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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, 1999
|_| 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 0-2660
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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 |X| No |_|
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 5,933,500 shares of Common
Stock, $.001 par value, were outstanding, as of March 31, 1999.
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 I. Financial Information.............................................. 2
Item 1. Financial Statements .............................................. 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
Item 1. Financial Statements
Balance Sheets
(expressed in United States dollars)
March 31, 1999 December 31, 1998
-------------- ----------------
Assets
Current assets
Cash $ 2,780 $ 2,734
Equipment 71,582 71,582
Mineral properties 2,098,200 2,098,200
----------- -----------
$ 2,172,562 $ 2,172,516
=========== ===========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 413,791 $ 386,357
Contracts payable to related parties 2,533,330 2,506,843
Loans payable to related parties 42,565 30,304
----------- -----------
$ 2,989,686 $ 2,923,504
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 1,581,105 1,581,105
Deficit (2,405,163) (2,339,027)
----------- -----------
$( 817,124) $( 750,988)
----------- -----------
$ 2,172,562 $ 2,172,516
=========== ===========
See accompanying notes to financial statements.
2
<PAGE>
Statements of Operations and Deficit
(expressed in United States dollars)
Three months Ended March 31,
1999 1998
--------------- ---------------
Expenses:
Exploration expenditures $ 1,652 $ 10,672
Interest and financing 28,574 830
Management salary 22,500 22,500
Professional fees 11,358 6,668
Office and administrative 2,052 35
---------- ---------
Loss for the period ( 66,136) ( 40,705)
Deficit, beginning of period (2,339,027) (1,325,111)
---------- ---------
Deficit, end of period $(2,405,163) $(1,365,817)
---------- ---------
Loss per share $ (0.01) $ --
--------- ---------
See accompanying notes to financial statements.
3
<PAGE>
Statements of Cash Flows
(expressed in United States dollars)
Three months ended March 31,
1999 1998
--------------- ---------------
Cash generated from (used in):
Operations:
Loss for the period $ (66,136) $ (40,705)
Changes in non-cash operating working capital:
Accounts payable and accrued liabilities 27,434 22,570
--------- ---------
(38,702) (18,135)
Financing Activities:
Changes in contracts payable 26,487 53,241
Loans payable to related parties 12,261 ( 4,543)
--------- ---------
46 48,698
Investing activities:
Mineral properties -- 30,067)
--------- ---------
Increase in cash $ 46 $ 496
Cash, beginning of period 2,734 --
--------- ---------
Cash, end of period $ 2,780 $ 496
========= =========
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, 1999 and for the
three month periods ending March 31, 1999 and 1998 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.
Results of operations for the three month period ended March 31, 1999
are not necessarily indicative of the results that may be expected for the
full year ended December 31, 1999. It is suggested that these financial
statements be read in conjunction with the financial statements and notes
thereto included in the Company's 1998 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, 1999, the Company
had a working capital deficiency of approximately $2,987,000, 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.
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 are not intended to reflect present or future values.
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 one Lease of Placer Minerals (LPM) 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 $4,500,000 in exploring and developing
the Properties. Because of the inconsistencies of placer golds, none of the
Company's Properties may be defined as containing proven or probable reserves.
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, a portion of the
1998 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.
The Company has not generated meaningful revenues which will only be realized
upon the commencement of full-scale mining operations. At the end of the 1998
mining season the Company successfully completed sustained test runs of the
production plant yielding quantities of gold as detailed in the following table.
- --------------------------------------------------------------------------------
Days of Cubic Yds. Recovered Ounces Oz/Cu. Yd. $/Cu. Yd.
Processing Processed Grams
Between
Clean-ups
- --------------------------------------------------------------------------------
3 900 473.3 15.22 0.017 3.87
6 1,580 2,092.7 67.28 0.049 11.05
3 672 1,696.7 54.55 0.081 16.91
4 1,814 4,063.3 130.65 0.072 17.34
5 1,642 2,976.0 95.68 0.058 14.33
7 2,360 6,716.4 215.93 0.091 24.17
- --------------------------------------------------------------------------------
"Clean-up" is the process of removing concentrated gold bearing materials
accumulated in a secure area of the processing plant and occurs at the
discretion of management, under the scrutiny of Company management personnel.
Because of the record snow fall at the site this season the Company anticipates
that it will commence operations around the end of May, 1999, subject to weather
conditions and the dissipation of the snow cover. Currently, the Company
estimates that it will process approximately 300,000 cubic yards of material
over the term of the 1999 mining season.
During the current quarter, Noble Metal Group Incorporated requested and the
Company agreed that as consideration for granting an extension of the due date
of the remaining balance due to Noble, the Bill of Sale Absolute for the Placer
Leases will be placed in trust with Noble's attorney until such time as the
Company has fulfilled all of its obligations to Noble with respect to repayment
of debt. Noble also agreed to convert 1,000,000 common shares of the Company
into an obligation to pay Noble 8,695 ounces of gold from the Company's share of
gold referred to in previous agreements in the following manner:
(i) for 1999, 33% of the ounces of gold remaining after fulfillment of previous
obligations to Noble; and
(ii) for 2000 and thereafter and until the 8,695 ounces have been paid to Noble,
50% of the ounces of gold after fulfillment of previous obligations to
Noble.
The parties agreed that the Company may at any time elect to pay Noble more
ounces of gold than the minimum levels specified above.
The Company also entered into a further agreement with an Affiliate, with
respect to its contract payable to such Affiliate of $200,000, whereby the
Company agreed to pay the Affiliate 200 ounces of gold instead of 150 ounces
previously agreed, from the Company's share of gold produced from mining
operations on its placer leases, if any, to extend the due date to December 31,
2001.
At March 31, 1999, the Company has a shareholders' deficiency of approximately
$817,000 and working capital deficiency in excess of $2,900,000, a significant
portion of which is due to related parties, all of whom have a vested interest
in ensuring the Company's continued existence. 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.
On March 31, 1999 the Company concluded the listing for Blue Sky purposes and
was published in the Standard & Poor's Corporation Records Current News Edition
dated March 31, 1999. Subsequent to this, the Company, through First London
Securities, Inc. was approved for quotation on the OTC Bulletin Board.
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: May 14, 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-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 2,780
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,780
<PP&E> 2,172,562
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,172,562
<CURRENT-LIABILITIES> 2,989,686
<BONDS> 0
0
0
<COMMON> 6,934
<OTHER-SE> (817,124)
<TOTAL-LIABILITY-AND-EQUITY> 2,172,562
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 66,136
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 28,885
<INCOME-PRETAX> (66,136)
<INCOME-TAX> 0
<INCOME-CONTINUING> (66,136)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (66,136)
<EPS-PRIMARY> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>