SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB(A-1)
(Mark One)
[ X ] Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 for quarter period ended
March 31, 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
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(State of incorporation) (IRS Employer Identification No.)
12401 South 450 East, Building D2, Suite A, Salt Lake City, UT 84020
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(Address of principal executive offices) (Zip Code)
Golden Eagle's telephone number, including area code: (801) 619-9320
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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 March 31, 2000, there were 150,181,280 shares of common stock outstanding.
Transitional Small Business Disclosure Format: [ ] Yes [ X ] No
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
--------------------
The unaudited Financial Statements for the Quarter Year ended March
31, 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 March 31, 2000, and subsequently, Golden Eagle has had significant
working capital shortages. In fact, since its inception through the first
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 March 31, 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 March 31, 2000 ($3,484,209) 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 first 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
2000 (through May 31, 2000), Golden Eagle has raised approximately $181,900
from the sale of 6,063,335 shares of its common stock and approximately
$300,000 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 calendar year 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.
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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). 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 the possibility of increasing its existing gold production from the
Cangalli project based on the mining and metallurgical study of the project by
one of its directors. 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.
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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, 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 first 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 is being rehabilitated from the impacts of the flooding. 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
three 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 three 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 management's analysis is very positive for
future relations, any potential investors or current shareholders
4
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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 first quarter of 2000 resulted in
significant continuing losses and negative cash flow. During the first quarter
of 2000, Golden Eagle's subsidiary 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 is being rehabilitated from the impacts
of the flooding. 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 three months of the first quarter of 2000
compared with the same period in 1999.
Golden Eagle incurred operating expenses totaling $365,280 in the
first quarter of 2000, as compared to $352,811 in the same period in 1999, an
increase of 3%. As a result of having limited revenues from operations,
Golden Eagle incurred operating losses of ($365,280) in the first quarter of
2000 and ($347,734) during the same period in 1999, an increase of 5%.
As of March 31, 2000, Golden Eagle had accrued cumulative unpaid
compensation and related payroll taxes of approximately $1,210,963,
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 first quarter of 2000 or subsequently.
The president's salary will continue to accrue in the second quarter of 2000,
and throughout the balance of the year, at the rate of $200,000 per year for
the Company's president. As set forth above, Golden Eagle has paid salaries
to its United States and Bolivian employees currently.
Golden Eagle's costs and operating expenses for first quarter of 2000
increased slightly as to general and administrative expenses, totaling
$311,200 to $301,959 during the same period in 1999, a 3% increase. First
quarter 2000 exploration expenses also increased slightly from $29,751 in 1999
to $35,323 in 2000 (See, following paragraph).
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As of March 31, 2000, property and equipment as assets included:
capitalized costs related to the Bolivian prospect. These capital costs
include principally $100,000 paid for prospect acquisition rights, $797,529
for mining equipment, $69,446 for office equipment and $59,796 for vehicles,
for a total of property and equipment of $1,029,271, less accumulated
depreciation of $(241,462), resulting in a net figure of $787,809. Total
assets, then, would include this property and equipment figure, plus advanced
royalties and deposits of $98,388, for a total of assets on the balance sheet
of $1,045,085. 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 an equal interest expense in the first quarter
of 2000 of $78,948, as compared to first quarter 1999 interest of $76,934.
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 first quarter of 2000 of
($444,446), or $(.003) per share, compared to its net loss during the same
period in 1999 of ($426,268), 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, 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 first 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.
Year 2000 Compliance
-------------------
The year 2000 ("Y2K"), in the estimation of Golden Eagle's
management, did not present the anticipated problems for computer programs, as
well as other embedded technologies which use date recognition methods or
time-sensitive logic based upon two digits. However, the Company continues to
be vigilant regarding unanticipated post-Y2K computer-related issues that may
arise.
To its knowledge, and its ability to verify, Golden Eagle concluded
that all banks, airlines, vendors, utilities, and other third parties with
which the Company had dealings, were Y2K compliant in all material respects.
The Company itself further made an effort to ensure that its internal
computing systems were compliant and experienced no Y2K-related problems, and
to the date of the filing of this report is unable to determine any material
effect on the Company's financial condition, results of operations or cash
flow.
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. However, of those disclosed legal proceedings, the
following had activity during the first quarter of 2000:
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SEC Investigation and Enforcement Action
----------------------------------------
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 the Company;
the Company's former president (who resigned in May of 1996); the Company's
former corporate secretary/treasurer (who resigned in October of 1999); the
Company's former public relations firm (which had not performed work for the
Company since before May 1996); and two individuals who were neither officers
nor directors of the Company, regarding acts which had occurred between 1994
and mid-1996. Among the allegations made in the SEC's Complaint were that the
Company and the individuals involved had issued press releases that were false
and misleading in an attempt to hype the value of Golden Eagle's stock.
On May 22, 1998, the Company issued a press release that discussed a
number of aspects, including the estimate of proven gold reserves, from a
report on the Cangalli properties prepared by an independent consulting
geophysicist and mining engineer, Mr. Guido Paravicini. The staff of the SEC
raised concerns regarding the accuracy of that report and interviewed both
Golden Eagle's President and Mr. Paravicini. As a result of subsequent
internal review of the Paravicini report, the Company's management concluded
that Mr. Paravicini's reserve estimate did not meet the definition of reserves
pursuant to Guide 7 of the SEC Regulations.
On November 14, 1998, the SEC filed an Amended Complaint in the
above-referenced action alleging that Golden Eagle and its President had an
inadequate basis for making a May 22, 1998, press release regarding the
Paravicini geological report regarding the Cangalli gold deposit.
In February 1999, Golden Eagle settled the above civil action on its
own behalf by entering into a consent agreement, neither admitting nor denying
any of the allegations in the SEC's action, but consenting to the issuance of
an injunction not to violate certain securities laws in the future. Pursuant
to that consent agreement, on March 4, 1999, the Federal District Court for
the District of Colorado entered an 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 was also advised that on June 30, 1999, its former
president, Ronald A. Knittle, who resigned in May 1996, and its former
corporate secretary, Mary A. Erickson, who resigned in October 1999, settled
all allegations against them in the above action by entering into a consent
agreement, neither admitting nor denying any of the allegations in the SEC's
action, but consenting to the issuance of an injunction against future
violations of certain securities laws and an order for disgorgement. Pursuant
to that consent agreement, on September 21, 1999, the Federal District Court
for the District of Colorado entered an injunction ordering the two former
officers not to violate certain securities laws in the future and disgorgement
was waived.
The Company's former public relations firm was dismissed from the
above action. The two additional individuals who had never been officers or
directors of Golden Eagle also settled with the SEC, one in 1998 and the other
in 1999, by similarly entering into consent agreements, without admitting or
denying any of the allegations against them, for the issuance of injunctions
against future violations of certain securities laws.
The only defendant remaining in the SEC's civil action at year-end
1999, was Golden Eagle's President, with the only issue remaining bearing on
the Company's May 22, 1998, press release regarding its receipt of a
geological report on its Cangalli gold deposit. That matter came to trial in
the Federal District Court of Denver, Colorado, on February 14, 2000. On
February 18, 2000, after four days of testimony before the Court from both
fact and expert witnesses, the Court ruled that the SEC had not proven that
Golden Eagle's President had committed any of the alleged securities
violations and entered judgment for the Company's President on all claims,
dismissing the SEC's complaint. The Court further found that Golden Eagle's
President acted reasonably in believing that the consulting firm's report
about the Cangalli gold deposit was accurate based on the due diligence
performed regarding the consultant, based on the highly reputed status of the
consultant, and based on the technical advice from Ronald L Atwood, Ph.D., a
member of the Company's Technical Advisory Board.
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Litigation/Potential Litigation With Former Employee/Officer
------------------------------------------------------------
On June 29, 1998, a former employee and officer of the Company filed
suit for enforcement of the terms of an employment contract (Paul Enright vs.
Golden Eagle International, Inc., 98-CV-5118, Div. 1, District Court, City and
County of Denver, State of Colorado). The Company believes, and asserted in
its Answer and Counterclaim, that the former employee/officer did not earn the
compensation sought, breached his employment agreement with the Company,
violated his fiduciary duty while acting as an officer for the Company,
violated his duties of good faith and loyalty to the Company, breached his
obligation to avoid self-dealing to the Company's detriment, disclosed
confidential information, failed to return the Company's property including
trade secrets, created a competing corporation contrary to the non-compete
provision of his employment agreement, interfered with the Company's
prospective business advantages, took actions to defame or disparage the
Company's business, engaged in unfair competition with the Company, and
tortiously interfered with the Company's business relations.
In March 2000, Golden Eagle was informed by the District Court for
the City and County of Denver that the above-referenced action had been
dismissed by the Court due to the former employee's failure to prosecute the
case diligently. However, at the date of the filing of this report, the
former employee's new counsel has contacted the Company to indicate that the
action may be re-filed.
Golden Eagle is committed to vigorously pursue its defense against
this employee/officer, as well as prosecute its claims against him.
Civil Action Against the Company
--------------------------------
On February 3, 2000, two individuals filed a lawsuit in the District
Court for Denver City and County, Colorado (Pappas v. Golden Eagle
International, Inc., et al., Civil No. 00CV0518) naming the Company as a
party, and two individuals, alleging that plaintiffs had not received 80,000
shares of free-trading common stock of the Company sold to them by the two
third party individuals. The plaintiffs further allege that the Company was
responsible because the two third parties were its agents. Plaintiffs allege
that they paid $8,000 in the purported transaction, but are seeking $190,000
in damages. The Company has denied in its Answer any involvement in the
transaction, and has denied that the two third parties were its agents for any
purpose. The Company will continue to vigorously defend itself in this
litigation and expects to prevail. However, litigation is subject to many
uncertainties and the Company is unable to predict the outcome of this matter.
Item 2. Changes in Securities
---------------------
During the quarter ending March 31, 2000, Golden Eagle used its
common stock directly to raise capital and to satisfy some of its obligations.
The Company issued a total of 6,063,335 restricted common shares for cash to
eight unaffiliated, accredited investors at $.03 per share. The Company also
reduced its current liabilities by issuing a total of 14,000,000 restricted
common shares to one unaffiliated, accredited investor company ($390,000) as
partial payment of a note, and partial accumulated interest, at $.03 per
share. In addition, the Company paid for metallurgical services that had been
provided to it during 1999 ($60,174) by issuing 2,005,800 shares of restricted
common stock at $0.03 per share. An additional 58,333 shares of restricted
common stock were used to pay accumulated interest at $0.03. 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.
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. 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
per share or one-half of the average closing price during the last three days
prior to conversion, whichever is less.
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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 March 31, 2000, and subsequently, and are incorporated by reference
herein:
January 3, 2000 reporting an event under Item 5 of Form 8-K.
March 20, 2000 reporting an event under Item 5 of Form 8-K.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, Golden Eagle has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
GOLDEN EAGLE INTERNATIONAL, INC.
-------------------------------
(Golden Eagle)
July 10, 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.
GOLDEN EAGLE INTERNATIONAL, INC.
--------------------------------
(Golden Eagle)
July 10, 2000 by: /s/ Terry C. Turner
-----------------------------
Terry C. Turner,
Director and Principal Executive
Officer
July 10, 2000 by: /s/ Jennifer T. Evans
------------------------------
Jennifer T. Evans
Corporate Secretary/Treasurer
and Principal Financial Officer
9
<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
Notes to Consolidated Financial Statements F-5
<PAGE>
____________________________________________________________________________
Golden Eagle International, Inc.
(A Development Stage Company)
Consolidated Balance Sheet
____________________________________________________________________________
March 31, December 31,
2000 1999
------------- -------------
(Unaudited)
ASSETS
CURRENT ASSETS
Cash $ 65,179 $ 1,490
Prepaid expense and other costs 93,709 64,171
------------- -------------
Total current assets 158,888 65,661
------------- -------------
PROPERTY AND EQUIPMENT
Mining equipment 800,029 800,029
Acquisition cost of mining prospect 100,000 100,000
Office equipment 69,446 61,123
Vehicles 59,796 59,796
------------- -------------
1,029,271 1,020,948
Less accumulated depreciation (241,462) (222,706)
------------- -------------
787,809 798,242
------------- -------------
OTHER ASSETS
Advance royalties 90,568 90,568
Deposits 7,820 5,868
------------- -------------
98,388 96,436
------------- -------------
$ 1,045,085 $ 960,339
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Loans from related parties $ 1,289,774 $ 1,258,688
Bank loan payable 1,000,000 1,000,000
Other notes payable 387,037 462,250
Accounts payable 320,378 384,751
Accrued compensation and taxes 1,210,963 1,243,738
Accrued interest payable 321,142 314,949
------------- -------------
Total current liabilities 4,529,294 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 150,181,280 and 128,053,812 shares 15,018 12,803
Additional paid-in capital 9,906,636 9,244,577
Deficit accumulated during the development stage (13,405,863) (12,961,417)
------------- -------------
Total stockholders' (deficit) (3,484,209) (3,704,037)
------------- -------------
$ 1,045,085 $ 960,339
============= =============
See accompanying notes
F-1
<PAGE>
____________________________________________________________________________
Golden Eagle International, Inc.
(A Development Stage Company)
Consolidated Statement of Operations
(Unaudited)
____________________________________________________________________________
July 21, 1988
Three Months Ended (Inception)
March 31, To March 31,
2000 1999 2000
------------- ------------ -------------
REVENUES $ - $ 5,077 $ 160,201
COSTS AND OPERATING EXPENSES
General and administration 311,200 301,959 7,883,979
Exploration 35,323 29,751 1,081,726
Depreciation 18,757 21,101 242,008
------------- ------------ -------------
Total costs and operating expenses 365,280 352,811 9,207,713
------------- ------------ -------------
OPERATING (LOSS) (365,280) (347,734) (9,047,512)
------------- ------------ -------------
OTHER INCOME (EXPENSE)
Interest expense (78,948) (76,934) (1,050,508)
Interest income - 2,932 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 2,835 484 35,969
Other expenses (3,053) (5,016) (26,263)
------------- ------------ -------------
Total other income (expense) (79,166) (78,534) (4,353,051)
------------- ------------ -------------
NET INCOME (LOSS) $ (444,446) $ (426,268) $(13,400,563)
============= ============ =============
BASIC EARNINGS (LOSS) PER SHARE $ (0.00) $ (0.00) $ (0.37)
============= ============ =============
WEIGHTED AVERAGE SHARES OUTSTANDING 143,031,508 109,682,385 36,446,650
============= ============ =============
See accompanying notes.
F-2
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____________________________________________________________________________
Golden Eagle International, Inc.
(A Development Stage Company)
Consolidated Statement of Cash Flows
(Unaudited)
____________________________________________________________________________
<TABLE>
<CAPTION>
July 21, 1988
Three Months Ended (Inception)
March 31, To March 31,
2000 1999 2000
------------- ------------ -------------
<S> <S> <S> <S>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (444,446) $ (426,268)$ (13,400,563)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Stock issued for services 60,174 37,500 3,044,093
Depreciation expense 18,757 21,101 242,008
Stock issued for accrued interest 6,750 7,500 171,634
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 (29,538) (1,943) (93,709)
Payables and accrued liabilities (90,955) 171,134 1,852,483
------------- ------------ -------------
Net cash flows (used for) operating activities (479,258) (190,976) (4,804,027)
------------- ------------ -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in property and equipment (8,323) (7,377) (1,619,587)
Deposits (1,952) 3,000 (9,320)
Advance royalties - (38,489) (90,568)
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 (10,275) (42,866) (1,690,273)
------------- ------------ -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Loans from related parties 36,085 98,862 1,943,994
Repayments of loans from related parties (5,000) (12,580) (573,632)
Proceeds from other notes payable 39,787 25,000 674,085
Repayments of other notes payable - (1,637) (108,912)
Proceeds from bank loan - - 1,000,000
Proceeds from convertible debentures 300,000 - 713,500
Common stock issued 182,350 128,500 2,973,508
Stock issuance costs - - (63,064)
------------- ------------ -------------
Net cash flows from financing activities 553,222 238,145 6,559,479
------------- ------------ -------------
NET INCREASE (DECREASE) IN CASH 63,689 4,303 65,179
CASH - BEGINNING OF PERIOD 1,490 1,305 -
------------- ------------ -------------
CASH - END OF PERIOD $ 65,179 $ 5,608 $ 65,179
============= ============ =============
See accompanying notes.
F-3
<PAGE>
____________________________________________________________________________
Golden Eagle International, Inc.
(A Development Stage Company)
Consolidated Statement of Stockholders' Equity (Deficit)
____________________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
Additional
Common Stock Paid-in Accumulated
Shares Amount Capital Deficit Total
------------- --------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
Inception July 21, 1988 - $ - $ - $ - $ -
Issued 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) 6,063,335 607 181,743 - 182,350
Convert notes payable ($.03 per share) 13,833,333 1,384 413,616 - 415,000
Issued for services ($.03 per share) 2,005,800 201 59,973 - 60,174
Issued for interest ($.03 per share) 225,000 23 6,727 - 6,750
Net loss for the period - - - (444,446) (444,446)
------------- --------- ------------ ----------- ------------
Balance at March 31, 2000 150,181,280 $ 15,018 $9,906,636$(13,405,863) $(3,484,209)
============= ========= =========== ============ ============
See accompanying notes.
F-4
</TABLE>
<PAGE>
_____________________________________________________________________________
Golden Eagle International, Inc.
(A Development Stage Company)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
_____________________________________________________________________________
Note A - General
Golden Eagle International, Inc. (a development stage company, the "Company,")
was incorporated in Colorado on July 21, 1988. The Company is to engage in
the business of acquiring, developing, and operating gold, silver and other
precious mineral properties. Activities of the Company since November 1994
have been primarily devoted to organizational matters and identification of
precious mineral properties considered for acquisition. Presently,
substantially all of the Company's operations and business interests are
focused on a prospect in the Tipuani River area of the Republic of Bolivia.
The accompanying unaudited condensed financial statements have been prepared
in accordance with the instructions to Form 10-QSB and do not include all of
the information and notes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all material
adjustments, consisting of only normal recurring adjustments considered
necessary for a fair presentation, have been included. These statements
should be read in conjunction with the financial statements and notes thereto
included in the Company's Form 10-KSB for the year ended December 31, 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 three months ended March 31, 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).
Note D - Issuance of Convertible Debenture
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. 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
F-5
<PAGE>
_____________________________________________________________________________
Golden Eagle International, Inc.
(A Development Stage Company)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
_____________________________________________________________________________
part of those sums, at the election of the holder, to shares of common stock
of the Company; a conversion 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 28, 2000 for 100,000
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 March 31, 2000, the Company issued 6,063,335 shares of
restricted common stock to eight accredited investors (non-affiliates) for
cash totaling $181,743 ($.03 per share).
Note G - Issuances of Common Stock to Advisors
Through March 31, 2000, the Company agreed to issue a total of 168,674 shares
of common stock to a financial advisor as compensation for identification of
prospective investors and financial public relations.
During 1999, the Company had contracted the services of a consulting
metallurgical firm to carry out metallurgical and feasibility studies, as well
as perform laboratory and bench testing and analysis, on its Cangalli
prospect. As of March 2000, the Company owed this consulting firm $60,174 for
services and expenses. On March 16, 2000, the Company satisfied this
indebtedness in its entirety by issuing 2,005,800 restricted shares of common
stock ($.03) to the consulting firm.
F-6
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