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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-KSB
Annual Report Under Section 13 or 15 (d) of
the Securities Exchange Act of 1934
For the fiscal year ended September 30, 1999
Commission file number: 0-12809
GOLDEN CHIEF RESOURCES, INC.
(Name of small business issuer in its charter)
State of Kansas 48-0846635
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification #)
406 Griffith Avenue, Terrell, Texas 75160
(Address of principal executive offices)(Zip code)
Issuer's telephone number:(972) 524-8215
Securities registered under Section 12 (g) of the Exchange Act: Common
stock, no par value
The issuer (1) has 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. Yes [X] No [ ]
Check if disclosure of delinquent filers in response 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 $938.
The aggregate market value of the voting stock held by non-affiliates
of the registrant on September 30, 1999, was zero ($0) since the stock
was not trading. The number of shares outstanding of the registrant's
common stock on September 30, 1999, was 65,015,890 shares. On March 1,
2000, the Company had 162,515,890 shares outstanding.
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PART I
Item 1. Description of Business
(a) Business Development
Golden Chief Resources, Inc. (the "Company") was incorporated in the
State of Kansas on November 16, 1976, under the name of Art's Antique
Autos, Ltd. The Company remained dormant for several years and had no
appreciable assets or revenues until 1981. On August 14, 1981, the
name of the corporation was changed to Golden Chief Resources, Inc.
During September, 1981, the Company entered into concurrent
transactions wherein the Company issued stock to two groups in exchange
for assets including cash, notes receivable, and working interests in
oil and gas leases. The Company also acquired interests in several
mining leases and acquired commercial real estate which was used for
the Company's offices with extra space leased out to related parties.
Management abandoned the mining project since it did not result in the
production of sufficient quantities of minerals and sold fifty percent
of the investment in 1982. With the downturn of the real estate and
oil and gas economies during the mid 1980's, the Company was forced to
sell, close or abandon all of its oil and gas leases. The related
companies which operated oil and gas leases also failed during this
period and discontinued operations. The mortgagor on the Company's
commercial real estate foreclosed on the property to satisfy the
outstanding mortgage.
This series of transactions resulted in substantial losses of income
and operating assets. Management decided to discontinue any further
business operations and completed the liquidation of the few remaining
assets during 1986. The Company has not operated since that time.
Currently the Company initiated a new phase last fiscal year.
Management filed the necessary documents with the State of Kansas to
reinstate its existence. Effective August 25, 1998, the Company's
status with the State of Kansas was reinstated and the Company remains
in good standing and authorized to engage in business as a Kansas
corporation.
The Company is re-emerging as a development stage enterprise. The
Company will continue to be in a development stage until it has begun
significant operations and is generating significant revenues. The
process of reinitializing the Company will include identifying,
evaluating, structuring and completing a merger with or acquisition of
a privately owned entity.
During its fiscal year ended September 30, 1999, the Company was not
involved in any bankruptcy, receivership, or similar proceeding and
underwent no material reclassification, merger, or consolidation. The
Company does not anticipate involvement or participation in any of the
above proceedings, excepting a possible merger or consolidation.
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(b) Business of Issuer
As previously discussed, the Company currently has no business.
Management has been actively searching for possible merger or
acquisition partners. Meetings have been held with some interested
parties, but no deals have been consummated as of the date of this
report. However, Management has entered into an agreement in principle
for a changed in control of the Company. As discussed below, this deal
was consummated subsequent to September 30, 1999.
The past business of the Company was carried on by Arthur Sykes, Jr.,
Donald D. Roehrman, and Jereta Sykes, and this management team is
currently in place to search for possible merger or acquisition
partners as mentioned above. The Company had no employees as of
September 30, 1998.
Item 2. Description of Property
As of September 30, 1999, the Company had minimal assets consisting of
cash and marketable securities..
Item 3. Legal Proceedings
As of February 28, 2000 there were no legal proceedings to which the
Company was a party, and no litigation is known to be pending.
Item 4. Submission of Matters to a Vote of Securities Holders
A special meeting of shareholders was held on September 19, 1998 where
a proposal to approve an increase in authorized shares to 500,000,000
was approved by a majority vote. No other business came before the
meeting.
On October 12, 1999 a special meeting of shareholders was held in
Wichita, Kansas at which the Company agreed to issue 97,500,000 common
shares to Red River Properties, Inc. of Terrell, Texas and others ("The
Red River Group) in exchange for a 10% working interest in oil and gas
properties located in the JFS Field in Dimmit County, Texas. This
transaction resulted in the Red River Group owning approximately 60% of
the outstanding common shares. In exchange for past services rendered
to the Company by Arthur Sykes, Jr. the Company transferred the minimal
assets in the Company prior to the Red River transaction to Mr. Sykes.
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PART II
Item 5. Market for Common Equity and Related Stockholder Matters
(a) Market Information
Currently there is no market for the common stock. There are no
outstanding warrants to purchase any of the Company's securities. As
of March 1, 2000 certain options have been granted to officers and key
personnel as follows: 14.8 million shares at an exercise price of
$0.10 per share with expiration periods varying from December 31, 2000
to December 31, 2010; and 10.5 million shares at an exercise price of
$0.20 per share with expiration periods varying from December 31, 2004
to December 31, 2010.
(b) Holders
As of March 1, 2000, there were approximately 221 stockholders of
record of the Company's common stock. Additional stockholders hold
stock in street name; the number of street name holders is not
available to the Company.
(c) Dividends
The Company has not declared or paid dividends in the past, and does
not anticipate doing so in the immediate future.
Item 6. Management's Discussion and Analysis or Plan of Operations
No comparative analysis of revenues and expenses can be made between
the current year and the same period a year ago as there has been no
activity until September 30, 1998 when management began bringing the
Company back into compliance.
As of the end of the fiscal year ended September 30, 1999 the Company
did not have any income producing assets; however, the Company did
receive $861 in oil revenues from an unclaimed account held in suspense
since the 1980's during the second quarter ended March 31, 1999.
Miscellaneous income of $38 was received during the quarter ended June
30, 1999 as interest income on a brokerage account held by the Company.
With the downturn of the real estate and oil and gas economies during
the mid 1980's, the Company was forced to sell, close or abandon all of
its oil and gas leases. The related companies which operated oil and
gas leases also failed during this period and discontinued operations.
The mortgagor on the Company's commercial real estate foreclosed on the
property to satisfy the outstanding mortgage. This series of
transactions resulted in substantial losses of income and operating
assets. Management decided to discontinue any further business
operations and completed the liquidation of the few remaining assets
during 1986. The Company has not operated since that time.
The Company initiated a new phase last fiscal year. Management filed
the necessary documents with the State of Kansas to reinstate its
existence. Effective August 25, 1998, the Company's status with the
State of Kansas was reinstated and the Company is currently in good
standing and authorized to engage in business as a Kansas corporation.
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During the current fiscal year ended September 30, 1999, 16,857,840
common shares were issued for expenses, marketable securities, and
cash. Also during the current year the Company sold certain assets in
order to meet current cash requirements. The Company incurred a net
loss of $74,342 due mainly to the provision for payment of compensation
to management in the amount of $90,757. This amount reflects the sums
due under the transaction discussed more fully in Subsequent Events.
In the previous fiscal year while bringing the Company into compliance
with the state, management incurred expenses which were reimbursed with
the issuance of Company stock. In addition, officers of the Company
were paid for past services with stock. A total of 15,941,000 shares
of restricted common stock were issued to Arthur Sykes, Jr. and Donald
D. Roehrman for past services provided to the Company valued at $1,000
and reimbursement of expenses totaling $594.
Currently, management has found an acquisition partner. See Subsequent
Events below. At September 30, 1999 there was no assurance that the
transaction would occur, and there is no assurance that the resulting
new company or business combination will be successful.
Subsequent Events
On October 12, 1999 a special meeting of shareholders was held in
Wichita, Kansas at which the Company agreed to issue 97,500,000 common
shares to Red River Properties, Inc. of Terrell, Texas and others ("The
Red River Group) in exchange for a 10% working interest in shut-in oil
and gas properties located in the JFS Field in Dimmit County, Texas.
The property was returned to production in January of 2000. This
transaction resulted in the Red River Group owning approximately 60% of
the outstanding common shares. In exchange for past services rendered
to the Company by Arthur Sykes, Jr. the Company transferred the minimal
assets in the Company prior to the Red River transaction to Mr. Sykes.
At the October 12, 1999 special shareholders meeting in Item 1 above
James W. Landrum of Terrell, Texas, Richard M. Hewitt of Westlake,
Texas, and Michael H. McIlvain of Tulsa, Oklahoma were elected as
directors of the Company. At the same meeting Arthur Sykes, Jr.,
Jereta Sykes, and Donald D. Roehrman then resigned as officers and
directors.
At a Special Meeting of the Board of Directors held immediately after
the above Special Shareholders' Meeting the Board named James W.
Landrum, Terrell, Texas, President, Michael H. McIlvain as Executive
Vice President and Treasurer, and Richard M. Hewitt as Secretary.
Income Taxes
See Note 3 to the Financial Statements.
Disclosure Regarding Forward-Looking Statements
This Form 10-KSB includes "forward-looking" statements within the
meaning of Section 27A of the Securities Act and the Company desires to
take advantage of the "safe harbor" provisions thereof. Therefore, the
Company is including this statement for the express purpose of availing
itself of the protections of such safe harbor provisions with respect
to all of such forward-looking statements. The forward-looking
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statements in this Form 10-KSB reflect the Company's current views with
respect to future events and financial performance. These forward-
looking statements are subject to certain risks and uncertainties that
could cause actual results to differ from those anticipated. In the
Form 10-KSB, the words "anticipates," "believes, "expects," "intends,"
"future" and similar expressions identify forward-looking statements.
The Company undertakes no obligation to publicly revise these forward-
looking statements to reflect events or circumstances that may arise
after the date hereof. All subsequent written and oral forward-looking
statements attributable to the Company or persons acting on its behalf
are expressly qualified in their entirety by this section.
Item 7. Financial Statements
The financial statement information for the Company is set forth
immediately following the signature page of this Form 10-KSB. See the
Index to Financial Statements on page F-1.
Item 8. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
In 1998 the Company changed auditors from A. Leon Prior, CPA, to Robert
Early & Company, P.C., who continues to represent the Company. The
Company had no disagreements on accounting and financial disclosure
with the former auditor and has none with the present auditor.
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons
Each of the officers and directors hold office for one year terms.
None of the officers or directors have been involved in any material
legal proceedings. The following are the officers and directors of the
Company as of August 3, 1999:
Director
Name Age Position Since
- ------------------ --- -------- --------
Arthur Sykes, Jr. 72 President and Director 1976
Jereta Sykes 75 Secretary and Director 1998
Donald D. Roehrman 63 Vice President and Director 1981
Also see Subsequent Events and New Management below.
*Arthur Sykes, Jr. and Jereta Sykes are husband and wife. There are no
other family relationships between the officers and directors.
Arthur Sykes, Jr. has been a director of the Company since 1976 and its
president since October 1998. He was a securities broker-dealer with
LSCO Securities, Inc. (formerly The Larmer-Sykes Co., Inc.) from 1963
through 1989 and served as its president. He has also served as an
officer and/or director of several other companies over the years
including three oil and gas companies - Kit Karson Corporation, Q-West
Resources, Inc., Conquest Gas Corporation, a modular housing company -
Classic Design, Inc. and an engine rebuilding company - Merge Tech,
Inc... He is currently the president of Five Star Resources, Inc.
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Jereta Sykes was elected as secretary/treasurer and a director of the
Company in 1998. She has been involved in both public and private
companies since 1988. She served in the capacity of
secretary/treasurer of Kit Karson Corporation, a publicly traded
company on the Electronic Bulletin Board, from 1988 through 1997. She
began serving as secretary/treasurer of LSCO Securities, Inc. in 1989
and continues to hold this position. In 1998 she became
secretary/treasurer for Five Star Resources, Inc. She has also been a
homemaker since 1948.
Donald D. Roehrman was president of the Company for fifteen years and
currently serves as its vice president and a director. He spent ten
years as vice president, director, and securities broker-dealer for
LSCO Securities, Inc. For the past ten years, he has served as the
manager of the architectural products division for Rayer's Bearden
Stained Glass Inc. He also holds real estate and insurance licenses in
the State of Kansas.
New Management.
James W. Landrum, age 50, Terrell, Texas was elected President and a
director. Mr. Landrum is a business administration graduate of the
University of Texas at Arlington. He has twenty years of experience
in the oil and gas industry with Lanco Energy and for his own
account. Between 1995 and 1998, he was President of Esco Elevators,
Inc., an elevator manufacturing company and Megalith Corp., a public
company both of Fort Worth, Texas.
Michael H. McIlvain, age 53, Tulsa, Oklahoma is Executive Vice-
President and a director of the Company. Mr. McIlvain holds BS and
MBA degrees from the University of Kansas. He has more than 20 years
of experience in the oil and gas business, mainly with Clinton Oil
Co., Wichita, Kansas, and Rickelson Oil and Gas Company, Tulsa,
Oklahoma. Between 1994 and 1997, he was executive vice president of
BeneFund, Inc., a publicly held telecommunications company based in
Tulsa.
Richard M. Hewitt, age 62, Trophy Club, Texas is a director and the
Secretary. Mr. Hewitt is a graduate of Grinnell College and Southern
Methodist University School of Law and has been a licensed attorney
in Texas since 1963. Between 1964 and 1979, he was employed by the
U.S. Securities and Exchange Commission in Fort Worth, Texas. Mr.
Hewitt has been in private practice in the Dallas, Texas area since
1981 and a sole practitioner since 1992.
Item 10. Executive Compensation
At September 30, 1999 a provision was made for the compensation of Mr.
Sykes in the amount of $90,757, such amount being the total of assets
in the Company at September 30, 1999 pursuant to a proposed business
combination with the Red River Properties, Inc. Group more fully
discussed in Subsequent Events.
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During the first quarter of the current fiscal year, the Company
issued 5,388,920 shares valued at $2,177 to officers and directors or
their assignees for expenses incurred on behalf of the Company.
Additionally, 300,000 shares valued at $300 were issued for
investment banking services and 7,219,320 shares valued at $7,219
were issued to a related entity in exchange for marketable
securities.
During the last three quarters ending September 30, 1999, the Company
issued 980,000 shares for $14,300 cash, 2,269,600 shares to related
parties for marketable securities, and 700,000 shares valued at
$14,000 for consulting and professional services.
In September 1998, the Board approved the issuance of 15,941,000 shares
of common stock to its president and secretary for past services
provided to the Company valued at $1,000 and reimbursement of expenses
totaling $594. No other compensation was paid to officers and
directors for the past two fiscal years.
Item 11. Security Ownership of Certain Beneficial Owners and
Management
The following is certain information regarding the Company's common
stock as of August 3, 1999 with respect to (a) security ownership of
each person known by the Company to own beneficially more than 5% of
the Company's common stock, and (b) security ownership of management.
Ownership at September 30, 1999 Prior to the
Red River Properties, Inc. Transaction
Name and Address Number of Percent
Title of Class of Beneficial Owner Shares Owned of Class
- -------------- ------------------- ------------ --------
Common Stock Arthur Sykes, Jr. 21,539,447 33.13%
No Par Value 106 S. Parkdale See 1 below.
Wichita, KS 67209
Common Stock Jereta Sykes 3,020,000 4.65%
No Par Value 106 S. Parkdale See 2 below.
Wichita, KS 67209
Common Stock LSCO Securities, Inc.* 9,138,640 14.06%
No Par Value 106 S. Parkdale See 3 below.
Wichita, KS 67209
Common Stock Donald D. Roehrman 7,755,500 11.93%
No Par Value 801 N. Covington See 4 below.
Wichita, KS 67212
All directors and officers
as a group (3 persons) 41,453,587 63.76%
See 5 below.
*LSCO is controlled by Arthur Sykes, Jr.
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Common Stock Osage Hills Energy 3,922,714 6.03%
No Par Value Company
6901 Hillpark
Dallas, TX 75262
Common Stock Sierra Leone Diamond 5,469,186 8.41%
No Par Value Export Corp.
215 Suntide
Sunnyvale, TX 76262
Arthur Sykes, Jr. and Jereta Sykes are husband and wife. There are no
other family relationships between the officers and directors.
1. Arthur Sykes, Jr. shares include 853,207 shares held in Five Star
Resources, Inc. of which Mr. Sykes, is the president; 7,219,320 shares
held in LSCO Securities, Inc. of which Mr. Sykes controls; 1,919,320
shares held in Larmer-Sykes Co., Inc. of which Mr. Sykes controls;
37,500 shares held as custodian for minor children; and 11,510,100
shares held directly.
2. Jereta Sykes' shares include 3,020,000 shares held directly and 37,500
shares held as custodian for minor children.
3. LSCO Securities, Inc. is controlled by Arthur Sykes, Jr. and 1,919,320
shares are held by Larmer-Sykes Co., Inc.
4. Mr. Roehrman's shares include 4,150,500 shares held in the name of
Karen Roehrman, his wife; 312,500 held in the name of Karen Roehrman as
custodian for minor children; 12,500 shares held by Mr. Roehrman as
custodian for a minor child; and the remainder in his name.
5. The directors include Arthur Sykes, Jr., Jereta Sykes, and Mr.
Roehrman.
Management's Ownership Following the
Red River Properties, Inc. Transaction
Name and Address Number of Percent
Title of Class of Beneficial Owner Shares Owned of Class
- -------------- ------------------- ------------ --------
Common Stock James W. Landrum 75,100,000 46.21%
No Par Value 406 Griffith Avenue See 1 below.
Terrell, Texas 75160
Common Stock M. H. McIlvain 15,000,000 9.23%
No Par Value 3114 E. 83rd Street See 2 below.
Tulsa, OK. 74137
Common Stock Richard M. Hewitt 1,500,000 0.92%
No Par Value 202 Fresh Meadow Drive See 3 below.
Trophy Club, TX 72626
Common Stock Red River Properties, 59,100,000 36.37%
No Par Value Inc. See 1 below.
406 Griffith Avenue
Terrell, Texas 75160
All new directors and officers
as a group (3 persons) 91,600,000 56.36%
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1. Of Mr. Landrum's shares 59,100,000 shares are held by Red River
Properties, Inc. of which he is the President; 4,000,000 shares held by
the 4 L-J Trust of which he is a Trustee; 4,000,000 shares held by the
4 L-K Trust of which he is a Trustee; 4,000,000 shares held by the 4 L-
L Trust of which he is a Trustee; and 4,000,000 shares held by the 4 L-
W Trust of which he is a Trustee. Mr. Landrum also was granted options
to obtain up to 5,000,000 shares at $.10 per share through 12/31/2010
and 5,000,000 shares at $.20 per share through 12/31/2010.
2. Of Mr. McIlvain's shares 4,000,000 are held by Elizabeth L. McIlvain,
his wife; 1,000,000 held by Elizabeth L. McIlvain as custodian for a
minor child; and the remaining 10,000,000 shares are held directly.
Mr. McIlvain was granted options to obtain up to 5,000,000 shares at
$.10 per share through 12/31/2010 and 5,000,000 shares at $.20 through
12/31/2010.
3. Mr. Hewitt's shares are held as joint tenant with his wife Karen C.
Hewitt. Mr. Hewitt was granted options to obtain up to 2,000,000
shares at $.10 per share through 12/31/2005.
(c) Changes in Control
A change in control occurred on October 12, 1999. (See Subsequent
Events)
Item 12. Certain Relationships and Related Transactions
During the year ended September 30, 1999, the Company's president and
other related parties contributed marketable securities to the
Company in exchange for newly issued restricted stock as discussed in
Note 3 to the financial statements. In addition, certain expenses
were paid and reimbursed to these related parties with restricted
stock, again, as mentioned in Note 3 to the financial statements.
During the first quarter of the current fiscal year, the Company
issued 5,388,920 shares valued at $2,177 to officers and directors or
their assignees for expenses incurred on behalf of the Company.
Additionally, 300,000 shares valued at $300 were issued for
investment banking services and 7,219,320 shares valued at $7,219
were issued to a related entity in exchange for marketable
securities.
During the last three quarters ending September 30, 1999, the Company
issued 980,000 shares for $14,300 cash, 2,269,600 shares to related
parties for marketable securities, and 700,000 shares valued at
$14,000 for consulting and professional services.
There were no transactions with related parties during the dormant
years until 1998. On September 1, 1998, the Company caused the
issuance of 3,076,000 restricted common shares to Arthur Sykes, Jr. for
expenses incurred in bringing the Company current with its state
filings and also issued 2,865,000 shares to Donald D. Roehrman in
conjunction with these same expenses. On September 19, 1998, 5,000,000
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shares were issued to Arthur Sykes, Jr. and 5,000,000 shares were
issued to Donald D. Roehrman for past services. The value of the
services was placed at $1,000 and the expenses were $594.
Subsequent to the end of the fiscal year, on October 26, 1998, the
Company caused the issuance of 1,869,600 restricted common shares to
Arthur Sykes, Jr. for additional expenses incurred on behalf of the
Company. Also, on the same date, 100,000 shares were issued to Donald
D. Roehrman for expenses he incurred.
On November 19, 1998, LSCO Securities, Inc., a company of which Arthur
Sykes, Jr. is president and director, purchased 1,819,320 restricted
common shares for $1,800. These funds were used by the Company to pay
for accounting services from a non-related party.
Item 13. Exhibits and Reports on Form 8-K
A Form 8-K was filed on October 29, 1999 disclosing the change in
control of the Company. (See Subsequent Events)
SIGNATURES
In accordance with Section 13 or 15 (d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
GOLDEN CHIEF RESOURCES, INC.
Date: March 3, 2000 /s/ ARTHUR SYKES, JR.
By: Arthur Sykes, Jr., President,
Chief Executive Officer,
Principal Accounting Officer, &
Principal Financial Officer
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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:
Signature Title Date
- --------- ----- ----
/s/ ARTHUR SYKES, JR. Director March 3, 2000
- ---------------------
Arthur Sykes, Jr.
/s/ JERETA SYKES Director March 3, 2000
- ----------------
Jereta Sykes
/s/ DONALD D. ROEHRMAN Director March 3, 2000
- ----------------------
Donald D. Roehrman
/s/ JAMES W. LANDRUM Director March 3, 2000
- --------------------
James W. Landrum
/s/ MICHAEL H. MCILVAIN Director March 3, 2000
- -----------------------
Michael H. McIlvain
/s/ RICHARD M. HEWITT Director March 3, 2000
- ---------------------
Richard M. Hewitt
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GOLDEN CHIEF RESOURCES, INC.
INDEX TO FINANCIAL STATEMENTS
Page
Report of Independent Certified Public Accountants . . . . . . F-2
Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . F-3
Statements of Operations . . . . . . . . . . . . . . . . . . . F-4
Statement of Stockholders' Equity . . . . . . . . . . . . . . F-5
Statements of Cash Flows . . . . . . . . . . . . . . . . . . . F-6
Notes to Financial Statements . . . . . . . . . . . . . . . . F-7
F-1
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REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Golden Chief Resources, Inc.
Terrel, Texas
We have audited the accompanying balance sheets of Golden Chief Resources,
Inc. (a development stage enterprise) (the "Company") as of September 30, 1999
and 1998, and the related statements of operations, stockholders' equity, and
cash flows for the years then ended. 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 audits.
We conducted our audits 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
statement 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 Golden Chief Resources, Inc.
at September 30, 1999 and 1998, and the results of its operations and its cash
flows for the years then ended, in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 6 to the
financial statements, the Company has agreed to disburse its assets and to
acquire new assets in accordance with a change in control. These facts raise
substantial doubt about the Company's ability to continue as a going concern.
Management's plans in regard to these matters are also discussed in Note 6.
The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
/s/ ROBERT EARLY & COMPANY
ROBERT EARLY & COMPANY, P.C.
Abilene, Texas
February 10, 2000
F-2
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Golden Chief Resources, Inc.
(A Development Stage Enterprise)
Balance Sheets
September 30,
1999 1998
---------- ---------
ASSETS
Current Assets:
Cash $ 84,767 $ -
Marketable securities 6,090 -
---------- ---------
TOTAL ASSETS $ 90,857 $ -
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accrued expenses $ 90,757 $ -
---------- ---------
Stockholders' Equity:
Common stock, no par value (500,000,000 shares
authorized, 65,015,890 and 48,158,050 outstanding) 1,070,676 996,234
Accumulated deficit (994,640) (994,640)
Deficit accumulated during the development stage (75,936) (1,594)
---------- ---------
Total Stockholders' Equity 100 -
---------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 90,857 $ -
========== =========
The accompanying notes are an integral part of these financial statements.
F-3
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Golden Chief Resources, Inc.
(A Development Stage Enterprise)
Statements of Operations
Cumulative
Years Ended During the
September 30, Development
1999 1998 Stage
---------- ---------- ---------
Revenues:
Miscellaneous income $ 938 $ - $ 938
Operating Expenses:
Directors and officers compensation 91,057 1,000 92,057
Consulting fees 10,000 - 10,000
Professional fees 14,967 239 15,206
Other expenses 1,180 355 1,535
--------- ---------- ---------
Total Operating Expenses 117,204 1,594 118,798
--------- ---------- ---------
Income from Operations (116,266) (1,594) (117,860)
Other Income/(Expenses):
Gain on sale of marketable securities 46,347 - 46,347
Interest income 518 - 518
Unrealized loss on marketable securities (4,941) - (4,941)
--------- ---------- ---------
Income before income taxes (74,342) (1,594) (75,936)
Income taxes - - -
--------- ---------- ---------
Net Income $ (74,342) $ (1,594) $(75,936)
========= ========== =========
Earnings per Share $ (0.00) $ (0.00) $ (0.00)
========= ========== =========
Weighted Average Shares Outstanding 60,230,126 32,990,445 58,817,206
========== ========== =========
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
<PAGE>
<TABLE>
Golden Chief Resources, Inc.
(A Development Stage Enterprise)
Statement of Stockholders' Equity
For the Years Ended September 30, 1999 and 1998
<S> <C> <C> <C> <C> <C>
Deficit
Accumulated
During the
Common Stock Accumulated Development
Date Shares Amount Deficit Stage
------ ---------- ----------- ---------- -----------
Balances, October 1, 1997 32,217,050 $ 994,640 $ (994,640) $ -
Net income/(loss) for year - - - -
Balances, September 30, 1997 32,217,050 994,640 (994,640) -
Shares issued for services and
expenses 09/98 15,941,000 1,594 - -
Net income/(loss) for year - - - (1,594)
---------- ----------- ---------- -----------
Balances, September 30, 1998 48,158,050 996,234 (994,640) (1,594)
Shares issued for:
Expenses 10/98 5,688,920 2,477 - -
Marketable securities 12/98 7,219,320 7,219 - -
Cash 01/99 330,000 3,300 - -
Marketable securities 02/99 894,600 8,946 - -
Consulting 03/99 500,000 10,000 - -
Cash 04/99 200,000 2,000 - -
Expenses 04/99 200,000 4,000 - -
Cash 07/99 450,000 9,000 - -
Marketable securities 07/00 1,375,000 27,500 - -
Net income/(loss) for year - - - (74,342)
---------- ----------- ---------- -----------
Balances, September 30, 1999 65,015,890 $1,070,676 $ (994,640) $ (75,936)
========== =========== ========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
<PAGE>
Golden Chief Resources, Inc.
(A Development Stage Enterprise)
Statements of Cash Flows
(Increases/(Decreases) in Cash)
Cumulative
Years Ended During the
September 30, Development
1999 1998 Stage
---------- ---------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) $ (74,342) $ (1,594) $ (75,936)
Adjustments to reconcile net income/(loss)
to net cash provided by operations:
Gain on sale of securities (46,347) - (46,347)
Unrealized loss on securities 4,941 - 4,941
Services and expenses purchased with stock 16,477 1,594 18,071
Accrued expenses 90,757 - 90,757
---------- ---------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES (8,514) - (8,514)
---------- ---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of marketable
securities 90,012 - 90,012
Purchase of marketable securities (11,031) - (11,031)
---------- ---------- ---------
NET CASH PROVIDED BY INVESTING ACTIVITIES 78,981 - 78,981
---------- ---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Stock issued 14,300 - 14,300
---------- ---------- ---------
Increase/(decrease) in cash for period 84,767 - 84,767
Cash, Beginning of period - - -
---------- ---------- ---------
Cash, End of period $ 84,767 $ - $ 84,767
========== ========== =========
Supplemental Disclosures:
Cash payments for:
Interest $ - $ - $ -
Income taxes - - -
Stock issued for:
Various expenses $ 2,177 $ 1,594 $ 3,771
Consulting 10,300 - 10,300
Professional services 4,000 - 4,000
Marketable securities 43,665 - 43,665
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
<PAGE>
Golden Chief Resources, Inc.
(A Development Stage Enterprise)
Notes to Financial Statements
Years Ended September 30, 1999 and 1998
GENERAL INFORMATION
The Company was incorporated as Arts Antique Autos, Ltd. in November 1976 in
the State of Kansas. During the early 1980's the Company engaged in oil and
gas operating, mining, real estate operations. During the mid 1980's, economic
conditions caused the Company to lose its asset and revenue base. Management
decided to discontinue any further business operations and completed the
liquidation of the few remaining assets during 1986. The Company has not
operated a line of business since that time. During the fiscal year ended
September 30, 1998, new assets were contributed in an attempt to revive the
Company. In August 1999, an agreement was made whereby interests in oil and
gas properties would be contributed by third parties in exchange for newly
issued stock. Management's plans include efforts to raise operating and
development capital followed by further acquisition and development of oil and
gas properties.
DEVELOPMENT STAGE ENTERPRISE. Due to the loss of assets and operations in
1986, the Company's current activity is the initiation of a new phase. As a
result, the Company is re-emerging as a development stage enterprise. The
Company will continue to be considered to be in a development stage until it
has begun significant operations and is generating significant revenues.
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
MARKETABLE SECURITIES. The Company's securities investments are held
principally for the purpose of selling them in the near term and are
classified as trading securities. Trading securities are carried at fair
value on the balance sheet in current assets, with the change in fair value
during the period included in current income. Costs associated with realized
gains are recognized on the first-in, first-out basis.
INCOME TAXES. Deferred tax liabilities and assets result from temporary
differences between the financial statement and income tax bases of assets and
liabilities. The Company records and adjusts any deferred tax asset valuation
based on judgments as to future realization of the deferred tax benefits
supported by demonstrated trends in the Company's operating results.
EARNINGS PER SHARE. Accounting rules provide for the calculation of "Basic"
and "Diluted" earnings per share. Basic earnings per common share excludes
dilutive securities and is computed by dividing net income available to common
stockholders by the weighted average number of common shares outstanding for
the period. Diluted earnings per common share reflects the potential dilution
of securities that could share in the earnings of the entity on an "as if"
converted basis. This is done by dividing net income available to common
shareholders, as adjusted if necessary, by the weighted average number of
common shares outstanding plus potential dilutive securities. The Company had
no dilutive securities during 1999 or 1998.
F-7
<PAGE>
<PAGE>
CASH AND CASH EQUIVALENTS. The Company considers all highly liquid
investments with an original maturity of three months or less to be cash
equivalents for purposes of preparing its Statement of Cash Flows. The
Company had no cash equivalents at September 30, 1999 or 1998.
USE OF ESTIMATES. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
NOTE 2: MARKETABLE SECURITIES
Investments in securities are summarized as follows at September 30, 1999. No
investments were held at September 30, 1998.
Gross Gross
Unrealized Unrealized Fair
Cost Gain Loss Value
-------- ---------- ---------- --------
Common stock $ 11,031 $ - $ 4,941 $ 6,090
During 1999, results of operations includes a charge of $4,941 for the
unrealized loss presented above.
NOTE 3: STOCK TRANSACTIONS
In September 1998, the Board of Directors (the Board) increased the number of
authorized shares of no par common stock of the Company from 50,000,000 to
500,000,000. This action was taken with regard to recent merger or
acquisition inquiries.
During September 1998, the Board approved the issuance of 15,941,000 shares of
common stock to its President and Secretary for past services provided to the
Company valued at $1,000 and reimbursement of expenses totaling $594.
During the first quarter of the current fiscal year, the Company issued
5,388,920 shares valued at $2,177 to officers and directors or their assignees
for expenses incurred on behalf of the Company. Additionally, 300,000 shares
valued at $300 were issued for investment banking services and 7,219,320
shares valued at $7,219 were issued to a related entity in exchange for
marketable securities.
During the last three quarters ending September 30, 1999, the Company issued
980,000 shares for $14,300 cash, 2,269,600 shares to related parties for
marketable securities, and 700,000 shares valued at $14,000 for consulting and
professional services.
NOTE 4: INCOME TAXES
During its operations and the liquidation of its assets in 1986, the Company
incurred net operating losses and generated investment tax credits which might
provide benefits in reducing future tax liabilities. The losses were
available to offset taxable income and the credits were available to offset
F-8
<PAGE>
<PAGE>
regular income tax liability for a period of fifteen years after they were
incurred. Although the amount of net operating losses and tax credits which
have not expired has not been determined by management, it is believed that
substantial losses may still be available to offset taxable income and income
taxes generated through the fiscal year ending September 30, 2001. However, a
contemplated significant change in ownership of the Company due to merger or
other capital infusion functions to limit the Company's ability to utilize
these deferred tax assets. Management has determined that any future
utilization of these losses would, in all likelihood, be immaterial and that
the cost of determining actual amounts at this time would be cost prohibitive.
Additionally, since utilization of these deferred tax assets is not
foreseeable, any value which might be attributable to them would be offset by
a valuation allowance.
There is no provision for income tax expense or benefit in 1999 or 1998. This
is due to the fact that although net operating losses of $69,401 and $1,594
were generated in 1999 and 1998, there is no current foreseeable taxable
income to against which to offset these losses. They are available to carry
forward.
Temporary differences in taxable income and book income consists of unrealized
los on securities of $4,941 in 1999. The tax effect of temporary differences
that give rise to deferred tax assets is as follows:
1999 1998
-------- --------
Unrealized loss on equity investments $ 1,680 $ -
Net operating loss carry-forwards 24,120 524
The calculated potential future benefits from these losses has been offset by
a valuation allowance.
NOTE 5: RELATED PARTY TRANSACTIONS
During the year ended September 30, 1999, the Company's president and other
related parties contributed marketable securities to the Company in exchange
for newly issued restricted stock as discussed in Note 3. In addition,
certain expenses were paid and reimbursed to these related parties with
restricted stock, again, as mentioned in Note 3.
NOTE 6: SUBSEQUENT EVENTS AND CURRENT ACTIVITIES
In October 1999, the shareholders approved an agreement to issue 97,500,000
shares to Red River Properties, Inc. in exchange for a 10% working interest
in an oil and gas field. With this transaction, Red River controls
approximately 60% of the outstanding shares of the Company. A portion of this
agreement and shareholders' approval provided for the Company to distribute to
its former president all of the remaining assets of the Company as
compensation for his efforts in reviving the Company. This amounted to a
total of $90,757 which has been accrued at September 30, 1999 as compensation.
The property underlying the Company's new oil and gas interest has not been in
production during the last two years. Management plans to rework and reenter
the property in order to reestablish production from reserves believed to be
in existence there.
F-9
<PAGE>
<PAGE>
Pursuant to its plan of operations, subsequent to September 30, 1999, the
Company has raised $44,100 in new capital through the issuance of its common
stock and has granted stock options to certain officers and key personnel.
NOTE 7: GOING CONCERN
As discussed in the General Information regarding the Development Stage
Enterprise, the Company has not had operations since 1986 and has subsequently
disbursed its existing assets at the financial statement date. Subsequent
activities since the financial statement date have not included revenue
generating operations. The Company has generated some new capital, as
indicated above, and has acquired an interest in a non- producing oil and gas
lease which was placed in production in January 2000. Management's plans
include the generation of significant new capital. Should management prove
unsuccessful in its fund-raising efforts, the Company is not in significant
danger of dissolution as long as the officers and directors are willing to pay
the nominal costs of keeping it in good standing.
F-10
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The following schedule contains summary financial information which has been
extracted from the consolidated financial statements of GOLDEN CHIEF RESOURCES
INC. for the annual financial statements filed on Form 10-KSB for the periods
indicated. These summary schedules are qualified in their entirety by
reference to such financial statements and the notes thereto.
</LEGEND>
<CIK> 0000752391
<NAME> Golden Chief Resources, Inc.
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> SEP-30-1999 SEP-30-1998
<PERIOD-END> SEP-30-1999 SEP-30-1998
<CASH> 84,767 0
<SECURITIES> 6,090 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 90,857 0
<PP&E> 0 0
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 90,857 0
<CURRENT-LIABILITIES> 90,757 0
<BONDS> 0 0
0 0
0 0
<COMMON> 1,070,676 996,234
<OTHER-SE> (1,070,756) (996,234)
<TOTAL-LIABILITY-AND-EQUITY> 90,857 0
<SALES> 0 0
<TOTAL-REVENUES> 938 0
<CGS> 0 0
<TOTAL-COSTS> 938 0
<OTHER-EXPENSES> 117,204 1594
<LOSS-PROVISION> (117,204) 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (74,342) (1594)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (74,342) (1594)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (74,342) (1594)
<EPS-BASIC> 0 0
<EPS-DILUTED> 0 0
