UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934.
For the Quarter ended March 31, 1998 Commission File No.33-2392-D
European American Resources, Inc. (formerly Merlin Mining Co.)
(Exact name of registrant as specified in its charter)
Delaware 87-0443214
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification Number)
1212 Court St., Suite C-2, Clearwater, FL 33756
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, (813) 298-0636
Indicate by check mark whether the registrant (1) has filed all reports
required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934,
during
the preceding 12 months (or for shorter period that the registrant was
required
to file such report), and (2) has been subject to such filing requirements for
the past 90 days.
Yes: X No:
Transitional Small Business Disclosure Format:
Yes: X No:
The number of shares outstanding of each of the registrant's classes of common
stock as of March 31, 1998 is 11,403,008 shares all of one class of $.0001 par
value common stock.
<PAGE>
EUROPEAN AMERICAN RESOURCES, INC. AND SUBSIDIARY
(FORMERLY MERLIN MINING CO.)
INDEX
PAGE
PART I FINANCIAL INFORMATION
Consolidated Balance Sheet - March 31, 1998 1
Consolidated Statements of Operations - Three
Months Ended March 31, 1998 and 1997 2
Consolidated Statements of Cash Flows - Three
Months Ended March 31, 1998 and 1997 3
Notes to Financial Statements 4-5
Management's Discussion and Analysis of financial
conditions and results of operations 6
PART II OTHER INFORMATION
Item 1. Legal Proceedings 7
Item 2. Changes in Securities 7
Item 3. Defaults Upon Senior Securities 7
Item 4. Submission of Matters to a Vote of
Security Holders 7
Item 5. Other Information 7
Item 6. Exhibits on Reports on Form 8-K 7
Signature Page 7
<PAGE>
EUROPEAN AMERICAN RESOURCES, INC. AND SUBSIDIARY
(FORMERLY MERLIN MINING CO.)
CONSOLIDATED BALANCE SHEET
MARCH 31, 1998
Assets
Current Assets
Cash and cash equivalents $ 957,126
Prepaid rent on mining claims 35,625
Total Current Assets 992,751
Resource properties 2,102,110
Property and equipment, net of accumulated
depreciation of $32,711 24,850
Other Assets
Investments, net of valuation reserve of $803,792 482,000
Other assets 33,353
Total Other Assets 515,353
Total Assets 3,635,064
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable and accrued expenses 320,541
Due to Related Party -
Total Current Liabilities 320,541
Distribution rights payable 437,500
Stockholders' Equity
Preferred stock; $.0001 par value, 25,000,000
shares authorized, no shares issued or
outstanding
Common stock; $.0001 par value, 250,000,000
shares authorized, 11,403,008 shares issued
and outstanding 1,140
Additional paid in capital 9,464,773
Deficit accumulated during the exploration stage (6,588,890)
Total Stockholders' Equity 2,877,023
Total Liabilities and Stockholders' Equity $3,635,064
<PAGE>
EUROPEAN AMERICAN RESOURCES, INC. AND SUBSIDIARY
(FORMERLY MERLIN MINING CO.)
CONSOLIDATED STATEMENT OF OPERATIONS
For the Three Months
Ended
March 31,
1998 1997
Revenue
Sales $ -$ -
Operating Expenses
Operating costs 19,575 29,124
General and administrative 137,497 11,321
Depreciation and amortization 2,500 -
Total Operating Expenses 159,572 40,445
Loss from operations (159,572) (40,445)
Other Income
Interest income 8,081 427
Total Other Income 8,081 427
Loss before income taxes (151,491) (40,018)
Income tax expense - -
Net Loss $ (151,491) $ (40,018)
Basic Loss per share $ (.013) $ (.004)
Average common shares outstanding 11,403,008 9,733,365
<PAGE>
EUROPEAN AMERICAN RESOURCES, INC. AND SUBSIDIARY
(FORMERLY MERLIN MINING CO.)
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Three Months
Ended
March 31,
1998 1997
Cash Flows Operating Activities
Net Loss $(151,491) $ (40,018)
Adjustments to reconcile net loss to net cash
(used) by operating activities:
Depreciation 2,500 -
Changes in assets and liabilities:
Decrease (increase) in prepaid rent 19,575 (7,570)
(Increase) in other assets (500) -
(Decrease) increase in accounts payable
and accrued expenses (42,862) 19,605
Net Cash Used by Operating Activities (172,778) (27,983)
Cash Flows From Investing Activities
Additions to resource properties (82,309) (44,211)
Net Cash (Used In) Investing Activities (82,309) (44,211)
Cash Flows from Financing Activities
Advances from (repayments to) related party (134,093) 73,500
Proceeds from stock subscription 700,000 -
Net Cash Provided By Financing Activities 565,907 73,500
Net Increase in Cash and Cash Equivalents 310,820 1,306
Cash and Cash Equivalents at Beginning of Period 646,306 951
Cash and Cash Equivalents at End of Period $ 957,126 $ 2,257
<PAGE>
A. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to
Form 10-QSB and Article 10 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been
included.
Operating results for the three month period ended March 31, 1997 are not
necessarily indicative of the results that may be expected for the year
ending December 31, 1998. For the year ending December 31, 1997, and all
periods presented thereafter, the Company adopted FASB 128 to compute
earnings per share. Basic EPS excludes dilution and is computed by
dividing income available to common stockholders by the weighted-average
number of common shares outstanding for the period. Diluted EPS reflects
the potential dilution that could occur if securities or other contracts
to issue common stock were exercised or converted into common stock or
resulted in the issuance of common stock that then shared in the earnings
of the entity. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Registrant
Company's annual report on form 10-KSB for the year ended December 31,
1996.
B. RESOURCE PROPERTIES
The Company has incurred over $2,661,000 in direct exploratory activity
costs since acquisition of the right to these mining properties. In
accounting for these costs the Company selected an accounting policy
which capitalizes exploratory costs rather than expensing them as
incurred. Amortization of these costs is to be calculated by the units
of production method based upon proven or probable reserves. Costs
incurred on properties later determined to be unproductive are expensed
by the Company as that determination is made. As of March 31, 1998, the
Company has $2,102,110 in resource properties. If these remaining costs
had been expensed rather than capitalized, the accumulated deficit at
March 31, 1998 would have been $8,691,000 rather than $6,588,890.
The Company has been in the exploration stage to determine the amount of
proven or probable reserves of its resource properties, if any. Since
December 31, 1997, sufficient testing was completed to indicate the
Company's reserves are probable and in excess of the amounts capitalized,
yet since they are not yet proven, estimates of their potential value are
not available at this time.<PAGE>
C.
DURING THE YEAR, THE COMPANY ADOPTED FASB STATEMENT NO. 130 - REPORTING
COMPREHENSIVE INCOME.
Statement No. 130 requires the reporting of comprehensive income and its
components in addition to net income from operations. Comprehensive
income is a more inclusive financial reporting methodology that includes
disclosure of certain financial information that historically has not
been recognized in the calculation of net income. To date, FASB
Statement No. 130 does not have a material effect on the Company's
financial position or the results of operations.
D. RELATED PARTY TRANSACTIONS
Amounts due to related party at December 31, 1997, which total $134,093
including interest were repaid during the quarter ended March 31, 1998.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain significant
factors which have affected the Company's financial position and operating
results during the periods included in the accompanying condensed financial
statements, as well as information relating to the plans of the Company's
current management.
RESULTS OF OPERATIONS AND CURRENT METHOD OF OPERATION
Three Months Ended March 31, 1998
The Company's historical results of operations for the three months ended
March 31, 1998 consisted of a loss of $151,491 as compared to March 31, 1997
which consisted of a loss of $40,018. The Company continued its effort to
establish a value of its resource properties.
Liquidity and Working Capital
The Company's working capital declined during the quarter ended March 31, 1998.
At March 31, 1998 the Company had a working capital of $672,210 as compared to
working capital of $927,510 at December 31, 1997.
Also, during the period ended March 31, 1998 the Company invested $82,309 in
resource properties as compared to during the same period last year.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
NONE
Item 2. Changes in Securities
NONE
Item 3. Defaults Upon Senior Securities
NONE
Item 4. Submission of Matters to a Vote of Security Holders
NONE
Item 5. Other Information
NONE
Item 6. Exhibits and Reports on Form 8-K
Form 8 dated April 29, 1998 disclosing changes in management and
directors.
<PAGE>
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.
EUROPEAN AMERICAN RESOURCES, INC.
FORMERLY MERLIN MINING CO.
Dated: By: /s/ Martin Sportschuetz
Martin Sportschuetz, CEO
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<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 957,126
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<RECEIVABLES> 0
<ALLOWANCES> 0
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<PP&E> 786
<DEPRECIATION> (32,711)
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<COMMON> 1,140
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<OTHER-EXPENSES> 159,572
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<CHANGES> 0
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<EPS-PRIMARY> (.013)
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