SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarter period ended September 30, 1997
Commission file number 023726
GOLDEN EAGLE INTERNATIONAL, INC.
----------------------------------------------------
(Exact name of Registrant as specified in its charter)
Colorado 84-1116515
-------- ----------
(State of incorporation) (I.R.S. Employer
Identification No.)
4949 South Syracuse Street, Ste. #300, Denver, CO 80237
-------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 694-6101
--------------
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 X No
----- -----
As of September 30, 1997, there were 87,853,654 shares of common stock
outstanding, par value $.0001.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
- ----------------------------
The unaudited Financial Statements for the Quarter Year ended September 30,
1997 are attached hereto. Please refer to pages F-1 through F-7.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
- --------------------------------------------------------------------------------
of Operations.
- --------------
Results of Operations for the Quarter ended September 30, 1997, compared to
September 30, 1996.
The Company had mining revenues of $36,268 in this quarter. It incurred
operating expenses in the amount of $598,736 and incurred an operating loss of
($562,468). For the same period in 1996, the Company incurred operating expenses
of $173,554 and had no revenue for an operating loss of ($173,554). The increase
in operating expenses was a result of the Company placing its mineral prospect
in Bolivia into production. The Company expects that these increased expenses
will continue and, as well, the Company will incur promotional expenses, and
legal and accounting fees. General and administrative expenses and salaries or
consulting fees will continue at an increased rate.
Net income (loss) for the period was ($787,134) for a loss of ($.009) per
share, as compared to a net loss for the same period in 1996 of ($193,729) for a
loss of ($.004) per share.
The large loss increase was due primarily to increased operating expenses
related to commencement of mining operations in Bolivia
The Company was, during the period, completing the movement of equipment
and setting the equipment in place at its mineral prospect site, prior to
commencement of mining operations toward the end of the quarter. At period end,
the equipment was in place and operational.
Results of Operations for the Nine Months ended September 30, 1997, compared to
September 30, 1996.
The Company had mining revenues in this period of $36,268. It incurred
operating expenses in the amount of $1,300,614 and incurred an operating loss of
($1,264,346). For the same period in 1996, the Company incurred operating
expenses of $1,428,623 and had no revenue for an operating loss of ($1,428,623).
In 1997, the bulk of the expenses were related to commencement of mining
operations in Bolivia. The Company expects that increased expenses will continue
and, as well, the Company will incur promotional expenses, and legal and
accounting fees. General and administrative expenses and salaries or consulting
fees will continue at an increased rate.
Net income (loss) for the period was ($3,839,348) for a loss of ($.052) per
share as compared to a net loss for the same period in 1996 of ($1,485,900) for
a loss of ($.034) per share.
The large loss increase was due primarily to a $2,475,000 charge for
issuance of stock related to the loan guarantee and renewals which caused a
Texas bank to issue the $1 million credit line to the Company.
2
<PAGE>
Changes in Financial Conditions and Liquidity.
The Company had a net working capital deficit of ($1,865,226) at period
end. As of period end the Company had $2,735,983 in total assets, of which
$1,492,667 consisted of equipment and vehicles in use at its mining operation.
At year end 1996, the Company had a total of $824,760 in assets, largely
consisting of capitalized investment in the Bolivian mineral prospect and
equipment for use at the mining prospect. At period end, the Company had total
liabilities of $2,583,147, of which $1,968,523 were current, compared to
$1,666,870 at 1996 year end. Of the liabilities, $1,000,000 consisted of a bank
note payable, $188,500 consisted of convertible debentures, and $614,624
consisted of long-term debt owed related parties. Advances from officers and
related parties were $78,950 and accounts payable were $486,028.
In April 1997, the Company completed opening a line of credit with a Texas
bank for $1,000,000. The Company used approximately $240,000 to pay off a
previous loan from the same bank, and had $760,000 of the credit line to use.
During the three months ended June 30, 1997 it used $550,000 in advances from
the credit line, with the remaining $210,000 advanced during the three months
ended September 30, 1997.
The Company had $1,178 in cash at period end.
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings
- -------------------------
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 has agreed to a proposed settlement with the
Securities and Exchange Commission which would include an injunction against any
future violations; however, approval of such proposal is still pending with the
SEC in Washington, DC.
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. A jury trial has been set for December 16, 1997. The
future outcome cannot be predicted at this time.
During 1995, the Company engaged a person it believed was an independent
mining engineer 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 did not provide the services contracted, usurped business
opportunities, and tortiously interfered with the Company. 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.
3
<PAGE>
Item 2. Changes in Securities
- -----------------------------
None.
Item 3. Defaults upon Senior Securities
- ---------------------------------------
None.
Item 4. Submission of Matters to a Vote of Security Holders
- -----------------------------------------------------------
None.
Item 5. Other Information
- -------------------------
None
Item 6. Exhibits and Reports on Form 8-K:
- -----------------------------------------
(a) The following are filed as Exhibits to this Quarterly Report. The
numbers refer to the Exhibit Table of Item 601 of Regulation S-K:
27.1 Financial Data Schedules
(b) Reports on Form 8-K filed during the three months ended September
30, 1997 (incorporated by reference):
July 15, 1997
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has fully caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GOLDEN EAGLE INTERNATIONAL, INC.
(Registrant)
Date: November 24, 1997. by: /s/ Mary A. Erickson
--------------------------------------
Mary A. Erickson, Secretary
4
<PAGE>
- --------------------------------------------------------------------------------
Golden Eagle International, Inc.
(A Development Stage Company)
Consolidated Condensed Financial Statements (Unaudited)
Table of Contents
================================================================================
PAGE
----
Consolidated Condensed Balance Sheet F-1
Consolidated Condensed Statement of Operations F-2
Consolidated Condensed Statement of Cash Flows F-3
Consolidated Condensed Statement of Changes in
Stockholders' Equity (Deficit) F-4 - F-5
Notes to Consolidated Condensed Financial Statements F-6
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Golden Eagle International, Inc.
(A Development Stage Company)
Consolidated Condensed Balance Sheet (Unaudited)
=========================================================================================================
September 30,
1997 December 31,
(Unaudited) 1996
- ---------------------------------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS
<S> <C> <C>
Cash $ 1,178 $ 11,741
Prepaid expense and other costs 93,173 30,897
Income tax refund receivable 8,946 8,946
- ---------------------------------------------------------------------------------------------------------
Total current assets 103,297 51,584
- ---------------------------------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT
Exploration and development costs of mining prospect 973,462 570,853
Mining equipment 1,405,074 33,569
Vehicles 122,593 --
Office equipment 41,678 13,342
Mining equipment and vehicles not placed in service -- 158,448
- ---------------------------------------------------------------------------------------------------------
2,542,807 776,212
Less accumulated depreciation and amortization (84,023) (7,811)
- ---------------------------------------------------------------------------------------------------------
2,458,784 768,401
- ---------------------------------------------------------------------------------------------------------
OTHER ASSETS
Advances to Bolivian cooperative 170,127 --
Deposits 3,775 4,775
- ---------------------------------------------------------------------------------------------------------
173,902 4,775
- ---------------------------------------------------------------------------------------------------------
$ 2,735,983 $ 824,760
=========================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Bank loan payable $ 1,000,000 $ --
Convertible debentures 188,500 188,500
Loans from related parties 78,950 46,900
Notes and loans payable 51,788 89,558
Accounts payable 486,028 400,581
Accrued interest 73,203 74,566
Other accrued liabilities 90,054 40,000
- ---------------------------------------------------------------------------------------------------------
Total current liabilities 1,968,523 840,105
- ---------------------------------------------------------------------------------------------------------
LONG-TERM DEBT 614,624 826,765
- ---------------------------------------------------------------------------------------------------------
Total liabilities 2,583,147 1,666,870
- ---------------------------------------------------------------------------------------------------------
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 87,853,654
and 44,517,143 shares, respectively 8,785 4,452
Additional paid-in capital 7,133,410 1,856,949
Common stock issuable, none and 2,384,500 shares, respectively -- 446,500
Deficit accumulated in the development stage (6,989,359) (3,150,011)
- ---------------------------------------------------------------------------------------------------------
Total stockholders' equity (deficit) 152,836 (842,110)
- ---------------------------------------------------------------------------------------------------------
$ 2,735,983 $ 824,760
=========================================================================================================
See accompanying notes.
F-1
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Golden Eagle International, Inc.
(A Development State Company)
Consolidated Condensed Statement of Operations (Unaudited)
====================================================================================================================================
July 21, 1988
Three Months Ended Nine Months Ended (Inception)
September 30, September 30, Through
----------------------------- ---------------------------- September 30,
1997 1996 1997 1996 1997
- ------------------------------------------------------------------------------------------------------------------- -------------
<S> <C> <C> <C> <C> <C>
NET MINING REVENUE $ 36,268 $ -- $ 36,268 $ -- $ 36,268
OPERATING EXPENSES 788,940 261,096 1,300,614 1,428,623 4,376,264
- ------------------------------------------------------------------------------------------------------------------------------------
OPERATING (LOSS) (752,672) (261,096) (1,264,346) (1,428,623) (4,339,996)
- ------------------------------------------------------------------------------------------------------------------------------------
OTHER INCOME (EXPENSE)
Stock issued related parties
for loan guarantees and renewals -- -- (2,475,000) -- (2,475,000)
Interest expense (36,499) (2,799) (97,969) (60,444) (204,894)
Interest income 161 -- 175 -- 1,901
Other 1,876 3,222 (2,208) 3,167 32,054
- ------------------------------------------------------------------------------------------------------------------------------------
Total other income (expense) (34,462) 423 (2,575,002) (57,277) (2,645,939)
- ------------------------------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) $ (787,134) $ (260,673) $ (3,839,348) $ (1,485,900) $ (6,985,935)
====================================================================================================================================
EARNINGS (LOSS) PER SHARE $ (.009) $ (.007) $ (.052) $ (.034) $ (.442)
====================================================================================================================================
WEIGHTED AVERAGE SHARES 87,666,154 35,546,471 73,472,805 43,387,533 15,782,297
====================================================================================================================================
See accompanying notes.
F-2
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Golden Eagle International, Inc.
(A Development Stage Company)
Consolidated Condensed Statement of Cash Flows (Unaudited)
=====================================================================================================================
July 21, 1988
Nine Months Ended (Inception)
September 30, Through
-------------------------------- September 30,
1997 1996 1997
- ------------------------------------------------------------------------------------------------ -------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C> <C>
Net income (loss) $(3,839,348) $(1,485,900) $(6,985,935)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Stock issued related parties for loan
guarantees and renewals 2,475,000 -- 2,475,000
Stock issued for services -- 805,125 1,405,919
Accrued interest converted to stock 41,659 -- 41,659
Depreciation and amortization expense 77,128 5,293 87,753
Loss (gain) from sale of investments -- (19,167) (114,670)
Other 4,084 -- 118,398
Changes in operating assets and liabilities:
Prepaid expense and other costs (62,276) (129,376) (93,173)
Marketable securities -- 9,666 --
Income tax refund receivable -- (8,946) (8,946)
Accounts payable and accrued liabilities 134,138 168,969 649,285
- --------------------------------------------------------------------------------------------------------------------
Net cash flows (used for) operating activities (1,169,615) (654,336) (2,424,710)
- --------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in property and equipment (1,766,595) (525,732) (2,546,835)
Advances to Bolivian cooperative (170,127) -- (170,127)
Deposits 1,000 (2,100) (3,775)
Proceeds from investment sales -- 19,167 184,380
Other -- -- (156,279)
- --------------------------------------------------------------------------------------------------------------------
Net cash flows from (used for) investing activities (1,935,722) (508,665) (2,692,636)
- --------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from bank loan 1,000,000 -- 1,000,000
Loans from related parties 97,050 666,227 1,306,930
Repayments of loans from related parties (239,417) (116,500) (569,642)
Proceeds from notes payable 51,788 16,000 191,346
Repayment of notes payable and bank loan (82,282) (10,422) (92,704)
Proceeds from convertible debentures -- 188,500 188,500
Common stock issued -- 402,030 889,523
Stock issuance costs -- -- (63,064)
- --------------------------------------------------------------------------------------------------------------------
Net cash flows from financing activities 827,139 1,145,835 2,850,889
- --------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH (2,278,198) (17,166) (2,266,457)
CASH - BEGINNING OF PERIOD 11,741 32,979 --
- --------------------------------------------------------------------------------------------------------------------
CASH - END OF PERIOD $(2,266,457) $ 15,813 $(2,266,457)
====================================================================================================================
See accompanying notes.
F-3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Golden Eagle International, Inc.
(A Development Stage Company)
Consolidated Condensed Statement of Stockholders' Equity (Deficit) (Unaudited)
=============================================================================================================
Additional
Common Stock Paid-in
Shares Amount Capital
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Inception July 21, 1988 -- $ -- $ --
Issuance of common stock:
June 1, 1989 for cash at $.00006 per share 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
November 7, 1994, convert debt to equity
at $.003 per share 2,640,830 264 7,659
November 8, 1994, $.00125 per share:
Note receivable from affiliate 20,000,000 2,000 23,000
Legal services 375,000 37 432
Other (70) -- 2,625
Issued for cash in June and August ($.01 to $.05
per share), less $41,644 in stock issuance costs 10,052,250 1,005 164,044
Issued for services in 1995 ($.07 per share) 2,009,000 201 148,799
Convert notes payable in 1995 ($.15625 per share) 800,000 80 124,920
Payment of note by affiliate in 1995 -- -- --
Issuable for cash in 1995 ($.125 to $.282 per share),
417,500 shares -- -- --
Issuable I 1995 for services and additional consideration
for loan ($.07 per share), 328,333 shares -- -- --
Collection of receivable January 9, 1996 -- -- --
Shares previously subscribed issued in 1996 568,333 57 52,926
Issued for cash in 1996 ($.05 to $.25 per share) 21,150 2 5,528
Issuable for cash in 1996 ($.10 to $.20 per share),
2,207,000 shares -- -- --
Issued for services in 1996 ($.07 to $.30 per share) 5,448,985 545 1,230,297
Net loss for the periods -- -- --
- -------------------------------------------------------------------------------------------------------------
Balance at December 31, 1996 44,517,143 4,452 1,856,949
Unaudited:
Issued for cash ($.10 per share) 10,126,350 1,012 1,011,623
Issued to related parties for loan guarantees
and renewals ($.10 per share) 25,000,000 2,500 2,497,500
Issued for services ($.10 per share) 2,200,000 220 219,780
Issued for equipment ($.334 per share) 2,993,161 299 999,701
Issued for conversion of note payable
and accrued interest ($.256 per share) 260,000 26 66,633
Issuable for vehicle ($.10 per share), 350,000 shares 350,000 35 34,965
Shares previously subscribed issued 2,407,000 241 446,259
Net loss for the period (unaudited) -- -- --
- -------------------------------------------------------------------------------------------------------------
Balance at September 30, 1997 (Unaudited) 87,853,654 $ 8,785 $ 7,133,410
=============================================================================================================
See accompanying notes.
F-4
<PAGE>
- -----------------------------------------------------------------------------------------------------------------------------
Golden Eagle International, Inc.
(A Development Stage Company)
Consolidated Condensed Statement of Stockholders' Equity (Deficit) (Unaudited) (Continued)
=============================================================================================================================
Common
Stock Stockholder Accumulated
Issuable Receivable Deficit Total
- -----------------------------------------------------------------------------------------------------------------------------
Inception July 21, 1988 $ -- $ -- $ -- $ --
Issuance of common stock:
June 1, 1989 for cash at $.00006 per share -- -- -- 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
November 7, 1994, convert debt to equity
at $.003 per share -- -- -- 7,923
November 8, 1994, $.00125 per share:
Note receivable from affiliate -- (25,000) -- --
Legal services -- -- -- 469
Other -- -- -- 2,625
Issued for cash in June and August ($.01 to $.05
per share), less $41,644 in stock issuance costs -- -- -- 165,049
Issued for services in 1995 ($.07 per share) -- -- -- 149,000
Convert notes payable in 1995 ($.15625 per share) -- (20,000) -- 105,000
Payment of note by affiliate in 1995 -- 25,000 -- 25,000
Issuable for cash in 1995 ($.125 to $.282 per share),
417,500 shares 80,000 -- -- 80,000
Issuable I 1995 for services and additional consideration
for loan ($.07 per share), 328,333 shares 22,983 -- -- 22,983
Collection of receivable January 9, 1996 -- 20,000 -- 20,000
Shares previously subscribed issued in 1996 (52,983) -- -- --
Issued for cash in 1996 ($.05 to $.25 per share) -- -- -- 5,530
Issuable for cash in 1996 ($.10 to $.20 per share),
2,207,000 shares 396,500 -- -- 396,500
Issued for services in 1996 ($.07 to $.30 per share) -- -- -- 1,230,842
Net loss for the periods -- -- (3,144,711) (3,144,711)
- -----------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1996 446,500 -- (3,150,011) (842,110)
Unaudited:
Issued for cash ($.10 per share) -- -- -- 1,012,635
Issued to related parties for loan guarantees
and renewals ($.10 per share) -- -- -- 2,500,000
Issued for services ($.10 per share) -- -- 220,000
Issued for equipment ($.334 per share) -- -- -- 1,000,000
Issued for conversion of note payable
and accrued interest ($.256 per share) -- -- -- 66,659
Issuable for vehicle ($.10 per share), 350,000 shares -- -- -- 35,000
Shares previously subscribed issued (446,500) -- -- --
Net loss for the period (unaudited) -- -- (3,839,348) (3,839,348)
- -----------------------------------------------------------------------------------------------------------------------------
Balance at September 30, 1997 (Unaudited) $ -- $ -- $(6,989,359) $ 152,836
=============================================================================================================================
See accompanying notes.
F-5
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
Golden Eagle International, Inc.
(A Development Stage Company)
Notes to Consolidated Condensed Financial Statements
(Unaudited)
================================================================================
Note A - General
Golden Eagle International, Inc. (the "Company,") was incorporated in
Colorado on July 21, 1988. The Company is engaged in the business of
acquiring, developing, and operating gold, silver and other precious
mineral properties. Activities of the Company since November 1994 have been
devoted to organizational matters and identification of precious mineral
properties considered for acquisition. Presently, substantially all of the
Company's operations and business interests are focused on a prospect in
the Tipuani River area of the Republic of Bolivia whereon commercial
production commenced in September 1997. Although planned principal
operations have commenced, they have not resulted in significant production
of revenue to date. Consequently, the Company is considered a development
stage company.
The accompanying unaudited condensed financial statements have been
prepared in accordance with the instructions to Form 10-QSB and do not
include all of the information and notes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all material adjustments, consisting of only normal recurring
adjustments considered necessary for a fair presentation, have been
included. These statements should be read in conjunction with the financial
statements and notes thereto included in the Company's Form 10-KSB for the
year ended December 31, 1996.
The financial statements include the accounts of Golden Eagle
International, Inc. and its subsidiaries Golden Eagle Bolivia Mining, S.A.
and Eagle Mining of Bolivia, Ltd. All inter-company transactions and
balances have been eliminated.
The results of operations for the nine and three months ended September 30,
1997, are not necessarily indicative of the results for the remainder of
1997.
Note B - 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
became issuable.
Note C - Bank Financing, Notes Payable and Long -Term Debt
Bank Financing
--------------
On February 11, 1997, a Texas bank loaned the Company $240,000 pursuant to
a short-term bridge loan at the bank's prime rate, due August 1, 1997. On
March 13, 1997 the bank agreed to loan the Company $1 million pursuant to a
revolving line of credit agreement due June 1, 1998 and bearing interest at
the prime rate (8 1/2% as of September 30, 1997). The loan is personally
guaranteed by an officer of the Company (and its former president and
principal shareholder), including a pledge of 13,500,000 shares of common
F-6
<PAGE>
stock of the Company owned by a corporation wholly-owned by the officer,
and is further secured as described below. The agreement called for the
retirement of the earlier $240,000 bank loan from the proceeds of the $1
million loan. The $1 million bank loan, which closed in the second quarter
of 1997, is secured by the pledge of certain trust assets of relatives of
an officer (and former president) for a period of five years from closing
of the loan. As of both September 30, 1997 and November 24, 1997, all
available credit on the line of credit has been utilized.
As consideration for the relatives' pledge on the bank loan, the Company
agreed to issue a total of 20,000,000 shares of common stock to the
relatives. The Company also agreed to issue an additional 5,000,000 shares
of common stock for renewal and extension to January 1, 2000, of $450,000
and $228,341 in prior loans to the Company by relatives and abatement of
$25,000 in previously accrued interest. The 25 million shares were issued
in the second quarter after final approval on April 10, 1997 of the bank
financing and renewal agreements, and were valued at $.10 per share, the
estimated fair value of restricted stock on April 10, 1997. The estimated
value of the stock issued, $2,500,000, less the abated interest of $25,000,
is reflected as a period expense for the loan guarantees and renewals,
since the future economic benefit cannot be reasonably estimated.
Also, as a part of the renewal agreement, the Company agreed to assume a
$165,000 personal loan of an officer (and former president) from a
relative, as a partial offset to total amounts owed the same officer of
$268,975 as of December 31, 1996. The $165,000 loan is due January 1, 2000,
is unsecured and bears interest at the prime rate (8 1/2% as of March 31,
1997). As of September 30, 1997, this transaction has not been finalized
and recorded by the Company.
On March 14, 1997, the Company repaid a $50,000, 10% convertible note
payable and accrued interest.
Note D - Common Stock
Sales of Common Stock to Investors
----------------------------------
During the nine months ended September 30, 1997, the Company received cash
of $1,012,635 from individual investors for which it issued a total of
10,126,350 shares of restricted common stock.
Purchase of Equipment, Vehicle and Common Stock Issued and Issuable
-------------------------------------------------------------------
On September 18, 1996, the Company initiated an agreement to purchase
certain mining equipment located in Bolivia from an individual for $20,000
cash and convertible debentures or restricted common stock totaling $1
million. Closing of the agreement was on February 10, 1997. On February 25,
1997 the individual notified the Company of his desire to exercise an
option pursuant to the debenture agreement to convert the debentures into
2,993,161 shares of common stock, which were issued June 16, 1997.
F-7
<PAGE>
On May 23, 1997, the Company agreed to issue 350,000 shares of restricted
common stock, valued at $.10 per share to acquire a vehicle. The shares
were issued on July 23, 1997.
Conversion of Note Payable to Common Stock
------------------------------------------
On March 27, 1997, an individual elected to convert a $50,000 15% note
payable, plus accrued interest totaling $16,659, to 260,000 shares of
restricted common stock.
Stock Issued for Services
-------------------------
During the nine months ended September 30, 1997, a total of 2,000,000
restricted shares, valued at $.10 per share, were issued to a Bolivian
officer of the Company as a bonus and 200,000 restricted shares were issued
to an independent consultant.
Note E - Related Party Transactions
During the nine months ended September 30, 1997, relatives of an officer
loaned the Company a total of $60,000, with interest ranging from 10-1/2%
to 12%. During the same period, $239,417 was repaid the officer and her
relatives against amounts previously loaned the Company. In addition,
during the nine months ended September 30, 1997, the president and a
Bolivian officer advanced the Company $22,050 and $10,000, respectively.
F-8
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 1,178
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 103,297
<PP&E> 2,542,807
<DEPRECIATION> (84,023)
<TOTAL-ASSETS> 2,735,983
<CURRENT-LIABILITIES> 1,968,523
<BONDS> 614,624
0
0
<COMMON> 8,785
<OTHER-SE> 144,051
<TOTAL-LIABILITY-AND-EQUITY> 152,836
<SALES> 36,268
<TOTAL-REVENUES> 36,268
<CGS> 0
<TOTAL-COSTS> 1,264,346
<OTHER-EXPENSES> 2,472,617
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