SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[ X ] Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 for quarter period ended
September 30, 1998
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the transition period from __________ to __________.
Commission file number 0-23726
GOLDEN EAGLE INTERNATIONAL, INC.
--------------------------------
(Exact name of Registrant as specified in its charter)
Colorado 84-1116515
-------- ----------
(State of incorporation) (IRS Employer Identification No.)
4949 South Syracuse Street, Suite 300, Denver, CO 80237
-------------------------------------------------------
(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: None
Name of each exchange on which registered: None
Securities registered pursuant to Section 12(g) of the Act:
$.0001 par value Common Stock
-----------------------------
(Title of class)
Check whether the issuer (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 issuer was required to file such
reports), and (2) has been subject to the filing requirements for the past 90
days.
[ ] Yes [ X ] No
At December 15, 1998, there were 108,754,051 shares of common stock outstanding.
Transitional Small Business Disclosure Format: [ ] Yes [ X ] No
<PAGE>
PART I-- FINANCIAL INFORMATION
------------------------------
Item 1. Financial Statements
--------------------
The unaudited Financial Statements for the Quarter Year ended June 30,
1998, are attached hereto. Please refer to pages F-1 through F-6.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
------------------------------------------------------------------------
Liquidity and Capital Resources
-------------------------------
At September 30, 1998, and subsequently, Golden Eagle has had significant
working capital shortages. In fact, since its inception through the third
quarter of 1998, Golden Eagle's current liabilities have substantially exceeded
current assets. This situation has created a significant hardship for the Golden
Eagle in meeting its obligations to pay its bills currently, and as of September
30, 1998, Golden Eagle was behind in its payment of salaries for employees of
its Bolivian operations, as well as some of its suppliers' billings and other
current expenses. As discussed below, Golden Eagle's working capital deficit as
of the third quarter of 1998 ($3,800,549) was primarily due to short-term loans
made from affiliates and unrelated parties, and unpaid compensation.
In the first quarter of 1998, Golden Eagle issued a $250,000 convertible
debenture to a foreign corporation at 8%, of which $125,000 was paid to Golden
Eagle in the second quarter. This debenture was convertible at 50% of the
average closing bid price during the three-day period prior to the notice of
conversion. These funds were used primarily for working capital and operating
expenses. The $125,000 issued under this debenture was converted to 2,560,000
shares of Golden Eagle's common stock on October 15, 1998. Golden Eagle does not
expect to receive the balance due under this debenture.
Through 1997, Golden Eagle's majority-owned subsidiary, GEBM, received
loans totaling $35,850 in cash from Golden Eagle's president, Terry C. Turner,
and $90,331 (in equipment rentals and cash) from GEBM's president, Rene
Velasquez. The funds provided by these loans were used to maintain Golden
Eagle's ongoing operations in Bolivia. These loans bear interest at 24% per
annum and are repayable upon demand. In the first quarter of 1998, Mr. Turner
received substantial repayment of his debt and accrued interest through the
conveyance of a vehicle owned by Golden Eagle, valued at $27,575, and subsequent
to the first quarter, the payment of $9,500 in cash. Mr. Velasquez has not
indicated an intention to require repayment of his loan at the present time,
although Golden Eagle deems the debt due and payable.
Golden Eagle also used its common stock directly to raise capital and to
satisfy some of its obligations. During the first quarter of 1998, Golden Eagle
entered into an agreement with two related entities (which are not affiliated
with Golden Eagle) to provide certain services to Golden Eagle on a
non-exclusive basis. These services include introducing Golden Eagle to
investment bankers and accredited investors. These services do not include the
offer or sale of securities. Golden Eagle has agreed to pay these entities a
total of 1,500,000 shares of its restricted common stock as a fee for these
services. During the third quarter of 1998, Golden Eagle continued to receive
services from these two service-providers.
Golden Eagle's ability to use its capital stock and other securities to
raise working capital and to pay its indebtedness is subject to extensive
federal and state regulation. Although Golden Eagle has exerted its best efforts
to comply with all applicable regulations, there can be no assurances that it
has been able to do so. To the extent there may be any non-compliance, Golden
Eagle may incur certain liabilities, although no such claims have, to Golden
Eagle's knowledge, been asserted to date.
The situation requiring use of Golden Eagle's stock to raise working
capital has continued throughout 1998. Golden Eagle has been required to seek
financing from other sources, including affiliates and their family members, to
allow it to continue its exploration and evaluation operations on its Bolivian
properties, and to pay its general and administrative expenses in the United
States and Bolivia. Although Golden Eagle has been successful in obtaining funds
to date, there can be no assurance that Golden Eagle will be able to continue to
be successful in doing so. Golden Eagle's ability to finance its operations
will, in the end, be dependent on Golden Eagle's ability to generate cash flow
from operations, of which there can be no assurance.
2
<PAGE>
To date, Golden Eagle has only been able to achieve limited cash flow from
the limited non-commercial mining operations it has conducted. During 1997
Golden Eagle produced approximately 13,678 grams of gold, which it sold for
approximately $126,000 (before payment of $25,000 in royalties). During the
first quarter of 1998, Golden Eagle's operations in Bolivia produced
post-royalty revenue of $11,800, during the second quarter, $12,779, and during
the third quarter, $13,667, for a total through September 30, 1998, of $38,246.
During 1997, and first three quarters of 1998, these revenues were all used in
the Bolivian operations. Although Golden Eagle believes that it will be able to
generate a significant amount of additional revenues from mining gold from its
properties, no reserves have been established to date, Golden Eagle has not
developed a formal mining plan, and there can be no assurance that any revenues
received will exceed the expenses incurred.
During the 1997 fiscal year (through December 31, 1997), Golden Eagle,
through its Bolivian subsidiaries, completed a substantial amount of work on the
Cangalli properties. These activities included ongoing rehabilitation and
exploration of the Cangalli shaft, and exploration of several open-pit mining
sites within the concession area. Shaft maintenance, as well as a small gold
production from the shaft and its adits, continued throughout the third quarter
of 1998. The most significant limitation on Golden Eagle during the third
quarter was its ongoing inability to finance any significant operations, other
than its overall exploration work, on the Cangalli property.
Golden Eagle has no significant capital commitments other than to continue
to evaluate and explore its properties in Bolivia with the goal of achieving
commercial production if the properties are capable of producing gold
commercially. Golden Eagle is contractually committed to investing $3 million in
the development and exploration of the Cangalli property over the 25-year life
of the initial contract period. As a result of meetings held with the president
and general secretary of the UCL in Miami, Florida on December 14 and 15, 1998,
Golden Eagle's president and corporate secretary committed to fulfill a pending
obligation to the cooperative of $42,451 owing on the purchase of equipment from
the cooperative and for royalties on production. In addition, Golden Eagle
committed to the cooperative that it would finish paying any and all back
obligations owed to workers and suppliers in the Cangalli district, within the
first quarter of 1999, which amount is still pending an accounting from Golden
Eagle's subsidiary in La Paz, Bolivia.
In addition, Golden Eagle has offered to purchase the interests
("Certificados de Aporte" or "Certificates of Contribution") from each of UCL's
118 members. If the offer is accepted, and if certain conditions precedent are
met, Golden Eagle will pay each member approximately $10,000, including $3,000
cash and the balance in shares of Golden Eagle's common stock. Among the
conditions precedent that must be met before the offer can be completed is
compliance with U.S. and Bolivian securities laws, as well as acceptance by the
UCL members. Golden Eagle's offer to UCL is still pending as of the filing of
this quarterly report.
In summary, therefore, Golden Eagle believes that it does not have
sufficient liquidity or capital resources to purchase the interests of the UCL
members or to accomplish its other operational objectives. Golden Eagle's
current status makes it more difficult for Golden Eagle to raise such funds on
reasonable terms. Issues that Golden Eagle believes would be of concern to
prospective investors include (without limitation) the pending litigation filed
by the Securities and Exchange Commission, the significant working capital
shortage, the lack of proven mineral reserves or a mine plan, the difficulties
associated with international operations, the concentration of Golden Eagle's
assets in a single prospect in Bolivia, and the significant dependence on
management.
3
<PAGE>
In addition, Golden Eagle believes that a substantial and material risk
exists, which Management has termed the "cooperative risk factor." This risk
relates to various aspects of Golden Eagle's relationship with the UCL, an
organization consisting of 118 members of all socio-economic, education, and
political levels and criteria. Golden Eagle's Management has sought and
received, repeatedly, assurances from UCL's president and board of directors
that Golden Eagle's subsidiary's contract position and right to the quiet
pursuit of its contract rights of exploration, development, and mining will
remain undisturbed. Over the course of the contract between Golden Eagle's
subsidiary and UCL, approximately 22 years, Golden Eagle has received informal
and formal complaints from UCL's administration regarding Golden Eagle's
contract compliance. However, Golden Eagle believes it has always been able to
satisfactorily resolve any complaint or dispute. Golden Eagle's management
believes that this problem resolution process will continue for the life of the
contract, 25 years from January 1996. Factors which are somewhat out of Golden
Eagle's management's control regarding the "cooperative risk factor" are:
tortious interference by unrelated third parties, force majeure, commodities and
metals market fluctuations, or the failure of governmental institutions to
support Golden Eagle's legitimate rights vis-a-vis some illegal action on the
part of UCL or third parties. Golden Eagle is aware that certain third parties
are attempting to disrupt Golden Eagle's relationship with UCL. Golden Eagle has
defended, and intends to continue to defend, its rights aggressively. Although
management believes it will be able to defend its rights, there can be no
assurance that it will be successful. During the meetings with members of UCL's
board of directors in December 1998, Golden Eagle's president and corporate
secretary received written assurances that relations between UCL and Golden
Eagle are extremely cordial and in excellent condition. While Golden Eagle's
management's analysis is very positive for future relations, any potential
investors or current shareholders must take notice of the "cooperative risk
factor," and weigh it carefully when making any investment decision regarding
Golden Eagle's securities.
As noted, the future conduct of Golden Eagle's business and its response to
issues raised by third parties are dependent upon a number of factors, and there
can be no assurance that Golden Eagle will be able to conduct its operations as
contemplated. Certain statements contained in this report using the terms "may,"
"expects to," and other terms denoting future possibilities, are forward-looking
statements. The accuracy of these statements cannot be guaranteed as they are
subject to a variety of risks which are beyond Golden Eagle's ability to predict
or control and which may cause actual results to differ materially from the
projections or estimates contained herein. These risks include, but are not
limited to, the risks described above, and the other risks associated with
start-up mineral exploration operations, and Golden Eagle's operations with
insufficient liquidity and no historical profitability. It is important that
each person reviewing this report understands the significant risks attendant to
Golden Eagle's operations and that of its subsidiaries. As noted, the future
conduct of Golden Eagle's business and its subsidiaries is dependent upon a
number of factors, and there can be no assurance that any of these companies
will be able to conduct its operations as contemplated herein. Golden Eagle
disclaims any obligation to update any forward-looking statement made herein.
Results of Operations
---------------------
Golden Eagle's operations in the third quarter of 1998 resulted in
significant losses and negative cash flow. Notwithstanding the limited amount of
revenues generated from mining operations ($13,667 in post-royalty revenues in
the third quarter of 1998), Golden Eagle's general, administrative and other
costs have vastly outstripped the resources generated by Golden Eagle's
operations. As described above in "Liquidity and Capital Resources," Golden
Eagle has been dependent on loans from affiliated and unaffiliated parties
(including certain family members of affiliates), stock issuances and debenture
arrangements to meet its working capital obligations and to finance Golden
Eagle's continuing operating losses. There can be no assurance that Golden Eagle
will be able to continue to finance its operating losses in such a manner.
The following sets forth certain information regarding Golden Eagle's
results of operations during the three months of the third quarter of 1998
compared with the same period in 1997, as well as some cumulative numbers for
the first nine months of 1998 compared to the same period in 1997:
4
<PAGE>
Golden Eagle incurred operating expenses totaling $409,522 in the third
quarter of 1998, as compared to $788,940 during that same period in 1997, a
decrease of 48%. The nine month comparison of total costs and operating expenses
in 1998, of $1,220,155 compares with $1,300,614 in 1997, a 6% decrease. This
decrease is attributable to elevated costs and expenses associated with mounting
two open pit operations, Cueva Playa high terrace and Cueva Playa beach terrace,
in the third quarter of 1997. Golden Eagle's subsidiary experienced substantial
fine gold losses and discontinued those operations during the fourth quarter of
1997 and the first quarter of 1998, while a metallurgical consultant studied the
problem. As a result of having limited revenues from operations, Golden Eagle
incurred operating losses of ($395,855) in the third quarter of 1998 and
($752,672) for the comparable period in 1997, a decrease of 47%. The nine months
ended September 30, 1998, with a total operating loss of ($1,181,909), likewise
reflected a 7% decrease when compared to the same nine month period in 1997, or
($1,264,346). The difference results from the same factors as described above,
i.e., increased 1997 third quarter activity in opening the Cueva Playa.
As of September 30, 1998 Golden Eagle had accrued cumulative compensation
and related payroll taxes of approximately $798,604 (Golden Eagle's president,
as well as Golden Eagle's secretary/treasurer, were not paid any salary during
the first three quarters of 1998; neither Golden Eagle's president nor the
secretary/treasurer has been paid any compensation subsequently during 1998,
although salaries are continuing to accrue at the rate of $200,000 per year for
the president and $150,000 per year for the secretary/treasurer.)
Golden Eagle's costs and operating expenses for third quarter of 1998
decreased substantially as to general and administrative expenses, totaling
$339,402 compared to $629,212 during the same period in 1997, a 46% decrease.
The same rationale applies as was explained above regarding overall operating
expenses in the third quarter of 1997. Third quarter 1998 exploration expenses
of $39,082 decreased 67% when compared to third quarter 1997 exploration
expenses of $117,873 (see following paragraph). Depreciation remained relatively
constant in the third quarter at $31,038, down from $41,855 in 1997,
representing a decrease of 26%.
During 1997, due to uncertainties regarding the recoverability of Golden
Eagle's investment in the Bolivian prospect (the uncertainty regarding
reserves), Golden Eagle elected to write-down $873,462 of costs previously
capitalized, including $470,853 which were incurred in 1996. As of December 31,
1997, through September 30, 1998, capitalized costs related to the Bolivian
prospect are principally $100,000 paid for prospect acquisition rights and
$813,529 for mining equipment.
Golden Eagle incurred interest expense in the third quarter and for the
nine months ended September 30, 1998 of $16,118 and $203,434, respectively, a
decrease of 56% for the three month period and an increase of 108% for the nine
month period, as compared to 1997. The increased amount of operating loans
during the course of 1998, and the issuance of 558,353 shares of common stock in
lieu of $72,500 cash for interest (in the first quarter), led to this
escalation. This increased interest cost will continue, and probably rise
significantly, during the balance of 1998 and through the foreseeable future
because of increased borrowings necessary to maintain liquidity for operating
purposes.
Golden Eagle had a net loss for the third quarter of 1998 of ($411,293), or
$(.004) per share, compared to its net loss during the same period of 1997 of
($787,134), or $(.009) per share, a decrease of 48% and 56% per share,
respectively. Golden Eagle anticipates that the trend of net losses will
continue through the balance of 1998, as it invests further in exploration on
its Cangalli prospect and in general and administrative expenses in the United
States and Bolivia, without generating significant revenues from those efforts.
Impact of Inflation and Changing Prices
---------------------------------------
Golden Eagle has not experienced any impact from the effects of inflation
during the last three operating periods, 1995, 1996, or 1997, and was not
impacted during the third quarter of 1998. Bolivian inflation, while
astronomical at points during the early 1980's, has been relatively stable, at
less than 10% since 1985, and during the last three years has been less than 8%
per annum.
Year 2000 Compliance
--------------------
Although there can be no assurance, Golden Eagle does not anticipate that
it will suffer any adverse impact as a result of Year 2000 (Y2K) computer
software issues either as a result of third party non-compliance or as a result
of internal matters. None of the information technology or other software and
hardware systems utilized by Golden Eagle or its subsidiaries incorporates
technology that is incapable of recognizing dates beyond December 31, 1999.
5
<PAGE>
In making the foregoing determination, Golden Eagle assessed embedded
systems contained in its office buildings, equipment, and other infrastructures.
As a result, Golden Eagle has not established a contingency plan to come into
effect in the event of a Y2K catastrophe, and management does not believe that
such a plan is necessary. Of course, Golden Eagle is dependent on facilities
outside of its control, such as electrical power supplies, banking facilities,
transportation facilities (such as airlines), and communications facilities.
Furthermore, Bolivia, the location of Golden Eagle's mineral property and its
significant operations, is an emerging-growth country. Based on Golden Eagle's
observation, although Bolivian facilities are attempting to address issues
associated with Y2K, it does not appear that the infrastructure (banking
facilities, communications facilities, transportation facilities, and electrical
power supplies, among other things) is as sensitive to the issues as in the
United States. Also, generally software available in Bolivia is less likely to
be Y2K compliant, but Golden Eagle does not believe that a requirement to
replace its existing hardware or software used in its Bolivian operations, if
necessary, will materially affect it.
While Golden Eagle believes, based on public reports and some notifications
they have received, that the outside facilities in the United States and Bolivia
are or will be Y2K compliant, Golden Eagle has no other basis for determining
their compliance. The operations of Golden Eagle would be significantly and
adversely affected if any of these outside facilities in the United States or
Bolivia are adversely affected by the millennium change or by other issues
related to Y2K.
PART II-OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
There are no material pending or threatened legal proceedings except as
disclosed in Golden Eagle's annual report on Form 10-KSB for the year ended
December 31, 1997, and its current report on Form 8-K reporting an event of
November 13, 1998.
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:
---------------------------------
The following exhibits are filed with this Form 10-QSB or incorporated
herein by the following references:
a. 27.1 Financial Data Schedules
6
<PAGE>
b. Reports on Form 8-K:
The following reports on Form 8-K were filed during the last quarter of the
year ended December 31, 1997, and subsequently:
July 7, 1998, reporting an event under Item 5 of Form 8-K
July 24, 1998, reporting an event under Item 5 of Form 8-K
September 25, 1998, reporting an event under Item 5 of Form 8-K
October 8, 1998, reporting an event under Item 5 of Form 8-K
November 13, 1998 reporting an event under Item 5 of Form 8-K
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Golden Eagle has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
GOLDEN EAGLE INTERNATIONAL, INC.
-------------------------------
(Golden Eagle)
December 31, 1998
by: /s/ Terry C. Turner
-------------------------------------
Terry C. Turner, President
Pursuant to the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the Golden Eagle and in the
capacities and on the dates indicated.
GOLDEN EAGLE INTERNATIONAL, INC.
--------------------------------
December 31, 1998
by: /s/ Terry C. Turner
-------------------------------------
Terry C. Turner,
Director and Principal Executive
Officer
December 31, 1998
by: /s/ Mary A. Erickson
-------------------------------------
Mary A. Erickson,
Director, Principal Financial Officer
and Principal Accounting Officer
7
<PAGE>
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Golden Eagle International, Inc.
(A Development Stage Company)
Consolidated Financial Statements
Table of Contents
- --------------------------------------------------------------------------------
PAGE
----
Consolidated Balance Sheet F-1
Consolidated Statement of Operations F-2
Consolidated Statement of Cash Flows F-3
Consolidated Statement of Changes in Stockholders' Equity (Deficit) F-4 - F-5
Notes to Consolidated Financial Statements F-6
<PAGE>
- --------------------------------------------------------------------------------
Golden Eagle International, Inc.
(A Development Stage Company)
Consolidated Balance Sheet
- --------------------------------------------------------------------------------
September 30, December 31,
1998 1997
---- ----
(Unaudited)
ASSETS
CURRENT ASSETS
Cash $ 25,365 $ 72,157
Prepaid expense and other costs 10,062 5,658
Income tax refund receivable -- 8,946
------------ ------------
Total current assets 35,427 86,761
------------ ------------
PROPERTY AND EQUIPMENT
Mining equipment 813,529 813,529
Acquisition cost of mining prospect 100,000 100,000
Vehicles 59,796 94,796
Office equipment 45,933 45,933
------------ ------------
1,019,258 1,054,258
Less accumulated depreciation (158,836) (70,389)
------------ ------------
860,422 983,869
------------ ------------
OTHER ASSETS
Advance royalties 76,902 71,914
Deposits 52,275 38,775
------------ ------------
129,177 110,689
------------ ------------
$ 1,025,026 $ 1,181,319
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Bank loan payable, current maturities $ 1,000,000 $ --
Loans from related parties 998,921 946,819
Convertible debentures 135,000 268,500
Other notes payable 367,962 7,276
Accounts payable 249,180 191,635
Payable to related parties 64,549 128,361
Accrued compensation and taxes 798,604 533,085
Accrued interest payable 173,402 101,944
Other accrued liabilities 48,358 41,996
------------ ------------
Total current liabilities 3,835,976 2,219,616
------------ ------------
BANK LOAN PAYABLE, less current maturities -- 1,000,000
------------ ------------
Total liabilities 3,835,976 3,219,616
------------ ------------
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 103,991,063 and 95,359,112
shares, respectively 10,398 9,534
Additional paid-in capital 7,673,818 7,065,734
Deficit accumulated during the development stage (10,495,166) (9,113,565)
------------ ------------
Total stockholders' (deficit) (2,810,950) (2,038,297)
------------ ------------
$ 1,025,026 $ 1,181,319
============ ============
F-1
See accompanying notes.
<PAGE>
<TABLE>
<CAPTION>
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Golden Eagle International, Inc.
(A Development Stage Company)
Consolidated Statement of Operations
(Unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
July 21, 1988
(Inception)
Three Months Ended Nine Months Ended Through
September 30, September 30, September 30,
1998 1997 1998 1997 1998
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
REVENUES $ 13,667 $ 36,268 $ 38,246 $ 36,268 $ 139,705
COSTS AND OPERATING COSTS
General and administration 339,402 629,212 963,632 1,135,469 5,828,419
Exploration 39,082 117,873 163,409 117,873 839,856
Depreciation 31,038 41,855 93,114 47,272 152,240
------------- ------------- ------------- ------------- -------------
Total costs and operating expenses 409,522 788,940 1,220,155 1,300,614 6,820,515
------------- ------------- ------------- ------------- -------------
OPERATING (LOSS) (395,855) (752,672) (1,181,909) (1,264,346) (6,680,810)
------------- ------------- ------------- ------------- -------------
OTHER INCOME (EXPENSE)
Interest expense (16,118) (36,499) (203,434) (97,969) (494,563)
Interest income 2 161 846 175 14,492
Loss on sale and retirement of equipment -- -- (2,758) -- (20,072)
Loan financing costs, net -- -- (2,475,000) (2,475,000)
Write-down of mining prospect -- -- -- (873,462)
Gain on marketable securities -- -- -- 124,336
Commissions -- -- -- 6,708
Write off advances to Mineral Mountain
Mining Co. -- (78,000)
Write off loan to investment advisor -- -- -- -- (15,000)
Other income 678 1,876 5,654 -- 21,795
Other expenses -- -- -- (2,208) (20,290)
------------- ------------- ------------- ------------- -------------
Total other income (expense) (15,438) (34,462) (199,692) (2,575,002) (3,809,056)
------------- ------------- ------------- ------------- -------------
NET INCOME (LOSS) $ (411,293) $ (787,134) $ (1,381,601) $ (3,839,348) $ (10,489,866)
============= ============= ============= ============= =============
BASIC EARNINGS (LOSS) PER SHARE $ (.004) $ (.009) $ (.014) $ (.052) $ (.435)
============= ============= ============= ============= =============
WEIGHTED AVERAGE SHARES 103,370,424 87,666,154 101,563,487 73,472,805 24,104,559
============= ============= ============= ============= =============
F-2
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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Golden Eagle International, Inc.
(A Development Stage Company)
Consolidated Statement of Cash Flows
(Unaudited)
- ------------------------------------------------------------------------------------------------------------
July 21, 1988
Nine Months Ended (Inception) to
September 30, September 30,
1998 1997 1998
---- ---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C> <C>
Net income (loss) $ (1,381,601) $ (3,839,348) $(10,489,866)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Stock issued for services 271,000 220,000 2,492,919
Stock issued in lieu of interest 79,448 27,271 106,719
Stock issued for loan pledges and renewals 2,500,000 2,500,000
Depreciation expense 93,114 76,212 152,240
Loss on retirement of equipment and other 2,758 5,170 8,235
Write-down of mining prospect -- -- 873,462
Write off advances to Mineral Mountain Mining Co. -- -- 78,000
Write off loan to investment advisor -- -- 15,000
Fair value of officer salary expensed -- -- 20,000
Loss (gain) from investments -- -- (114,670)
Changes in operating assets and liabilities:
Prepaid expense and other costs (4,404) (62,276) (10,062)
Income tax refund receivable 8,946 -- --
Payables and accrued liabilities 337,072 134,588 1,334,093
------------ ------------ ------------
Net cash flows (used for) operating activities (593,667) (938,383) (3,033,930)
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in property and equipment -- (731,595) (1,602,432)
Advance royalties (4,988) (170,127) (76,902)
Deposits (13,500) 1,000 (53,775)
Proceeds from investments sales -- -- 184,380
Advances to Mineral Mountain Mining Co. -- -- (78,000)
Loan to investment advisor -- -- (15,000)
Purchase of investment securities -- -- (59,478)
Purchase of subsidiary (net of cash acquired) -- -- (2,700)
------------ ------------ ------------
Net cash flows from (used for) investing activities (18,488) (900,722) (1,703,907)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from bank loan -- 1,000,000 1,000,000
Loans from related parties 106,677 92,050 1,537,886
Repayments of loans from related parties (27,000) (227,141) (458,376)
Proceeds from other notes payable 360,686 -- 500,244
Repayments of other notes payable -- (37,770) (69,146)
Proceeds from convertible debentures 125,000 -- 413,500
Common stock issued -- 1,012,635 1,902,158
Stock issuance costs -- -- (63,064)
Net cash flows from financing activities 565,363 1,839,774 4,763,202
------------ ------------ ------------
NET INCREASE (DECREASE) IN CASH (46,792) 669 25,365
CASH - BEGINNING OF PERIOD 72,157 11,741 --
------------ ------------
CASH - END OF PERIOD $ 25,365 $ 12,410 $ 25,365
============ ============ ============
F-3
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Golden Eagle International, Inc.
(A Development Stage Company)
Consolidated Statement of Stockholders' Equity (Deficit)
- ------------------------------------------------------------------------------------------------------------------------------
Common Additional
Common Stock 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 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, $.00125 per share:
Note receivable from affiliate 20,000,000 2,000 -- 23,000
Legal services 375,000 37 -- 432
Other (70) -- -- 2,625
Issued for cash in June and August 1995 ($.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 $.282 per share),
417,500 shares -- -- 80,000 --
Issuable in 1995 for services and additional consideration
for loan ($.07 per share), 328,333 shares -- -- 22,983 --
Collection of receivable January 9, 1996 -- -- -- --
Shares previously subscribed issued in 1996 568,333 57 (52,983) 52,926
Issued for cash in 1996 ($.05 to $.25 per share) 21,150 2 -- 5,528
Issuable for cash in 1996 ($.10 to $.20 per share),
2,207,000 shares -- -- 396,500 --
Issued for services in 1996 ($.07 to $.30 per share) 5,448,985 545 -- 1,230,297
Shares previously subscribed in 1996 issued in 1997 2,407,000 238 (446,500) 446,262
Issued for cash in 1997 ($.10 per share) 10,126,350 1,013 -- 1,011,622
Issued to related parties for loan guarantees and
renewals in 1997 ($.10 per share) 25,000,000 2,500 -- 2,497,500
Issued for services in 1997 ($.03 to $.17 per share) 9,276,398 928 -- 815,072
Issued for equipment in 1997 ($.10 per share) 2,993,161 299 -- 299,017
Issued for conversion of debentures and --
note payable in 1997 ($.09 and $.26 per share) 689,060 69 -- 104,347
Issued for vehicle in 1997 ($.10 per share) 350,000 35 -- 34,965
Net loss for the periods -- -- -- --
------------ ------------ ------------ ------------
Balance at December 31, 1997 95,359,112 9,534 -- 7,065,734
Unaudited:
Issued for services ($.0867 to $.175 per share) 1,828,066 183 -- 270,817
Issued for conversion of debentures ($.0467 per share) 5,687,219 569 -- 264,879
Issued in lieu of interest ($.0867 to $.1603 per share) 1,116,666 112 -- 72,388
Net loss for the period -- -- -- --
------------ ------------ ------------ ------------
Balance at September 30, 1998 103,991,063 $ 10,398 $ -- $ 7,673,818
============ ============ ============ ============
F-4
<PAGE>
- --------------------------------------------------------------------------------------------------------------
Golden Eagle International, Inc.
(A Development Stage Company)
Consolidated Statement of Stockholders' Equity (Deficit)
- -------------------------------------------------------------------------------------------------------------
Stockholder Accumulated
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, $.00125 per share:
Note receivable from affiliate (25,000) -- --
Legal services -- -- 469
Other -- -- 2,625
Issued for cash in June and August 1995 ($.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 $.282 per share),
417,500 shares -- -- 80,000
Issuable I 1995 for services and additional consideration
for loan ($.07 per share), 328,333 shares -- -- 22,983
Collection of receivable January 9, 1996 20,000 -- 20,000
Shares previously subscribed issued in 1996 -- -- --
Issued for cash in 1996 ($.05 to $.25 per share) -- -- 5,530
Issuable for cash in 1996 ($.10 to $.20 per share),
2,207,000 shares -- -- 396,500
Issued for services in 1996 ($.07 to $.30 per share) -- -- 1,230,842
Shares previously subscribed in 1996 issued in 1997 -- -- --
Issued for cash in 1997 ($.10 per share) -- -- 1,012,635
Issued to related parties for loan guarantees and
renewals in 1997 ($.10 per share) -- -- 2,500,000
Issued for services in 1997 ($.03 to $.17 per share) -- -- 816,000
Issued for equipment in 1997 ($.10 per share) -- -- 299,316
Issued for conversion of debentures and
note payable in 1997 ($.09 and $.26 per share) -- -- 104,416
Issued for vehicle in 1997 ($.10 per share) -- -- 35,000
Net loss for the periods -- (9,108,265) (9,108,265)
------------ ------------ ------------
Balance at December 31, 1997 -- (9,113,565) (2,038,297)
Unaudited:
Issued for services ($.0867 to $.175 per share) -- -- 271,000
Issued for conversion of debentures ($.0467 per share) -- -- 265,448
Issued in lieu of interest ($.0867 to $.1603 per share) -- -- 72,500
Net loss for the period -- (1,381,601) (1,381,601)
------------ ------------ ------------
Balance at September 30, 1998 $ -- $(10,495,166) $ (2,810,950)
============ ============ ============
F-5
See accompanying notes.
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
Golden Eagle International, Inc.
(A Development Stage Company)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
- --------------------------------------------------------------------------------
Note A - General
Golden Eagle International, Inc. (a development stage company, the "Company,")
was incorporated in Colorado on July 21, 1988. The Company is to engage in the
business of acquiring, developing, and operating gold, silver and other precious
mineral properties. Activities of the Company since November 1994 have been
primarily 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.
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, 1997.
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 intercompany transactions and balances have been eliminated.
The results of operations for the three and nine months ended September 30,
1998, are not necessarily indicative of the results for the remainder of 1998.
Note B - Earnings (Loss) Per Share
Basic 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).
Note C - Loans from Consulting Firm
Through September 30 1998, the Company borrowed a total of $360,686 on an
unsecured basis from a Bolivian consulting engineering firm at 15% per annum
with repayment due December 31, 1998.
Note D - Related Party Transactions
During the nine months ended September 30, 1998, relatives of an officer loaned
the Company a total of $106,677, with interest ranging from 12% to 24%.
F-6
<PAGE>
- --------------------------------------------------------------------------------
Golden Eagle International, Inc.
(A Development Stage Company)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
- --------------------------------------------------------------------------------
Note E - Convertible Debenture
In April and May 1998, the Company issued a $250,000 ten percent Convertible
Debenture to a foreign corporation which is convertible to common stock at the
lesser of 50% of the OTC Bulletin Board average closing bid price for three days
prior to notice or $.16 per share. The Debenture requires quarterly interest
payments beginning June 30, 1998 and was due June 30, 1998. As of October 14,
1998, $125,000 of the Debenture had been funded. On October 15, 1998, the
Debenture holder and the Company agreed to conversion of the $125,000 debenture
plus accrued interest and penalty totaling $35,000 into 2,560,000 shares of
common stock at a conversion rate of $.0625. In addition, the Company agreed to
file a registration statement covering the issued shares within 90 days and
granted the holder the right to purchase up to $200,000 of stock within 30 days
of the effectiveness of the registration statement in the event additional
securities are registered.
F-7
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 25,365
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 35,427
<PP&E> 1,019,258
<DEPRECIATION> (158,836)
<TOTAL-ASSETS> 1,025,026
<CURRENT-LIABILITIES> 3,835,976
<BONDS> 0
0
0
<COMMON> 10,398
<OTHER-SE> (2,821,348)
<TOTAL-LIABILITY-AND-EQUITY> 1,025,026
<SALES> 38,246
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 1,220,155
<OTHER-EXPENSES> (3,742)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (203,434)
<INCOME-PRETAX> (1,381,601)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,381,601)
<EPS-PRIMARY> (.014)
<EPS-DILUTED> (.014)
</TABLE>
