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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 June 30, 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)
-----------------------------------------------
(former address)
-----------------------------------
(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 June 30, 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 .................................................................... 7
Item 6. Exhibits and Reports on Form 8-K.................................... 7
SIGNATURES.......................................................... 8
<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.
1
<PAGE>
Part 1. Financial Information
Balance Sheets
(expressed in United States dollars)
<TABLE>
<CAPTION>
June 30, 1998 December 31, 1997
(Restated)
------------- -----------------
<S> <C> <C>
Assets
Current Assets
Cash $ 84 $
Equipment 71,582 71,582
Mineral properties $ 2,418,302 $ 2,358,170
----------- -----------
$ 2,489,968 $ 2,429,752
=========== ===========
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts Payable and Accrued Liabilities $ 339,645 $ 277,251
Contracts Payable to related parties 2,227,843 1,908,893
Loans Payable to related parties $ 23,137 $ 27,680
----------- -----------
$ 2,590,625 $ 2,213,824
Shareholders' Equity
Capital Stock
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 $(1,641,697) $(1,325,111)
----------- -----------
$ (100,658) $ 215,928
----------- -----------
$ 2,489,968 $ 2,429,752
=========== ===========
</TABLE>
See accompanying notes to financial statements.
2
<PAGE>
Statements of Operations and Deficit
(expressed in United States dollars)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30, 1998 June 30, 1997 June 30, 1998 June 30, 1997
(Restated) (Restated)
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Expenses:
Exploration and development costs $ 245,976 $ 403,858 $ 234,304 $ 403,858
Interest Expense $ 1,083 $ 452 $ 253 $ 452
Management Salary 45,000 45,000 22,500 22,500
Professional Fees 21,871 13,606 15,203 9,510
Office and Administrative $ 2,656 -- $ 2,621 --
----------- ----------- ----------- -----------
Loss for the period (316,586) (462,916) (275,881) (436,320)
Deficit, beginning of period (1,325,111) (948,807) (1,365,816) (975,403)
Deficit, end of period $(1,641,697) $(1,411,723) $(1,641,697) $(1,411,723)
Loss per share $ (0.05) $ (0.07) $ (0.04) $ (0.00)
=========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
Statements of Cash Flows
(expressed in United States dollars)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30, 1998 June 30, 1997 June 30, 1998 June 30, 1997
(Restated) (Restated)
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Cash generated from (used in):
Operations:
Loss for the period $(316,586) $(462,916) $(275,881) $(436,320)
Change in non-cash operating working capital:
Accounts Payable and Accrued Liabilities $ 62,934 $ 64,260 39,824 38,165
--------- --------- --------- ---------
(254,192) (398,656) (236,057) (398,155)
Financing:
Deferred Financing Costs -- (6,404) 6,304
Payments of contracts payable 318,950 403,860 265,709 403,859
Loans payable to related parties $ (4,543) $ 1,200 -- 600
--------- --------- --------- ---------
314,408 398,656 265,709 398,155
Investing activities:
Mineral properties: (60,132) -- (30,064) --
--------- --------- --------- ---------
Increase in cash 84 0 (412) 0
Cash, beginning of period 0 0 496 0
--------- --------- --------- ---------
Cash, end of period $ 84 $ 0 84 0
========= ========= ========= =========
</TABLE>
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 June 30, 1998 and for the
three and six month periods ending June 30, 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.
2. Significant accounting policies:
The financial statements have been prepared in accordance with generally
accepted accounting principles in the United States.
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, 1997,
1996, and 1995 by $242,736, $341,999, and $398,926 respectively.
(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 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 and six months period ended June
30, 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.
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 inconsistency 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, which included the stripping and hauling
of surface materials and the heavy blue clay which overlies the channel
deposits. The materials expected, rich black/brown gravels, grey/green gravels
and boulders are now exposed at the upper portion of the channel pocket. The
edges of the first placer pocket were exposed with the pocket appearing to be 75
feet (25 meters) wide and, per the previous Seismic Refraction Surveys, Induced
Polarization Survey and past drilling, will drop off sharply to a depth of some
135 feet (45 meters) of which 90 feet (30 meters) extends below the level of
Keithley Creek.
In May and June 1998 the Company successfully initiated test runs of the
production plant using materials from the upper edges of the pocket yielding
small flat and rice sizes of gold. As this material was extracted 18 feet (6
meters) above the actual drop into the placer pocket it is very encouraging. 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-down the mining
operation for winter at the end of September 1998 with the exception, weather
permitting, of a stripping crew which will remain active preparing the site for
the following spring start-up.
The Company currently anticipates that it will process approximately
100,000 cubic yards of material over the balance of the 1998 mining season.
At June 30, 1998, the Company had a working capital deficit of
approximately $2,591,000, a substantial portion of which is owed to Noble,
$2,038,343, and officers and directors of the Company, all of whom have a vested
interest in ensuring the Company's continued existence. During the first six
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.
6
<PAGE>
Part II
Item 6. Exhibits and Reports on Form 8-K
Not applicable.
7
<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
8
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from financial
statements for the period ended June 30, 1997 and is qualified in its entirety
by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 84
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 84
<PP&E> 2,489,968
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,489,968
<CURRENT-LIABILITIES> 2,590,625
<BONDS> 0
0
0
<COMMON> 6,934
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 2,489,968
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 316,586
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,083
<INCOME-PRETAX> (316,586)
<INCOME-TAX> 0
<INCOME-CONTINUING> (316,586)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (316,586)
<EPS-PRIMARY> (0.05)
<EPS-DILUTED> (0.05)
</TABLE>
