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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
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FORM 10-QSB
[ x ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from:
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Commission file number 333-86331
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PAXTON MINING CORPORATION
(Exact name of Registrant as specified in its charter.)
NEVADA 88-0433489
(State of other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
400 Burrard Street
Suite 1950
Vancouver, British Columbia V6C 3A6
(Address of principal executive offices, including zip code.)
(604) 605-0885
Registrant's telephone number, including area code.
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Act of
1934 during the preceding 12 months (or for such shorter period that
the Registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. YES [ ]
NO [ x ]
The number of shares outstanding of the Registrant's Common Stock, no
par value per share, at March 31, 2000 was 5,510,200 shares.
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<PAGE> 2
PART I
ITEM 1. FINANCIAL STATEMENTS.
ACCOUNTANT'S REVIEW REPORT
The Board of Directors
Paxton Mining Corporation
Las Vegas, Nevada
We have reviewed the accompanying balance sheet of Paxton Mining
Corporation (an exploration stage enterprise), as of March 31, 2000,
and the related statements of operations, stockholders' equity, and
cash flows for the nine month period ended March 31, 2000, and for the
period from June 10, 1999 (inception) to March 31, 2000. All
information included in these financial statements is the
representation of the management of Paxton Mining Corporation.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of
interim financial information consists principally of applying
analytical procedures to financial data and making inquiries of persons
responsible for financial and accounting matters. It is substantially
less in scope than an audit in accordance with generally accepted
auditing standards, the objective of which is the expression of an
opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to the accompanying financial statements in order
for them to be in conformity with generally accepted accounting
principles.
The financial statements for the year ended June 30, 1999 were audited
by us and we expressed an unqualified opinion on it in our report dated
December 1, 1999. We have not performed any auditing procedures since
that date.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 2,
the Company has been in the exploration stage since its inception on
June 10, 1999. Realization of a major portion of the assets is
dependent upon the Company's ability to meet its future financing
requirements, and the success of future operations. These factors
raise substantial doubt about the Company's ability to continue as a
going concern. Management's plans regarding those matters also are
described in Note 2. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ Williams & Webster, P.S.
Williams & Webster, P.S.
Certified Public Accountants
Spokane, Washington
May 4, 2000
1
<PAGE> 3
PAXTON MINING CORPORATION
(AN EXPLORATION STAGE ENTERPRISE)
BALANCE SHEETS
March 31, June 30,
2000 1999
(Unaudited)
ASSETS
CURRENT ASSETS
Cash $ 6,984 $ 100
---------- ----------
Total Current Assets 6,984 100
---------- ----------
PROPERTY AND EQUIPMENT
Office equipment 7,969 -
Less accumulated depreciation (79) -
---------- ----------
Total Property and Equipment 7,890 -
---------- ----------
OTHER ASSETS
Mining claims 262 262
---------- ----------
TOTAL ASSETS $ 15,136 $ 362
========== ==========
LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 5,495 $ -
Loans to a related party - 12,000
---------- ----------
Total Current Liabilities 5,495 12,000
---------- ----------
COMMITMENTS AND CONTINGENCIES - -
---------- ----------
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock,100,000,000 shares
authorized, $0.00001 par value;
5,510,200 and 5,000,000 shares
issued and outstanding,
respectively 55 50
Additional paid-in-capital 325,965 274,950
Deficit accumulated during the
exploration stage (316,379) (286,638)
---------- ----------
TOTAL STOCKHOLDERS' EQUITY
(DEFICIT) 9,641 (11,638)
---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY (DEFICIT) $ 15,136 $ 362
========== ==========
See accompanying notes and accountant's review report.
2
<PAGE> 4
PAXTON MINING CORPORATION
(AN EXPLORATION STAGE ENTERPRISE)
STATEMENT OF OPERATIONS
For the For the For the
Three Nine Period
Months Month from 06/10/99
Period Period Inception (inception)
Ending Ending Through Through
03/31/000 03/31/00 06/30/99 03/31/00
(Unaudited) (Unaudited) (Unaudited)
REVENUES $ - $ - $ - $ -
-------- --------- ---------- ----------
EXPENSES
Executive
compensation - - 273,356 273,356
Filing fees 105 105 400 505
Legal and
professional 4,693 25,288 11,600 36,888
Office expense 1,635 3,217 31 3,248
Depreciation expense 79 79 - 79
Transfer agent 1,052 1,052 - 1,052
Mining exploration
expense - - 1,251 1,251
-------- --------- ---------- ----------
TOTAL EXPENSES 7,564 29,741 286,638 316,379
-------- --------- ---------- ----------
LOSS FROM
OPERATIONS (7,564) (29,741) (286,638) (316,379)
INCOME TAXES - - - -
-------- --------- ---------- ----------
NET LOSS $ (7,564) $ (29,741) $ (286,638) $ (316,379)
======== ========= ========== ==========
BASIC AND DILUTED
NET LOSS PER
COMMON SHARE $ nil $ (0.01) $ (0.06) $ (0.06)
======== ========= ========== ==========
BASIC AND DILUTED
WEIGHTED AVERAGE
NUMBER OF COMMON
STOCK SHARES
OUTSTANDING 5,510,200 5,173,170 5,000,000 5,160,843
========= ========= ========== ==========
See accompanying notes and accountant's review report.
3
<PAGE> 5
PAXTON MINING CORPORATION
(AN EXPLORATION ENTERPRISE)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
Accumulated
Common Stock Deficit Total
Additional During Stockholders'
Number Paid-in Exploration Equity
of Shares Amount Capital Stage (Deficit)
Issuance of common stock
for compensation and in
payment of advances at
approximately $.055
per share 5,000,000 $ 50 $ 274,950 $ - $ 275,000
Loss for year ending,
June 30, 1999 - - - (286,638) (286,638)
--------- ---- --------- ---------- ----------
Balance
June 30, 1999 5,000,000 50 274,950 (286,638) (11,638)
Issuance of common
stock for cash at $.10
per share 510,200 55 1,015 - 51,020
Loss for the period
ending March 31, 2000 - - - (29,741) (29,741)
--------- ---- --------- --------- ----------
Balance, March 31, 2000
(Unaudited) 5,510,200 $ 55 $ 325,965 $ (316,379) $ 9,641
========= ==== ========= ========== ==========
See accompanying notes and accountant's review report.
4
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PAXTON MINING CORPORATION
(AN EXPLORATION STAGE ENTERPRISE)
STATEMENT OF CASH FLOWS
For the For the 06/10/99
Nine-Month Period From (Inception)
Period Ended Inception Through
03/31/00 Through (03/31/00)
(Unaudited) 06/30/99 (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (29,741) $ (286,638) $ (316,379)
Adjustments to reconcile
net loss to net cash used
by operating activities:
Payment of expenses from
issuance of stock - 274,638 274,638
Depreciation expense 79 - 79
Changes in assets and
liabilities:
Accounts payable 5,495 - 5,495
--------- ---------- ----------
Net cash (used) in operating
activities (24,167) (12,000) (36,167)
--------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in property
and equipment (7,969) - (7,969)
---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from advances - 100 100
Proceeds from short-term
loan payable 3,000 12,000 15,000
Payments made on short-term
loan payable (15,000) - (15,000)
Proceeds from stock
issuance 51,020 - 51,020
--------- ---------- ----------
Net cash provided by
financing activities 39,020 12,100 51,120
--------- ---------- ----------
Change in cash 6,884 100 6,984
Cash, beginning of period 100 - -
--------- ---------- ----------
Cash, end of period $ 6,984 $ 100 $ 6,984
========= ========== ==========
Supplemental disclosures:
Interest paid in cash $ - $ - $ -
========= ========== ==========
Income taxes paid in cash $ - $ - $ -
========= ========== ==========
NON-CASH TRANSACTIONS:
Stock issued in payment of
compensation and other
expenses $ - $ 274,638 $ 274,638
Stock issued in payment
of advances $ - $ 100 $ 100
Stock issued in payment
of mining claims $ - $ 262 $ 262
See accompanying notes and accountants's review report.
5
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PAXTON MINING CORPORATION
(AN EXPLORATION STAGE ENTERPRISE)
NOTES TO THE FINANCIAL STATEMENTS
March 31, 2000 and June 30, 1999
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Paxton Mining Corporation (hereinafter "the Company") was
incorporated on June 10, 1999, under the laws of the State of Nevada
for the purpose of acquiring, exploring and developing mining
properties. The Company maintains offices in Las Vegas, Nevada and
in Vancouver, British Columbia. The Company's fiscal year end is
June 30.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies of Paxton Mining
Corporation is presented to assist in understanding the Company's
financial statements. The financial statements and notes are
representations of the Company's management which is responsible for
their integrity and objectivity. These accounting policies conform
to generally accepted accounting principles and have been
consistently applied in the preparation of the financial statements.
Exploration Stage Activities
The Company has been in the exploration stage since its formation in
June 1999 and has not yet realized any revenues from its planned
operations. It is primarily engaged in the acquisition, exploration
and development of mining properties. Upon location of a commercial
minable reserve, the Company plans to actively prepare the site for
its extraction and enter a development stage.
Going Concern
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern.
As shown in the accompanying financial statements, the Company
incurred net losses of $29,741 and $286,638 for the nine months ended
March 31, 2000 and the year ended June 30, 1999, respectively, and
had no sales. The future of the Company is dependent upon its ability
to obtain financing and upon future successful explorations for and
profitable operations from the development of mineral properties.
Management has plans to seek additional capital through a private
placement and public offering of its common stock. The financial
statements do not include any adjustments relating to the
recoverability and classification of recorded assets, or the amounts
and classification of liabilities that might be necessary in the
event the Company cannot continue in existence.
6
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PAXTON MINING CORPORATION
(AN EXPLORATION STAGE ENTERPRISE)
NOTES TO THE FINANCIAL STATEMENTS
March 31, 2000 and June 30, 1999
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Accounting Method
The Company's financial statements are prepared using the accrual
method of accounting.
Loss Per Share
Loss per share was computed by dividing the net loss by the weighted
average number of shares outstanding during the period. The weighted
average number of shares was calculated by taking the number of
shares outstanding and weighting them by the amount of time that they
were outstanding. Diluted net loss per share is the same as basic
net loss per share as there are no common stock equivalents to be
included in the calculation.
Cash and Cash Equivalents
For purposes of the Statement of Cash Flows, the Company considers
all short-term debt securities purchased with a maturity of three
months or less to be cash equivalents.
Provision for Taxes
At March 31, 2000, and June 30, 1999, the Company had cumulative net
operating losses of approximately $316,000 and $286,000,
respectively. No provision for taxes or tax benefit has been
reported in the financial statements, as there is not a measurable
means of assessing future profits or losses.
Use of Estimates
The process of preparing financial statements in conformity with
generally accepted accounting principles requires the use of
estimates and assumptions regarding certain types of assets,
liabilities, revenues, and expenses. Such estimates primarily relate
to unsettled transactions and events as of the date of the financial
statements. Accordingly, upon settlement, actual results may differ
from estimated amounts.
Impaired Asset Policy
In March 1995, the Financial Accounting Standards Board issued a
statement titled "Accounting for Impairment of Long-lived Assets."
In complying with this standard, the Company reviews its long-lived
assets quarterly to determine if any events or changes in
circumstances have transpired which indicate that the carrying value
of its assets may not be recoverable. The Company determines
impairment by comparing the undiscounted future cash flows estimated
to be generated by its assets to their respective carrying amounts.
The Company does not believe any adjustments are needed to the
carrying value of its assets at March 31, 2000, or June 30, 1999.
7
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PAXTON MINING CORPORATION
(AN EXPLORATION STAGE ENTERPRISE)
NOTES TO THE FINANCIAL STATEMENTS
March 31, 2000 and June 30, 1999
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Exploration Costs
In accordance with generally accepted accounting principles, the
Company will expense exploration costs as incurred.
Interim Financial Statements
The interim financial statements as of and for the nine months ended
March 31, 2000 included herein have been prepared for the Company
without audit. They reflect all adjustments, which are, in the
opinion of management, necessary to present fairly the results of
operations for these periods. All such adjustments are normal
recurring adjustments. The results of operations for the periods
presented are not necessarily indicative of the results to be
expected for the full fiscal year.
Derivative Instruments
In June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 133,
"Accounting for Derivative Instruments and Hedging Activities." This
new standard establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments
embedded in other contracts, and for hedging activities. It requires
that an entity recognize all derivatives as either assets or
liabilities in the balance sheet and measure those instruments at
fair value.
At March 31, 2000, the Company has not engaged in any transactions
that would be considered derivative instruments or hedging
activities.
NOTE 3 - MINING CLAIMS
In June 1999, the Company acquired 100% of the rights, titles and
interests in three mining claims in the Twelve Mile Creek, Kalso
Area, Slocan Mining Division, B.C. Canada (See Note 5).
NOTE 4 - PROPERTY AND EQUIPMENT
Office equipment is stated at cost. Depreciation expense is computed
using the straight-line method over five years and amounted to $79
for the period ending March 31, 2000, and $0 for the period ended
June 30, 1999.
8<PAGE> 10
PAXTON MINING CORPORATION
(AN EXPLORATION STAGE ENTERPRISE)
NOTES TO THE FINANCIAL STATEMENTS
March 31, 2000 and June 30, 1999
NOTE 5 - COMMON STOCK
On December 29, 1999, the Company issued 510,200 shares of common
stock in a public offering for $0.10 per share.
On June 20, 1999, 5,000,000 shares of common stock were issued to
officers and directors only. There was no public offering of any
securities at this time. The above referenced shares were issued in
payment of compensation in the amount of $273,356 and repayment of
mining claim recording fees of $262, expenses of $1,282 and advances
of $100. These shares were issued pursuant to exemption from
registration contained in Section 4 (2) of the Securities Act of
1933.
In June 1999, the Company, through Hugh Grenfal, president and a
member of the board of directors, acquired 100% of the rights, titles
and interests in three mining claims in the Twelve Mile Creek, Kalso
Area, Slocan Mining Division, B.C. Canada in exchange for $7 in cash.
In addition, payment of $255 was required to record the three mining
claims totaling 36 units. These amounts were paid by the
shareholders and repaid by the Company in the form of stock as
denoted above. The Company, through Mr. Grenfal, exercised an option
and acquired the mining claims. The claims are recorded in Mr.
Grenfal's name for tax purposes, however, title to the claims has
been conveyed to the Company via an unrecorded deed.
NOTE 6 - RELATED PARTIES
The Company occupies office space provided by the president of the
Company in his capacity as vice president and director of Callinan
Mines Limited at no charge. The value of this space is not
considered materially significant for financial reporting purposes.
The president of the Company has advanced monies to the Company to
open a checking account for payment of expenses. The funds advanced
to open the checking account were repaid as part of the
aforementioned stock transaction (See Note 5). The balance of the
advances have been recorded as short-term loans, bearing no interest
and having no specific due date. During the period ending March 31,
2000, the balance of the advances was paid in full.
NOTE 7 - CONCENTRATION OF CREDIT RISK FOR CASH HELD AT BANKS
The Company maintains a United States dollar checking account at a
bank in Vancouver, British Columbia, Canada. This account is not
insured.
9
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PAXTON MINING CORPORATION
(AN EXPLORATION STAGE ENTERPRISE)
NOTES TO THE FINANCIAL STATEMENTS
March 31, 2000 and June 30, 1999
NOTE 8 - COMMITMENTS AND CONTINGENCIES
Foreign Operations
The accompanying balance sheet includes $15,136 relating to the
Company's assets in Canada. Although this country is considered
politically and economically stable, it is always possible that
unanticipated events in foreign countries could disrupt the Company's
operations.
Environmental Studies
The Company is engaged in the exploration and development of mineral
properties. At present there are no feasibility studies establishing
proven and probable reserves.
Although the minerals exploration and mining industries are
inherently speculative and subject to complex environmental
regulations, the Company is unaware of any pending litigation or of
any specific past or prospective matters which could impair the value
of its mining claims or cause the Company to pay for land remediation
costs.
NOTE 9 - YEAR 2000 ISSUES
Like other companies, Paxton Mining Corporation could be adversely
affected if the computer systems the Company, its suppliers or
customers use do not properly process and calculate date-related
information and data from the period surrounding and including
January 1, 2000. This is commonly known as the "Year 2000" issue.
Additionally, this issue could impact non-computer systems and
devices such as production equipment and elevators, etc. Any costs
associated with Year 2000 compliance are expensed when incurred. At
this time, the Company does not have any evidence of problems
associated with the Year 2000 issue.
10
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Financial Condition, Liquidity and Capital Resources
Since inception on June 10, 1999, the Company has been engaged
in exploration and acquisition of mineral properties. The Company's
principal capital resources have been acquired through issuance of
common stock and from shareholder loans.
At March 31, 2000, there was positive working capital of $1,489
compared to deficit working capital of $(11,900) at June 30, 1999.
This change is primarily the result of the Company's stock issuance
proceeds of $51,020, more than offsetting increasing accounts payable
and payment of related party loans.
At March 31, 2000, the Company's total assets of $15,136
consists of mainly cash and office equipment. This compares favorably
with the Company's assets at June 30, 1999 of $362, which consisted
of only $100 in cash.
At March 31, 2000, the Company's total liabilities decreased to
$5,495 from $12,000 at June 30, 1999, primarily reflecting a net
payment to related party loans of $12,000 and a build-up of accounts
payable in the amount of $5,495.
The Company has not had revenues from inception. Although there
is insufficient capital to fully explore and develop its mineral
properties, the Company expects to survive and exploit its resources
primarily with funding from sales of its securities and, as
necessary, from shareholder loans.
The Company has no long-term debt and does not regard long-term
borrowing as a good, prospective source of financing.
Results of Operations
The Company posted losses of $7,564 and $29,741 for the three
months and nine months ending March 31, 2000, respectively. The
principal component of each loss was professional expenses.
Operating expenses for the nine months ending March 31, 2000
were $29,741, down almost $257,000 from the short year ending June
30, 1999, primarily as a result of decreased executive compensation
expenses, which were $273,356 in the year ended June 30, 1999 and $0
thereafter.
EXHIBIT INDEX
Exhibit No. Description
27 Financial Data Schedule
<PAGE> 12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Dated this 11th day of May, 2000.
PAXTON MINING CORPORATION
(the "Registrant")
BY: /s/ Hugh Grenfal
Hugh Grenfal, President, Treasurer,
Chief Financial Officer and a Member of
the Board of Directors.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Statement of Financial Condition at March 31, 2000 (Unaudited) and the
Statement of Income for the nine months ended March 31, 2000 (Unaudited) and is
qualified in its entiretty by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-END> MAR-31-2000
<CASH> 6,984
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6,984
<PP&E> 7,969
<DEPRECIATION> (79)
<TOTAL-ASSETS> 15,136
<CURRENT-LIABILITIES> 5,495
<BONDS> 0
0
0
<COMMON> 55
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 15,136
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 29,741
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (29,741)
<INCOME-TAX> 0
<INCOME-CONTINUING> (29,741)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (29,741)
<EPS-BASIC> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
