U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to .
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Commission file number 1-4799
EMPIRE GOLD INC.
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(Exact name of small business issuer as specified in its charter)
Indiana 35-0540454
-------------------------------- -------------------------------
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
802 - 1985 Belleville Ave.,
West Vancouver, British Columbia, Canada, V7V 1B6
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(Address of principal executive office)
604-921-2811
----------------------------
(Issuer's telephone number)
N/A
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(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.[X] Yes [ ] No
As of September 30, 1998, 75,472,331 shares of common stock, no par value,
of the Issuer were outstanding.
Transitional Small Business Disclosure Format (Check one): [ ] Yes [X] No
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<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
<TABLE>
<CAPTION>
EMPIRE GOLD INC.
Consolidated Balance Sheets
as at September 30,
(unaudited)
1998 1997
---- ----
Assets
<S> <C> <C>
Current assets
Cash .......................................................................... 21,279 83,325
Accounts receivable ........................................................... 0 75,000
Stock subscription receivable ................................................. 0 190,000
----------- -----------
21,279 348,325
Mineral property and deferred development costs ................................. 515,929 579,460
----------- -----------
$ 537,208 $ 927,785
=========== ===========
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable and accrued liabilities ...................................... $ 209,241 $ 202,341
Loans payable ................................................................. 0 72,801
Due to shareholder ............................................................ 50,454 11,988
----------- -----------
259,695 287,130
----------- -----------
Shareholders' equity
Common stock, no par value, 1,000,000,000 shares
authorized, 75,472,331 and 72,587,948 shares
issued and outstanding in 1998 and 1997
Respectively .................................................................. 48,405,267 47,772,890
Common stock subscription ....................................................... 455,985
Common stock transferred by shareholder ....................................... (46,000) (46,000)
Accumulated deficit ........................................................... (48,081,754) (47,542,223)
----------- -----------
Total shareholders' equity ...................................................... 277,513 640,655
----------- -----------
$ 537,208 $ 927,785
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
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<PAGE>
<TABLE>
<CAPTION>
EMPIRE GOLD INC.
Consolidated Statements of Changes in Shareholders Equity
for the three months ended March 31, 1998 and March 31, 1997
(unaudited)
Common Stock Common Common Stock
--------------------- Stock Transferred
Number Amount Subscriptions by Affiliate Deficit Total
------ ------ ------------- ------------ ------- -----
<S> <C> <C> <C> <C> <C> <C>
December 31, 1996 ..................... 70,005,997 $ 47,258,890 $ 514,000 $ (46,000) $ (47,336,622) $ 390,268
Sale of common stock .................. 2,581,951 514,000 (58,015) 455,988
Net loss .............................. -- -- -- -- (205,602) (205,602)
----------- ----------- ----------- ---------- ----------- -----------
September 30, 1997 .................... 72,587,948 $ 47,772,890 $ 455,988 $ (46,000) $ (47,542,223) $ 640,655
Sale of common stock .................. 1,543,049 455,988 (455,988) -- --
Cancellation of common stock .......... (2,000) (100) -- -- -- (100)
1997 net loss ......................... -- -- -- -- (363,082) (363,082)
----------- ----------- ----------- ---------- ----------- -----------
December 31, 1997 ..................... 74,128,997 $ 48,228,778 $ -- $ (46,000) $ (47,905,305) $ 277,473
Sale of common stock .................. 1,343,334 176,490 176,490
Net loss .............................. -- -- -- -- (176,449) (176,449)
----------- ----------- ----------- ---------- ----------- -----------
September 30, 1998 .................... 75,472,331 $ 48,405,267 $ -- $ (46,000) $ (48,081,754) $ 277,513
=========== =========== =========== ========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements
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<PAGE>
<TABLE>
<CAPTION>
EMPIRE GOLD INC.
Consolidated Statements of Operations and Deficit
(unaudited)
for the nine months for the three months
September 30 September 30
----------------------- ----------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues
Interest income .................................. 162 3,968 $ 0 $ 3,729
---------- ---------- ---------- ----------
Expenses
General and administrative expenses .............. 45,855 58,281 24,109 23,778
Legal fees ....................................... 12,274 76,887 0 41,926
Audit fees ....................................... 19,089 24,042 0 2,106
Management fees .................................. 67,988 50,357 23,410 25,044
Exploration expenses ............................. 31,405 0 10,063 0
---------- ---------- ---------- ----------
176,611 209,567 57,582 92,854
---------- ---------- ---------- ----------
Net loss ........................................... (176,449) (205,599) $ (57,582) $ (89,125)
========== ========== ========== ==========
Weighted average number of shares of
common stock outstanding ........................... 74,392,705 72,608,621 74,392,705 72,608,621
========== ========== ========== ==========
Net loss per share ................................. $ 0 $ 0 $ -- $ --
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
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<PAGE>
<TABLE>
<CAPTION>
EMPIRE GOLD INC.
Consolidated Statements of Cash Flow
for the nine months ended September 30
(unaudited)
1998 1997
---- ----
<S> <C> <C>
Cash provided by (used in) operating activities
Net loss for the period ........................................................ $(176,449) $(205,599)
Change in non-cash working capital ............................................. 84,864 159,256
--------- ---------
Cash provided used in continuing operations ...................................... (91,585) (46,343)
--------- ---------
Cash provided by (used in) investing activities
Mineral property and deferred development costs ................................ (76,422) (379,268)
--------- ---------
(76,422) (379,268)
--------- ---------
Cash used in financing activities
Loans payable ................................................................. 72,801
Proceeds from sale of common stock ............................................ 176,490 291,250
Common stock issue costs ....................................................... -- (25,265)
--------- ---------
Net cash used in financing activities ............................................ 176,490 388,786
--------- ---------
Increase (Decrease) in cash ...................................................... 8,483 (86,825)
Cash, beginning of period ........................................................ 12,796 170,150
--------- ---------
Cash, end of period .............................................................. $ 21,279 $ 83,325
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
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<PAGE>
EMPIRE GOLD INC.
Notes to Consolidated Financial Statements
for the nine months ended September 30, 1998 and 1997
(unaudited)
1. Basis to Note Presentation
The notes to the consolidated financial statements do not present all disclosure
required under generally accepted accounting principles but instead, as
permitted by the Securities and Exchange Commission regulations, presume that
users of the interim financial statements have read or have access to the
audited consolidated financial statements and notes thereto contained in
Company's Annual Report on Form 10-KSB for the year ended December 31, 1997 as
filed with the Securities and Exchange Commission, and that the adequacy of
additional disclosure needed for a fair presentation may be determined in that
context.
The accompanying consolidated interim financial statements include adjustments
which are, in the opinion of management, necessary for fair presentation of the
consolidated results of operation for the periods presented. All such
adjustments are of a normal recurring nature. The interim results of operation
for the third quarter ended September 30, 1998 are not necessarily indicative of
the results that may be expected for any other interim period of 1998 or for the
year ending December 31, 1998.
2. Continuity of Operations
The financial statements have been prepared assuming the Company will continue
as a going concern. At September 30, 1998, the Company has an accumulated
deficit of $48,081,754 and a working capital deficiency of $238,416.
Furthermore, additional funds will be required to proceed with the Company's
exploration program. The ability of the Company to raise sufficient funds to
operate in the ordinary course of business and proceed with exploration plans,
raise substantial doubt about the Company's ability to continue as a going
concern. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
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<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation
General
This quarterly report contains certain forward looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Statements
which are not historical facts contained in this report are forward looking
statements that involve risks and uncertainties that could cause actual results
to differ from projected results. When used in this report, in future filings by
the Company with the Securities and Exchange Commission, in the Company's press
releases and in any oral statements made by the Company, the words or phrases
"will likely result," "expects," "intends," "will continue," "is anticipated,"
"estimates," "projects," "plans," and similar expressions are intended to
identify such "forward looking statements". These forward looking statements are
subject to risks, uncertainties, and other factors which could cause actual
results to differ materially. Forward looking statements included in this report
and in communications of the Company include the proposed business plan of the
Company, the planned development of the Company's mining properties in Austria,
the commencement dates and the costs of diamond core drilling and exploration
activities, the future acquisition of mining properties, the procurement of
future financing to fund the Company's operations, and the compliance with
environmental and other mining laws in Austria. Factors that could cause actual
results to differ materially from projected results include, among others, risks
and uncertainties relating to general domestic and international economic and
political conditions, risks associated with mining operations in Austria, the
selling price of metals, unanticipated ground and water conditions,
unanticipated grade and geological problems, metallurgical and other processing
problems, availability of materials and equipment, the timing of receipt of
necessary governmental permits, the occurrence of unusual weather or operating
conditions, force majeure events, lower than expected ore grades and higher than
expected stripping ratios, the failure of equipment or processes to operate in
accordance with specifications and expectations, labor relations, accidents,
delays in anticipated start-up dates, environmental costs and risks, the ability
of the Company to raise financing on a favorable basis to the Company or at all,
and general financial and stock market conditions. Many such factors are beyond
the Company's ability to control or predict. Readers are cautioned not to put
undue reliance on forward looking statements. In light of the significant
uncertainties inherent in forward looking statements, the inclusion of any such
statement should not be regarded as a representation by the Company or any other
person that the objectives or plans of the Company will be achieved or that the
Company will ever obtain significant revenue or profitability. The Company
disclaims any intent or obligation to update publicly the forward looking
statements contained in this report, whether as a result of new information,
future events or otherwise, except as required by applicable laws.
Prior to December 1996, the Company derived revenues from the operation of its
real estate development business. In December 1996, the Company discontinued
such operations and commenced new operations in the mineral exploration and
development industry.
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<PAGE>
Mineral Property and Deferred Development Costs
Mineral Property and Deferred Development Costs of $26,393 for the quarter ended
September 30, 1998 are capitalized as "Mineral property and deferred development
costs" on the Company's Balance Sheet. Such costs were $Nil for the comparable
period in the prior year. These cost were incurred to further develop the
Company's nine Austrian properties, particularly preparatory work for the
drilling program on the Company's Schellgaden property.
Results of Operations
General and administrative expenses for the quarter ended September 30, 1998,
were $24,109 compared to $23,778 for the same period in 1997.
Legal fees for the quarter ended September 30, 1998, were $Nil compared to
$41,926 for the same period in 1997. The costs were higher in 1997 due to
efforts in bringing its regulatory filings up to date.
Audit fees for the quarter ended September 30, 1998, were $Nil compared to
$2,106 for the same period in 1997.
Management fees for the quarter ended September 30, 1998, were $23,410 compared
to $25,044 for the same period in 1997.
The net loss from continuing operations for the quarter ended September 30,
1998, was $57,582 compared to $89,125 for the same period in 1997.
Liquidity and Capital Resources
The Company's working capital deficiency (current assets less current
liabilities) amounted to $238,416 at September 30, 1998. The Company has
$259,695 in current liabilities of which $50,370 pertains to a prior year over
accrual of liabilities. Current assets at September 30, 1998, amounted to
$21,279.
Operating activities of the Company used net cash of $91,585 for the nine months
ended September 30, 1998, compared to using net cash of $46,343 for the same
period in 1997. The cash provided by operations for the nine months ended
September 30, 1998 consisted of a net loss of $176,449 offset by decreases of
$84,864 in accounts payable and accrued liabilities and in accounts receivable.
The Company used $76,422 and $379,268 in net cash for investing activities for
the nine months ended September 30, 1998 and 1997, respectively. Net cash used
in investing activities for the nine months ended September 30, 1998 was used
for the further development of the Company's nine Austrian properties.
- 8 -
<PAGE>
The cash obtained for financing activities was $176,490 and $338,786 for the
nine months ended September 30, 1998 and 1997, respectively. During the nine
months ended September 30, 1997, the Company incurred common stock issue costs
of $25,265.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports of Form 8-K
(a) Exhibits.
The following is a list of exhibits filed as part of this Form 10-QSB.
Where so indicated by footnote, exhibits which were previously filed are
incorporated by reference. For exhibits incorporated by reference, the location
of the exhibits in the previously filed is indicated in parenthesis.
Item 601
Category Exhibit
- - -------- -------
3.1 Amended and Restated Articles of Empire Gold Inc., adopted September
2, 1997. (2) (Exhibit 1)
3.2 Amended and Restated Bylaws of Empire Gold Inc., adopted August 6,
1997. (2) (Exhibit 2)
3.3 Articles of Amendment of Articles of Incorporation of Registrant (1)
(Exhibit 3.1)
3.4 Amended By-Laws of National Enterprises, Inc., adopted February 11,
1972 as amended to March 15, 1993. (3) (Exhibit 1)
10.1 Share Purchase Agreement, dated November 28, 1996, among National
Enterprises Inc. and Danca Investments Inc., pertaining to the sale of
all of the issued and outstanding shares of NRC, Inc. Filed as Exhibit
1.I to Form 8-K filed March 27, 1997 and incorporated herein by
reference. (3) (Exhibit 2)
10.2 Share Purchase Agreement, dated November 28, 1996, among National
Enterprises Inc. and Danca Investments Inc., pertaining to the sale of
all of the issued and outstanding shares of National Building Systems,
Inc. Filed as Exhibit 1.II to Form 8-K filed March 27, 1997 and
incorporated herein by reference. (3) (Exhibit 3)
10.3 Share Purchase Agreement, dated November 28, 1996, among National
Enterprises Inc. and Danca Investments Inc. pertaining, to the sale of
all of the issued and outstanding shares of Arendswood Homes, Inc.
Filed as Exhibit 1.III to Form 8-K filed March 27, 1997 and
incorporated herein by reference. (3) (Exhibit 4)
- 9 -
<PAGE>
10.4 Agreement, dated November 30, 1997, among National Enterprises, Inc.,
Argosy Mining Corp. and Mercury Immobilien und Verwaltungs AG,
pertaining to the acquisition of Argosy Mining G.m.b.H. Filed as
Exhibit 2.IV to Form 8-K filed March 27, 1997 and incorporated herein
by reference. (3) (Exhibit 5)
10.5 National Enterprises, Inc. 1994 Stock Option Plan. (3) (Exhibit 6)
10.6 Management Agreement between National Enterprises Inc. and United
Tri-Star Resources Limited, dated September 30, 1997. (2) (Exhibit 3)
21* List of subsidiaries of National Enterprises, Inc.
27* Financial Data Schedule.
*Filed herewith.
(1) File as an Exhibit to Form 10-KSB of National Enterprises Inc. filed March
20, 1997 for the year ended December 31, 1995.
(2) Filed as an Exhibit to Form 10-QSB of National Enterprises Inc. filed
November 13, 1997, for the quarter ended September 30, 1997.
(3) Filed as an Exhibit to Form 10-KSB of National Enterprises Inc. filed July
21, 1997, for the year ended December 31, 1996.
(b) Reports on Form 8-K. One report on Form 8-K has been filed during the
quarter ended September 30, 1998.
(i) Filed on October 21,1998. .
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
EMPIRE GOLD INC.
By: /s/ Florian Riedl-Riedenstein Date: November 12, 1998
-------------------------
Florian Riedl-Riedenstein, Chairman,
Chief Executive Officer (Principal
Executive Officer), and Director
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<PAGE>
In accordance with the Exchange Act, this Report has been signed below by
the following persons on behalf of the Registrant and in the capacities and on
the dates indicated.
By: /s/ Florian Riedl-Riedenstein Date: November 12, 1998
------------------------------
Florian Riedl-Riedenstein, Chairman,
Chief Executive Officer (Principal
Executive Officer), and Director
By: /s/ Eunice R. Ludlow Date: November 12, 1998
-----------------------
Eunice R. Ludlow,
Chief Financial Officer (Principal
Financial and Accounting Officer)
and Secretary
By: /s/ William Warke Date: November 12, 1998
-----------------
William Warke, President and Director
By: /s/ Matthew Gassenbeek, III Date: November 12, 1998
---------------------------
Matthew Gaasenbeek, III, Director
By: /s/ Robert Needham Date: November 12, 1998
------------------
Robert Needham, Director
By: /s/ Hans R. Klob Date: November 12, 1998
----------------
Hans R, Klob, Director
- 11 -
List of Subsidiaries of National Enterprises, Inc.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Empire Gold
Inc.'s Consolidated Balance Sheets at March 31, 1998 and Consolidated Statements
of Operations and Deficit for the three months then ended and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 21,279
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 21,279
<PP&E> 515,929
<DEPRECIATION> 0
<TOTAL-ASSETS> 537,208
<CURRENT-LIABILITIES> 259,695
<BONDS> 0
0
0
<COMMON> 48,405,267
<OTHER-SE> (48,127,754)
<TOTAL-LIABILITY-AND-EQUITY> 537,208
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 176,611
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (176,611)
<INCOME-TAX> 0
<INCOME-CONTINUING> (176,611)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (176,611)
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
</TABLE>
