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, 1999
[ ] 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 Golden Eagle as specified in its charter)
Colorado 84-1116515
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(State of incorporation) (IRS Employer Identification No.)
12401 South 450 East, Building D2, Suite A, Salt Lake City, UT 84020
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(Address of principal executive offices) (Zip Code)
Golden Eagle's telephone number, including area code: (801) 619-9320
4949 South Syracuse Street, Suite 300, Denver, CO 80237
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(Former address if changed since last report) (Zip Code)
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.
[ X ] Yes [ ] No
At September 30, 1999, there were 118,114,614 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 September 30,
1999, are attached hereto. Please refer to pages F-1 through F-5.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
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Liquidity and Capital Resources
-------------------------------
At September 30, 1999, and subsequently, Golden Eagle has had significant
working capital shortages. In fact, since its inception through the third
quarter of 1999, Golden Eagle's current liabilities have substantially exceeded
current assets. This situation has created a significant hardship for Golden
Eagle in meeting its obligations to pay its bills currently, although at
September 30, 1999, Golden Eagle was able to pay or was in the process of
arranging for the payment of all salaries for employees of its Bolivian
operations, as well as most of its suppliers' billings and other current
expenses. As discussed below, Golden Eagle's working capital deficit as of
September 30, 1999 ($3,949,996) was primarily due to short-term loans made from
affiliates and unrelated parties, and unpaid compensation to Golden Eagle's
president and former corporate secretary, and certain other payables primarily
to vendors in the United States.
Golden Eagle has historically financed its significant operating losses and
cash flow deficits through working capital loans from affiliates and,
occasionally, from non-affiliates. In addition, Golden Eagle also used its
common stock directly to raise capital and to satisfy some of its obligations.
The situation requiring use of Golden Eagle's stock to raise working capital has
continued throughout 1999 and will result in dilution to Golden Eagle's current
shareholders (See, Part II, Item 2, "Changes in Securities").
Golden Eagle has also 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 under contract,
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.
During the third quarter of 1999, the Board of Directors of both GEBM and
Eagle Mining of Bolivia, Ltd. ("EMB"), opened discussions with Rene Velasquez,
the President of those two Golden Eagle subsidiaries, regarding his resignation
as president and director to pursue other interests in Bolivia. Among the topics
discussed and under negotiation were GEBM's outstanding debt with Mr. Velasquez,
which includes his back salary, social benefits payable under Bolivian law,
un-compensated vacation benefits and other operating advances which Mr.
Velasquez, personally and through his wife Sonia Orihuela de Velasquez, had
provided in the three and one-half years of his employment. The total debt, with
accrued interest, was approximately $312,000 at September 30, 1999. Golden Eagle
offered an additional bonus in the Company's restricted common shares to
recognize Mr. Velasquez' contribution to operations and forbearance on his
salaries, social and vacation benefits, during his tenure as president of GEBM
and EMB. Mr. Velasquez has agreed to resign his position as president of GEBM
and EMB when he and the Company reach a final negotiated solution on his
outstanding GEBM account. As a result, the Board of Directors of GEBM, Golden
Eagle's operating subsidiary in Bolivia, appointed an interim representative to
carry on operating functions under the Board's direction. In addition, Golden
Eagle offered to purchase Mr. Velasquez' 13% (thirteen percent) shareholding in
EMB, which is the majority-owned (84%) Golden Eagle subsidiary holding the
contract exploration and mining rights for Cangalli gold deposit, for one
million shares of Golden Eagle's restricted common stock. Negotiations with Mr.
Velasquez have concluded successfully as to the terms and conditions of
settlement, however, final contract language is still pending as of the filing
of this report and will be updated through a Current Report on Form 8-K.
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In connection with Golden Eagle's offer to Mr. Velasquez to purchase his
13% shareholding in EMB, Golden Eagle also made a proportionate offer under
similar terms to the Velasquez offer to Mary Erickson, Golden Eagle's former
corporate secretary/treasurer and chief financial officer, who owns 3% (three
percent) of the shares in EMB. Ms. Erickson has agreed in principle to Golden
Eagle's offer and the final purchase arrangements are being made at the time of
the filing of this report and will be updated through a Current Report on Form
8-K.
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.
To date, Golden Eagle, through its operating subsidiary GEBM, has only been
able to achieve limited cash flow from the limited non-commercial mining
operations it has conducted. Specifically, to date GEBM has been able to produce
and sell approximately 21,000 grams of gold, with post-royalty revenues of
$163,300. During the third quarter of 1999, Golden Eagle's operations in Bolivia
did not produce gold for sale due to some flooding of the Cangalli shaft which
resulted in adverse working conditions. Those flooding and pumping issues are
being resolved currently. All revenues generated to date were 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 the
Cangalli properties under contract, no reserves have been established to date,
and there can be no assurance that any revenues received will exceed expenses
incurred.
On August 2, 1999, the Company announced that it had received a new
metallurgical report regarding the results of a study relating to its Cangalli,
Bolivia gold deposit from Ronald L Atwood, Ph.D., a metallurgical consultant and
former chief metallurgist for Newmont Mining. Dr. Atwood is also a member of
Golden Eagle's technical advisory board. Dr. Atwood expressed his opinion in the
report that operating costs at the Cangalli site (including general and
administrative costs and an allocable share of corporate overhead) will range
from $31 to $123 per ounce of gold produced, depending on the feed grade and
tonnage being mined. Dr. Atwood also expressed his opinion that the difficulty
other consultants have identified in recovering fine gold in Cangalli can be
overcome with certain specified technology and equipment. Dr. Atwood's report,
"Report of Investigation on the Cangalli, Bolivia Gold Deposit--Recovery of Fine
Gold with a Mine Plan and Economic Projections," is the result of his fieldwork
on Golden Eagle's Cangalli site, as well as bench testing and laboratory
analysis. Dr. Atwood has visited and investigated the Cangalli gold deposit
several times since March 1997. His most recent work was performed between April
and June 1999.
Dr. Atwood's most significant findings reported to Golden Eagle are in
three categories:
o Fine gold recoveries. Other consultants have raised concerns that
traditional mining and recovery methods used in the Cangalli area will
not result in the recovery of a significant amount of the "fine gold"
known to be present in the deposit. Dr. Atwood stated in his report,
"Based on the work performed, the gold recoveries in the Chaco area
[of the Cangalli gold deposit] can be expected to be in excess of
95%." He further stated, "Through enhanced acceleration in the
centrifugal concentrator systems we have demonstrated that the
historical fine gold losses suffered in the Cangalli area can be
resolved."
o Cost per ounce of gold produced. Dr. Atwood expressed his opinion in
the report that operating costs at the Cangalli site (including
general and administrative costs and an allocable share of corporate
overhead) will range from $31 to $123 per ounce of gold produced,
depending of the feed grade and tonnage being mined. (It should be
noted that Dr. Atwood's cost per ounce projections were not based on
estimates of resources or reserves. Dr. Atwood based his projections
on information from sampling data collected on the Cangalli site by
other consulting geologists, geophysicists and mining engineers.)
o Recommendation regarding operations. Dr. Atwood recommended in his
report that Golden Eagle consider installing a 400-ton-per-hour,
8,800-ton-per-day, mining operation and recovery plant at the Chaco
Playa site. He provided a mine plan and economic projections for his
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recommended operation based on various scenarios. His estimated cost
for the plant construction, mining equipment acquisition, and
operating and administrative costs during the start-up phase was $3
million, but ramping up operations could begin with a smaller
investment. Dr. Atwood stated that he believes that his recommended
mine plan would be the best and most cost-effective method for
creating positive cash flow for the company, while also gathering a
significant amount of information regarding the Cangalli gold deposit.
Golden Eagle's ability to pursue any mine plan is dependent on a number of
factors, including obtaining necessary government and local consents and permits
and, most importantly, obtaining a significant amount of additional financing.
Golden Eagle's management is currently pursuing various funding options.
However, there can be no assurance that Golden Eagle will be able to obtain a
sufficient amount of financing on commercially reasonable terms, if at all.
Golden Eagle has no significant capital commitments regarding operations
other than to continue to rehabilitate, maintain and explore the Cangalli shaft,
and continue its evaluation and exploration of its properties in Bolivia. Golden
Eagle's stated objective is 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. In
addition, Golden Eagle has liabilities that require debt service and other
financial arrangements that are set out in detail at page F-1 in the attached
Financial Statements.
During the second quarter of 1999, Golden Eagle's president met for two
weeks of negotiations in the company's offices in La Paz, Bolivia, with the
designated negotiating committee and board of directors of the United Cangalli
Gold Mining Cooperative, Ltd. ("UCL"). The purpose of these negotiations was
Golden Eagle's purchase of all right, title and interest owned by UCL in the
Cangalli concessions. The negotiations were successfully concluded for a
reasonable combined offer of cash and restricted shares in the company. Specific
contract language was drafted and UCL's negotiating committee and board of
directors concluded that the proposed contract had to be submitted to UCL's
general assembly for approval. UCL's general assembly, however, did not approve
the contract language citing their inability to comprehend the complex
securities language that had been included in the proposed contract due to the
fact that it dealt with Golden Eagle's restricted securities. Because of the
lack of sophistication of UCL's general membership regarding securities, during
the third quarter of 1999, UCL sent Golden Eagle an all-cash counter-offer. The
Company's Board rejected UCL's counter-offer and instead instituted a strategy
of purchasing individual shares in UCL from cooperative members interested in
selling. During a General Assembly of UCL's membership in Cangalli, Bolivia,
held on September 26, 1999, a majority of those assembled voted to allow
individual members to sell their shares in UCL. While continuing to negotiate
with UCL's Board of Directors on a total buyout of UCL's interest in the
Cangalli concessions, Golden Eagle has also continued to purchase individual
shares in UCL. Management believes that by acquiring a voice and vote in the
internal affairs of UCL, it can decrease the risk described below as the
"cooperative risk factor". Golden Eagle cannot assure that it will acquire a
majority interest in UCL, thereby eliminating the "cooperative risk factor" and
controlling the ownership interest in the Cangalli gold deposit, because said
acquisition is contingent on the company's ability to obtain adequate financing,
of which there can be no assurance. However, the Company will continue
implementing the current acquisition strategy.
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 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
three and one-half 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, or until Golden Eagle can accomplish the
total acquisition of UCL's interest in the Cangalli concession. 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
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that certain third parties have attempted 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.
Because of technical and financial issues on staging its own operations,
and because of the size and nature of the Cangalli gold deposit, Golden Eagle's
management has decided that one of its important objectives must be carrying out
negotiations with potential joint-venture partners for the development of the
Cangalli gold deposit. The Company is continuing its search for a viable and
beneficial joint-venture relationship, but cannot assure that any potential
joint-venture partners will be interested in evaluating the Cangalli prospects
or in negotiating a relationship with the Company.
As stated above, implementation of any or all of Golden Eagle's planned
strategies requires significant infusions of working and operating capital, and
the Company cannot assure that it will be successful in raising that capital
through loans, secondary offering or private placements.
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 that 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 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 1999 resulted in
significant continuing losses and negative cash flow. During the third quarter
of 1999, Golden Eagle's subsidiary operations in Bolivia did not produce gold
for sale due to some flooding of the Cangalli shaft which resulted in adverse
working conditions. Those flooding and pumping issues are being resolved
currently. All revenues generated to date were used in Bolivian operations.
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) and stock issuances 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 1999
compared with the same period in 1998.
Golden Eagle incurred operating expenses totaling $406,007 in the third
quarter of 1999, as compared to $409,522 in the same period in 1998, a decrease
of 1%. As a result of having limited revenues from operations, Golden Eagle
incurred operating losses of ($406,007) in 1999 and ($395,855) during the same
period in 1998, an increase of 3%.
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As of September 30, 1999, Golden Eagle had accrued cumulative compensation
and related payroll taxes of approximately $1,189,814. (Golden Eagle's
president, as well as Golden Eagle's former secretary/treasurer, were not paid
any salary during the third quarter of 1999. In addition, neither Golden Eagle's
president nor the its former secretary/treasurer have been paid any compensation
subsequently during 1999, although salary will continue to accrue in the fourth
quarter at the rate of $200,000 per year for the president.)
Golden Eagle's costs and operating expenses for third quarter 1999
increased as to general and administrative expenses, totaling $324,260 compared
to $339,402 during the same period in 1998, a 4% decrease. However, third
quarter 1999 exploration expenses increased from $39,082 in 1998 to $62,011 in
1999 (see following paragraph).
As of September 30, 1999, capitalized costs related to the Bolivian
prospect are principally $100,000 paid for prospect acquisition rights and
$797,529 for mining equipment.
Golden Eagle incurred a slightly increased interest expense in the third
quarter of 1999 of $92,734, as opposed to third quarter 1998 interest of
$16,118. Interest costs will continue, and probably rise significantly, during
the balance of 1999 and through the forseeable future because of increased
borrowings necessary to maintain liquidity for operating purposes.
Golden Eagle had a net loss for the third quarter of 1999 of ($497,417), or
$(.004) per share, compared to its net loss during the same period in 1998 of
($411,293), also $(.004) per share. Golden Eagle anticipates that the trend of
net losses will continue through the balance of 1999. Those losses will continue
as it invests further in exploration on its Cangalli prospect; continues its
pursuit of funding and implementation of mining and recovery operations at
Cangalli; and in general and administrative expenses in the United States and
Bolivia, without generating significant revenues from those efforts. Golden
Eagle's continued ability to survive notwithstanding the continuing losses is,
as described above, its ability to raise necessary financing. This cannot
continue indefinitely and, eventually, Golden Eagle will have to generate
positive cash flows from its operating activities to be able to continue as a
going concern.
Impact of Inflation and Changing Prices
---------------------------------------
Golden Eagle has not experienced any impact from the effects of inflation
during the last three operating periods, 1996, 1997, or 1998, and was not
impacted during the first three quarters of 1999. 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 incorporate
technology that is incapable of recognizing dates beyond December 31, 1999.
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.
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While Golden Eagle believes, based on public reports and some notifications
it has 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 were adversely affected by the millennium change or by other issues
related to Y2K.
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
On May 7, 1998, the SEC filed a civil action (SEC vs. Golden Eagle
International, Inc., et al, No. 98-Z-1020 [D. Colo.]) against Golden Eagle;
Golden Eagle's former president (who resigned in May of 1996); Registrant's
former secretary/treasurer and a director (resigned in October 1999); Golden
Eagle's former public relations firm (which had not performed work for
Registrant since before May 1996); and two individuals, regarding acts which had
occurred between 1994 and mid-1996. Among the allegations made in the SEC's
complaint were that Golden Eagle and the individuals involved had issued press
releases which were false and misleading in an attempt to hype the value of
Golden Eagle's stock.
On November 14, 1998, the SEC filed an Amended Complaint in the
above-referenced action. That complaint alleged that the company and its
president had an inadequate basis for making the May 22, 1998, press release
regarding a geological report that Golden Eagle had received from an independent
geophysicist and mining engineer regarding the Cangalli gold deposit.
In February 1999, Golden Eagle entered into a Consent, neither admitting
nor denying any of the allegations in the SEC's action, but resolving any and
all issues as to the SEC's Complaint and Amended Complaint as they relate to
Golden Eagle International, Inc., by agreeing to the issuance of a Permanent
Injunction not to violate certain securities laws in the future. Pursuant to
that Consent, on March 4, 1999, the Federal District Court for the District of
Colorado entered a Permanent Injunction ordering the company not to violate
certain securities laws in the future. Golden Eagle was not assessed any civil
or monetary penalty.
The Company has also been advised that on June 30, 1999, its former
president, Ronald A. Knittle, who resigned in May 1996, and its former corporate
secretary and director, Mary A. Erickson, who resigned in October 1999, entered
into a Consent agreement with the Central Regional Office (Denver, Colorado) of
the Securities and Exchange Commission to settle all allegations against them in
the above pending civil action. Mr. Knittle and Ms. Erickson neither admitted
nor denied any of the allegations in the SEC's complaint, but to resolve the
situation they consented to the issuance of an injunction against future
violations of certain securities laws and an order for disgorgement. Pursuant to
that Consent, in September 1999, the Federal District Court for the District of
Colorado entered a Permanent Injunction ordering the two former officers not to
violate certain securities laws in the future.
The only defendant remaining in the SEC's civil action is Golden Eagle's
president, with the only issue remaining bearing on the Company's May 22, 1998,
press release regarding its receipt of a geological report on its Cangalli gold
deposit. That matter is set for hearing on February 14, 2000 and the Company's
president strenuously denies any wrongdoing that may be actionable under federal
securities laws.
In September 1999, Sonia Orihuela de Velasquez, the wife of GEBM's
president, Rene Velasquez, filed an executive action in the District Court of La
Paz against Rene Velasquez, naming as a corollary party GEBM, Golden Eagle's
operating subsidiary, to recover principal and interest on operating advances
that she had given GEBM during the her husband's tenure as GEBM's president.
This action was the direct result of GEBM's Board of Directors' decision to open
discussions with Mr. Velasquez regarding his resignation, and the Board's
appointment of an interim representative to continue operations during the
pendency of negotiations with Mr. Velasquez. Golden Eagle believes that all
matters relative to Mr. Velasquez, including those represented in the name of
Sonia Orihuela de Velasquez, have been resolved and that this matter will be
dismissed within the Fourth Quarter of 1999.
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There are no other 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, 1998.
Item 2. Changes in Securities
---------------------
During the quarter ending September 30, 1999, Golden Eagle used its common
stock directly to raise capital and to satisfy some of its obligations. The
Company issued a total of 3,000,000 restricted common shares for cash to an
unaffiliated accredited investor at $.05 per share. The Company also issued a
total of 300,000 restricted common shares to three unaffiliated unaccredited
investors at $.10 per share. These offers and sales were accomplished pursuant
to the exemptions from registration found in Sections 4(2) of the Securities Act
of 1933, as amended, and the rules thereunder. The funds received from these
investors were used to satisfy Golden Eagle's working capital obligations
associated with its exploration and evaluation activities in Bolivia, and to
meet the company's goals under its agreement with the UCL. There was no
underwriter involved in these transactions.
Since late 1994 through the fourth quarter of 1998, Golden Eagle was
publicly-traded under the symbol "MINE" on the OTC Bulletin Board which is
operated under the supervision of the National Association of Securities
Dealers, Inc. ("NASD"). However, in February 1999, the NASD reassigned the
"MINE" symbol to a NASDAQ company, and has assigned to Registrant the trading
symbol "MYNG". The OTC Bulletin Board is a securities market utilizing a
sophisticated computer and telecommunications network. Market participants
comprise market makers generally dealing in "penny stocks", independent dealers
who commit capital and stocks and compete with each other for orders. The OTC
Bulletin Board has adopted rules that require companies quoted on its system to
be current in their reporting obligations to the SEC, among other things. The
Securities and Exchange Commission has adopted rules, such as Rule 15c2-6, which
impose restrictions on a broker-dealer's ability to trade in penny stocks.
Currently, however, the company's shares are quoted on the "pink sheets", a
manual system of reporting that is less efficient and accessible than the OTC
Bulletin Board. The "pink sheets" are operated by the National Quotation Bureau,
which recently announced that it is creating an electronic reporting system and
that selected securities listed in the "pink sheets" would be quoted
electronically on this new system. Golden Eagle believes, but cannot assure,
that its shares will be quoted on the new electronic quotation system.
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
b. Reports on Form 8-K:
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The following reports on Form 8-K were filed during the quarter ended
September 30, 1999, and subsequently, and are incorporated by reference herein:
August 4, 1999 reporting an event under Item 5 of Form 8-K.
October 11, 1999 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, 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)
November 12, 1999
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 Golden Eagle and in the
capacities and on the dates indicated.
GOLDEN EAGLE INTERNATIONAL, INC.
--------------------------------
November 12, 1999
by: /s/ Terry C. Turner
-----------------------
Terry C. Turner,
Director and Principal Executive Officer
November 12, 1999
by: /s/ Jennifer T. Evans
-------------------------
Jennifer T. Evans
Corporate Secretary/Treasurer and
Principal Financial Officer
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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
Notes to Consolidated Financial Statements F-5
<PAGE>
<TABLE>
<CAPTION>
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Golden Eagle International, Inc.
(A Development Stage Company)
Consolidated Balance Sheet
============================================================================================================
September 30, December 31,
1999 1998
- ------------------------------------------------------------------------------------------------------------
(Unaudited)
ASSETS
CURRENT ASSETS
<S> <C> <C>
Cash $ 19,551 $ 1,305
Prepaid expense and other costs 67,613 56,087
- ------------------------------------------------------------------------------------------------------------
Total current assets 87,164 57,392
- ------------------------------------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT
Mining equipment 797,529 813,529
Acquisition cost of mining prospect 100,000 100,000
Vehicles 59,796 59,796
Office equipment 70,059 46,682
- ------------------------------------------------------------------------------------------------------------
1,027,384 1,020,007
Less accumulated depreciation (207,795) (147,780)
- ------------------------------------------------------------------------------------------------------------
819,589 872,227
- ------------------------------------------------------------------------------------------------------------
OTHER ASSETS
Advance royalties 85,498 44,634
Deposits 8,675 12,275
- ------------------------------------------------------------------------------------------------------------
94,173 56,909
- ------------------------------------------------------------------------------------------------------------
$ 1,000,926 $ 986,528
============================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Loans from related parties $ 1,309,331 $ 1,249,240
Bank loan payable 1,000,000 1,000,000
Other notes payable 453,596 448,816
Accounts payable 462,300 213,898
Payable to related parties 1,563 19,468
Accrued compensation and taxes 1,189,814 907,577
Accrued interest payable 276,261 166,526
Other accrued liabilities -- 1,863
- ------------------------------------------------------------------------------------------------------------
Total current liabilities 4,692,865 4,007,388
- ------------------------------------------------------------------------------------------------------------
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 118,114,614 and 109,217,885 shares, respectively 11,810 10,920
Additional paid-in capital 8,885,920 8,154,810
Deficit accumulated during the development stage (12,589,669) (11,186,590)
- ------------------------------------------------------------------------------------------------------------
Total stockholders' (deficit) (3,691,939) (3,020,860)
- ------------------------------------------------------------------------------------------------------------
$ 1,000,926 $ 986,528
============================================================================================================
See accompanying notes.
F-1
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Golden Eagle International, Inc.
(A Development Stage Company)
Consolidated Statement of Operations
(Unaudited)
=============================================================================================================================
July 21, 1988
Three Months Ended Nine Months Ended (Inception)
September 30, September 30, Through
------------------------------ ------------------------------ September 30,
1999 1998 1999 1998 1999
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
REVENUES $ -- $ 13,667 $ 9,377 $ 38,246 $ 163,307
COSTS AND OPERATING COSTS
General and administration 334,001 339,402 979,492 963,632 7,366,367
Exploration 62,011 39,082 138,022 163,409 1,009,817
Depreciation 9,995 31,038 60,015 93,114 191,457
- -----------------------------------------------------------------------------------------------------------------------------
Total costs and operating expenses 406,007 409,522 1,177,529 1,220,155 8,567,641
- -----------------------------------------------------------------------------------------------------------------------------
OPERATING (LOSS) (406,007) (395,855) (1,168,152) (1,181,909) (8,404,334)
- -----------------------------------------------------------------------------------------------------------------------------
OTHER INCOME (EXPENSE)
Interest expense (92,734) (16,118) (237,142) (203,434) (867,986)
Interest income 24 2 69 846 14,618
Loss on sale of equipment -- -- -- (2,758) (17,314)
Loan financing costs, net -- -- -- -- (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 1,300 678 2,146 5,654 24,113
Other expenses -- -- -- -- (23,048)
- -----------------------------------------------------------------------------------------------------------------------------
Total other income (expense) (91,410) (15,438) (234,927) (199,692) (4,180,035)
- -----------------------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) $ (497,417) $ (411,293) $ (1,403,079) $ (1,381,601) $ (12,584,369)
=============================================================================================================================
BASIC EARNINGS (LOSS) PER SHARE $ (.004) $ (.004) $ (.012) $ (.014) $ (.393)
=============================================================================================================================
WEIGHTED AVERAGE SHARES OUTSTANDING 116,196,804 103,370,424 113,408,588 101,563,487 32,053,164
=============================================================================================================================
See accompanying notes.
F-2
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Golden Eagle International, Inc.
(A Development Stage Company)
Consolidated Statement of Cash Flows
(Unaudited)
=========================================================================================================
July 21, 1988
Nine Months Ended (Inception)
September 30, To September 30,
--------------------------------------------
1999 1998 1999
--------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C> <C>
Net income (loss) $ (1,403,079) $ (1,381,601) $(12,584,369)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Stock issued for services 147,500 229,000 2,832,419
Depreciation expense 60,015 62,076 201,198
Stock issued for accrued interest 15,000 79,448 156,234
Stock issued for loan pledges and renewals -- -- 2,500,000
Loss on retirement of vehicle, equipment and other -- 2,758 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 (11,526) (5,287) (67,613)
Payables and accrued liabilities 620,605 186,087 1,929,937
- ---------------------------------------------------------------------------------------------------------
Net cash flows (used for) operating activities (571,485) (827,519) (4,152,167)
- ---------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in property and equipment (7,377) -- (1,610,558)
Advance royalties (40,864) (4,834) (85,498)
Deposits 3,600 (13,500) (10,175)
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 (44,641) (18,334) (1,677,029)
- ---------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Loans from related parties 160,856 114,816 1,926,061
Repayments of loans from related parties (100,764) -- (536,140)
Proceeds from other notes payable 30,199 126,051 611,297
Repayments of other notes payable (25,419) -- (94,565)
Proceeds from bank loan -- -- 1,000,000
Proceeds from convertible debentures -- 125,000 413,500
Common stock issued 569,500 -- 2,591,658
Stock issuance costs -- -- (63,064)
- ---------------------------------------------------------------------------------------------------------
Net cash flows from financing activities 634,372 365,867 5,848,747
- ---------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH 18,246 (479,986) 19,551
CASH - BEGINNING OF PERIOD 1,305 72,157 --
- ---------------------------------------------------------------------------------------------------------
CASH - END OF PERIOD $ 19,551 $ (407,829) $ 19,551
=========================================================================================================
See accompanying notes.
F-3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Golden Eagle International, Inc.
(A Development Stage Company)
Consolidated Statement of Stockholders' Equity (Deficit)
===================================================================================================================================
Common Stock Additional
------------------------- Paid-in Accumulated
Shares Amount Capital Deficit Total
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception July 21, 1988 -- $ -- $ -- $ -- $ --
Issued June 1, 1989 for cash ($.00006 per share) 1,666,665 167 (67) -- 100
Issued in 1990 for cash ($.003 to $.03 per share) 666,665 67 10,033 -- 10,100
50,000 to 1 stock split -- -- 4,900 -- 4,900
Issued in 1991 for cash ($.30074 per share from
stock offering) 268,335 27 59,253 -- 59,280
November 1, 1993, acquisition of subsidiary -- -- 2,600 (5,300) (2,700)
Fair value of officer salary -- -- 20,000 -- 20,000
November 7, 1994, convert debt to equity
($.003 per share) 2,640,830 264 7,659 -- 7,923
Issued in 1994 for note receivable from affiliate
($.00125 per share) 20,000,000 2,000 23,000 -- 25,000
Issued in 1994 for legal services ($.00125 per
share) 375,000 37 432 -- 469
Issued for cash in 1995 ($.01 to $.282) less
$41,644 issuance costs 10,469,750 1,047 244,002 -- 245,049
Issued for services in 1995 ($.07 per share) 2,337,333 234 171,749 -- 171,983
Convert notes payable in 1995 ($.15625 per share) 800,000 80 124,920 -- 125,000
Issued for cash in 1996 ($.05 to $.25 per share) 2,250,650 222 401,808 -- 402,030
Issued for services in 1996 ($.07 to $.30 per share) 5,448,985 545 1,230,297 -- 1,230,842
Issued for cash in 1997 ($.10 per share) 10,126,350 1,013 1,011,622 -- 1,012,635
Issued in 1997 for loan guarantees and renewals
($.10 per share) 25,000,000 2,500 2,497,500 -- 2,500,000
Issued in 1997 for services ($.03 to $.17 per share) 9,276,398 928 815,072 -- 816,000
Issued in 1997 for equipment ($.10 per share) 2,993,161 299 299,017 -- 299,316
Convert debenture and note in 1997 ($.09 and $.26
per share) 689,060 69 104,347 -- 104,416
Issued in 1997 for vehicle ($.10 per share) 350,000 35 34,965 -- 35,000
Issued for cash in 1998 ($.10 per share) 1,200,000 120 119,880 -- 120,000
Issued in 1998 for services ($.10 to $.16 per share) 3,704,172 370 462,630 -- 463,000
Conversion of debentures in 1997 ($.03 to $.07
per share) 8,396,268 840 434,122 -- 434,962
Issued in 1998 for interest ($.13 per share) 558,333 56 72,444 -- 72,500
Other (70) -- 2,625 -- 2,625
Net loss for the periods -- -- -- (11,181,290) (11,181,290)
- -----------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1998 109,217,885 10,920 8,154,810 (11,186,590) (3,020,860)
Issued for cash ($.05 to $.10 per share) 7,195,000 720 568,780 -- 569,500
Issued for services ($.08 to $.10 per share) 1,551,729 155 147,345 -- 147,500
Issued for interest ($.10 per share) 150,000 15 14,985 -- 15,000
Net loss (unaudited) -- -- -- (1,403,079) (1,403,079)
- -----------------------------------------------------------------------------------------------------------------------------------
Balance at September 30, 1999 (Unaudited) 118,114,614 $ 11,810 $ 8,885,920 $(12,589,669) $ (3,691,939)
===================================================================================================================================
See accompanying notes.
F-4
</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, 1998.
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,
1999, are not necessarily indicative of the results for the remainder of 1999.
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 - Arrangements to Issue Stock and Loan Secured by Stock
In the first quarter of 1999, the Company agreed in principle to issue a total
of 1.5 million shares of common stock to two financial advisors as compensation
for identification of prospective investors and financial public relations in
1999. The shares are accrued as issued ratably during the year.
F-5
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 19,551
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 87,164
<PP&E> 1,027,384
<DEPRECIATION> (207,795)
<TOTAL-ASSETS> 1,000,926
<CURRENT-LIABILITIES> 4,692,865
<BONDS> 0
0
0
<COMMON> 11,810
<OTHER-SE> (3,703,749)
<TOTAL-LIABILITY-AND-EQUITY> 1,000,926
<SALES> 9,377
<TOTAL-REVENUES> 9,377
<CGS> 0
<TOTAL-COSTS> 1,177,529
<OTHER-EXPENSES> (2,215)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 237,142
<INCOME-PRETAX> (1,403,079)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,403,079)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,403,079)
<EPS-BASIC> (.012)
<EPS-DILUTED> (.012)
</TABLE>
