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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-QSB
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________________________ to _____________________
Commission File Number 0-25786
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NAPTAU GOLD CORPORATION
(Exact name of small business issuer as specified in its charter)
Delaware 22-3386947
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
9551 Bridgeport Road
Richmond BC
Canada V6X 1S3
(address of principal executive offices)
(604) 273-9992
(Issuer's telephone number)
------------------------------------
-----------------------------
(Former name, former address and former fiscal year
if changed since last report)
Check whether the issuer (1) 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 registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days.
Yes | | No |X|
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 6,700,000 shares of Common
Stock, $.001 par value, were outstanding, as of March 31, 1996.
Transitional Small Business Disclosure Format (check one):
Yes | | No |X|
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<PAGE>
Form 10-QSB
INDEX
Page
Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets 3
Statements of Operations and Deficit 4
Statements of Cash Flows 5
Notes to Financial Statements 6-11
Item 2. Plan of Operation 12
PART II. OTHER INFORMATION 12
SIGNATURES 13
<PAGE>
NAPTAU GOLD CORPORATION
(formerly West Africa - American Lines, Inc.)
Balance Sheets
(expressed in United States dollars)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31,
March 31, --------------------------
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Assets
Current asset:
Cash $ 1,000 $ 1,000 $ --
Mineral properties (note 3) 2,443,110 2,374,726 --
Deferred financing costs 45,000 40,000 --
----------- ----------- -----------
$ 2,489,110 $ 2,415,726 $ --
=========== =========== ===========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities (note 4) $ 67,500 $ 45,000 $ --
Contracts payable (note 3) 2,222,884 2,154,500 --
Loans payable to related parties (note 4) 107,757 101,697 --
----------- ----------- -----------
2,398,141 2,301,197 --
Shareholders' equity:
Capital stock (note 5):
Authorized:
5,000,000 preferred shares with a par value of
$0.001 per share
20,000,000 common shares with a par value of
$0.001 per share
Issued and outstanding:
6,700,000 common shares 6,700 6,700 1,900
Additional paid-in capital (note 5) 168,339 168,339 --
Shares alloted but unissued (note 5(c)(ii)) 100 100 --
Deficit (84,170) (60,610) (1,900)
----------- ----------- -----------
90,969 114,529 --
Continuing operations (note 1)
Commitments (notes 3 and 6)
Subsequent events (notes 3, 4 and 5(c))
----------- ----------- -----------
$ 2,489,110 $ 2,415,726 $ --
=========== =========== ===========
</TABLE>
<PAGE>
NAPTAU GOLD CORPORATION
(formerly West Africa - American Lines, Inc.)
Statements of Operations and Deficit
(expressed in United States dollars)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three months
Inception to ended Years ended December 31,
March 31, March 31, -----------------------------------
1996 1996 1995 1994 1993
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Expenses:
Management salary (note 6) $ 67,500 $ 22,500 $ 45,000 $ -- $ --
Professional fees 13,253 400 12,853 -- --
Office and administrative 1,417 660 757 -- --
Stock grant program expense (note 5(c)(ii)) 100 -- 100 -- --
--------- --------- --------- --------- ---------
Loss for the period 82,270 23,560 58,710 -- --
Deficit, beginning of period (62,510) (60,610) (1,900) (1,900) (1,900)
--------- --------- --------- --------- ---------
Deficit, end of period $ 144,780 $ 84,170 $ 60,610 $ 1,900 $ 1,900
========= ========= ========= ========= =========
Loss per share $ (0.01) $ (0.01) $ (0.01) $ $
========= ========= ========= ========= =========
</TABLE>
See accompanying notes to financial statements
<PAGE>
NAPTAU GOLD CORPORATION
(formerly West Africa - American Lines, Inc.)
Statements of Cash Flows (note 8)
(expressed in United States dollars)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three months
Inception to ended Years ended December 31,
March 31, March 31, ----------------------------------
1996 1996 1995 1994 1993
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Cash generated from (used in):
Operations:
Loss for the period $ (82,270) $ (23,560) $ (58,710) $ -- $ --
Stock grant program expense,
an item not involving cash 100 100 -- --
Changes in non-cash operating working capital:
Accounts payable and accrued liabilities 67,500 22,500 45,000 -- --
--------- --------- --------- --------- ---------
(14,670) (1,060) (13,610) -- --
Financing:
Deferred financing costs (45,000) (5,000) (40,000) -- --
Payment of contracts payable 22,884 68,384 (45,500)
Loans payable to related parties 107,757 6,060 101,697
--------- --------- --------- --------- ---------
85,641 69,444 16,197 -- --
Investing activities:
Mineral properties (69,971) (68,384) (1,587) -- --
--------- --------- --------- --------- ---------
Increase in cash $ 1,000 $ -- $ 1,000 $ -- $ --
Cash, beginning of period -- 1,000 -- -- --
--------- --------- --------- --------- ---------
Cash, end of period $ 1,000 $ 1,000 $ 1,000 $ -- $ --
========= ========= ========= ========= =========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
NAPTAU GOLD CORPORATION
(formerly West Africa - American Lines, Inc.)
Notes to Financial Statements
(expressed in United States dollars)
March 31, 1996
================================================================================
1. Continuing operations:
Naptau Gold Corporation (the "Company") (formerly West Africa - American
Lines, Inc. until June 1, 1995) was formed under the laws of the State of
Delaware on January 18, 1988 and was inactive until 1995 when it entered
into an agreement to acquire certain mineral properties (note 3). The
Company's principal business activity is the exploration and development
of mineral properties, with its principal mineral properties comprising of
various placer leases in the Cariboo Mining Division of British Columbia,
Canada (the "Placer Leases").
These financial statements have been prepared on the basis of accounting
principles applicable to a going concern. At March 31, 1996, the Company
had a working capital deficiency of approximately $2,300,000. The
Company's continuing operations and the ability of the Company to
discharge its liabilities are dependent upon the ability of the Company to
obtain the necessary financing to meet its liabilities as they come due.
The recoverability of the amounts shown as mineral properties is dependent
upon economically recoverable mineral reserves, the ability of the Company
to obtain the necessary financing to complete the development of its
mineral properties and upon future profitable production or proceeds from
the disposition thereof.
2. Significant accounting policies:
The financial statements have been prepared in accordance with generally
accepted accounting principles in the United States.
(a) Mineral property interests:
Mineral property acquisition costs and related exploration and
development expenditures are deferred until the property is placed
into production, sold or abandoned. These costs will be amortized on
a unit-of-production basis over the estimated life of the property
following commencement of commercial production or written off if
the property is sold, allowed to lapse or abandoned.
Mineral property acquisition costs include cash consideration and
the fair value of common shares issued for mineral properties.
Administrative expenditures are expensed in the period incurred.
The amounts shown for mineral properties represent costs or deemed
costs incurred to date and is not intended to reflect present or
future values.
(b) Deferred financing costs:
The Company defers costs associated with specific financing
activities and charges those costs against the related share capital
or to operations if the financing activity is unsuccessful.
<PAGE>
NAPTAU GOLD CORPORATION
(formerly West Africa - American Lines, Inc.)
Notes to Financial Statements, page 2
(expressed in United States dollars)
March 31, 1996
================================================================================
2. Significant accounting policies (continued):
(c) Loss per share:
Loss per share has been calculated using the weighted average number
of common shares outstanding during the year. Fully diluted loss per
share has not been presented as the effect would be anti-dilutive.
3. Mineral properties:
<TABLE>
<CAPTION>
===================================================================================
Placer Leases, Cariboo Mining Division, British Columbia: 1996 1995
<S> <C> <C>
Acquisition costs:
Placer Leases acquired from Noble $1,775,000 1,775,000
Placer Leases acquired from a director of Noble 200,800 200,800
- -----------------------------------------------------------------------------------
1,975,800 1,975,800
Exploration and development expenditures:
Incurred by Noble 465,723 397,339
Incurred by the Company 1,587 1,587
- -----------------------------------------------------------------------------------
467,310 398,926
- -----------------------------------------------------------------------------------
$2,443,110 2,374,726
===================================================================================
</TABLE>
During 1995, the Company entered into an agreement to acquire certain
Placer Leases owned by Noble Metal Group Incorporated (a British Columbia
company) ("Noble") in exchange for 4 million common shares of the Company,
representing an initial 59.7% interest in the Company. As Noble acquired
control of the Company by this exchange, it is considered a common control
transaction and, accordingly, the common shares have been accounted for at
the carrying value of the Placer Leases in the accounts of Noble at
December 31,1994 of $1,775,000 (Noble, in association with limited
partnerships, had also expended an additional $550,000 on exploration of
the Placer Leases which was recovered from these limited partnerships and
accordingly, is not reflected in the aforementioned carrying value). A
British Columbia Mineral Tenure Act Bill of Sale Absolute held by the
Company relating to the Placer Leases has not yet been registered with the
appropriate authorities and as a result, registration of the Placer Leases
remains in the name of the operator, Noble. The Company can, at any time
and without any restriction, apply to conclude registration in its name.
<PAGE>
NAPTAU GOLD CORPORATION
(formerly West Africa - American Lines, Inc.)
Notes to Financial Statements, page 3
(expressed in United States dollars)
March 31, 1996
================================================================================
3. Mineral properties (continued):
The Company and Noble also entered into an operating agreement whereby
Noble will remain the operator for the mining activities on the Placer
Leases for a term of ten years, with Noble having the option of renewing
the agreement for a further ten year term. The Company agreed to pay Noble
$1,000,000 in consideration for entering into this operating agreement. In
addition, the Company is obligated to pay $1,000,000 in respect of 1995
exploration and development expenditures and agreed to fund future annual
operating expenditures on the Placer Leases. These required payments have
been accrued in contracts payable. However, as this is a common control
transaction, the amount of $1,602,661, being the excess of these amounts
over the book value of the related assets in the accounts of Noble, has
been charged against additional paid-in capital (note 5). To March 31,
1996, the Company had advanced $45,500 to Noble with respect to
exploration and development expenditures on the Placer Leases which has
been recorded as a reduction in the Company's contracts payable.
In addition to funding future annual operating expenditures on the Placer
Leases, the Company agreed that the "proceeds" (sales of minerals
recovered or the value of unrefined minerals converted to a monetary value
equal to 85% of the refined price) from the mining operation on the leases
will be divided between Naptau and Noble with Noble receiving the
following:
o for the first $1,000,000 of proceeds or 2,500 ounces of raw gold,
whichever is lesser, 10% of such proceeds;
o for the next $1,000,000 of proceeds or 2,500 ounces of raw gold,
whichever is lesser, 17.5% of such proceeds; and
o for cumulative operating revenues in excess of $2,000,000 or 5,000
ounces of raw gold, whichever is lesser, 25% of such proceeds.
The Company also acquired a Placer Lease owned by a director of Noble (the
"Director") for $200,000 (accrued but not yet paid) and 800,000 common
shares of the Company that have been assigned their par value of $0.001
per share.
In addition, during 1996 the Company entered into extension agreements
with each of Noble and the Director with respect to the contracts payable,
whereby the Company would issue 85,000 common shares to Noble and 8,500
common shares to the Director at an agreed price of $2.40 per share to
extend the due dates to June 30, 1996 and October 12, 1996 respectively
for the initial amounts outstanding under the contracts payable. The
Company issued the common shares subsequent to year-end.
<PAGE>
NAPTAU GOLD CORPORATION
(formerly West Africa - American Lines, Inc.)
Notes to Financial Statements, page 4
(expressed in United States dollars)
March 31, 1996
================================================================================
4. Amounts payable to related parties:
Loans payable to related parties consist of amounts received from
directors and officers which are non-interest bearing and due on demand.
During 1996, the directors and officers converted $96,000 of these loans
into 40,000 shares at a price of $2.40 per share.
At December 31,1995, accounts payable and accrued liabilities consist of
accruals for salaries to a director and officer pursuant to an employment
agreement (note 6), which are included in management salary expense for
the period.
5. Capital stock:
(a) Authorized:
During 1995, the Company increased the authorized capital stock from
200 common shares with a par value of $0.001 per share to 25,000,000
shares consisting of 5,000,000 preferred shares and 20,000,000
common shares, each with a par value of $0.001 per share, of which
1,900 common shares were outstanding. The Company subsequently split
the 1,900 common shares outstanding on a 10,000 new for 1 old basis.
(b) Issued:
A continuity of the Company's issued and outstanding capital stock
from incorporation on January 18,1988 is as follows:
<TABLE>
<CAPTION>
==============================================================================================
Common shares
------------------------- Additional
Year Consideration Number Amount Paid-in capital Total
==============================================================================================
<S> <C> <C> <C> <C> <C>
1988 Cash and contribution of
organization costs of $500 190 $ 1,900 $ -- $ 1,900
==============================================================================================
Balance December 31, 1994 190 1,900 -- 1,900
1995 Share split on a 10,000
new for 1 old basis 1,899,810
==============================================================================================
1,900,000 1,900 -- 1,900
1995 Mineral properties (note 3) 4,000,000 4,000 1,771,000 1,775,000
1995 Reduction in additional
paid-in capital relating to
operating agreements with
Noble (note 3) -- -- (1,602,661) (1,602,661)
1995 Mineral properties (note 3) 800,000 800 800
==============================================================================================
Balance, December 31, 1995 6,700,000 $ 6,700 $ 168,339 $ 175,039
==============================================================================================
</TABLE>
<PAGE>
NAPTAU GOLD CORPORATION
(formerly West Africa - American Lines, Inc.)
Notes to Financial Statements, page 5
(expressed in United States dollars)
March 31, 1996
================================================================================
5. Capital stock (continued):
(c) Stock option plan and stock grant program:
In June, 1995 the Company adopted a non-qualified stock option plan
and a stock grant program with the following provisions:
(i) Stock option plan:
The Company has reserved 300,000 shares of its authorized
common stock for issuance to key employees or consultants of
the Company and affiliates. Under this plan, no employee may
receive more than 100,000 stock options. Options are
non-transferable and expire if not exercised within two years.
The options may not be exercised by the employee until after
the completion of two years of employment with the Company.
The options are issuable to officers, key employees and
consultants in such amounts and prices as determined by the
Board of Directors. As of March 31, 1996, no options were
granted pursuant to this plan.
(ii) Stock grant program:
The Company has reserved 300,000 shares of its authorized
common stock for issuance to key employees and directors.
Under this plan, no employee may receive more than 100,000
shares. The program requires the employee to remain in the
employ of the Company for at least one year following the
grant and to agree not to engage in any activity which would
be considered in competition with the Company's business. If
the employee violates any one of these conditions the
ownership of the shares issued under the program shall revert
back to the Company. The shares issued under the program are
non-transferable for two years. As of December 31,1995, a
total of 100,000 shares had been granted to five directors
pursuant to this plan, however the shares were not issued
until subsequent to year-end. These shares were recorded
during the period granted at their par value of $0.001 per
share and have been presented as shares allotted but unissued.
6. Commitments:
On June 30, 1995, the Company entered into a five year employment
agreement with the President of the Company that provides for a salary of
$7,500 per month beginning July 1,1995 (plus a cost of living adjustment
to be made on the first day of each calendar year.) The agreement also
provides for additional incentive compensation equal to 1/2 of 1% Of net
sales up to $5,000,000, 3/4 of 1% on the next $20,000,000 in net sales and
1 percent of net sales above $25,000,000.
<PAGE>
NAPTAU GOLD CORPORATION
(formerly West Africa - American Lines, Inc.)
Notes to Financial Statements, page 6
(expressed in United States dollars)
March 31, 1996
================================================================================
7. Income taxes:
Under the asset and liability method of Statement of Financial Accounting
Standards No. 109 ("SFAS 109"), deferred income tax assets and liabilities
are measured using enacted tax rates for the future income tax
consequences attributable to differences between the financial statement
carrying amount of existing assets and liabilities and their respective
tax bases. The Company adopted the provisions of SFAS 109 effective
January 1,1995, however, there were no material deferred income tax assets
or liabilities at that time.
At December 31,1995, the Company has not recognized any deferred tax
assets or liabilities as the available benefits, primarily loss carry
forwards of approximately $110,000 arising in l995, are fully offset by a
valuation allowance of the same amount.
The Company did not pay any interest or income taxes during the years
ended December 31, 1995, 1994 or 1993.
8. Supplementary cash flow information:
The following non-cash financing and investing activities occurred during
the period:
<TABLE>
<CAPTION>
==================================================================================
Year end December 31,
------------------------------
1995 1994 1993
==================================================================================
<S> <C> <C> <C>
Issue of common shares for mineral properties,
net of reduction in additional paid-in capital
relating to operating agreements with Noble $ 173,139 $ -- $ --
Contracts payable for mineral properties 2,200,000 -- --
==================================================================================
</TABLE>
<PAGE>
Item 2. Plan of Operation
During 1995 the Company entered into an agreement to acquire certain
placer leases from Noble Metal Group Incorporated (a British Columbia Company)
for shares representing approximately 60% of the outstanding Common Stock of the
Company. The Company and Noble also entered into an Operating Agreement whereby
Noble agreed to conduct necessary mining activities on the properties for a term
of ten years and, at Noble's option, an additional ten years. The Company agreed
to pay Noble $1,000,000 for entering into the Operating Agreement. In addition,
the Company is obligated to pay Noble $1,000,000 in respect of 1995 exploration
and development activities. Further, the Company and Noble agreed that the
following proceeds from mining activities would be paid to Noble.
- 10% of the first $1,000,000 of proceeds or 2,500 ounces of new gold,
whichever is less;
- 17.5% of the next $1,000,000 of proceeds or 2,500 ounces of new
gold, whichever is less; and
- 25% of the cumulative operating revenues in excess of $2,000,000 or
5,000 ounces of raw gold, whichever is less.
In 1995 the Company also acquired a placer lease from a director of Noble
for $200,000 (accrued but not yet paid) and 800,000 common shares of the
Company.
During the first quarter of 1996 the Company entered into agreements with
Noble and the director of Noble extending the due dates of the amounts payable
by the Company. In consideration of such extensions the Company issued 85,000
shares of common stock to Noble and 8,500 shares of common stock to the director
of Noble.
At March 31, 1996, the Company had a working capital deficit of
approximately $2,300,000. The Company's continuing operations and its ability to
realize the amounts shown as mineral properties on its Balance Sheet are
dependent upon the Company's ability to obtain the financing necessary to meet
its obligations and undertake mining activities. To date, substantially all of
the Company's financing for its mining activities has been provided by Noble.
There is no assurance that Noble will continue to fund the Company or that
necessary financing will be made available by third parties, or if made
available, be on terms acceptable to the Company.
PART II. OTHER INFORMATION
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NAPTAU GOLD CORPORATION
/s/ Edward D. Renyk
-----------------------------------
Dated: April 23, 1998 By: Edward D. Renyk
President and
Principal Accounting Officer
