U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 033-37099-S
GOLDEN QUEST, INC.
(Exact name of small business issuer as specified in its
charter)
Nevada 91-1465664
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
5882 South 900 East, Suite 202, Salt Lake City, Utah 84117
(Address of principal executive offices)
801-269-9500
(Issuer's telephone number)
Not Applicable
(Former name, address and fiscal year, if changed since last report)
Check whether the issuer (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act during the
preceding 12 months (or for such shorter period that the issuer
was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [ X] No [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:
Check whether the registrant has filed all documents and reports
required to be filed by Sections 12, 13, or 15(d) of the
Exchange Act subsequent to the distribution of securities under
a plan confirmed by a court. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
State the number of shares outstanding of each of the issuer's
classes of common equity, as of June 30, 2000: 33,941,927
shares of common stock.
Transitional Small Business Format: Yes [ ] No [ X ]
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FORM 10-QSB
GOLDEN QUEST, INC.
INDEX
Page
PART I. Financial Information 3
Review Report of Independent Certified
Public Accountants 4
Condensed Balance Sheets - June 30, 2000
(unaudited) and December 31, 1999 5
Condensed Statements of Operations
(unaudited) for the Three and Six Months
Ended June 30, 2000 and from the Re-entry
of Development Stage on January 1, 1993
through June 30, 2000 6
Condensed Statements of Cash Flows
(unaudited) for the Three and Six Months
Ended June 30, 2000 and 1999, from Re-
entry of Development Stage on January 1,
1993 through June 30, 2000 7
Notes to Unaudited Consolidated Financial
Statements 8
Item 2. Management's Discussion and
Analysis of Financial Condition or Plan
of Operation 12
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
(Inapplicable items have been omitted)
2
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PART I.
Financial Information
Item 1. Financial Statements (unaudited)
In the opinion of management, the accompanying unaudited
financial statements included in this Form 10-QSB reflect all
adjustments (consisting only of normal recurring accruals)
necessary for a fair presentation of the results of operations
for the periods presented. The results of operations for the
periods presented are not necessarily indicative of the results
to be expected for the full year.
3
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ACCOUNTANTS' REVIEW REPORT
Board of Directors
GOLDEN QUEST, INC.
Salt Lake City, Utah
We have reviewed the accompanying condensed balance sheet of
Golden Quest, Inc. (A Development Stage Company) as of June 30,
2000, and the related condensed statements of operations for the
three and six months ended June 30, 2000 and for the period from
the re-entering of development stage on January 1, 1993 through
June 30, 2000, and the statement of cash flows for the six months
ended June 30, 2000 and for the period from the re-entering of
development stage on January 1, 1993 through June 30, 2000. All
information included in these financial statements is the
representation of the management of Golden Quest, Inc.
We conducted our review in accordance with standards established
by the American Institute of Certified Public Accountants. A
review consists principally of inquiries of Company personnel and
analytical procedures applied to financial data. It is
substantially less in scope than an audit in accordance with
generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements
taken as a whole. Accordingly, we do not express such an
opinion.
Based on our review, we are not aware of any material
modifications that should be made to the condensed financial
statements reviewed by us, in order for them to be in conformity
with generally accepted accounting principles.
The accompanying condensed financial statements have been
prepared assuming the Company will continue as a going concern.
As discussed in Note 5 to the financial statements, the company
has no on-going operations, has incurred substantial losses since
its inception, has liabilities in excess of assets and has no
working capital. These factors raise substantial doubt about its
ability to continue as a going concern. Management's plans in
regards to these matters are also described in Note 5. The
financial statements do not include any adjustments that might
result from the outcome of these uncertainties.
PRITCHETT, SILER & HARDY, P.C.
August 8, 2000
Salt Lake City, Utah
4
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GOLDEN QUEST, INC.
[A Development Stage Company]
CONDENSED BALANCE SHEETS
[Unaudited - See Accountants' Review Report]
ASSETS
June 30, December 31,
2000 1999
___________ ___________
CURRENT ASSETS:
Cash in bank $ - $ -
___________ ___________
Total Current Assets - -
___________ ___________
$ - $ -
___________ ___________
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 123,140 $ 123,140
Interest payable 795,062 752,357
Notes payable 853,889 853,889
Accounts payable to related party 24,494 10,648
___________ ___________
Total Current Liabilities 1,796,585 1,740,034
___________ ___________
STOCKHOLDERS' (DEFICIT):
Common stock, $.001 par value, 50,000,000
shares authorized, 33,941,927 shares issued
and outstanding 33,942 33,942
Additional paid in capital 649,254 649,254
Retained deficit (1,812,410) (1,812,410)
Deficit accumulated during the
development stage (667,371) (610,820)
___________ ___________
Total Stockholders' (Deficit) (1,796,585) (1,740,034)
___________ ___________
$ - $ -
___________ ___________
Note: The balance sheet at December 31, 1999 was taken from the
unaudited financial statements at that date and condensed.
The accompanying notes are an integral part of these unaudited
condensed financial statements.
5
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GOLDEN QUEST, INC.
[A Development Stage Company]
CONDENSED STATEMENTS OF OPERATIONS
[Unaudited - See Accountants' Review Report]
Cumulative From
the Re-entering of
For the Three For the Six Development Stage
Months Ended Months Ended on January 1,
June 30, June 30, 1993 through
___________________________________ June 30,
2000 1999 2000 1999 2000
__________________________________________________
REVENUE:
Sales $ - $ - $ - $ - $ -
__________________________________________________
Total Revenue - - - - -
__________________________________________________
EXPENSES:
General and
administrative 8,198 - 13,846 - 24,494
__________________________________________________
Total Expenses (8,198) - (13,846) - (24,494)
__________________________________________________
LOSS FROM OPERATIONS (8,198) - (13,846) - (24,494)
__________________________________________________
OTHER EXPENSE:
Interest expense 21,353 21,353 42,705 42,705 642,877
__________________________________________________
Total Other Expense (21,353) (21,353) (42,705) (42,705) (642,877)
__________________________________________________
LOSS BEFORE INCOME TAXES(29,551) (21,353) (56,551) (42,705) (667,371)
CURRENT INCOME TAXES - - - - -
DEFERRED INCOME TAX - - - - -
__________________________________________________
NET LOSS $ (29,551) $(21,353) $(56,551) $(42,705) $(667,371)
__________________________________________________
LOSS PER SHARE $ (.00) $ (.00) $ (.00) $ (.00) $ (.02)
__________________________________________________
The accompanying notes are an integral part of these unaudited
condensed financial statements.
6
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GOLDEN QUEST, INC.
[A Development Stage Company]
CONDENSED STATEMENTS OF CASH FLOWS
[Unaudited - See Accountants' Review Report]
From Re-entry of
For the Six Development Stage
Months Ended on January 1,
June 30, 1993 through,
_____________________ June 30,
2000 1999 2000
_________________________________
Cash Flows From Operating Activities:
Net loss $(56,551) $(42,705) $ (667,371)
Adjustments to reconcile net loss to
net cash used by operating activities:
Changes in assets and liabilities:
Increase in interest payable
-related party 42,705 42,705 642,877
Increase in accounts payable to
related party 13,846 - 24,494
_________________________________
Net Cash (Used) by
Operating Activities - - -
________________________________
Cash Flows From Investing Activities:
- - -
________________________________
Net Cash (Used) by
Investing Activities - - -
________________________________
Cash Flows From Financing Activities:
- - -
________________________________
Net Cash Provided by
Financing Activities - - -
________________________________
Net Increase in Cash - - -
Cash at Beginning of the Period - - -
________________________________
Cash at End of the Period $ - $ - $ -
________________________________
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest $ - $ - $ -
Income taxes $ - $ - $ -
Supplemental Schedule of Noncash Investing and Financing
Activities:
For the six months ended June 30, 2000:
None
For the six months ended June 30, 1999:
None
The accompanying notes are an integral part of these unaudited
condensed financial statements.
7
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GOLDEN QUEST, INC.
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - Golden Quest, Inc. (the Company) was organized
under the laws of the State of Utah on August 8, 1984. On May 8
1989 the Company changed its domicile to Nevada. The Company was
formed to engage in any lawful activity. From 1989 to 1992 the
Company engaged in the locating and recovering of archeological
artifacts, precious metals and other valuables from shipwrecks.
During 1993, Management determined it was in the best interest of
the Company to discontinue its previous operations. The Company
is considered to have re-entered into a new development stage
January 1, 1993.
Condensed Financial Statements - The accompanying financial
statements have been prepared by the Company without audit. In
the opinion of management, all adjustments (which include only
normal recurring adjustments) necessary to present fairly the
financial position, results of operations and cash flows at June
30, 2000 and 1999 and for the periods then ended have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted.
It is suggested that these condensed financial statements be read
in conjunction with the financial statements and notes thereto
included in the Company's December 31, 1999 audited financial
statements. The results of operations for the periods ended June
30, 2000 are not necessarily indicative of the operating results
for the full year.
Development Stage Company - The Company is considered a
development stage company as defined in Statement of Financial
Accounting Standards (SFAS) No. 7.
Loss Per Share - The computation of loss per share of common
stock is based on the weighted average number of shares
outstanding during the periods presented, in accordance with
Statement of Financial Accounting Standards No. 128, "Earnings
Per Share" [See Note 6].
Cash and Cash Equivalents - For purposes of the financial
statements, the Company considers all highly liquid debt
investments purchased with a maturity of three months or less to
be cash equivalents.
Accounting 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, the 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 estimated by management.
Recently Enacted Accounting Standards - Statement of Financial
Accounting Standards (SFAS) No. 132, "Employer's Disclosure about
Pensions and Other Postretirement Benefits", SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities",
SFAS No. 134, "Accounting for Mortgage-Backed Securities.", SFAS
No. 135, "Rescission of FASB Statement No. 75 and Technical
Corrections", SFAS No. 136, "Transfers of Assets to a not for
profit organization or charitable trust that raises or holds
contributions for others", and SFAS No. 137, "Accounting for
Derivative Instruments and Hedging Activities - deferral of the
effective date of FASB statement No. 133 ( an amendment of FASB
Statement No. 133.)," were recently issued. SFAS No. 132, 133,
134, 135, 136 and 137 have no current applicability to the
Company or their effect on the financial statements would not
have been significant.
8
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GOLDEN QUEST, INC.
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 2 - DISCONTINUED OPERATIONS
The accompanying financial statements as of June 30, 2000
reflect management's decision to discontinue the Company's
operations of locating and recovering of archeological
artifacts, precious metals and other valuables from shipwrecks.
The following liabilities related to the former operations are
still owed by the Company:
June 30,
2000
___________
Accounts payable $123,140
Interest payable 795,062
Notes payable 853,889
___________
Total liabilities $ 1,772,091
___________
NOTE 3 - INCOME TAXES
The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standards No. 109 "Accounting
for Income Taxes" which requires an asset and liability approach
for the effect of income taxes.
The Company has available at June 30, 2000, unused operating loss
carryforwards of approximately $2,470,000, which may be applied
against future taxable income and which expire in various years
through 2020. If certain substantial changes in the Company's
ownership should occur, there could be an annual limitation on
the amount of net operating loss carryforward which can be
utilized. The amount of and ultimate realization of the benefits
from the operating loss carryforwards for income tax purposes is
dependent, in part, upon the tax laws in effect, the future
earnings of the Company and other future events, the effects of
which cannot be determined. Because of the uncertainty
surrounding the realization of the loss carryforwards the Company
has established a valuation allowance equal to the tax effect of
the loss carryforwards and, therefore, no deferred tax asset has
been recognized for the loss carryforwards. The net deferred tax
assets are approximately $840,000 and $820,000 as of June 30,
2000 and December 31, 1999, respectively, with an offsetting
valuation allowance at each period end of the same amount,
resulting in a change of approximately $20,000 during the six
months ended June 30, 2000.
9
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GOLDEN QUEST, INC.
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 4 - RELATED PARTY TRANSACTIONS
Management Compensation - During the periods presented, the
Company did not pay any compensation to its officers and
directors.
Office Space - The Company has not had a need to rent office
space. An officer/shareholder of the Company is allowing the
Company to use his office as a mailing address, as needed, at no
expense to the Company.
Expenses - During the six months ended June 30, 2000, an Officer
of the Company paid expenses amounting to $5,648. This amount is
included as an accounts payable
to related party. Also, an entity related to an officer of the
Company paid expenses amounting to $8,198. This is also included
as an account payable to related party.
Change in Management - During 1999 the Company under went a
change in the Officers and Board of Director's of the Company.
NOTE 5 - GOING CONCERN
The accompanying financial statements have been prepared in
conformity with generally accepted accounting principles, which
contemplate continuation of the Company as a going concern.
However, the Company has no on-going operations and has incurred
losses since its inception. Further, the Company has current
liabilities in excess of assets and has no working capital to pay
its expenses. These factors raise substantial doubt about the
ability of the Company to continue as a going concern. In this
regard, management is proposing to raise any necessary additional
funds not provided by operations through loans or through sales
of its common stock or through a possible business combination
with another company. There is no assurance that the Company
will be successful in raising this additional capital or
achieving profitable operations. The financial statements do not
include any adjustments that might result from the outcome of
these uncertainties.
10
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GOLDEN QUEST, INC.
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 6 - EARNINGS (LOSS) PER SHARE
The following data show the amounts used in computing income
(loss) per share and the effect on income (loss) and the weighted
average number of shares of dilutive potential common stock for
the six months ended June 30, 2000 and 1999 and for the period
from the re-entering of development stage on July 1, 1994 through
June 30, 2000:
Cumulative From
the Re-entering of
For the Three For the Six Development Stage
Months Ended Months Ended on January 1,
June 30, June 30, 1993 through
___________________________________ June 30,
2000 1999 2000 1999 2000
__________________________________________________
Loss from continuing
operations available to
common stockholders
(numerator) $(29,551) $(21,353) $(56,551) $(42,705) $(667,371)
__________________________________________________
Weighted average number of
common shares outstanding
used in loss per share
during the period
(denominator) 33,941,922 33,941,927 33,941,927 33,941,927 31,968,880
__________________________________________________
Dilutive earnings (loss) per share was not presented, as the
Company had no common equivalent shares for all periods presented
that would effect the computation of diluted earnings (loss) per
share.
11
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION OR PLAN OF OPERATION
Forward-Looking Statement Notice
When used in this report, the words "may," "will," "expect,"
"anticipate," "continue," "estimate," "project," "intend," and
similar expressions are intended to identify forward-looking
statements within the meaning of Section 27a of the Securities
Act of 1933 and Section 21e of the Securities Exchange Act of
1934 regarding events, conditions, and financial trends that may
affect the Company's future plans of operations, business
strategy, operating results, and financial position. Persons
reviewing this report are cautioned that any forward-looking
statements are not guarantees of future performance and are
subject to risks and uncertainties and that actual results may
differ materially from those included within the forward-looking
statements as a result of various factors. Such factors are
discussed under the "Item 6. Management's Discussion and
Analysis of Financial Condition or Plan of Operations," and also
include general economic factors and conditions that may directly
or indirectly impact the Company's financial condition or results
of operations.
Three Month periods Ended June 30, 2000 and 1999
The Company had no revenue from continuing operations for the
three-month periods ended June 30, 2000 and 1999.
General and administrative expenses for the three-month periods
ended June 30, 2000 and 1999, consisted of general corporate
administration, legal and professional expenses, and accounting
and auditing costs. These expenses were $8,198 and $-0- for the
three-month periods ended June 30, 2000 and 1999, respectively.
The Company realized $21,353 in interest expense for the three-
month periods ended June 30, 2000 and 1999.
As a result of the foregoing factors, the Company realized a net
loss of $29,551 for the three months ended June 30, 2000, as
compared to a net loss of $21,353 for the same period in 1999.
Six Month periods Ended June 30, 2000 and 1999
The Company had no revenue from continuing operations for the six-
month periods ended June 30, 2000 and 1999.
General and administrative expenses for the six-month periods
ended June 30, 2000 and 1999, consisted of general corporate
administration, legal and professional expenses, and accounting
and auditing costs. These expenses were $13,846 and $-0- for the
six-month periods ended June 30, 2000 and 1999, respectively.
The Company realized $42,705 in interest expense for the six-
month periods ended June 30, 2000 and 1999.
As a result of the foregoing factors, the Company realized a net
loss of $56,551 for the six months ended June 30, 2000, as
compared to a net loss of $42,705 for the same period in 1999.
Liquidity and Capital Resources
At June 30, 2000, the Company had $-0- cash on hand and
liabilities in the amount of $1,796,585 in form of accounts
payable, interest payable, notes payable and accounts payable to
related party.
Management believes that the Company will have adequate cash to
meet the anticipated needs of the Company's operations through at
least the next 12 months through advances and loans from officers
of the
12
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Company. However, there can be no assurances to that effect, as
the Company has no significant revenues and the Company's need
for capital may change dramatically if it acquires an interest in
a business opportunity during that period. The Company's current
operating plan is to (i) handle the administrative and reporting
requirements of a pubic company, and (ii) search for potential
businesses, products, technologies and companies for acquisition.
At present, the Company has no understandings, commitments or
agreements with respect to the acquisition of any business
venture, and there can be no assurance that the Company will
identify a business venture suitable for acquisition in the
future. Further, there can be no assurance that the Company
would be successful in consummating any acquisition on favorable
terms or that it will be able to profitably manage any business
venture it acquires.
13
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PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
Reports on Form 8-K: No reports on Form 8-K were filed by the
Company during the quarter ended June 30, 2000.
Exhibits: Included only with the electronic filing of this report
is the Financial Data Schedule for the six month period ended
June 30, 2000 (Exhibit ref. No. 27).
14
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SIGNATURES
In accordance with the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned thereunto
duly authorized.
GOLDEN QUEST, INC.
Date: August 14, 2000 By: /s/ Kip Eardley
President, Secretary and Treasurer
15
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