<PAGE> 1
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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 September 30, 1999.
[ ] 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 September 30, 1999 was 5,000,000 shares.
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<PAGE> 2
PART I
ITEM 1. FINANCIAL STATEMENTS.
WILLIAMS & WEBSTER, P.S.
Certified Public Accountants & Business Consultants
Bank of America Center, 601 West Riverside,
Suite 1940, Spokane, WA 99201
(509) 838-5111 - FAX (509) 838-5114
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 September 30,
1999, and the related statements of operations, stockholders' equity,
and cash flows for the three month period ended September 30, 1999, and
for the period from June 10, 1999, (inception) to September 30, 1999.
The review was conducted in accordance with Statements on Standards for
Accounting and Review Services issued by the American Institute of
Certified Public Accountants. All information included in these
financial statements is the representation of the management of Paxton
Mining Corporation.
A review consists principally of inquiries of Company personnel and
analytical procedures applied to financial data. 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
February 8, 2000
1
<PAGE> 3
PAXTON MINING CORPORATION
(AN EXPLORATION STAGE ENTERPRISE)
BALANCE SHEETS
<TABLE>
<CAPTION>
September 30 June 30
1999 1999
--------- --------
(Unaudited)
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash $ 641 $ 100
--------- ---------
Total Current Assets 641 100
--------- ---------
OTHER ASSETS
Mining claims 262 262
--------- ---------
TOTAL ASSETS $ 903 $ 362
========= =========
LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Loans to a related party $ 15,000 $ 12,000
--------- ---------
Total Current Liabilities 15,000 12,000
--------- ---------
COMMITMENTS AND CONTINGENCIES - -
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock,100,000,000 shares
authorized, $0.00001 par value;
5,000,000 shares issued
and outstanding 50 50
Additional paid-in-capital 274,950 274,950
Deficit accumulated during the
exploration stage (289,097) (286,638)
--------- ---------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (14,097) (11,638)
--------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY (DEFICIT) $ 903 $ 362
========= =========
</TABLE>
See accompanying notes and accountant's review report.
2
<PAGE> 4
PAXTON MINING CORPORATION
(AN EXPLORATION STAGE ENTERPRISE)
STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
<TABLE>
<CAPTION>
For the For the Period June 10, 1999
Three-Month From Inception (Inception)
Period Ending Through Through
09/30/99 06/30/99 09/30/99
---------- ---------- ----------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
REVENUES $ - $ - $ -
---------- ---------- ----------
EXPENSES
Executive compensation - 273,356 273,356
Filing fees - 400 400
Legal and professional 2,000 11,600 13,600
Office expense 459 31 490
Transfer agent - - -
Mining exploration
expense - 1,251 1,251
---------- ---------- ----------
TOTAL EXPENSES 2,459 286,638 289,097
---------- ---------- ----------
NET LOSS FROM OPERATIONS (2,459) (286,638) (289,097)
INCOME TAXES - - -
---------- ---------- ----------
NET LOSS (2,459) (286,638) (289,097)
ACCUMULATED DEFICIT,
BEGINNING BALANCE (286,638) - -
---------- ---------- ----------
ACCUMULATED DEFICIT,
ENDING BALANCE $ (289,097) $ (286,638) $ (289,097)
========== ========== ==========
BASIC AND DILUTED NET
LOSS PER COMMON SHARE $ NIL $ (0.06) $ (0.06)
========== ========== ==========
BASIC AND DILUTED
WEIGHTED AVERAGE NUMBER
OF COMMON STOCK SHARES
OUTSTANDING 5,000,000 5,000,000 5,000,000
========== ========== ==========
</TABLE>
See accompanying notes and accountant's review report.
3
<PAGE> 5
PAXTON MINING CORPORATION
(AN EXPLORATION STAGE ENTERPRISE)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
Common Stock Additional Total
Number Paid-In Accumulated Stockholders'
of Shares Amount Capital Deficit Equity
(Deficit)
<S> <C> <C> <C> <C> <C>
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)
Income (loss) for the
period ending September
30, 1999 - - - (2,459) (2,459)
--------- ---- --------- ---------- ---------
Balance,
September 30, 1999
(Unaudited) 5,000,000 $ 50 $ 274,950 $ (289,097) $ (14,097)
========= ==== ========= ========== =========
</TABLE>
See accompanying notes and accountant's review report.
4
<PAGE> 6
PAXTON MINING CORPORATION
(AN EXPLORATION STAGE ENTERPRISE)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the For the
Three Month Period from 06/10/99
Period Inception (Inception)
Ended Through Through
09/30/99 06/30/99 09/30/99
(Unaudited) (Unaudited)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (2,459) $ (286,638) $ (289,097)
Adjustments to reconcile
net loss to net cash used
by operating activities:
Payment of expenses from
issuance of stock - 274,638 274,638
-------- ---------- ----------
Net cash (used) in
operating activities (2,459) (12,000) (14,459)
CASH FLOWS FROM
INVESTING ACTIVITIES - - -
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from advances - 100 100
Proceeds from short-term
loan payable 3,000 12,000 15,000
-------- ---------- ----------
Net cash provided by
financing activities 3,000 12,100 15,100
-------- ---------- ----------
Change in cash 541 100 641
Cash,
beginning of period 100 - -
-------- ---------- ----------
Cash, end of period $ 641 $ 100 $ 641
======== ========== ==========
Supplemental disclosures:
Interest paid $ - $ - $ -
======== ========== ==========
Income taxes paid $ - $ - $ -
======== ========== ==========
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
</TABLE>
See accompanying notes and accountant's review report.
5
<PAGE> 7
PAXTON MINING CORPORATION
(AN EXPLORATION STAGE ENTERPRISE)
NOTES TO THE FINANCIAL STATEMENTS
September 30, 1999 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 will 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 $2,459 and $286,638 for the three months ended September
30, 1999 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.
Accounting Method
The Company's financial statements are prepared using the accrual
method of accounting.
6
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PAXTON MINING CORPORATION
(AN EXPLORATION STAGE ENTERPRISE)
NOTES TO THE FINANCIAL STATEMENTS
September 30, 1999 and June 30, 1999
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
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 September 30, 1999, and June 30, 1999, the Company had cumulative
net operating losses of approximately $289,000 and $287,000,
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 September
30, 1999, or June 30, 1999.
Exploration Costs
In accordance with generally accepted accounting principles, the
Company will expense exploration costs as incurred.
7
<PAGE> 9
PAXTON MINING CORPORATION
(AN EXPLORATION STAGE ENTERPRISE)
NOTES TO THE FINANCIAL STATEMENTS
September 30, 1999 and June 30, 1999
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 4).
NOTE 4 - COMMON STOCK
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. The above referenced shares were issued in payment for
compensation in the amount of $273,356 and repayment for 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 the 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 5 - 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 and in payment of expenses. The funds advanced to
open the checking account were repaid as part of the stock transaction
(See Note 4). The balance of the advances have been recorded as short-
term loans, bearing no interest and having no specific due date.
NOTE 6 - 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, which is not insured.
NOTE 7 - COMMITMENTS AND CONTINGENCIES
Foreign Operations
The accompanying balance sheet includes $903 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.
8
<PAGE> 10
PAXTON MINING CORPORATION
(AN EXPLORATION STAGE ENTERPRISE)
NOTES TO THE FINANCIAL STATEMENTS
September 30, 1999 and June 30, 1999
NOTE 7 - COMMITMENTS AND CONTINGENCIES - Continued
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 8 - 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.
9
<PAGE> 11
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Financial Condition, Liquidity and Capital Resources
Since inception on June 19, 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.
During the three months ended September 30, 1999, the Company's sole
current asset, cash, increased from $100 to $641, while the Company's
sole current liability, shareholder loans payable, increased from
$12,000 to $15,000. Accordingly, at September 30, 1999, there was a
working capital deficit of $(14,359) compared to deficit working
capital of $(11,900) at June 30, 1999. The change is primarily the
result of increased shareholder loans used for funding quarterly
expenses.
During the three months ended September 30, 1999, there were no stock
sales or proceeds received from stock issuances, and the Company's
operations were funded solely from shareholder loans.
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 a loss of $2,459 for the quarter ended September 30,
1999 as compared with a loss of $286,638 for the short year ended June
30, 1999. These losses primarily reflect initial expenses associated
with management compensation and professional expenses. Expenses
during the quarter ended September 30, 1999 were minimal <only $2,459>
and primarily attributable to legal and professional fees.
The Company's general and administrative expenses of $2,459 for the
quarter ended September 30, 1999 represents a substantial decrease from
the total $286,638 reported for the short year ended June 30, 1999.
The expense reduction primarily reflects the fact that there was no
executive compensation expense in the quarter ended September 30, 1999
while this corresponding expense was $273,356 for the year ended June
30, 1999.
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 February, 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
Consolidated Statement of Financial Condition at September 30, 1999 (Unaudited)
and the Consolidated Statement of Income for the three months ended September
30, 1999 (Unaudited) and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> SEP-30-1999
<CASH> 641
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 641
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 903
<CURRENT-LIABILITIES> 15,000
<BONDS> 0
0
0
<COMMON> 50
<OTHER-SE> (14,147)
<TOTAL-LIABILITY-AND-EQUITY> 903
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,459
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (2,459)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,459)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,459)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
