SECURITIES AND EXCHANGE COMMISSION
450 Fifth Street, N.W.
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended: July 31, 1996
Commission File Number: 0-9496
GOLD STANDARD, INC.
---------------------------
(Exact name of registrant
as specified in its charter)
Utah 87-0302579
- - ----------------------------------------- -------------------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) identification number)
712 Kearns Building, Salt Lake City, Utah 84101
- - ----------------------------------------- -------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number,
Including Area Code: (801) 328-4452
Page 1
<PAGE>
<PAGE>
Indicate by checkmark 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, and (2) has been subject to
such filing requirements for the past 90 days.
Yes _______ No _______
As of July 31, 1996, there were 18,697,500 shares of common capital
stock outstanding.
Page 2
<PAGE>
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
---------------------
GOLD STANDARD, INC.
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR INCLUSION IN QUARTERLY REPORT
ON FORM 10-Q
Page 3
<PAGE>
July 31, 1996
<PAGE>
GOLD STANDARD, INC.
CONSOLIDATED BALANCE SHEETS
July 31, 1996 and October 31, 1995
July 31, 1996 October 31, 1995
---------------- ----------------
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash
equivalents $ 6,483,592 $ 2,465,980
Royalties
receivable - 133,764
Accrued interest 19,465 99
Securities available for
sale at market value 328,300 -
Exchange traded options
at market value 67,753 -
Prepaid expenses 3,143 5,118
-------------- ----------------
TOTAL CURRENT
ASSETS 6,902,253 2,604,961
PROPERTY AND EQUIPMENT
Equipment and leasehold
improvements 163,427 100,060
-------------- ----------------
163,427 100,060
OTHER ASSETS
Deferred offering costs 60,856 50,259
Deposits 740 740
-------------- ----------------
61,596 50,999
-------------- ----------------
$ 7,127,276 $ 2,756,020
============== ================
Page 4
<PAGE>
<PAGE>
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable - trade $ 53,428 $ 58,396
Accrued liabilities 2,877 566
Income tax payable - 300
TOTAL CURRENT
LIABILITIES 56,305 59,262
-------------- ----------------
LONG-TERM LIABILITIES
Deferred liabilities 61,000 61,000
-------------- ----------------
TOTAL LIABILITIES 117,305 120,262
STOCKHOLDERS' EQUITY
Common stock 19,298 14,848
Additional paid-in
capital 13,704,328 9,396,277
Retained deficit (6,713,655) (6,775,367)
-------------- ----------------
TOTAL STOCKHOLDERS'
EQUITY 7,009,971 2,635,758
-------------- ----------------
$ 7,127,276 $ 2,756,020
============== ================
See accompanying notes to consolidated financial statements.
Page 5
<PAGE>
<PAGE>
GOLD STANDARD, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three and nine month periods ended July 31, 1996 and 1995
Three months ended Nine months ended
July 31, July 31,
--------------------------- --------------------------
1996 1995 1996 1995
------------ ------------ ------------ ------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
INCOME FROM OPERATIONS
Royalty income $ - $ 260,730 $ 339,726 $ 260,730
EXPENSES
Depreciation 11,116 5,427 25,893 16,020
Leasehold exploration
and carrying costs 194,967 7,905 398,276 192,177
General and
administrative:
Legal 17,093 136,930 32,499 293,241
Other 103,278 78,368 278,555 235,257
------------ ------------ ------------ ------------
NET LOSS FROM
OPERATIONS (326,454) (17,900) (395,497) (475,965)
OTHER INCOME (EXPENSES)
Gain from securities
available for sale 21,523 - 149,741 -
Gain on sale of assets 10,200 - 310,200 -
Unrealized gain (loss)
on securities available
for sale (160,790) - 132,300 -
Interest income 55,462 29,735 105,515 89,246
Unrealized loss
on options (55,421) - (240,547) (327,800)
---------- ----------- ------------ -----------
NET INCOME (LOSS) $(455,480) $ 11,835 $ 61,712 $ (714,519)
=========== =========== =========== ===========
Net income (loss)
per common share $ (0.03) $ 0.01 $ 0.01 $ (0.05)
See accompanying notes to consolidated financial statements
Page 6
<PAGE>
<PAGE>
GOLD STANDARD, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three and nine month periods ended July 31, 1996 and 1995
Three months ended Nine months ended
July 31, July 31,
------------------------- ---------------------------
1996 1995 1996 1995
------------ ----------- ------------ ------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
CASH PROVIDED BY (USED
IN) OPERATING ACTIVITIES
Net income (loss) $ (455,480) $ 11,835 $ 61,712 $ (714,519)
Add (deduct) adjustments
to cash basis:
Depreciation 11,116 5,427 25,893 16,020
Services provided in
exchange for stock 25,000 - 25,000
Net unrealized losses 216,211 - 108,247 -
Gain on sale of
assets and
securities (31,723) - (400,000) -
Accounts receivable (12,321) (262,227) 114,398 (265,338)
Prepaid expenses (1,130) (2,570) 1,975 881
Deposits - 10,000 - -
Deferred costs (6,890) (3,345) (10,597) (15,384)
Accounts payable 2,746 17,090 (4,968) (82,685)
Accrued liabilities 1,690 12 2,011 (180)
------------ ------------ ------------ -----------
NET CASH PROVIDED BY
(USED IN) OPERATING
ACTIVITIES (250,781) (223,778) (76,329) (1,061,205)
CASH USED IN INVESTMENT
ACTIVITIES
Equipment sold 10,200 - 10,200 -
Equipment purchased (88,203) (758) (89,261) (5,513)
Proceeds from sales
of trading securities 37,525 - 293,802 -
Purchase of options - - (308,300) -
Commissions on
sales of assets - - (100,000)
Increase in restricted
cash - (421) - (1,111)
------------ ------------ ------------ -----------
NET CASH USED IN
INVESTMENT
ACTIVITIES (40,478) (1,179) (193,559) (6,624)
(Continued)
See accompanying notes to consolidated financial statements.
Page 7
<PAGE>
<PAGE>
GOLD STANDARD, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three and nine month periods ended July 31, 1996 and 1995
Three months ended Nine months ended
July 31, July 31,
------------------------- -------------------------
1996 1995 1996 1995
----------- ----------- ----------- ------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
CASH PROVIDED BY FINANCING
ACTIVITIES
Issuance of stock
and warrants 4,100,000 124,000 4,287,500 236,500
------------ ----------- ----------- -----------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 4,100,000 124,000 4,287,500 236,500
NET INCREASE (DECREASE)
IN CASH 3,808,741 (100,957) 4,017,612 (831,329)
CASH BALANCE AT BEGINNING
OF PERIOD 2,674,851 2,217,768 2,465,980 2,948,140
------------ ----------- ------------ -----------
CASH BALANCE AT END
OF PERIOD $6,483,592 $2,116,811 $6,483,592 $2,116,811
============ ============ ============ ===========
Non-cash Transactions
In February 1996 the Company exchanged their rights to certain diamond
properties for 100,000 shares of American Mining Fields stock valued at $4.00
per share. The gain on the sale of $300,000 included in Other Income is net
of bonuses on the transaction of $100,000.
In March 1996 a subsidiary of the Company issued 100,000 shares of its common
stock in exchange for services valued at $25,000.
See accompanying notes to consolidated financial statements.
Page 8
<PAGE>
<PAGE>
GOLD STANDARD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
July 31, 1996 and October 31, 1995
(Unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company's accounting policies reflect industry practices and
conform to generally accepted accounting principles. The following
policies are considered to be significant:
Financial Statements
--------------------
The financial information provided in the Consolidated Balance Sheet
for the year ended October 31, 1995, has been taken from the audited
financial statements at that date. In the opinion of management, all
adjustments necessary to present fairly the financial position, results
of operations and cash flow at July 31, 1996, have been made. All such
adjustments were of a normal, recurring nature.
Principles of Consolidation
---------------------------
The accompanying consolidated financial statements include the accounts
of Gold Standard, Inc., its wholly owned subsidiaries, Gold Standard
South and Kelwood Enterprises, Ltd., a 64.4% owned subsidiary, Big Pony
Gold and a 100% owned subsidiary, Gold Standard Minas. As used herein,
references to Gold Standard, Inc., the Registrant, or the Company
refers to Gold Standard, Inc. and its consolidated subsidiaries. All
significant intercompany transactions are eliminated.
Gold Standard South, a Utah corporation, was organized for the express
purpose of carrying on a property acquisition and gold exploration
program in the country of Uruguay. Big Pony Gold holds certain mineral
exploration concessions in Uruguay and is conducting exploration work
on those properties. Kelwood Enterprises, Ltd. is a wholly owned
Canadian Corporation with no active operations. Gold Standard Minas
was organized for the purpose of carrying on a gold exploration program
in the country of Brazil.
Investment in Mining Properties
-------------------------------
Prospecting and exploration costs incurred in the search for new mining
properties are charged to expense as incurred. Direct costs associated
with the development of identified reserves are capitalized until the
related geological areas are either put into production, sold or
abandoned. As of July 31, 1996 there were no geological areas under
production.
Page 9
<PAGE>
<PAGE>
GOLD STANDARD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
July 31, 1996 and October 31, 1995
(Unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Earnings (Loss) Per Share
-------------------------
Earnings (loss) per share of common stock is computed on the
weighted-average number of shares outstanding during the period.
Cash Equivalents
----------------
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments and investments readily convertible into
cash, or purchased with a maturity of three months or less, to be cash
equivalents.
Securities Available for Sale and Options
-----------------------------------------
Instruments used in trading activities include both securities and
options and are stated at market value. Quoted market prices are
generally used as a basis to determine the market value. If quoted
market prices are not available market values are based on dealer
quotes. Realized and unrealized losses are recognized in the financial
statements.
Foreign Currency Translation
----------------------------
Substantially all assets and liabilities of the Company's international
operations are translated at year-end exchange rates and the resulting
adjustments are accumulated in stockholders' equity. Income and
expenses are translated at exchange rates prevailing during the period.
Foreign currency transaction gains and losses are included in net
income, except for those relating to intercompany transactions of a
long-term investment nature, which are accumulated in stockholders'
equity.
NOTE 2 - SECURITIES AVAILABLE FOR SALE
In February 1996 the Company entered into a non-monetary transaction
exchanging rights to diamond potential properties located in Brazil for
100,000 shares of American Mineral Fields stock (AMZ) which was trading
at $4.00 per share. This transaction resulted in a net gain to the
Company of $300,000 ($400,000 less $100,000 paid to three geologists as
bonuses on the transaction).
Page 10
<PAGE>
<PAGE>
GOLD STANDARD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
July 31, 1996 and October 31, 1995
(Unaudited)
NOTE 2 - SECURITIES AVAILABLE FOR SALE (Continued)
During the period February 1,1996 to July 31, 1996, the Company
realized gains on the sale of this stock in the amount of $149,741. At
July 31, 1996, the remaining 49,000 shares with a book value of $4.00
per share were valued at $6.70 per share.
NOTE 3 - EXCHANGE TRADED OPTIONS
The Company has invested in options to purchase gold. The options
expire in May 1998. Through July 31, 1996 the Company has recorded a
cumulative unrealized loss related to these instruments of $240,547.
NOTE 4 - EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Equipment and leasehold improvements as of July 31, 1996, and October
31, 1995, are detailed in the following summary:
Net Book Value
Accumulated July 31, Oct. 31,
Cost Depreciation 1996 1995
--------- ------------ -------------------
Furniture &
fixtures $ 57,266 $ 46,430 $ 10,836 $ 12,795
Leasehold
improvements 3,200 3,200 -- --
Vehicles &
equipment 257,812 105,221 152,591 87,265
--------- --------- --------- ---------
$318,278 $154,851 $163,427 $100,060
========= ========= ========= =========
Depreciation of furniture, fixtures, vehicles and equipment is
calculated on the straight line method based on the estimated service
lives of the depreciable assets. Depreciation expense for the three
and nine month periods ended July 31, 1996, totaled $11,116 and $25,893
($5,427 and $16,020 for the three and nine month periods ended July 31,
1995).
Page 11
<PAGE>
<PAGE>
GOLD STANDARD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
July 31, 1996 and October 31, 1995
(Unaudited)
NOTE 5 - MINING PROPERTIES
The Company holds directly or through its subsidiary companies, mineral
and exploration rights to property located in the Dugway region of
western Utah, Southern Uruguay, and Brazil. All exploration costs
associated with these properties have been charged to operations as
incurred, consistent with the Company's accounting policies (see
Note 1). The Company's leasehold exploration and carrying expenses for
the nine month period ended July 31, 1996 are summarized as follows:
Uruguay $107,950
Brazil 269,722
United States 20,604
---------
Total $398,276
=========
NOTE 6 - DEFERRED LIABILITY
The Company received a payment of $61,000 in 1990 from Compania Minera
San Jose, S.A., a joint venture participant in Uruguay (see Note 9).
The payment is to be used to fund potential future reclamation costs on
the San Juan Hills joint venture in Uruguay. Upon completion of the
reclamation efforts, any unused portion of the deposit will be refunded
to the payor.
NOTE 7 - CAPITAL STOCK
In February 1996, outstanding stock warrants that were issued in March
1992, were exercised for the purchase of 250,000 shares of common stock
in the Company. The exercise price of these warrants was $.75 per
share. The Company realized $187,500 from the transaction.
In May and June 1996, Sun Valley Gold Company purchased 3,000,000
shares of the Company's common stock for $1.00 per share. As part of
the transaction, Sun Valley Gold also received warrants for the
purchase of 3,000,000 additional shares of the Company's common stock.
The exercise price of these warrants is $1.50 per share and the
warrants expire in May 1999. The Company realized $3,000,000 from this
transaction.
In May 1996, FCMI purchased 600,000 shares of the Company's common
stock for $1.00 per share. The Company realized $600,000 from this
transaction.
Page 12
<PAGE>
<PAGE>
In June 1996 the Company extended the expiration dates of warrants for
the purchase of 500,000 shares of common stock from June 1996 to June
1999. The Company also extended the expiration date of warrants for
the purchase of an additional 100,000 shares of common stock from
NOTE 7 - CAPITAL STOCK (Continued)
October 1996 to October 1999. Warrants for the purchase of 200,000
shares of common stock expired in June 1996 and were not extended.
The Company's stock purchase warrants outstanding as of July 31, 1996,
are summarized as follows:
Shares
Issue Expiration Exercise Subject to
Date Date Price Warrant
06/87 06/30/99 $1.25 500,000
10/87 10/01/99 1.25 100,000
07/88 07/18/99 2.25 750,000
10/89 09/15/96 3.00 25,500
03/92 03/31/03 .75 750,000
05/93 01/18/98 1.25 50,000
05/96 05/31/99 1.50 3,000,000
---------
Total outstanding warrants 5,175,000
=========
If all outstanding stock purchase warrants were exercised, the total
proceeds would be $7,639,000.
In March 1996, Big Pony Gold, the Company's 64.4% owned subsidiary
issued 100,000 shares of its unregistered and restricted common stock
to two individuals in consideration of consulting services rendered.
In May 1996, Sun Valley Gold Company purchased 500,000 shares of Big
Pony Gold's common stock for $1.00 per share. As part of the
transaction, Sun Valley Gold also received warrants for the purchase of
500,000 additional shares of Big Pony Gold's common stock. The
exercise price of these warrants is $1.25 per share and the warrants
expire in May 1999. Big Pony Gold realized $500,000 from this
transaction. These are the only outstanding warrants for the purchase
of Big Pony Gold common stock and if they were all exercised proceeds
would be $625,000.
NOTE 8 - RELATED PARTY TRANSACTIONS
The Company has funded the majority of the operations of its
subsidiaries Big Pony Gold, Gold Standard South, and Gold Standard
Minas with unsecured non-interest bearing long term cash advances. As
of July 31, 1996 the Company had receivables from these companies of
$246,485, $574,089, and $535,338 respectively. All intercompany
transactions have been eliminated in consolidation.
Page 13
<PAGE>
<PAGE>
GOLD STANDARD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
July 31, 1996 and October 31, 1995
(Unaudited)
NOTE 8 - RELATED PARTY TRANSACTIONS (Continued)
To guarantee the future reclamation commitments in Uruguay of the
Company's subsidiary, Big Pony Gold, Inc., the Company has obtained a
standby letter of credit in the amount of $1,000,000 and extended the
benefits of the letter of credit to their subsidiary.
On March 14, 1996 the Company acquired 750,000 shares of the common
stock of its subsidiary Big Pony Gold, Inc. in exchange for
cancellation of $10,000 in debt owed by the subsidiary to the Company
and transfer by the Company of all its interest in certain mineral
rights and assets pursuant to the cancellation of the Campo Del Oro
venture (Note 9).
NOTE 9 - OPERATING AND JOINT VENTURE AGREEMENTS
The Company was party to three operating or joint venture agreements.
While the terms of the agreements differ, they all generally address
funding of exploration activities and subsequent mine development and
production activities, should exploration results warrant development.
The agreements are summarized as follows:
a. In September 1988, the Company entered into a joint venture
agreement for the exploration of certain properties in
southern Uruguay with Compania Minera San Jose S.A. (CMSJ), a
wholly owned subsidiary of Bond International Gold. During
1992 CMSJ was acquired by California-based American
Resources, Inc. (ARI) who has continued to drill and explore
the property under the terms of the agreement. ARI
previously acquired a 60% interest in the project by funding
the project's exploration activities, while the Company
retained a 40% participating interest. In an agreement dated
February 22, 1995, the Company's 40% participating interest
was replaced with a 20% royalty interest in a parcel of this
property known as the San Carlos Mine. In June 1995 gold
production commenced at this mine. In accordance with the
terms of the joint venture agreement, the Company's royalties
revenues totaled $339,726 for the nine months ended July 31,
1996.
Page 14
<PAGE>
<PAGE>
b. In June 1992, the Company entered into a joint venture
agreement with Santa Fe Pacific Mining, Inc. The objective
of the agreement was to facilitate exploration and potential
future development of all the Company's mineral holdings in
southern Uruguay, except for those properties covered by a
joint venture agreement with Compania Minera San Jose S.A.
which is discussed in the preceding paragraph. Under terms
of this agreement, Santa Fe could earn up to a 60% interest
in producible discoveries on the subject properties by
funding 100% of the exploration expenses up to either a
specified minimum investment or until a decision to develop a
discovery was reached. Thereafter, the Company was to
participate by funding its proportionate share of future
development costs or have its 40% participating interest
eroded. In February 1996, the agreement was terminated with
all assets and properties being relinquished by Santa Fe
Pacific Mining, Inc. to the Company and its subsidiary Big
Pony Gold, Inc.
c. In November 1994, Big Pony Gold, Inc., the Company's
subsidiary, entered into a joint venture agreement with Ashton
Mining of Australia and Santa Fe Pacific Gold. The objective
of the agreement was to facilitate the exploration for
diamonds and encompassed the entire country of Uruguay. Under
terms of this agreement Big Pony Gold's share of costs and
proceeds was 16% for diamonds and 24% for gold. These terms
did not apply to any properties covered by the preceding two
joint venture agreements. In February 1996, the agreement was
terminated.
Page 15
<PAGE>
<PAGE>
NOTE 10 - INCOME TAX
The amounts and expiration dates of net operating loss carryforwards
and investment tax credits at July 31, 1996 are detailed in the
following summary:
Federal State
Net Operating Net Operating Invest.
Expiration Date Loss Loss Tax Credit
October 31, 1996 $ -- $ 545,295 $ 26
December 31, 1996 -- 216,911 270
October 31, 1997 -- 569,296 --
October 31, 1998 -- 15,927 --
October 31, 1999 -- 559,140 --
October 31, 2001 -- 674,520 --
October 31, 2003 1,477,109 -- --
December 31, 2003 1,391 -- --
October 31, 2004 675,277 -- --
December 31, 2004 332,153 -- --
October 31, 2005 1,106,261 -- --
December 31, 2005 408,740 -- --
October 31, 2006 762,506 -- --
October 31, 2007 568,726 -- --
October 31, 2008 16,537 -- --
October 31, 2009 558,487 -- --
October 31, 2010 674,483 -- --
$6,581,670 $ 2,581,089 $ 296
Page 16
<PAGE>
<PAGE>
GOLD STANDARD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
July 31, 1996 and October 31, 1995
(Unaudited)
NOTE 11 - LITIGATION
In 1986, the Company filed a lawsuit against American Barrick Resources
Corporation, Getty Oil Company, and Texaco, relative to party's interest
on the Mercur gold mine located in Tooele County, Utah. The lawsuit
alleges breach of contract, breach of fiduciary duty and several other
causes of action related to the operating agreement between the Company
and the defendants or their successors in interest to the Mercur gold
mine. Under the action the Company sought the return of the Mercur
property, monetary damages and other appropriate relief.
In April 1993, the Company accepted an out-of-court cash settlement with
American Barrick Resources Corporation, one of the defendants in the
action, for a total of $5,225,000.
The lawsuit against the other defendants went to trial in July 1993.
Following a seven week trial the jury returned a verdict in favor of the
Company on September 3, 1993, and awarded the Company $404,164,000 in
damages. Subsequently, the judge set aside the jury verdict, thereby
denying the Company the jury's award. The Company appealed the judge's
decision to the Supreme Court of the State of Utah. On January 11, 1996,
the Supreme Court announced its decision to uphold the trial judge's
directed verdict for the defendants in the case. As a result of the
unsuccessful appeal, the Company must pay approximately $48,000 in court
costs. These costs have been accrued in the July 31, 1996 financial
statements.
In May 1996 the Company was notified that a Writ of Reconsideration filed
with the Utah Supreme Court was denied. The Company has decided to no
longer continue its efforts in the lawsuit.
Page 17
<PAGE>
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operations.
---------------------
INTRODUCTION
Gold Standard, Inc. and its subsidiaries (the Registrant) are principally
engaged in the acquisition of, and exploration for, producing or potentially
productive gold properties. Its activities are concentrated, for the most
part, in southern Uruguay, Brazil and west central Utah.
A significant factor that effected the Registrant's operations for years
was its lawsuit against the operators and former operators of the Mercur Gold
Mine in Tooele County, Utah. A January, 1996 ruling against the Registrant,
and a subsequent denial for reconsideration has ended the Registrant's efforts
in the case.
RESULTS OF OPERATIONS
The Registrant holds a 40% royalty interest in a joint venture property
in Southern Uruguay known as the San Juan Hills property. Its joint venture
partner, American Resources, Inc., has been funding exploration on this
property. Mining from one deposit, the San Carlos Mine, has resulted in
royalty revenue of $339,726 for the Registrant during the nine month period
ended July 31, 1996. In March 1996 surface mining on the deposit was
completed. Additional studies are continuing and if deposits are found the
Registrant will receive royalties or its share of production.
The Registrant had no other operating revenue and no other properties
under production. The Registrant does not expect to receive revenue from any
of its other properties during the near future. The Registrant's operating
activities have been solely exploration related and have been concentrated on
their Uruguay, Brazil, Dugway, and other western Utah properties. Exploration
related expenses for the nine month period ended July 31, 1996 were $398,276
($192,177 for the nine month period ended July 31, 1995). Exploration costs
incurred during the nine month period ended July 31, 1996 are summarized as
follows:
Uruguay $107,950
Brazil 269,722
Utah 20,604
--------
$398,276
========
Page 18
<PAGE>
<PAGE>
Exploration expenses have been significantly higher in 1996 than in 1995
because of the Registrant's increased activity in its properties in Brazil.
Exploration activities continue on the Registrant's Uruguay properties. The
termination of the joint venture agreements with Sante Fe Pacific Mining, Inc.
has made the Registrant responsible for all exploration costs. However, the
Registrant is currently working on funding for the Uruguay properties through
it's subsidiary, Big Pony Gold.
Legal fees and costs relative to the Mercur litigation should no longer
use a significant portion of the Registrant's funds, since the State of Utah
Supreme Court's ruling for the defendants in the case. Legal fees for the nine
month period ended July 31, 1996 totaled $32,499 ($293,241 for the nine month
period ended July 31, 1995).
The Registrant's general and administrative expenses, excluding legal
expenses totaled $278,555 for the nine month period ended July 31, 1996
($235,257 for the nine month period ended July 31, 1995). The two most
significant general and administrative expense categories during the nine
month period ended July, 1996 were (a) professional and consulting fees
($99,163) and (b) wages and salaries ($98,400). The balance of general and
administrative expenses includes office supplies and expenses, office rent,
travel, etc.
LIQUIDITY AND CAPITAL RESOURCES
In addition to royalty income from its Uruguay property, the Registrant
will continue to rely on funds received from the 1993 settlement with one of
the parties in the Mercur lawsuit. The Registrant will also receive operating
funds as investors exercise outstanding warrants for the purchase of common
stock. During the nine month period ended July 31, 1996 the Registrant and
its subsidiary, Big Pony Gold, have realized $4,287,500 from stock
transactions.
The Registrant has no material capital commitments or agreements which
would require significant outlays of capital during the remaining three months
of the year.
The Company's liquidity should improve in 1996. In the short term, the
Registrant has sufficient cash reserves to fund operations. These reserves
have been funded by royalties and sales of trading securities. In the
long-term it will look to the issuance of additional equity capital and
increased production from its properties.
Page 19
<PAGE>
<PAGE>
INFLATION
The impact of inflation on the Registrant's operations will vary. The
future price of gold and the level of future interest rates could directly
effect the Registrant's future operating revenue.
Serious increases in inflation could increase general and administrative
expenses for the Registrant and make it difficult to remain within budget.
However, management does not expect any material increases in the inflation
rate during the near future.
ENVIRONMENTAL RULES AND REGULATIONS
The Registrant is not aware of any noncompliance with environmental rules
and regulations, nor has the Registrant been cited by any local, state or
national agency either in the United States or South America for noncompliance
with environmental rules and regulations.
At July 31, 1996, the Registrant had cash and investments of $12,083
which was pledged as security against future reclamation costs on mineral
properties under exploration in Uruguay. With the termination of the joint
venture agreements with Santa Fe Pacific Mining, Inc, the Registrant will need
to put additional funds on deposit for future reclamation. These amounts had
not been determined as of the date of this report. Except for the above
reclamation costs, the Company will have no involvement in environmental
remediation activities.
Page 20
<PAGE>
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
-----------------
Not applicable
Item 2. Changes in Securities.
---------------------
Not applicable
Item 3. Defaults Upon Senior Securities.
-------------------------------
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders.
---------------------------------------------------
No items were presented for a vote of security holders during
the period ended July 31, 1996
Item 5. Other information.
-----------------
Not applicable
Item 6. Exhibits and Reports on Form 8-K.
--------------------------------
Not applicable
Page 21
<PAGE>
<PAGE>
SIGNATURE
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.
GOLD STANDARD, INC.
Registrant
DATED: September 16, 1996 By /s/ Scott L. Smith
------------------------------------
Scott L. Smith
President, Treasurer,
Chairman of the Board and
Principal Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUL-31-1996
<CASH> $6,483,592
<SECURITIES> $347,765
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> $6,902,253
<PP&E> $163,427
<DEPRECIATION> 0
<TOTAL-ASSETS> $7,127,276
<CURRENT-LIABILITIES> $56,305
<BONDS> 0
0
0
<COMMON> $19,298
<OTHER-SE> $6,990,673
<TOTAL-LIABILITY-AND-EQUITY> $7,127,276
<SALES> 0
<TOTAL-REVENUES> $87,185
<CGS> 0
<TOTAL-COSTS> $326,454
<OTHER-EXPENSES> $216,211
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> $(455,480)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> $(455,480)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> (.03)
</TABLE>
