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
June 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.
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(Exact name of Golden Eagle as specified in its charter)
Colorado 84-1116515
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(State of incorporation) (IRS Employer Identification No.)
4949 South Syracuse Street, Suite 300, Denver, CO 80237
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(Address of principal executive offices) (Zip Code)
Golden Eagle'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
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(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 June 30, 1999, there were 113,937,885 shares of common stock outstanding.
Transitional Small Business Disclosure Format: [ ] Yes [ X ] No
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PART I - FINANCIAL INFORMATION
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Item 1. Financial Statements
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The unaudited Financial Statements for the Quarter Year ended June 30,
1999, 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
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Liquidity and Capital Resources
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At June 30, 1999, and subsequently, Golden Eagle has had significant
working capital shortages. In fact, since its inception through the second
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 June
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 June 30, 1999 ($4,387,919) was
primarily due to short-term loans made from affiliates and unrelated parties,
and unpaid compensation to Golden Eagle's president and corporate secretary.
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").
One matter which affected the number of shares recorded as issued during
the second quarter of 1999 was entered into during the first quarter of 1999.
Golden Eagle entered into an agreement with two related entities (which are not
affiliated with Golden Eagle) to provide certain services in 1999 to Golden
Eagle on a non-exclusive basis. These services include introducing Golden Eagle
to investment bankers and accredited investors. In addition, these entities are
providing Golden Eagle with financial public relations. 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 1999 services, however, these shares are being accrued for as being issued
ratably during the year. (See, Note C of the attached Financial Statements.)
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, 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.
In the first quarter of 1999, Golden Eagle borrowed $25,000 from an
unrelated individual pursuant to a promissory note bearing interest at two
percent per annum that is secured by 500,000 shares of unissued, restricted
common stock. In addition to the interest accrued on the note, the lender
received 75,000 shares of restricted common stock as additional compensation.
Pursuant to the loan agreement, the Company opted to extend the due date of the
loan for 75,000 additional shares of common stock. The loan was satisfied in
full. The Company's president also personally guaranteed the obligation.
As of June 30, 1999, Golden Eagle and its majority-owned subsidiary, GEBM,
had received loans totaling $38,240 in cash from Golden Eagle's president, Terry
C. Turner, and $157,866 (in equipment rentals and cash) from GEBM's president,
Rene Velasquez, and his wife. 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 1999,
Mr. Velasquez requested repayment of his loans and equipment rental amounts, and
Golden Eagle deemed the loans and rental amounts due and payable. During the
second quarter, Golden Eagle negotiated with Mr. Velasquez regarding various
repayment programs, and presently, Mr. Velasquez is considering those proposed
terms and conditions.
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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 has only been able to achieve limited cash flow from
the limited non-commercial mining operations it has conducted. Specifically, to
date Golden Eagle has been able to produce and sell approximately 21,000 grams
of gold, with post-royalty revenues of $163,300. During the second quarter of
1999, Golden Eagle's operations in Bolivia only produced an estimated $4,300 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 its properties, no reserves have been
established to date, and there can be no assurance that any revenues received
will exceed expenses incurred.
During the second quarter of 1999, a study was performed regarding Golden
Eagle's Cangalli prospect. On August 2, 1999, the company announced that it had
received a new metallurgical report regarding the results of that 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
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.
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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.
During the second quarter of 1999, Golden Eagle, through its Bolivian
subsidiaries, carried out work on the Cangalli properties. These activities
included ongoing rehabilitation, maintenance and exploration of the Cangalli
shaft, and exploration of the Chaco area as an open-pit mining prospect within
the Cangalli concession area.
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, UCL
sent Golden Eagle an all-cash counter-offer. Golden Eagle's management is
currently negotiating with UCL's leadership on acceptable contract language and
various alternate proposals. In any event, 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 UCL's general assembly. Any
offer by Golden Eagle to UCL also would be contingent on the company's ability
to obtain adequate financing, of which there can be no assurance.
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 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 January1996, 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 vi a-vis
some illegal action on the part of UCL or third parties. Golden Eagle is aware
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.
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During the last quarter of 1998, and the first and second quarters of 1999,
Registrant's officers attended several substantive meetings with Bolivian
government officials at the highest levels, including: Bolivia's President, Hugo
Banzer; the Minister of Economic Development, Jorge Pacheco; the Vice Minister
of Mining and Metallurgy, Rene Rengel; and the Governor of the State of La Paz,
Luis Alberto Valle, among others. Registrant's management believes that these
meetings foster an important atmosphere of trust and confidence in promoting
both Bolivia's national interests, as well as Golden Eagle's corporate
objectives.
Because of technical and financial issues on staging its own operations,
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. As a condition precedent to beginning
those negotiations, Golden Eagle's management projected that within the fourth
quarter of 1998, or within the first quarter of 1999, Registrant would have the
initial geological report from its current consulting firm, evaluating its
Cangalli gold deposit. Golden Eagle's management believed that it would be
important, taking into account all of the existing circumstances, to have this
report in hand as one of its criteria for inviting intended joint venture
partners onto the Cangalli properties. The delay in receiving this report
delayed any negotiations with other potential joint venture partners. Registrant
cannot assure that any potential joint venture partners will be interested in
evaluating the Cangalli prospects or in negotiating a relationship with
Registrant.
On June 16, 1999, Golden Eagle announced that it had received a report on
its Cangalli gold deposit from the internationally-recognized minerals industry
consulting firm of Behre Dolbear & Company, Inc. ("Behre Dolbear"). Behre
Dolbear's report entitled: "Report on Results of Gold Sampling Program: Cangalli
Area, Bolivia" is the result of a field sampling program and literature search
performed by Behre Dolbear geologists beginning with site work in October 1998,
and culminating with a site visit in February 1999.
Behre Dolbear's report, a geological analysis of the Cangalli deposit and
an in-depth historical survey of gold production in Cangalli and the Tipuani
Mining District, "confirms that alluvial gold is present in the Cangalli
conglomerate. Gold occurence is erractic, but extends over significant vertical
and horizontal sections". Behre Dolbear further stated: "The extent of the
deposition of Cangalli conglomerates is impressive."
The Company retained Behre Dolbear in September 1998, to conduct the fourth
geological study commissioned on Golden Eagle's Cangalli gold deposit since
January 1996 (Trites, January 1996) (Paravicini, April 1997) (Paravicini, May
1998) (Behre Dolbear, May 1999). In addition, Golden Eagle had received reports
on site visits from Donald M. Hausen, Ph.D., former chief minerologist for
Newmont Mining (September 1997); Max Staheli, former controller of South
American operations for Barrick Gold Corporation (September 1997); and Ronald L
Atwood, Ph.D., former chief metallurgist for Newmont Mining (March 1997), all
members of Golden Eagle's Technical Advisory Board. All of the reports
preceeding the Behre Dolbear report had indicated that the Cangalli gold deposit
was a large, widely-mineralized gold deposit with a good potential for
supporting one or more open-pit and underground mining operations. Golden
Eagle's management sought a consulting firm with the stature and expertise of
Behre Dolbear to confirm this concept from these prior reports.
In its summary, Behre Dolbear's report states:
"Based on specific observations within Golden Eagle's Cangalli landholding
and the sample results, Behre Dolbear noted that:
* visible alluvial gold was recovered from 68 of 73 samples [93%] of
Cangalli conglomerate taken from six widely separated areas,
indicating that the Cangalli conglomerate is mineralized over an
extensive vertical and horizontal section, albeit in the erratic,
non-predictive manner typical of most alluvial deposits;
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* gold recovered from the samples indicates grades ranging from zero to
5.64 g Au/m3. The mineralization is very erratic, sometimes changing
from less than 0.01 g Au/m3 to greater than 1.0g Au/m3 in a vertical
distance of 1-meter;
* using 0.8 g Au/m3 as a threshold grade of gold sufficient to warrant
further consideration, 17 of 73 samples of the Cangalli conglomerate
were in excess of this exploration target grade from four areas, Chaco
[0.91, 0.96, 1.09, 1.14, 1.31, 1.80, and 4.56 g Au/m3], Isuhuaya
[0.92, 1.01, 1.14, 1.40, 1.53, and 3.64 g Au/m3] Flor de Mayo [1.10,
2.41 and 2.79 g Au/m3] and Cangalli (within the town limits)[5.64 g
Au/m3];
* the four surface areas, Chaco, Isuhuaya, Flor de Mayo and Cangalli,
are considered potential targets for further exploration to determine
the extent of the higher grade material;
* while no samples were taken from the Cangalli underground mine, the
operation was visited and based on the observations of the Behre
Dolbear personnel [two unsupervised mine runs which averaged 4.28 g
Au/m3 and 21.55 g Au/ton], further consideration is recommended to
confirm the existence of high grade material; and
* the Paleozoic bedrock in the Camino Maderero area sampled is not a
potential source of primary gold mineralization.
Behre Dolbear took a limited number of samples during the investigation.
The program was not designed as a representative sample analysis for
various reasons, including the areal extent of the property (approximately
40 square kilometers [24 square miles]), the thickness of the conglomerate
(500 m [1,600 feet] to 2,500 m [8,000 feet] in thickness), and access to
various sites (steep hills and valleys, many with +75 degree slopes)."
Behre Dolbear also reported on the unique nature of Golden Eagle's conglomerate
gold deposits:
"Although normal stream processes deposited the gold within the Cangalli
conglomerate, the gold deposits are unique in the following ways:
* based on Behre Dolbear's sample results and observation of present and
abandoned mining operations, gold appears to have been deposited
throughout the entire 500-meter plus [1,600 feet] thickness, rather
than at or near the bedrock/gravel contact as in "typical" alluvial
gold deposits;
* the conglomerate is indurated, not loose gravel;
* "paystreaks", which are typically thin, occur in a random manner. They
usually contain a higher percentage of large boulders than the normal
conglomerate, and locally may have high gold values (greater than 31
g/m3 [greater than 1 oz Au/m3]). Some have been mined by underground
methods; and
* the gravels between paystreaks may also contain gold. Behre Dolbear
collected samples from these gravels, which predominately contain less
than 0.1 g Au/m3, although 17 samples contained at least 0.8 g Au/m3.
These higher grade samples may actually reflect the presence of other
unrecognized paystreaks which occur in the unit."
Behre Dolbear confirmed Golden Eagle's previous disclosures that
exploration in the Cangalli concessions will be, and has been to date, difficult
and expensive since:
* "the rugged topography makes correlation of geological horizons and
paleochannels difficult; and
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* the widespread, but erratic nature of gold occurrences containing
reasonably large "nuggets" and the presence of large boulders in the
conglomerate makes collection of representative samples difficult.
Thus the calculation of a resource, which is essential for determining
economic viability, is problematic".
Regarding historical mining in the Cangalli conglomerate deposits such as
Golden Eagle's, Behre Dolbear performed a historical literature search at Golden
Eagle's request and reported the following:
"Information taken from Aramayo company annual reports indicates that from
1939 to 1949, 6,161 meters were driven underground at the Tujujahuira adit
[in Cangalli conglomerates], resulting in an extraction of 49,151 m3 of
gravels bearing 1,604,800 grams of gold (equal to 51,000 ounces) with an
average grade of 32.6 g Au/m3 [1.05 oz Au/m3] (United Nations 1968). In
1944, one rich pocket yielded 112,352 grams of gold (equal to 3,610 ounces)
from 12.1 m3 (United Nations 1968). It was reported by another source that
the Tujujahuira adit had a 60-degree decline connecting from the main
operation through the mountain to an additional drainage, two ventilation
shafts, and three galleries located on the 30, 50 and 60 meter levels.
Nineteen gold-bearing pay zones were exploited, with grades reaching 150 g
Au/m3 [4.82 oz Au/m3](Revilla 1988). During this period Aramayo had between
300 and 600 laborers working for the company (United Nations 1968). The
Tujujahuira adit is located nine kilometers [5.4 miles] up-river from the
Golden Eagle concessions." [The preceeding historical information is
included in the Behre Dolbear report's historical section, but has not been
independently confirmed by Behre Dolbear. This historical information
applies to the same conglomerate formation in the Paleo-Tipuani system as
is found on Golden Eagle's property, however, Golden Eagle cannot assure
that its gold deposition or mine performance will be the same as or similar
to the historical information given.]
On the issue of fine gold, Behre Dolbear indicated that its geologists did
not consider the presence of "microfine" or "ultrafine" gold within the scope of
its work on the Cangalli deposit. Instead, the Behre Dolbear study focused on
visually-verifiable gold conventionally recoverable using gravity concentration
techniques. Regarding the presence of fine gold in the deposit, Behre Dolbear
stated:
"While visiting the Chaco site, the size fraction of the gold was
discussed. Golden Eagle stated that the size fraction included a reasonable
volume of flour gold and dust; however due to the processing methods, the
gold was generally lost during the sluice box operations. This statement is
supported by the previous work of Zambrana and Trites. Additionally, since
the gold was extremely flat, the smaller particles tended to float on the
surface. To confirm this, Dr. Sandri [Henry Sandri, Ph.D., project manager
for Behre Dolbear] placed a small amount of grease on his hand and let the
post sluice box water flow spill over his hand for about five minutes,
after which his hand showed very minute particles of gold trapped in the
grease.
It was proposed to Golden Eagle [by Dr. Sandri] that they could further
"test" gold losses in their tails by rerunning a number of tonnes through
the process again. Accordingly, four tonnes of tailiings fines from the
existing tailings area were reprocessed through the gravity plant,
recognizing that any very fine gold would probably again be lost from the
circuit for the same reasons that it was lost in the initial processing.
The final concentrates from these reprocessed tailings were collected by
Dr. Sandri and brought to the U.S. for final cleaning and weighing. They
were processed in the U.S. and resulted in over 500 particles of gold
weighing 1.69 g. Au, averaging 0.42 g. Au per ton of tails reprocessed.
Most of the gold was very small and it confirmed Golden Eagle's belief that
fine particles were being washed through this processing plant."
Golden Eagle's management was desirous of firming up other strategic issues
before inviting potential joint venture partners onto its Cangalli properties.
Foremost among these other strategic moves, Golden Eagle's management began
implementing a program of land acquisition during the fourth quarter of 1998
through the first quarter of 1999. This program included, as indicated above,
negotiating the ownership of the Cangalli properties currently under
Registrant's contractual control (thereby extinguishing the 18% UCL royalty) and
eliminating the "cooperative risk" factor, as well as acquiring surrounding
properties in the Paleo-Tipuani Trend.
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Registrant also cannot assure that its current surrounding land acquisition
program will be successful in acquiring all, or even many, of the significant
land holdings in the Paleo-Tipuani Trend. Nevertheless, Registrant's management
believes that it is essential, from various strategic perspectives, to begin
these acquisitions and the formal legal proceedings required by Bolivian law to
perfect titles on these properties. Golden Eagle did actively pursue its land
acquisition program during the second quarter of 1999, and anticipates,
contingent on securing further financing arrangements during the current
quarter, of which there can be no assurance, that certain land acquisitions will
be undertaken during the third quarter of 1999.
Given Registrant's working capital shortages and current world market
conditions for commodities, including minerals and metals, Registrant's
management has set the following priorities for the use of proceeds as they
become available:
(a) Maintenance of current operations, contractual payments, and land
patent payments;
(b) Acquisition of surrounding or adjacent landholdings within the
Paleo-Tipuani Trend;
(c) Acquisition of UCL's ownership interests in the Cangalli properties;
(d) Implementation of recommendations from the geological and
metallurgical reports, including, but not limited to:
i. Constructing a metallurgical recovery plant at Chaco Playa, Chaco
Face, to begin commercial production;
ii. Entering second-stage resource confirmation work with an
independent geological consulting firm;
iii. Entering into negotiations, including site visits and initial
field studies, with interested joint venture partners.
As stated above, implementation of any or all of these planned strategies
by Registrant requires significant infusions of working and operating capital,
and Registrant cannot assure that it will be successful in raising that capital
through loans, a 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 second quarter of 1999 resulted in
significant losses and negative cash flow. Notwithstanding the limited amount of
revenues generated from mining operations ($4,300 in post-royalty revenues in
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the second quarter of 1999), 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 second quarter of 1999
compared with the same period in 1998.
Golden Eagle incurred operating expenses totaling $418,711 in the second
quarter of 1999, as compared to $353,698 in the same period in 1998, an increase
of 18%. As a result of having limited revenues from operations, Golden Eagle
incurred operating losses of ($414,411) in 1999 and ($340,919) during the same
period in 1998, an increase of 22%.
As of June 30, 1999, Golden Eagle had accrued cumulative compensation and
related payroll taxes of approximately $1,085,387. (Golden Eagle's president, as
well as Golden Eagle's secretary/treasurer, were not paid any salary during the
second quarter of 1999. In addition, neither Golden Eagle's president nor the
secretary/treasurer has been paid any compensation subsequently during 1999,
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 second quarter 1999
increased as to general and administrative expenses, totaling $353,273 compared
to $254,303 during the same period in 1998, a 39% increase. However, second
quarter 1999 exploration expenses decreased more substantially from $68,357 in
1998 to $46,260 in 1999 (see following paragraph).
As of June 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 second
quarter of 1999 of $67,474, as opposed to second quarter 1998 interest of
$64,432. 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 second quarter of 1999 of ($479,394),
or $(.004) per share, compared to its net loss during the same period in 1998 of
($402,349), 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 two 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.
9
<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
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
current secretary/treasurer and a director; 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 and Undertaking,
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 and Undertaking, on March 4, 1999, the Federal District
Court for the District of Colorado entered a Final Judgment of 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 current
corporate secretary, Mary A. Erickson, entered into a consent agreement with the
Central 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. The consent agreement is not binding on the SEC until
approved by the full Commission and the Federal District Court.
10
<PAGE>
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. Negotiations are currently underway for the settlement of this last
allegation, and the Company's president strenuously denies any wrongdoing that
may be actionable under federal securities laws.
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 June 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 2,610,000 restricted common shares for cash to unaffiliated
investors at a price of $.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 second quarter of 1999, 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:
The following reports on Form 8-K were filed during the quarter
ended June 30, 1999, and subsequently, and are incorporated by
reference herein:
June 30, 1999 reporting an event under Item 5 of Form 8-K;
August 4, 1999 reporting an event under Item 5 of Form 8-K.
11
<PAGE>
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>
<TABLE>
<CAPTION>
Golden Eagle International, Inc.
(A Development Stage Company)
Consolidated Balance Sheet
June 30, December 31,
1999 1998
---- ----
(Unaudited)
ASSETS
CURRENT ASSETS
<S> <C> <C>
Cash $ 202 $ 21,305
Prepaid expense and other costs 67,884 56,087
------------ ------------
Total current assets 68,086 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 (188,060) (147,780)
------------ ------------
839,324 872,227
------------ ------------
OTHER ASSETS
Advance royalties 84,798 44,634
Deposits 9,275 12,275
------------ ------------
94,073 56,909
------------ ------------
$ 1,001,483 $ 986,528
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Loans from related parties $ 1,301,999 $ 1,249,240
Bank loan payable 1,000,000 1,000,000
Other notes payable 448,633 448,816
Accounts payable 383,874 213,898
Payable to related parties 1,563 19,468
Accrued compensation and taxes 1,085,387 907,577
Accrued interest payable 234,549 166,526
Other accrued liabilities -- 1,863
------------ ------------
Total current liabilities 4,456,005 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 113,937,885 and 109,217,885 shares, respectively 11,393 10,920
Additional paid-in capital 8,626,337 8,154,810
Deficit accumulated during the development stage (12,092,252) (11,186,590)
------------ ------------
Total stockholders' (deficit) (3,454,522) (3,020,860)
------------ ------------
$ 1,001,483 $ 986,528
============ ============
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 Six Months Ended (Inception)
June 30, June 30, Through
------------------------------ ------------------------------ June 30,
1999 1998 1999 1998 1999
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
REVENUES $ 4,300 $ 12,779 $ 9,377 $ 24,579 $ 163,307
COSTS AND OPERATING COSTS
General and administration 353,273 254,303 655,232 624,230 7,032,366
Exploration 46,260 68,357 76,011 124,327 947,806
Depreciation 19,178 31,038 40,279 62,076 181,462
------------- ------------- ------------- ------------- -------------
Total costs and operating expenses 418,711 353,698 771,522 810,633 8,161,634
------------- ------------- ------------- ------------- -------------
OPERATING (LOSS) (414,411) (340,919) (762,145) (786,054) (7,998,327)
------------- ------------- ------------- ------------- -------------
OTHER INCOME (EXPENSE)
Interest expense (67,474) (64,432) (144,408) (187,316) (775,252)
Interest income (2,887) 820 45 844 14,594
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 362 2,182 846 4,976 22,813
Other expenses 5,016 -- -- -- (23,048)
------------- ------------- ------------- ------------- -------------
Total other income (expense) (64,983) (61,430) (143,517) (184,254) (4,088,625)
------------- ------------- ------------- ------------- -------------
NET INCOME (LOSS) $ (479,394) $ (402,349) $ (905,662) $ (970,308) $ (12,086,952)
============= ============= ============= ============= =============
BASIC EARNINGS (LOSS) PER SHARE $ (.004) $ (.004) $ (.008) $ (.010) $ (.402)
============= ============= ============= ============= =============
WEIGHTED AVERAGE SHARES OUTSTANDING 112,374,053 103,123,790 111,198,801 100,620,720 30,074,398
============= ============= ============= ============= =============
F-2
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Golden Eagle International, Inc.
(A Development Stage Company)
Consolidated Statement of Cash Flows
(Unaudited)
Six Months Ended July 21, 1988
June 30, (Inception)
---------------------------- To June 30,
1999 1998 1999
--------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C> <C>
Net income (loss) $ (905,662) $ (970,308) $(12,086,952)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Stock issued for services 75,000 229,000 2,759,919
Depreciation expense 40,279 62,076 181,462
Stock issued for accrued interest 7,500 79,448 148,734
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 (11,797) (5,287) (67,884)
Payables and accrued liabilities 396,042 186,087 1,705,374
------------ ------------ ------------
Net cash flows (used for) operating activities (398,638) (416,226) (3,979,320)
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in property and equipment (7,377) -- (1,610,558)
Advance royalties (40,164) (4,834) (84,798)
Deposits 3,000 (13,500) (10,775)
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 (44,541) (18,334) (1,676,929)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Loans from related parties 110,123 114,816 1,875,328
Repayments of loans from related parties (57,364) -- (492,740)
Proceeds from other notes payable 25,000 126,051 606,098
Repayments of other notes payable (25,183) -- (94,329)
Proceeds from bank loan -- -- 1,000,000
Proceeds from convertible debentures -- 125,000 413,500
Common stock issued 389,500 -- 2,411,658
Stock issuance costs -- -- (63,064)
------------ ------------ ------------
Net cash flows from financing activities 442,076 365,867 5,656,451
------------ ------------ ------------
NET INCREASE (DECREASE) IN CASH (1,103) (68,693) 202
CASH - BEGINNING OF PERIOD 1,305 72,157 --
------------ ------------ ------------
CASH - END OF PERIOD $ 202 $ 3,464 $ 202
============ ============ ============
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
Shares Amount Capital
------ ------ -------
<S> <C> <C> <C>
Inception July 21, 1988 -- $ -- $ --
Issued June 1, 1989 for cash ($.00006 per share) 1,666,665 167 (67)
Issued in 1990 for cash ($.003 to $.03 per share) 666,665 67 10,033
50,000 to 1 stock split -- -- 4,900
Issued in 1991 for cash ($.30074 per share from stock offering) 268,335 27 59,253
November 1, 1993, acquisition of subsidiary -- -- 2,600
Fair value of officer salary -- -- 20,000
November 7, 1994, convert debt to equity ($.003 per share) 2,640,830 264 7,659
Issued in 1994 for note receivable from affiliate ($.00125 per share 20,000,000 2,000 23,000
Issued in 1994 for legal services ($.00125 per share) 375,000 37 432
Issued for cash in 1995 ($.01 to $.282) less $41,644 issuance costs 10,469,750 1,047 244,002
Issued for services in 1995 ($.07 per share) 2,337,333 234 171,749
Convert notes payable in 1995 ($.15625 per share) 800,000 80 124,920
Issued for cash in 1996 ($.05 to $.25 per share) 2,250,650 222 401,808
Issued for services in 1996 ($.07 to $.30 per share) 5,448,985 545 1,230,297
Issued for cash in 1997 ($.10 per share) 10,126,350 1,013 1,011,622
Issued in 1997 for loan guarantees and renewals ($.10 per share) 25,000,000 2,500 2,497,500
Issued in 1997 for services ($.03 to $.17 per share) 9,276,398 928 815,072
Issued in 1997 for equipment ($.10 per share) 2,993,161 299 299,017
Convert debenture and note in 1997 ($.09 and $.26 per share) 689,060 69 104,347
Issued in 1997 for vehicle ($.10 per share) 350,000 35 34,965
Issued for cash in 1998 ($.10 per share) 1,200,000 120 119,880
Issued in 1998 for services ($.10 to $.16 per share) 3,704,172 370 462,630
Conversion of debentures in 1997 ($.03 to $.07 per share) 8,396,268 840 434,122
Issued in 1998 for interest ($.13 per share) 558,333 56 72,444
Other (70) -- 2,625
Net loss for the periods -- -- --
------------ ------------ ------------
Balance at December 31, 1998 109,217,885 10,920 8,154,810
Issued for cash ($.10 per share) 3,895,000 390 389,110
Issued for services ($.10 per share 750,000 75 74,925
Issued for interest ($.10 per share) 75,000 8 7,492
Net loss (unaudited) -- -- --
------------ ------------ ------------
Balance at June 30, 1999 (Unaudited) 113,937,885 $ 11,393 $ 8,626,337
============ ============ ============
F-4
Table is continued on next page.
<PAGE>
Golden Eagle International, Inc.
(A Development Stage Company)
Consolidated Statement of Stockholders' Equity (Deficit)
(Continued)
Accumulated
Deficit Total
------- -----
Inception July 21, 1988 $ -- $ --
Issued June 1, 1989 for cash ($.00006 per share) -- 100
Issued in 1990 for cash ($.003 to $.03 per share) -- 10,100
50,000 to 1 stock split -- 4,900
Issued in 1991 for cash ($.30074 per share from stock offering) -- 59,280
November 1, 1993, acquisition of subsidiary (5,300) (2,700)
Fair value of officer salary -- 20,000
November 7, 1994, convert debt to equity ($.003 per share) -- 7,923
Issued in 1994 for note receivable from affiliate ($.00125 per share -- 25,000
Issued in 1994 for legal services ($.00125 per share) -- 469
Issued for cash in 1995 ($.01 to $.282) less $41,644 issuance costs -- 245,049
Issued for services in 1995 ($.07 per share) -- 171,983
Convert notes payable in 1995 ($.15625 per share) -- 125,000
Issued for cash in 1996 ($.05 to $.25 per share) -- 402,030
Issued for services in 1996 ($.07 to $.30 per share) -- 1,230,842
Issued for cash in 1997 ($.10 per share) -- 1,012,635
Issued in 1997 for loan guarantees and renewals ($.10 per share) -- 2,500,000
Issued in 1997 for services ($.03 to $.17 per share) -- 816,000
Issued in 1997 for equipment ($.10 per share) -- 299,316
Convert debenture and note in 1997 ($.09 and $.26 per share) -- 104,416
Issued in 1997 for vehicle ($.10 per share) -- 35,000
Issued for cash in 1998 ($.10 per share) -- 120,000
Issued in 1998 for services ($.10 to $.16 per share) -- 463,000
Conversion of debentures in 1997 ($.03 to $.07 per share) -- 434,962
Issued in 1998 for interest ($.13 per share) -- 72,500
Other -- 2,625
Net loss for the periods (11,181,290) (11,181,290)
------------ ------------
Balance at December 31, 1998 (11,186,590) (3,020,860)
Issued for cash ($.10 per share) -- 389,500
Issued for services ($.10 per share -- 75,000
Issued for interest ($.10 per share) -- 7,500
Net loss (unaudited) (905,662) (905,662)
------------ ------------
Balance at June 30, 1999 (Unaudited) $(12,092,252) $ (3,454,522)
============ ============
F-5
</TABLE>
<PAGE>
Golden Eagle International, Inc.
(A Development Stage Company)
Notes to Condensed Consolidated Financial Statements
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 six months ended June 30, 1998,
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.
On February 17, 1999, the Company borrowed $25,000 from an individual
pursuant to a two-percent promissory note that is secured by 500,000 shares
of unissued, restricted common stock. As additional compensation, the
lender also received 75,000 shares of restricted common stock. The
Company's president personally guaranteed the obligation, which was repaid
in May 1999.
F - 6
<PAGE>
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)
August 13, 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.
August 13, 1999
by: /s/ Terry C. Turner
-----------------------
Terry C. Turner,
Director and Principal Executive Officer
August 13, 1999
by: /s/ Mary A. Erickson
------------------------
Mary A. Erickson
Director, Principal Financial Officer and
Principal Accounting Officer
12
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 202
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 68,086
<PP&E> 1,027,384
<DEPRECIATION> (188,060)
<TOTAL-ASSETS> 1,001,483
<CURRENT-LIABILITIES> 4,456,005
<BONDS> 0
0
0
<COMMON> 11,393
<OTHER-SE> (3,465,915)
<TOTAL-LIABILITY-AND-EQUITY> 1,001,483
<SALES> 9,377
<TOTAL-REVENUES> 9,377
<CGS> 0
<TOTAL-COSTS> 771,522
<OTHER-EXPENSES> 143,517
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 144,408
<INCOME-PRETAX> (905,662)
<INCOME-TAX> 0
<INCOME-CONTINUING> (905,662)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (905,662)
<EPS-BASIC> (.008)
<EPS-DILUTED> (.008)
</TABLE>
