<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB/A No. 3
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934 FOR THE FISCAL YEAR ENDED APRIL 30, 1998
--------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD OF _________ TO
_________.
Commission File Number: 0-15859
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Rich Coast Inc.
---------------
(Name of small business issuer in its charter)
Nevada 91-1835978
------------------------------ -------------------
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
10200 Ford Road, Dearborn, Michigan 48126
-----------------------------------------
(Address of principal executive offices)
Issuer's telephone number: 313-582-8866
Securities registered under Section 12(b) of the Act: None
----
Securities registered under Section 12(g) of the Act:
Common Stock, $.001 Par Value
-----------------------------
(Title of Class)
Check whether the Issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
Yes [x] No [ ]
Check here if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B 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. [ ]
Issuer's revenues for its most recent fiscal year: $2,547,083.
At July 14, 1998 there were 4,876,645 shares of the Registrant's $.001 par value
Common Stock ("Common Stock"), the only outstanding class of voting securities,
outstanding. Based on the closing price of the Common Stock as reported by
Nasdaq on July 14, 1998, the aggregate market value of Common Stock held by non-
affiliates of the Registrant was approximately $7,070,305.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [x]
<PAGE>
PART IV
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Item 13. Financial Statements, Schedules and Exhibits and Reports on Form 8-K
(a) Financial Statements, Schedules and Exhibits:
---------------------------------------------
(1) Financial Statements - April 30, 1997 and the fiscal years ended April
----------------------------------------------------------------------
30, 1996 and 1997
-----------------
a) Index to Financial Statements;
b) Auditor's Report to the Shareholders;
c) Comments by Auditors for U.S. Readers on Canada-U.S. Reporting
Conflict;
d) Consolidated Balance Sheets;
e) Consolidated Statements of Operations;
f) Consolidated Statements of Deficit;
g) Consolidated Statements of Changes in Financial Position;
h) Notes to Consolidated Financial Statements.
(2) Schedules
---------
Schedules are omitted as the information is not required or not applicable,
or the required information is shown in the financial statements or notes
thereto.
(3) Exhibits
--------
The Exhibits listed in the Exhibit Index at Item 14(c) are filed as part of
this Annual Report.
(b) Reports on Form 8-K No reports on Form 8-K were filed during the last
-------------------
quarter of the fiscal year covered by this report.
(c) Exhibits
--------
3.(i) Certificate of Incorporation of Rich Coast Inc. (1)
3.(ii) Bylaws of Rich Coast Inc. (1)
10.1 Terminating Agreement - Mobil Oil Corporation. (P)
10.2 Employment Contract between the Company and Robert W. Truxell (Exhibit
1 to the Agreement of Merger dated October 31, 1995.) (2)
10.3 Employment Contract between the Company and James P. Fagan (Exhibit 2
to the Agreement of Merger dated October 31, 1995.) (2)
<PAGE>
10.4 1995 Incentive Compensation Plan. (3)
10.5 1996 Employee Stock Option and Bonus Plan, as amended. (4)
10.6 1997 Stock Option and Stock Bonus Plan. (5)
21.1 List of Subsidiaries of the Registrant.*
27.1 Financial Data Schedule.
_______________
(1) Incorporated by reference from Registration Statement on Form S-4, File No.
333-6099, effective August 7, 1996.
(2) Incorporated by reference to the Company's Form 8-K dated November 16,
1995.
(3) Incorporated by reference from the Company's Registration Statement on Form
S-8, File No. 333-41443.
(4) Incorporated by reference from the Company's Registration Statement on Form
S-8, File No. 333-50763.
(5) Incorporated by reference from the Company's Registration Statement on Form
S-8, File No. 333-56275.
(P) Filed in paper format on August 13, 1996 under cover of Form SE.
(*) Filed previously.
(d) Schedules. Schedules are omitted as the information is not required or not
applicable, or the required information is shown in the financial statements or
notes thereto.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Form 10-KSB/A No. 3 to
be signed on its behalf by the undersigned, thereunto duly authorized.
RICH COAST INC.
Date: December 29, 1999 By: /s/ James P. Fagan
-----------------------------------
James P. Fagan, President and Chief
Executive Officer
Date: December 29, 1999 By: /s/ Michael M. Grujicich
-----------------------------------
Michael M. Grujicich, Chief
Financial and Accounting Officer
<PAGE>
RICH COAST, INC.
(Formerly Rich Coast Resources Ltd.)
Consolidated Financial Statements
(U.S. Dollars)
April 30, 1998 and 1997
<TABLE>
<CAPTION>
INDEX Page
----- ----
<S> <C>
Report of Independent Chartered Accountants 25
Consolidated Financial Statements
Consolidated Balance Sheets 26
Consolidated Statements of Operations 27
Consolidated Statements of Stockholders' Equity 28
Consolidated Statements of Cash Flows 29
Notes to Consolidated Financial Statements 30-40
</TABLE>
<PAGE>
REPORT OF INDEPENDENT CHARTERED ACCOUNTANTS
TO THE BOARD OF DIRECTORS AND STOCKHOLDERS
OF RICH COAST, INC.
We have audited the accompanying consolidated balance sheets of Rich Coast, Inc.
(formerly Rich Coast Resources Ltd.) as of April 30, 1998 and 1997 and the
related consolidated statements of operations, stockholders' equity and cash
flows for each of the three years in the period ended April 30, 1998. 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
in the United States. Those standards require that we plan and perform the
audit to obtain reasonable assurance 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, these consolidated financial statements present fairly, in all
material respects, the consolidated financial position of the Company as at
April 30, 1998 and 1997 and the consolidated results of its operations and cash
flows for each of the three years in the period ended April 30, 1998 in
conformity with generally accepted accounting principles in the United States.
"Smythe Ratcliffe"
Chartered Accountants
Vancouver, Canada
July 27, 1998, except for notes 2(k), (l) and 9, which are as of January 19,
1999, and notes 1 and 2(f), which are as of March 17, 1999.
<PAGE>
RICH COAST, INC.
(Formerly Rich Coast Resources Ltd.)
Consolidated Balance Sheets
April 30
(U.S. Dollars)
<TABLE>
<CAPTION>
================================================================================================================
1998 1997
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets (note 7)
Current
Cash $ 53,043 $ 12,919
Accounts receivable 460,558 288,265
Insurance claim receivable (note 3) 435,290 0
Share subscription receivable (note 8(d)) 25,000 0
Inventory 108,265 135,673
Prepaid expenses 0 4,436
- ----------------------------------------------------------------------------------------------------------------
1,082,156 441,293
Distillation Unit (note 5) 2,024,706 2,024,706
Property and Equipment, at cost (net) (notes 4 and 7) 2,990,373 3,210,485
Patent and Technology, net 25,681 30,525
Deferred Finance Charges and Deposits 120,732 82,775
- ----------------------------------------------------------------------------------------------------------------
$ 6,243,648 $ 5,789,784
================================================================================================================
Liabilities
Current
Accounts payable and accrued liabilities (note 6) $ 838,966 $ 739,128
Accrued oil and waste treatment costs 450,444 303,973
Due to shareholder (note 10) 0 100,000
Current portion of long-term debt (note 7) 595,309 78,673
Current portion of obligation under capital lease 0 5,521
- ----------------------------------------------------------------------------------------------------------------
1,884,719 1,227,295
Long-Term Debt (note 7) 2,016,510 2,108,996
Obligation Under Capital Lease 0 7,815
- ----------------------------------------------------------------------------------------------------------------
3,901,229 3,344,106
- ----------------------------------------------------------------------------------------------------------------
Stockholders' Equity (note 8):
Common stock, $0.001 par value;
100,000,000 shares authorized, 18,875,771 (4,718,942 post
reverse split) and 16,155,913 (4,038,978 post reverse split) (note
12b) shares issued and outstanding at April 30, 1998 and 1997, respectively 15,518 12,773
Additional paid-in capital (note 1) 22,579,874 21,311,957
Accumulated deficit (note 1) (20,252,973) (18,879,052)
- ----------------------------------------------------------------------------------------------------------------
2,342,419 2,445,678
- ----------------------------------------------------------------------------------------------------------------
$ 6,243,648 $ 5,789,784
================================================================================================================
</TABLE>
See notes to consolidated financial statements.
<PAGE>
RICH COAST, INC.
(Formerly Rich Coast Resources Ltd.)
Consolidated Statements of Operations
Years Ended April 30
(U.S. Dollars)
<TABLE>
<CAPTION>
================================================================================================================
1998 1997 1996
<S> <C> <C> <C>
Sales $ 2,547,083 $ 1,897,155 $1,741,352
Cost of Sales (exclusive of depreciation
shown separately below) 1,080,557 967,062 550,035
- ----------------------------------------------------------------------------------------------------------------
Gross Profit 1,466,526 930,093 1,191,317
- ----------------------------------------------------------------------------------------------------------------
Expenses
Salaries and wages 982,918 713,605 565,670
Compensation for past services 0 0 351,935
Forgiveness of past service
compensation liability 0 (351,935) 0
Consulting and management fees 152,223 816,953 53,198
Shareholder relations 149,406 41,630 98,030
Audit, accounting and legal 130,626 213,911 129,108
Travel 125,030 79,939 80,343
Utilities 121,168 129,463 88,400
Insurance 103,805 83,364 65,079
Property taxes 85,760 72,612 61,017
Equipment and storage leases 83,820 111,437 90,661
Repairs and maintenance 62,603 40,983 129,036
Office and general 59,122 31,857 95,577
Telephone and facsimile 40,693 29,489 72,487
Listing, transfer agent and filing fees 24,573 27,176 40,505
Factoring costs 24,304 19,634 68,644
Bad debts 8,375 11,984 47,704
Rent and secretarial 7,353 4,300 46,578
Advertising 5,853 12,356 10,139
Financing 0 26,772 0
Depreciation 256,398 359,168 387,982
- ----------------------------------------------------------------------------------------------------------------
2,424,030 2,474,698 2,482,093
- ----------------------------------------------------------------------------------------------------------------
Loss Before Other Items 957,504 1,544,605 1,290,776
Other Items
Insurance proceeds in excess of current expenditures
(note 3) (103,503) 0 0
Interest expense 303,648 213,912 56,246
Interest - beneficial conversion feature (note 2(l)) 198,626 0 0
Loss on equipment disposal 0 147,752 2,478
Amortization of deferred financing costs 17,646 22,060 0
Gain from oil and gas operations (note 2) 0 0 (2,449)
Resource properties disposal loss (note 2) 0 0 73,868
- ----------------------------------------------------------------------------------------------------------------
Net Loss for Year $ 1,373,921 $ 1,928,329 $1,420,919
================================================================================================================
Net Loss per Share $ 0.08 $ 0.13 $ 0.14
================================================================================================================
Post Reverse Split Net Loss per Share (Note 12b) $ 0.32 $ 0.52 $ 0.56
================================================================================================================
Weighted Average Number of Shares Outstanding 17,272,153 15,035,155 9,843,419
Post Reverse Split (Note 12b) 4,318,038 3,758,788 2,460,854
================================================================================================================
</TABLE>
<PAGE>
RICH COAST, INC.
(Formerly Rich Coast Resources Ltd.)
Consolidated Statements of Stockholders' Equity
Years Ended April 30
(U.S. Dollars)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Common Post Reverse Common Additional Accumulated Total
Shares Split Shares Paid-In Deficit Stockholders'
Number (note 12b) Amount Capital (note 1) Equity (Deficit)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance April 30, 1995 7,749,422 1,937,355 $ 7,749 $18,529,829 $(15,519,727) $ 3,017,851
Issuance of common
stock (note 8), as
previously reported 5,574,671 1,393,668 5,575 4,144,921 0 4,150,496
Adjustment to correct the
recording of issuance of
shares on acquisition of
subsidiaries (note 1) 0 0 (3,383) (2,481,341) (10,077) (2,494,801)
Share issue costs 0 0 0 (451,823) 0 (451,823)
Net Loss 0 0 0 0 (1,420,919) (1,420,919)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance, April 30, 1996 13,324,093 3,331,023 9,941 19,741,586 (16,950,723) 2,800,804
Issuance of common
stock (note 8) 2,831,820 707,955 2,832 1,585,239 0 1,588,071
Financing cost 0 0 0 (14,868) 0 (14,868)
Net loss 0 0 0 0 (1,928,329) (1,928,329)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance, April 30, 1997 16,155,913 4,038,978 12,773 21,311,957 (18,879,052) 2,445,678
Issuance of common
stock (note 8) 2,719,858 679,964 2,745 804,526 0 807,271
Interest - beneficial
conversion (note 2(l)) 0 0 0 463,391 0 463,391
Net loss 0 0 0 0 (1,373,921) (1,373,921)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance, April 30, 1998 18,875,771 4,718,942 $15,518 $22,579,874 $(20,252,973) $ 2,342,419
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
RICH COAST, INC.
(Formerly Rich Coast Resources Ltd.)
Consolidated Statements of Cash Flows
Years Ended April 30
(U.S. Dollars)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
1998 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Activities
Net loss for year $(1,373,921) $(1,928,329) $(1,420,919)
Adjustments to reconcile net loss to net cash
Used by operating activities
Interest - beneficial conversion feature 198,626 0 0
Interest - expense 64,356 0 0
Depreciation and amortization 274,045 381,228 387,982
Resource properties disposal loss 0 0 73,902
Loss on equipment disposal 0 147,752 0
Consulting and management fees 155,410 608,548 0
Salaries and wages 231,405 0 0
Changes in Operating Assets and Liabilities
Accounts receivable (172,293) 138,700 (281,430)
Insurance claim receivable (435,290) 0 0
Subscriptions receivable (25,000) 0
Inventory 27,408 (135,673) 0
Prepaid expenses 4,436 37,250 (40,049)
Accounts payable and accrued liabilities 99,839 (125,241) (54,372)
Accrued oil and waste treatment costs 146,470 201,867 102,106
Past services compensation payable 0 (351,935) 351,935
- ------------------------------------------------------------------------------------------------------------------------------------
Net Cash Used in Operating Activities (779,509) (1,025,833) (880,845)
- ------------------------------------------------------------------------------------------------------------------------------------
Investing Activities
Purchase of property and equipment (163,230) (123,054) (2,160,338)
Investment in and expenditures on mineral properties 0 0 (2,480)
Distillation unit costs incurred 0 0 (16,156)
Fire insurance proceeds re fixed assets 131,714 0 0
Proceeds on sale of oil and gas properties 0 0 4,933
Proceeds on sale of equipment 0 2,000 7,253
- ------------------------------------------------------------------------------------------------------------------------------------
Net Cash Used in Investing Activities (31,516) (121,054) (2,166,788)
- ------------------------------------------------------------------------------------------------------------------------------------
Financing Activities
Issue of common stock 231,100 964,673 1,315,251
Land contract repayments (8,085) (33,776) 0
Shareholders' loans 0 (4,763) 0
Obligation under capital lease (13,336) (1,181) (4,245)
Notes payable 697,000 0 2,000,000
Finders' fees and share issue costs 0 0 (248,100)
Deferred finance charges and other (55,530) 203,303 0
- ------------------------------------------------------------------------------------------------------------------------------------
Net Cash Provided by Financing Activities 851,149 1,128,256 3,062,906
- ------------------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Cash 40,124 (18,631) 15,273
Cash, Beginning of Year 12,919 31,550 16,277
- ------------------------------------------------------------------------------------------------------------------------------------
Cash, End of Year $ 53,043 $ 12,919 $ 31,550
- ------------------------------------------------------------------------------------------------------------------------------------
Supplemental information
Issue of common stock
For short term shareholder advances received in year $ 0 $ 531,061 $ 0
For settlement of debt $ 100,230 $ 531,061 $ 104,487
For partnership interest $ 0 $ 0 $ 2,484,724
For services and compensation $ 386,815 $ 608,548 $ 246,034
For finder's fee $ 0 $ 14,850 $ 0
For interest $ 64,126 $ 0 $ 0
Interest paid $ 154,860 $ 211,808 $ 41,684
Income taxes paid $ 0 $ 0 $ 0
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
RICH COAST, INC.
(Formerly Rich Coast Resources Ltd.)
Notes to Consolidated Financial Statements
Years Ended April 30, 1998 and 1997
(U.S. Dollars)
________________________________________________________________________________
1. ORGANIZATION AND BASIS OF PRESENTATION
Pursuant to an Agreement of Merger, effective October 31, 1995 and
executed on November 16, 1995, Rich Coast, Inc. (the "Company") acquired
Integrated Waste Systems, Inc., a Michigan corporation ("IWS"), and The
Powers Fagan Group, Inc., a Michigan corporation ("Powers/Fagan"),
through the issuance of 3,383,200 shares of its common stock. At April
30, 1995 and prior to the merger, the Company held a controlling
interest (approximately 55%) in Waste Reduction Systems ("the
Partnership"). IWS and Powers/Fagan together held the remaining
(approximately 45%) interest in the Partnership. Neither IWS nor
Powers/Fagan had any assets, liabilities or operations other than their
interest in the Partnership.
The acquisition was initially accounted for as a combination of entities
under common control, a method similar to a pooling of interests.
Management has now determined that this method did not reflect the
substance of the transaction. The error in the prior period financial
statements has now been reported as a prior period adjustment with the
acquisition of IWS and Powers/Fagan accounted for using the purchase
method of accounting. The Company, pursuant to the partnership
agreement with the Partnership, had been including its approximately
majority interest in the partnership's losses and also absorbing the
losses pertaining to the Partnership interests held by IWS and
Powers/Fagan, hence their interests in the partnership were of nil
value. Because the Company had accounted for virtually all the
partnership losses on an equity basis to April 30, 1995 the prior period
adjustment would change individual balance sheet items for paid in
capital, additional paid-in capital and accumulated deficit to reflect
the nil value of the underlying assets of the acquired subsidiaries.
The net book value of the assets received (nil value) was determined to
be the purchase cost as such value was more clearly evident than the
fair value of the common stock issued. Thus the stock issued for IWS
and Powers/Fagan now reflects the nil value (note 8(a)).
Consolidated operating results as if the Company's acquisition of IWS
and Powers/Fagan had been consummated as of May 1, 1995 would not be
different from the results shown in the financial statements
Prior to the acquisition of its interest in the Partnership and the
acquisition of IWS and Powers/Fagan, the Company was engaged in mineral
exploration and had accumulated a deficit of $13,210,746. The Company
now operates a non-hazardous waste treatment facility in Dearborn,
Michigan, specializing in recycling of waste oils.
These consolidated financial statements are prepared in accordance with
generally accepted accounting principles in the United States and all
amounts are in U.S. dollars.
During the 1997 fiscal year the Company was discontinued in British
Columbia and continued in the State of Delaware under the General
Corporate Law of that jurisdiction under the name Rich Coast, Inc.
Effective July 14, 1998 the Company reincorporated in the State of
Nevada.
<PAGE>
RICH COAST, INC.
(Formerly Rich Coast Resources Ltd.)
Notes to Consolidated Financial Statements
Years Ended April 30, 1998 and 1997
(U.S. Dollars)
________________________________________________________________________________
2. SIGNIFICANT ACCOUNTING POLICIES
(a) Principles of consolidation
These financial statements include the accounts of Rich Coast, Inc.
(a Delaware Corporation, a Nevada Corporation effective July 14,
1998) and its wholly-owned subsidiaries Rich Coast Oil, Inc., Waste
Reduction Systems, Inc., Rich Coast Pipeline, Inc., and Rich Coast
Resources Inc. all being Michigan corporations. All intercompany
balances and transactions have been eliminated.
(b) Inventory
Inventories are stated at the lower of cost or market. Cost is
determined on a first in, first out (FIFO) basis.
(c) Distillation unit, property and equipment
The distillation unit and the property and equipment are recorded
at cost. These assets are depreciated over their estimated useful
lives as follows:
Buildings Straight line basis
Machinery and equipment Double declining balance basis
Bulk storage tanks 1.5 declining balance basis
Furniture and fixtures Double declining basis
Computer Double declining basis
No depreciation has been taken on the distillation unit or the
property and equipment and pipeline that have not yet been put into
use.
The Company reviews long term assets such as the distillation unit
to determine if the carrying amount is recoverable based on the
estimate of future cash flows expected to result from the use of
the asset and its eventual disposition. If in this determination
there is an apparent shortfall, the loss will be recognized as a
current charge to operations.
(d) Resource properties
During the 1996 fiscal year the Company disposed of its remaining
mineral and oil and gas properties concurrent with the merger
referred to in note 1 above.
(e) Deferred finance charges
Costs related to long-term financing are being amortized over the
terms of the related debt on a straight-line basis, which is not
materially different from the effective interest method.
<PAGE>
RICH COAST, INC.
(Formerly Rich Coast Resources Ltd.)
Notes to Consolidated Financial Statements
Years Ended April 30, 1998 and 1997
(U.S. Dollars)
________________________________________________________________________________
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
(f) Reporting Currency
Financial statements for reporting periods up to and including the
year ended April 30, 1996 were originally presented in Canadian
dollars because that was the reporting currency. As discussed in
note 1, the Company became a US corporation during the 1997 fiscal
year. Effective May 1, 1996 financial statements are presented in
United States dollars, the functional currency for recording the
operations and activities of the Company.
(g) Net loss per share
Net loss per share computations are based on the weighted average
number of common shares outstanding during the year. The effect of
exercising share warrants and options is not reflected as the
result would be anti-dilutive.
(h) Income taxes
The Company uses the asset and liability approach in its method of
accounting for income taxes which requires the recognition of
deferred tax liabilities and assets for expected future tax
consequences of temporary differences between the carrying amounts
and the tax basis of assets and liabilities. A valuation allowance
against deferred tax assets is recorded if, based upon weighted
available evidence, it is more likely than not that some or all of
the deferred tax assets will not be realized.
(i) Use of estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosures 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 and would
impact future results of operations and cash flows.
(j) Financial instruments
The carrying value of cash, accounts receivable, accounts payable,
insurance claim receivable and accrued liabilities approximate
their fair value because of the short maturity of these financial
instruments. Advances on factored accounts receivable are recorded
as deductions from the related receivable amounts. In the opinion
of management, the carrying amounts of these financial instruments
approximate their fair value because of the short maturity of these
financial instruments. Long term debt approximates its fair value
because interest payments over the term of the debt approximated
market rates at inception of the debt.
<PAGE>
RICH COAST, INC.
(Formerly Rich Coast Resources Ltd.)
Notes to Consolidated Financial Statements
Years Ended April 30, 1998 and 1997
(U.S. Dollars)
________________________________________________________________________________
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
(k) Stock based compensation
The Company applies APB Opinion No. 25 and related interpretations
in accounting for its stock option plans and, accordingly, no
compensation cost has been recognized because stock options granted
under the plans were at exercise prices which were equal to market
value at date of grant. Compensation expense is recorded when
options are granted to management at discounts to market.
(l) Long-term debt
The beneficial conversion features relating to the 10% 18-month
promissory notes and the subsequent issue of 8% debentures are
accounted for as an interest charge and are amortized over the
period from the date of issue through the date the debt is first
convertible. This policy conforms to the accounting for these
transactions announced by the SEC staff in March 1997.
3. INSURANCE CLAIM
In December 1997 the Company incurred damage to its premises at 10200
Ford Road, Dearborn as a result of a fire. The accounts at April 30,
1998 reflect the amounts subsequently received from the insurers and the
expenditures incurred for repairs (note 6).
<PAGE>
RICH COAST, INC.
(Formerly Rich Coast Resources Ltd.)
Notes to Consolidated Financial Statements
Years Ended April 30, 1998 and 1997
(U.S. Dollars)
________________________________________________________________________________
4. PROPERTY AND EQUIPMENT
The Company's offices, plant, processing equipment and bulk storage
terminal located in Dearborn, Michigan are comprised of the following:
<TABLE>
<CAPTION>
=========================================================================================================================
Estimated
Useful Lives
(Years) 1998 1997
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Land -- $ 250,041 $ 250,041
Buildings 39 1,388,117 1,370,903
Machinery and equipment 7 1,586,789 1,558,465
Bulk storage tanks 15 636,534 636,534
Pipeline 15 296,187 296,187
Furniture, fixtures, computers, etc 5 to 7 51,274 86,309
-------------------------------------------------------------------------------------------------------------------------
Total at cost 4,208,942 4,198,439
Accumulated depreciation 1,218,569 987,954
-------------------------------------------------------------------------------------------------------------------------
$2,990,373 $3,210,485
=========================================================================================================================
</TABLE>
The Company's premises at 10200 Ford Road in Dearborn, Michigan are
currently listed for sale. The property is occupied under the terms of a
land contract (note 7). The premises were occupied and used throughout 1998
fiscal year. Depreciation charges based on historical cost have been
recorded.
5. DISTILLATION UNIT
The Company has a mineral distillation unit acquired at an original cost of
$2,000,000 from GAP Energy, Inc. The mineral distillation unit was
originally purchased for use on the proposed joint venture project with GAP
Minerals, Inc. in the development of the Gongora Property in Costa Rica.
The price of sulphur dropped making the development of the project
uneconomical, however; the Company had intended to proceed with the project
once world prices improve to the point the project becomes profitable. In
view of this, the Company searched for an alternate use of the unit and
found that it could possibly be used for soil remediation for such things
as oil pits polluted with hydrocarbons. Testing was conducted on the unit
to confirm this use. Preliminary results indicate the system is capable of
removing soil contaminants to a level acceptable to the Environmental
Protection Agency of the United States.
The investment in the distillation unit comprises a significant portion of
the Company's assets. Realization of the Company's investment in the
distillation unit is dependent upon the successful development of the unit
for soil remediation purposes, the attainment of successful production from
the unit or from the proceeds of the unit's disposal.
<PAGE>
RICH COAST, INC.
(Formerly Rich Coast Resources Ltd.)
Notes to Consolidated Financial Statements
Years Ended April 30, 1998 and 1997
(U.S. Dollars)
________________________________________________________________________________
6. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
<TABLE>
<CAPTION>
======================================================================
1998 1997
----------------------------------------------------------------------
<S> <C> <C>
Trade payables $516,482 $587,925
Building repair (fire damage) (note 3) 200,187 0
Accrued salaries and wages 50,325 70,491
Accrued property taxes 55,296 45,367
Payroll taxes 11,676 18,679
Accrued interest 5,000 16,666
----------------------------------------------------------------------
$838,966 $739,128
======================================================================
</TABLE>
<PAGE>
RICH COAST, INC.
(Formerly Rich Coast Resources Ltd.)
Notes to Consolidated Financial Statements
Years Ended April 30, 1998 and 1997
(U.S. Dollars)
<TABLE>
<CAPTION>
=====================================================================================================================
7. LONG-TERM DEBT
===========================================================================================================
1998 1997
-----------------------------------------------------------------------------------------------------------
<S> <C> <C>
10% 18 month convertible promissory notes - series 1997, interest
payable quarterly. Holders elected at the time of purchase to
receive interest in shares of the Company's common stock values at
a price per share equal to the average closing bid price as quoted
on NASDAQ over the 20 trading days preceding the close of the
calendar quarter. The notes may be converted at the option of the
holder at maturity into shares of common stock at a price per
share equal to 50% of the quoted NASDAQ bid price at the
conversion date. One holder of a $30,000 note has elected to
receive cash at maturity $ 697,000 0
Unamortized interest charge relating to beneficial conversion
feature (note 2(l)) (264,765) 0
-----------------------------------------------------------------------------------------------------------
432,235 0
10% senior secured note, due October 1, 2001 interest payable
monthly (see below for security) 2,000,000 2,000,000
Land contract payable in monthly instalments of $4,753 each
including principal and interest at 8% unless the Company falls
behind in its payments at which time the interest rate increases
to 12% and monthly instalments increase to $5,384 until the
payments are back to schedule (the Company's arrears payments were
corrected by a payment of $84,371 on June 1, 1998). After the
land contract is paid in full, the Company may lease the property
for a 7-year term, which will cause the land to be titled to the
Company for $1.00, either after satisfactory clean up by others or
91 years. 179,584 187,669
-----------------------------------------------------------------------------------------------------------
2,611,819 2,187,669
Less: Current portion 595,309 78,673
-----------------------------------------------------------------------------------------------------------
$2,016,510 $2,108,996
===========================================================================================================
</TABLE>
<PAGE>
RICH COAST, INC.
(Formerly Rich Coast Resources Ltd.)
Notes to Consolidated Financial Statements
Years Ended April 30, 1998 and 1997
(U.S. Dollars)
================================================================================
7. LONG TERM DEBT (Continued)
The senior secured note payable is secured by a $2,000,000 mortgage
granted by the Company over the real property at 6011 and 6051
Wyoming, Dearborn, Michigan and a charge on all other assets of the
Company. The loan agreement contains covenants relating to financial
requirements, expenditures, etc. for the Company. The holder may
convert the loan into common shares at $0.50 per share in the event of
default by the Company.
At the time the loan arrangements were made, the note holder was
issued warrants to purchase 3,600,000 shares of the Company (note 9).
The land contract payable relates to premises occupied at 10200 Ford
Road, Dearborn, Michigan which is currently listed for sale.
The amount of long-term obligations outstanding at April 30, 1998
mature as follows:
======================================================================
1999 $ 595,309
2000 267,858
2001 13,417
2002 2,000,000
----------------------------------------------------------------------
$2,876,584
======================================================================
<PAGE>
RICH COAST, INC.
(Formerly Rich Coast Resources Ltd.)
Notes to Consolidated Financial Statements
Years Ended April 30, 1998 and 1997
(U.S. Dollars)
================================================================================
8. STOCKHOLDERS' EQUITY
(a) Activity of the common stock account for the years 1996, 1997 and 1998
is as follows:
<TABLE>
<CAPTION>
Number of Number of
Shares (Pre Shares (Post Additional
Reverse Reverse Par Paid-In
Split) Split) Value Capital
(note 12b)
<S> <C> <C> <C> <C>
Fiscal 1996
Shares issued
For cash - private placements 1,198,945 299,736 $ 1,199 $ 835,445
For cash - exercise of stock options 575,150 143,787 575 478,032
For services 250,000 62,500 250 245,784
For settlement of loan payable to shareholder 167,376 41,844 168 104,319
Acquisition of subsidiaries (note 1) 3,383,200 845,800 3,383 2,481,341
5,574,671 1,393,667 $ 5,575 $ 4,144,921
As previously reported
Adjustment to correct the recording of
issuance of shares on acquisition of
subsidiary (note 1) 0 0 (3,383) (2,481,341)
5,574,671 1,393,667 $ 2,192 $ 1,663,580
Fiscal 1997
Shares issued
For financing fees 50,000 12,500 $ 50 $ 14,800
For settlement of debt 1,104,470 276,117 1,104 529,957
For cash - private placements 475,000 118,750 475 354,000
For cash - exercise of stock options 81,750 20,437 82 79,055
For services 1,120,600 280,150 1,121 607,427
2,831,820 707,954 $ 2,832 $ 1,585,239
Fiscal 1998
Shares issued
For services and compensation* 921,892 230,473 922 385,893
For cash - private placements** 430,000 107,500 430 107,070
For cash - exercise of stock options 355,000 88,750 355 78,245
For cash - exercise of warrants 280,000 70,000 280 69,720
For settlement of loan payable to a
Shareholder 521,198 130,299 521 99,709
For interest 211,768 52,942 237 63,889
2,719,858 679,964 $ 2,745 $ 804,526
</TABLE>
<PAGE>
RICH COAST, INC.
(Formerly Rich Coast Resources Ltd.)
Notes to Consolidated Financial Statements
Years Ended April 30, 1998 and 1997
(U.S. Dollars)
================================================================================
8. STOCKHOLDERS' EQUITY (Continued)
* Includes 100,000 shares for cash consideration of $25,000 subscribed and
paid July 28, 1998.
** Includes $81,000 of compensation relating to options granted to
management at a discount to market.
(b) Subsequent to April 30, 1998 the Company issued 132,500 shares (pre
reverse split) (33,025 post reverse split) (note 12(b)) and 1,875 shares
post reverse split under the terms of the 1996 Employee Stock Option and
Stock Bonus Plan (note 9) for total cash of $35,000. Additionally, options
were exercised under the terms of the 1995 Incentive Compensation Plan and
the 1997 Stock Option and Stock Bonus Plan for 498,500 shares (pre reverse
split) (124,625 post reverse split) (note 12b) for cash proceeds of
$104,430.
(c) 8,099 shares (post reverse split) were issued for interest of $16,927
on notes payable for the quarter ended June 30, 1998.
(d) The share subscription receivable was collected by the Company July 28,
1998.
9. STOCK OPTIONS AND WARRANTS
Options
Pursuant to the Company's 1995 Incentive Compensation Plan as
subsequently amended in 1996 ("the 1995 Plan"), the 1996 Employee
Stock Option and Stock Bonus Plan ("the 1996 Plan"), and the 1997
Stock Option and Bonus Plan ("the 1997 Plan") the Company may issue
stock options and stock bonuses for shares in the capital stock of the
Company to provide incentives to officers, directors, key employees
and other persons who contribute to the success of the Company. The
exercise price of the Incentive Options (employees of the Company or
its subsidiaries) is no less than the fair market value of the stock
at the date of the grant and for non-qualified options (non employees)
the exercise price is no less than 80% of the fair market value
(defined as the most recent closing sale price reported by NASDAQ) on
the date of the grant.
The following table summarizes the Company's stock option activity for
the years ended April 30, 1998 and 1997:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
1998 1997
-------------------------------------------------------------------------------------------------------------
Weighted Weighted
Average Average
Shares Exercise Price Shares Exercise Price
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Outstanding, Beginning of Year 2,015,000 $1.00 2,005,000 $1.00
Granted 4,292,913 $0.83 220,000 $1.00
Exercised (40,000) $0.72 0 $0.00
Expired 0 $0.00 (210,000) $1.00
-------------------------------------------------------------------------------------------------------------
Outstanding, End of Year 6,267,913 2,015,000
-------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
RICH COAST, INC.
(Formerly Rich Coast Resources Ltd.)
Notes to Consolidated Financial Statements
Years Ended April 30, 1998 and 1997
(U.S. Dollars)
================================================================================
9. STOCK OPTIONS AND WARRANTS (Continued)
The following table summarizes information about the Company's stock
options outstanding:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
Weighted
Average Weighted Weighted
Remaining Average Average
Range of Number Contractual Exercise Number Exercise
Exercise Prices Outstanding Life Price Exercisable Price
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
April 30, 1998 $0.72 - $2.00 6,267,913 $3.50 $0.88 6,097,913 $0.85
April 30, 1997 $1.00 - $2.00 2,015,000 $3.70 $1.00 1,720,000 $1.00
------------------------------------------------------------------------------------------------
</TABLE>
The Company applies APB Opinion No. 25 and related interpretations in
accounting for its stock option plans and, accordingly, no compensation
cost has been recognized because stock options granted under the plans were
at exercise prices which were equal to market value at date of grant. Had
compensation expense been determined as provided in SFAS 123 using the
Black-Sholes option-pricing model, the pro-forma effect on the Company's
net income (loss) and per share amounts would have been:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
1998 1997
------------------------------------------------------------------------------------------
<S> <C> <C>
Net income (loss), as reported $ (1,373,921) $ (1,928,329)
Net income (loss), pro-forma (4,339,709) (2,129,279)
Net income (loss) per share, as reported $ (0.08) $ (0.13)
Net income (loss) per share, as reported
- post reverse split $ ( 0.32) $ (0.52)
Net income (loss) per share, pro-forma $ ( 0.25) $ (0.14)
Net income (loss) per share, pro-forma
- post reverse split $ (1.00) $ (0.57)
------------------------------------------------------------------------------------------
</TABLE>
The fair value of each option grant is calculated using the following
weighted average assumptions:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------
1998 1997
---------------------------------------------------------------------------------
<S> <C> <C>
Expected life (years) 3 3
Interest rate 6.28% 5.99%
Volatility 101.14% 117.82%
Dividend yield 0.00% 0.00%
---------------------------------------------------------------------------------
</TABLE>
<PAGE>
RICH COAST, INC.
(Formerly Rich Coast Resources Ltd.)
Notes to Consolidated Financial Statements
Years Ended April 30, 1998 and 1997
(U.S. Dollars)
================================================================================
9. STOCK OPTIONS AND WARRANTS (Continued)
Note: For fiscal 1998 add $3,164,414 in expenses for pro-forma net income
and per share amounts. For fiscal 1997 add $200,950.
<TABLE>
<CAPTION>
=========================================================================================================================
1997 (Post 1996 (Post 1995 (Post
Plan Reverse Split) Plan Reverse Split) Plan Reverse Split)
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
(note 12(b)) (note 12(b)) (note 12(b))
Bonus Shares
Fiscal 1996
Issued 250,000 62,500
Fiscal 1997
Issued 410,000 102,500
Fiscal 1998
Issued 50,000 12,500
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
50,000 12,500 410,000 102,500 250,000 62,500
-------------------------------------------------------------------------------------------------------------------------
Options - Other
Fiscal 1998
Issued (40,000) (10,000)
Exercise price to
September 8, 2007 $ 0.18 $ 0.72
-------------------------------------------------------------------------------------------------------------------------
</TABLE>
Warrants
At April 30, 1998 there were 5,394,643 (1,348,660 Post Reverse Split)
(Note 12b) share purchase warrants outstanding.
<TABLE>
<CAPTION>
Exercise Number of
Expiry Date Price Warrants
------------------------------------------------------------------------------------
Pre Post Pre Post
Reverse Reverse Reverse Reverse
Split Split Split Split
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
September 8, 1998 $0.25 1.00 200,000 50,000
June 15, 2001 $0.25 1.00 150,000 37,500
November 5, 2001 $0.25 1.00 180,000 45,000
January 13, 2002 $0.25 1.00 420,000 105,000
July 30, 2002 $0.20 0.80 844,643 211,160
June 10, 2006 $0.30 1.20 3,600,000 900,000
------------------------------------------------------------------------------------
5,394,643 1,348,660
====================================================================================
</TABLE>
<PAGE>
RICH COAST, INC.
(Formerly Rich Coast Resources Ltd.)
Notes to Consolidated Financial Statements
Years Ended April 30, 1998 and 1997
(U.S. Dollars)
================================================================================
10. RELATED PARTY TRANSACTIONS
(a) Management fees of $30,000 were paid to directors or companies
controlled by directors for the year ended April 30, 1998 (1997 -
$30,000; 1996 - $30,000)
(b) Shareholder advance of $100,000 to the Company for working capital
purposes in 1997 fiscal year was settled by the issuance of 521,198
shares in 1998 fiscal year, which included an interest component of
$4,240.00. The shares were issued at a discount to market of 20%.
(c) Accounts payable (accrued payroll) includes $27,910 payable to two
directors and officers of the Company.
11. INCOME TAXES
A deferred tax asset stemming from the Company's net operating loss
carryforward, has been reduced by a valuation account to zero due to
uncertainties regarding the utilization of the deferred assets.
At April 30, 1998 the Company has available net operating loss
carryforward of approximately $6,400,000 which it may use to offset
future federal taxable income. The net operating loss carryforwards, if
not utilized, will begin to expire in 2007.
12. SUBSEQUENT EVENTS
(a) Subsequent to April 30, 1998 the Company completed a private
placement of $1,500,000 of 8% convertible debenture due June 15,
2003 which netted the Company $1,292,330. The debenture and accrued
interest thereon may be converted at the option of the holder at
anytime into common stock at a price per share equal to the lesser
of the closing bid price of the shares at the date of issuance of
the debenture or 75% of the five day average closing bid price for
the five trading days immediately preceding the conversion date.
(b) The Company announced a one for four reverse split of the authorized
common stock effective June 19, 1998.
(c) Share issuances after April 30, 1998 are set out in notes 8(b) and
(c).
(d) The Company reincorporated in the State of Nevada effective July 14,
1998.
13. LITIGATION
In December 1997 a complaint was filed against the Company relating to
alleged payments of $225,000 due by the Company under a Terminating
Agreement of May 18, 1995. The outcome of the dispute is not
determinable at this time, however, management is of the opinion the
matter will be settled prior to trial. No provision for loss has been
recorded in the accounts.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS AMENDED SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
RICH COAST INC. AUDITED FINANCIAL STATEMENTS AS AMENDED FOR THE FISCAL YEARS
ENDED APRIL 30, 1998 AND 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-30-1998
<PERIOD-END> APR-30-1998
<CASH> 53,043
<SECURITIES> 0
<RECEIVABLES> 460,558
<ALLOWANCES> 0
<INVENTORY> 108,265
<CURRENT-ASSETS> 1,082,156
<PP&E> 4,208,942
<DEPRECIATION> 1,218,569
<TOTAL-ASSETS> 6,243,648
<CURRENT-LIABILITIES> 1,884,719
<BONDS> 2,016,510
0
0
<COMMON> 15,518
<OTHER-SE> 2,326,901
<TOTAL-LIABILITY-AND-EQUITY> 6,243,648
<SALES> 0
<TOTAL-REVENUES> 2,547,083
<CGS> 0
<TOTAL-COSTS> 1,080,557
<OTHER-EXPENSES> 2,424,030
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 303,648
<INCOME-PRETAX> (1,477,424)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 103,503
<CHANGES> 0
<NET-INCOME> (1,373,921)
<EPS-BASIC> (.08)
<EPS-DILUTED> (.08)
</TABLE>
