SECURITIES EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
Annual Report Pursuant to
the Securities Exchange Act of 1934
For the fiscal year ended December 31, 1995
Commission file number 023726
GOLDEN EAGLE INTERNATIONAL, INC.
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(Exact name of registrant as specified in its charter)
Colorado 84-1116515
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(State of incorporation) (I.R.S. Employer
Identification No.)
4949 South Syracuse Street, Ste. #300, Denver, CO 80237
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303)694-6101
Securities registered pursuant to Section 12(b) of
the Act:
Title of each class: None
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Name of each exchange on which registered: N/A
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Securities registered pursuant to Section 12(g) of
the Act:
Title of each class: Common No Par Value
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to the filing
requirements for at least the past 90 days.
Yes No X
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Check if disclosure of delinquent filers pursuant to Item 405 of Regulation S-B
is not 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. X
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State issuer's revenues for its most recent fiscal year. $0
Transitional Small Business Disclosure Format:
Yes X No
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<PAGE>
Aggregate market value of the voting stock held by non-affiliates of the
registrant as of December 31, 1995 was $5,193,334, based upon the closing price
of the common stock on December 31, 1995.
Number of outstanding shares of the registrant's no par value common stock, as
of December 31, 1995: 38,478,675*.
*an additional 745,833 common shares were issuable at year end.
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the following documents if incorporated by reference and the
Part of this Form 10-K into which the document is incorporated: (1) Any annual
report to security holders - None; (2) Any proxy or information statement -
None; (3) Any prospectus filed pursuant to Rule 424(b) or (c) under the
Securities Act of 1933 - None.
<PAGE>
PART 1
Item 1. Business Development
HISTORY
Golden Eagle International, Inc., formerly Beneficial Capital Financial
Services Corp. (hereinafter referred to as the "Registrant") is a development
stage company, incorporated pursuant to the laws of the State of Colorado on
July 21, 1988. Prior to the change of control, described in subsequent
paragraphs, which occurred on November 8, 1994, the Registrant was engaged in
the business of providing financial services to emerging growth companies in the
United States, as well as development stage companies located in selected
developing countries, primarily in Central and South America. Since the change
in control, the Registrant intends to engage in the business of acquiring,
developing, and operating gold, silver and other precious mineral properties.
The business activities of Registrant for the fiscal year ended December
31, 1995 were limited to attempting to negotiate, evaluate and purchase several
mining projects. Registrant had no revenues for the fiscal year ended December
31, 1995. Consequently, a description of the Registrant's prior business
activities from inception through December 31, 1994, in view of the change of
control and a complete change of the Registrant's primary business activities,
is considered by management immaterial to an informed understanding of
Registrant's current business operations and status.
On February 2, 1995, Registrant changed its name to Golden Eagle
International, Inc.
REORGANIZATION
On November 8, 1994, a change of control of Registrant occurred by virtue
of the issuance of shares of authorized but unissued shares, the appointment of
two new directors of the incumbent Board of Directors and the appointment of new
Officers of Registrant.
The Registrant issued 20,000,000 (adjusted post split on a 5 for 1 basis)
common restricted shares to Golden Eagle Mineral Holdings, Inc., a Colorado
corporation controlled by Mary Erickson, the President and a Director.
Consideration for the issuance of such shares was the delivery of a Secured
Corporate Promissory Note in the amount of $25,000.00 at ten percent (10%)
interest, due on demand.
In addition, the Registrant agreed and appointed to its existing Board of
Directors consisting of Messrs. Robert A. Hildebrand and Kenneth P. Bottoms two
<PAGE>
additional directors consisting of Ronald A. Knittle and Mary A. Erickson.
Ronald A. Knittle was appointed President and Chief Executive Officer and Mary
A. Erickson was Secretary and Treasurer. Robert A. Hildebrand and Kenneth
Bottoms resigned as directors in 1994 and 1995, respectively.
Other than as specified herein there were no other arrangements or
understandings among the members of both the former and new control group and
their associates with the respect to election of directors or other matters
except that Registrant intends to convene a special meeting of the shareholders
for the purposes of electing a new slate of directors, to approve other matters
as deemed necessary, essential or appropriate.
(b) BUSINESS OF ISSUER
General Information
Former Business
From inception to November, 1994, Registrant was engaged in the business of
providing financial services to emerging growth companies in the United States,
and also contemplated such activities for companies in developing countries.
Registrant's activities during this period of time for such activities were
insignificant in nature and amount. Registrant's total revenues from such
activities amounted to only Twenty Two Thousand One Hundred Sixteen Dollars
($22,116.00) while incurring operating losses of Two Hundred Sixty Three
Thousand Eight Hundred Fifty Six Dollars ($263,856.00) for the same. (See
"Financial Statements").
Business Activities in Mining
Management of Registrant acquired control on November 8, 1994. Activities
of management were primarily devoted to organizational matters following the
change in control and the identification of precious mineral properties which it
deemed suitable for evaluation and possible acquisition.
Plan of Operation
Registrant's plan of operation is to engage in the business of evaluating,
acquiring, developing, owning, and operating gold, mineral and other precious
mineral properties. Registrant will also, in accordance with industry custom,
when the opportunity is available, enter into partnerships, business
associations and other arrangements to directly or indirectly, jointly and with
others, engage in similar activities with a view toward becoming a fully
operating mineral exploration, development and marketing company.
During the fiscal year ended December 31, 1994, Registrant commenced its
initial activities toward this objective. Such activities were exclusively
<PAGE>
concentrated on negotiating the acquisition of mineral properties or interests
in mineral properties which had the potential of commercial development and
production, in the opinion of management, and deemed worthy of continued
corporate activities to acquire such properties.
An affiliate of Registrant entered into a Letter of Intent with Mineral
Mountain Mining Co. to acquire a 50% equity interest in Mineral Mountain Mining
Co., which is the owner of the Silver Bar Mine, located near Apache Junction,
Arizona. In that connection and in reliance upon representations made, and in
anticipation of the closing of a definitive agreement in the first quarter of
1995, affiliates of Registrant advanced substantial funds to Mineral Mountain
Mining Co. Registrant commenced preparation of documentation and continued
negotiations of technical matters relating to the acquisition during late 1994
and early 1995.
During this time, Registrant became aware of undisclosed unfavorable facts
concerning the proposed acquisition which it considered material to its decision
and which had induced it to enter into the Agreement. MMMC refused to enter into
a definitive agreement. Registrant, in view of such facts, declined to close the
transaction. Consequently, no acquisition of the property was made.
As of the date of this report, Registrant has abandoned efforts to acquire
the property. Registrant has filed a lawsuit in Arizona to recover monies
advanced toward acquisition of this property. (See Item 3).
In addition, Registrant entered into negotiations to acquire a precious
metals property known as the Long Point Placer Mining claims, Parcels I and II,
located in Siskiyou County, California. Registrant proposed to acquire all of
the assets and assume certain of the liabilities of Cash Plus Mining, LP., a
Missouri Limited Partnership which owned the property. An Asset Purchase
Agreement dated December 28, 1994, between an affiliate of Registrant, Cash Plus
Mining, L.P. and F.R.S., Inc., its Corporate General Partner and all limited
partners, was signed by an affiliate of Registrant and the Corporate General
Partnership of Cash Mining, L.P., on December 31, 1994. Cash Plus Mining, L.P.
thereafter undertook procedures to have the Agreement approved by its Limited
Partners on or about January 28, 1995.
During November, 1994, Registrant negotiated for the acquisition of a
precious minerals property known as the Evergreen Nos. 1 through 12 unpatented
lode mining claims located in Siskiyou County, California. The property is owned
by Mark 1 Limited, a Delaware corporation.
Mark I Limited on December 4, 1994, confirmed to Registrant that a Letter
of Intent dated November 29, 1994 was acceptable and the preparation of the
definitive agreement commenced.
<PAGE>
These transactions have been abandoned, due to unsatisfactory due diligence
results.
History of Prospective Mineral Property Area in Bolivia
More than ten thousand years ago, an ancient river flowed from the
Cordillera Real Mountains at the base of the Andes to the tropical jungle area
where it converged with two other rivers. This ancient river, known today as the
Tipuani River, carried with it deposits of gold which were disbursed in its bed
and laid to rest along the its length, from the head of the river to the
convergence. As time passed, these deposits were covered by other alluvial
deposits as the valley filled with material washed away from the surrounding
mountains with each season's flooding and erosion. Containing significant
amounts of the associated deposits, for centuries the river was one of the Incan
Empire's sources of gold, which was the basis of their monetary system.
In 1562, Juan de Roda arrived at Roman Playa near Tipuani, Bolivia. This
was the first colonial expedition to the Tipuani River. Exploitation reached
Chuqini in 1580 and Tipuani in 1602. The Tipuani River, as previously mentioned,
held significant deposits of gold from the surface down to the ancient riverbed,
known as the Paleocanal, up to 1,200 ft. below the surface.
Early in the 19th century the first attempts at large-scale mining were
made by Ildefonso Villamil. Villamil produced more than 150,000 ounces of gold
from several areas upstream from Tipuani from 1813 to 1833 and again from 1850
to 1866. The first attempts at mechanization were made with the use of water
pumps in 1840 by J. Wheathey, an Irishman.
Heavy equipment was not introduced in the area until near the end of the
19th century. In 1898, the Incahuira Dredging Company brought machinery and a
dredge to the nearby Kaka River. But it was the "Compania Aramayo de Minas"
which conducted major mining activities between 1936 and 1949, putting the main
emphasis on the exploration and exploitation of the "Old Channel" of the
Paleotipuani. Since 1952 (following the nationalization of the mines and the
forced return of all gold concessions held by Aramayo to the State on November 7
of that year) and until 1961, the gold placers of the Tipuani Valley were
exploited by groups controlled by the Banco Minero, which bought the gold. In
1961 the government annulled all previous licenses and granted juridical
personality to cooperatives, which in 1963 formed the "Federacion Regional de
Cooperativas Auriferas", which is currently exploiting the placer deposits.
Current Status of Company Interests
In October, 1995 the Registrant began reviewing potential mining
opportunities in Bolivia. A site visit to the Tipuani River Basin followed in
December, with representatives of the Registrant traveling to Cangalli,
approximately 2 km downriver from Tipuani. Included in the expedition was an
<PAGE>
independent geologist hired to evaluate the Cangalli area and determine the
project's feasibility. This consultant reported that the area merited further
study.
Based on this favorable report, along with other pre-existing reports on
the Tipuani area, the Registrant formed a majority-owned Bolivian subsidiary,
Golden Eagle Bolivia Mining, S.A. ("GEBM"), of which Registrant initially owned
74% and later acquired an additional 19% from its Bolivian partners. This new
entity entered into an agreement with Unidas Cooperativa Cangalli Ltda. for the
rights to explore and mine an area consisting of 11 concessions along the
Tipuani River, covering an area of 2,004 hectares (4,810 acres). The Registrant
then began to assist in the clean-up of the cooperative's title interests in the
concessions to ensure that the contract between the Company and cooperative
could be protocolized by the Notary of Mines in La Paz.
For strategic reasons involving Registrant's partners involved in GEBM, the
Registrant's directors elected to form a new majority-owned Bolivian subsidiary,
Eagle Mining of Bolivia, Ltd. ("EMB"), in October 1996. Registrant owns 84% of
EMB, Registrant's current president owns 3%, and Lic. Rene Velasquez owns 13%.
EMB subsequently assumed GEBM's contract rights and proceeded to renegotiate the
contract with the cooperative, which was protocolized with the Notary of Mines
in La Paz on November 11, 1996.
Giovanni Viscarra, a geologist with regional experience in the Tipuani
River Valley of Bolivia, was hired by GEBM as chief geologist and mine
superintendent. Lic. Rene Velasquez soon joined Golden Eagle Bolivia Mining,
S.A. as president. Lic. Velasquez is an economist who has served as head of
collections for the Bolivian Internal Revenue Service, as well as being in
charge of the development corporation for the State of La Paz. Velasquez has run
his own construction/mining company, which has worked extensively in the Tipuani
River Basin. Both Viscarra and Velasquez assumed their respective positions in
the new Bolivian subsidiary, Eagle Mining of Bolivia, Ltd. Lic. Velasquez has
also run his own construction/mining company, which has worked extensively in
the Tipuani River Basin. Both Viscarra and Velasquez assumed their respective
positions in the new Bolivian subsidiary, Eagle Mining of Bolivia, Ltd.
Principal products or services and their markets. Registrant has not yet
commenced operation of its proposed business activities as a gold, silver,
precious minerals, exploration, development and marketing company. When such
activities are commenced, its principal products obviously will be such
minerals. In November of 1995 the Registrant became aware of certain gold placer
concessions along the Tipuani River in Bolivia about 100 kilometers northeast of
La Paz. These concessions were owned by Unidas Cooperativa Cangalli Ltda. and
had been worked on a limited basis under primitive conditions. The Registrant
employed the services of Echo Gold, Inc. of Denver, Colorado to travel to
Cangalli and evaluate the presence of gold or silver deposits. After study,
<PAGE>
testing and sampling, Echo Gold submitted its report to the Registrant and it
recommended that the property warranted further evaluation. The Registrant,
under its majority owned subsidiary, Golden Eagle Bolivia Mining, S. A., signed
an agreement with Unidas Cooperativa Cangalli Ltda. on January 25, 1996 to
explore and mine the properties and market any subsequent precious metals that
could be extracted from the property. The Registrant purchased and shipped some
limited equipment to help in the evaluation of the property. It also continued
an existing exploration shaft directed toward an ancient paleocanal that in
other areas had been known to contain significant deposits of gold.
Distribution methods of the products or services. When, if ever, Registrant
is successful in commencing and maintaining operations in its proposed business
activities, it will utilize distribution methods which are customarily employed
within the mineral industry. Registrant does not contemplate that it would be
employing any distribution methods which would be considered innovative or
unusual. The Registrant has established, through its legal counsel in Bolivia,
buyers for any precious metals that it may be successful in producing from its
properties in Bolivia. The Registrant has not yet determined if it will sell
these precious metals to the local buyers or if it will ship the metals to other
worldwide locations for sale to various well-known refiners.
Status of any publicly announced new product or service. Not applicable.
Competition business conditions and the small business issuer's competitive
position in the industry and methods of competition. Registrant is an
insignificant participant among the firms which engage in the same line of
business which Registrant has chosen as its principal area of business
concentration. Many of the competitors of the Registrant are companies with
significantly greater financial and personnel resources and technical expertise
than the Registrant. The combined financial resources and management experience
of Registrant's officers and directors are very limited and Registrant has and
will continue to encounter substantial competitive disadvantages compared to
Registrant's competitors.
Sources and availability of raw materials and the names of principal
suppliers. As of December 31, 1995, the Company had no raw materials needs. If
it ever conducts mining operations, in Bolivia or elsewhere, it will need mining
equipment and supplies. Such items are often in short supply and may be
unavailable. In addition, high import tariffs may make mining equipment either
very expensive or of restricted availability due to import difficulties.
Dependence on one or a few major customers. The Registrant is currently
dependent upon one contract with Unidas Cooperativa Cangalli Ltda. to explore,
develop, and mine 11 concessions along the Tipuani River in Bolivia, and market
precious metals which may be produced therefrom. The Registrant has not
<PAGE>
commenced its business activities on any other property nor can there be any
assurances that there will be any other properties in the future.
Patents, trademarks, licenses, franchises, concessions, royalty agreements
or labor contracts, including duration. Registrant, through its majority owned
subsidiary, has contracted for 11 concessions along the Tipuani River to
explore, develop, and market precious metals that it may be able to extract from
the properties involved in the concessions. In the same contract the
Registrant's subsidiary has granted an 18% royalty to Unidas Cooperativa
Cangalli Ltda. in exchange for the rights to the concessions. The Duration of
the contract between the Registrant's subsidiary and Unidas Cooperativa Cangalli
Ltda. is for 25 years with an automatic extension for another 25 years. The
Company made a financial commitment to spend $3 million on the mining project
within 390 days from October 28, 1996.
Need for any government approval of principal products or services. If
government approval is necessary and the small business issuer has not yet
received that approval, discuss the status of the approval within the government
approval process. Neither the Company, nor either of its operating subsidiaries,
Golden Eagle Bolivia Mining, S.A., or Eagle Mining of Bolivia, Limited, are
obligated to receive approval of their principal products or services. Some
activities in which the Company's subsidiaries are engaged do require
permitting, such as the harvesting of lumber for mine timbers and the transport
of explosives. However, the Unidas Cooperativa Cangalli Ltda. has had those
permits for many years, and the Company's subsidiaries are allowed to piggy-back
onto those permits and any others which are occasionally required for moving
heavy equipment, etc.
Effect of existing or probable governmental regulations on the business.
Registrant intends to concentrate its immediate efforts in developing its
Bolivian mineral prospect and obtain all necessary governmental approvals. The
effect of such governmental regulations on its business should not cause
Registrant to incur any delays in commencing operations but may directly affect
its ability to continue operations once commenced. It is impossible at this time
to determine within any reasonable degree of certainty the effect of such
regulations on its proposed business.
Research and development activities. Registrant does not intend to engage
in any research and development activities.
Costs and effects of compliance with environmental laws. Registrant
proposes to engage in an industry which is historically subject to assertive,
time consuming, and expensive compliance with environmental law. There is and
can be no assurance that Registrant, with its small financial resources and
limited personnel, will be able to comply with such environmental laws and yet
operate in a commercially profitable manner.
<PAGE>
Number of total employees and number of full time employees. Registrant at
year end employed five (5) persons consisting of its officers and office
personnel. In addition, it had at year end several part time employees who act
as consultants and advisors to the Registrant. Such consultants and advisors
include persons providing expertise in disciplines directly related to mining
activities.
Item 2. Property
The Registrant has its executive offices at 4949 South Syracuse, Suite 300,
Denver, Colorado 80237. These offices are leased from a nonaffiliated third
party. Registrant utilizes at no cost computer, fax machine and other general
office furnishings, owned by Mary A. Erickson, located on the premises.
Item 3. Legal Proceedings
At year end there were no actual or threatened legal proceedings
against Registrant, any Officer, Director, affiliate, except as
follows:
There is an active civil investigation of the company and its
officers by the Denver Regional Office of the Securities and
Exchange Commission into violations of the Securities Act of
1933 and Securities Exchange Act of 1934. There is no
disposition at this date but it could result in SEC actions
against the Company and its officers, directors, or control
shareholders for injunctive relief and penalties.
The Company is Plaintiff in Case No. 96-043428 in Superior
Court, Pinal County, Arizona. The Company sued Mineral
Mountain Mining Co. and James and Diane Brown alleging fraud
and misrepresentations and for refund of monies paid and
benefits received. Trial has not been set and the case
remains pending in the discovery stage. The future outcome
cannot be predicted at this time.
During 1995, the Company engaged a person it believed was an independent mining
engineer, Timothy Trites, as a consultant. In 1996, the consultant claimed the
Company liable for unpaid services and expenses totaling $78,440. The Company
believes that the consultant misrepresented qualifications as a mining engineer,
did not provide the services contracted, usurped business opportunities, and
interfered with the Company's business opportunity. No litigation has been filed
to date between the parties and the Company is still assessing its position. An
evaluation as to the outcome of this matter cannot be made at this time.
<PAGE>
Item 4. Submission of Matters to a Vote of Security
Holders
On January 29, 1995, a Special Meeting of Shareholders was called and
conducted pursuant to Section 14 of the Securities Exchange Act of 1934.
Shareholders voted to amend Registrant's Articles of Incorporation as follows:
(1) To change the name of the Corporation to Golden Eagle
International, Inc. The change of name was effective on
February 2, 1995, when the Articles of Amendment to the
Articles of Incorporation were filed with the Secretary of
State of the State of Colorado.
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters
The following table shows the high and low bid of Registrant's Common
Stock during the last three years.
<TABLE>
<CAPTION>
1993 Low Bid High Bid
- ---- ------- --------
<S> <C> <C>
First Quarter did not trade
Second Quarter
Third Quarter
Fourth Quarter
1994 Low Bid High Bid
- ---- ------- --------
First Quarter did not trade
Second Quarter did not trade
Third Quarter did not trade
Fourth Quarter $2.50 $6.25
1995 Low Bid High Bid
- ---- ------- --------
First Quarter $.125 $5.50
Second Quarter $.1875 $.75
Third Quarter $.21875 $.53125
Fourth Quarter $.125 $.43275
</TABLE>
(b) Holders
As of December 31, 1995, there were 541 shareholders of record of the
Registrant's Common Stock.
On January 10, 1994, Registrant held a special shareholders meeting and
approved a 150 to 1 reverse split reducing issued and outstanding shares to
1,123,500. After a change in control previously described, the Board of
Directors, pursuant to the Business corporation Act of the State of Colorado, on
<PAGE>
December 6, 1994, authorized and declared a forward five-for-one (5 for 1) split
of the then 5,123,500 issued and outstanding Common Stock of the Registrant,
thereby increasing issued and outstanding to 25,617,500. Notwithstanding such
forward split the par value and the authorized capital of Registrant remain
unchanged.
Registrant is authorized to issue Eight Hundred Million (800,000,000)
shares par value of $0.0001 Common Shares. In addition, Registrant is authorized
to issue Ten Million (10,000,000) Preferred Shares par value $0.001. No shares
of Preferred Stock have been issued.
The Registrant has never paid a cash dividend on its Common Stock and has
no present intention to declare or pay cash dividends on the Common Stock in the
foreseeable future. The Registrant intends to retain any earnings which it may
realize in the foreseeable future to finance its operations. Future dividends,
if any, will depend on earnings, financing requirements and other factors.
Item 6. Management's Discussion and Analysis of
Financial Condition and Results of Operations
The Company incurred expenses in substantially greater amounts in 1995 than
in 1994, due to its attempts to negotiate, evaluate and attempt to acquire
mineral prospects, none of which had been accomplished at year end 1995. The
Company incurred $250,830 in contract labor, professional fees of $10,754,
$67,108 in consulting fees and legal fees of $51,284. Promotion and Public
Relations costs of $44,709 and stock transfer fees of $24,122 were incurred.
Airfare and travel costs of $55,487 were expended. The Company issued stock or
agreed to issue for various services rendered in the amount of $171,983, some of
which involved consulting service and some of which was for service in planning
capital formation. This compares to 1994 in which expenses were $114,212 as a
large growth of expenses for 1995 (totalling $815,507) over the nominal
operations of 1994. The expenses for 1995 exceeded 1994 by over 700%.
In 1995 the Company was reliant upon loans and advances from its officers
or relatives of officers for most of the funding for its operations.
The Company had no operational revenue and the Company would in the year
1996 be dependant upon loans to fund expenses, unless equity capital sources
could be found. As of year end, there was no immediate prospect of revenue from
any company business or operations.
The Company had no capital resources, nominal assets, and minimal cash on
hand at year end.
<PAGE>
Comparison of Results of Operation for the Fiscal Years
Ended December 31, 1994 and 1993
During the fiscal year ended December 31, 1994, the Registrant realized a
net loss on operations of $119,354 compared to $908,130 for the fiscal year
ended December 31, 1995. In 1994, $899 in interest income was generated from
business loans and in 1995 no revenue was generated.
Until such time as the Registrant is able to generate additional capital,
management believes that the Registrant will not generate profits from its
current business, due primarily to the nominal amount of capital available to
the Registrant. Management further believes that the Registrant's results from
operation in 1994 and 1995 may not be indicative of future operations.
Operating expenses increased during 1995 to $815,507 compared to 1994 at
$114,212 as a result of the increase in administrative, travel and professional
costs involved in negotiating and evaluating potential mining prospects. In
addition, only in 1995 did the Company begin activities in mineral prospect
analysis and evaluation and incurred greatly increased expenses as a result of
its attempts to negotiate, evaluate and acquire mineral prospects. It had to
write off $78,000 in expenditures for the Mineral Mountain/Arizona proposed
acquisition. It issued or agreed to issue stock for services of $171,983 in
relation to operations and attempts to find mining properties. Accounts payable
increased by $215,516 related to ongoing operations. It wrote off a loan to an
investment advisor of $15,000. It received advances or loans from officers and
related parties of $297,846 and repaid $168,811 of such loans or advances. It
issued stock, and agreed to issue stock related to financing activities that the
company valued at $391,693. The Company issued notes for funds advanced of
$110,422.
The trend that the Company perceives is that expenses will continue at an
even greater rate if the Company continues its efforts to acquire and begin
limited exploration operations on its Bolivian prospect.
The Company has no capital resources at this point to provide future
operating capital, and any operations may be severely limited and impaired by
the lack of capital.
Further, the Company anticipates that it will be required by contract to
make capital commitments in order to acquire and explore any mineral prospect,
without having any sources for such capital committed.
The terms of the Company agreement with the Cangalli cooperative require
the expenditure of $3,000,000 USD to develop and exploit the prospect within 390
days from October 28, 1996, or the agreement will be null and void.
<PAGE>
(b) Liquidity and Capital Resources
The Registrant has no liquidity or capital resources at 1995 year end.
Registrant had a working capital and shareholders' deficit as of December 31,
1995, and has incurred substantial losses since its inception. Its ability to
continue as a "going concern" (which contemplates the realization of assets and
the satisfaction of liabilities in the normal course of business) will depend
upon obtaining suitable significant additional financing to satisfy its
obligations and continue its activities.
Item 7. Financial Statements and Supplementary Data
Please refer to pages F-1 through F-12.
Item 8. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure
There were no disagreements with the former auditors on any matters of
accounting principles, practices or financial statement disclosures during 1995.
PART III
Item 9. Directors and Executive Officers of the
Registrant and Compliance with Section 16(a)
of the Exchange Act.
The following table sets forth certain information concerning the Directors
and Executive Officers of the Registrant as of December 31, 1995.
<TABLE>
<CAPTION>
Name Age Position Office Office
- ---- --- -------- Period Term
------ ------
<S> <C> <C> <C>
Ronald A. Knittle ........................................ 43 President, Chief Executive 11-8-94*
Officer, Chairman of the Board
of Directors & Director
Mary A. Erickson ......................................... 38 Secretary/Treasurer & 11-8-94/Present**
Director
</TABLE>
*Note: Resigned May 4, 1996 as an Officer and Director
**Note: Became President as of July 4, 1996
Directors are elected at the annual meeting of shareholder to serve for a
period of one year or until their successors are elected and have qualified.
<PAGE>
Vacancies on the Board of Directors are filled by the Board of Directors.
Officers serve at the discretion of the Board of Directors.
Family Relationships. Ronald A. Knittle and Mary A. Erickson are husband and
wife and through their direct or indirect beneficial ownership of Golden Eagle
Mineral Holdings, Inc., may be deemed controlling persons and parents of the
Registrant.
BIOGRAPHICAL INFORMATION
The following biographical information is presented for the present and
former Officers and Directors of Registrant.
Ronald A. Knittle has been President, Chief Executive Officer and Chairman
of the Board of Directors of the Registrant since November 8, 1994. From January
15, 1991 to September 1, 1994 he was an officer and director of Timberline
Consultants, Inc., an investor relations consulting firm. From June 15, 1989 to
January 15, 1991 he was associated with JRS Acquisitions, Inc., an investor
relations consulting firm. From January 1987 to June 15, 1989 Mr. Knittle was
affiliated with various brokerage firms as a stock broker.
Mr. Knittle attended Brigham Young University where he concentrated his
studies in business courses.
Mr. Knittle devoted virtually all of his professional time to the business
affairs of the Company. He is the husband of Mary A. Erickson, who is also an
officer, director and principal stockholder of Registrant, through her company.
Mary A. Erickson, Secretary and Treasurer. Ms. Erickson has been the
Secretary/Treasurer and a Director of the Company since November 8, 1994, and is
a major shareholder of Golden Eagle Mineral Holdings, Inc. Prior to her
association with Golden Eagle, Ms. Erickson was employed as an executive
assistant in publishing and administration with companies such as Jones
Intercable, Inc. (1984-1987), Jones Spacelink, Ltd. (1987-1988), AIRCOA
Hospitality Services (1988-1989), and CIBER, Inc. (1989-1991). She was an
officer and director of Timberline Consultants, Inc., an investor relations
consulting firm, from January 1991 until September 1, 1994.
Ms. Erickson intends to devote whatever professional time is required of
her to perform her executive duties on behalf of the Company to ensure its
success. She is the wife of Ronald A. Knittle.
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers and directors, and persons who
own more than 10% of a registered class of the Company's equity securities, to
file reports of ownership and changes in ownership of equity securities of the
<PAGE>
Company with the Securities and Exchange Commission and NASDAQ.
Officers,directors and greater-than 10% shareholders are required by the
Securities and Exchange Commission regulation to furnish the Company with copies
of all Section 16(a) filings.
Item 10. Executive Compensation
It appears that Golden Eagle Mineral Holdings, Inc., Ron Knittle and Mary
Erickson failed to file several Forms 4 and Form 5 for 1995 to report changed
share holdings.
The Company paid or accrued a total of $142,886 compensation to the
executive officers as a group for services rendered to the Company in all
capacities during the 1995 fiscal year. No one executive officer received, or
has accrued for his benefit, in excess of $60,000 for the year. No cash bonuses
were or are to be paid to such persons.
The Company does not have any employee incentive stock option plans.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE OF EXECUTIVES
Annual Compensation Awards
- ------------------------------------------------------------------------------------------------------------------------------------
Name and Year Salary Bonus Other Annual Restricted Securities
Principal ($) ($) Compensation Stock Underlying
Position ($) Award(s) Options/
($) SARs (#)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
President, 1993 0 0 0 0 0
Ron
Knittle
-----------------------------------------------------------------------------------------------------------
1994 0 0 0 0 0
-----------------------------------------------------------------------------------------------------------
1995 35,583 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Secretary, 1993 0 0 0 0 0
Mary A.
Erickson
-----------------------------------------------------------------------------------------------------------
1994 0* 0 0 0 0
-----------------------------------------------------------------------------------------------------------
1995 58,499 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Vice 1993 0 0 0 0 0
President,
Dave
Hills**
-----------------------------------------------------------------------------------------------------------
1994 0 0 0 0 0
-----------------------------------------------------------------------------------------------------------
1995 24,500 0 0 $14,000.00 0
-----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Vice 1993 0 0 0 0 0
President,
Paul
Enright**
-----------------------------------------------------------------------------------------------------------
1994 0 0 0 0 0
-----------------------------------------------------------------------------------------------------------
1995 24,304 0 0 $14,000.00 0
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
* Designates unpaid accruals for management services.
** Resigned during 1996
Option/SAR Grants Table (None)
Aggregated Option/SAR Exercises in Last Fiscal Year an FY-End Option/SAR
value (None)
Long Term Incentive Plans - Awards in Last Fiscal Year (None)
DIRECTOR COMPENSATION FOR LAST FISCAL YEAR
(Except for compensation of Officers who are also Directors which
Compensation is listed in Summary Compensation Table of Executives)
<TABLE>
<CAPTION>
Cash Compensation Security Grants
- -----------------------------------------------------------------------------------------------------------------------------------
Name Annual Meeting Consulting Number Number of
Retainer Fees Fees/Other of Securities
Fees ($) ($) Fees ($) Shares Underlying
(#) Options/SARs
(#)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
A. Ron Knittle, 0 0 0 0 0
Director
- -----------------------------------------------------------------------------------------------------------------------------------
B. Mary A. 0 0 0 0 0
Erickson,
Director
===================================================================================================================================
</TABLE>
Item 11. Security Ownership of Certain Beneficial
Owners and Management
The following table sets forth information, as of May 31, 1995, as to the
number of shares of the Registrant's Common Stock owned by (a) beneficial owners
of more than five percent of the Registrant's outstanding Common Stock who are
known by the Registrant, and (b) the Officers and Directors of the Registrant,
individually, an the Officers and Directors of the Registrant as a group, and
(c) the percentage of ownership of the outstanding Common Stock represented by
such shares.
<TABLE>
<CAPTION>
Stock Names and Address Beneficial Percent
Title of Class of Beneficial Owner Ownership of
- -------------- ------------------- ---------- Class
-------
<S> <C> <C> <C>
Common Stock Ronald A. Knittle
4949 S. Syracuse St., #300 0 38.3%(1)
Denver, CO 80237
Common Stock Mary A. Erickson 14,737,717 38.3%(2)
4949 S. Syracuse St., #300
Denver, CO 80237
</TABLE>
<PAGE>
(1) Owned indirectly and beneficially through his wife, the sole shareholder of
Golden Eagle Mineral Holdings, Inc.
(2) Owned indirectly and beneficially as sole shareholder of Golden Eagle
Mineral Holdings, Inc.
The following table sets forth information, as of December 31, 1995, with
respect to the beneficial ownership of the Company's $.01 par value common stock
by the directors and officers of the Company, both individually and as a group.
<TABLE>
<CAPTION>
Name and address of Beneficial Ownership %Ownership
of Owner Outstanding ----------
- ------------------------------ Common (4)
-----------
<S> <C> <C>
Golden Eagle Mineral Holdings, Inc. 14,737,717 38.3%
4949 S. Syracuse St., #300
Denver, CO 80237
Ronald A. Knittle 14,737,717 38.3%
4949 S. Syracuse St., #300 (1)(3)
Denver, CO 80237
Mary A. (Erickson) Knittle 14,737,717 38.3%
4949 S. Syracuse St., #300 (2)(3)
Denver, CO 80237
L.J. Campbell 2,000,000 5.2%
748 E. Center Street
Provo, Utah 84601
Present Officers and Directors
as a Group 14,737,717 38.3%
</TABLE>
1) Ronald A. Knittle may be deemed the beneficial indirect owner of these shares
by virtue of being the husband of Mary A. (Erickson) Knittle who is the sole
shareholder of Golden Eagle Mineral Holdings, Inc.
2) Mary A. Knittle owns these shares indirectly and beneficially as sole
shareholder of Golden Eagle Mineral Holdings, Inc.
3) Ronald A. and Mary A. Knittle, husband and wife, may be deemed to possess
jointly the voting and dispositive power over the shares owned by Golden Eagle
Mineral Holdings, Inc.
4) Based upon 38,478,675 shares issued and outstanding as of December 31, 1995.
Item 12. Certain Relationships and Related Transactions
During 1995, the Company issued a total of 10,052,250 sharesof common stock
to individuals for a total of $206,693 (ranging from $.01 to $.05) per share)
<PAGE>
and incurred $41,644 in stock issuance costs, for net cash proceeds to the
Company of $165,049.
During 1995, a total of 2,009,000 shares of common shares were issued to
employees for services (700,000 shares valued at $.07 per share) and to
consultants for services (1,000,000 shares valued at $.07 and 309,000 shares at
$.10 per share).
In August and September 1995, a total of 800,000 shares of common stock
were issued to a corporate investor for $125,000 ($.15625 per share), consisting
of conversion of $105,000 of short-term loans made the Company in August through
October 1995, and a $20,000 receivable which was subsequently paid January 9,
1996. The receivable is shown as a reduction of stockholders' equity in the
accompanying balance sheet.
Convertible Debt and Other Arrangements to Issue Common Stock
A $50,000 note payable, due in October 1998, is convertible to common stock
at the lender's option, at the bid price on October 16, 1996, (approximately
$.46875 per share). In addition, another $50,000 note payable, presently in
default, is personally guaranteed by the former President (and husband of the
current President) and by 200,000 shares of common stock of the Company.
As a result of compensation arrangements, the Company is obligated to issue
5,363,985 shares of common stock to employees and consultants for 1996 services
rendered through November 13, 1996.
During 1994, the then Secretary/Treasurer of the Company advanced a total
of $44,107 to the Company. In 1995, the Secretary/Treasurer advanced additional
sums totaling $265,163 and was repaid $185,719 (amount due as of December 31,
1995, was $123,551). The advances are unsecured and are due upon demand. In
1996, repayment of the advances was agreed to, providing for interest at eight
percent.
During 1995, the parents of the current President advanced the Company a
total of $32,683 and were repaid $8,092 (amount due as of December 31, 1995 was
$24,591). The advances are unsecured and are due upon demand. In 1996, repayment
of the advances was agreed to, providing for interest at twelve percent.
During 1995, the Company agreed to issue 80,000 shares of common stock,
valued at $.07 per share, to a cousin of the former President for services. As
of December 31, 1995, the shares had not been issued, and are reflected in the
accompanying financial statements as "issuable." The shares were issued in
October 1996.
In 1993, compensation expense of $20,000 was recorded based on management's
best estimate of the fair value of time provided by the two officers. Cash will
<PAGE>
not be disbursed to pay these wages. The compensation was credited to the
Company as additional paid-in capital.
During 1993, the Company sold 50,000 shares of Resource Finance Group, Ltd.
("RFG") stock for $98,170, realizing a profit on the investment of $97,070.
Prior to the sale of the stock two Company officers and directors were also
officers and directors of RFG.
Loans and Advances
Through November 13, 1996, an aunt of the current President loaned the
Company a total of $450,000 pursuant to one year unsecured 10.5% promissory
notes payable. Also, the President's parents advanced the Company $67,400.
Common Stock Issued and Issuable
The Company has issued or will issue a total of 2,203,775 shares of common
stock to investors for cash received through November 13, 1996, totaling
approximately $418,500. Also, through November 13, 1996, the Company has issued
or has committed to issue for services, a total of 5,363,985 shares of common
stock to employees or former employees and consultants.
Item 13. Exhibits, Financial Statement Schedules and
Reports on Form 8-K
The following documents are filed as part of this report:
Report of Independent Public Accountant Balance sheet as of
December 31, 1995 Statements of Operations, for the years
ended December 31, 1994 and 1995 and from July 21, 1988
(inception of development stage) through December 31, 1995
Statements of Cash Flows, for the years ended December 31,
1994 and 1995 and from July 21, 1988 (inception of development
stage) through December 31, 1995 Statements of Stockholders'
Equity (Deficit) Notes to Financial Statements
Reports on Form 8-K: None
Exhibits:
The following exhibits are filed with this Form 10-KSB or incorporated
herein by the following references:
Registrant hereby incorporates by reference all exhibits identified in Par.
III, Item 1 Exhibit Index of its Report on Form 10-SB, effective June 17, 1994.
<PAGE>
Golden Eagle International, Inc.
(A Development Stage Company)
Financial Statements
Table of Contents
- -------------------------------------------------------------------------------
PAGE
----
Report of Independent Public Accountant F-2
Financial Statements
Balance Sheet F-3
Statement of Operations F-4
Statement of Cash Flows F-5
Statement of Changes in Stockholders' Equity (Deficit) F-6
Notes to Financial Statements F-7
F-1
<PAGE>
GAYLEN R. HANSEN
CERTIFIED PUBLIC ACCOUNTANT
7863 WEST JEWELL AVENUE
LAKEWOOD, COLORADO 80232-6807
(303) 986-1120
REPORT OF INDEPENDENT PUBLIC ACCOUNTANT
November 13, 1996
To the Board of Directors
Golden Eagle International, Inc.
Denver, Colorado
I have audited the accompanying balance sheet of Golden Eagle International,
Inc. (a development stage company, the "Company,") as of December 31, 1995, and
the related statements of operations, cash flows and changes in stockholders'
equity for the years ended December 31, 1995 and 1994, and the related amounts
included in the cumulative amounts for the period from July 21, 1988 (beginning
of the development stage) to December 31, 1995. These financial statements are
the responsibility of the Company's management. My responsibility is to express
an opinion on these financial statements based on my audits.
I conducted my audits in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audits to obtain reasonable
assurance about 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.
I believe that my audits provide a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Golden Eagle International, Inc. at
December 31, 1995, and the results of its operations and its cash flows for the
years ended December 31, 1995 and 1994, and the related amounts included in the
cumulative amounts for the period from July 21, 1988 (beginning of the
development stage) to December 31, 1995, in conformity with generally accepted
accounting principles.
The accompanying financial statements have been presented assuming that the
Company will continue as a going concern, which contemplates the realization of
assets and the satisfaction of liabilities in the normal course of business. As
more fully described in Note A to the financial statements, the Company had
significant working capital and stockholders' deficits as of December 31, 1995
and has incurred substantial losses since its inception. The Company presently
has no product or producing properties and requires additional financing to
satisfy its outstanding obligations and commence operations. Unless the Company
successfully obtains suitable significant additional financing as discussed in
Note A, there is substantial doubt about the Company's ability to continue as a
going concern. Management's' plans in regard to these matters are also described
in Note A. The financial statements do not include any adjustments to reflect
the possible future effect on the recoverability and classification of assets or
the amounts and classifications of liabilities that may result from the outcome
of this uncertainty.
/s/ Gaylen R. Hansen
F-2
<PAGE>
Golden Eagle International, Inc.
(A Development Stage Company)
<TABLE>
<CAPTION>
Balance Sheet
- -------------------------------------------------------------------------------
December 31,
1995
------------
<S> <C>
ASSETS
CURRENT ASSETS
Cash ........................................................ $ 32,979
Marketable securities ....................................... 9,666
-----------
Total current assets ....................................... 42,645
-----------
PROPERTY AND EQUIPMENT
Mining equipment ............................................ 30,930
Office equipment ............................................ 3,586
-----------
34,516
Less accumulated depreciation ............................... (805)
-----------
33,711
-----------
DEPOSITS ..................................................... 2,675
-----------
$ 79,031
===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Notes payable ............................................... $ 60,422
Advances from President and related party ................... 148,142
Accounts payable and bank overdraft ......................... 207,746
Accrued payroll taxes and interest .......................... 48,961
-----------
Total current liabilities .................................. 465,271
-----------
NOTE PAYABLE ................................................. 50,000
-----------
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, par value $.01 per share;
shares authorized 10,000,000; none issued .................. --
Common stock, par value $.0001 per share; authorized
800,000,000 shares; issued and outstanding 38,478,675 shares 3,848
Common stock issuable, 745,833 shares .................... 102,983
Additional paid-in capital ................................... 568,198
Receivable from stockholder .................................. (20,000)
Deficit accumulated during the development stage .......... (1,091,269)
-----------
Total stockholders' (deficit) .............................. (436,240)
-----------
$ 79,031
===========
</TABLE>
See accompanying notes.
F-3
<PAGE>
Golden Eagle International, Inc.
(A Development Stage Company)
<TABLE>
<CAPTION>
Statement of Operations
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended July 21, 1988
December 31 Through
---------------------------- December
1995 1994 31, 1995
---- ---- -------------
<S> <C> <C> <C>
REVENUE
Interest from loans ............................. $ -- $ 899 $ 11,727
Commissions ..................................... -- -- 6,708
Other ........................................... -- -- 3,681
----------- ------------ ------------ ---
Total revenue .................................. -- 899 22,116
----------- ------------ ------------ ---
OPERATING EXPENSES ............................... 815,507 114,212 1,092,882
----------- ------------ ------------ ---
OPERATING (LOSS) ................................. (815,507) (113,313) (1,070,766)
----------- ------------ ------------ ---
OTHER INCOME (EXPENSE)
Unrealized gain on marketable securities ........ 9,666 -- 9,666
Gain (loss) on sale of investments .............. -- (1,757) 95,503
Write off advances to Mineral Mountain Mining Co. (78,000) -- (78,000)
Write off loan to investment advisor ............ (15,000) -- (15,000)
Interest expense ................................ (9,289) (3,229) (27,784)
Interest income ................................. -- 259 1,726
Loss on retirement of equipment ................. -- (1,314) (1,314
----------- ------------ ------------
Total other income (loss) ...................... (92,623) (6,041) (15,203)
----------- ------------ ------------
NET INCOME (LOSS) ................................ $ (908,130) $ (119,354) $ (1,085,969)
=========== ============ ============
EARNINGS (LOSS) PER SHARE ........................ $ (.03) $ (.03) $ (.17)
=========== ============ ============
WEIGHTED AVERAGE SHARES OUTSTANDING .............. 31,852,522 3,996,156 6,504,933
=========== ============ ============
</TABLE>
See accompanying notes.
F-4
<PAGE>
Golden Eagle International, Inc.
(A Development Stage Company)
<TABLE>
<CAPTION>
Statement of Cash Flows
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended July 21, 1988
December 31 Through
---------------------------- December
1995 1994 31, 1995
---- ---- -------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) ....................................... $ (908,130) $ (119,354) $(1,085,969)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Stock issued and issuable for services ................ 171,983 3,094 175,077
Write off advances to Mineral Mountain Mining Co. ..... 78,000 -- 78,000
Write off loan to investment advisor .................. 15,000 -- 15,000
Depreciation expense .................................. 805 603 3,619
Unrealized gain on marketable securities .............. (9,666) -- (9,666)
Loss (gain) on sale of investments .................... -- 1,757 (95,503
Loss on retirement of equipment ....................... -- 1,314 1,314
Fair value of officer salary expensed ................. -- -- 20,000
Changes in operating assets and liabilities:
Accounts payable and accrued liabilities .............. 215,516 30,350 256,707
Notes receivable and accrued interest ................. -- 4,047 --
----------- ----------- -----------
Net cash flows (used for) operating activities .......... (436,492) (78,189) (641,421)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Advances to Mineral Mountain Mining Co. ................. (68,000) (10,000) (78,000)
Purchase of equipment ................................... (34,516) -- (38,544)
Loan to investment advisor .............................. (15,000) -- (15,000)
Deposits on office lease ................................ (2,675) -- (2,675)
Purchase of investment securities ....................... -- (58,378) (59,478)
Proceeds from investment sales .......................... -- 56,621 154,791
Purchase of subsidiary (net of cash acquired) ........... -- -- (2,700)
----------- ----------- -----------
Net cash flows from (used for) investing activities ..... (120,191) (11,757) (41,606)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Advances from President and related party ............... 297,846 44,107 397,857
Repayments of advances from President and related party.. (168,811) (35,162) (216,702)
Issuance of notes payable ............................... 110,4252 -- 110,422
Common stock issued and issuable ........................ 391,693 -- 487,493
Stock issuance costs .................................... (41,644) -- (63,064)
----------- ----------- -----------
Net cash flows from financing activities ................ 589,506 8,945 716,006
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH .......................... 32,826 (81,001) 32,979
CASH - BEGINNING OF PERIOD ............................... 156 81,157 --
----------- ----------- -----------
CASH - END OF PERIOD ..................................... $ 32,979 $ 156 $ 32,979
=========== =========== ===========
</TABLE>
See accompanying notes.
F-5
<PAGE>
Golden Eagle International, Inc.
(A Development Stage Company)
<TABLE>
<CAPTION>
Statement of Stockholders' Equity (Deficit)
- -----------------------------------------------------------------------------------------------------------------------------------
Common Stock Common Additional
----------------------- Stock Paid-in
Shares Amount Issuable Capital
------ ------ -------- ----------
<S> <C> <C> <C> <C>
Inception July 21, 1988 ............................... -- $ -- $ -- $ --
Issuance of common stock:
June 1, 1989 for cash at $.00006 .................... 1,666,665 167 -- (67)
June 30, 1990 for cash at $.03 per share ............ 300,000 30 -- 8,970
July 3, 1990 for cash at $.003 per share ............ 366,665 37 -- 1,063
50,000 to 1 stock split ............................. -- -- -- 4,900
January and March 1991 for cash at
$.30074 per share from stock offering .............. 268,335 27 -- 59,253
November 1, 1993 - deficit of acquired subsidiary .... -- -- -- --
Acquisition of subsidiary ............................ -- -- -- 2,600
Fair value of officer salary ......................... -- -- -- 20,000
Net loss for the periods ............................. -- -- -- --
----------- ----------- ----------- -----------
Balance at December 31, 1993 .......................... 2,601,665 261 -- 96,719
November 7, 1994, convert debt to equity
at $.003 per share .................................. 2,640,830 264 -- 7,659
Novemeber 8, 1994, $.00125 per share:
Note receivable from affiliate ...................... 20,000,000 2,000 -- 23,000
Financial services .................................. 2,1000,000 210 -- 2,415
Legal services ...................................... 375,000 37 -- 432
Net loss for the year ................................ -- -- -- --
----------- ----------- ----------- -----------
Balance at December 31, 1994, previously reported .... 27,717,495 2,772 -- 130,225
Correction (See Note F) .............................. (2,100,070) (210) -- 210
----------- ----------- ----------- -----------
Balance at December 31, 1994, corrected ............... 25,617,425 2,562 -- 130,435
Issued for cash in June and August ($.01 to $.05
per share), less $41,644 in stock issuance costs .... 10,052,250 1,005 -- 164,044
Issued for services ($.07 per share) ................. 2,009,000 201 -- 148,799
Convert notes payable ($.15625 per share) ............ 800,000 80 -- 124,920
Payment of note by affiliate ......................... -- -- -- --
Issuable for cash ($.125 to $.282 per share),
417,500 shares ...................................... -- -- 80,000 --
Issuable for services and additional consideration for
loan ($.07 per share), 328,333 shares ............... -- -- 22,983 --
Net loss for the year ................................ -- -- -- --
----------- ----------- ----------- -----------
Balance at December 31, 1995 .......................... 38,478,675 $ 3,848 $ 102,983 $ 568,198
=========== =========== =========== ===========
<PAGE>
<CAPTION>
Stockholder Accumulated
Receivable Deficit Total
----------- ----------- -----
<S> <C> <C> <C>
Inception July 21, 1988 ............................... $ -- $ -- $ --
Issuance of common stock:
June 1, 1989 for cash at $.00006 .................... -- -- 100
June 30, 1990 for cash at $.03 per share ............ -- -- 9,000
July 3, 1990 for cash at $.003 per share ............ -- -- 1,100
50,000 to 1 stock split ............................. -- -- 4,900
January and March 1991 for cash at
$.30074 per share from stock offering .............. -- -- 59,280
November 1, 1993 - deficit of acquired subsidiary .... -- (5,300) (5,300)
Acquisition of subsidiary ............................ -- -- 2,600
Fair value of officer salary ......................... -- -- 20,000
Net loss for the periods ............................. -- (58,485) (58,485)
----------- ----------- -----------
Balance at December 31, 1993 .......................... -- (63,785) 33,195
November 7, 1994, convert debt to equity
at $.003 per share .................................. -- -- 7,923
Novemeber 8, 1994, $.00125 per share:
Note receivable from affiliate ...................... (25,000) -- --
Financial services .................................. -- -- 2,625
Legal services ...................................... -- -- 469
Net loss for the year ................................ -- (119,354) (119,354)
----------- ----------- -----------
Balance at December 31, 1994, previously reported .... (25,000) (183,139) (75,142)
Correction (See Note F) .............................. -- -- --
----------- ----------- -----------
Balance at December 31, 1994, corrected ...............
Issued for cash in June and August ($.01 to $.05
per share), less $41,644 in stock issuance costs .... (25,000) (183,139) (75,142)
Issued for services ($.07 per share) ................. -- -- 165,049
Convert notes payable ($.15625 per share) ............ -- -- 149,000
Payment of note by affiliate ......................... (20,000) -- 105,000
Issuable for cash ($.125 to $.282 per share), 25,000 -- 25,000
417,500 shares ...................................... -- -- 80,000
Issuable for services and additional consideration for
loan ($.07 per share), 328,333 shares ............... -- -- 22,983
Net loss for the year ................................ -- (908,130) (908,130)
----------- ----------- -----------
Balance at December 31, 1995 .......................... $ (20,000) $(1,091,269) $ (436,240)
=========== =========== ===========
</TABLE>
See accompanying notes.
F-6
<PAGE>
Golden Eagle International, Inc.
(A Development Stage Company)
Notes to Financial Statements
- --------------------------------------------------------------------------------
Note A - Organization and Operations
Background
Golden Eagle International, Inc. (a development stage company, the "Company,")
was incorporated in Colo rado July 21, 1988. The Company is to engage in
the business of acquiring, developing, and operat ing gold, silver and
other precious mineral properties. Activities of the Company since November
1994 have been primarily devoted to organizational matters and
identification and limited sampling of precious mineral properties
considered for acquisition. Presently, substantially all of the Com pany's
operations and business interests are focused on a prospect in the Tipuani
River area of the Republic of Bolivia See Note I - Events Subsequent to
December 31, 1995 - Organization of Subsidiary and Bolivian Joint Venture.
Reorganization
On November 8, 1994, the Company issued 20,000,000 common restricted shares to
a corporation solely owned by the then Secretary-Treasurer (currently the
President and Chairman of the Board) and a director of the Company.
Consideration for the common shares was a $25,000 promissory note, secured
by equipment at 10% interest, due on demand. The note receivable was
satisfied in 1995 as a result of application of 1995 advances from the
President in excess of the outstanding balance due.
Going Concern Considerations
The accompanying financial statements have been presented assuming the Company
will continue as a going concern, which contemplates the realization of
assets and the satisfaction of liabilities in the normal course of
business. The Company had significant working capital and stockholders'
deficits as of December 31, 1995 and has incurred substantial losses since
its inception. In addition, a note payable of the Company is presently in
default (see Note D - Notes Payable). The Company pres ently has no product
or producing properties and requires additional financing to satisfy its
outstand ing obligations and commence operations. Unless the Company
successfully obtains suitable signifi cant additional financing, there is
substantial doubt about the Company's ability to continue as a going
concern. Management's plans to address these matters include proposed
private placements of stock, obtaining short-term loans and the acquisition
of operating properties that will provide cash flow. The financial
statements do not include any adjustments to reflect the possible future
effect on the recoverability and classification of assets or the amounts
and classifications of liabilities that may result from the outcome of this
uncertainty.
F-7
<PAGE>
Golden Eagle International, Inc.
(A Development Stage Company)
Notes to Financial Statements
- --------------------------------------------------------------------------------
Note B -- Summary of Significant Accounting Policies
Estimates
Preparation of the Company's financial statements in conformity with generally
accepted accounting princi ples requires the Company's management to make
estimates and assumptions that affect the re ported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amount of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
Principles of Consolidation
The financial statements include the accounts of Golden Eagle International,
Inc. and its wholly owned sub sidiary, International Resource Finance, Inc.
("IFR") from November 1, 1993 (see Note C - Acquisi tion and Disposition of
Subsidiary), until November 8, 1994, at which time IFR was relinquished to
prior management in connection with the reorganization described above (see
Note A - Reorganiza tion). All intercompany transactions and balances
during the period of affiliation have been elimi nated.
Marketable Securities and Payable to Stock Investment Company
Marketable securities consist of equity securities stated at fair market value
in accordance with Statement of Financial Standard No. 115, "Accounting for
Certain Investments in Debt and Equity Securities." Market values are based
on quoted prices. Realized and unrealized gains and losses are computed
using the first-in, first-out method of determining the cost of securities.
Property and Equipment
Property and equipment are recorded at cost. Depreciation is computed using the
straight-line method over the assets' estimated useful lives which range
from five to seven years for office equipment and seven years for mining
equipment.
Maintenance and repair costs are charged to expense as incurred, and renewals
and improvements that extend the useful life of assets are capitalized.
F-8
<PAGE>
Golden Eagle International, Inc.
(A Development Stage Company)
Notes to Financial Statements
- --------------------------------------------------------------------------------
Income Taxes
The Company has adopted the provisions of Statement of Financial Accounting
Standards No. 109, "Ac counting for Income Taxes," which incorporates the
use of the asset and liability approach of ac counting for income taxes.
The asset and liability approach requires the recognition of deferred tax
assets and liabilities for the expected future consequences of temporary
differences between the financial reporting basis and tax basis of assets
and liabilities. See Note E - Income Taxes.
Statement of Cash Flows Information and Supplemental Non-Cash Financing
Activities
Cash and cash equivalents include cash and short-term investments with original
maturities of three months or less.
During 1995 and 1994, the Company paid interest on notes payable to related
parties of none and $10,841, respectively.
During 1995, non-cash transactions consist of a $20,000 promissory note received
from a corporation in partial payment of 800,000 shares of common stock
upon conversion of 1995 short-term loans total ing $105,000 (see Note F -
Common Stock Issued); issuance of 700,000 common shares and 83,333 common
shares issuable to former employees for services, valued at $.07 per share;
issuance of 1,309,000 common shares and 80,000 common shares issuable to
consultants for services, valued at $.07 per share (1,080,000 shares) and
$.10 per share (309,000 shares); and, 165,000 common shares issuable as
additional consideration to an individual for making a $50,000 loan to the
Company, valued at $.07 per share (see Note D - Notes Payable).
During 1994 non-cash transactions consist of a $25,000 promissory note received
from a corporation owned by the President for 20,000,000 shares of common
stock (see Note A - Reorganization); conversion of $7,923 debt owed related
parties for 2,640,830 shares of common stock, and issuance of 375,000
shares to an attorney.
Earnings (Loss) Per Share
Earnings (loss) per share of common stock are computed using the weighted
average number of shares outstanding during each period plus common
equivalent shares (in periods in which they have a dilutive effect).
Weighted average shares include common shares issuable from the date they
be came issuable.
F-9
<PAGE>
Golden Eagle International, Inc.
(A Development Stage Company)
Notes to Financial Statements
- --------------------------------------------------------------------------------
Note C -- Acquisition and Disposition of Subsidiary
On November 1, 1993, the Board of Directors of the Company approved the
purchase of all of the outstand ing shares of stock of International
Resource Finance, Inc. from affiliates for $100 in cash. The acquisition
was accounted for as a purchase using the predecessor's cost basis. The
acquired subsidiary had been newly formed with minimal operations,
consequently supplementary information reflecting separate prior results of
operations is not presented. On November 8, 1994, this subsid iary (with no
significant operations or net assets) was relinquished to prior management
in connec tion with the reorganization described above. See Note A -
Reorganization.
Note D -- Notes Payable
Note payable dated April 5, 1995, to an
individual at 15%, due July 5, 1995
and upon de mand in the event of
default. Personally guaranteed by
the former President (and husband
of the current President) and
200,000 shares of common stock of
the Company. This obligation is
presently in default - see Note A -
Going Concern Considerations and
Note F - Common Stock, Convertible
Debt and Other Arrangements to
Issue Common Stock. $ 50,000
Note payable to an individual at 10%,
due in October 1998, convertible at
the lender's option to common stock
at $.46875 per share. In addition,
165,000 shares of common stock is
issuable to the lender as
additional consideration for making
this loan to the Company (valued at
$.07 per share). See Note F -
Common Stock Issuable. 50,000
Note payable to a bank, interest at
17.75%, due October 15, 1996,
unsecured. 10,422
--------
110,422
Less current maturities 60,422
--------
Current maturities $ 50,000
========
F-10
<PAGE>
Golden Eagle International, Inc.
(A Development Stage Company)
Notes to Financial Statements
- --------------------------------------------------------------------------------
Note E -- Income Taxes
At December 31, 1995, the Company has net operating loss carryforwards
totaling approximately $812,000 that may be offset against future taxable
income, if any. These loss carryforwards expire in varying amounts from
2005 through 2010. Furthermore, use of the loss carryforwards are limited
by certain changes in the Company's ownership.
A tax benefit has not been reported in the accompanying financial statements
for the operating loss carryforwards because the Company is uncertain as to
the likelihood of utilization. Accordingly, the approximate tax benefit of
$122,000 of the loss carryforward has been offset by a valuation allowance
of the same amount.
Note F - Stockholders' Equity
Authorized Shares
The Company initially authorized 10,000 shares of no par value common stock. On
June 1, 1990, the Com pany authorized a 50,000 for one stock split and
authorized 800,000,000 shares of $.0001 par value common stock and
10,000,000 shares of $.01 par value preferred stock, and additional capital
of $4,900 was contributed to allow enough equity for the split to take
place.
Common Stock Issued
On June 1, 1989, the Company issued 1,666,665 shares of common stock for cash
of $100.
In 1990, the Company issued 300,000 shares of common stock for cash at $.03,
or $9000, and 366,665 shares of common stock to individuals for cash at
$.003 per share or $1,100.
From January through April 1991, the Company met the minimum funding
requirements of a stock offering and sold 268,335 units at $.30 per unit
which consisted of one share of common stock and four warrants to purchase
one additional share each of common stock at $.60. After deferred offering
costs of $21,420, the Company received net proceeds of $59,280.
F-11
<PAGE>
Golden Eagle International, Inc.
(A Development Stage Company)
Notes to Financial Statements
- --------------------------------------------------------------------------------
On November 7, 1994, the Company issued 2,640,830 shares stock for a reduction
of amounts owed related parties in the amount of $7,923 ($.003 per share).
On November 8, 1994, the Company issued 20,000,000 common restricted shares to
a corporation solely owned by the President of the Company. Consideration
for the common shares (valued at $.00125) was a $25,000 promissory note,
secured by equipment, at 10% interest, due on demand. The note receivable
was satisfied in 1995 as a result of application of 1995 advances from the
President in excess of the outstanding balance.
Also on November 8, 1994, 375,000 common restricted shares valued at $.00125
were issued to an attorney for services.
During 1995, the Company issued a total of 10,052,250 shares of common stock to
individuals for a total of $195,049 (ranging from $.01 to $.05 per share)
and incurred $41,644 in stock issuance costs, for net cash proceeds to the
Company of $165,049.
During 1995, a total of 2,009,000 shares of common shares were issued to
employees for services (700,000 shares valued at $.07 per share) and to
consultants for services (1,000,000 shares valued at $.07 and 309,000
shares at $.10 per share).
In August and September 1995, a total of 800,000 shares of common stock were
issued a corporate investor for $125,000 ($.15625 per share), consisting of
conversion of $105,000 of short-term loans made the Company in August
through October 1995, and a $20,000 receivable which was subsequently paid
January 9, 1996. The receivable is shown as a reduction of stockholders'
equity in the accompanying balance sheet.
Common Stock Issuable
As of December 31, 1995, a total of 745,833 shares of common stock were
issuable for the following: 177,500 shares for $50,000 cash ($.282 per
share); 240,000 shares for $30,000 cash ($.125 per share); 83,333 shares
for employee services (valued at $.07); 80,000 shares to a consultant for
services (valued at $.07 per share); and, 165,000 shares to an individual
as additional consideration for making a $50, 000 loan to the Company
(valued at $.07 per share).
F-12
<PAGE>
Warrants to Purchase Common Stock
As a result of the 1991 sale of units described above, there were warrants to
purchase 1,073,333 shares of common stock at an exercise price of $.60 each
until October 12, 1995. There were no warrants exercised.
Convertible Debt and Other Arrangements to Issue Common Stock
A $50,000 note payable, due in October 1998, is convertible to common stock
at the lender's option, at the bid price on October 16, 1996 (approximately
$.46875 per share). In addition, another $50,000 note payable, presently in
default, is personally guaranteed by the former President (and husband of
the current President) and by 200,000 shares of common stock of the
Company. See Note D - Notes Payable.
As a result of compensation arrangements, the Company is obligated to issue
5,363,985 shares of common stock to employees and consultants for 1996
services rendered through November 13, 1996.
Correction of Errors
In 1994, a total of 2,100,000 shares of common stock were reported as issued
to investment advisors for financial services totaling $2,625. These shares
were ultimately not issued by the Company. In addition, there were
cumulative stock differences between underlying stock records and the Com
pany's financial statements totaling 70 shares. As a result of the
foregoing, issued and outstanding shares of common stock as of December 31,
1994, in the accompanying statement of stockholders' equity (deficit) have
been reduced by 2,100,070 shares.
Note G - Related Party Transactions
During 1994, the President of the Company advanced a total of $44,107 to the
Company. In 1995, the President advanced additional sums totaling $265,163,
was repaid $160,719, and applied $25,000 against a promissory note issued
the Company by an affiliate November 8, 1994 in connection with the
purchase of stock (the amount due the President as of December 31, 1995 was
$123,551). The advances are unsecured and are due upon demand. In 1996,
repayment of the advances was agreed to, providing for interest at eight
percent.
F-13
<PAGE>
Golden Eagle International, Inc.
(A Development Stage Company)
Notes to Financial Statements
- --------------------------------------------------------------------------------
During 1995, the parents of the President advanced the Company a total of
$32,683 and were repaid $8,092 (amount due as of December 31, 1995 was
$24,591). The advances are unsecured and are due upon demand. In 1996,
repayment of the advances was agreed to, providing for interest at twelve
percent.
During 1995, the Company agreed to issue 80,000 shares of common stock, valued
at $.07 per share, to a cousin of the former President for services. As of
December 31, 1995, the shares had not been issued, and are reflected in the
accompanying financial statements as "issuable." The shares were issued in
October 1996.
In 1993, compensation expense of $20,000 was recorded based on management's
best estimate of the fair value of time provided by the two officers. Cash
will not be disbursed to pay these wages. The compensation was credited to
the Company as additional paid-in capital.
During 1993, the Company sold 50,000 shares of Resource Finance Group, Ltd.
(`RFG") stock for $98,170, realizing a profit on the investment of $97,070.
Prior to the sale of the stock two Company officers and directors were also
officers and directors of RFG.
Note H - Commitments and Contingencies
Securities and Exchange Commission
Thereis an active civil investigation of the Company and its officers by the
Denver Regional Office of the Securities and Exchange Commission into
violations of the Securities Act of 1933 and Securities Exchange Act of
1934. There is no disposition of this matter as of November 13, 1996, but
it could result in SEC actions against the Company and its officers,
directors, or control shareholders for injunctive relief and penalties.
Disagreement with Consultant
During 1995, the Company engaged a person it believed was an independent mining
consultant. In 1996, the consultant claimed the Company liable for unpaid
services and expenses totaling $78,440. The Company believes the consultant
did not provide the services contracted, usurped business opportu nities,
and tortuously interfered with the Company. No litigation has been filed to
date and the Company is still assessing damages that it has incurred as a
result of the consultant's conduct. An evaluation as to the outcome of this
matter cannot be made at this time.
F-14
<PAGE>
Golden Eagle International, Inc.
(A Development Stage Company)
Notes to Financial Statements
- --------------------------------------------------------------------------------
MMMC and Silver Bar Mining Prospect
During 1994, a corporation owned by the then Secretary-Treasurer (and current
President) of the Company conducted negotiations with Mineral Mountain
Mining Co. ("MMMC") to acquire a 46% equity interest in MMMC, the owner of
the Silver Bar Mine located near Apache Junction, Arizona. As a result of
the foregoing, a letter of intent was entered into with MMMC. The rights
and obligations pursuant to the letter of intent were assigned to the
Company. The purchase price of the 46% equity interest was to be $1.2
million cash and a $4.3 million loan at two percent over the prime rate.
The letter of intent also provides an option to acquire an additional four
percent equity in MMMC for nominal amounts upon certain conditions. In
partial performance and pursuant to the negotiations, the Company advanced
$10,000 to MMMC in 1994.
In 1995, the Company continued negotiations with MMMC in attempts to conclude
the stock purchase agreement, advancing an additional $68,000 to MMMC (for
cumulative total advances of $78,000).
Principals of MMMC subsequently refused to execute or acknowledge the agreement.
On January 18, 1996, the Company filed suit against MMMC and two of its
principals for breach of the joint venture agreement. As of November 13,
1996, a trial date has not been set. Litigation is subject to many
uncertainties and the Company is unable to predict the outcome of this
matter. Accordingly, the $78,000 in advances to MMMC were written off
during 1995.
Facility Leases
In July 1995, the Company relocated its principal offices to a Denver
Technological Center office building pursuant to a twelve month lease at
$1,875 per month. Rental expense for the year ended Decem ber 31, 1995 was
$11,250 and as of that date future minimum rentals were $11,250. On July 3,
1996 the lease converted to a month-to month arrangement.
In addition, in 1996, the Company entered into a one year office lease in La
Paz, Bolivia at $1,500 per month, effective January 1, 1996, and on a
month-to month basis thereafter.
F-15
<PAGE>
Golden Eagle International, Inc.
(A Development Stage Company)
Notes to Financial Statements
- --------------------------------------------------------------------------------
Note I - Events Subsequent to December 31, 1995 (Unaudited)
Organization of Subsidiary and Bolivian Mining Venture
In January 1996, the Company organized a Bolivian corporation, Golden Eagle
Bolivia Mining, S.A. ("GEBM") which was succeeded in August 1996 by Eagle
Mining of Bolivia, Ltd. ("EMB"). The Company has an 84% ownership in EMB,
13% is owned by a Bolivian national, and the remaining 3% is personally
owned by the President of the Company.
On January 25, 1996, GEBM entered into an agreement with a Bolivian gold
mining cooperative, United Cangalli Limited ("UCL") for a 25 year period
with an option for an additional 25 year period, to mine, explore and
exploit a mining concessions owned by UCL. That agreement was never
"protocolized" (recorded by the Bolivian Notary of Mines). A new agreement
was completed with UCL and protocolized in November 1996. The agreement
provides for a gross royalty interest of 18% in gold production to UCL and
commits the Company to invest a minimum of $3,000,000 by November 22, 1997.
Loans and Advances
Through November 13, 1996, an aunt of the President loaned the Company a total
of $450,000 pursuant to one year unsecured 10.5% promissory notes payable.
Also, the President's parents advanced the Company $67,400. See Note G -
Related Party Transaction).
Through November 13, 1996, two stockholders of the Company advanced $21,000 to
the Company.
In addition, an individual loaned $5,000 to the Company on March 31, 1996,
pursuant to an eight percent promissory note payable, due in one year with
accumulated interest. The note payable is convertible at the holder's
option into 20,000 shares of common stock, held as collateral.
Common Stock Issued and Issuable
The Company has issued or will issue a total of 2,203,775 shares of common
stock to investors for cash re ceived through November 13, 1996, totaling
approximately $418,500. Also, through November 13, 1996, the Company has
issued or has committed to issue for services, a total of 5,363,985 shares
of common stock to employees or former employees and consultants.
F-16
<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 report to be signed on its
behalf by the undersigned, thereunto duly authorized.
GOLDEN EAGLE INTERNATIONAL, INC.
(Registrant)
Date: December 17, 1996
/s/ Mary A. Erickson
------------------------------------
President, Chief Executive Officer
Mary A. Erickson
Pursuant to the Securities Exchange Act of 1934, this report has been signed
below by the following persons on behalf of the registrant and in the capacities
and on the dates indicated.
GOLDEN EAGLE INTERNATIONAL, INC.
(Registrant)
Date: December 17, 1996
/s/ Mary A. Erickson
------------------------------------
Director - Mary A. Erickson
------------------------------------
Director
------------------------------------
Director
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<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 32,979
<SECURITIES> 9,666
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 42,645
<PP&E> 34,516
<DEPRECIATION> 805
<TOTAL-ASSETS> 79,031
<CURRENT-LIABILITIES> 465,271
<BONDS> 0
0
0
<COMMON> 3,848
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<TOTAL-LIABILITY-AND-EQUITY> 79,031
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<TOTAL-COSTS> 815,507
<OTHER-EXPENSES> (9,666)
<LOSS-PROVISION> 93,000
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