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 September 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 November 13, 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
Condensed Balance Sheets - September 30, 3
2000 (unaudited) and December 31, 1999
Condensed Statements of Operations 4
(unaudited) for the Three and Nine Months
Ended September 30, 2000 and from the Re-
entry of Development Stage on January 1,
1993 through September 30, 2000
Condensed Statements of Cash Flows 5
(unaudited) for the Three and Nine Months
Ended September 30, 2000 and 1999, from
Re-entry of Development Stage on January
1, 1993 through September 30, 2000
Notes to Unaudited Consolidated Financial 6
Statements
Management's Discussion and Analysis of 10
Financial Condition or Plan of Operation
PART II. Other Information 11
Signatures 11
2
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PART I. FINANCIAL INFORMATION
GOLDEN QUEST, INC.
[A Development Stage Company]
CONDENSED BALANCE SHEETS
[Unaudited]
ASSETS
September 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 816,414 752,357
Notes payable 853,889 853,889
Accounts payable - related party 25,714 10,648
_________ _________
Total Current Liabilities 1,819,157 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 (689,943) (610,820)
_________ _________
Total Stockholders' (Deficit) (1,819,157) (1,740,034)
__________ _________
$ - $ -
__________ _________
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.
3
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GOLDEN QUEST, INC.
[A Development Stage Company]
CONDENSED STATEMENTS OF OPERATIONS
[Unaudited]
<TABLE>
<CAPTION>
Cumulative From
the Re-entering of
For the Three For the Nine Development Stage
Months Ended Months Ended on January 1,
September 30, September 30, 1993 through
_________________________________________ September 30,
2000 1999 2000 1999 2000
<S> <C> <C> <C> <C> <C>
REVENUE:
Sales $ - $ - $ - $ - $ -
Total Revenue - - - - -
EXPENSES:
General and administrative 1,220 - 15,066 - 25,714
Total Expenses (1,220) - (15,066) - (25,714)
LOSS FROM OPERATIONS (1,220) - (15,066) - (25,714)
OTHER EXPENSE:
Interest expense 21,352 21,352 64,057 64,057 664,229
Total Other Expense (21,352) (21,352) (64,057) (64,057) (664,229)
LOSS BEFORE INCOME TAXES (22,572) (21,352) (79,123) (64,057) (689,943)
CURRENT INCOME TAXES - - - - -
DEFERRED INCOME TAX - - - - -
NET LOSS $(22,572) $(21,352) $(79,123) $(64,057) $(689,943)
LOSS PER SHARE $ (.00) $ (.00) $ (.00) $ (.00) $ (.02)
</TABLE>
The accompanying notes are an integral part of these unaudited
condensed financial statements.
4
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GOLDEN QUEST, INC.
[A Development Stage Company]
CONDENSED STATEMENTS OF CASH FLOWS
[Unaudited]
From Re-entering of
For the Nine Development Stage
Months Ended on January 1,
September 30, 1993 through,
______________ September 30,
2000 1999 2000
________________________________
Cash Flows From Operating Activities:
Net loss $ (79,123) $ (64,057) $ (689,943)
Adjustments to reconcile net loss to
net cash used by operating activities:
Changes in assets and liabilities:
Increase in interest payable 64,057 64,057 664,229
Increase in accounts payable to related party 15,066 - 25,714
_________________________________
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 nine months ended September 30, 2000:
None
For the nine months ended September 30, 1999:
None
The accompanying notes are an integral part of these unaudited
condensed financial statements.
5
<PAGE>
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
September 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 unaudited financial
statements. The results of operations for the periods ended
September 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. 136, "Transfers of Assets to a
not for profit organization or charitable trust that raises or
holds contributions for others", 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.)," SFAS No. 138 "Accounting for Certain
Derivative Instruments and Certain Hedging Activities - and
Amendment of SFAS No. 133", SFAS No. 139, "Recission of SFAS No.
53 and Amendment to SFAS No 63, 89 and 21", and SFAS No. 140,
"Accounting to Transfer and Servicing of Financial Assets and
Extinguishment of Liabilities", were recently issued SFAS No.
136, 137, 138, 139 and 140 have no current applicability to the
Company or their effect on the financial statements would not
have been significant.
6
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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 September 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:
September 30,
2000
___________
Accounts payable $ 123,140
Interest payable 816,414
Notes payable 853,889
___________
Total liabilities $ 1,772,091
___________
The Company has a total of twenty notes payable outstanding with
an aggregate principal balance of $853,889. The interest rate on
nineteen notes is 10% per annum, and one note for $1,000 accrues
interest at 12% per annum. All notes are unsecured and are
overdue.
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 September 30, 2000, unused operating
loss carryforwards of approximately $2,501,000, 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 $850,000 and $820,000
as of September 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 $30,000
during the nine months ended September 30, 2000.
7
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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 nine months ended September 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.
8
<PAGE>
GOLDEN QUEST, INC.
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 6 - EARNINGS (LOSS) PER SHARE
The following data shows 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 nine months ended September 30, 2000 and 1999 and for the
period from the re-entering of development stage on January 1,
1993 through September 30, 2000:
Cumulative From
the Re-entering of
For the Three For the Nine Development Stage
Months Ended Months Ended on January 1,
September 30, September 30, 1993 through
___________________________________ September 30,
2000 1999 2000 1999 2000
Loss from continuing
operations available to
common stockholders
(numerator) $ (22,572) $ (21,352) $ (79,123) $ (64,057) $(689,943)
Weighted average number of
common shares outstanding
used in loss per share
during the period
(denominator) 33,941,927 33,941,927 33,941,927 33,941,927 32,033,044
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.
9
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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 Months Ended September 30, 2000 and 1999
The Company had no revenue from continuing operations for the
three-month periods that ended September 30, 2000 and 1999.
General and administrative expenses for the three month-periods
that ended September 30, 2000 and 1999 were $1,220 and $0,
respectively. These expenses consisted of general corporate
administration, legal and professional expenses, plus accounting
and auditing costs.
The Company realized $21,352 in interest expense for both of the
three-month periods that ended September 30, 2000 and 1999.
As a result of the foregoing factors, the Company realized a net
loss of $22,572 for the three months ended September 30, 2000, as
compared to a net loss of $21,352 for the same period in 1999.
Nine Months Ended September 30, 2000 and 1999
The Company had no revenue from continuing operations for the
nine-month periods ended September 30, 2000 and 1999.
General and administrative expenses for the nine month-periods
that ended September 30, 2000 and 1999 were $15,066 and $0,
respectively. These expenses consisted of general corporate
administration, legal and professional expenses, plus accounting
and auditing costs.
The Company realized $64,057 in interest expense for both of the
nine-month periods that ended September 30, 2000 and 1999.
As a result of the foregoing factors, the Company realized a net
loss of $79,123 for the nine months ended September 30, 2000, as
compared to a net loss of $64,057 for the same period in 1999.
Liquidity and Capital Resources
At September 30, 2000, the Company had a working capital deficit
of approximately $1,819,157, as compared to a working capital
deficit of $1,740,034 at December 31, 1999. This decrease in the
working
10
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capital is attributable to three quarters of accruing interest
expense plus general and administrative expenses without any
increase in cash.
The Company does not have sufficient cash to meet its operational
needs for the next twelve months. Management, like in the past,
will attempt to raise capital for its current operational needs
through debt financing, equity financing or a combination of
financing options. However, there are no existing
understandings, commitments or agreements for such an infusion;
nor can there be assurances to that effect. Moreover, the
Company's need for capital may change dramatically if and during
that period, it acquires an interest in a business opportunity.
Unless the Company can obtain additional financing, its ability
to continue as a going concern is doubtful.
The Company's current operating plan is to (i) handle the
administrative and reporting requirements of a public 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.
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 that ended September 30, 2000.
Exhibits: Included only with the electronic filing of this report
is the Financial Data Schedule for the nine-month period that
ended September 30, 2000 (Exhibit ref. No. 27).
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: November 14, 2000 By: /s/ Kip Eardley
Kip Eardley
President, Secretary and Treasurer
11
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