 4 - COVENANTS
4.1 TAXES
GDRV does not assume and shall not be liable for any taxes whatsoever
under the INCOME TAX Act (Canada) or any other taxes whatsoever which may be or
become payable by the CNC Securityholders including, without limiting the
generality of the foregoing, any taxes resulting from or arising as a
consequence of the transfer or exchange by the CNC Securityholders to GDRV of
the CNC Shares herein contemplated.
ARTICLE 5 - PRE-CLOSING MATTERS
5.1 PRESERVATION OF REPRESENTATIONS AND WARRANTIES
Each of the parties shall, at all times up to and including
the Closing Time, do or cause to be done all such acts and things as may be
required to ensure the continued material accuracy of the representations and
warranties made by it in Article 3.
5.2 PUBLIC ANNOUNCEMENTS
GDRV and CNC shall consult with each other before any press release is
issued or other public statement made with respect to this Agreement and the
transactions provided hereby, and, except as may be required by law or pursuant
to any listing agreement with any stock exchange or securities commission, no
such press release or public statement shall be issued or made without the prior
consent of the other, such consent not to be unreasonably withheld.
5.3 EXAMINATION
At all reasonable times during ordinary business hours up to the
Closing Time, CNC and GDRV shall:
(a) Permit the other to examine and inspect, in organized form, and to
take extracts from, their respective books, records, accounts, data
systems, and files; and
(b) Furnish to the other such information relating to their respective
affairs, businesses, prospects, operations, conditions and assets, as
may be reasonably requested from time to time and as they respectively
have access to or control over. The rights under this section shall be
extended to the respective representatives and professional advisors
of GDRV and CNC.
ARTICLE 6 - CONDITIONS
6.1 CONDITIONS OF CNC SECURITYHOLDERS
The obligations of a CNC Securityholder and CNC to complete the
transactions provided for in this Agreement is subject to the following
conditions:
(a) The representations and warranties of GDRV in this Agreement shall be
true and correct in all material respects as at the Closing Time;
(b) GDRV shall have complied with all obligations on its part under this
Agreement and under the Act as required to be performed at or before
the Closing Time;
-12-
<PAGE>
(c) The board of directors of GDRV shall have authorized and approved of
this Agreement; and
(d) At the Closing Time, no action or proceeding at law or in equity shall
be pending or threatened by any Person to enjoin or prohibit:
(i) The acquisition by GDRV of CNC Shares as contemplated by this
Agreement or the right of GDRV to own the CNC Shares; or
(ii) The right of GDRV to conduct its operations and to carry on its
business in the normal course as its business and operations have
been carried on in the past.
If any or all of the aforesaid conditions are not fulfilled, Dan
Collins, on behalf of the CNC Securityholders, may rescind this Agreement by
notice to GDRV, and in such event, Dan Collins and the CNC Securityholders shall
be released from all obligations hereunder. Unless the condition or conditions,
the non-performance of which has given rise to rescission, were reasonably
capable of being performed or caused to be performed by it, then GDRV shall also
be released from all obligations hereunder. Notwithstanding the foregoing, Dan
Collins on behalf of the CNC Securityholders, may waive by written instrument
compliance with any of the said conditions, without prejudice to their rights of
rescission in the event of non-fulfilment of any other condition or conditions.
6.2 CONDITIONS OF GDRV
The obligation of GDRV to complete the transactions provided for in
this Agreement is subject to the following conditions:
(a) The representations and warranties of CNC and the Principal, on behalf
of the CNC Securityholders, in this Agreement shall be true and
correct in all material respects as at the Closing Time;
(b) CNC and all of the CNC Securityholders shall have complied with all
obligations on their respective parts required to be performed at or
before the Closing Time; and
(c) The board of directors of CNC shall have approved the transfer of the
CNC Shares to GDRV, and all other acts and things shall have occurred
as are necessary to give GDRV full status as owner of the CNC Shares,
upon delivery to GDRV of the certificates therefor.
If any or all of the aforesaid conditions are not fulfilled, GDRV may
rescind this Agreement by notice to Dan Collins, on behalf of the CNC
Securityholders, and in such event GDRV shall be released from all obligations
hereunder. Unless the condition or conditions, the non-performance of which has
given rise to rescission, were reasonably capable of being performed or caused
to be performed by them, then the CNC Securityholders, Dan Collins and CNC shall
also be released from all obligations hereunder. Notwithstanding the foregoing,
GDRV may waive, by written instrument, compliance with any of the said
conditions, without prejudice to its right of rescission in the event of
non-fulfilment of any other condition or conditions.
6.3 MUTUAL CONDITIONS
The obligations of all parties to complete the transactions provided
for in this Agreement are subject to the conditions that:
(a) The British Columbia Securities Commission ("BCSC")(if and as may be
required) shall have approved this Agreement and the within
contemplated transactions at or before the Closing Time;
-13-
<PAGE>
(b) That GDRV obtain the approval of this transaction from its
shareholders entitled to vote and obtain an exemption order from the
BCSC, if and as may be required;
(c) CNC be in receipt of duly executed counterparts of this Agreement
representing not less than 90% of the outstanding CNC Shares; and
(d) All closing documentation tabled by or on behalf of the parties hereto
shall be mutually satisfactory to counsel acting for each of CNC and
GDRV.
6.4 CLOSING OBLIGATIONS OF GDRV
At the Closing Time, GDRV shall, tender to the CNC Securityholders
confirmations from the Transfer Agent of securities held in escrow and stock
option agreements for the GDRV Shares to be respectively issued to the CNC
Securityholders in the respective numbers set forth in Schedule "A", such share
certificates and/or stock option agreements to be in the form required by law
and by the Constating Documents of GDRV.
6.5 CLOSING OBLIGATIONS OF THE CNC SECURITYHOLDERS
At the Closing Time, Dan Collins, on behalf of each of the CNC
Securityholders, shall tender to GDRV the share certificate or certificates for
the CNC Securities owned by the CNC Securityholders, as set forth in Schedule
"A", duly endorsed for transfer to GDRV, if applicable. Additionally, CNC shall
provide a certified copy of a resolution of the directors authorizing the
transfer of the CNC Shares to GDRV and directing the registration of such shares
into the name of GDRV.
6.6 SECURITIES REGULATORY APPROVAL
(a) The terms of this Agreement are subject to the approval of all
securities regulatory authorities having jurisdiction, including the
BCSC;
(b) GDRV agrees to forthwith apply for and obtain an exemption order from
the BCSC, if required, and further agrees to call an extraordinary
meeting of its shareholders to seek shareholder requisite approval for
the transactions contemplated herein;
(c) CNC agrees to promptly comply with all reasonable conditions and
requirements of the BCSC; and
(d) In the event that the BCSC or any other regulatory authority having
jurisdiction shall prevent the closing of the purchase and sale of the
CNC Shares and the consummation of the transactions contemplated in
this Agreement, neither GDRV nor its directors, officers, legal
counsel, servants or agents shall in any way be liable to any of the
CNC Securityholders or CNC in respect of any damages or losses
suffered by them as a result of such failure to give their approval
provided that GDRV has, with all due diligence and in good faith, used
its best efforts to obtain the approval of such regulatory
authorities.
ARTICLE 7 - BROKERAGE FEES
7.1 Any and all brokerage fees payable for presentation and closing of this
transaction (as paid by the delivery of CNC shares to any and all brokers in
this transaction) in the sum of the equivalent of 3,000,000 GDRV shares on
exchange paid by CNC (represented by 2,097,232 CNC shares) shall also be
exchanged for GDRV shares pursuant to this Share Exchange Agreement.
ARTICLE 8 - FINANCING - PRIVATE PLACEMENT
8.1 GDRV will use its best efforts to secure private placement equity fund
financing in the sum of not
-14-
<PAGE>
less than $400,000.00 U.S. prior to the Closing
Time. All subscription monies deposited under the private placement equity
financing shall be held in trust with GDRV until completion of the transaction,
subject to any early release to GDRV to CNC, only after receiving written
request for funds by CNC and after receiving GDRV Board of Director approval for
same.
ARTICLE 9 - CHANGE OF NAME
9.1 Upon completion of this reverse take-over transaction, the name of GDRV
shall be changed to Columbus Networks Corporation.
ARTICLE 10 - DIRECTORS
10.1 It is anticipated that the go forward Board of Directors post-reverse
take-over for the resulting company shall consist of seven Directors as
follows:
(i) Dan Collins;
(ii) Tom Beadman;
(iii) Scott McLean
(iv) Roger Watts (Chairman);
(v) Greg Shannon;
(vi) Mervyn Weiss; and
(vii) Vern Berg
It is also anticipated that the Officers for the resulting company,
post-closing shall consist of the following individuals:
(i) Dan Collins, President and CEO;
(ii) Tom Beadman, Vice-President, Network Systems;
(iii) Scott McLean, Vice-President;
(iv) Greg Shannon, Corporate Secretary
ARTICLE 11 - GENERAL PROVISIONS
11.1 GENDER AND NUMBER
The provisions of this Agreement shall be read with all changes in
gender and number as may be required by the context.
11.2 WAIVER AND AMENDMENT
This Agreement may only be amended by further written agreement
executed and delivered by all parties. No waiver or consent by a party of or to
any breach or default by another party shall be effective unless evidenced in
writing, executed and delivered by the party so waiving or consenting. No such
waiver or consent shall operate as a waiver of or consent to any further or
other breach or default in relation to the same or any other provision of this
Agreement.
11.3 ENTIRETY OF AGREEMENT
This Agreement contains the entire agreement among the parties with
respect to the matters of agreement herein, and the parties acknowledge and
agree that there are no oral or other written agreements, undertakings,
promises, conditions, representations or warranties respecting the matters of
agreement herein.
11.4 SEVERANCE
-15-
<PAGE>
If any provision of this Agreement is judicially determined to be
void, illegal or unenforceable, such provision shall be ineffective to the
extent of such voidness, illegality or unenforceability, but without
invalidating or affecting the validity or enforceability of any of the remaining
provisions of this Agreement.
11.5 PROPER LAW AND JURISDICTION OF ADJUDICATION
This Agreement shall be construed in accordance with the laws of
British Columbia and the federal laws of Canada applicable therein. Each of the
parties hereto irrevocably attorns to the jurisdiction of the Courts of British
Columbia and consents that any dispute between them may be litigated in and
adjudicated upon by any otherwise appropriate court located in British Columbia.
11.6 NOTICES
All notices and other communications required or permitted pursuant to
or in relation to this Agreement shall be in writing and shall be:
(a) Personally served upon the addressee (if an individual) or an officer
or director of the addressee (if a body corporate), in which case such
notice or other communication shall be conclusively deemed to have
been given to the addressee at the time of such service; or
(b) Sent by postage prepaid first class mail addressed to the addressee at
the following respective addresses:
(i) For the CNC Securityholders:
c/o Columbus Networks Corporation
100, 1295 Stevens Road
Kelowna, British Columbia, V1Z 2S9
Telecopier No. 250.769.8096
ATTENTION: DAN COLLINS, PRESIDENT
(ii) For CNC:
Columbus Networks Corporation
100, 1295 Stevens Road
Kelowna, British Columbia, V1Z 2S9
Telecopier No. 250.769.8096
ATTENTION: DAN COLLINS, PRESIDENT
With a copy to:
Miller Thomson LLP
Barristers & Solicitors
3000, 700 - 9 Avenue S.W.
Calgary, Alberta, T2P 3V4
ATTENTION: GREG P. SHANNON, LL.M.
Telecopier No. 403.262.0007
(iii)For GDRV:
Golden River Resources Inc.
2420 Pandosy Street
Kelowna, British Columbia, V1Y 1T8
Telecopier No. 250.861-1971
-16-
<PAGE>
with a copy to:
Dill, Dill, Carr, Stonbraker & Hutchings, Attorneys at Law
Suite 300, 455 Sherman Street
Denver, Colorado
ATTENTION: FAY MATSUKAGE
Telecopier No. 303.777-3823
in which case such notice or other communication shall conclusively be
deemed to have been given to the addressee upon the expiration of the
5th day (excluding Saturdays, Sundays and statutory holidays), free
from interruption in the postal service, from the date of mailing. If
the postal service is interrupted due to a strike, lockout or other
cause, whether at the time of such mailing or during the said period
of 5 days, service of such notice or other communication shall not be
effective unless given in accordance with the provisions of paragraph
(a). Any party may by notice in writing to the other parties change
its address for service.
11.7 TIME OF THE ESSENCE
Time shall be of the essence in this Agreement.
11.8 FURTHER ASSURANCES
A party shall, upon request of another party, execute and deliver or
cause to be executed and delivered all such documents, deeds and other
instruments of further assurance and do or cause to be done all such acts and
things as may be reasonably necessary or advisable to implement and give full
effect to the provisions of this Agreement.
11.9 COUNTERPART EXECUTION
This Agreement may be executed in as many counterparts as may be
necessary, each of which so signed shall be deemed to be an original (and each
signed copy sent by electronic facsimile transmission shall be deemed to be an
original) and such counterparts together shall constitute one and the same
instrument and notwithstanding the date of execution shall be deemed to bear the
date as set forth herein.
-17-
<PAGE>
11.10 ENUREMENT
This Agreement shall enure to the benefit of and be binding upon the
parties, the successors and permitted assigns of corporate parties and the
heirs, executors, administrators, personal representatives, successors and
assigns of individual parties.
IN WITNESS WHEREOF the parties have caused this Agreement to be duly
executed and delivered as of te date first above written
GOLDEN RIVER RESOURCES INC.
Per:
------------------------------------
Roger Watts, Chairman
Per:
------------------------------------
Bruce Manery, Director
COLUMBUS NETWORKS
CORPORATION
Per:
------------------------------------
Dan Collins, President
Per:
------------------------------------
Scott McLean, Vice-President
----------------------------------------
NORMA AHERNS
----------------------------------------
ANN ANTIGNANO
----------------------------------------
LEN N. ARCHER
BEADMAN FAMILY TRUST
Per:
------------------------------------
TOM BEADMAN, TRUSTEE
----------------------------------------
SHAYNE T. BORSUK
----------------------------------------
DEAN BOTTOMLEY
----------------------------------------
EVAN BOTTOMLEY
----------------------------------------
MARK BOTTOMLEY
----------------------------------------
MICHAEL BOTTOMLEY
-18-
<PAGE>
----------------------------------------
ANDREW BURPEE
----------------------------------------
ROSANNA BURPEE
----------------------------------------
TIMOTHY COLLINGS
----------------------------------------
JANE COLLINGS
COLLINS FAMILY TRUST
PER:
------------------------------------
DAN COLLINS, TRUSTEE
----------------------------------------
DOUGLAS FRANKIW
----------------------------------------
MERLENE FRANKIW
----------------------------------------
RAY GAGNON
----------------------------------------
HERMENIA JEANIE HICKS
----------------------------------------
MARTIN JOHNSON
----------------------------------------
CATHERINE INGRID ROSE KALLMAN
----------------------------------------
LYNN KERMODE
----------------------------------------
MATTHEW D. KINNEAR
----------------------------------------
PAMELA LI
----------------------------------------
INGE AND BILL LINTON
----------------------------------------
HENDRIK MALENSTYN
----------------------------------------
PATRICIA MALENSTYN
-19-
<PAGE>
----------------------------------------
JOHN MALENSTYN
----------------------------------------
MAUREEN MALENSTYN
MCLEAN FAMILY TRUST
Per:
------------------------------------
SCOTT MCLEAN
PACIFIC INTERNATIONAL SECURITIES INC.
Per:
------------------------------------
ERIC EISBRENNER
----------------------------------------
DOUG PLAYER
----------------------------------------
PAM RITCHIE
----------------------------------------
ALYDA ANTONIA ROBINSON
----------------------------------------
DARLENE GAY ROBINSON
----------------------------------------
WILLIAM MAXWELL ROBINSON
----------------------------------------
GREG P. SHANNON
----------------------------------------
MICHAEL SPROULE
----------------------------------------
RETA SPROULE
----------------------------------------
BARBARA STEPHEN
TRIVETT HOLDINGS LTD.
Per:
------------------------------------
ROY TRIVETT, PRESIDENT
----------------------------------------
MICHAEL VOLKER
-20-
<PAGE>
----------------------------------------
CLAYTON WESTON
----------------------------------------
BARRY REID
----------------------------------------
JOHN WEILER
----------------------------------------
KEITH NELSON
----------------------------------------
RON KING
----------------------------------------
MERV-CO HOLDINGS LTD.
----------------------------------------
BERCRISS CORPORATION RELATIONS INC.
-21-
<PAGE>
APPENDIX B
GOLDEN RIVER FORM 10-KSB FOR THE FISCAL YEAR ENDED JUNE 30, 2000
<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to _________
Commission file number: 0-27953
GOLDEN RIVER RESOURCES INC.
(Name of small business issuer in its charter)
NEVADA 98-0187538
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2420 PANDOSY STREET, KELOWNA, BRITISH COLUMBIA, CANADA V1Y 1T8
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (250) 717-1049
Securities registered under Section 12(b) of the Exchange Act: NONE
Securities registered under Section 12(g) of the Exchange Act:
COMMON STOCK, $.001 PAR VALUE
(Title of class)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Check if no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is contained in this form, and no disclosure will be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ ]
State issuer's revenues for its most recent fiscal year: $-0-
State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was sold, or the average bid and asked price of such common equity, as of a
specified date within the past 60 days: $1,084,660 as of September 22, 2000.
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 17,653,072 AS OF JUNE 30, 2000
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
Exhibit index on page 17. Page 1 of 32 pages
<PAGE>
PART I
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 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,
had been engaged in the acquisition and exploration of a precious mineral
property. It is now seeking a new business opportunity.
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 were subject to a restrictive legend which expired 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
that had been 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 Company has
determined not to pursue a transaction with Transmeridian.
On June 30, 2000, the Board of Directors determined not to continue with the
agreement on the Mexicana I property. Accordingly, both Rob Roy and La Mexicana
are inactive corporations.
On August 15, 2000, the Company signed a letter of intent with Columbus Networks
Corporation ("Columbus"), a private corporation incorporated under the laws of
British Columbia. The letter of intent contemplates that the Company will issue,
after a reverse stock split of its outstanding shares, its Common Stock for all
of the outstanding common stock of Columbus such that after the transaction, the
former Columbus shareholders will own approximately 70% of the then outstanding
Common Stock of the Company. If completed, the proposed transaction would be
accounted for as a reverse acquisition with Columbus identified as the acquirer.
Completion of the share exchange is subject to completion of due diligence,
shareholder and regulatory approval, and completion of definitive agreements.
The Company is currently engaged in a private placement of its Common Stock and
warrants to raise up to $500,000 in gross proceeds. The proceeds of the offering
are to be loaned to Columbus.
2
<PAGE>
As a result of the abandonment of the option to acquire the Mexicana I property
through La Mexicana, the Company has no current operations and no material
assets. As such, the Company can be defined as a "shell" company, whose sole
purpose at this time is to locate and consummate a merger or acquisition with a
private entity. The Board of Directors of the Company has elected to commence
implementation of the Company's principal business purpose, described below
under "Plan of Operation."
INVESTMENT COMPANY ACT OF 1940
Although the Company will be subject to regulation under the Securities Act of
1933, as amended (the "Securities Act"), and the Securities Exchange Act of
1934, as amended (the "Exchange Act"), management believes the Company will not
be subject to regulation under the Investment Company Act of 1940, as amended
(the "Investment Company Act"), insofar as the Company will not be engaged in
the business of investing or trading in securities. In the event the Company
engages in business combinations which result in the Company holding passive
investment interests in a number of entities, the Company could be subject to
regulation under the Investment Company Act. In such event, the Company would be
required to register as an investment company and could be expected to incur
significant registration and compliance costs. The Company has obtained no
formal determination from the Securities and Exchange Commission as to the
status of the Company under the Investment Company Act and, consequently, a
violation of such Act could subject the Company to material adverse
consequences.
FORWARD LOOKING STATEMENTS
Pursuant to the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995 (the "PSLRA"), the Company cautions readers regarding forward
looking statements found in the following discussion and elsewhere in this
report and in any other statement made by, or on the behalf of the Company,
whether or not in future filings with the Securities and Exchange Commission.
Forward-looking statements are statements not based on historical information
and which relate to future operations, strategies, financial results or other
developments. Forward looking statements are necessarily based upon estimates
and assumptions that are inherently subject to significant business, economic
and competitive uncertainties and contingencies, many of which are beyond the
Company's control and many of which, with respect to future business decisions,
are subject to change. These uncertainties and contingencies can affect actual
results and could cause actual results to differ materially from those expressed
in any forward-looking statements made by or on behalf of the Company. The
Company disclaims any obligation to update forward-looking statements.
PLAN OF OPERATION
The Company intends to seek to acquire assets or shares of an entity actively
engaged in a business that generates revenues, in exchange for its securities.
While the Company has entered into a letter of intent with Columbus, there is no
assurance that the proposed transaction will be completed. If the proposed
transaction is not completed, management intends to contact investment bankers,
corporate financial analysts, attorneys and other investment industry
professionals through various media.
Depending upon the nature of the relevant business opportunity and the
applicable state statutes governing the manner in which the transaction is
structured, the Company's Board of Directors expects that it will provide the
Company's shareholders with complete disclosure documentation concerning a
potential business opportunity and the structure of the proposed business
combination prior to consummation. Such disclosure is expected to be in the form
of a proxy, information statement, or report.
While such disclosure may include audited financial statements of such a target
entity, there is no assurance that such audited financial statements will be
available. The Board of Directors does intend to obtain certain assurances of
value of the target entity's assets prior to consummating such a transaction,
with further assurances that audited financial statements would be provided
within sixty days after closing. Closing documents will include representations
that the value of the assets conveyed to or otherwise so transferred will not
materially differ from the representations included in such closing documents,
or the transaction will be voidable.
3
<PAGE>
Due to the Company's intent to remain a shell company until a merger or
acquisition candidate is identified, it is anticipated that its cash
requirements will be minimal, and that all necessary capital, to the extent
required, will be provided by the directors or officers. The Company does not
anticipate that it will have to raise capital or acquire any plant or
significant equipment in the next twelve months, unless a merger or acquisition
target is identified.
GENERAL BUSINESS PLAN
The Company's purpose is to seek, investigate and, if such investigation
warrants, acquire an interest in business opportunities presented to it by
persons or firms who or which desire to seek the perceived advantages of an
Exchange Act registered corporation. The Company will not restrict its search to
any specific business, industry, or geographical location and the Company may
participate in a business venture of virtually any kind or nature. This
discussion of the proposed business is purposefully general and is not meant to
be restrictive of the Company's virtually unlimited discretion to search for and
enter into potential business opportunities. Management anticipates that it may
be able to participate in only one potential business venture because the
Company has nominal assets and limited financial resources. This lack of
diversification should be considered a substantial risk to shareholders of the
Company because it will not permit the Company to offset potential losses from
one venture against gains from another.
The Company may seek a business opportunity with entities that have recently
commenced operations, or that wish to utilize the public marketplace in order to
raise additional capital in order to expand into new products or markets, to
develop a new product or service, or for other corporate purposes. The Company
may acquire assets and establish wholly-owned subsidiaries in various businesses
or acquire existing businesses as subsidiaries.
Management anticipates that the selection of a business opportunity in which to
participate will be complex and extremely risky. Due to general economic
conditions, rapid technological advances being made in some industries and
shortages of available capital, management believes that there are numerous
firms seeking the perceived benefits of a publicly registered corporation. Such
perceived benefits may include, among other things, facilitating or improving
the terms on which additional equity financing may be sought, providing
liquidity for incentive stock options or similar benefits to key employees, and
providing liquidity (subject to restrictions of applicable statutes) for all
shareholders. Potentially, available business opportunities may occur in many
different industries and at various stages of development, all of which will
make the task of comparative investigation and analysis of such business
opportunities extremely difficult and complex.
The Company has, and will continue to have, no capital with which to provide the
owners of business opportunities with any significant cash or other assets.
However, management believes the Company will be able to offer owners of
acquisition candidates the opportunity to acquire a controlling ownership
interest in a publicly registered company without incurring the cost and time
required to conduct an initial public offering. The owners of the business
opportunities will, however, incur significant legal and accounting costs in
connection with the acquisition of a business opportunity, including the costs
of preparing annual (Form 10-K or 10-KSB), quarterly (Form 10-Q or 10-QSB) and
current reports (Form 8-K), agreements and related documents. The Exchange Act
specifically requires that any merger or acquisition candidate comply with all
applicable reporting requirements, which include providing audited financial
statements to be included within the numerous filings required under the
Securities Exchange Act. Nevertheless, the officers and directors of the Company
have not conducted market research and are not aware of statistical data which
would support the perceived benefits of a merger or acquisition transaction for
the owners of a business opportunity.
The analysis of new business opportunities will be undertaken by, or under the
supervision of, the officers and directors of the Company, none of whom is a
professional business analyst. Management intends to concentrate on identifying
preliminary prospective business opportunities which may be brought to its
attention through present associations of the Company's officers and directors,
or by the Company's shareholders. In analyzing prospective business
opportunities, management will consider such matters as the available technical,
financial and managerial resources; working capital and other financial
requirements; history of operations, if any; prospects for the future; nature of
present and expected competition; the quality and experience of management
services which may be available and the depth of that management; the potential
for further research, development, or exploration; specific risk factors not now
foreseeable but which then may be anticipated to impact the proposed activities
of the Company; the potential for growth or expansion; the potential for profit;
the perceived public recognition of
4
<PAGE>
acceptance of products, services, or trades; name identification; and other
relevant factors. Officers and directors of the Company expect to meet
personally with management and key personnel of the business opportunity as part
of their "due diligence" investigation. To the extent possible, the Company
intends to utilize written reports and personal investigations to evaluate the
above factors. The Company will not acquire or merge with any company that
cannot provide audited financial statements within a reasonable period of time
after closing of the proposed transaction.
Management of the Company, while not especially experienced in matters relating
to the new business of the Company, shall rely upon their own efforts and, to a
much lesser extent, the efforts of the Company's shareholders, in accomplishing
the business purposes of the Company. It is not anticipated that any outside
consultants or advisors, except for the Company's legal counsel and accountants,
will be utilized by the Company to effectuate its business purposes. However, if
the Company does retain such an outside consultant or advisor, any cash fee
earned by such party will most likely be paid by the prospective
merger/acquisition candidate, as the Company has no cash assets with which to
pay such obligation. As of the date of this report, the Company does not have
any contracts or agreements with any outside consultants and none are
contemplated.
Management will not restrict the Company's search for any specific kind of
firms, but may acquire a venture that is in its preliminary or development stage
or is already operating. It is impossible to predict at this time the status of
any business in which the Company may become engaged, in that such business may
need to seek additional capital, may desire to have its shares publicly traded,
or may seek other perceived advantages which the Company may offer. Furthermore,
management does not intend to seek capital to finance the operation of any
acquired business opportunity until such time as the Company has successfully
consummated a merger or acquisition.
It is anticipated that the Company will incur nominal expenses in the
implementation of its business plan. Because the Company has no capital with
which to pay these anticipated expenses, present management of the Company will
pay these charges with their personal funds, as interest free loans to the
Company. If additional funding is necessary, management and/or shareholders will
continue to provide capital or arrange for outside funding. However, the only
opportunity which management has to have these loans repaid will be from a
prospective merger or acquisition candidate. Management's agreements with the
Company contain no negative covenants that would impede or prevent consummation
of a proposed transaction. There is no assurance, however, that management will
continue to provide capital indefinitely if a merger candidate cannot be found.
If a merger candidate cannot be found in a reasonable period of time, management
may be required reconsider its business strategy, which could result in the
dissolution of the Company.
ACQUISITION OF OPPORTUNITIES
In implementing a structure for a particular business acquisition, the Company
may become a party to a merger, consolidation, reorganization, joint venture, or
licensing agreement with another corporation or entity. The Company may also
acquire stock or assets of an existing business. On the consummation of a
transaction, it is probable that the present management and shareholders of the
Company will no longer be in control of the Company. In addition, the Company's
directors may, as part of the terms of the acquisition transaction, resign and
be replaced by new directors without a vote of the Company's shareholders or may
sell their stock in the Company. Any and all such sales will only be made in
compliance with the securities laws of the United States and any applicable
state.
It is anticipated that any securities issued in any such reorganization would be
issued in reliance upon an exemption from registration under applicable federal
and state securities laws. In some circumstances, however, as a negotiated
element of its transaction, the Company may agree to register all or a part of
such securities immediately after the transaction is consummated or at specified
times thereafter. If such registration occurs, of which there can be no
assurance, it will be undertaken by the surviving entity after the Company has
successfully consummated a merger or acquisition and the Company is no longer
considered a "shell" company. Until a merger or acquisition is consummated, the
Company will not attempt to register any additional securities. The issuance of
substantial additional securities and their potential sale into the trading
market may have a depressive effect on the value of the Company's securities.
5
<PAGE>
While the actual terms of a transaction to which the Company may be a party
cannot be predicted, it may be expected that the parties to the business
transaction will find it desirable to avoid the creation of a taxable event and
thereby structure the acquisition in a so-called "tax-free" reorganization under
Sections 368(a)(1) or 351 of the Internal Revenue Code (the "Code"). In order to
obtain tax-free treatment under the Code, it may be necessary for the owners of
the acquired business to own 80% or more of the voting stock of the surviving
entity. In such event, the shareholders of the Company would retain 20% or less
of the issued and outstanding shares of the surviving entity, which would result
in significant dilution in the equity of such shareholders.
As part of the Company's "due diligence" investigation, officers and directors
of the Company will meet personally with management and key personnel, may visit
and inspect material facilities, obtain independent analysis of verification of
certain information provided, check references of management and key personnel,
and take other reasonable investigative measures to the extent of the Company's
limited financial resources and management expertise. The manner in which the
Company participates in an opportunity will depend on the nature of the
opportunity, the respective needs and desires of the Company and other parties,
the management of the opportunity and the relative negotiation strength of the
Company and such other management.
With respect to any merger or acquisition negotiations with target company
management is expected to focus on the percentage of the Company which the
target company shareholders would acquire in exchange for all of their
shareholdings in the target company. Depending upon, among other things, the
target company's assets and liabilities, the Company's shareholders will in all
likelihood hold a substantially lesser percentage ownership interest in the
Company following any merger or acquisition. The percentage ownership may be
subject to significant reduction in the event the Company acquires a target
company with substantial assets. Any merger or acquisition effected by the
Company can be expected to have a significant dilutive effect on the percentage
of shares held by the Company's then shareholders.
The Company will participate in a business opportunity only after the
negotiation and execution of appropriate written agreements. Although the terms
of such agreements cannot be predicted, generally such agreements will require
some specific representations and warranties by all of the parties, will specify
certain events of default, will detail the terms of closing and the conditions
that must be satisfied by each of the parties prior to and after such closing,
will outline the manner of bearing costs, including costs associated with the
Company's attorneys and accountants, will set forth remedies on default and will
include miscellaneous other terms.
As stated previously, the Company will not acquire or merge with any entity that
cannot provide independent audited financial statements within a reasonable
period of time after closing of the proposed transaction. The Company is subject
to the reporting requirements of the Securities Exchange Act. Included in these
requirements is the affirmative duty of the Company to file independent audited
financial statements as part of its Form 8-K to be filed with the Securities and
Exchange Commission upon consummation of a merger or acquisition, as well as the
Company's audited financial statements included in its annual report on Form
10-K (or 10-KSB, as applicable). If such audited financial statements are not
available at closing, or within time parameters necessary to insure the
Company's compliance with the requirements of the Exchange Act, or if the
audited financial statements provided do not conform to the representations made
by the candidate to be acquired in the closing documents, the closing documents
will provide that the proposed transaction will be voidable at the discretion of
the present management of the Company. If such transaction is voided, the
agreement will also contain a provision providing for the acquisition entity to
reimburse the Company for all costs associated with the proposed transaction.
COMPETITION
The Company will remain an insignificant participant among the firms which
engage in the acquisition of business opportunities. There are many established
venture capital and financial concerns which have significantly greater
financial and personnel resources and technical expertise than the Company. In
view of the Company's combined extremely limited financial resources and limited
management availability, the Company will continue to be at a significant
competitive disadvantage compared to the Company's competitors.
6
<PAGE>
EMPLOYEES
As of September 25, 2000, the Company employed one person full-time and one
person part-time at its Kelowna office.
ITEM 2. DESCRIPTION OF PROPERTY.
La Mexicana, a wholly owned subsidiary of Rob Roy, acquired options to purchase
rights to certain mineral properties in Mexico. 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. In June 2000, the Company determined
to abandon the option on the Mexicana I property.
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.
LA MEXICANA
La Mexicana 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 required exercise by February 12, 2001.
The Company had not conducted any exploration on the Mexicana 1 property.
Subject to the availability of funds, the Company had planned 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 work program required a budget of approximately $96,000.
The Company determined that the property would require too much exploration and
development work and that it would be too difficult to raise the capital
necessary to carry out the proposed work program, given the depressed gold
exploration market. The Company paid acquisition costs of $307,500 and issued
500,000 shares prior to terminating the option.
ITEM 3. LEGAL PROCEEDINGS.
None.
7
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
8
<PAGE>
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER 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 has been quoted on the OTC-BB from January 15, 1999 to December 1,
1999 and since July 21, 2000. From December 2, 1999 to July 21, 2000, the Common
Stock was 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.
<TABLE>
<CAPTION>
<S> <C> <C>
Fiscal Quarter Ended High Bid Low Bid
March 31, 1999 $0.51 $0.34
June 30, 1999 $0.51 $0.31
September 30, 1999 $0.44 $0.09
December 31, 1999 $0.29 $0.01
March 31, 2000 $0.28 $0.02
June 30, 2000 $0.22 $0.10
</TABLE>
On September 22, 2000, the high and low bid prices were both $0.07.
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 Computershare Investor Services
(formerly 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 June 30, 2000, the shareholders' list for the Company's Common Stock showed
155 registered shareholders and 17,653,072 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.
ITEM 6. 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 fiscal years ended June 30, 2000 and
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
9
<PAGE>
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>
<S> <C> <C> <C>
Inception (June 13, 1997)
Year ended Year ended to June 30, 1998
June 30, 2000 June 30, 1999 (unaudited)
Revenues -- -- --
(Loss) from continuing
operations $ (578,584)
(Loss) per common share
$ (0.04) $ (0.15) $ (0.26)
June 30, 2000 June 30, 1999 June 30, 1998
Working capital (deficiency) $ (262,631) $ (170,390) $ (28,983)
Total assets $ 37,120 $ 72,797 $ 12,798
Long-term obligations $ -- -- --
</TABLE>
Results of Operations
During the fiscal year ended June 30, 2000, the Company incurred a loss of
$578,584. The Company's level of activity was lower in fiscal 2000, with the
Company focusing its efforts on regaining the listing of its Common Stock on the
OTC Bulletin Board. Accordingly, the Company did very little in the way of
exploration work on the Mexicana I property and other outside activities. The
loss included the write-off of $30,000 in option payments and $42,065 in
exploration costs on the Mexicana I property. See Part I - Item 2. Description
of Property. The most significant expenses incurred by the Company were for
consulting fees of $226,425, $215,720 of which was paid through the issuance of
shares of the Company's Common Stock and the granting of stock options. General
and administrative expenses were slightly higher in fiscal 2000 ($47,044 as
compared to $35,592 in 1999). However, travel and promotion decreased from
$136,384 in 1999 to $73,949 in 2000.
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.
Due to the lack of any revenues, and the cumulative losses of $2,289,943
incurred through June 30, 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. If it is unable to obtain such
financing, it may be unable to continue operations.
10
<PAGE>
LIQUIDITY AND 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 June 30, 2000, the
Company has raised $1,055,230, 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 1,932,200 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, as
well as loans from shareholders. 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.
Pursuant to an interim financing agreement dated January 24, 2000, the Company
borrowed $75,000 from an unrelated party. The interim financing bears interest
at 8%, is due in full by October 30, 2000, and is guaranteed by R. Bruce Manery
and Roger Watts, officers and directors of the Company. In addition, during the
fiscal year ended June 30, 2000, the Company borrowed $60,350 from various
shareholders. These advances do not bear interest, have no fixed terms of
repayment, and are not evidenced by any written agreements. The Company will
need to obtain additional funds through loans of this sort or the sale of its
equity securities to maintain its operations.
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. In June 2000, the Company terminated its option agreement and no
longer has any interest in any mineral properties.
At June 30, 2000, the Company had a working capital deficiency of $262,631. The
increase was due primarily to the loss incurred during the year then ended.
PLAN OF OPERATION
Of the $291,577 in current liabilities at June 30, 2000, $124,129 was for trade
and other obligations, and $75,000 had a October 30, 2000 repayment date. The
remaining amount of $92,448 does not have a fixed date for repayment.
As of June 30, 2000, the Company had approximately $20,000 cash on hand. The
Company is able to maintain an office, but is not able to service any existing
debt. The Company does not intend to hire any more full-time employees over the
next 12 months. The Company does not intend to make any purchases of plant or
equipment over the next 12 months.
ITEM 7. FINANCIAL STATEMENTS.
The audited financial statements of the Company for the fiscal years ended June
30, 2000 and 1999, with comparative figures to June 30, 1998 are attached hereto
as pages F-1 to F-14. 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.
11
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
12
<PAGE>
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
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.
<TABLE>
<CAPTION>
<S> <C> <C>
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
</TABLE>
All directors of the Company have served since April 7, 1999. The officers and
directors were elected on December 3, 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.
No other directorships are held by each director in any company with a class of
securities registered pursuant to Section 12 of the Securities Exchange Act of
1934 or any company registered as an investment company, under the Investment
Company Act of 1940.
Messrs. Dunn, Manery and Watts may be deemed to be "promoters" and "control
persons" of the Company, as that term in defined in the Securities Act of 1933.
There are no other control persons.
13
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
During the fiscal year ended June 30, 2000, Messrs. Dunn, Manery and Watts were
required to file a Form 3 by January 3, 2000, the date on which the Company's
registration statement on Form 10-SB became effective. The Forms 3 for Messrs.
Manery and Watts were filed on January 7, 2000. The Form 3 for Mr. Dunn was
filed on February 8, 2000. There were no other known failures to file a report
required by Section 16(a) of the Securities Exchange Act of 1934.
ITEM 10. 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:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Long Term Compensation
--------------------------- -----------
Annual Compensation Awards Payouts
--------- -------- ------------- ------------ -------------- -----------
Other
Annual Restrict- Securities
Name and Compensation ed Stock Underlying LTIP All Other
Principal Salary Bonus ($) Award(s) Options/ Payouts Compensation
Position Year ($) ($) ($) SARs (#) ($) ($)
------------------ -------- --------- -------- ------------- ------------ -------------- ----------- ---------------
David St. Clair 2000 -0- -0- -0- -0- -0- -0- $4,715
Clair Dunn, 1999 -0- -0- -0- -0- -0- -0- $18,333
President (1)<F1>
David Parsons, 1999 -0- -0- -0- -0- -0- -0- -0-
President (2)<F2>
Ryan 1999 -0- -0- -0- -0- -0- -0- -0-
Barnard, 1998 -0- -0- -0- -0- -0- -0- -0-
President (3)<F3>
Nolan Moss, 1998 -0- -0- -0- -0- -0- -0- -0-
President (4)<F4>
<FN>
(1)<F1> Mr. Dunn has been the President since April 7, 1999. The amount paid was for geological work.
(2)<F2> Mr. Parsons was the President from December 18, 1998 to April 7, 1999.
(3)<F3> Mr. Barnard was the President from April 3, 1998 to December 18, 1998.
(4)<F4> Mr. Moss was the President from June 17, 1997 to April 3, 1998.
</FN>
</TABLE>
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. On May 31, 2000, the
Company granted stock options to purchase 250,000 shares of Common Stock
exercisable at $0.10 per share for 5 years. The closing bid price at the date of
grant was $0.10 per share. The following officers and directors were granted
non-qualified stock options:
14
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Optionee Number of Options Granted
Roger Watts 150,000
Bruce Manery 150,000
David St. Clair Dunn 100,000
</TABLE>
The options vest December 23, 1999 and expire September 23, 2004.
Option/SAR Grants in Last Fiscal Year
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Number of Percent of total
Securities options/SARs granted
Underlying to employees in
Options/SARs fiscal year Exercise or base
Name granted (#) price ($/Sh) Expiration date
David St. Clair Dunn 100,000 25% $0.10 09/23/04
</TABLE>
Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option SAR Values
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Number of Value of unexercised
unexercised in-the-money options/
options/SARs at SARs at FY-end ($)
FY-end (#) exercisable/
Shares acquired on exercisable/ unexercisable
Name exercise (#) Value realized ($) unexercisable
David St. Clair Dunn -0- -0- 100,000/0 0/0
</TABLE>
PLANS AND OTHER COMPENSATION
The Company paid management fees of $57,104 and $55,618 to Bruce Manery and
Roger Watts during the years ended June 30, 2000 and 1999, respectively.
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
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 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth, as of June 30, 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.
15
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF
NAME SHARES OWNED COMMON STOCK OWNED(1)
<S> <C> <C>
DAVID ST. CLAIR DUNN(2)<F2> (3)<F3> 100,000 0.56%
1154 Marine Drive
Gibsons, British Columbia
Canada V0N 1V1
ROBERT BRUCE MANERY (3)<F3> (4)<F4> 195,200 1.09%
2420 Pandosy Street
Kelowna, British Columbia
Canada V1Y 1T8
ROGER WATTS (2)<F2> (4)<F4> 195,200 1.09%
200 - 537 Leon Avenue
Kelowna, British Columbia
Canada V1Y 2A9
67849 CAPITAL LTD. 1,182,200 6.70%
Box 209, Chancery Court
Leeward Highway
Turks and Caicos
West Indies
Twilight Enterprises JLK Ltd. 885,322 5.02%
Box 209, Chancery Court
Leeward Highway
Turks and Caicos
West Indies
ALL OFFICERS & DIRECTORS 490,400 2.72%
AS A GROUP(5)<F5>
-----------
<FN>
(1)<F1> This table is based on 17,653,072 shares of Common Stock outstanding on
June 30, 2000. If a person listed on this table has the right to obtain
additional shares of Common Stock within sixty (60) days from June 30,
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)<F2> 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)<F3> Includes options to purchase 100,000 shares of Common Stock. See Part
III - Item 10. Executive Compensation.
(4)<F4> Includes options to purchase 150,000 shares of Common Stock. See Part
III - Item 10. Executive Compensation.
(5)<F5> Includes options to purchase 400,000 shares of Common Stock. See Part
III - Item 10. Executive Compensation.
</FN>
</TABLE>
CHANGES IN CONTROL
We are not aware of any arrangements that may result in a change in control of
the Company.
16
<PAGE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
During the year ended June 30, 2000, the Company paid or accrued management fees
of $57,104 to officers and directors of the Company. At June 30, 2000, $84,417
payable to the directors is included in accounts payable.
On January 24, 2000, the Company borrowed $75,000 from a non-affiliated third
party with interest at 8% per annum. The loan is due in full by October 30, 2000
and has been 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 13. EXHIBITS AND REPORTS ON FORM 8-K.
<TABLE>
<CAPTION>
Regulation
S-B Number Document
<S> <C>
2.1 Offer to Purchase (1)<F1>
3.1 Articles of Incorporation (1)<F1>
3.2 Bylaws (1)<F1>
10.1 Mexicana I Agreement dated as of February 12, 1998 (1)<F1>
10.2 La Lajita Agreement dated as of February 12, 1998 (1)<F1>
10.3 1999 Stock Option Plan (1)<F1>
10.4 Agreement with Transmeridian Exploration Inc., as amended (1)<F1>
10.5 Letter of Intent with OREX Gold Mines Corporation (1)<F1>
10.6 Mexicana I Agreement dated as of November 12, 1999 (1)<F1>
10.7 Interim Financing Agreement (1)<F1>
21 Subsidiaries of the Registrant (1)<F1>
27 Financial Data Schedule
---------------
<FN>
(1)<F1> Incorporated by reference to the exhibits to the registrant's registration statement on Form 10-SB.
</FN>
</TABLE>
No reports on Form 8-K were filed during the last quarter of the period
covered by this report.
17
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
GOLDEN RIVER RESOURCES INC.
Date: October 11, 2000 By:/S/ DAVID ST. CLAIR DUNN
--------------------------------
David St. Clair Dunn, President
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
Signature Title Date
/S/ DAVID ST. CLAIR DUNN President and director
--------------------------------------------- (Principal Executive Officer) October 11, 2000
David St. Clair Dunn
/S/ ROBERT BRUCE MANERY
--------------------------------------------- Vice President Corporate Development October 11, 2000
Robert Bruce Manery Secretary and director (Principal
Accounting Officer)
/S/ ROGER D. WATTS
--------------------------------------------- Chairman of the Board of Directors October 11, 2000
Roger D. Watts (Principal Financial Officer)
</TABLE>
18
<PAGE>
Consolidated Financial Statements of
Golden River Resources Inc.
and subsidiaries
(A Development Stage Enterprise)
Year ended June 30, 2000
F-1
<PAGE>
Auditors' Report to the stockholders
We have audited the accompanying consolidated balance sheets of Golden River
Resources Inc. and subsidiaries (a development stage enterprise) as at June 30,
2000 and 1999, and the related consolidated statements of loss, stockholders'
deficiency and comprehensive income and cash flows for the years then ended and
the period from June 13, 1997 (inception) to June 30, 2000. 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 audits.
We conducted our audits in accordance with auditing standards generally accepted
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 audits provide 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, 2000 and 1999 and the results of their operations
and their cash flows for the years then ended and the period from June 13, 1997
(inception) to June 30, 2000, in accordance with accounting principles generally
accepted 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 $2,289,943. 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.
/S/ KPMG LLP
Kelowna, Canada
August 18, 2000
F-2
<PAGE>
Golden River Resources Inc.
(A Development Stage Enterprise)
Consolidated Balance Sheet
June 30, 2000, and 1999
$ United States
<TABLE>
<CAPTION>
2000 1999
------------ ------------
<S> <C> <C>
ASSETS
Current assets
Cash $ 19,865 $ 57,149
Prepaid expenses 9,081 6,220
------------ ------------
28,946 63,369
Capital assets (note 4) 8,174 9,428
------------ ------------
$ 37,120 $ 72,797
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities
Accounts payable and accrued liabilities $ 124,129 $ 146,569
Due to shareholders (note 5) 21,468 12,190
Shares to be issued for services (note 8(d)) 10,630 75,000
Debt (note 6 ) 60,350 -
Interim financing payable (note 7) 75,000 -
------------ ------------
291,577 233,759
Subscription for shares (note 8(e)) 25,000 -
Stockholders' Deficiency
Capital stock (note 8) 17,653 1,537,475
Additional paid in capital 1,979,911 -
Deficit accumulated during the development stage (2,289,943) (1,711,359)
Accumulated other comprehensive income
Cumulative translation adjustment 12,922 12,922
------------ ------------
(279,457) (160,962)
Commitment (note 9)
Subsequent events (note 11)
------------ ------------
$ 37,120 $ 72,797
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
On behalf of the Board:
"Roger D. Watts" Director
---------------------------------------
"R. Bruce Manery" Director
---------------------------------------
F-3
<PAGE>
Golden River Resources Inc.
(A Development Stage Enterprise)
Consolidated Statements of Loss
Years ended June 30, 2000 and 1999
$ United States
<TABLE>
<CAPTION>
From Inception
(June 13, 1997)
to June 30, 2000 2000 1999
---------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Expenses
Amortization $ 3,574 $ 2,342 $ 1,232
Consulting fees 229,246 226,425 -
Exploration of mineral properties 358,038 42,065 245,210
Foreign exchange (10,588) (10,588) -
General and administrative 109,437 47,044 35,592
Interest on long term debt 6,667 6,667 -
Option payments to acquire mineral properties 860,489 30,000 576,050
Professional fees 287,947 103,576 152,065
Management fees 182,412 57,104 55,618
Travel and promotion 262,721 73,949 136,384
------------ ------------ ------------
Loss $ 2,289,943 $ 578,584 $ 1,202,151
============ ============ ============
Weighted average number of shares 8,597,173 16,284,097 8,032,055
Loss per share $ (0.27) $ (0.04) $ (0.15)
============ ============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
Golden River Resources Inc.
(A Development Stage Enterprise)
Consolidated Statement of Stockholders' Deficiency and Comprehensive Income
Years ended June 30, 2000 and 1999
$ United States
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Deficit Accumulated
Capital Stock Accumulated during Other
-------------------------- Additional the Development Comprehensive
Shares Amount Paid in Capital Stage Income Total
------------ ------------ --------------- ------------------ ------------- ------------
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)
Reversal of amount accrued in
1999 for share issue costs - 80,000 - - - 80,000
Restate capital stock to equal
par value of shares
outstanding - (1,602,652) 1,602,652 - - -
Issued for services (note 8)(b)) 750,000 750 74,250 - - 75,000
Issued for services (note 8(c)) 1,182,200 1,182 117,038 - - 118,220
Issued for cash at $0.10 per
share, net of share issue
costs 648,000 648 46,721 - - 47,369
Compensation cost of options
issued to non-employees
(note 8(f)) - - 97,500 - - 97,500
Shares issued pursuant to
Mineral Property agreement
@ $0.12 per share (note 9) 250,000 250 29,750 - - 30,000
Expenses incurred by
shareholder on behalf of
the Company (note 7) - - 12,000 - - 12,000
------------ ------------ ------------ ------------ ------------ ------------
17,653,072 17,653 1,979,911 (1,711,359) 12,922 299,127
Comprehensive income:
Loss - - - (578,584) - (578,584)
------------ ------------ ------------ ------------ ------------ ------------
Balance June 30, 2000 17,653,072 $ 17,653 $ 1,979,911 $(2,289,943) $ 12,922 $ (279,457)
============ ============ ============ ============ ============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
Golden River Resources Inc.
(A Development Stage Enterprise)
Consolidated Statements of Cash Flows
Years ended June 30, 2000 and 1999
$ United States
<TABLE>
<CAPTION>
From Inception
(June 13, 1997)
to June 30, 2000 2000 1999
---------------- ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Loss $(2,289,943) $ (578,584) $(1,202,151)
Non cash items
Amortization 3,574 2,342 1,232
Mineral property option payments paid with
share consideration 60,000 30,000 30,000
Compensation cost of options issued to
non-employees 97,500 97,500 -
Amortization of expenses incurred by
shareholder on behalf of the Company 6,667 6,667 -
Consulting fees paid with share consideration 118,220 118,220 -
Accounts payable and accrued liabilities 124,129 57,560 29,789
Other 17,720 11,750 969
------------ ------------ ------------
(1,862,133) (254,545) (1,140,161)
Cash flows from investing activities:
Purchase of capital assets (11,748) (1,088) (10,660)
Cash flows from financing activities:
Issuance of capital stock 1,030,230 57,999 508,851
Subscription for shares 25,000 25,000 -
Proceeds of interim financing 75,000 75,000 -
Proceeds of debt 60,350 60,350 -
Proceeds from realization of net assets acquired
on the business combination with Golden River 690,244 - 690,244
------------ ------------ ------------
1,880,824 218,349 1,199,095
Foreign currency translation adjustment 12,922 - (3,923)
------------ ------------ ------------
Increase (decrease) in cash 19,865 (37,284) 44,351
Cash, beginning of period - 57,149 12,798
------------ ------------ ------------
Cash, end of period $ 19,865 $ 19,865 $ 57,149
============ ============ ============
Supplementary information
Interest paid - - -
Income taxes paid - - -
Non-cash investing and financing activities
Common shares issued for services 193,220 193,220 -
Common shares issued pursuant to
mineral property agreements 60,000 30,000 30,000
Common shares to be issued for share issue costs 10,630 10,630 -
Compensation cost of options issued to non-employees 97,500 97,500 -
Expenses incurred by shareholder on behalf
of the Company 12,000 12,000 -
Reversal of amount accrued in 1999 for share
issue costs 80,000 80,000 -
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
Golden River Resources Inc.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements (page 1)
Years ended June 30, 2000 and 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 was mineral property exploration and development. During
2000, the Company abandoned its remaining mineral property (note 9) and
ceased active operations. 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.
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 $2,289,943.
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. Subsequent to June 30, 2000,
the Company has entered into an agreement to acquire Columbus Networks
Corporation (note 11(b)). If completed as proposed, management intends
that the Company's future active operations will be based on Columbus'
business. Management intends to pursue financings to fund future
operations, although no firm financing sources have been identified. If
management is unable to generate sufficient cash to fund future
operating activities it may be required to reduce operations.
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 was
accounted for in these consolidated financial statements as a reverse
acquisition. Consequently, the 1999 consolidated statements of loss,
stockholders' deficiency and comprehensive income and cash flows
reflect the results from operations and cash flows of Rob Roy, the
legal subsidiary 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.
F-7
<PAGE>
Golden River Resources Inc.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements (page 2)
Years ended June 30, 2000 and 1999
$ United States
--------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
c) Translation of Financial Statements
The functional currency of the Company and its subsidiary, Rob Roy
Resources Ltd., is the United States dollar. The Company's subsidiary
operates in Canada and its operations are conducted in Canadian
currency. The method of translation into United States dollars 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 $1.4839.
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 rate of exchange in effect at the
transaction date.
iv) The net adjustment arising from the translation is included in the
consolidated statement of loss. During the year ended June 30,
1999, the functional currency of Rob Roy was the Canadian dollar.
Accordingly, the net adjustment arising from the translation was
recorded as a separate component of stockholders' deficiency
called "Cumulative translation adjustment" which is included in
"Accumulated 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.
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 and debt as maturity dates
are not determinable and there is no active market for indebtedness of
this nature. The fair value of the interim financing payable
approximates its carrying amount due to the fixed interest rate of the
financing closely approximating floating rates at the financial
statement date. The maximum credit risk exposure for all financial
assets is the carrying amount of that asset.
F-8
<PAGE>
Golden River Resources Inc.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements (page 3)
Years ended June 30, 2000 and 1999
$ United States
--------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
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:
<TABLE>
<CAPTION>
Asset Method Rate
<S> <C> <C>
Furniture and equipment Declining balance 20%
Computer equipment Declining balance 30%
</TABLE>
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 stock
options (note 8(g)), 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."
Adoption of this statement is not expected to impact the Company's
results of operations or financial position.
j) Stock option plan
During 1999, the Company adopted a stock option plan whereby directors,
officers, consultants and employees of the Company were granted the
right to subscribe for up to 10% of the issued and outstanding shares
of the Company. Options issued pursuant to the plan have a vesting
period of three months, expire five years from the date of issue and
have exercise prices equal to or greater than the fair market value of
the Company's common stock at the date of grant.
The Company applies APB Opinion No. 25 in accounting for stock options
granted to employees 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
employee stock options in the financial statements. Options granted to
non-employees are accounted for at their fair value at the date of
grant.
F-9
<PAGE>
Golden River Resources Inc.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements (page 4)
Years ended June 30, 2000 and 1999
$ United States
--------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
k) Income taxes
The Company accounts for income taxes by the asset and liability
method. Under the asset and liability method, deferred tax assets and
liabilities are recognized for the future tax consequences attributable
to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases, and
operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax assets
and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date. Although the Company has
consolidated loss carryforwards of approximately $2,200,000 available,
no amount has been reflected on the balance sheet for deferred income
taxes as any deferred income tax asset has been fully offset by a
valuation allowance.
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 was accounted for in these financial statements
as a reverse acquisition and the purchase method of accounting was 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
<TABLE>
<CAPTION>
<S> <C>
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
==========
</TABLE>
F-10
<PAGE>
Golden River Resources Inc.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements (page 5)
Years ended June 30, 2000 and 1999
$ United States
--------------------------------------------------------------------------------
3. Business combination (continued):
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.
4. CAPITAL ASSETS:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
2000 Accumulated Net book Value
Cost amortization 2000
Furniture and equipment $ 7,717 $ 1,955 $ 5,762
Computer equipment 4,031 1,619 2,412
-------- ------- -------
$ 11,748 $ 3,574 $ 8,174
======== ======= =======
1999 Accumulated Net book Value
Cost amortization 1999
Furniture and equipment 6,629 628 6,001
Computer equipment 4,031 604 3,427
-------- ------- -------
10,660 1,232 9,428
======== ======= =======
</TABLE>
5. DUE TO SHAREHOLDERS:
The amount due to shareholders is unsecured and without interest or stated
terms of repayment.
6. 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.
7. INTERIM FINANCING PAYABLE
On January 24, 2000, the Company signed an interim financing agreement with
an unrelated party for $75,000. The financing is due in full by October 30,
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. The market value of shares at the time of the transfer,
aggregating $12,000, was recorded as prepaid interest and a capital
contribution in the accounts of the Company. This amount is amortized on a
straight line basis over the estimated nine month term of the interim
financing.
F-11
<PAGE>
Golden River Resources Inc.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements (page 6)
Years ended June 30, 2000 and 1999
$ United States
--------------------------------------------------------------------------------
8. 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) During 1999, the Company received services for which it agreed to issue
750,000 common shares at their market value of $0.10 per share. The
shares were issued during 2000.
c) During 2000, the Company received services for which it issued
1,182,200 common shares at their market value of $0.10 per share.
d) During 2000, the Company received services for which it agreed to issue
88,587 common shares at their market value of $0.12 per share.
e) During 2000, the Company received $25,000 for subscriptions for 200,000
common shares of the Company.
f) During 2000, the Company issued 1,700,000 common share stock options.
These stock options have an exercise price of $0.10 per share and
expire on September 23, 2004. All options have vested as at June 30,
2000.
Of the options, 1,300,000 were granted to non-employees. The fair value
of $97,500 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 year.
Had the Company determined compensation cost based on the fair value of
the 400,000 options issued to employees at the grant date under SFAS
No. 123, the Company's loss would have been increased to the pro forma
amounts indicated below:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
2000 1999
Loss As reported $ 582,505 $ 1,202,151
Pro forma 612,505 1,202,151
</TABLE>
The above pro forma amount 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.
F-12
<PAGE>
Golden River Resources Inc.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements (page 7)
Years ended June 30, 2000 and 1999
$ United States
--------------------------------------------------------------------------------
9. COMMITMENT:
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, 2000, the Company has made option payments in the aggregate
amount of $307,500, 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 revised 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. During
2000, the Company issued the initial 250,000 shares required under the
revised terms of the original agreement at $0.12 per share, being the
market value of the stock at the date of issue.
During 2000, the Company elected to terminate the agreement and is no
longer committed to expend the above exploration amounts or issue further
common shares.
F-13
<PAGE>
Golden River Resources Inc.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements (page 8)
Years ended June 30, 2000 and 1999
$ United States
--------------------------------------------------------------------------------
10. RELATED PARTY TRANSACTIONS:
During the year, the Company paid or accrued management fees of $57,104
(1999 - $55,618) to Directors of the Company. The Company also paid
consulting fees of $4,715 (1999 - $nil) to the President of the Company.
Included in accounts payable is $84,417 (1999 - $21,276) payable to three
of the Directors of the Company.
11. SUBSEQUENT EVENTS:
a) The shares referred to in note 8 (d) were issued.
b) On August 15, 2000, the Company signed a letter of intent with Columbus
Networks Corporation ("Columbus") a Canadian private corporation.
Columbus' major activity is the development of electronic recruitment
websites including the Education Canada Network. The letter states the
Company will issue, subsequent to a share consolidation, approximately
11,200,000 common shares for all of the outstanding common shares of
Columbus such that after the transaction the former Columbus
shareholders will own approximately 70% of the outstanding common stock
of the Company. The proposed transaction would be accounted for as a
reverse acquisition with Columbus identified as the acquirer. After the
proposed transaction, the Company's name will be changed to Columbus
Networks Corporation. Implementation of the share exchange is subject
to completion of due diligence, shareholder and regulatory approval and
completion of definitive agreements. The Company anticipates completing
its due diligence by October 15, 2000.
c) Subsequent to June 30, 2000, the Company received a subscription for
750,000 common shares for cash proceeds of $75,000.
12. COMPARATIVE FIGURES:
Certain of the comparative figures have been restated to conform with the
presentation adopted in the current year.
F-14
<PAGE>
APPENDIX C
COLUMBUS AUDITED FINANCIAL STATEMENTS FOR THE PERIOD ENDED JUNE 30, 2000
<PAGE>
FINANCIAL STATEMENTS OF
COLUMBUS NETWORKS CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
YEAR ENDED JUNE 30, 2000
<PAGE>
AUDITORS' REPORT TO THE STOCKHOLDERS
We have audited the accompanying balance sheet of Columbus Networks Corporation
(a development stage enterprise) as at June 30, 2000 and the related statements
of operations, stockholders' equity and comprehensive income and cash flows for
the year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
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 financial statements referred to above present fairly, in
all material respects, the financial position of the Company as at June 30, 2000
and the results of its operations and its cash flows for the year then ended, in
accordance with accounting principles generally accepted in the United States of
America.
SIGNED "KPMG LLP"
Kelowna, Canada
September 26, 2000
1
<PAGE>
COLUMBUS NETWORKS CORPORATION
(A Development Stage Enterprise)
Balance Sheet
June 30, 2000
$ United States
<TABLE>
<CAPTION>
ASSETS
Current assets
<S> <C>
Cash $ 31,986
Accounts receivable 7,239
Prepaid expenses and deposits 5,825
----------
45,050
Fixed assets (note 3) 51,271
Website development (note 4) 19,790
----------
$ 116,111
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities $ 34,459
Unearned revenue 25,115
Payable to directors 825
----------
60,399
Subscription for shares (note 5(b)) 1,689
Stockholders' Equity
Capital stock (note 5) 293,178
Deficit accumulated during the development stage (241,191)
Accumulated other comprehensive income
Cumulative translation adjustment 2,036
----------
54,023
Commitment (note 6)
Subsequent events (note 7)
$ 116,111
==========
</TABLE>
See accompanying notes to financial statements.
Approved by the Board:
, Director
---------------------------------------------------------
, Director
---------------------------------------------------------
2
<PAGE>
COLUMBUS NETWORKS CORPORATION
(A Development Stage Enterprise)
Statement of Operations
$ United States
<TABLE>
<CAPTION>
Predecessor Business (note 2(a))
Year ended Period from Year ended
June 30, 2000 July 1, 1999 to June 30, 1999
December 15, 1999
(unaudited) (unaudited)
<S> <C> <C> <C>
Fee revenue $ 38,151 $ 53,850 $ 83,217
Interest and other income 1,796 - -
----------- ---------- ------------
39,947 53,850 83,217
Expenses
Advertising and promotion 17,280 893 1,527
Amortization - fixed assets 5,208 1,071 1,837
Amortization- website development 486 - -
Automotive 9,808 5,727 7,678
Bank charges 766 125 318
Conferences 7,906 - -
Inducement fee 18,996 - -
Insurance 1,224 - -
Internet fees 15,238 884 2,001
Licences, fees and dues 3,049 - -
Office 8,644 2,039 4,267
Professional fees 18,858 733 993
Rent 12,470 2,088 2,384
Repairs and maintenance 1,612 - -
Telephone 5,049 2,697 2,342
Training 1,022 - -
Travel 13,866 2,090 7,621
Wages and benefits 137,098 - -
Website development 2,558 16,488 20,990
----------- ---------- ------------
281,138 34,835 51,958
(Loss) net income $ (241,191) $ 19,015 $ 31,259
=========== ========== ============
Weighted average number of shares outstanding 3,732,500
Loss per share (note 2(d)) $ (0.06)
===========
See accompanying notes to financial statements.
</TABLE>
3
<PAGE>
COLUMBUS NETWORKS CORPORATION
(A Development Stage Enterprise)
Statement of Stockholders' Equity and Comprehensive Income
Year ended June 30, 2000
$ United States
<TABLE>
<CAPTION>
Deficit
Accumulated Accumulated
During the Other
CAPITAL STOCK Development Comprehensive
--------------------------
Shares Amount Stage Income Total
CLASS A SHARES
<S> <C> <C> <C> <C> <C>
Shares issued for acquisition
of assets on December 15,
1999 (note 1) 4,500,000 $ 1 $ - $ - $ 1
Shares issued for cash at Cdn
$0.25 (US $0.17) per share
on January 28, 2000 1,800,000 303,930 - - 303,930
Shares issued for cash at Cdn
$0.25 (US $0.17) per share
on June 16, 2000 80,000 13,508 - - 13,508
Share issue costs - (24,262) - - (24,262)
--------- ---------- ---------- ------ ----------
6,380,000 293,177 - - 293,177
CLASS B SHARES
Shares issued for acquisition
of assets on December 15,
1999 (note 1) 1,000,000 1 - - 1
--------- ---------- ---------- ------ ----------
7,380,000 293,178 - - 293,178
Comprehensive income
Loss - - (241,191) - (241,191)
Foreign currency
translation adjustment - - - 2,036 2,036
--------- ---------- ---------- ------ ----------
Comprehensive income (loss) - - (241,191) 2,036 (239,155)
--------- ---------- ---------- ------ ----------
Balance, June 30, 2000 7,380,000 $ 293,178 $(241,191) $2,036 $ 54,023
========= ========== ========== ====== ==========
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
COLUMBUS NETWORKS CORPORATION
(A Development Stage Enterprise)
Statement of Cash Flows
Years ended June 30, 2000 and 1999
$ United States
<TABLE>
<CAPTION>
Predecessor Business (note 2(a))
Year ended Period from Year ended
June 30, 2000 July 1, 1999 to June 30, 1999
December 15, 1999
(unaudited) (unaudited)
<S> <C> <C> <C>
Cash provided by (used in):
Operating activities
Cash receipts from customers $ 44,269 $ 48,894 $ 73,129
Cash receipts from interest and other income 1,796 - -
Cash paid to suppliers and employees (235,052) (34,059) (51,759)
----------- ---------- ------------
(188,987) 14,835 21,370
Financing activities
Increase in payable to directors 825 - -
Issuance of shares 293,176 - -
Subscription for shares 1,689 - -
Partners' draws - (4,614) (29,399)
Bank indebtedness - (364) 364
----------- ---------- ------------
295,690 (4,978) (29,035)
Investing activities
Purchase of fixed assets (56,477) (9,857) (1,578)
Website development costs capitalized (20,276) - -
----------- ---------- ------------
(76,753) (9,857) (1,578)
Foreign currency translation adjustment 2,036 - -
----------- ---------- ------------
Increase (decrease) in cash 31,986 - (9,243)
Cash, beginning of year - - 9,243
----------- ---------- ------------
Cash, end of year $ 31,986 $ - $ -
=========== ========== ============
See accompanying notes to financial statements.
Supplementary information
Interest paid $ - $ - $ -
Income taxes paid - - -
Non-cash financing and investing activities
Common shares issued for fixed assets 2 - -
=========== ========== ============
</TABLE>
5
<PAGE>
COLUMBUS NETWORKS CORPORATION
(A Development Stage Enterprise)
Notes to Financial Statements
Year ended June 30, 2000
$ United States
1. OPERATIONS:
The Company was incorporated under the laws of the Province of British
Columbia on March 3, 1999 and was inactive until December 1, 1999. On
December 15, 1999 the Company purchased the undernoted assets from a
partnership, the partners of which are now directors of the Company and
currently own 4,265,000 class A common shares and 1,000,000 class B common
shares of the Company. As the controlling partner of the partnership
acquired a controlling interest in the Company on this transaction and
control of the underlying assets has not changed on the acquisition, this
transaction is accounted for as a common control transaction. Accordingly,
the purchase of the assets has been recorded in the accounts of the Company
at an amount equal to the net book value in the accounts of the partnership
at the transaction date.
<TABLE>
<CAPTION>
<S> <C>
Assets Purchased
Fixed assets $17,783
=======
Consideration Paid
Non-interest bearing demand promissory note $17,781
Issuance of 4,500,000 class A common shares 1
Issuance of 1,000,000 class B common shares 1
-------
$17,783
=======
</TABLE>
The promissory note was repaid during the year ended June 30, 2000.
The major activity of the Company is developing electronic recruitment
websites including the Education Canada Network.
2. ACCOUNTING POLICIES:
(a) Basis of Presentation
In accordance with the rules and regulations of the Securities and
Exchange Commission, the partnership described in note 1 is considered
to be a predecessor entity as the Company's operations are a
continuation of the operation of the partnership. As such, the
predecessor entity's financial statements are required to be presented
in specified U.S. Securities filing documents. Accordingly, the
amounts presented for the period from July 1, 1999 to December 15,
1999 and for the year ended June 30, 1999 in the statements of
operations and cash flows are those of a predecessor partnership.
These amounts are unaudited, however, in the opinion of management,
all adjustments (consisting of normal recurring items) necessary for
the fair presentation of these unaudited amounts in conformity with
accounting principles generally accepted in the United States have
been made.
6
<PAGE>
COLUMBUS NETWORKS CORPORATION
(A Development Stage Enterprise)
Notes to Financial Statements
Year ended June 30, 2000
$ United States
2. ACCOUNTING POLICIES (CONTINUED):
(b) Translation of Financial Statements
The Company operates in Canada and its operations, and therefore its
functional currency, are conducted in Canadian currency.
These financial statements have been translated into United States
dollars. 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 U.S. $1.00 per Cdn.
$1.4806.
ii) Revenue and expenses are translated at the exchange rate in
effect at the transaction date.
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) 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.
(d) Loss Per Share
Loss per share has been calculated using the weighted average number
of common shares outstanding during the period.
(e) Fixed assets
Fixed assets are stated at cost. Amortization is provided using the
straight-line method at the annual rates set out in note 3.
(f) Website Development
Website development costs incurred in the planning stage are expensed
as incurred. The costs of application and infrastructure development
incurred subsequent to the preliminary project stage, and that have
received management approval for further development, and are
capitalized and amortized on the straight-line method over their
estimated useful life (estimated to be three years). Once developed,
operating costs are expensed as incurred.
7
<PAGE>
COLUMBUS NETWORKS CORPORATION
(A Development Stage Enterprise)
Notes to Financial Statements
Year ended June 30, 2000
$ United States
2. ACCOUNTING POLICIES (CONTINUED):
(g) Revenue recognition
Revenue earned in connection with website subscriptions is recognized
over the term of the subscription. Revenue received in advance of
reaching the recognition point is recorded as unearned revenue.
(h) Income taxes
The Company accounts for income taxes by the asset and liability
method. Under the asset and liability method, deferred tax assets and
liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying
amounts of existing assets and their respective tax bases, and
operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax assets
and liabilities of a change in tax rates is recognized in income in
the period that includes the enactment date. Although the Company has
loss carryforwards available, no amount has been reflected on the
balance sheet for deferred income taxes as any deferred income tax
asset has been fully offset by a valuation allowance.
(i) Financial instruments
The fair values of cash, accounts receivable, accounts payable and
accrued liabilities and payable to directors approximate their
carrying values due to the relatively short periods to maturity of
these instruments. The maximum credit risk exposure for all financial
assets is the carrying amount of that asset.
(j) Accounting Standards Change
In June 1998 the Financial Accounting Standards Board issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities."
Adoption of this statement is not expected to impact the Company's
results of operations or financial position as the Company has not, to
date, entered into any derivative contracts.
(k) Stock option plan
During the year the Company adopted a stock option plan whereby
directors, officers, employees and consultants can be granted the
right to subscribe for common shares of the Company. The maximum
number of shares subject to the plan and the exercise price shall be
determined by the directors, but shall be subject to the rules of any
stock exchange on which the common shares are then listed or other
regulatory body having jurisdiction. The vesting period and expiry
date of options shall be determined by the board of directors. As at
June 30, 2000 there are no options outstanding under the plan.
8
<PAGE>
COLUMBUS NETWORKS CORPORATION
(A Development Stage Enterprise)
Notes to Financial Statements
Year ended June 30, 2000
$ United States
2. ACCOUNTING POLICIES (CONTINUED):
(k) Stock option plan (continued)
The Company applies APB Opinion No. 25 in accounting for stock options
granted to employees whereby compensation cost is recorded only to the
extent that the market price exceeds the exercise price at the date of
grant. Options granted to non-employees are accounted for at their
fair value at the date of grant.
3. FIXED ASSETS:
<TABLE>
<CAPTION>
Accumulated Net Book
Rate Cost Amortization Value
<S> <C> <C> <C> <C>
Office furniture and equipment 20% $ 12,025 $ 801 $ 11,224
Computer equipment 33% 33,619 3,495 30,124
Computer software 33% 7,213 701 6,512
Leasehold improvements 20% 3,622 211 3,411
------------ ------------ ------------
$ 56,479 $ 5,208 $ 51,271
============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
4. WEBSITE DEVELOPMENT:
<S> <C>
Capitalized costs $ 20,276
Accumulated amortization 486
------------
$ 19,790
============
</TABLE>
9
<PAGE>
COLUMBUS NETWORKS CORPORATION
(A Development Stage Enterprise)
Notes to Financial Statements
Year ended June 30, 2000
$ United States
5. CAPITAL STOCK:
a) Authorized:
100,000,000 Class A common shares with no par value
1,000,000 Class B common non-voting shares with no par value
1,000,000 Class C common non-voting shares with no par value
1,000,000 Class D common non-voting shares with no par value
1,000,000 Class E redeemable non-voting preferred shares with a par
value of $100 and a redemption value of $100 each
10,000,000 Class F redeemable, retractable non-voting preferred
shares with a par value of $0.01 each
10,000,000 Class G redeemable, retractable non-voting preferred
shares with a par value of $0.01 each
1,000,000 Class H redeemable, retractable non-voting preferred
shares with a par value of $0.01 and a redemption value of $100
each
The Class F and G shares shall only be issued as consideration for the
acquisition of property. The redemption value of the shares shall be
determined by formula at the time of issuance. The Class F and G
shares are only entitled to non-cumulative dividends as described
below unless the Company fails to redeem the shares at the request of
the holder(s). In this event, the Class F and G shares are entitled to
a 9% annual cumulative dividend based on the redemption amount of the
shares.
The class H shares are non-participating as to dividends unless the
Company fails to redeem the shares at the request of the holder(s). In
this event, the Class H shares are entitled to a 9% annual cumulative
dividend based on the redemption amount of the shares.
The Class A, B, C, D, E, F and G shares are entitled to dividends at
the discretion of the directors, but dividends shall not be declared
if doing so would reduce the value of the net assets of the Company
below the aggregate redemption amounts of the issued Class F,G and H
shares.
b) Subscription for shares:
During the year, the Company received a subscription for 10,000 Class
A common shares at CDN $0.25 (US $0.17) per share. The shares were
issued subsequent to June 30, 2000.
6. COMMITMENT:
The Company rents its premises under a lease expiring on October 31, 2001.
Future minimum annual lease payments over the remaining term of the lease
are:
2001 $ 25,384
2002 8,461
10
<PAGE>
COLUMBUS NETWORKS CORPORATION
(A Development Stage Enterprise)
Notes to Financial Statements
Year ended June 30, 2000
$ United States
7. SUBSEQUENT EVENTS:
a) On September 15, 2000 the Company entered into a letter of intent
which proposes that all of the shareholders of the Company will
exchange their common shares for approximately 70% of the common
shares of Golden River Resources Inc., the shares of which are listed
and posted for trading on the facilities of the over the counter
bulletin board market in the United States. The shares of Golden River
Resources Inc. received by the shareholders of the Company may be
subject to escrow. This proposed transaction is subject to both
shareholder and regulatory approval.
b) Subsequent to June 30, 2000, the Company issued 543,800 Class A common
shares for aggregate cash proceeds of $91,821.
c) On August 30, 2000, the Company issued 100,000 Class A common shares
in exchange for ownership of a website and associated domain names.
The fair value of the shares issued, aggregating $16,885, approximated
the fair value of the assets acquired.
d) Subsequent to June 30, 2000, the Company loaned $18,236 to the
President and two directors of the Company. The loans do not bear
interest, are unsecured and are demand in nature.
8. STATEMENT OF CASH FLOWS:
Cash flows from operating activities prepared under the indirect method are
as follows:
<TABLE>
<CAPTION>
Predecessor Business (note 2(a))
Year ended Period from Year ended
June 30, 2000 July 1, 1999 to June 30, 1999
December 15, 1999
(unaudited) (unaudited)
<S> <C> <C> <C>
(Loss) net income $ (241,191) $ 19,015 $ 31,259
Non-cash item:
Amortization 5,694 1,071 1,837
Accounts receivable (7,239) 4,545 1,512
Prepaid expenses and deposits (5,825) - -
Accounts payable and accrued liabilities 34,459 (295) (1,638)
Unearned revenue 25,115 (9,501) (11,600)
------------- ---------- ------------
$ (188,987) $ 14,835 $ 21,370
============= ========== ============
</TABLE>
11
<PAGE>
APPENDIX D
GOLDEN RIVER UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
<PAGE>
Unaudited Pro Forma Consolidated Financial Information for
GOLDEN RIVER RESOURCES INC.
and subsidiaries
(A Development Stage Enterprise)
Year ended June 30, 2000
<PAGE>
GOLDEN RIVER RESOURCES INC.
Unaudited pro forma consolidated and combined financial information
The following unaudited pro forma consolidated and combined financial
information gives effect to the acquisition of Columbus Networks Corporation
("Columbus") by Golden River Resources Inc. ("Golden River"), which acquisition
is proposed to occur effective November 30, 2000. Under the proposed terms, the
Columbus shareholders will obtain control of Golden River through the exchange
in their shares of Columbus for shares of Golden River. Accordingly, for
accounting purposes the acquisition of Columbus has been accounted for in these
unaudited pro forma consolidated financial statements by the purchase method as
a reverse acquisition in accordance with APB Opinion No. 16.
Under the purchase method of accounting for reverse acquisitions, the fair value
of the purchase consideration issued is allocated to the assets acquired and
liabilities assumed based on their estimated fair values. As Columbus, the
accounting acquirer, is a closely held private company with no quoted market
price for its shares, the purchase price has been estimated based on the fair
value of Golden River's net assets. Management has estimated that there is no
material difference between the book values and the fair values of Golden
River's net assets and, accordingly, the transaction has been recorded at the
net book values of Golden River's net assets at June 30, 2000.
The unaudited pro forma consolidated balance sheet as at June 30, 2000 gives
effect to the acquisition as if it occurred on June 30, 2000. The Golden River
and Columbus balance sheet information was derived from their audited June 30,
2000 balance sheets. The unaudited pro forma combined statement of operations
gives pro forma effect to the acquisition as if the transaction was consummated
as of July 1, 1999. The Golden River and Columbus statement of operations
information was derived from their audited statements of operations for the year
ended June 30, 2000.
The unaudited pro forma consolidated and combined financial information has been
prepared by management and is not necessarily indicative of the consolidated
financial position or combined results of operations in future periods or the
results that actually would have been realized had Golden River and Columbus
been a combined company during the specified periods. The pro forma combined
statement of operations does not include any material non-recurring charges or
credits directly attributable to the transaction. The unaudited pro forma
consolidated and combined financial information, including the notes thereto,
should be read in conjunction with, the historical consolidated financial
statements of Golden River included in its Form 10-KSB filed October 13, 2000
with the Securities and Exchange Commission and the historical financial
statements of Columbus attached to this proxy statement.
<PAGE>
GOLDEN RIVER RESOURCES INC.
(A Development Stage Enterprise)
Unaudited Pro Forma Consolidated Balance Sheet
June 30, 2000
$ United States
<TABLE>
<CAPTION>
Historical Pro Forma
Golden River Columbus Adjustments Consolidated
(note 2)
<S> <C> <C> <C> <C>
Assets
Current assets
Cash $ 19,865 $ 31,986 $ 500,000 (d)$ 551,851
Accounts receivable - 7,239 - 7,239
Prepaid expenses and deposits 9,081 5,825 - 14,906
------------ ---------- ------------ ----------
28,946 45,050 500,000 573,996
Capital assets 8,174 51,271 - 59,445
Website development - 19,790 - 19,790
------------ ---------- ------------ ----------
$ 37,120 $ 116,111 $ 500,000 $ 653,231
============ ========== ============ ==========
Liabilities and Stockholders' Equity (Deficiency)
Current liabilities
Accounts payable and
accrued liabilities $ 124,129 $ 34,459 $ - $ 58,588
Due to shareholders 21,468 825 - 22,293
Shares to be issued for services 10,630 - - 10,630
Debt 60,350 - - 60,350
Interim financing payable 75,000 - - 75,000
Unearned revenue - 25,115 - 25,115
------------ ---------- ------------ ----------
291,577 60,399 - 351,976
Subscription for shares 25,000 1,689 - 26,689
Stockholders' Equity (Deficiency)
Capital stock 17,653 293,178 356,529 (a)
(356,529)(a)
1 (b)
(17,653)(c)
500,000 (d)
(192,000)(e)
(580,560)(f) 20,619
Additional paid in capital 1,979,911 - (1,979,911)(c)
192,000 (e)
580,560 (f) 772,560
Deficit accumulated during the
development stage (2,289,943) (241,191) (279,458)(b)
2,289,943 (c) (520,649)
Accumulated other comprehensive
income
Cumulative translation adjustment 12,922 2,036 (12,922)(c) 2,036
------------ ---------- ------------ ----------
(279,457) 54,023 500,000 274,566
------------ ---------- ------------ ----------
$ 37,120 $ 116,111 $ 500,000 $ 653,231
============ ========== ============ ==========
</TABLE>
See accompanying notes to financial information.
On behalf of the Board:
"ROGER D. WATTS" Director
-----------------------------------------
"R. BRUCE MANERY" Director
---------------------------------------
<PAGE>
GOLDEN RIVER RESOURCES INC.
(A Development Stage Enterprise)
Unaudited Pro Forma Combined Statement of Operations
Year ended June 30, 2000
$ United States
<TABLE>
<CAPTION>
Historical Pro Forma
Golden River Columbus Adjustments Combined
<S> <C> <C> <C>
Fee revenue $ - $ 38,151 $ $ 38,151
Interest and other income - 1,796 1,796
------------ ---------- ------------ ----------
- 39,947 39,947
Expenses
Advertising and promotion - 17,280 17,280
Amortization - fixed assets 2,342 5,208 7,550
Amortization - website development - 486 486
Automotive - 9,808 9,808
Bank charges - 766 766
Conferences - 7,906 7,906
Consulting fees 226,425 - 226,425
Exploration of mineral properties 42,065 - 42,065
Foreign exchange (10,588) - (10,588)
General and administrative 47,044 - 47,044
Inducement fee - 18,996 18,996
Insurance - 1,224 1,224
Interest on long term debt 6,667 - 6,667
Internet fees - 15,238 15,238
Licenses, fees and dues - 3,049 3,049
Management fees 57,104 - 57,104
Office - 8,644 8,644
Option payments to acquire mineral
properties 30,000 - 30,000
Professional fees 103,576 18,858 122,434
Rent - 12,470 12,470
Repairs and maintenance - 1,612 1,612
Telephone - 5,049 5,049
Training - 1,022 1,022
Travel and promotion 73,949 13,866 87,815
Wages and benefits - 137,098 137,098
Website development - 2,558 2,558
------------ ---------- ------------ ----------
578,584 281,138 859,722
------------ ---------- ------------ ----------
Loss $ (578,584) $(241,191) $ $(819,775)
============ ========== ============ ==========
Weighted average number of shares 16,284,097 20,276,499
Loss per share (note 3) $ (0.04) $ (0.04)
============ ===========
</TABLE>
See accompanying notes to financial information.
<PAGE>
GOLDEN RIVER RESOURCES INC.
(A Development Stage Enterprise)
Notes to Unaudited Pro Forma Consolidated and Combined Financial Statements
Year ended June 30, 2000
$ United States
--------------------------------------------------------------------------------
1. BASIS OF PRESENTATION:
These pro forma consolidated and combined financial statements have been
prepared in accordance with generally accepted accounting principles in the
United States.
Golden River proposes to acquire Columbus effective November 30, 2000.
Immediately prior to the transaction, Golden River's outstanding common
stock will be rolled back on the basis of one common share for each four
outstanding common shares. Golden River will then issue 14,955,475 shares
of its common stock to the Columbus stockholders for all of the outstanding
common stock of Columbus.
The acquisition will be accounted for under the purchase method of
accounting for reverse acquisitions in accordance with APB Opinion No. 16.
Under the purchase method of accounting for reverse acquisitions, the
purchase price is allocated to the assets acquired and liabilities assumed
based on their estimated fair values. As Columbus, the accounting acquirer,
is a closely held private company with no quoted market price for its
shares, the purchase price is based upon the fair value of Golden River's
net assets. Management has estimated that there is no material difference
between the book values and the fair values of Golden River's net assets.
Accordingly, the book values of Golden River's assets and liabilities have
been combined with the historical values of the assets and liabilities of
Columbus in the unaudited pro forma consolidated financial information.
The actual measurement and allocation of the purchase price will depend on
Golden River's net assets on the closing date. Consequently, the actual
measurement and allocation of the purchase price could differ from that
presented in the unaudited pro forma consolidated financial statements.
2. PRO FORMA ADJUSTMENTS:
The pro forma consolidated balance sheet gives effect to the following
transactions as if they had occurred on June 30, 2000:
(a) To reflect the issuance of 2,097,232 Columbus Class A common shares at
a deemed value of $0.17 per share for brokerage services immediately
prior to the share exchange.
(b) To reflect the issuance of 14,955,475 shares of Golden River common
stock for all of the outstanding common stock of Columbus. As Golden
River has a net asset deficiency, the amount of this deficiency has
been recorded as a capital transaction in stockholders' equity.
(c) To reflect the elimination of the stockholders' deficiency of Golden
River upon consummation of the transaction.
<PAGE>
GOLDEN RIVER RESOURCES INC.
(A Development Stage Enterprise)
Notes to Unaudited Pro Forma Combined Financial Statements (continued)
Year ended June 30, 2000
$ United States
--------------------------------------------------------------------------------
2. PRO FORMA ADJUSTMENTS (CONTINUED):
(d) To reflect stock subscriptions for 1,250,000 common shares of Golden
River for aggregate cash proceeds of $500,000 received prior to share
exchange in anticipation of the transaction, which shares will be
issued on completion of the transaction.
(e) To reflect the fair value of 1,250,000 share purchase warrants granted
in conjunction with the share issuance described in note 2 d). The
warrants have an exercise price of $0.40 per share and are exercisable
for one year from the date of grant. The warrants are assumed to be
granted immediately subsequent to the share exchange.
The fair value of $192,000 of these warrants has been determined using
the Black Scholes Method assuming the expected life to be equal to the
life of the warrants, volatility factor of 95%, risk free rate of 6.0%
and no assumed dividend rate. The fair value of the warrants has been
recorded as a share issuance cost for purposes of these pro forma
financial statements.
(f) To restate capital stock to equal par value of common stock
outstanding.
3. PRO FORMA LOSS PER SHARE:
The unaudited pro forma combined loss per share is based upon the weighted
average number of outstanding shares of common stock of Golden River during
the year presented adjusted for the roll back, plus the following share
issuances as if the acquisition occurred at the beginning of the year
presented:
i) the number of shares issued to consummate the acquisition of Columbus
described in note 2 b); and
ii) the common shares issued for cash described in note 2 d).
<PAGE>
FORM OF PROXY
<PAGE>
PROXY SOLICITED BY THE BOARD OF DIRECTORS
OF GOLDEN RIVER RESOURCES INC.
FOR A SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 25, 2000
The undersigned hereby constitutes and appoints Roger Watts and Bruce Manery,
the true and lawful attorneys and proxies of the undersigned with full power of
substitution and appointment, for and in the name, place, and stead of the
undersigned to act for and to vote all of the undersigned's shares of Common
Stock of Golden River Resources Inc. (the "Company") at a Special Meeting of
Shareholders to be held on November 25, 2000, at 10:30 a.m., local time, at 2420
Pandosy Street, Kelowna, British Columbia, Canada, and at any and all
adjournments thereof, for the purpose of considering and acting upon:
1. Proposal to approve the acquisition of Columbus Networks Corporation:
|_|For |_|Against |_|Abstain
2. Proposal to approve a 1-for-4 reverse split of the issued and outstanding
common stock:
|_|For |_|Against |_|Abstain
3. Proposal to changing the name of the Company to "Columbus Networks
Corporation":
|_|For |_|Against |_|Abstain
4. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE UNDERSIGNED
SHAREHOLDER. IF NO DIRECTION IS GIVEN, THEN THE SHARES REPRESENTED BY THIS PROXY
WILL BE VOTED FOR PROPOSALS 1, 2, AND 3.
It is understood that this Proxy confers discretionary authority in respect to
matters not known or determined at the time of the mailing of the Notice of
Special Meeting of Shareholders to the undersigned. THE PROXIES AND ATTORNEYS
INTEND TO VOTE THE SHARES REPRESENTED BY THIS PROXY ON SUCH MATTERS, IF ANY, AS
DETERMINED BY THE BOARD OF DIRECTORS.
The undersigned hereby acknowledges receipt of the Notice of Special Meeting of
Shareholders and Proxy Statement.
Dated and signed ______________, 2000
-----------------------------------
Signature
-----------------------------------
Signature
Signature(s) should agree with the name(s) stenciled hereon. Executors,
administrators, trustees, guardians, and attorneys should indicate when signing.
Attorneys should submit powers of attorney.
PROXIES MUST BE SIGNED AND DATED IN ORDER TO BE VALID. PLEASE SIGN AND RETURN
THIS PROXY IN THE ENVELOPE PROVIDED. THE GIVING OF A PROXY WILL NOT AFFECT YOUR
RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING. YOUR COMPLETED PROXY MAY BE
FAXED TO (250) 861-1971.
<PAGE>
