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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-QSB
(Mark One)
|X| QUARTERLY REPORT (AMENDED) PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
|_| 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 0-26600
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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.)
5391 Blundell Road
Richmond BC
Canada V7C 1H3
(address of principal executive offices)
(604) 277-5252
(Issuer's telephone number)
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(former address)
9551 Bridgeport Road
Richmond BC
Canada V6X 1S3
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(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: 6,933,500 shares of Common
Stock, $.001 par value, were outstanding, as of March 31, 1998.
Transitional Small Business Disclosure Format (check one):
Yes |_| No |X|
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<PAGE>
Form 10-QSB
INDEX
Page
Number
"Safe Harbor" Statement.................................................... 1
Part 1. Financial Information.............................................. 2
Balance Sheets...................................................... 2
Statements of Operations and Deficit................................ 3
Statements of Cash Flows............................................ 4
NOTES TO FINANCIAL STATEMENTS....................................... 5
Item 2. Plan of Operation.................................................. 6
Part II.................................................................... 6
Item 6. Exhibits and Reports on Form 8-K................................... 6
SIGNATURES.......................................................... 7
<PAGE>
"Safe Harbor" Statement
Cautionary Statement for purposes of the "Safe Harbor" Provisions of the
Private Securities Litigation Reform Act of 1995. With the exception of
historical matters, the matters discussed in this report are forward-looking
statements that involve risks and uncertainties that could cause actual results
to differ materially from projections or estimates contained herein. Such
forward-looking statements include statements regarding planned levels of
development, exploration and other expenditures, anticipated production and
schedules for development. Factors that could cause actual results to differ
materially include, among others, decisions and activities related to the mining
properties, unanticipated grade, geological, metallurgical, processing or other
problems, conclusion of feasibility studies, changes in project parameters or
plans, the timing and receipt of governmental permits, the failure of plant,
equipment or processors to operate in accordance with specifications or
expectations, results of current exploration activities, accidents, delays in
start-up dates, environmental costs and risks, changes in gold prices, as well
as other factors described elsewhere in this Form 10-QSB. Most of these factors
are beyond the Registrant's ability to predict or control. The Registrant
disclaims any obligation to update any forward-looking statement made herein.
<PAGE>
Part 1. Financial Information
Balance Sheets
(expressed in United States dollars)
March 31, 1998 December 31, 1997
(Restated)
-------------- -----------------
Assets
Current assets
Cash $ 496 $ --
Equipment 71,582 71,582
Mineral properties 2,388,237 2,358,170
Deferred financing costs -- --
----------- -----------
$ 2,460,315 $ 2,429,752
=========== ===========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 299,821 $ 277,251
Contracts payable to related parties 1,962,134 1,908,893
Loans payable to related parties 23,137 27,680
----------- -----------
$ 2,285,092 $ 2,213,824
Shareholders' equity
Capital stock
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:
6,933,500 common shares 6,934 6,934
Additional paid-in capital 1,534,105 1,534,105
Deficit (1,365,817) (1,325,111)
----------- -----------
$ 175,222 $ 215,928
$ 2,460,315 $ 2,429,752
=========== ===========
See accompanying notes to financial statements.
2
<PAGE>
Statements of Operations and Deficit
(expressed in United States dollars)
Three months Ended March 31,
1998 1997
(Restated)
--------------- ---------------
Expenses:
Exploration expenditures $ 10,672 $ --
Interest Expense $ 830 $ --
Management salary 22,500 22,500
Professional fees 6,668 4,096
Office and administrative 35 --
----------- -----------
Loss for the period 30,033 (26,595)
Deficit, beginning of period (1,325,111) (948,807)
----------- -----------
Deficit, end of period $(1,365,817) $ (975,403)
----------- -----------
Loss per share $ -- $ --
----------- -----------
See accompanying notes to financial statements.
3
<PAGE>
Statements of Cash Flows
(expressed in United States dollars)
Three months March 31, ended
1998 1997
(Restated)
--------------- ---------------
Cash generated from (used in):
Operations:
Loss for the period $ (40,705) $ (26,596)
Changes in non-cash operating working capital:
Accounts payable and accrued liabilities 22,570 26,097
--------- ---------
(7,463) (499)
Financing:
Deferred financing costs -- (101)
Payment of contracts payable 53,241 --
Loans payable to related parties (4,543) 600
--------- ---------
48,698 (499)
Investing activities:
Mineral properties (30,067) --
--------- ---------
Increase in cash $ 496 $ 0
Cash, beginning of period 0 0
--------- ---------
Cash, end of period $ 496 $ 0
========= =========
See accompanying notes to financial statements.
4
<PAGE>
NAPTAU GOLD CORPORATION
NOTES TO FINANCIAL STATEMENTS
1. The Company and basis of presentation:
Naptau Gold Corporation (the "Company") was formed under the laws of the
State of Delaware on January 8, 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").
The financial statements presented herein as of March 31, 1998 and for the
three month periods ending March 31, 1998 and 1997 are unaudited and, in
the opinion of management, include all adjustments (consisting only of
normal and recurring adjustments) necessary for a fair presentation of
financial position and results of operations. Such financial statements do
not include all of the information and footnote disclosures normally
included in audited financial statements prepared in accordance with
generally accepted accounting principles.
Change in accounting policy:
Prior to 1998, the Company's policy was to capitalize mineral property
acquisition costs and related exploration and development costs incurred
in the period. Effective January 1, 1998 the Company changed its policy
with regards to exploration and development costs related to mineral
properties to expense the exploration and development costs in the period
incurred. This change has been applied retroactively and has reduced the
amount previously reported for mineral properties by $983,661 as at
December 31, 1997 and increased exploration and development expenses and
deficit for each of the years ended December 31, 1992, 1996, and 1995 by
$242,736, $341,999, and $398,926 respectively.
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 proven and probable reserves 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.
Exploration and development expenditures are expensed in the period
incurred until such time as the Company establishes the existence of
commercial feasibility at which time these costs will be deferred.
On an on-going basis, the Company evaluates the status of its mineral
properties based on results to date to determine the nature of exploration
and development work that is warranted in the future. If there is little
prospect of further work on a property being carried out, the deferred
costs related to that property are written down to their estimated
recoverable amount.
The amounts shown for mineral properties represent costs incurred to date
and is not intended to reflect present or future values.
The results of operations for the three month period ended March 31, 1998
are not necessarily indicative of the results that may be expected for the
full year ended December 31, 1998. It is suggested that these financial
statements be read in conjunction with the financial statements and notes
thereto included in the Company's 1997 Annual Report on Form 10-KSB.
These financial statements have been prepared on the basis of accounting
principles applicable to a going concern. At March 31, 1998, the Company
had a working capital deficiency of approximately $2,285,000, a
significant portion of which is due to related parties. The Company's
continuing operations and the ability of the Company to discharge its
liabilities are dependent upon the continued financial support of its
related parties and 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.
5
<PAGE>
NAPTAU GOLD CORPORATION
Item 2. Plan of Operation
The Company is engaged in the acquisition, exploration and development of
mineral properties, primarily gold properties. The Company's properties are
comprised of five adjacent placer mining leases and two adjacent staked placer
claims (collectively, the "Properties") located in the Cariboo Mining District,
British Columbia, Canada.
It is estimated that the Company and prior owners of the Properties have
expended an aggregate of approximately $4,000,000 in exploring and developing
the Properties. Because of the inconsistence of placer golds, none of the
Company's Properties may be defined as containing proven or probable reserves.
Although prior exploration programs have produced in excess of 300 ounces of
gold from the Properties, the Company has not generated meaningful revenues and
will not generate revenues until commencement of full-scale placer mining
operations.
In May 1997 the Company moved a new $250,000 production plant on site with
the expectation of processing 150,000 to 200,000 cubic yards of material over
the 5 to 6 month 1997 mining season. This represented an average operating level
of 50% of the capacity of the plant. This conservative estimate was based on the
assumption that shakedown time would be required during start-up of production
and the necessity of processing marginal pay gravels while opening the main
channel deposits. Production did not commence during the 1997 mining season,
however, due to the failure of the manufacturer of the production plant to
deliver a turnkey plant. The Company spent the 1997 season and approximately
$100,000 bringing the plant to operating status. Concurrently with the
preparation of the production plant, the Company carried on further site
preparation in anticipation of an upcoming season of production.
At the commencement of the 1998 mining season the Company completed the
tasks necessary to commence production. In May and June 1998 the Company
successfully initiated test runs of the production plant yielding initial
limited quantities of gold. The Company anticipates that it will continue to
process materials through the balance of the 1998 mining season. The Company
intends to stop processing materials and shut the mine down for winter in late
September 1998. The Company currently anticipates that it will process
approximately 300,000 cubic yards of material over the balance of the 1998
mining season.
At March 31, 1998, the Company had a working capital deficit of
approximately $2,285,000, a substantial portion of which is owed to Noble,
$1,762,134, and officers and directors of the Company, all of whom have a vested
interest in ensuring the Company's continued existence. During the first three
months of 1998 the Company's operating expenses consisted primarily of amounts
accrued in respect of officer salaries and professional fees. The Company's
continuing operations and 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 continue its
exploration and development activities. To date, substantially all of the
financing for the Company's 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
Item 6. Exhibits and Reports on Form 8-K
Response: None.
6
<PAGE>
NAPTAU GOLD CORPORATION
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: February 17, 1999 By: Edward D. Renyk
President and
Principal Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 496
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 496
<PP&E> 2,460,315
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<TOTAL-ASSETS> 2,460,315
<CURRENT-LIABILITIES> 2,285,092
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0
0
<COMMON> 6,934
<OTHER-SE> 175,222
<TOTAL-LIABILITY-AND-EQUITY> 2,460,315
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<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 40,705
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 830
<INCOME-PRETAX> (40,705)
<INCOME-TAX> 0
<INCOME-CONTINUING> (40,705)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (40,705)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
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