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, 2000
[ ] 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
(State of incorporation) (IRS Employer Identification No.)
12401 South 450 East, Building D2, Suite A, Salt Lake City, UT 84020
---------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Golden Eagle's telephone number, including area code: (801) 619-9320
-----------------
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 June 30, 2000, there were 154,831,884 shares of common stock outstanding.
Transitional Small Business Disclosure Format: [ ] Yes [ X ] No
<PAGE>
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
--------------------
The unaudited Financial Statements for the Quarter Year ended June 30,
2000, 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
--------------------------------------
Liquidity and Capital Resources
-------------------------------
At June 30, 2000, and subsequently, Golden Eagle has had significant
working capital shortages. In fact, since its inception through the second
quarter of 2000, 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, 2000, 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, 2000 ($4,598,542) was due, in part, to short-term loans made from
affiliates and unrelated parties; unpaid compensation to Golden Eagle's
president and former corporate secretary; and certain other payables primarily
to vendors in Bolivia. A significant portion of the working capital deficit is
due to a $1 million revolving line of credit with a Texas bank. This line of
credit has been fully extended to Golden Eagle. The note underlying this line
of credit came due on June 1, 2000. Management believes, but cannot assure,
that this note will be renewed for an additional year, through June 2, 2001,
with the sole obligation on the company's part to continue paying the monthly
interest. No additional compensation has been requested by, nor offered to,
the affiliated guarantors of this obligation for their continued guarantee.
Management conducted a telephone conference on July 7, 2000, with the loan
officers of the Texas bank and the guarantors, as well as their legal and
financial advisors, for the purpose of finalizing the loan extension. While
management reiterates that it is confident that the loan will be extended, it
also reiterates that there can be no assurance of that fact until actual
extension documents have been executed.
With respect to the unpaid executive compensation and short-term
operating loans made by affiliates over the past 3 years, management has not
negotiated a satisfactory solution to date. No demand has been made, however,
those compensation and loan obligations are past due, and in some cases,
significantly past due. Golden Eagle is committed to proposing and negotiating
solutions to those compensation and debt obligations within the second half of
2000, however, again, there can be no guarantees that those solutions will be
acceptable to the parties to whom the amounts are owed. Because Golden Eagle's
president and former corporate secretary/treasurer are included among these
creditors, any resolution will be negotiated and approved by the disinterested
members of Golden Eagle's board of directors.
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 the second quarter of 2000 and subsequently, and will
continue to result in dilution to Golden Eagle's current shareholders (See,
Part II, Item 2, "Changes in Securities"). During the six months ended June
30, 2000 (and through July 31, 2000), Golden Eagle raised approximately
$293,000 from the sale of 9,810,927 shares of its common stock and
approximately $360,000 from the sale of convertible debt from accredited
investors (including some existing shareholders and other related and
unrelated parties). Golden Eagle has used these funds to finance its operating
losses and working capital deficit generated in the second quarter of 2000
(and through July 31, 2000) and previous periods. In each case, Golden Eagle
has relied on exemptions from registration for transactions with accredited
investors only, not involving public offerings. In most cases, funds are
raised as they are needed to satisfy Golden Eagle's operational requirements.
Management would prefer to plan further in the future and to have funds
available for business operations planned for future periods, but Golden Eagle
has not be able to obtain the financing necessary to achieve such a status to
date.
2
<PAGE>
In addition, Golden Eagle has a number of future commitments for which
it does not presently have the cash necessary to satisfy. These commitments
include the payment of the short-term indebtedness to affiliated and
unaffiliated parties described in the preceding paragraphs, as well as the
ongoing purchase of interests from the shareholders of the UCL (which we have
a standing offer to purchase at the rate of $5,000 per share). In the third
quarter of 1999, we have purchased seven shares (certificates of contribution)
outright, and have made cash deposits of amounts ranging between $500 and
$2,000 per share for the purchase of an additional 42 shares. (This is
described in more detail below.)
Because of the Company's ongoing working capital shortages, technical and
financial issues resulting from the need to conduct its own operations, and
because of the size and nature of the Cangalli gold deposit, Golden Eagle has
focused its efforts and expenditures on its priority obligations. These
obligations include maintaining in good standing its obligations to its staff
in Bolivia and in the United States.
Golden Eagle is continuing to seek joint venture partners or other
industry participants who would be interested in joining with Golden Eagle in
the development of its Cangalli prospect. We cannot, however, offer any
assurance that any potential joint-venture partners will be interested in
evaluating the Cangalli prospects or in negotiating a relationship with the
Company on reasonable or acceptable terms. Any industry participant who may
choose to enter into a joint venture with Golden Eagle would likely initially
require a significant interest in the project in exchange for the necessary
investment. However, Golden Eagle believes that it has some negotiating
leverage to compromise on a more reasonable allocation of a direct or indirect
interest in the Cangalli project in exchange for an appropriate investment.
Among the areas of possible negotiating leverage include Golden Eagle's
acquisition of the shares in the UCL, which owns the property underlying the
original Cangalli project, and to which an 18% royalty on gross production is
owed. In addition, Golden Eagle's management has and continues to maintain
important contacts with governmental officials and UCL agents in Bolivia.
Also, the Company has acquired an additional mining concession land holding
surrounding the original Cangalli concession, which is approximately 10 times
as large as the Cangalli claims. Golden Eagle believes that these, and other
intangible factors, add value to the Cangalli project.
As another place for negotiating leverage, Golden Eagle has been studying
recommencing its gold production from the Cangalli project based on the mining
and metallurgical study of the project by one of its directors when and if
adequate financing becomes available. Dr. Ronald L Atwood's investigation
indicates that Golden Eagle may be able to establish an 8,800 ton-per-day
operation on the Cangalli property at a capital cost of approximately
$6,000,000. As is apparent from the financial statements attached hereto,
Golden Eagle does not have that amount of capital available and there can be
no assurance that Golden Eagle will be able to obtain the necessary capital.
Golden Eagle has had discussions with several potential financing sources, but
none of these discussions have proceeded beyond a preliminary discussion
stage. Any financing will be contingent on the preparation of definitive
agreements, satisfactory due diligence by the financing source, and other
conditions and contingencies. There can be no assurance that any of these
sources will provide the necessary financing or, if they are willing to
provide the financing, the terms will be reasonable. Investors in Golden Eagle
should anticipate that their interests in the Cangalli project will be
significantly diluted by any financing, joint venture, or other industry
participation, either through the issuance of additional shares of Golden
Eagle common stock or through a reduction in Golden Eagle's direct interest in
the Cangalli project or its Bolivian subsidiary.
While Golden Eagle has been seeking financing sources for its Bolivian
operations, Golden Eagle has also been required to seek financing for its
general and administrative operations as well as mine maintenance from other
sources, including affiliates and their family members. This financing, which
the Board of Directors believes has been obtained from accredited investors
(including some existing shareholders and other related and unrelated parties)
on terms more favorable to Golden Eagle than would have been available from
strictly third party financing sources, has allowed Golden Eagle 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 it 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 its ability to generate cash flow from operations, of which there
can be no assurance.
3
<PAGE>
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.
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 $160,201. During the second quarter of 2000, Golden Eagle's
operations in Bolivia did not produce gold for sale due to some flooding of
the Cangalli shaft that resulted in adverse working conditions. Those
flooding and pumping issues were resolved in the first quarter of 2000, and
the shaft was in the process of rehabilitation from the impacts of the
flooding during the second quarter. All revenues generated to date have been
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, and those that it owns
outright, no reserves have been established to date pursuant to Guide 7, SEC
Regulations, and there can be no assurance that any revenues received will
exceed expenses incurred. Golden Eagle's ability to generate revenues from
mining operations depends in part on its ability to finance substantial
additional capital expenditures for a new production plant, which ability is
subject to substantial risks to Golden Eagle and its shareholders as discussed
above.
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. However, there can be no assurance that Golden Eagle will be able
to meet the requirements necessary to overcome these factors and be able to
pursue its mine plan as currently contemplated, 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 Cangalli and Tipuani
Valley properties in Bolivia (a commitment estimated to be from $300,000,
minimum, to more that $600,000, as a maximum during the remaining two
quarters of the current fiscal year); and to complete its purchase obligations
for any UCL shares which accept Golden Eagle's offer (a commitment we estimate
to be $300,000 during the remaining two quarters of the current fiscal
year). 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, which requirement has already been met in Golden Eagle's
estimation. 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.
The Company 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 the
Company'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 four years, the Company has received
informal and formal complaints from UCL's administration regarding the
Company's contract compliance. However, Golden Eagle believes it has always
been able to satisfactorily resolve any complaint or dispute. The Company's
management believes that this problem resolution process will continue for the
life of the contract, 25 years from January 1996. Factors which are somewhat
out of the Company's management's control regarding the "cooperative risk
factor" are: tortious interference by unrelated third parties; force majeure;
commodities and metals market fluctuations; or the failure of governmental
institutions to support Golden Eagle's legitimate rights vis-a-vis some
illegal action on the part of UCL or third parties. Golden Eagle is aware
that certain third parties have attempted to disrupt the Company's
relationship with UCL. However, the Company 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. While Golden Eagle's
4
<PAGE>
management's analysis is very positive for future relations, any potential
investors or current shareholders must take notice of the "cooperative risk
factor," and weigh it carefully when making any investment decision regarding
Golden Eagle's securities.
As 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 second quarter of 2000 resulted in sig-
nificant continuing losses and negative cash flow. The pumping of the Cangalli
Shaft was resolved in the first quarter of 2000, and the shaft was in the
process of rehabilitation during the second quarter. As the result of the
continuing rehabilitation and lack of sufficient working capital,Golden Eagle's
Bolivian subsidiary did not produce gold for sale during the second quarter of
2000. As described above, all revenues generated to date have been used in
Bolivian operations. Golden Eagles' general, administrative and other costs have
vastly outstripped the revenues 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 and negative cash flow in such a manner.
The following sets forth certain information regarding Golden Eagle's
results of operations during the six months ended June 30, 2000
compared with the same period in 1999.
Golden Eagle incurred operating expenses totaling $310,745 in the first
quarter of 2000, as compared to $418,711 in the same period in 1999, a
decrease of 26%. As a result of having no revenues from operations,
Golden Eagle incurred operating losses of ($310,745) in the second quarter of
2000 and ($414,411) during the same period in 1999, a decrease of 25%.
As of June 30, 2000, Golden Eagle had accrued cumulative unpaid
compensation and related payroll taxes of approximately $1,289,575 principally
owing to Golden Eagle's president and its former secretary/treasurer (who
resigned in October 1999, Golden Eagle has not paid any current or past due
salary to its president, or past due salary to its former secretary/treasurer
during the six months ended June 30, 2000 or subsequently. The president's
salary will continue to accrue in the third quarter of 2000, and throughout the
balance of the year, at the rate of $200,000 per year. As set forth above,
Golden Eagle has paid salaries to its other United States and Bolivian employees
currently.
Golden Eagle's costs and operating expenses for second quarter of 2000
decreased substantially as to general and administrative expenses, totaling
$258,873 compared to $353,273 during the same period in 1999, a 27% decrease.
Second quarter 2000 exploration expenses also decreased substantially from
$46,260 in 1999 to $28,998 in 2000 (See, following paragraph).
5
<PAGE>
As of June 30, 2000, property and equipment as assets included,
principally, $100,000 paid for prospect acquisition rights, $803,796 for
mining equipment, $69,445 for office equipment and $59,796 for vehicles, for a
total of property and equipment of $1,033,037, less accumulated depreciation
of $(264,336), resulting in a net figure of $768,701. Total assets, then,
would include this property and equipment figure, plus current assets of
$128,666, and advanced royalties and deposits of $101,758, for a total of assets
on the balance sheet of $999,125. Although these assets are reflected on Golden
Eagle's balance sheet, their recoverability is at issue as is set forth in the
report of Golden Eagle's independent public accountants attached to Golden
Eagle's financial statements for the year ended December 31, 1999 included as a
part of Golden Eagle's annual report on Form 10-KSB for the year then ended.
Golden Eagle incurred a slight increase in interest expense in the second
quarter of 2000 of $73,475, as compared to second quarter 1999 interest of
$67,474. Interest costs will continue, and probably rise significantly, during
the balance of 2000 and through the foreseeable future because of increased
borrowings necessary to maintain liquidity for operating purposes.
Golden Eagle had a net loss for the second quarter of 2000 of ($381,614),
or $(.003) per share, compared to its net loss during the same period in 1999
of ($479,394), or $(.004) per share. Golden Eagle anticipates that the trend
of net losses will continue through the balance of 2000. Those losses will
continue as it invests further in exploration on its gold prospects in
Bolivia; continues its pursuit of funding and implementation of mining and
recovery operations in Bolivia; 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, dependent on 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, 1997, 1998, or 1999, and was not
impacted during the second quarter of 2000. 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.
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings
------------------
There are no other pending or threatened legal proceedings except as
disclosed in Golden Eagle's Annual Report on Form 10-KSB for the year ended
December 31, 1999; and its Quarterly Report on Form 10-QSB for the period
ended March 31, 2000.
Item 2. Changes in Securities
---------------------
During the six months ended June 30, 2000, Golden Eagle used its common
stock directly to raise capital and to satisfy some of its obligations.
The Company issued a total of 9,810,927 restricted common shares for cash
to seven unaffiliated, accredited investors at $.03 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.
In addition, during the six months ended June 30, 2000 the Company entered
into a Convertible Debenture Agreement with an accredited investor and current
shareholder in the amount of $360,000. The terms of the Convertible Debenture
are: a one year term; interest accruing at 10% per annum; conversion of loan
amount and any accrued interest, or any part of those sums, at the election of
the holder, to shares of restricted common stock of the Company; a conversion
rate of $.03
6
<PAGE>
per share or one-half of the average closing price during the last three days
prior to conversion, whichever is less.
On June 1, 2000, Golden Eagle's board of directors adopted the 2000
Employee and Consultant Stock Compensation Plan which provides for
compensation payable to employees and consultants to Golden Eagle (not
including officers, directors or others deemed to be insiders) by issuing
shares of its common stock or options to purchase its common stock. The plan
reserves the right to issue up to 20 million shares in the discretion of the
board of directors. (See, Current Report of Form 8-K dated June 1, 2000.)
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, 2000, and subsequently, and are incorporated by reference herein:
May 22, 2000, reporting an event under Item 5 of Form 8-K.
June 1, 2000, reporting events under Items 5 and 7 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)
August 14, 2000 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.
7
<PAGE>
GOLDEN EAGLE INTERNATIONAL, INC.
(Golden Eagle)
August 14, 2000 by: /s/ Terry C. Turner
---------------------------
Terry C. Turner,
Director and Principal
Executive Officer
August 14, 2000 by: /s/ Jennifer T. Evans
----------------------------
Jennifer T. Evans
Corporate Secretary/Treasurer
and Principal Financial Officer
8
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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> 9
____________________________________________________________________________
Golden Eagle International, Inc.
(A Development Stage Company)
Consolidated Balance Sheet
_____________________________________________________________________________
June 30, December 31,
2000 1999
------------- -------------
(Unaudited)
ASSETS
CURRENT ASSETS
Cash $ 21,301 $ 1,490
Prepaid expense and other costs 107,365 64,171
------------- -------------
Total current assets 128,666 65,661
------------- -------------
PROPERTY AND EQUIPMENT
Mining equipment 803,796 800,029
Acquisition cost of mining prospect 100,000 100,000
Office equipment 69,445 59,796
Vehicles 59,796 61,123
------------- -------------
1,033,037 1,020,948
Less accumulated depreciation (264,336) (222,706)
------------- -------------
768,701 798,242
------------- -------------
OTHER ASSETS
Advance royalties 94,138 90,568
Deposits 7,620 5,868
------------- -------------
101,758 96,436
------------- -------------
$ 999,125 $ 960,339
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Loans from related parties $ 1,294,821 $ 1,258,688
Bank loan payable 1,000,000 1,000,000
Other notes payable 446,874 462,250
Accounts payable 318,457 384,751
Accrued compensation and taxes 1,289,575 1,243,738
Accrued interest payable 377,481 314,949
------------- -------------
Total current liabilities 4,727,208 4,664,376
------------- -------------
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 154,831,884 and 128,053,812
shares, respectively 15,482 12,803
Additional paid-in capital 10,043,912 9,244,577
Deficit accumulated during the development stage (13,787,477) (12,961,417)
------------- -------------
Total stockholders' (deficit) (3,728,083) (3,704,037)
------------- -------------
$ 999,125 $ 960,339
============= =============
F-1
See accompanying notes.
<PAGE> 10
<TABLE>
<CAPTION>
__________________________________________________________________________________________________________
Golden Eagle International, Inc.
(A Development Stage Company)
Consolidated Statement of Operations
(Unaudited)
__________________________________________________________________________________________________________
July 21, 1988
(Inception)
Three Months Ended Six Months Ended Through
June 30, June 30, June 30,
2000 1999 2000 1999 2000
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
REVENUES $ - $ 4,300 $ - $ 9,377 $ 160,201
COSTS AND OPERATING COSTS
General and administration 258,873 353,273 570,073 655,232 8,142,852
Exploration 28,998 46,260 64,321 76,011 1,110,724
Depreciation 22,874 19,178 41,631 40,279 264,882
------------- ------------- ------------- ------------- -------------
Total costs and operating expenses 310,745 418,711 676,025 771,522 9,518,458
------------- ------------- ------------- ------------- -------------
OPERATING (LOSS) (310,745) (414,411) (676,025) (762,145) (9,358,257)
------------- ------------- ------------- ------------- -------------
OTHER INCOME (EXPENSE)
Interest expense (73,475) (67,474) (152,423) (144,408) (1,123,983)
Interest income - (2,887) - 45 15,483
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)
Loss on sale of equipment - - - - (17,314)
Other income - 362 2,835 846 35,969
Other expenses 2,606 5,016 (447) - (23,657)
------------- ------------- ------------- ------------- -------------
Total other income (expense) (70,869) (64,983) (150,035) (143,517) (4,423,920)
------------- ------------- ------------- ------------- -------------
NET INCOME (LOSS) $ (381,614) $ (479,394) $ (826,060) $ (905,662) $(13,782,177)
============= ============= ============= ============= =============
BASIC EARNINGS (LOSS) PER SHARE $ (0.003) $ (0.004) $ (0.006) $ (0.008) $ (0.354)
============= ============= ============= ============= =============
WEIGHTED AVERAGE SHARES OUTSTANDING 152,231,905 112,374,053 146,990,833 111,198,801 38,887,720
============= ============= ============= ============= =============
See accompanying notes.
F-2
</TABLE>
<PAGE> 11
<TABLE>
<CAPTION>
______________________________________________________________________________________________________
Golden Eagle International, Inc.
(A Development Stage Company)
Consolidated Statement of Cash Flows
(Unaudited)
______________________________________________________________________________________________________
July 21, 1988
Six Months Ended (Inception)
June 30, To June 30,
2000 1999 2000
-------------- -------------- ---------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (826,060) $ (905,662) $ (13,782,177)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Stock issued for services 79,764 75,000 3,063,683
Depreciation expense 41,631 40,279 264,882
Stock issued for accrued interest 14,250 7,500 179,134
Stock issued for loan pledges and renewals - - 2,500,000
Write-down of mining prospect - - 873,462
Write off advances to Mineral Mountain Mining Co. - - 78,000
Fair value of officer salary expensed - - 20,000
Write off loan to investment advisor - - 15,000
Loss on retirement of vehicle, equipment and other - - 8,235
Loss (gain) from investments - - (114,670)
Changes in operating assets and liabilities:
Prepaid expense and other costs (43,194) (3,713) (107,365
Payables and accrued liabilities 42,075 (239,627) 1,985,513
-------------- -------------- ---------------
Net cash flows (used for) operating activities (691,534) (1,026,223) (5,016,303)
-------------- -------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in property and equipment (12,089) (7,377) (1,623,353)
Advance royalties (3,570) 5,770 (94,138)
Deposits (1,752) (3,407) (9,120)
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 (17,411) (5,014) (1,697,409)
-------------- -------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES
Loans from related parties 41,132 100,675 1,949,041
Repayments of loans from related parties (5,000) (57,364) (573,632)
Proceeds from other notes payable 39,624 25,000 673,922
Repayments of other notes payable - (38,617) (108,912)
Proceeds from bank loan - - 1,000,000
Proceeds from convertible debentures 360,000 - 773,500
Common stock issued 293,000 389,500 3,084,158
Stock issuance costs - - (63,064)
-------------- -------------- ---------------
Net cash flows from financing activities 728,756 419,194 6,735,013
-------------- -------------- ---------------
NET INCREASE (DECREASE) IN CASH 19,811 (612,043) 21,301
CASH - BEGINNING OF PERIOD 1,490 1,490 -
-------------- -------------- ---------------
CASH - END OF PERIOD $ 21,301 $ (610,553) $ 21,301
============== ============== ===============
F-3
</TABLE>
<PAGE> 12
<TABLE>
<CAPTION>
_________________________________________________________________________________________________________
Golden Eagle International, Inc.
(A Development Stage Company)
Consolidated Statement of Stockholders' Equity (Deficit)
_________________________________________________________________________________________________________
Additional
Common Stock Paid-in Accumulated
Shares Amount Capital Deficit Total
------------- --------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
Inception July 21, 1988 - $ - $ - $ - $ -
Issued in 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) 268,335 27 59,253 - 59,280
Acquisition of subsidiary, November 1, 1993 - - 2,600 (5,300) (2,700)
Fair value of officer salary, 1993 - - 20,000 - 20,000
Convert debt to equity ($.003 per
share), 1994 2,640,830 264 7,659 - 7,923
Issued in 1994 for note receivable
($.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 $.282)
less issuance costs 10,469,750 1,047 244,002 - 245,049
Issued for services in 1995 ($.07 per share) 2,337,333 234 171,749 - 171,983
Convert notes payable in 1995 ($.15625
per share) 800,000 80 124,920 - 125,000
Issued in 1996 for cash ($.05 to $.25
per share) 2,250,650 222 401,808 - 402,030
Issued in 1996 for services ($.07 to $.30
per share) 5,448,985 545 1,230,297 - 1,230,842
Issued in 1997 for cash ($.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
Issued in 1997 for conversion of debt ($.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 in 1998 for cash ($.10 per share) 1,200,000 120 119,880 - 120,000
Issued in 1998 for services ($.10 to $.16
per share) 3,704,172 370 462,630 - 463,000
Issued in 1998 for conversion of debt ($.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
Issued in 1999 for cash ($.02 to $.10
per share) 14,070,000 1,407 767,593 - 769,000
Issued in 1999 for services ($.04 to
$.10 per share) 4,385,927 438 298,562 - 299,000
Issued in 1999 for interest ($.03 to $.10
per share) 380,000 38 23,612 - 23,650
Other (70) - 2,625 - 2,625
Net loss for the periods - - - (12,956,117) (12,956,117)
------------- --------- ------------ ----------- ------------
Balance at December 31, 1999 128,053,812 12,803 9,244,577 (12,961,417) (3,704,037)
Issued for cash ($.03 per share) 9,810,927 981 292,019 - 293,000
Convert notes payable ($.03 per share) 13,833,333 1,384 413,616 - 415,000
Issued for services ($.03 per share) 2,658,812 266 79,498 - 79,764
Issued for interest ($.03 per share) 475,000 48 14,202 - 14,250
Net loss for the period - - - (826,060) (826,060)
------------- --------- ----------- ------------ ------------
Balance at June 30, 2000 154,831,884 $ 15,482 $10,043,912 (13,787,477) $(3,728,083)
============= ========= =========== ============ ============
F-4
See accompanying notes.
</TABLE>
<PAGE> 13
_____________________________________________________________________________
Golden Eagle International, Inc.
(A Development Stage Company)
Notes to 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, 1999.
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 six months ended June 30, 2000, are not
necessarily indicative of the results for the remainder of 2000.
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 - Conversions of Notes payable
On January 6, 2000, $390,000 of a note payable to a Bolivian consulting
engineering firm was converted to 13 million shares of common stock ($.03 per
share). On March 4, 2000, a $25,000 note payable to an individual on December
31, 1999 was converted to 933,333 shares of common stock ($.0268 per share).
<PAGE> 14
_____________________________________________________________________________
Golden Eagle International, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
(Unaudited)
_____________________________________________________________________________
Note D - Issuance of Convertible Debentures
On February 10, 2000, the Company entered into a Convertible Debenture
Agreement with an accredited investor and current shareholder in the amount of
$300,000. During the second quarter of 2000, an additional $60,000 was
received pursuant to the terms of the earlier agreement. The debenture is for
a one-year term, interest accrues at 10% per annum, and conversion of the loan
and any accrued interest, or any part of those sums, at the election of the
holder to shares of common stock at a rate of $.03 per share or one-half of
the average closing price during the last three days prior to conversion.
Note E - Short-term Loan
On January 14, 2000, the Company borrowed $25,000 from an individual pursuant
to a three-percent, 90-day promissory note that is secured by 500,000 shares
of unissued common stock. As additional compensation, the lender also
received 100,000 shares of common stock. At the Company's option, it extended
the due date of the loan from April 14, 2000 to April 2000 for additional
shares of common stock. The Company's president also personally guaranteed
the obligation.
Note F - Sale of Common Stock to Investors
From January through June 30, 2000, the Company issued 9,810,927 shares of
restricted common stock to accredited investors (non-affiliates) for cash
totaling $293,000 (.03 per share).
Note G - Issuance of Common Stock to for Services
From January 2000, through June 30, 2000, the Company agreed to issue a total
of 653,012 shares of common stock with an estimated value of $19,590 ($.03 per
share) to a financial advisor as compensation for identification of
prospective investors and financial public relations.
During 1999, the Company contracted the services of a consulting metallurgical
firm to carry out metallurgical and feasibility studies, as well as laboratory
and bench testing and analysis, on its Cangalli prospect for $60,174. On
March 16, 2000, the Company satisfied the debt in its entirety by issuing the
consulting firm 2,005,800 restricted shares of common stock ($.03).
Note H - Adoption of the 2000 Employee and Consultant Stock Compensation Plan
On June 1, 2000, Golden Eagle's board of directors adopted the 2000 Employee
and Consultant Stock. Compensation Plan which provides for compensation
payable to employees and consultants to Golden Eagle (not including officers,
directors or others deemed to be insiders) by issuing shares of its common
stock or options to purchase its common stock. The plan reserves the right to
issue up to 20 million shares in the discretion of the board of directors.
F-6
<PAGE> 15
