SECURITIES EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
Annual Report Pursuant to
The Securities Exchange Act of 1934
Fiscal Year Ended March 31, 1999 Commission file number 0-10065
COLORADO GOLD & SILVER, INC.
(Exact name of registrant as specified in its charter)
Colorado 82-0379959
(State of incorporation) (I.R.S. Employer
Identification No.)
c/o 10200 W. 44th Ave., #400, Wheat Ridge, CO 80033
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 422-8127
Securities registered pursuant to Section 12(g) of the Act:
No Par Value Common Stock
Title of each class
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 Exchange 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 the filing
requirements for at least the past 90 days. Yes X No ___
---
Check if disclosure of delinquent filers pursuant to Item 405 of Regulation S-B
is not 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. X
---
State issuer's revenues for its most recent fiscal year. $0
There were 64,217,400 shares of the Registrant's no par value common stock
outstanding as of March 31, 1999.
The aggregate market value of the 44,426,600 shares of voting common stock held
by nonaffiliates of the Registrant is approximately $4,442.66. This calculation
is based upon the per-share bid ($.0001) prices of the stock on March 31, 1999.
This Form 10-K contains pages.
<PAGE>
TABLE OF CONTENTS
PART I Page
- ------ ----
Item 1. Description of business 3
Item 2. Description of Property 5
Item 3. Legal Proceedings 5
Item 4. Submission 5
PART II
- -------
Item 5. Market for Common Equity and Related Stockholder Matters 5
Item 6. Management's Discussion and Analysis or Plan of Operation 6
Item 7. Financial Statements 7
Item 8. Changes in and Disagreements With Accountants on Accounting 7
And Financial Disclosure
PART III
- --------
Item 9. Directors, Executive Officers, Promoters and Control
Persons; Compliance with Section 16(a) of the Exchange Act 8
Item 10. Executive Compensation 9
Item 11. Security Ownership of Certain Beneficial Owners and
Management 11
PART IV
- -------
Item 12. Certain Relationships and Related Transactions 11
Item 13. Exhibits and Reports on Form 8-K 12
SIGNATURES
- ----------
<PAGE>
PART I
------
Item 1. BUSINESS
--------
Development of Business
- -----------------------
Colorado Gold & Silver, Inc. (the Company) was organized under the laws of
Colorado on March 3, 1980. The Company was organized for the principal purpose
of acquiring, exploring, and, if warranted, developing mineral prospects. The
Company became publicly held in October 1981, through a public offering
registered on Form S-18.
Financial Information About Industry Segments
- ---------------------------------------------
See "Financial Statements and supplementary Data," Item 7 below.
Narrative Description of Business
- ---------------------------------
The Company has been involved in several unsuccessful ventures since its
inception.
The Company's capital resources for the past several years have been primarily
provided by M. Coke Reeves, founder and President of the Company, in the form of
shareholder advances. Such shareholder advances totaled $888,919 at March 31,
1998. The Company has no active operations at this time.
The Company does not own any patents, trademarks, licenses, franchises, or
concessions except mineral interest granted by governmental authorities and
private land owners. The Company has no material portion of its business which
may be subject to renegotiations of profits or termination of contracts or
subcontracts at the election of the government.
The Company's business is generally not seasonal in nature. The Company has not
experienced any such delays in the past.
The Company is not dependent upon a single customer or a few customers for its
products. Backlog is not material to an understanding of the Company's business
and the Company has no backlog of orders. During the fiscal year ended March 31,
1998, the Company had no operations in foreign countries.
At the present time, the existence of environmental laws does neither materially
hinder nor adversely affect the Company's business. Capital expenditures
relating to environmental control facilities have not been material to the
operations of the Company in the past year.
<PAGE>
A. On November 28, 1998, the Company canceled a Plan and agreement of
reorganization with Contract Power, Inc. for non-performance.
B. The company subsequently attempted to negotiate a Share Exchange
agreement with shareholders of Progressive Telecommunications Corporation (PTC),
subject to receipt of shareholder consent by PTC shareholders and subject to
several conditions including payment of a deposit and due diligence review. The
contract was never finalized, and the conditions precedent could not be met and
negotiations were terminated.
C. New Business Focus. The Company has ceased all efforts within the
mining and minerals industry. The Company has determined that it will seek an
acquisition or merger within the Internet-related industry, and that it will
make no further efforts within the mining or minerals industry. The Company has
no expertise in Internet-related matters and has no capital at this time. The
company has no revenues whatsoever at this date.
The company will pursue the acquisition of development stage Internet-related
companies and technologies. It is not anticipated that any of the companies
acquired will have significant operating or financial histories and, in all
likelihood, will be unprofitable with significant losses and negative
shareholders equity. If technology is acquired, it most likely will be
development stage with little or no revenue and no history of sales.
The company would intend to be an "incubator" of such Internet - related
endeavors to take them into the stage of marketing and an attempt to generate
revenue.
At this time, management has no expertise in Internet-related technology or
marketing Internet-related matters and will be in competition with numerous
larger competitors for management and technical expertise.
Shareholders may not be afforded a vote on the companies acquired or upon
technologies acquired, and the company does not intend to seek shareholder
approval for acquisitions within such business areas, unless required to do so,
if it were ever to achieve an exchange listing.
The new business focus will require an amendment to the Articles of
Incorporation, which is being requested in a Proxy Statement for a shareholders
meeting.
The Company has no funds or source of funds to accomplish such new business
plan, and there is no assurance any funds will be available from any source,
debt, or equity to facilitate even a portion of such business plan. The Company
will ask shareholders to approve a change of name.
D. Contemplated Reverse Split. The Company contemplates up to a one for
200 share reverse split to be effected through a Special Meeting of
Shareholders. The Board of Directors has approved a resolution for the reverse
split to be submitted to shareholders.
E. The Company has settled, as of March 31, 1999, debts to officers of
$1,560,922 for cash advances in consideration of $25,000 cash and a note for
$75,000 payable over twelve months in quarterly installments without interest.
<PAGE>
F. The Company has issued additional shares of common stock (35,782,600
shares) for consideration of services rendered in the reorganization, settlement
of debt, and preparation of the SEC reports to bring the Company current.
G. The Company also proposes to change its name and to allow up to nine
directors through an amendment to the 'Articles of Incorporation being requested
in a Proxy Statement for a Shareholders Meeting.
Item 2. PROPERTIES
----------
Facilities
- ----------
The Company has no offices at this time. Records are maintained at 10200 W. 44th
Avenue, #400, Wheat Ridge, CO 80033.
Real Property
- -------------
None
Mineral Properties
- ------------------
None
Item 3. LEGAL PROCEEDINGS
-----------------
As of March 31, 1999, the Company was not a party nor were any of its properties
subject to any legal proceedings.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
No matters were submitted to a vote of the Company's shareholders through the
solicitation of proxies or otherwise during the fiscal year ended March 31,
1999.
PART II
-------
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
-------------------------------------------------------------
MATTERS
-------
The Company's common stock, no par value, began trading on October 26, 1981 and
is traded in the over-the-counter market. As of March 31, 1999, there were
approximately 2,100 shareholders (this does not include the number of beneficial
owners who hold stock in street names and brokerage accounts). No dividends have
been paid on the Company's common stock. The Company has no present intention of
paying dividends.
<PAGE>
Set forth below is the range of high and low bid prices for the quarters
indicated of the shares of common stock the Company has reported by the National
Daily Quotation Service (Pink Sheets) or local brokers. The quotations reflected
inter-dealer prices without retail markup, markdown, or commission and may not
necessarily represent actual transactions.
Quarter Ended High Low
- -------------------------------------------------------------------------------
June 30, 1997 .001 .000
September 30, 1997 .001 .000
December 31, 1997 .001 .000
March 31, 1998 .001 .000
June 30, 1998 .001 .000
September 30, 1998 .001 .000
December 31, 1998 .001 .000
March 31, 1999 .001 .000
Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS
-----------------------------------
Financial Condition and Changes in Financial Condition
- ------------------------------------------------------
Liquidity and Capital Resources
- -------------------------------
No operations were conducted and no revenues were generated in the fiscal
year. The Company at year end had no capital, no cash, and no other assets. The
Company at year end was totally illiquid and needed cash infusions from
shareholders to provide capital, or loans from any sources. Its liabilities
exceeded assets by $850,058.
Results of Operations
- ---------------------
Year Ended March 31, 1999 Compared to Same Period Ended March 31, 1998.
The Company had no revenues or operations for the year ended March 31, 1999.
While the company sought other business opportunities in the year, its attempts
to acquire any were unsuccessful. The company incurred $25,000 in legal fees and
expenses in bringing the Company's corporate matters current, and for contract
negotations. At March 31, 1999 the Company settled $1,580,922 in debt to its
President and Director, Coke Reeves, for a $100,000 note, which resulted in an
extraordinary gain of $1,480,922.
In the year ended March 31, 1999 the company had an operating loss of ($25,000)
for legal expenses, compared to the prior year loss of ($50,000) from accrual of
interest on debt. The company recognized an extraordinary gain in the fiscal
year ended March 31, 1999 in the amount of $1,480,922 from the settlement of
debt which resulted in a net gain of $1,435,922 for the year. In the fiscal year
ended March 31, 1998 the company had no revenue and no extraordinary gain and
showed a net loss of ($50,0000)from interest accrual. Net gain per share in year
ended March 31, 1999 was $.02 per share compared to a loss in the prior fiscal
year of ($.0001).
The Company does not expect there to be a similar extraordinary gain in the
future, except that subsequent to year end, an agreement was reached with Coke
Reeves president, for forgiveness of $390,000 in salary accruals under certain
circumstances, of which there is no assurance. The Company otherwise can be
expected to incur operation losses in seeking other business opportunities.
Year Ended March 31, 1998 Compared to Same Period Ended March 31, 1997
During the fiscal year ended March 31, 1998, the Company incurred $0 in
general and administrative expenses, and accrued $0 for services of officers. In
year ended March 31, 1997 the Company incurred $0 in General and Administrative
expenses, and $0 for services rendered by officers. At present, the Company has
no business income or operations. Loss on operations in 1998 was ($50,000) from
interest accrual compared to the 1997 loss on operations of ($50,000) as a
result of accrual on debt of interest on debt in 1997.
<PAGE>
Year 2000 issues "Year 2000 problems) result primarily from the inability
of some computer software to properly store, recall or use data after December
31, 1999. The Company is engaged primarily in organizational and fund raising
activities and accordingly, does not rely on information technology ("IT")
systems. Accordingly, the Company does not believe that it will be materially
affected by Year 2000 problems. The Company relies on non-IT systems that may
suffer from Year 2000 problems including telephone systems, facsimile and other
office machines. Moreover, the Company relies on third-parties that may suffer
from Year 2000 problems that could affect the Company's minimal operations, the
Company does not believe that such non-IT systems or third-party Year 2000
problems will affect the Company in a manner that is different or more
substantial than such problems affect other similarly situated companies.
Consequently, the Company does not currently intend to conduct a readiness
assessment of Year 2000 problems or develop a detained contingency plan with
respect to Year 2000 problems that may affect the Company or third-parties.
The foregoing is a "Year 2000 Readiness Disclosure" within the meaning of
the Year 2000 Information and Readiness Disclosure Act of 1998.
Item 7. Financial Statements and Supplementary Data
-------------------------------------------
Please refer to pages F-1 through F-11.
Item 8. Changes in and Disagreements on Accounting and Financial Disclosure
-------------------------------------------------------------------
In connection with audits of two most recent fiscal years and any interim
period preceding resignation, no disagreements exist with any former accountant
on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope of procedure, which disagreements if not resolved
to the satisfaction of the former accountant would have caused him to make
reference in connection with his report to the subject matter of the
disagreement(s).
The audit report by Michael B. Johnson & Co. LLC for the year ended March
31, 1998, contained an opinion which included a paragraph discussing
uncertainties related to continuation of the Registrant as a going concern.
The principal accountants' reports on the financial statements for any of
the past two years contained no adverse opinion or a disclaimer of opinion nor
was qualified as to uncertainty, audit scope, or accounting principles except
for the "going concern" qualification.
<PAGE>
PART III
--------
Item 9. Directors and Executive Officers of the Registrant and Compliance
-------------------------------------------------------------------
with Section 16(a)
------------------
The directors and executive officers of the Company as of March 31, 1999,
are as follows:
Name Age Position
- ---- --- --------
M. Coke Reeves 86 President, Director
M.R. Reeves 68 Vice President, Director
The principle occupations of each director and officer of the Company for
at least the past five years are as follows:
M. Coke Reeves has been employed on a full-time basis with the Company as
--------------
its President since inception in March 1980. Prior to that time, Mr. Reeves had
been in the mining and home-building business as Reeves of Texas, Inc. from 1973
to 1980. He has mined tungsten in Nevada as Reeves Mining, Inc. He was involved
in the operation of the Gold Bond Mine in Cripple Creek, Colorado through Reeves
Minerals, Inc. from 1973 to 1980. He was President and a director and the sole
shareholder of the foregoing companies, all of which were sold or discontinued
by Mr. Reeves in 1980. He was the President and founder of Bentex Pharmaceutical
Company from 1950 to 1971, which was subsequently sold to ICN Pharmaceuticals,
Inc. He resigned as Vice-President of ICN Pharmaceuticals in 1973. Prior
thereto, he was involved in various businesses associated with coal mining and
marketing. Mr. Reeves received a B.A. degree from Westminster College, Fulton,
Missouri in 1933.
M.R. Reeves has been Secretary of the Company since 1984. Mrs. Reeves
------------
served as Secretary of Reeves of Texas, Inc., a company involved in the mining
and home-building business from 1973 to 1980. From 1960 to 1970, she was
employed by Bentex Pharmaceutical Company as a buyer and in charge of its
direct mail department.
M. Coke Reeves and M.R. Reeves are husband and wife.
A new director has been appointed to the Board of Directors effective
April 20, 1999.
Reginald Troy Green, age 45. Mr. Green has been co-owner operator of
---------------------
Green's B & R Enterprises, a wholesale donut baker, since 1983. He has been an
active investor in small capital public companies since 1987. He is a director
of Kimbell deCar Corporation since November 1998 and is a Director of Dynadapt
System, Inc. since April, 1998.
<PAGE>
Another appointee for director has been nominated:
Robert E. Clautice, age 69, has been an independent consultant from 1992 to
------------------
present in computer related matters. Mr. Clautice has a B. S. in Physics (1961)
from the University of Maryland and has studied for and completed the
requirements of a Master of Science from the University of Colorado and
anticipates graduation in the next quarter. Mr. Clautice has substantial
programming and data recording experience. Mr. Clautice has been an adjunct
professor at Red Rocks Community college and Arapahoe community college, in
Denver, Colorado.
The Company must amend its Articles of Incorporation to allow more than
three directors before Mr. Clautice can become a director.
The term of office of each director and executive officer ends at, or
immediately after, the next annual meeting of shareholders of the Company.
Except as otherwise indicted, no organization by which any director or officer
has been previously employed is an affiliate, parent or subsidiary of the
Company.
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers and directors, and persons who
own more than 10% of a registered class of the Company's equity securities, to
file reports of ownership and changes in ownership of equity securities of the
Company with the Securities and Exchange Commission and NASDAQ. Officers,
directors and greater-than 10% shareholders are required by the Securities and
Exchange Commission regulation to furnish the Company with copies of all Section
16(a) filings.
1. The following people did not file any reports under Section 16(a)
during the most recent fiscal year:
a. M. Coke Reeves President and Director
b. M.R. Reeves Secretary and Director
2. For each person, listed by subparagraph letter above:
Number of late Number of Known failures
reports transactions not to file forms required
- -------- reported on a -----------------------
timely basis
------------
a. none none none
b. none none none
Item 10. Executive Compensation
----------------------
The Company accrued a total of $0 in compensation to the executive
officers as a group for services rendered to the Company in all capacities
during the fiscal year ended March 31, 1999. No one executive officer received,
or has accrued for his benefit, in excess of $60,000 for the year. No cash
bonuses were or are to be paid to such persons.
The Company does not have any employee incentive stock option plans.
<PAGE>
There are no plans pursuant to which cash or non-cash compensation was
paid or distributed during the last fiscal year, or is proposed to be paid or
distributed in the future, to the executive officers of the Company. No other
compensation not described above was paid or distributed during the last fiscal
year to the executive officers of the Company. There are no compensatory plans
or arrangements, with respect to any executive office of the Company, which
result or will result from the resignation, retirement or any other termination
of such individual's employment with the Company or from a change in control of
the Company or a change in the individual's responsibilities following a change
in control.
SUMMARY COMPENSATION TABLE OF EXECUTIVES
----------------------------------------
Annual Compensation Awards
Name and Year Salary ($) Bonus Other Annual Restricted Securities
Principal Ended ($) Compensation Stock Award(s) Underlying
Position March ($) ($) Options/
31 SARs (#)
- --------------------------------------------------------------------------------
M. Coke Reeves, 1997 0 0 0 0 0
President
---------------------------------------------------------------
1998 0 0 0 0 0
---------------------------------------------------------------
1999 0 0 0 0 0
================================================================================
M.R. Reeves, 1997 0 0 0 0 0
Secretary
---------------------------------------------------------------
1998 0 0 0 0 0
---------------------------------------------------------------
1999 0 0 0 0 0
---------------------------------------------------------------
Option/SAR Grants Table (None)
Aggregated Option/SAR Exercises in Last Fiscal Year an FY-End Option/SAR
value (None)
Long Term Incentive Plans - Awards in Last Fiscal Year (None)
<PAGE>
DIRECTOR COMPENSATION FOR LAST FISCAL YEAR
------------------------------------------
(Except for compensation of Officers who are also Directors which Compensation
is listed in Summary Compensation Table of Executives)
Cash Compensation Security Grants
----------------- ---------------
Name Annual Meeting Consulting Number Number of
Retainer Fees ($) Fees/Other of Securities
Fees ($) Fees ($) Shares Underlying
(#) Options/SARs(#)
- --------------------------------------------------------------------------------
A. Director 0 0 0 0 0
M. Coke Reeves
B. Director 0 0 0 0 0
M.R. Reeves
Item 11. Security Ownership of Certain Beneficial Owners and Management
--------------------------------------------------------------
The following table sets forth information, as of March 31, 1998, with
respect to the beneficial ownership of the Company's no par value common stock
by each person known by the Company to be the beneficial owner of more than five
percent of the outstanding common stock.
Percentage of
Number of Outstanding
Name Relationship Shares Owned Shares
- --------------------------------------------------------------------------------
M. Coke Reeves(1) President and 14,790,800
Director
M.R. Reeves(1) Secretary and 5,000,000
Director
All Officers and Directors 19,790,800
as a group (2 persons)
(1) M. Coke Reeves and M.R. Reeves are husband and wife.
PART IV
-------
Item 12. Certain Relationships and Related Transactions.
Shareholders advances totaling $888,919 at March 31, 1998 and 1997,
respectively, represent advances made to the Company by Mr. M. Coke Reeves,
president of the Company. Accrued interest expense of $672,003 related to the
shareholder advances had been charged to operation in prior years. The interest
rate charged on the principal balance was 5.6% per annum. On March 31, 1999 the
board of Directors authorized the settlement of this debt and interest to Coke
Reeves for $100,000; $25,000 to be paid to Coke Reeves from a new Loan to the
company, and a note for $75,000 payable over twelve months in quarterly
installments of $25,000.
<PAGE>
Accrued officer salary in the amounts of $390,000 represents salary due Mr.
M. Coke Reeves for services performed through March 31, 1998. An agreement was
reached on April, 1999 between Coke Reeves and the Board of Directors to forgive
the $390,000 accrued salary after the common share price of the Company on the
OTC Bulletin Board had averaged $3.00 per share for thirty (30) consecutive
trading days. In the event that such average price does not occur within two
years of the date of the Agreement, the company will issue S-8 registered shares
at the then market price, in full satisfaction of the obligation. In addition,
Coke Reeves shall hold a pledge of 20,000,000 shares of Colorado Gold & Silver
as collateral for the payment of the accrued and unpaid salary.
The Company has issued additional shares of common stock (35,782,600) as of
April 20, 1999 for consideration of services rendered in the reorganization,
settlement of debt, and preparation of the SEC reports to bring the Company
current. None of the stocks was issued to existing shareholders or officers or
directors at such time, and none of the recipients own 5% or more of the
outstanding common stock of the company.
Item 13. Exhibits and Reports on Form 8-K
--------------------------------
The following documents are filed as part of this report:
1. Reports on Form 8-K: None
2. Exhibits:
INDEX
-----
Regulation Form 10-K
S-K Number Exhibit Page Number Consecutive
- ---------- ------- ----------- -----------
3.1 Articles of Incorporation *Incorporated by reference
to Registration Statement
#2-87742-D
3.2 Bylaws *Incorporated by reference
to Registration Statement
#2-87742-D
27.1 Financial Data Schedule F-1 - F-12
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
COLORADO GOLD & SILVER, INC.
(Registrant)
Date: _______________
/s/ M. Coke Reeves
________________________
M. Coke Reeves, President
Pursuant to the Securities Exchange Act of 1934, this report has been signed
below by the following persons on behalf of the registrant and in the capacities
and on the dates indicated.
COLORADO GOLD & SILVER, INC.
----------------------------
(Registrant)
Date: _________________
/s/ M. Coke Reeves
_____________________
M. Coke Reeves, Director
/s/ M.R. Reeves
______________________
M.R. Reeves, Director
______________________
Director
<PAGE>
COLORADO GOLD & SILVER, INC.
(A Development Stage company)
FINANCIAL STATEMENTS
March 31, 1999
<PAGE>
Board of Directors
Colorado Gold & Silver, Inc.
We have audited the accompanying balance sheet of Colorado Gold & Silver, Inc.
(A Development Stage Company) as of March 31, 1999, and the related statements
of operations, cash flows, and changes in stockholders' equity for the period
March 3, 1980 (inception), through March 31, 1999, and the fiscal year ended
March 31, 1999. 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 generally accepted auditing standards.
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 statements presentation.
We believe that our audits provide 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 Colorado Gold & Silver, Inc. at
March 31, 1999, and the results of its operations and its cash flows for the
period March 3, 1980 (inception), through March 31, 1999, and the fiscal year
ended March 31, 1999, in conformity with generally accepted accounting
principles.
As shown in the financial statements, the company incurred net losses for all
three years and had incurred substantial losses in the prior years. At March 31,
1999, current liabilities exceed current assets by $750,058. These factors
indicate that the company has substantial doubt about its ability to continue as
a going concern. 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.
The financial statements for the years ended March 31, 1980 through March 31,
1992 were audited by other accountants, whose reports dated July 6, 1992 were
qualified as to a going concern. They have not performed any auditing procedures
since that date.
Michael Johnson & Co., LLC
Denver, Colorado
May 27, 1999
F-1
<PAGE>
<TABLE>
<CAPTION>
COLORADO GOLD & SILVER, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
March 31,
---------
<S> <C> <C> <C>
ASSETS 1999 1998 1997
Current Assets:
Cash $ - $ - $ -
TOTAL ASSETS $ - $ - $ -
LIABILITIES AND SHAREHOLDERS'
(DEFICIT)
Current Liabilities:
Accounts payable & Accrued expenses $ 360,058 $ 335,058 $ 335,058
Accrued salary. officer 390,000 390,000 390,000
Accrued Interest payable - 672,003 672,003
Shareholder advances (Note 4) 100,000 888,919 888,919
------- ------- -------
Total Current Liabilities 850,058 2,285,980 2,235,980
------- --------- ---------
Shareholders (Deficit):
Common stock, no par value;
authorized 100,000.000 shares;
issued and outstanding at
March 31, 1999, and at March
31, 1998, and 1997, 64,217,400
shares issued and outstanding 2,714,603 2,714,603 2,714,603
Deficit accumulated during the
Development stage (3,564,661) (5,000,583) (4,950,583)
Total Shareholders' (Deficit) (850,058) (2,285,980) (2,285,980)
TOTAL LIABILITIES & SHAREHOLDERS'
(DEFICIT) $ - $ - $ -
</TABLE>
The accompanying notes are an Integral part of these financial statements.
F-2
<PAGE>
<TABLE>
<CAPTION>
COLORADO GOLD & SILVER, INC
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM INCEPTION (MARCH 3,1980) THROUGH MARCH 31,1999
Cumulative
Amounts from
Inception (March
3,1980) through Year Ended
March 31, March 31, March 31, March 31,
1999 1999 1998 1997
<S> <C> <C> <C> <C>
Costs and Expenses:
General and administrative
including exploration costs $ 1,017,893 $ 25,000 $ - $ -
Interest expense 710,069 - 50,000 50,000
Bad debt expense 2,500 - - -
Depreciation 44,325 - - -
Write-down of deferred
mine development costs,
mineral properties,
and joint ventures
advances to estimated
not realizable value, 1,227,003 - - -
Write-down of milling
equipment to estimated
net realizable value 619,365 - - -
Write-off of abandoned
mineral properties and
write-off of advance
royalties on abandoned
or expired lease claims 210,240
Write-down of inventories
to lower of cost or market, 18,401 - - -
Oil and gas dry-hole costs 25,000 - - -
Write-off of deferred
mine development costs
on abandoned mine projects 264,238 - - -
Operating (Loss) 5,039,034 25,000 50,000 50,000
Other Income (Expenses):
Assay services 20,041 - - -
Interest income 212,754 - - -
Rental Income 38,238 - - -
Other income 32,149 - - -
Loss on dispositions
including sale of
milling equipment and
abandonments of mine
equipment buildings
and improvements,
furniture and
equipment and vehicles, (311,542) - - -
(8,360)
Net (loss) before income
taxes and extraordinary
items. (5,047,394) (25,000) (50,000) (50,000)
Provision for income taxes
Net (loss) before
extraordinary items (5,047,394) (25,000) (50,000) (50,000)
Extraordinary item;
Gain from forgiveness of
debt (Note 4) 1,462,733 1,480,922 - -
Net Gain (loss) $(3,584,661) $1,435,922 $(50,000) $(50,000)
Net Gain (loss) pot share: $ 0.020 (0.001) (0.001)
Weighted average shares
outstanding 64,217,400 64,217,400 64,217,400
</TABLE>
The accompanying notes are an Integral part of there financial statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
COLORADO GOLD & SILVER, INC,
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF SHAREHOLDERS' EQUITY
(DEFICIT)
FOR THE PERIOD FROM INCEPTION (MARCH 3, 1980) THROUGH MARCH 31,1999
Deficit
Accumulated
Common Stock During The Total
Number Exploration Shareholders
of Shares Amount Stage Equity
<S> <C> <C> <C> <C>
Date of inception, March 3,
1980 $ $ $
Contributed property from
officers and directors
($.00786 per Share
as of March 5, 1981) 28,250,000 222,048 - 222,048
Net (loss) for the period
from inception (March 3,
1980) through March 31,
1981 - - (9,293) (9,293)
Balances at March 31, 1981 28,250,000 222,048 (9,293) 212,755
Sale of stock to officers
and directors for cash
($.016 per share as
of April 1. 1981) 1,250,000 20,000 - 20,000
($.025 per share as
of April 7, 1981) 250,000 6,250 - 6,250
($.025 par share as
of April 14, 1981) 250,000 6,250 - 6,250
Sale of stock (private
placement) during June
1981 ($.05 per share) 6,000,000 300,000 - 300,000
Sale of stock in public
offering ($.l0 per
share, net of offering
costs of $.0125 per
share as of October 26,
1981) 25,017,900 2,129,473 - 2,129,473
Net (loss) for the year
ended March 31,1982 - - (18,559) (18,559)
Balances at March 31,
1982 61,017,900 2,684,021 (27,852) 2,656,169
Net (loss) for the year
ended March 31, 1983 - - (236,492) (236,492)
Balances at March 31,
1983 61,017,900 2,684,021 (264,344) 2,419,677
Net (loss) for the year
ended March 31, 1984 - - (538,995) (538,995)
Balances at March 31,
1984 61,017,900 2,684,021 (803,339) 1,880,682
Net(loss)for the year
ended March 31, 1985 - - (624,177) (624,177)
Balances at March 31,
1985 61,017,900 2,684,021 (1,427,516) 1,256,505
Issuance of restricted
stock for cash and
repayment of advance
royalty payment made
by a former director
on behalf of the company
($.01148 as of March 15,
1986) 1,750,000 20,082 - 20,082
</TABLE>
The accompanying notes are an integral part or these financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
COLORADO GOLD & SILVER, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT)
FOR THE PERIOD FROM INCEPTION (MARCH 3. 1990) THROUGH MARCH 31, 1999
Deficit
Accumulated
Common stock During The Total
Number of Exploration Shareholders
Shares Amount Stage Equity
<S> <C> <C> <C> <C>
Net (loss) for the year
ended March 31, 1980 -- $ -- $ -- $ (847,308) $ (847,308)
Balance at March 31, 1986 63,767,900 2,704,103 (2,274,824) 429,279
Issuance of restricted stock
for services ($.005 per
share as of March 31, 1987 1,000,000 5,000 -- 5,000
Net (loss) for the year
ended March 31, 1967 -- -- (526,070) (526,070)
Balances at March 31,
1987 63,767,900 2,709,103 (2,800,894) (91,791)
Net (loss) for the year
ended March 31, 1988 -- -- (194,702) (194,762)
Balances at March 31,
1968 63,767,900 2,709,103 (2,995,658) (286,553)
Issuance of restricted stock
for cash ($.015 per share as
of November 15, 1988 190,500 3,000 -- 3,000
Issuance of restricted stock
in partial settlement of a
disputed liability ($.01 per
share as of March 18, 1969) 250,000 2,500 -- 2,500
Net (loss) for the year
ended March 31, 1969 -- -- (65,082) (165,082)
Balances at March 31,
1989 64,217,400 2,714,603 (3,160,738) (446,135)
Net (loss) for the year
ended March 31, 1990 -- -- (725,765) (725,765)
Balances at March 31,
1990 64,217,400 2,714,603 (3,886,503) (1,171,900)
Net(loss) for the year
ended March 31, 1991 -- -- (134,961) (134,961)
Net unrealized (loss)
on non-current
marketable equity
security -- -- -- --
Balances at March 31,
1991 64,217,400 2,714,603 (4,021,464) (1,306,861)
Net floss) for the year
ended March 31,1992 -- -- (345,090) (345,090)
Balances at March 31,
1992 64,217,400 2,714,603 (4,366,554) (1,655,222)
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
<TABLE>
<CAPTION>
COLORADO GOLD & SILVER, INC,
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT)
F0R THE PERIOD FROM INCEPTION (MARCH 3, 1980) THROUGH MARCH 31, 1999
Deficit
Accumulated
Common stock During The Total
Number of Exploration Shareholders'
Shares Amount Stage Equity
<S> <C> <C> <C> <C>
Net (loss) for the year
ended March 31, 1 1993 - - (383,659) (383,659)
Realized (loss) on
security - - - 3,276
Balances at March 31,
1993 64,217,400 2,714,603 (4,750,213) (2,035,610)
Net (loss) for the year
ended March 31,1994 - - (50,370) (50,370)
Balances at March 31,
1994 64,217,400 2,714,603 (4,800,583) (2,085,980)
Net (loss) for the year
ended March 31, 1995 - - (50 000) (50,000)
Balances at March 31,
1995 64,217,400 2,714,603 (4,850,583) (2,135,980)
Net (loss) for the year
ended March 31, 1996 - - (50,000) (50,000)
Balances at March 31,
1996 64,217,400 2,714,603 (4.900,583) (2,185,980)
Net (loss) for the year
ended March 31, 1997 - - (50,000) (50,000)
Balances at March 31,
1997 64,217,400 2,714.603 (4,950,583) (2,235,980)
Net (loss) for the year
ended March 31, 1998 - - (50,000) (50,000)
Balances at March 31,
1999 64,217,400 2,714,603 (5,000,583 (2,285,980)
Net gain for the year
ended March 31, 1999 - - 1,435,922 1,435,922
Balances at March 31,
1999 $64,217,400 $2,714,603 $(3,564,661) $ (850,058)
</TABLE>
The accompanying notes are an integral pan of these financial statements.
F-6
<PAGE>
<TABLE>
<CAPTION>
COLORADO GOLD & SILVER INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM INCEPTION (MARCH 3,1980) THROUGH MARCH 31,1999
Cumulative
Amounts From
Inception
(March 3, 1960)
Through Year Ended
March 31, March 31, March 31, March 31,
1999 1999 1998 1997
<S> <C> <C> <C> <C>
Cash flows from operating
activities:
Net Gain (loss) $(3,564.651) $1,435,922 $(50,000) $(50,000)
Adjustments to reconcile
net loss to not cash
(used by) operating
activities
Depreciation and amortization 147,688 - - -
Write-down of deferred mine
development costs, mineral
properties and joint venture
advances to estimated net
realizable value 1,227,003 - - -
Write-down of milling
equipment to estimated net
realizable value 619,355 - - -
Write off of abandoned mineral
properties and advance
royalties 210,240 - - -
Write-off of deferred mine
development costs 264,238 - - -
Loss on disposition of mine
equipment, furniture and
equipment, and vehicles 311,542 - - -
Gain on disposition of
property and equipment (17,054) - - -
Oil and Gas dry-hole costs 25,000 - - -
Bad debt expense 2,500 - - -
Decrease in other assets 555 - - -
(Decrease) Increase in
accounts payable 360,058 25,000 - -
(Decrease) Increase in
accrued Interest payable - (672,003) 50,000 50,000
Increase in accrued
salary, officer 390,000 - - -
(Increase) in
miscellaneous receivable (2,500) - - -
Total Adjustments 3,538,615 (647,003) 50,000 50,000
Net cash (used by)
operating activities $ 73,954 $ 888,919 $ - $ -
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-7
<PAGE>
<TABLE>
<CAPTION>
COLORADO GOLD & SILVER, INC
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM INCEPTION (MARCH 3, 1980) THROUGH MARCH 31,1999
Cumulative
Amounts From
Inception
(March 3, 1980
Through Year Ended
March 31, March 31, March 31, March 31,
1999 1999 1998 1997
<S> <C> <C> <C> <C>
Cash flows from investing
activities:
Proceeds from the disposition
of property and equipment $ 86,628 $ - $ - $ -
Additions to deferred mine
development costs (1,257,154) - - -
Acquisition of other property
and equipment (1,012.523) - - -
(Increase) in other assets (235,651) - - -
Net cash (used by) investing
activities (2,416,700) - - -
Cash flows from financing
activities.
Proceeds from Issuance of
common stock 2,490,055 - - -
Issuance of long-term debt 81,250 - - -
Advance from an officer 36,350 - - -
Proceeds from other notes
payable including $14,809
reclassified from accounts
payable and $1,822 of
interest expense incurred
during the March 31, 1991
fiscal year 43,631 - - -
Payment an debt principal
including $2,000 for debt
forgiveness in 1991 (83,250) - - -
Repayment of advances from
officer (36,350) - - -
Advance to joint venture (186,940) - - -
Shareholder advances - (888,919) - -
Net cash provided by
financing activities 2,344,746 (888,919) - -
Net (decrease) increase in
cash and cash equivalents - - - -
Beginning cash and cash
equivalents - - - -
Ending cash and cash
equivalents $ - $ - $ - $ -
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-8
<PAGE>
<TABLE>
<CAPTION>
COLORADO GOLD & SILVER, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM INCEPTION (MARCH 3, 1980) THROUGH MARCH 31, 1999
Cumulative
Amounts From
Inception
(March 3, 1980)
Through Year Ended
March 31, March 31, March 31, March 3l,
1999 1999 1998 1997
<S> <C> <C> <C> <C>
Supplemental schedule
of non-cash investing
and financing activities:
Issuance of stock for
property 224,548 - - -
Investment In preferred
stock in exchange for
mining claims 4,024 - - -
Investment in marketable
equity security and
miscellaneous receivable
resulting from disposition
of milling equipment 13,276 - - -
Exchange of miscellaneous
receivable resulting from
milling equipment held
for sale (10,000) - - -
Supplemental disclosures of
cash information:
Cash paid for;
Interest 33,211 - - -
</TABLE>
The accompanying notes are an Integral part of these financial statements.
F-9
<PAGE>
COLORADO GOLD & SILVER, INC.
(A Development Stage Company)
Notes to Financial Statements
March 31, 1999, 1998, & 1997
Note 1 - Organization and Summary of Significant Accounting Policies:
- ---------------------------------------------------------------------
Colorado Gold & Silver, Inc.(the Company) was incorporated under the laws of the
State of Colorado on March 3, 1980. The Company was organized for the principal
purpose of engaging in the business of acquiring, exploring, and if warranted,
developing mineral prospects. Activities through March 31, 1992, during which
time the Company was in the exploration stage (a development stage company as
defined by Statement of Financial Accounting Standards No. 7), consisted
principally of organizational activities, including the sale of shares of its
common stock, and the acquisition, evaluation, exploration and development of
certain mineral properties for future production. Certain of these properties
were acquired from certain of the Company's officers and directors.
Cash and Cash Equivalents:
- --------------------------
For purposes of the Statement of Cash Flows, the Company considers demand
deposits and all highly liquid-debt investments purchased with a maturity of
three months or less to be cash equivalents.
Deferred Mine Development Costs, Mineral Properties and Advance Royalties:
- --------------------------------------------------------------------------
Mineral exploration costs were charged against income as incurred. Costs
incurred in developing mining properties for commercial production are
capitalized and reflected in the financial statements as deferred mine
development costs. Such costs consist primarily of labor, supplies, contract
construction services, allocated overhead and capitalized interest related to
mine development activities. The Company capitalized deferred mine development
costs at March 31, 1985 of $1,001,752 relating to the development of the
Company's Colorado mine. The Company had suspended development of this mine and
had written down the development costs to $250,000. During the year ended March
31, 1990, management of the Company made a decision to abandon this Colorado
mining project. The Company recorded a loss of $250,000 on the write down of
this Colorado deferred mine development cost to its estimated net realizable
value. In addition, the management of the Company also abandoned certain of its
California deferred mine development costs, which resulted in a loss of $93, 386
during the year-end of March 31, 1990.
Costs of mineral properties acquired and advance royalties on expected future
production were deferred pending ultimate realization of such production. All
such costs were to be amortized on a unit-of-production method if commercial
production from the Company's mineral properties occurs. Such costs were charged
against income when the mineral properties and advance royalties were abandoned.
Other Property and Equipment:
- -----------------------------
Other property and equipment were carried at costs and were depreciated on the
straight-line method over their estimated useful lives which were as follows:
Vehicles 3 years
Furniture and equipment 5 years
F-10
<PAGE>
COLORADO GOLD & SILVER, INC.
(A Development Stage Company)
Notes to Financial Statements
March 31, 1999, 1998, & 1997
Organization Costs:
- -------------------
Organization costs incurred by the Company totaling $5,000 had been capitalized
and have been amortized on the straight-line method over a five-year period.
Net (Loss) Per Share:
- ---------------------
The net (loss) per common share has been computed on the basis of the weighted
average number of shares of common stock outstanding during the year (64,217,400
in 1999, 1998 and 1997).
Note 2 - Going-Concern consideration:
- -------------------------------------
As shown in the financial statements, the Company incurred a net loss for the
years ended March 31, 1998 and 1997, and as of March 31, 1999 the Company's
current liabilities exceeded its current assets by $750,058.
Working Capital requirements of the Company have been provided primarily by Mr.
M. Coke Reeves, President of the Company. These factors indicate that the
Company may be unable to continue in existence without future working capital
and future profitable operations. The financial statements do not include any
adjustments relating to the recoverability and classification of recorded asset
amounts or the amounts and classification of liabilities that might be necessary
should the Company be unable to continue in existence.
Note 3 - Income Taxes:
- ----------------------
As of March 31, 1999, the Company has financial reporting net operating loss
carryforwards of approximately $3,564,661 for which the tax effect has not been
recognized for financial reporting purposes. The Company also has approximately
$3,000,000 of tax net-operating losses available for carry forward to offset
future years' taxable income. Such losses expire at various times through 2013
if not utilized earlier.
Note 4 - Related Party Transactions:
- ------------------------------------
Shareholder advances totaling $888,919 at March 31, 1998, and 1997,
respectively, represent advances made to the Company by Mr. M. Coke Reeves,
president of the Company. Interest accrual of $672,003 related to the
shareholder advances was charged to operation. On March 31, 1999 the Board of
Directors authorized the settlement of this debt and interest to Coke Reeves for
$100,000. $25,000 to be paid to Coke Reeves from a new loan to the company, and
a note for $75,000 payable over twelve months in quarterly installments of
$25,000.
Accrued officer salary in the amounts of $390,000 represents salary due Mr. M.
Coke Reeves for services performed through March 31, 1999. An agreement was
reached on April 20, 1999 between Coke Reeves and the Board of Directors to
forgive the $390,000 accrued salary after the common share price of the Company
on the OTC Bulletin Board had averaged $3.00 per share for thirty (30)
consecutive trading days. In the event that such average price does not occur
within two years of the date of the Agreement, the company will issue S-8
registered shares at the then market price, in full satisfaction of the
obligation. In addition, Coke Reeves shall hold a pledge of 20,000,000 shares of
Colorado Gold & Silver as collateral for the payment of the accrued and unpaid
salary.
F-11
<PAGE>
COLORADO GOLD & SILVER, INC.
(A Development Stage Company)
Notes to Financial Statements
March 31, 1999, 1998, & 1997
Note 5 - Subsequent Event
- -------------------------
On April 20, 1999, the Board of Directors, in consideration of services,
authorized the issuance of 35,782,600 shares of common stock for a value of
$3,578.
F-12
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> APR-01-1998
<PERIOD-START> MAR-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 850,058
<BONDS> 0
0
0
<COMMON> 2,714,603
<OTHER-SE> (3,564,661)
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 25,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (25,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (25,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 1,480,922
<CHANGES> 0
<NET-INCOME> 1,435,922
<EPS-BASIC> .02
<EPS-DILUTED> .02
</TABLE>
