SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
(Mark One)
|X| ANNUAL REPORT AMENDED PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the year ended December 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 0-26600
- --------------------------------------------------------------------------------
NAPTAU GOLD CORPORATION
(Exact name of registrant 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 |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
February 29, 2000.
Transitional Small Business Disclosure Format (check one):
Yes |_| No |X|
===============================================================================
<PAGE>
TABLE OF CONTENTS
Part I
ITEM 1. BUSINESS...................................................... 3
ITEM 2. DESCRIPTION OF PROPERTY....................................... 4
ITEM 3. LEGAL PROCEEDINGS............................................. 5
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS........... 5
Part II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDERS MATTERS........................................ 5
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS......................... 5
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA................... 6
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE...................... 7
Part III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.. 7
ITEM 10. EXECUTIVE COMPENSATION........................................ 8
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT.............................................. 9
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS................ 10
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.............................. 11
SIGNATURES.............................................................. 12
-2-
<PAGE>
PART I
ITEM 1. BUSINESS
(a) Business Development
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. The Company is registered as
a foreign corporation (extra provincial corporation) in the Province of British
Columbia, Canada.
In June 1995 and subsequently:
1) The Company entered into an agreement (the "Exchange Agreement") to
acquire certain placer leases (set forth under "Item 2 Description of
Property" of this report) 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.
2) The Company and Noble entered into an operating agreement (the
"Operating Agreement") whereby Noble remained 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.
3) The Company acquired from Dorothy Dennis ("Dennis") an additional
placer lease contiguous with the placer leases acquired from Noble
incurring an obligation to pay the Dennis $200,000.
4) In May 1996 the Company recorded the Bill of Sale Absolute on placer
claims Lou 1 and Lou 2 (the "Lou Claims") staked by William G. Timmins
as agent for Naptau.
Under subsequent extensions and modifications made to the Exchange Agreement and
Operating Agreement with Noble, the Company was obligated to:
1) Pay Noble $954,000 together with interest thereon at the rate of 10%
per annum from December 31, 1995 through June 30, 1997, and 12% per
annum thereafter.
2) Deliver to Noble 4,861 ounces of gold from the Company's share of the
gold produced from the Placer Leases.
3) Naptau also agreed not sell or assign its interest in the Placer
Leases until such time as these gold obligations were satisfied.
Under subsequent extensions and modifications made to the Acquisition Agreement
with Dennis the Company was obligated to deliver an additional 150 ounces of raw
placer gold to extend the due date of the Agreement to December 31, 1999.
Because of the inconsistency of placer golds, none of the Company's prospects or
properties could be defined as containing proven or probable reserves.
Although the Company extracted approximately 591 ounces of gold during the
latter portion of the 1998 mining season, it had yet to generate sufficient
revenues to sustain its operations. The Company's ability to maintain its mining
operations is dependent upon its ability to raise substantial additional funds.
With the exception of the funds received from the sale of the above extracted
gold, all of the Company's exploration activities had been conducted with funds
advanced by Noble.
The mining of the Placer Leases has been unsuccessful.
Effective December 31, 1999 the Company concluded a "Recission and Release
Agreement" with Noble whereby all assets related to the placer mining
operations, including those previously acquired from Noble and Dennis, together
with the staked placer leases Lou 1 and 2 and related production equipment
located on the properties were conveyed to Noble in consideration
- 3 -
<PAGE>
for the release from all debts and obligations owing by Naptau to Noble and
Dennis. In addition Naptau agreed to transfer all exploration account balances
for Canadian tax purposes relating to the operation incurred in respect to the
acquisition of Placer leases.
The financial statements of the Company contained herein have been prepared on a
going concern basis. If the Company were unable to raise the funds necessary to
commence mining operations or was unable to generate positive cash flow form
such operations, it might be forced to liquidate. In such event, it is unlikely
that the Company would realize the amounts indicated on the balance sheet upon
the sale of its placer properties.
For discussion of certain material risks involved in the Company's business, see
"Risk Factors" below.
(b) Business of Naptau Gold Corporation
Naptau Gold Corporation ("Naptau" or the "Company") is engaged in the
acquisition, exploration and development of mineral properties.
Risk Factors
Limited Operations: Need for Additional Funds. To date, the Company has
extracted only 591 ounces of gold through its mining program. By agreement,
effective December 31, 1999 (Recission and Release Agreement appended hereto
under Item 13) the Company relinquished all its mining properties and equipment
back to Noble Metal Group Incorporated for a release from all related debt. The
Company has not generated any significant revenues and will not generate
significant revenues until it is able to acquire new projects and sources of
financing. At December 31, 1999, the Company had an accumulated deficit of
$2,230,130 (1998 -$2,339,027).
Preparation of Financial Statements: The financial statements of the Company
contained herein have been prepared on a going concern basis. If the Company
were unable to raise funds necessary to continue operations or were unable to
generate positive cash flow from new operations, it might be forced to
liquidate. In such event, it is unlikely that the Company would realize amounts
sufficient to liquidate its liabilities recorded on the balance sheet.
Cautionary Statement for Purposes of The "Safe Harbor" Provisions of The Private
Securities Litigation Reform Act of 1995: The United States Private Securities
Litigation Reform Act of 1995 provides a new "safe harbor" for certain
forward-looking statements. The following factors set forth under "Risk Factors"
among others, could cause actual results to differ materially from those
contained in forward-looking statements made in this Form 10-KSB, future filings
by the Company with the SEC, in the Company's press releases and in oral
statements made by authorized officers of the Company. When used in this Form
10-KSB, the words "estimate," "project," "anticipate," "expect," "intend,"
"believe" and similar expressions are intended to identify forward-looking
statements.
Substantial Indebtedness to Related Parties: The Company owed an aggregate of
$439,797 (1998 $2,280,741) to Officers, Directors and related parties. There can
be no Assurance that the Company will be able to satisfy its obligations to the
Related Parties.
Conflicts of Interest: The terms upon which the Recission Agreement was
concluded were determined by negotiations between representatives of Noble and
the Company. Noble then owned more than a majority of the outstanding shares of
the Company and therefore, the agreement between Noble, Dennis and the Company
should not be deemed the product of arms' length negotiations.
- 4 -
<PAGE>
ITEM 2. DESCRIPTION OF THE PROPERTY
The Company previously held a 100% interest in all of its Properties:
Lease of Placer Minerals (LPM) Tenure #365488) formerly:
PL # 29 (Tenure #262692) PL # 1850 (Tenure #262822)
PL # 1159 (Tenure #282768) PL # 2093 (Tenure #282832)
PL # 1160 (Tenure #262769)
Placer Claims
Lou #1 (Tenure #337015) Lou #2 (Tenure #337016)
On October 4, 1998 Placer Mining Leases # 29, 1159, 1160, 1850, 2093 were
combined into a Lease of Placer Minerals (LPM) bearing Mineral Tenure # 365488
out of the Cariboo Mining Division of British Columbia. The LPM and staked
Placer Claims Lou 1 and Lou 2 (collectively, the "Properties") are adjacent
properties located at the confluence of Keithley Creek and Snowshoe Creek, 28
miles northwest of Likely, British Columbia in the Cariboo Mining District, and
are accessible by gravel road. The town of Likely is about 64 miles northeast of
Williams Lake, British Columbia, and may be reached by paved highway or private
plane.
At present the Company holds no properties.
The Company occupies office space provided by its President, E. D. Renyk, at
5391 Blundell Road, Richmond, BC, Canada, V7C 1H3. No rent was paid for the use
of this office. The space is adequate for the planned future conduct of the
Company's business over the next twelve months.
ITEM 3. LEGAL PROCEEDINGS
The Company is not the subject of any pending legal proceedings; and to the
knowledge of management, no proceedings are presently contemplated against the
Company by any federal, state or local governmental agency.
Further, to the knowledge of management, no director or executive officer is
party to any action in which any has an interest adverse to the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS There were no
shareholders' meetings during 1999.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS
(a) On April 22, 1999 Naptau Gold Corporation was cleared to post a bid and ask
quotation on the OTC Bulleting Board for Naptau Common Stock
Market price ranges of the Company's common stock during subsequent
quarters of the year 1999 were as follows:
1999
--------------------
Period High Low
------ ---- ---
2nd Quarter 1.60 1.01
3rd Quarter 1.03125 0.25
4th Quarter 0.32 0.10
- 5 -
<PAGE>
(b) Holders.
As of December 31, 1999, there were approximately 50 holders of the Company's
Common Stock including those held in "nominee" or "street" name.
(c). Dividends.
The Company has never paid a cash dividend on its Common Stock and has no
present intention to declare or pay cash dividends on the Common Stock in the
foreseeable future. The Company intends to retain any earnings, which it may
realize in the foreseeable future, to finance its operations. Future dividends,
if any, will depend on earnings, financing requirements and other factors.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following should be read in conjunction with the Company's financial
statements and the notes thereto.
There is a negative working capital balance of $642,091 (1998 -$2,920,770) a
significant portion, which is owed to related parties, all of whom have a vested
interest in ensuring the Company's continued existence.
Excluding the Adjustment to reflect recovery through recission agreement,
$611,196, the Company earned no revenues. (the Recission and Release Agreement
is attached hereto under Item 13)
Over the winter of 1998 and spring of 1999 the Cariboo area sustained record
snowfall and subsequently record spring run off. This record spring run off
caused substantial damage to the previously prepared mining site to the extent
that substantial expenditures, without benefit of a recommended engineering
study, were estimated up to as high as $500,000 and a completion time factor of
60 to 150 days. Because access to the site was not until the latter part of June
1999, well into the normal operating season, which usually concludes around the
end of September, it was decided not to attempt operation in 1999. The Company
did expend $$187,825 on road and general site recovery.
Further expenditures as shown in the Statements of Operations and Deficit on
non-resource property expenditures during the 1999 year were: (1) Interest of
$127,596, related to carrying costs of the debt to Noble; bonuses and interest
paid to third party investors to conclude Contracts Payable, maturing December
31, 2000. The Contracts Payable replaced agreements for delivery of raw placer
gold which the Company entered in May and June of 1999; which it was unable to
deliver by the due date of October 31, 1999. (2) Included in the Investor and
project development expenses of $57,602, are costs for the preparation of
corporate public relations information, Internet site research, and costs to
examine potential investment opportunities.
With the conclusion of the Recission and Release Agreement the Company has
substantially reduced its liabilities. The Company is actively pursuing other
opportunities in precious metal mining as well as Internet related projects.
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO FINANCIAL STATEMENTS
Reports of Independent Chartered Accountants..............................F-2
Balance Sheet.............................................................F-3
Statements of Operations..................................................F-4
Statements of Cash Flows..................................................F-5
Notes to Financial Statements.............................................F-6
- 6 -
<PAGE>
NAPTAU GOLD CORPORATION
FINANCIAL STATEMENTS
(expressed in United States dollars)
Years ended December 31, 1999, 1998 and 1997
<PAGE>
F-2
AUDITOR'S REPORT
TO THE DIRECTORS OF NAPTAU GOLD CORPORATION
I have audited the balance sheet of Naptau Gold Corporation as at December 31,
1999 and the statements of operations and deficit and cash flows for the year
then ended. These financial statements are the responsibility of the Company's
management. My responsibility is to express an opinion on these financial
statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform an audit to obtain reasonable
assurance whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation.
In my opinion, these financial statements present fairly, in all material
respects, the financial position of the Company as at December 31, 1999 and the
results of its operations and the cash flows for the year then ended in
accordance with generally accepted accounting principles in the United States.
The financial statements of the Company for the year ended December 31, 1998 and
1997 were audited by other auditors who issued their report without reservation,
on March 29, 1999.
G. Ross McDonald
Chartered Accountant
Vancouver, Canada
March 21, 2000
COMMENTS BY AUDITORS FOR U.S. READERS ON CANADA-U.S.
REPORTING DIFFERENCES
In the United States, reporting standards for auditors require the addition of
an explanatory paragraph (following the opinion paragraph) when the financial
statements are affected by significant uncertainties such as that referred to in
the attached balance sheets as at December 31, 1999 and as described in Note 1
to the financial statements. My report to the shareholders dated March 21, 2000
is expressed in accordance with Canadian reporting standards which do not permit
a reference to such uncertainties in the auditors' report when the uncertainties
are adequately disclosed in the financial statements.
/s/
G. Ross McDonald
Chartered Accountant
Vancouver, Canada
March 21, 2000
<PAGE>
NAPTAU GOLD CORPORATION
BALANCE SHEETS
(expressed in United States dollars)
December 31, 1999 and 1998
F-3
<TABLE>
<CAPTION>
1999 1998
--------- -----------
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash $ 1,042 $ 2,734
EQUIPMENT -- 71,582
MINERAL PROPERTIES (Note 4) -- 2,098,200
---------- -----------
$ 1,042 $ 2,172,516
=========== ===========
LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued liabilities (Note 5) $ 469,705 $ 386,357
Contracts payable (Note 5(a)) 78,310 --
Loans payable (Note 5(b)) 60,321 --
Contracts payable to related parties (Note 4) -- 2,506,843
Loans payable to related parties (Note 5(c)) 34,797 30,304
---------- -----------
643,133 2,923,504
---------- -----------
SHAREHOLDERS' DEFICIENCY
CAPITAL STOCK (Note 6)
Authorized -
5,000,000 preferred shares with a par value $0.001 per share
20,000,000 common shares with a par value $0.001 per share
Issued and outstanding -
5,933,500 common shares 5,934 6,934
ADDITIONAL PAID-IN CAPITAL 1,582,105 1,581,105
DEFICIT (2,230,130) (2,339,027)
---------- -----------
(642,091) (750,988)
---------- -----------
Continuing operations (Note 1)
Commitments and contingencies (Note 7)
$ 1,042 $ 2,172,516
=========== ===========
</TABLE>
APPROVED BY THE DIRECTORS
/s/ "E.D.Renyk"
- ----------------------------------------------------
Director
/s/ "Larry Fix"
- ----------------------------------------------------
Director
<PAGE>
NAPTAU GOLD CORPORATION
STATEMENTS OF OPERATIONS AND DEFICIT
(expressed in United States Dollars)
For the Years Ended December 31, 1999, 1998 and 1997
F-4
<TABLE>
<CAPTION>
1999 1998 1997
------------------- ------------------- -------------------
(restated - note 3)
<S> <C> <C> <C>
EXPENSES
Exploration and development, net $ 187,825 $ 474,620 $ 242,736
of gold recoveries
Interest and financing costs 127,596 119,053 112,280
Investor and project development 57,602 - -
Management salary (Note 7) 90,000 90,000 90,000
Office and administrative 4,804 23,809 4,105
Professional fees 34,472 46,464 17,035
Write-off of deferred financing costs - - 20,393
Adjustment to reflect recovery through recission (611,196) - -
agreement (Note 4)
------------------- ------------------- -------------------
INCOME (LOSS) FOR THE YEAR 108,897 (753,946) (486,549)
------------------- ------------------- -------------------
DEFICIT, BEGINNING OF YEAR
As previously reported - (341,450) (207,882)
Adjustment to reflect changes in accounting - (1,243,631) (890,650)
for exploration and development expenditures, and
interest and financing costs on contracts payable
related to such expenditures (Note 3)
------------------- ------------------- -------------------
As restated (2,339,027) (1,585,081) (1,098,532)
------------------- ------------------- -------------------
DEFICIT, END OF YEAR $ (2,230,130) $ (2,339,027) $ (1,585,081)
=================== =================== ===================
INCOME (LOSS) PER SHARE $ 0.02 $ (0.11) $ (0.07)
=================== =================== ===================
</TABLE>
<PAGE>
NAPTAU GOLD CORPORATION
STATEMENTS OF CASH FLOWS
(expressed in United States Dollars)
For the Years Ended December 31, 1999, 1998 and 1997
F-5
<TABLE>
<CAPTION>
1999 1998 1997
------------------- ------------------- -------------------
(restated - note 3)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Income (loss) for the year $ 108,897 $ (753,946) $ (486,549)
Adjustments to reconcile loss for the year to
net cash from (used in) operating activities:
Write-off of deferred financing costs - - 20,393
Non-cash operating expenses (Note 9) 274,135 606,848 352,981
Adjustments to reflect recovery through (611,196) - -
recission agreement (Note 4)
Increase in accounts payable and 83,348 111,108 120,068
accrued liabilities
------------------- ------------------- -------------------
Net cash from (used in) operating activities (144,816) (35,990) 6,893
------------------- ------------------- -------------------
FINANCING ACTIVITIES
Deferred financing costs (incurred) recovered - - (11,303)
Payment of contracts payable - (21,400) (10,500)
Contracts payable 78,310 - -
Loans payable 70,020 - -
Loans payable to related parties (5,206) 13,124 14,910
Additional paid in capital - 47,000 -
------------------- ------------------- -------------------
Net cash from (used in) financing activities 143,124 38,724 (6,893)
------------------- ------------------- -------------------
INCREASE (DECREASE) IN CASH (1,692) 2,734 -
CASH, BEGINNING OF YEAR 2,734 - -
------------------- ------------------- -------------------
CASH, END OF YEAR $ 1,042 $ 2,734 $ -
=================== =================== ===================
</TABLE>
Supplementary cash flow information (Note 9)
<PAGE>
F-6
NAPTAU GOLD CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
(expressed in United States Dollars)
For the Years Ended December 31, 1999, 1998, 1997
1. CONTINUING OPERATIONS
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 agreements to acquire certain mineral properties
(Note 4). The Company's principal business activity is the exploration
and development of mineral properties, with its principal mineral
properties comprising 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 December 31,
1999, the Company had a working capital deficiency in excess of
$640,000 (1998 - $2,900,000), a significant portion of which in 1998
was due to related parties, and has a shareholders' deficiency of
approximately $642,000 (1998 - $751,000). 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.
2. SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of presentation:
The financial statements have been prepared in accordance with
generally accepted accounting principles in the United States.
(b) Equipment:
Equipment is recorded at cost. Depreciation, which will be
provided using the straight-line method over 10 years, being
the estimated useful life of the assets, will commence once
the assets have been put in use.
(c) Mineral properties:
Mineral property acquisition costs and related interest and
financing costs 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 estimated fair value of common shares issued for
mineral properties, based on recent share issuances.
Exploration and development expenditures are expensed in the
period incurred (Note 3) until such time as the Company
establishes the existence of commercial feasibility, at which
time these costs will be deferred. Administrative expenditures
are expensed in the period incurred.
<PAGE>
F-7
NAPTAU GOLD CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
(expressed in United States Dollars)
For the Years Ended December 31, 1999, 1998, 1997
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
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.
(d) 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.
(e) Loss per share:
Loss per share has been calculated using the weighted average
number of common shares outstanding during the year. Diluted
loss per share has not been presented as the results would be
anti-dilutive.
(f) Use of estimates:
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements
and the reported amount of revenues and expenses during the
period. Significant areas requiring the use of management
estimates include impairment of assets and useful lives for
depreciation. Actual results may differ from those estimates.
(g) Financial instruments:
With the exception of amounts due to related parties, as at
December 31, 1999 and 1998, in all material respects the
carrying amounts for the Company's financial instruments
approximated fair value due to the short term nature of these
financial instruments. The Company is unable to determine the
fair value of the amounts due to related parties with
sufficient reliability. Accordingly, information on the
characteristics of these balances is described in Notes 4 and
5.
<PAGE>
F-8
NAPTAU GOLD CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
(expressed in United States Dollars)
For the Years Ended December 31, 1999, 1998, 1997
3. CHANGES IN ACCOUNTING POLICY
Prior to 1998, the Company's policy was to capitalize to mineral
properties, the mineral property exploration and development
expenditures and interest and financing costs on contracts payable
related to such expenditures, that were incurred during the period.
Effective January 1, 1998, the Company changed its policy in this
regard and began charging exploration and development expenditures on
its mineral properties, and interest and financing costs on contracts
payable related to such expenditures, to operations as incurred. This
change has been applied retroactively and has reduced the amount
previously reported for mineral properties and increased the amount
previously reported for deficit as at December 31, 1997 by $1,243,631.
This change also increased exploration and development expenses for
each of the years ended December 31, 1997 and 1996 by $242,736 and
$341,999 respectively, increased interest and financing costs for each
of the years ended December 31, 1997 and 1996 by $110,245 and $149,725
respectively, and has increased deficit as at January 1, 1996 by
$398,926.
4. MINERAL PROPERTIES
<TABLE>
<CAPTION>
1999 1998
------------------- ------------------
<S> <C> <C>
Placer Leases, Cariboo Mining Division,
British Columbia
Acquisition costs:
Placer Leases acquired from Noble $ - $ 1,775,000
Placer Leases acquired from an affiliate of the - 200,800
Company
--- -------------- -- ---------------
- 1,975,800
Deferred interest and financing costs:
Paid or accrued to Noble - 102,000
Paid to an affiliate of the Company - 20,400
--- -------------- -- ---------------
- 122,400
--- -------------- -- ---------------
$ - $ 2,098,200
=== ============== == ===============
</TABLE>
During 1995, the Company entered into an agreement to acquire certain
Placer leases from Noble Metal Group Incorporated ("Noble") in exchange
for 4 million common shares of the Company. As Noble acquired control
of the Company by this exchange, it was considered a common control
transaction and, accordingly, the common shares were accounted for at
the carrying value of the Placer leases in the accounts of Noble at
December 31, 1994.
<PAGE>
F-9
NAPTAU GOLD CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
(expressed in United States Dollars)
For the Years Ended December 31, 1999, 1998, 1997
The Company and Noble also entered into an operating agreement whereby
Noble would remain the operator for the mining activities on the Placer
leases for a period of ten years.
The Company also acquired a Placer lease owned by an affiliate of the
Company during the year ended December 31, 1995.
The operation of the Placer leases has been unsuccessful and as at
December 31, 1999 the Company entered into a recission and release
agreement with Noble whereby all assets previously acquired, including
the staked placer leases Lou 1 and 2 and related production equipment
located on the properties, were conveyed to Noble in consideration for
the release from all debts and obligations to Noble. The Company also
agreed to transfer all exploration account balances for Canadian tax
purposes relating to the operation of the Placer leases to Noble.
Further Noble agreed to assume $200,000 in debt due to an affiliate
incurred in respect of the acquisition of a Placer lease which was
conveyed to Noble. As a result of this transaction the Company has
recorded in the year ended December 31, 1999 a gain of $611,196 arising
from the release from debts relating to interest charges and other
amounts previously written off.
Noble also agreed to divest itself of up to 735,000 common shares of
the Company and thus no longer holds a control position in the Company.
Subsequent to December 31, 1999 Noble donated 585,000 common shares to
a charitable institution.
Pursuant to an agreement with Noble for the Company to pay Noble 8,695
ounces of gold, 1,000,000 common shares of the Company were returned to
the Company. By agreement the shares were returned to treasury and
cancelled and the obligation to deliver gold was terminated. The $1,000
gain on the cancellation of the shares has been added to additional
paid-in capital.
5. LOANS AND CONTRACTS PAYABLE
(a) Contracts Payable
The Company entered into two agreements to deliver 300 ounces
of raw placer gold by October 31, 1999 in consideration for
advances of $66,000 received by the Company. The Company was
unable to deliver the gold against these contracts and
subsequent to December 31, 1999 obtained an extension of time
until December 31, 2000 to repay this amount or deliver the
gold. In consideration for this extension the Company has
agreed to pay 15% interest on the advances plus bonus interest
of $10,400 which amounts have been recorded in the accounts of
the Company as at December 31, 1999.
(b) Loans Payable
Loans payable are non-interest bearing and have no specific
term for repayment.
<PAGE>
F-10
NAPTAU GOLD CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
(expressed in United States Dollars)
For the Years Ended December 31, 1999, 1998, 1997
(c) Loans Payable to Related Parties
Loans payable to related parties consist of amounts received
from directors and officers, are non-interest bearing and have
no specific terms of repayment.
At December 31, 1999, accounts payable and accrued liabilities
include accruals totalling $405,000 (1998 - $315,000) for
salaries to a director and officer pursuant to an employment
agreement (Note 7), which are included in management salary
expense for the period.
6. CAPITAL STOCK
(a) Issued:
The continuity of the Company's issued and outstanding capital
stock and additional paid-in capital is as follows:
<TABLE>
<CAPTION>
Common Shares Additional
-----------------------------------
Paid-in
Number Amount Capital Total
--------------- ---------------- ----------------- ------------------
<S> <C> <C> <C> <C>
Balance, December 31, 1997 6,933,500 $ 6,934 $ 1,534,105 $ 1,541,039
1998 Increase in additional paid-in - - 47,000 47,000
capital pursuant to an agreement
with a shareholder (Note 6(b))
--------------- -- ------------- --- ------------- --- --------------
Balance, December 31, 1998 6,933,500 6,934 1,581,105 1,588,039
1999 cancellation of shares (1,000,000) (1,000) 1,000 -
pursuant to an agreement with a
shareholder (Note 4)
--------------- -- ------------- --- ------------- --- --------------
Balance, December 31, 1999 5,933,500 $ 5,934 $ 1,582,105 $ 1,588,039
=============== == ============= === ============= === ==============
</TABLE>
<PAGE>
F-11
NAPTAU GOLD CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
(expressed in United States Dollars)
For the Years Ended December 31, 1999, 1998, 1997
6. CAPITAL STOCK (continued)
(b) Additional paid-in capital:
During 1998, the Company agreed to assist with the placement
of 625,000 shares of the Company held by an individual
shareholder with new investors willing to purchase such
shares. In consideration for providing this assistance, the
parties agreed that any cash received in excess of $0.072 per
share on the sale of such shares would be returned by the
individual to the Company which amounted to $47,000.
(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
and 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. To December
31, 1998, 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 employees 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, which were issued in 1996.
These shares were recorded during the period granted
at their par value of $0.001 per share and were
presented as shares allotted but unissued as at
December 31, 1995.
<PAGE>
F-12
NAPTAU GOLD CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
(expressed in United States Dollars)
For the Years Ended December 31, 1999, 1998, 1997
7. 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.
8. INCOME TAXES
Under the asset and liability method of accounting for income taxes,
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.
For all periods presented, the Company has not recognized any deferred
tax assets or liabilities as the available benefits, primarily as a
result of resource deductions of approximately $4,190,000 and loss
carry forwards of approximately $584,000 arising in 1995 through 1999,
are fully offset by a valuation allowance of the same amount.
9. SUPPLEMENTARY CASH FLOW INFORMATION
The following non-cash operating, financing and investing activities
occurred during the year:
<TABLE>
<CAPTION>
Year ended December 31,
-------------------------------------------------------------
1999 1998 1997
----------------- ----------------- -----------------
<S> <C> <C> <C>
Exploration and development expenses by way $ 159,595 $ 624,200 $ 242,736
of increase in contracts payable (net of payments)
Interest and financing costs incurred by way of 114,540 114,540 110,245
increase in contracts payable
Reduction of contracts payable by way of - (131,892) -
gold resources received by Noble
--- ------------- --- ------------- --- -------------
$ 274,135 $ 606,848 $ 352,981
--- ------------- --- ------------- --- -------------
Acquisition of equipment for contracts payable $ - $ - $ 71,582
--- ------------- --- ------------- --- -------------
</TABLE>
The Company did not pay any interest or income taxes during the years
ended December 31, 1999, 1998 and 1997.
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE In March 2000, the Company engaged the firm of G. ROSS
MCDONALD, Chartered Account of Vancouver, British Columbia as principal
accountant to audit the Company's financial statements.
In June, 1999, KPMG LLP, which had previously been engaged as the principal
accountant to audit the Company's financial statements advised the Company "that
we decline to stand for re-appointment as the auditors of Naptau Gold
Corporation".
During the Company's two most recent fiscal years and the subsequent period
preceding the receipt of KPMG's declination, there were no disagreements between
KPMG and the Company on any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedure, which
disagreement, if not resolved to the satisfaction of KPMG would have caused KPMG
to make reference to the subject in its report. In addition, during the
Company's two most recent fiscal years and the interim period preceding KPMG's
declination no reportable events, as defined in Item 304(a)(1)(iv)(A), (B) (D)
or (E) of Regulation S-B occurred.
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(A) OF THE EXCHANGE ACT
NAME POSITIONS HELD WITH THE CORPORATION
Edward D. Renyk Director, President & Chief Financial Officer
Lloyd E. Mear Director
Larry Fix Director
E. D. Renyk. Mr. Renyk has served as the President, Chief Financial Officer and
a Director of the Company since June 8, 1995. Mr. Renyk is a member of the
Canadian, Alberta and British Columbia Institutes of Chartered Accountants. He
has been a Chartered Accountant since 1962, managing and directing his own
practice for most of that period, specializing in consulting to both private and
publicly traded corporate firms. Prior to establishing his own practice and
subsequent to obtaining his designation as a Chartered Accountant he held
positions ranging from Controller to Vice President of Finance with various
corporations.
Mr. Renyk was admitted as a member of the Institute of Chartered Accountants of
Alberta in 1962.
Lloyd E. Mear. Mr. Mear has served as a Director of the Company since June 8,
1995. Mr. Mear has over thirty years of experience as a Civil Engineer including
fifteen years as an executive in the Mining Industry. From 1967 to date he has
served as the President and Chief Executive Officer of ReDev. Inc., a company
that extracts gold and platinum group metals from water sources throughout the
western United States and Canada.
Mr. Mear received a degree in Civil Engineering/Surveying in 1956 from
University of Alberta, Calgary, Alberta.
John Lawrence Fix. Mr. Fix has a rounded background commencing from an early age
including farming, sawmill operations, oilfield construction, and road building.
Through his high-school years he also managed a motel. After attending the
University of British Columbia he attained Chief Flying Instructor/Charter Pilot
positions progressing to become a Certified Aircraft Engineer. Having attained
these successes he returned to taking on tasks relating to the mining industry
such as staking, promoting, road building and overburden removal in an area near
Summerland, British Columbia. Because of
- 7 -
<PAGE>
his background in aviation opportunities opened in the insurance industry where
he carried out aircraft accident investigation and rose to manager of Brower &
Company Aviation, a Lloyds of London Agent. Upon the sale of Brower & Co. he
formed Pacific Adjusters carrying out insurance investigation on large
international claims. Having established this he then applied some of his
earlier gained knowledge an moved into the oilfield servicing industry through
the purchase of Shirley Air Services Limited. In addition to these operations he
manage to also form and operate Lower Mainland Security World which carried out
burglar alarm installations as well as developing network installation for the
computerization of homes (Smart House). This included central control of the
complexities of a home including remote access and satellite computer control of
remote equipment. To fill any spare time he co-incidentally invested in, owned
and operated multiple duplex rental units and carried on the international
brokerage of goods. He believes "all fields of endeavor are money making
opportunities if you keep your eye on the ball but that the trip is not complete
until the profit is in the Bank". Mr. Fix brings to the Board of Naptau his
analytical abilities and the drive and determination to bring a project to a
successful conclusion.
ITEM 10. EXECUTIVE COMPENSATION
The following table sets forth the compensation for the fiscal years ended
December 31, 1996, 1997 and 1998 ("fiscal years") payable to Mr. Renyk, the
Company's President. No other officer received any compensation from the Company
in these fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
- --------------------- -------------- ---------------------- ---------------------------- -------------------------------
Long-Term Compensation
Awards
- --------------------- -------------- ---------------------- ---------------------------- -------------------------------
Salary (1) Restricted Stock All Other Compensation
- --------------------- -------------- ---------------------- ---------------------------- -------------------------------
<S> <C> <C>
Edward Renyk 1996 $90,000 -- --
1997 $90,000 -- --
1998 $90,000 -- --
1999 90,000 -- --
- --------------------- -------------- ---------------------- ---------------------------- -------------------------------
</TABLE>
1. 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.
Stock Options
The Company did not grant any stock options to any executive officer during
fiscal years 1996, 1997, 1998 and 1999.
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:
Stock Option Plan
The Company has reserved 300,000 shares of its authorized Common Stock
for issuance to key employees and 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 from the date of issue.
- 8 -
<PAGE>
The options are issuable to officers, key employees and consultants in
such amounts and prices as determined by the Board of Directors. As of
December 31, 1998, no options were granted pursuant to this plan.
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, except for
transfers back to the Issuer, for a period of one year from the date of
issue. As of December 31, 1996, a total of 100,000 shares had been
granted to five directors pursuant to this plan. No further grants have
been made.
Board Compensation
The Board, from time to time, is authorized to establish compensation for the
Directors, but none has been set at this date. All of the directors are
reimbursed for their expenses incurred in connection with their attendance at
Board of Directors meetings.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of February 29, 2000, by its
executive officers and directors, both individually and as a group, and by each
person known by the Company to own more than 5% of the outstanding Common Stock.
Number of Percentage of
Name Shares owned (1) Shares Owned (2)
Noble Metal Group Incorporated (3) 2,500,000 42.13%
801-409 Granville Street
Vancouver, BC, Canada V6C 1T2
Edward D. Renyk 375,000 6.32%
5391 Blundell Rd.
Richmond, BC, Canada V7C 1H3
Director, President & Chief Financial Officer
John J. McIntyre 390,000 6.57%
McIntyre Winteringham
1501 - 543 Granville St.
Vancouver, BC, Canada V6C 1X8
Lloyd Mear 70,000 --
5391 Blundell Rd.
Richmond, BC, Canada V7C 1H3
Director
Dorothy Dennis 373,500 6.29%
705 - 588 Broughton St.
Vancouver, BC, Canada V6G 3E3
Officers and Directors 445,000 7.50%
as a Group (3 persons)
- -- Less than 1%
- 9 -
<PAGE>
(1) Unless otherwise indicated all shares are held of record by the
beneficial holders named above.
(2) Based upon 5,933,500 shares of Common Stock outstanding on March 31,
1999.
(3) Noble Metal Group Incorporated is a corporation publicly traded on the
CDNX Stock Exchange. Information extracted from the INFO CDNX web site
pertaining to Noble on March 24, 2000 show the authorized capital as
100,000,000 shares without par value, of which 35,637,119 were issued
and outstanding. Known owner(s) of 5% or more of the outstanding share
capital extracted from the same site was Dorothy Dennis who held
3,681,547 shares representing 10.33%.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In February 1988 the Company issued 1,900,000 shares of Common Stock to James A.
Howell in consideration of $1,400 and certain organization expenses paid by Mr.
Howell on behalf of the Company. In May 1995 Mr. Howell transferred 350,000
shares to each of Mr. Renyk and Mr. McIntyre.
In June 1995 the Company issued 4,000,000 shares of Common Stock to Noble
pursuant to the Exchange Agreement. In April 1996 the Company issued an
additional 85,000 shares to Noble in partial consideration of its agreement to
extend the due date of certain amounts due under the Operating Agreement entered
into with respect to the Placer Leases.
In October 1995 the Company issued 800,000 shares of Common Stock to Dorothy
Dennis as partial consideration for the assignment of the former PL #1160 Lease
pursuant to the PL #1160 Agreement. In April 1996 the Company issued an
additional 8,500 shares to Dorothy Dennis in consideration of her agreement to
extend the due date of $200,000 payable pursuant to the PL #1160 Lease
Agreement. For a more complete description of the terms of the PL #1160 Lease
Agreement and certain related agreements between the Company and Dorothy Dennis,
see "Item 1. Business."
During 1995 certain officers and directors loaned the Company an aggregate of
$101,677 which loans were non-interest bearing and payable on demand. In 1996,
such officers and directors agreed to convert $96,000 of those loans into 40,000
shares of Common Stock at a conversion price of $2.40 per share.
- 10 -
<PAGE>
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K The following are filed as part of
this Report:
3.1 Certificate of Incorporation of the Registrant (1)
3.2 Certificate of Amendment dated June 23, 1989 to Certificate of
Incorporation (1)
3.3 Certificate of Amendment dated June 1, 1995 to Certificate of
Incorporation (1)
3.4 Certificate for Renewal and Revival of Charter dated June 1, 1995 (1)
3.5 By-laws of the Registrant (1) 4.1 Form of Common Stock Certificate (1)
10.1 Agreement to Exchange Assets for Stock (1)
10.2 Operating Agreement (1)
10.3 Extension Agreement between the Registrant and Noble dated September 1,
1995 (1)
10.4 Second Extension Agreement between the Registrant and Noble dated April
30, 1996 (1)
10.5 Satisfaction of Debt with Stock-Noble Metal Group Incorporated (1)
10.6 Modification and Extension Agreement between Registrant and Noble dated
July 1996 canceling $1,000,000 obligation and further extending date for
payment of $954,500 in consideration for agreement to deliver 3,421
ounces of gold (1)
10.7 Agreement of Business Combination by Exchange of Assets for Stock
Regarding Place Lease #1160 between the Registrant and Dorothy Dennis
(1)
10.8 Extension Agreement between the Registrant and Dorothy Dennis dated
April 30, 1996 (1)
10.9 Satisfaction of Debt with Stock - Dorothy Dennis (1)
10.10 Satisfaction of Debt with Stock - E.D. Renyk (1)
10.11 Satisfaction of Debt with Stock - J.J. McIntyre (1)
10.12 Stock Option Program (1)
10.13 Stock Grant Program (1)
10.14 Employment Agreement of Edward D. Renyk (1)
10.15 Second Extension Agreement between Registrant and Dorothy Dennis dated
October 1996 (1)
10.16 Modification and Extension Agreement between the Registrant and Noble
Metal Group Incorporated dated March 9, 1999 (2)
10.17 Extension Agreement between the Company and Dorothy Dennis dated March
30, 1999 (2)
10.18.1 Letter of Intent between the Company and Cyber Centers.com, Inc. dated
July 6, 1999 (2)
10.18.2 Addendum dated July 28, 1999 to Letter of Intent (2)
10.19 Recission and Release Agreement between the Company and Noble Metal
Group Incorporated effective December 31, 1999 (2)
10.20 Release Agreement between the Company and Dorothy Dennis dated the 17th
day of February, 2000 (2)
16.1 Letter of former Accountant (2)
24.1 Consent of W.G.T. Consultants Ltd. (1)
- --------------
(1) Incorporated by reference to the Company's Form 10-SB, Commission File
No. 0-25786
(2) Filed herewith
- 11 -
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 and 15(d) 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.
Dated: March 24, 2000
NAPTAU GOLD CORPORATION
(Registrant)
By: /s/ Edward D. Renyk
-----------------------
Edward D. Renyk, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
Signature Title Date
/s/ Edward D. Renyk President, Director and March 24, 2000
- --------------------------- Principal Accounting Officer
Edward D. Renyk
/s/ Lloyd E. Mear Director March 24, 2000
- ----------------------
Lloyd E. Mear
/s/ Larry Fix Director March 24, 2000
- --------------------------
Larry Fix
- 12 -
Exhibit 10.18.1
Cyber Centers.com, Inc.
8501 Wilshire Blvd.
Suite 150
Beverly Hills, CA 90211
Phone 310-288-4585 ext. 325 - FAX 310-273-1772
Letter of Intent
I. This agreement shall serve as a Letter of Intent by and between NAPTAU Gold
Corp., a Delaware Corporation with its principal address being 5391 Blundell
Road, Richmond, British Columbia, Canada V7C 1H3 (herein after referred to as
"NPTU" or "buyer"), and Cyber Centers.com, Inc. Nevada corporation with its
principal place of business being 8501 Wilshire Blvd., Suite 150, Beverly Hills,
Ca. 90211 (herein after referred to as "CCC" or "seller").
II Whereas "NPTU" is a publicly traded company on the Over The Counter Bulletin
Board in the United States and has varied business interest in the U.S. and
Canada and
III. Whereas "CCC" is the business of acquiring, promoting, and operating
certain assets, selling procedures, materials, E-commerce business's and various
Internet related consumer services and products;
It is therefore the intention of both parties, pending the approval of their
respective Board of Directors and a definitive agreement to follow this Letter
of Intent that;
"CCC" shall offer and "NPTU" shall acquire the corporation and all its
property's as listed on exhibit "A" for Ten Million dollars ($10,OOO,OOOUS). The
payment shall be in the form of common stock in "NPTU" One Million (1,000,000.)
shares of its common stock shall be transferred at "closing date". Said date to
be no later then July 31,1999. The dollar value to be attributed to these shares
shall be established as the average market trading price of the immediately
preceding ten trading days to the date of "closing". The balance shall be paid,
in stock, that number of shares to be determined by dividing the balance by
shares valued at $5.00US each. Transfer of shares to take place when the per
share price of NPTU trades at an average of $5.00US per share for ten (10)
consecutive trading days or when the subsidiary corporation files for and is
granted a symbol as an independent, publicly traded company, whichever happens
first.
VI. "CCC" shall become a wholly owned subsidiary of "NPTU" with its Board of
Directors and management group to stay in place. "NPTU" shall add such members
to the Board of "CCC" as it deems necessary too properly
Initialed
EDR / JV
<PAGE>
oversee the activities of the. subsidiary and in turn shall allow for "CCC" to
appoint one member to the Board of "NPTU".
VII It is understood that "CCC" (the subsidiary) shall raise Five Million
Dollars ($5,OO0,00OUS) to support its current established business plan. The
security to be issued shall be that of the parent, "NPTU" with the share price
being established at $5.OOUS. Said shares shall be offered in the form of a unit
in which will be attached a warrant(s). The terms and pricing of same shall be
addressed and finalized in the "Definitive Agreement" to follow. In the event
"CCC" is unable to or for any reason does not raise the amount as set forth in
the offering, "NPTU" may at its sole option void or modify the "Agreement" based
on circumstances then in effect.
VIII It is further understood that within those guidelines to be set forth in
the "Definitive Agreement" to follow, "CCC" shall have full and continued
control of its day to day business operations and that within an agreed upon
period of time with the full support of "NPTU", take whatever actions necessary
and file with the Securities Exchange Commission to become an independent
publicly traded company.
IX Certain aspects of both businesses are proprietary in nature and as such
shall remain confidential and be reserved by both parties until actual
agreements are in place and executed. Except for this and paragraph 10, which
shall be legally binding in accordance with their respective terms, this
agreement in principle is not intended to, and shall not, create a binding legal
obligation, and the understandings set forth herein are subject to satisfactory
due diligence by the "buyer" and to the execution of the "Definitive Agreement".
X. The responsibility for the "Definitive Agreement" shall be that of "CCC".
If the foregoing accurately sets forth our understanding, please so indicate by
signing in the space provided.
This letter may be signed in counterparts, both of which taken together shall
consitute one instrument.
July 6, 1999
/s/ Edward D. Renyk
- --------------------------------
Mr. Edward D. Renyk, C.A., President
Naptau Gold Corporation
/s/ John Veyette
- --------------------------------
Mr. John Veyette, President
Cyber Centers.com., Inc.
Exhibit 10.18.2
NAPTAU GOLD CORPORATION
5391 Blundell Road, Richmond, British Columbia, Canada, V7C 1H3
TEL: 604-277-5252 FAX: 604-277-5282
July 28, 1999
ADDENDUM TO LETTER OF INTENT SIGNED JULY 6, 1999
BETWEEN:
CYBER CENTERS.COM, INC. AND NAPTAU GOLD CORPORATION
8501 Wilshire Blvd., Suite 150 5391 Blundell Road
Beverly Hills, CA 90211 Richmond, B.C., V7C 1H3
IT IS HEREBY MUTUALLY AGREED that time is of the essence and the "closing date"
is hereby extended to be "no later than August 31, 1999.
Acknowledged and agreed to this 27th day of July, 1999.
CYBER CENTERS.COM, INC. NAPTAU GOLD CORPORATION
/s/ John Veyette /s/ E. D. Renyk
- --------------------------- --------------------------------
per John Veyette, President per E. D. Renyk, C.A., President
Exhibit 10.19
AGREEMENT EFFECTIVE AS OF THE 31ST DAY OF DECEMBER, 1999
RESCISSION AND RELEASE AGREEMENT
BETWEEN:
NOBLE METAL GROUP INCORPORATED, a British Columbia Corporation having its
principal place of business at 801-409 Granville Street, Vancouver,
British Columbia, V6C 1T2 (herein "Noble")
AND:
NAPTAU GOLD CORPORATION, a Delaware Corporation, having its registered
offices at 11th Floor, Rodney Square North, 11th and Market Streets,
Wilmington, New Castle County, Delaware 19801 (herein "NAPTAU")
WITNESS THAT
WHEREAS
A. Noble and Maritime Transport & Technology Ltd., a New York Corporation,
entered into an agreement on the 6th day of June, 1995 providing for the
acquisition by Naptau of certain assets of Noble, consisting of placer mining
leases in the Cariboo Mining Division of British Columbia in the area of Likely,
British Columbia, Canada bearing placer lease numbers 29, 1159, 1850 and 2093
(collectively the "Placer Leases") (the said agreement being hereinafter
referred to as the "Exchange Agreement");
B. On the same date, Naptau entered into an agreement with Noble for the
operation by Noble of the Placer Leases on behalf of Naptau (the "Operating
Agreement");
C. Under the terms of the Exchange Agreement, Noble received as partial
consideration for the transfer of assets consisting of the Placer Leases, the
delivery of 4 million shares of Naptau, and Naptau was obligated to pay Noble
USD$1,000,000 by September 3,1995 for the entering into of the Operating
Agreement, and was obligated to pay a further USD$1,000,000 by October 3,1995
for the funding of the 1995 mining operations on the Placer Mining Leases;
D. Naptau paid to Noble a total of USD$45,500 by December 31, 1995 for the
operating expenses relating to the 1995 mining operations on the Placer Leases;
E. Naptau was unable to pay the balance of the sums due and owing under the
Exchange Agreement and Operating Agreement until such time as the company had
been granted approval for its Registration Statement filed with the United
States Security and Exchange Commission on August 9,1995, and was also granted a
listing on the NASDAQ Small Cap Market as soon as the listing requirements were
met;
F. Both Noble and Naptau wished to have fulfilled the obligations of the
Exchange Agreement and Operating Agreement as soon as Naptau was in a position
to complete;
<PAGE>
-2-
G. By an agreement dated September 1, 1995, Naptau was granted an extension of
the time for performance of its obligations under the Exchange Agreement and
Operating Agreement to December31, 1995 (the "Extension Agreement);
H. By a second extension agreement dated April 30, 1996, Naptau was granted a
further extension for performance of its obligations under the Exchange
Agreement and Operating Agreement to June 30, 1996 (the "Second Extension
Agreement");
I. By a third extension and modification agreement dated July 26, 1996, there
was a conversion of USD$1,000,000 debt to 3,241 ounces of raw gold at a deemed
price of USD$380 per ounce with a schedule for payments as set out in that
agreement with the balance of USD$954,500 owing under the terms of the Exchange
Agreement and the Operating Agreement for the deemed expenses of the 1995 mining
operations to be paid by June 30,1997 (the "Third Extension Agreement");
J. A further modification and extension agreement was entered into as of
December 31st, 1997 (the "Fourth Extension Agreement"). It was a term of that
agreement that Noble grant to Naptau a further extension of time until December
31, 1998, in which to pay the balance of USD$954,500 due and owing under the
terms of the Exchange Agreement and the Operating Agreement for the deemed
expenses of the 1995 mining operations on the Placer Leases. Compounded interest
was payable and calculated semi-annually on the above amount at the rate of 10%
per annum to June 30, 1997 and at the rate of 12% per annum thereafter. (The
principal and interest together referred to as the "Debt")
K. The Placer Leases were on October 14, 1998 combined into a Lease of Placer
Minerals along with Placer Lease #1160 for a term of ten years bearing Mineral
Tenure #365488 out of the Cariboo Mining Division of British Columbia (the
"Mineral Tenure Lease"). The Mineral Tenure Lease is in the joint names of Noble
and Dorothy Dennis.
L. Naptau acquired Placer Lease #1160 in an Exchange Agreement with Dorothy
Dennis which was entered into on October 12,1995 ("the PL1160 Agreement"). Under
the terms of that agreement Naptau was obligated to pay Dorothy Dennis
US$200,000 for the acquisition of the said Placer Lease. There have been various
extension agreements to the PL1160 Agreement, but Naptau remains obligated to
pay Dorothy Dennis the principal amount of US$200,000. With the consent of
Dorothy Dennis and in order to enjoy the full benefit of the Mineral Tenure
Lease to itself, Noble has agreed that it will assume the obligations of Naptau
to pay the said sum of US$200,000 to Dennis.
M. A fifth modification and extension agreement was entered into on March 9,1999
which provided for a further extension of time to Naptau to pay the Debt owing
by it to Noble by December 31st, 2001 and which provided for the deemed
conversion at U.S.$2.00 per share of 1,000,000 common shares of Naptau presently
held by Noble into 8695 ounces of raw gold which was to be paid and delivered in
accordance with the schedule therein (the "Fifth Extension Agreement").
N. Naptau with the concurrence of Noble obtained a listing on the NASDAQ
Electronic
<PAGE>
-3-
Bulletin Board. Since then, the management of Naptau experienced significant
changes and as of June 1999 has chosen to concentrate its business activities
and future growth in areas relating to e-commerce on the Internet. Naptau has
been unsuccessful in raising any funds that could be used to pay any of its debt
obligations to Noble.
0. Naptau was unable in 1999 to come up with any funds to pay to Noble for the
operating expenses on the placer leases, which combined with poor weather
conditions has resulted in no operating activity on the Placer Leases during
this year.
P. By a prior agreement between the parties, made in September 1999, Noble
agreed to an intercompany transfer of debts owing by Naptau to Dorothy Dennis of
the sum of US$51,637.50 as the value of conversion of ounces of raw gold payable
to Dorothy Dennis for the various extension agreements to the PL1160 Agreement;
and of the sum of US$9,382.86 for loans made by Dorothy Dennis to Naptau. Naptau
is obligated to repay these sums to Noble.
Q. Naptau has at the site of the Placer Leases and Placer Mining Claims hard
assets including but not limited to an interest in the production plant, pumps,
motors and a gold separation table, (all of which assets are collectively
referred to as the "Mining Equipment") all of which were purchased by Noble and
for which Naptau has yet to repay the same.
R. Neither of the parties has any present confidence in Naptau being in a
position to fulfill its contractual obligations to Noble in 2000 and to repay
any of the debts owing by Naptau to Noble.
S. There has been a recovery in the international price of gold which makes it
desirable for Noble to recover the property rights over the Placer Leases as
well as other placer leases in the area staked on behalf of Naptau and known as
the Lou I and Lou 2 Placer Mining Claims.
T. Noble does not wish to be in a position of control or deemed control of
Naptau through the ownership either directly or indirectly of shares of the
latter company.
U. The parties wish to sever their relationship on terms that will allow them to
carry on their separate business endeavours without any further recourse of one
against the other relating to any of the foregoing recitals.
IT IS NOW AGREED that in consideration of the payment of TEN DOLLARS ($10) by
Naptau to Noble, the receipt and sufficiency of which is hereby acknowledged,
and the further mutual covenants and agreements following, that:
1. Naptau hereby reconveys to Noble the Placer Leases, as now combined in the
Mineral Tenure Lease including all attached rights to benefit from the
development and extraction of all minerals, precious stones and nuggets there
from and hereby agrees to assign, transfer and deliver to Noble all documents of
title relating to the Mineral Tenure Lease.
2. Naptau hereby conveys to Noble all possessory and proprietary rights to the
placer
<PAGE>
-4-
properties in the Cariboo Mining Division of British Columbia known as the Lou 1
and Lou 2 Placer Mining Claims and agrees to deliver any documents of title that
may be necessary to effect this purpose.
3. Naptau agrees that if it is the holder of any other placer leases or has any
beneficial interest in any other Placer Mining Claims in the Cariboo Mining
Division of British Columbia which may be adjacent to or nearby the Placer
Leases, and for which any prior owner does not make any claim to return of the
same to their possession within 90 days of entering into this Agreement that it
does hereby, for the consideration aforesaid convey those other placer leases
and any beneficial interest in any other Placer Mining Claims to Noble and will
deliver all documents of title to Noble that may be necessary to effect this
purpose.
4. Naptau hereby conveys to Noble all possessory and proprietary rights to the
Mining Equipment located at the site of the Placer Leases and Placer Mining
Claims in the Cariboo Mining Division of British Columbia and agrees to deliver
any documents of title that may be necessary to effect this purpose.
5. Naptau agrees to transfer to Noble all exploration expenditures account
balances for Canadian tax purposes relating to the operation by Noble of the
Placer Leases since June 6,1995 for which Noble has received no reimbursement by
Naptau. In order to give full effect to this transfer Naptau and Noble agree to
jointly elect pursuant to subsection 66.7(7) of the Income Tax Act of Canada the
transfer of the exploration expenditure account balances using the Revenue
Canada prescribed Form (T2010) in the specified time, i.e. 180 days from the
companies' fiscal year in which the transfer took place. Naptau further agrees
that it will execute any other forms and elections which may be required under
the Income Tax Act of Canada for this purpose.
6. Noble hereby cancels all debt obligations due to it from Naptau, including
for delivery of raw gold, reimbursement of operating expenses, re-payment for
the Mining Equipment, interest charges and payment for the original transfer of
the Placer Leases as calculated by the various agreements referred to in the
above recitals including reimbursement for the transfer of the debt obligations
owing to Dorothy Dennis by Naptau.
7. Noble agrees to assume the liability of Naptau under the PL1160 Agreement to
Dorothy Dennis for US$200,000 and agrees to the release by Dorothy Dennis of
Naptau from that debt obligation.
8. Noble hereby agrees to divest itself within 60 days of up to 735,000 shares
of Naptau either by way of cancellation, donation or transfer of same to third
parties.
9. Naptau agrees that with the divestiture of the above shares that in its
opinion Noble is not either in fact or in law in any control position with
respect to the operations of Naptau or the acts of its Board of Directors and
that none of the Directors of Noble is in any way an affiliate of Naptau within
the meaning of the U.S. Securities legislation and Regulations. In accord with
this acknowledgment, Naptau further agrees to deliver any letters or
<PAGE>
-5-
documents necessary to have removed any legend on the transfer of any share
certificate of Naptau which may be held by Noble or the Directors of Noble.
10. It is agreed that Noble is entitled to remain the registered shareholder of
the balance of its shareholding in Naptau and to do with the same whatever it
sees fit.
11. Noble hereby agrees to release and forever discharge Naptau from all claims
arising out of or in any way connected with the failure of Naptau to meet the
terms and obligations of the prior agreements entered into between the parties
and referred to in the recitals.
12. Naptau hereby agrees to release and forever discharge Noble from all claims
that the former may have against Noble arising out of any failure on the part of
Noble to operate the Placer Leases in accordance with the expectation of the
parties and further hereby releases Noble from any other claim that it may have,
whether known or unknown including any other business opportunities anticipated,
proposed or discussed between the parties.
13. Both parties hereby agree that they may pursue any business opportunity
available to them without any recourse of the one against the other as a result
of the exclusion of the other party from any such opportunity.
14. This Agreement shall be construed in accordance with the laws of the
Province of British Columbia, Canada.
This Agreement may be executed in counterpart and by faxed signature and the
parties agree to deliver executed copies of the original document.
IN WITNESS WHEREOF THE PARTIES HERETO, CORPORATE PARTIES HAVING BEEN DULY
AUTHORIZED BY THEIR RESPECTIVE BOARDS OF DIRECTORS, HAVE SET THEIR HANDS AND
SEALS EFFECTIVE AS OF THE DAY FIRST ABOVE WRITTEN.
NOBLE METAL GROUP INCORPORATED
/S/ Dorothy Dennis /S/ William C. Jackson
BY: DOROTHY DENNIS, PRES. BY: WILLIAM C. JACKSON, DIRECTOR
/S/ Irvin Olsen
BY: IRVIN OLSEN, DIRECTOR
NAPTAU GOLD CORPORATION
/S/ Edward D. Renyk /S/ Lloyd Mear
BY: EDWARD D. RENYK, PRES. BY: LLOYD MEAR, DIRECTOR
/S/ Larry Fix
BY: LARRY FIX, DIRECTOR
Exhibit 10.20
RELEASE AGREEMENT
BETWEEN:
DOROTHY DENNIS, businesswoman (herein "Dennis"),
of #705 - 588 Broughton St., Vancouver, British Columbia, V6G 3E3
AND:
NAPTAU GOLD CORPORATION, a Delaware Corporation (herein
"NAPTAU"), having its registered offices at 11th Floor, Rodney
Square North, 11th and Market
Streets, Wilmington, New Castle County, Delaware 19801
WITNESS THAT
WHEREAS:
(A) NAPTAU and Dennis entered into an agreement on the 12th day of October, 1995
for the acquisition by NAPTAU of Placer Lease #1160 in the Cariboo Mining
Division of British Columbia, in the area of Likely, British Columbia, Canada
(the "Agreement");
(B) Pursuant to the Agreement NAPTAU was obligated, in part, to pay the sum of
USD$200,000 to Dennis on or before December 12,1995;
(C) By an agreement dated April 30, 1996, NAPTAU was granted an extension of the
time for performance of its obligation to make the above payment to October
12,1996 (the "Extension Agreement"). The Extension Agreement also included terms
reflecting settlement of any interest due on the above sum;
(D) By an agreement dated October 30, 1996 a Second Extension Agreement was
entered into providing for the extension of the amount required to be paid in
paragraph 2 above to the 12th day of October, 1997 and further providing for the
payment by NAPTAU to Dennis of 100 ounces of raw gold from its share of the gold
produced from all of its placer mining operations in the Cariboo Mining Division
of British Columbia (the "Leases");
(E) By a Third Extension Agreement dated December 31,1997 the time for payment
of the money referred to in paragraph 2 was extended to December 3lst, 1998 and
the number of ounces of raw gold required to be paid was increased to 150 ounces
which was to be paid to Dennis from production from the Leases;
(F) For reasons known to Dennis, NAPTAU was unable to obtain sufficient
production of raw gold from the Leases in 1998 to meet its obligations to Dennis
referred to in the preceding paragraph;
(G) Placer Lease #1160 was on October 14, 1998 combined into a mineral tenure
lease bearing Mineral Tenure #365488 (the "Mineral Tenure Lease");
<PAGE>
-2-
(H) By a fourth Extension Agreement entered into on or about March 30, 1999, the
amount agreed to be paid by NAPTAU to Dennis in paragraph 2 was extended to the
31st day of December, 1999, and instead of the 150 ounces of raw gold to be paid
by NAPTAU to Dennis under the Third Extension Agreement it was agreed that
Naptau would pay Dennis 200 ounces of raw gold from its share of the gold
produced from the mining operations on the Mineral Tenure Lease.
(I) The Extension Agreement, Second Extension Agreement, Third Extension
Agreement and Fourth Extension Agreement have now expired and NAPTAU has not as
yet made any of the monetary payments above referred to although the obligation
to pay 200 ounces of raw gold has been satisfied;
(J) NAPTAU has entered into an agreement effective December 31, 1999 with Noble
Metal Group Incorporated ("Noble") for the transfer of its entire interest in
the Mineral Tenure Lease to Noble (the "Settlement Agreement") on terms in part,
that includes Noble agreeing to assume the monetary obligation to pay Dennis the
US$200,000; and
(K) Dennis agrees to the substitution of Noble as the party responsible for the
payment of US$200,000 to her for the original transfer of PL1160 to Naptau under
the Agreement.
IT IS NOW AGREED that in consideration of the payment of TEN DOLLARS ($10) by
NAPTAU to Dennis, the receipt and sufficiency of which is hereby acknowledged,
and the further mutual covenants and agreements following that:
1. Dennis hereby agrees to the substitution of Noble as the party responsible to
pay her US$200,000 for the transfer of PL1160 under the Agreement.
2. Naptau hereby transfers and assigns to Dennis all rights necessary to enforce
the legal obligation of Noble to pay the US$200,000 to her pursuant to the
Settlement Agreement.
3. Dennis for the consideration aforesaid hereby releases and forever discharges
Naptau from any obligation to pay the US$200,000 to her pursuant to the
Settlement Agreement.
4. This Agreement shall be construed in accordance with the laws of the Province
of British Columbia, Canada.
5. This Agreement may be executed in counterpart and by faxed signature and the
parties agree to deliver executed copies of the original document.
IN WITNESS WHEREOF THE PARTIES HERETO, IF CORPORATE PARTIES HAVING BEEN DULY
AUTHORIZED BY THEIR RESPECTIVE BOARDS OF DIRECTORS, HAVE SET THEIR HANDS AND
SEALS AS OF THE 17th DAY OF FEBRUARY, 2000.
<PAGE>
-3-
NAPTAU GOLD CORPORATION
/S/ Edward Renyk
BY: EDWARD RENYK, President
EXECUTED BY DOROTHY DENNIS )
IN THE PRESENCE OF: )
Name: /s/ William C. Jackson )
WILLIAM C. JACKSON )
Address: 302 8770 Granville ) /s/ Dorothy Dennis
Vancouver, B.C. ) DOROTHY DENNIS
Occupation: Retired )
Exhibit 16.1
KPMG
KPMG LLP
Chartered Accountants
Box 10426 777 Dunsmuir Street Telephone (604) 691-3000
Vancouver BC V7K 1K3 Telefax (604) 691-3031
Canada www.kpmg.ca
Mr. Ed Renyk
President
Naptau Gold Corporation
5391 Blundell
Richmond BC V7C 1H3
June 2, 1999
Dear Mr. Renyk
Please be advised that we decline to stand for re-appointment as auditors of
Naptau Gold Corporation (the "Company"). We recommend that you seek legal advice
to ensure all relevant legal, statutory and regulatory requirements are met.
Yours very truly
/s/ D. C. Peniuk
D.C. Peniuk
Partner
(604) 691-3105
DCP:cec/83 185
cc Board of Directors
KPMG LLP, a Canadian owned limited liability partnership
established under the laws of Ontario, is a member of
KPMG International, a Swiss association
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Financial Statements of Naptau Gold Corporation for the years ended December 31,
1999, 1998 and 1997 (audited) and is qualified in its entirety by reference to
such Financial Statements
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 1,042
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 1,042
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,042
<CURRENT-LIABILITIES> 643,133
<BONDS> 0
0
0
<COMMON> 5,934
<OTHER-SE> 1,582,105
<TOTAL-LIABILITY-AND-EQUITY> 1,042
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> (108,897)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 127,596
<INCOME-PRETAX> 108,897
<INCOME-TAX> 0
<INCOME-CONTINUING> 108,897
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 108,897
<EPS-BASIC> .02
<EPS-DILUTED> .02
</TABLE>
