U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the transition period from to
Commission file number: 33-28562
TOUCAN GOLD CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 75-2661571
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8201 PRESTON ROAD
SUITE 600
DALLAS, TEXAS 75225
(Address of principal executive offices)
(214) 890-8065
(Registrants's telephone number, including area code)
Indicate by check mark whether the registrant (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 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
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable date:
Common Stock, $0.01 par value: 7,264,600 Shares Outstanding at November 14, 1996
Transitional Small Business Disclosure Format. Yes No X
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<PAGE>
TOUCAN GOLD CORPORATION
INDEX TO FORM 10-QSB
Part I.
FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited) Page
Consolidated Balance Sheets as of
December 31, 1995 and September 30, 1996.....................3
Consolidated Statements of Operations for the
Three Months and Nine Months Ended
September 30, 1996...........................................4
Consolidated Statements of Stockholders'
Equity for the Nine Months Ended
September 30, 1996...........................................5
Consolidated Statements of Cash Flows
for the Three Months and Nine Months Ended
September 30, 1996...........................................6
Notes to Financial Statements................................7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations..............9
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.............................10
SIGNATURE ............................................................11
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<PAGE>
TOUCAN GOLD CORPORATION
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
ASSETS 1996 1995
-------------------- -----
<S> <C> <C>
Cash $ 41,715 $ 45,208
Prepaid expenses 10,000 -
------- ------------
Total current assets 51,715 45,208
Mineral rights 175,290 175,290
-------- --------
$ 227,005 $ 220,498
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Amounts payable to related parties $ 175,558 $126,328
Accrued expenses and other 250,397 -
-------- --
Total current liabilities 425,955 126,328
Stockholders' equity (deficit)
Preferred stock, par value .01 per share; authorized, 2,000,000
shares; issued and outstanding, none - -
Common stock, $.01 par value per share in 1996 and no par
value in 1995; authorized 30,000,000 shares in 1996 and
1,000,000 in 1995; issued and outstanding, 5,664,600 shares
in 1996 and 647,857 in 1995 56,646 96,170
Additional paid-in capital 252,059 -
Deficit accumulated during development stage (507,655) (2,000)
-------- -------
Total stockholders' equity (deficit) (198,950) 94,170
---------- -------
$ 227,005 $ 220,498
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
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<PAGE>
TOUCAN GOLD CORPORATION
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three months Six months
ended ended
September 30, September 30,
1996 1996
Cost and expenses
<S> <C> <C>
Consulting fees $ 40,745 $ 157,765
Legal and professional fees 150,145 216,379
Travel and entertainment 37,840 88,867
Public relations 15,574 25,682
Maps and stationery - 9,000
Transfer agent - 3,156
Other 11,110 4,806
---------- ----------
Net loss $ (255,414) $ 505,655
=========== ==========
Loss per share $ (.05) $ (.09)
========== =========
Weighted average shares outstanding 5,355,182 5,228,320
=========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
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<PAGE>
TOUCAN GOLD CORPORATION
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Deficit
accumulated
Additional during
Preferred stock Common stock paid-in development
Shares Amount Shares Amount capital stage Total
------ ------ -------- ------ --------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1996 - $ - 647,857 $ 96,170 $ - $ (2,000) $ 94,170
Recapitalization of Toucan
Mining Limited and
merger with Starlight
Acquisitions, Inc. - - 4,453,602 5,859 94,141 - 100,000
Issuance of common stock - - 563,141 11,263 101,272 - 112,535
Change in par value - - - (56,646) 54,646 - -
Net loss - - - - - (505,655) (505,655)
--- --- --- --- --- -------- -------
Balance at September 30, 1996 - $ - 5,664,600 $ 56,646 $252,059 $(507,655) $ (198,950)
=== === ========= ======= ======= ======== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
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<PAGE>
TOUCAN GOLD CORPORATION
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three months Nine months
ended ended
September 30, September. 30,
1996 1996
Operating activities
<S> <C> <C>
Net loss $(255,414) $(505,655)
Net changes in operating assets and liabilities
Prepaid expenses - (10,000)
Accrued expenses 202,397 250,397
-------- --------
Net cash used in operating activities (53,017) (265,258)
Financing activities
Net borrowings from related parties (10,422) 49,230
Issuance of common stock - 112,535
Proceeds from merger with Starlight Acquisition, Inc. - 100,000
------------- --------
Net cash provided by financing activities 10,422 261,765
------- --------
Net increase in cash (42,595) (3,493)
Cash at beginning of period 84,310 45,208
------- -------
Cash at end of period $ 41,715 $ 41,715
======= =======
</TABLE>
The accompanying notes are an integral part of these statements.
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<PAGE>
TOUCAN GOLD CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
September 30, 1996
NOTE A - ORGANIZATION
Starlight Acquisitions, Inc. (Starlight) was formed in 1989 and was a
publicly-held development stage company with no principal operations since
its incorporation. On May 10, 1996, Starlight merged with Toucan Mining
Limited (Toucan Mining). Pursuant to the terms of the merger agreement,
each stockholder of Toucan Mining received seven shares of Starlight common
stock for each share of Toucan Mining common stock. Immediately after the
merger, the stockholders of Toucan Mining owned approximately 89% of the
outstanding common stock of Starlight. Therefore, the merger has been
accounted for as a reverse merger, whereby Toucan Mining is deemed to have
acquired Starlight.
During July 1996, Starlight formed Toucan Gold Corporation (Toucan Gold or
the Company), a wholly-owned subsidiary and a Delaware corporation. On July
29, 1996, Starlight merged into Toucan Gold, and pursuant to the terms of
the merger, the outstanding shares of Starlight were canceled in exchange
for shares of Toucan Gold. The authorized shares of Toucan Gold include
2,000,000 and 30,000,000 shares of preferred stock and common stock,
respectively, with par values of $.01.
NOTE B - GOING CONCERN
The Company is a development stage company at September 30, 1996, and is
still in the initial stages of exploration. However, management believes
that the Company will be able to obtain adequate resources to develop its
mineral rights. Management also believes that future revenues will exceed
the carrying amount of the mineral rights and that revenues will be
adequate to support the Company's cost structure and enable it to achieve
profitable operations in the future.
NOTE C - BASIS OF PRESENTATION
The accompanying unaudited 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 Rule
10-01 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 (which include only normal recurring adjustments) necessary
for a fair presentation of the results for the interim periods presented
have been made. The results of operations for such interim periods are not
necessarily indicative of the results of operations for a full year.
The accompanying notes are an integral part of these statements.
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<PAGE>
TOUCAN GOLD CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
September 30, 1996
NOTE D - MINERAL RIGHTS
Costs incurred to acquire and develop mineral rights have been
capitalized and will be amortized as revenues are generated from the
holding of those rights. If future revenues are less than the carrying
amount of the mineral rights, the Company may recognize a loss to
write-down the mineral rights to their realizable value. The Company's
wholly-owned Brazilian incorporated subsidiary, Mineradora de Bauxita
Ltda., ("MBL"), is the registered holder of the mineral rights.
NOTE E - RELATED PARTIES
Amounts payable to related parties consist of the following at
September 30, 1996:
Stockholders $ 46,795
Cardinal Holdings Limited 127,849
Mustardseed Estates Limited 914
-----------
$ 175,558
The loans to the stockholders are noninterest-bearing, unsecured and
with no specific maturity date. The loans to Cardinal Holdings Limited
and Mustardseed Estates Limited bear interest at 10%. These loans are
unsecured and are due upon demand.
NOTE F - SUBSEQUENT EVENTS
On August 23, 1996, Toucan Gold entered into a letter of intent with
two corporations that, subject to negotiation and execution of a
definitive agreement, gives such corporations the right to earn a 50%
interest in 10% of MBL's existing mining claims [in four blocks of
claims aggregating 476 square miles] to be selected by such
corporations, through the expenditure of $5 million (Canadian) in
exploration costs with respect to MBL's mining claims over a two-year
period
On November 1, 1996, Toucan Gold issued 1,600,000 units at 2.50 per
unit, consisting of one share of common stock plus warrants to purchase
one common share at an exercise price of $3.50.
The accompanying notes are an integral part of these statements.
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<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR
PLAN OF OPERATIONS
Effective May 10, 1996, Starlight Acquisitions, Inc. (Starlight), a
Colorado corporation, acquired all of the outstanding capital stock of
Toucan Mining Limited (Toucan Mining), a company organized under the laws
of the Isle of Man, in exchange for shares of common stock of Starlight. As
a result of the share exchange, a change in control of Starlight occurred,
whereby Toucan Mining is deemed to have acquired Starlight. See Notes to
the Consolidated Financial Statements.
Toucan Mining is a development stage company that conducts its
operations primarily through its wholly-owned subsidiary, Mineradora de
Bauxita Ltda. (MBL), which is an authorized mining company organized under
the laws of Brazil. MBL has been financed entirely by Toucan Mining for the
purpose of conducting mineral exploration, specifically gold exploration.
During July 1996, Starlight formed Toucan Gold Corporation, (Toucan
Gold or the Company), a wholly-owned subsidiary and a Delaware corporation.
On July 29, 1996, Starlight merged into Toucan Gold, and pursuant to the
terms of the merger, the outstanding shares of Starlight were canceled in
exchange for shares of Toucan Gold.
The consolidated financial statements for the three months and nine
months ended September 30, 1996, reflect the results of the Company's
operations, which consisted primarily of legal and consulting fees incurred
by the Company for the merger between Starlight and Toucan Mining.
The Company intends to undertake a program of mineral exploration to
target and explore selected areas of its Brazilian mining claims to
determine which areas are most likely to contain economic gold
mineralization or to effectuate this program through joint ventures. A
mapping program based upon satellite imagery will precede field
investigation, which will include detailed geologic mapping, geochemical
sampling and drilling in accordance with standard exploration practice. A
program of this nature is likely to take several years. In the event of
encouraging results in a particular area, a more concentrated study will be
undertaken to provide the basis of a feasibility study for mineral
development. MBL will also be working to acquire additional claims in the
Cuiaba Basin in the State of Mato Grosso, Brazil.
To fund this program for up to two years and to pay for normal
expenses, the Company has entered into a letter of intent with HRC
Development Corporation and Eldorado Gold Corporation (collectively
"HRC-Eldorado") with respect to a mineral exploration joint venture and
resolved to raise $4 million, less offering costs. Pursuant to the proposed
joint venture with HRC-Eldorado, El-Dorado would earn a 50% interest in 10%
of MBL's mining claims [in four blocks of claims aggregating 476 square
miles] to be selected by HRC-Eldorado through the expenditure of Canadian
$5 million by HRC-Eldorado within two years. The proposed joint venture is
subject to the negotiation and execution of a definitive agreement.
The Company has raised approximately $3.6 million in net proceeds
through the issuance of 1,600,000 units at $2.50 per unit (Units), each
unit consisting of one share of common stock and a warrant to purchase a
share of common stock at an exercise price of $3.50, in an offering (the
"Regulation S Offering") exempt from registration under the Securities Act
of 1933, as amended, pursuant to Regulation S. This offering was completed
on November 1, 1996.
The Company plans to use the proceeds from the sale of the Units to
finance the purchase of additional mining claims in the Cuiaba Basin, and
for general working capital purposes. These claims cover in excess of 350
square miles in the Cuiaba Basin. If the purchase of all of such claims is
consummated, the aggregate purchase price would consist of approximately
U.S. $1,400,000 in cash and 350,000 shares of Common Stock. While the
Company has an agreement with the owner of such claims with respect to the
purchase terms, the Company's obligations thereunder are subject to its
review of documentation relating to such claims. There can be no assurance
that the purchase of such claims will be consummated.
There is no assurance that the funds to be provided pursuant to the
HRC-Eldorado joint venture, if effectuated, and the Regulation S Offering
will be adequate. The Company's plan will be subject to review depending
upon joint ventures with other companies, including the consummation of the
HRC-Eldorado joint venture, the additional
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<PAGE>
mining claims acquired and to be acquired, and the results obtained from
its exploration activities. If the HRC- Eldorado joint venture is not
effectuated, the Company will need to seek another joint venture partner to
provide funds to implement the Company's exploration program and/or to
raise additional capital through the issuance of additional securities,
equity and/or debt, in the public and/or private capital markets. In
addition, the Company's proposed exploration program could be adversely
affected if costs rise materially because, among other things, the weather
proves untypically harsh, unforeseen ground conditions are encountered,
equipment becomes difficult to source or negotiations with surface owners
become prolonged. MBL may spend more or less on claim acquisitions than
currently estimated. There can be no assurance that the exploration program
will result in the discovery of economic gold mineralization.
Certain of the information contained in Parts I and II of this Form
10-QSB constitutes forward looking statements within the meaning of Section
27A of the Securities Act and Section 21E of the Securities Exchange Act of
1934, as amended, that involves certain risks, uncertainties and additional
costs described herein. The actual results that are achieved may differ
materially from any foward looking projections, due to such risks,
uncertainties and additional costs. Although the Company believes that the
expectations reflected in such forward looking statements are based upon
reasonable assumptions, it can give no assurance that its expectations will
be achieved. Subsequent written and oral forward looking statements
attributable to the Company or persons acting on its behalf are expressly
qualified in their entirety by reference to such risks, uncertainties and
additional costs.
PART II. OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) Exhibits:
10.1 Agreement with Yorkton Securities Inc. dated
October 17, 1996 (incorporated by reference from
Exhibit 10 in the Company's Current Report on Form
8-K dated October 21, 1996).
10.2 Amendment to Agreement with Yorkton Securities
Inc. dated October 23,1996 (incorporated by reference
from Exhibit 10.2 in the Company's Current Report on
Form 8-K/A dated October 29, 1996).
10.3 Letter of intent, dated August 23, 1996, by and
among Toucan Gold Corporation, Toucan Mining Limited,
HRC Development Corporation, and Eldorado Gold
Corporation (incorporated by reference from Exhibit
10 in the Company's Current Report on Form 8-K dated
August 30, 1996).
27 Financial Data Schedule
(B) Reports on Form 8-K:
1. On August 30, 1996, the Company filed a Current Report on Form
8-K reporting the execution of the letter of intent with HRC
Development Corporation and Eldorado Gold Corporation.
2. On October 21, 1996, the Company filed a Current Report on
Form 8-K reporting the execution of a placement agreement
(Placement Agreement) with Yorkton Securities Inc. with
respect to an offering (Offering) pursuant to Regulation S of
1,200,000 units (Units) to raise gross proceeds up to $3
million.
3. On October 29, 1996, the Company filed a Current Report on
Form 8-K/A reporting an amendment to the Placement Agreement
increasing the size of the Offering to 1,600,000 Units to
raise gross proceeds up to $4 million.
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<PAGE>
4. On November 14, 1996, the Company filed a Current Report on
Form 8-K reporting the consummation of the sale of 1,600,000
Units in the Offering at a purchase price of $2.50 per Unit,
which raised gross proceeds of $4 million. Each Unit had a
purchase price of $2.50 and consisted of one share of common
stock and a warrant to purchase one share of common stock at
an exercise price of $3.50.
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<PAGE>
SIGNATURE
In accordance with the requirements of the Exchange Act, the registrant
caused this amended report to be signed on its behalf by the undersigned,
thereunto duly authorized.
TOUCAN GOLD CORPORATION
(REGISTRANT)
Date: November 18, 1996 By:/s/ Robert Jeffcock
------------------------
Robert Jeffcock
(Principal Executive and Financial Officer and
Duly Authorized Officer)
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<PAGE>
INDEX TO EXHIBITS
Exhibits Exhibit Item
10.1* Agreement with Yorkton Securities
Inc. dated October 17, 1996
(Exhibit 10)
10.2** Amendment to Agreement with Yorkton
Securities Inc., dated
October 23, 1996 (Exhibit 10.2)
10.3*** Letter of intent, dated August 23,
1996, by and among Toucan Gold
Corporation, Toucan Mining Limited,
HRC Development Corporation, and
Eldorado Gold Corporation
(Exhibit 10)
27 Financial Data Schedule
---------------------
*Incorporated by reference from the exhibit shown in parenthesis
contained in the Company's Current Report on Form 8-K dated October 21,
1996. **Incorporated by reference from the exhibit shown in parenthesis
contained in the Company's Current Report on Form K/A dated October 29,
1996. ***Incorporated by referenced from the exhibit shown in
parenthesis contained in the Company's
Current Report on Form 8-K dated August 30, 1996.
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<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000850083
<NAME> Toucan Gold Corporation
<S> <C>
<PERIOD-TYPE> 9-mos
<FISCAL-YEAR-END> dec-31-1996
<PERIOD-START> jan-01-1996
<PERIOD-END> sep-30-1996
<CASH> 41,715
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 51,715
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 227,005
<CURRENT-LIABILITIES> 425,955
<BONDS> 0
0
0
<COMMON> 56,646
<OTHER-SE> (255,596)
<TOTAL-LIABILITY-AND-EQUITY> 227,005
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 255,414
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (255,414)
<INCOME-TAX> 0
<INCOME-CONTINUING> (255,414)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (255,414)
<EPS-PRIMARY> (.05)
<EPS-DILUTED> 0
</TABLE>
