Advantego Corp - Quarter Report: 2011 September (Form 10-Q)
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
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[X]
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Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for quarter period ended
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September 30, 2011
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[ ]
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Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from __________ to __________.
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Commission file number 0-23726
GOLDEN EAGLE INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
| Colorado | 84-1116515 |
| (State of incorporation) | (IRS Employer Identification No.) |
9653 South 700 East, Salt Lake City, UT 84070
(Address of principal executive offices) (Zip Code)
Golden Eagle's telephone number, including area code: (801) 619-9320
____________________________________
Former Address if Changed Since Last Report
Indicate by check mark whether the registrant (1) has 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 the filing requirements for the past 90 days.
[ X ] Yes [ ] No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
[X] Yes [ ] No
Indicate by check mark whether the registrant is a large accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer and “smaller reporting company” in rule 12b-2 of the Exchange Act.
Large accelerated filer |_| Accelerated filer |_|
Non-accelerated filer |_| Smaller reporting company |X|
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
|_| Yes |X| No
At November 14, 2011, there were 14,525,044 shares of Company common stock outstanding.
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
The unaudited Financial Statements for the three and nine months ended September 30, 2011 are attached hereto and incorporated by reference herein. Please refer to pages F-1 through F-10 following the signature page.
Item 2. Management's discussion and analysis of financial condition and results of operations
Throughout this Quarterly Report on Form 10-Q Golden Eagle International, Inc. is referred to as “we”, “our”, “us”, the “Company” and “Golden Eagle.”
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Because we want to provide you with more meaningful and useful information, this Quarterly Report on Form 10-Q contains certain “forward-looking statements” (as such term is defined in Section 21E of the Securities Exchange Act of 1934, as amended). These statements reflect our current expectations regarding our possible future results of operations, performance and achievements. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, regulations of the Securities and Exchange Commission and common law.
Wherever possible, we have tried to identify these forward-looking statements by using words such as “anticipate,” “believe,” “estimate,” “expect,” “plan,” “intend,” and similar expressions. These statements reflect our current beliefs and are based on information currently available to us. Accordingly, these statements are subject to certain risks, uncertainties, and contingencies, including those set forth under the heading “Risk Factors” in our annual report on Form 10-K for the year ended December 31, 2010, which could cause our actual results, performance, or achievements to differ materially from those expressed in, or implied by, such statements. Readers are cautioned that forward-looking statements are not guarantees of future performance and that actual results or developments may differ materially from those expressed or implied in the forward-looking statements.
We are under no duty to update any of these forward-looking statements after the date of this report. You should not place undue reliance on these forward-looking statements.
Overview; Plan of Operations
The following discussion should be read in conjunction with our financial statements and related notes appearing elsewhere in this Form 10-Q and our Annual Report on Form 10-K for our fiscal year ended December 31, 2010.
A. U.S. Assets and Operations
The Gold Bar Mill.
In 2004, we purchased the 3,500 to 4,500 ton-per-day (“tpd”) Gold Bar CIP gold mill (the “Gold Bar Mill”) located 25 miles northwest of Eureka, Nevada. Initially, our plan was to disassemble the Gold Bar Mill and transport it to Bolivia to be reconstructed on our former A Zone project in eastern Bolivia. However, for various reasons we determined that the best course of action with regards to the Gold Bar Mill was to leave it in place and explore other options related to the mill in Nevada. The Gold Bar Mill was not in operation when we acquired it, and it has not been in operation during our period of ownership. At the present time, the Gold Bar Mill is our only significant capital asset.
We are exploring and considering various alternatives with respect to the Gold Bar Mill. Among the options we are considering are:
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-
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A merger or an outright sale either for cash or stock and other consideration contingent upon identifying a suitable buyer;
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-
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Rehabilitating the Gold Bar Mill for toll refining which is defined as processing ore through our mill for a fixed fee or toll that is produced by a third-party mining company from its mine on its current site, although we do not have the capital resources to do so; and
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Engaging in a joint venture or other strategic transaction with other parties that may be able to produce ore from their mines and wish to utilize the mill.
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Although we have engaged in general discussions with certain third parties regarding certain possibilities with respect to the Gold Bar Mill, to date we have not taken any definitive steps that would result in either the Gold Bar Mill being put into operation, sold, or otherwise monetized for the Company’s benefit, and there can be no assurance that we will be able to do so.
Under Colorado law, shareholder approval would likely be required as a condition precedent for the Company to complete a merger , for the sale of all or substantially all of the Company’s assets not in the ordinary course of business, and for certain other significant corporate actions or transactions.
In the event we enter into a joint venture, refurbish, or operate the Gold Bar Mill on our own we would require the infusion of a significant amount of additional capital. Bringing the Gold Bar Mill back into operation would require a significant commitment both in terms of time and financial resources as we would need to take actions such as applying for various permits and constructing a new tailings impoundment facility for disposal. Therefore, given the Company’s limited resources it is not likely that the Company will be able to rehabilitate the Gold Bar Mill on its own, and the more likely scenario for the Gold Bar Mill will involve it being sold to a third party or otherwise rehabilitated and operated by a third party. Even if we are able to bring the Gold Bar Mill back into operation, larger mining companies providing similar services with greater financial resources in the area may affect our ability to attract toll refining partners or customers. Moreover, as a result of certain agreements previously entered into by the Company, we are required to pay a commission or fee if we are able to complete certain strategic transactions involving the Gold Bar Mill, such as its sale or transfer to a third party. We also have an obligation to pay an officer of the Company a 3% override or royalty on the net smelter return resulting from the Gold Bar Mill if the officer is a primary contributor to bringing the Gold Bar Mill into production whether through a merger, joint venture or on a toll refining basis. Additionally, we may enter into other agreements which may require us to pay a percentage of the transaction value as a fee for arranging the possible sale or transfer of our Gold Bar Mill.
Although the Company is not currently involved in active business operations, because of the significant value of the Gold Bar Mill, the Company does not believe it is a shell company as that term is defined in Rule 12b-2 of the Securities Exchange Act of 1934 (the “Exchange Act”).
B. Bolivia
As part of the sale of our Bolivian operations and assets during 2010, we received a 3% net smelter royalty on all minerals produced from the properties which may be sold, up to $3 million. The net smelter royalty will be paid to us on a quarterly basis if and when mineral production is achieved from the mining concessions previously owned by the Bolivian subsidiary, and will likely be subject to compliance with Bolivian law regarding the expatriation of capital. Through September 30, 2011, we have not received any payment or accrual of any obligations under the net smelter return, and we have no expectation of receiving any payments in the foreseeable future.
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C.
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Cash and Marketable Securities
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On August 20, 2010, we entered into a settlement agreement (the “YNG settlement”) with Yukon-Nevada Gold Corp. and its subsidiary, Queenstake Resources USA, Inc. (“Queenstake,” collectively referred to in this report as “YNG”), to settle all claims in the lawsuit among the parties filed in the Fourth Judicial District Court of Nevada, Elko County (Queenstake Resources USA, Inc. v. Golden Eagle International, Inc. v. Yukon-Nevada Gold Corp, et al., CV-C-09-544). This litigation arose from what we believed was YNG’s wrongful termination of a Mill Operating Agreement to operate the Jerritt Canyon Mill, a 4,000 tpd gold processing mill located near Elko, Nevada. A stipulation among the parties to dismiss the lawsuit with prejudice was filed with the court and each party bore its own costs and attorneys’ fees.
Pursuant to the settlement with YNG, we received a total cash payment of $3,467,152 and were issued 2,000,000 shares of YNG common stock. During the nine months ended September 30, 2011 we sold 350,000 YNG shares for $168,161, resulting in our ownership at September 30, 2011 of 1,650,000 YNG shares. The market price of YNG stock declined to $0.28 per share as of September 30, 2011 (as compared to the $0.576 per share valuation at the date of the settlement). We expect to sell the shares over time as market conditions permit and as necessary to allow us to meet our financial obligations. We have an obligation to a third party and a separate obligation to one of our officers to pay the third party and the officer an aggregate of 8% of the value of the YNG stock we currently hold as we sell those shares. The accounts payable disclosed in our financial statements include these obligations. Although the YNG common stock we acquired as part of the YNG settlement constitutes a significant asset on our balance sheet at September 30, 2011, the Company does not intend to engage in, and does not believe it is engaged in the business of investing or reinvesting in, holding, or trading securities of other companies. Instead (as noted above) the Company is focused on executing upon business opportunities with respect to its primary asset – the Gold Bar Mill.
Liquidity and capital resources
Until the completion of the YNG settlement described above, our working capital deficit and lack of liquidity for at least the preceding five years limited our ability to fund our operations and fully pursue our business plan. The YNG settlement and the sale of our Bolivian assets resulted in our ability to repay our current obligations and created a significant amount of positive working capital. The following table sets forth our working capital position at September 30, 2011 as compared to December 31, 2010.
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September 30, 2011
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December 31, 2010
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Cash and cash equivalents
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$ | 271,235 | $ | 1,670,949 | ||||
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Marketable securities*
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462,000 | 1,738,000 | ||||||
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Prepaid expenses
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1,100 | 1,100 | ||||||
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Accounts receivable
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8,597 | - | ||||||
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Current Assets (Total)
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742,933 | 3,410,049 | ||||||
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Current Liabilities
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(283,279 | ) | (1,241,453 | ) | ||||
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Working Capital
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$ | 459,654 | $ | 2,168,596 | ||||
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* We held 2,000,000 YNG shares (valued at $0.87 per share) at December 31, 2010, and 1,650,000 YNG shares (valued at $0.28 per share) at September 30, 2011.
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Our current liabilities as of September 30, 2011 totaled $283,279. This represents a significant decrease in our current liabilities from December 31, 2010 which totaled $1,241,453. During the nine months ended September 30, 2011 we satisfied debt obligations of approximately $451,410 and paid $480,101 of accrued interest associated with certain Company obligations. Primarily as result of the satisfaction of these debt obligations and our continuing use of our cash resources resulting from the YNG settlement to fund our limited operations (which resulted in a loss for the nine months ended September 30, 2011 of $764,325), our working capital decreased at September 30, 2011 by approximately $1,708,942 from December 31, 2010. The statement of cash flows indicates that this derived from a use of $1,181,465 in operating activities and $386,410 in financing activities, offset in small part by $168,161 received from the sale of the YNG shares.
Because we have no continuing active business operations, we have no revenues from operations and our on-going cash flow commitments are related primarily to our office lease, salaries, accounting and legal expenses associated with maintaining our status as a company reporting under the Exchange Act. Inasmuch as we have no revenues other than nominal amounts of interest, we can expect our working capital and available cash and other liquid assets to continue to decrease as we pay our corporate obligations. We have no prospects at the current time of generating any revenues from operations. Although we expect to be able to use our cash on hand and the proceeds from potential sales of our marketable securities to be sufficient to satisfy our basic corporate needs through the remainder of fiscal 2011, such resources are not sufficient to allow us to engage in any significant operations at the Gold Bar Mill or elsewhere.
We expect to continue to focus our efforts on identifying and executing upon a strategic transaction with respect to the Gold Bar Mill. However, to date we have not been able to execute upon such a transaction or otherwise engage in any revenue producing activities with respect to the Gold Bar Mill.
Capital Structure
As a result of the issuance of common stock in exchange for outstanding preferred stock and debentures that occurred in June 2011, our capital structure changed significantly at September 30, 2011 as compared to December 31, 2010, as reflected in the following table:
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September 30, 2011
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December 31, 2010
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Authorized Capital
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(shares)
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(shares)
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Common Stock
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2,000,000,000
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2,000,000,000
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Preferred Stock
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10,000,000
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10,000,000
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Series A
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3,500,000
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3,500,000
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Series B
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4,500,000
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4,500,000
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Series C
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1
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1
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Series D
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999,000
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999,000
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Remaining undesignated
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1,000,999
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1,000,999
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Outstanding Capital
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Common Stock
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14,525,044
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9,335,445
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Preferred Stock
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Series A
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-
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-
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Series B
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80,000
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80,000
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Series C
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-
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1
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Series D
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-
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568,886
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Additionally, at December 31, 2010, we had outstanding debentures and notes payable (totaling $509,952 in principal amount) that were convertible into 1,154,444 shares of our common stock outstanding (not including interest payable). During June 2011, we issued 1,344,660 shares of our restricted common stock to certain debenture holders in satisfaction of the principal and interest accrued on the debenture, leaving outstanding debentures and notes payable ($65,000 in principal amount and $20,425 accrued interest) that are convertible into 61,890 shares of our common stock (including interest payable). We anticipate that we will pay off this note in cash rather than convert it to common shares.
Results of Operations
Three and Nine Months Ended September 30, 2011
The following sets forth certain information regarding our results of operations for the three and nine-month period ended September 30, 2011, compared with the same period in 2010.
Revenue and Production Costs. We had no revenues from operations during the three or nine-months ended September 30, 2011. Further, due to the disposal of our Bolivian assets and the settlement with YNG we reclassified all prior activities to discontinued operations for the 2010 period and subsequent periods presented in this report.
General and administrative expenses. General and administrative expenses for the three-month period ended September 30, 2011 increased by $6,071 to $221,965 from $215,894 during the same 2010 period. General and administrative expenses for the nine-month period ended September 30, 2011 increased by $34,872 to $661,218 from $626,346 during the same 2010 period. The increase was the result of increased wages and the expenses we incurred to address issues resulting from the Public Company Accounting Oversight Board’s revocation of the registration of our former auditor including costs incurred to amend our Form 10-K and re-audit our December 31, 2009 financial statements. With the exception of these two items most other expenses decreased during the three and nine-month period during the 2011 periods compared to the 2010 periods.
Interest Expense. Interest expense for the three-month period ended September 30, 2011, decreased by $94,069 to $1,311, from $95,380 during the same 2010 period. Interest expense for the nine-month period ended September 30, 2011 decreased by $248,136 to $49,564 from $297,700 during the same 2010 period. The decrease was primarily the result of the payoff of debt with the proceeds from our legal settlement with YNG. We anticipate that interest expense will continue to decline as a result of additional debt reductions, in particular the payoff of debt that was accruing penalty interest.
Loss on sale of securities. During the three-month period ended September 30, 2011 we sold 210,000 shares of YNG common stock at prices ranging from $.53 per share to $.44 per share. The sale of shares resulted in a loss of $21,483 during the period (because these sales were at market prices less than our basis through the settlement with YNG). We generated net cash of $99,477 from the sale of these shares. During the nine-month period ended September 30, 2011 we sold 350,000 shares of YNG common stock at prices ranging from $.53 per share to $.44 per share. The sale of shares resulted in a loss of $33,499 during the period. We generated net cash of $168,161 from the sale of these shares.
Net Gain (Loss) on discontinued operations. Net gain on discontinued operations was $0 for the three-month period ending September 30, 2011 versus a gain of $4,055,691 for the three-months ended September 30, 2010. The gain during the three month period in 2010 resulted from our legal settlement with YNG with a gain of $4,077,270 less a loss of ($21,579) on our Bolivian operations. Net gain on discontinued operations was $0 for the nine-month period ending September 30, 2011 versus a gain of $3,736,866 for the nine-months ended September 30, 2010. The gain during the nine month period in 2010 resulted from our legal settlement with YNG with a gain of $3,874,582 less a loss of ($137,716) on our Bolivian operations and sale of our Bolivian assets.
Off balance sheet arrangements
None
Critical Accounting Policies
There were no accounting standards adopted during the three months ended September 30, 2011 that had a material impact on our consolidated financial statements. Based on our current operations, our management believes there are no significant accounting policies that require significant judgment or estimation.
Item 4. Controls and procedures
Our management, with the participation of our principal executive officer and our principal financial officer has evaluated the effectiveness of our disclosure controls and procedures as required by Exchange Act Rule 13a-15(b) as of September 30, 2011 (the end of the period covered by this report). Based on that evaluation, our principal executive officer and our principal financial officer have concluded that, because of the material weakness identified in our disclosure controls described in our annual report for the year ended December 31, 2010 on Form 10-K, our disclosure controls and procedures were not effective as of September 30, 2011. Due to a lack of financial resources, we are not able to, and do not intend to, immediately take any action to remediate the material weaknesses identified.
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
There were no changes in our internal control over financial reporting during the quarter ended September 30, 2011, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II – OTHER INFORMATION
Item 1. Legal proceedings
We are not currently a party to any on-going litigation that is likely to have a material impact on our financial position, results of operations, or cash flows.
Item 1A Risk Factors.
There have been no material changes to the information included in risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2010.
Item 2. Unregistered sales of equity securities and use of proceeds.
We issued no shares of our common stock during the quarter ended September 30, 2011, or subsequently, that have not been previously reported on within a Form10-Q or 8-K.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Reserved
Item 5. Other Information
As reported in the Company’s current report on Form 8-K dated April 8, 2011 (as amended), on April 8, 2011, the Public Company Accounting Oversight Board (“PCAOB”) issued an order permanently revoking the registration of Chisholm, Bierwolf, Nilson & Morrill, LLC (“Chisholm”), the accountants which had audited the financial statements of Golden Eagle International, Inc. (“GEII”) for the year ended December 31, 2009 and prior years. As a result of the revocation, the 2009 audit report filed by Chisholm as a part of GEII’s annual report on Form 10-K for the 2010 fiscal year (and in prior reports for prior years) were no longer effective. On September 13, 2011 we filed an amended 10-K/A which included our 2009 financial statements that had been re-audited by our current auditors, Mark Bailey & Company. The re-audited 2009 financial statements did not include any changes to the financial statements previously presented. We believe that we are now current with all of our required filings with the Securities and Exchange Commission.
Item 6. Exhibits:
Exhibits required by Item 601 of Regulation S-K:
31. Certifications pursuant to Rule 13a-14(a)
31.1 Certification of the Chief Executive Officer
31.2 Certification of the Chief Financial Officer
32. Certifications pursuant to 18 U.S.C. §1350.
32.1 Certification of the Chief Executive Officer
32.2 Certification of the Chief Financial Officer
101 Interactive Data Files required by Rule 405 of Regulation ST, and Item 601(101) of Regulation SK
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Golden Eagle has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| GOLDEN EAGLE INTERNATIONAL, INC. | |
| (Golden Eagle) | |
| November 14, 2011 | /s/ Terry C. Turner |
| Terry C. Turner | |
| President and Principal Executive Officer | |
| November 14, 2011 | /s/ Tracy A. Madsen |
| Tracy A. Madsen | |
| Principal Accounting Officer | |
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Golden Eagle International, Inc.
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Consolidated Balance Sheets
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(Unaudited)
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September 30,
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December 31,
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2011
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2010
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ASSETS
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CURRENT ASSETS
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Cash & cash equivalents
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$ | 271,235 | $ | 1,670,949 | ||||
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Marketable securities
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462,000 | 1,738,000 | ||||||
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Prepaid expenses
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1,100 | 1,100 | ||||||
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Accounts receivable
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8,597 | - | ||||||
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Total current assets
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742,933 | 3,410,049 | ||||||
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PROPERTY AND EQUIPMENT
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Plant and mill - idle
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3,980,000 | 3,980,000 | ||||||
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Office equipment
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9,204 | 9,204 | ||||||
| 3,989,204 | 3,989,204 | |||||||
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Less accumulated depreciation
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(9,102 | ) | (8,948 | ) | ||||
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Total property and equipment
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3,980,102 | 3,980,256 | ||||||
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Total Assets
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$ | 4,723,035 | $ | 7,390,305 | ||||
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LIABILITIES AND STOCKHOLDERS' EQUITY
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CURRENT LIABILITIES
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Accounts payable and accrued expenses
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$ | 197,854 | $ | 210,713 | ||||
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Deferred wages
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- | 51,782 | ||||||
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Notes payable
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15,000 | 401,410 | ||||||
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Debentures (net)
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50,000 | 108,542 | ||||||
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Accrued interest payable
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20,425 | 469,006 | ||||||
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Total current liabilities
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283,279 | 1,241,453 | ||||||
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Total Liabilities
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283,279 | 1,241,453 | ||||||
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Commitments and contingencies
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- | - | ||||||
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STOCKHOLDERS' EQUITY
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Preferred stock, par value $.01 per share; 10,000,000 shares authorized,
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80,000 and 648,887 issued and outstanding
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800 | 6,489 | ||||||
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Common stock, par value $.0001 per share; 2,000,000,000 authorized shares;
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14,525,044 and 9,335,445 issued and outstanding shares, respectively
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1,452 | 934 | ||||||
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Additional paid-in capital
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64,307,073 | 64,172,272 | ||||||
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Accumulated (deficit)
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(59,381,168 | ) | (58,616,843 | ) | ||||
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Accumulated other comprehensive income (loss)
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(488,400 | ) | 586,000 | |||||
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Total stockholders' equity
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4,439,757 | 6,148,852 | ||||||
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Total Liabilities and Stockholder's Equity
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$ | 4,723,035 | $ | 7,390,305 | ||||
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Golden Eagle International, Inc.
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Consolidated Statements of Operations and Other Comprehensive Income (Unaudited)
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For the Three and Nine Months Ended
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Three months ended
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Nine months ended
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September 30,
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September 30,
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September 30,
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September 30,
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2011
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2010
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2011
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2010
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REVENUES
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$ | - | $ | - | $ | - | $ | - | ||||||||
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OPERATING EXPENSES
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Exploration and development
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3,889 | 19,298 | 13,433 | 40,820 | ||||||||||||
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General and administration
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221,965 | 215,894 | 661,218 | 626,346 | ||||||||||||
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Depreciation and depletion
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52 | 51 | 154 | 154 | ||||||||||||
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Total operating expenses
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225,905 | 235,243 | 674,804 | 667,320 | ||||||||||||
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OPERATING (LOSS)
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(225,905 | ) | (235,243 | ) | (674,804 | ) | (667,320 | ) | ||||||||
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OTHER INCOME (EXPENSE)
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Interest expense
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(1,311 | ) | (95,380 | ) | (49,564 | ) | (297,700 | ) | ||||||||
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Loss on sale of securities
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(21,483 | ) | - | (33,499 | ) | - | ||||||||||
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Accretion of note discount
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- | (18,125 | ) | (6,458 | ) | (41,333 | ) | |||||||||
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Total other (expense)
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(22,794 | ) | (113,505 | ) | (89,521 | ) | (339,033 | ) | ||||||||
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Loss before income taxes
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(248,699 | ) | (348,748 | ) | (764,325 | ) | (1,006,353 | ) | ||||||||
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Income taxes
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- | - | - | - | ||||||||||||
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NET LOSS ON CONTINUING OPERATIONS
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(248,699 | ) | (348,748 | ) | (764,325 | ) | (1,006,353 | ) | ||||||||
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DISCONTINUED OPERATIONS,NET OF TAX
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Loss on discontinued operations (Bolivia) net of tax
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- | - | - | (52,606 | ) | |||||||||||
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Gain (loss) discontinued operations (Nevada) net of tax
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- | 354,019 | - | 151,331 | ||||||||||||
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Loss on sale of business unit (Bolivia) net of tax
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- | (21,579 | ) | - | (85,110 | ) | ||||||||||
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Gain on legal settlement Nevada
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- | 3,723,251 | - | 3,723,251 | ||||||||||||
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NET GAIN ON DISCONTINUED OPERATIONS
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- | 4,055,691 | - | 3,736,866 | ||||||||||||
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NET INCOME (LOSS)
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$ | (248,699 | ) | $ | 3,706,943 | $ | (764,325 | ) | $ | 2,730,513 | ||||||
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Basic gain (loss) per share on continuing operations
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$ | (0.02 | ) | $ | 0.45 | $ | (0.06 | ) | $ | 0.47 | ||||||
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Basic gain (loss) per share on discontinued operations
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- | $ | 0.50 | - | 0.64 | |||||||||||
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Weighted average shares outstanding - basic
|
14,525,044 | 8,166,137 | 11,827,561 | 5,870,196 | ||||||||||||
|
Fully Diluted gain (loss) per share on continuing operations
|
- | $ | 0.27 | - | $ | 0.24 | ||||||||||
|
Fully Diluted gain (loss) per share on discontined operations
|
- | $ | 0.29 | - | $ | 0.32 | ||||||||||
|
Weighted average shares outstanding - Fully diluted
|
- | 13,808,002 | - | 11,512,061 | ||||||||||||
|
OTHER COMPREHENSIVE INCOME
|
||||||||||||||||
|
Unrealized gain (loss) on securities
|
(216,840 | ) | 188,000 | (1,074,400 | ) | 188,000 | ||||||||||
|
NET COMPREHENSIVE INCOME (LOSS)
|
$ | (465,539 | ) | $ | 3,894,943 | $ | (1,838,725 | ) | $ | 2,918,513 | ||||||
|
Golden Eagle International, Inc.
|
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|
Consolidated Statements of Cash Flows
|
||||||||
|
For the nine Months Ended (Unaudited)
|
||||||||
|
September, 30
|
September 30,
|
|||||||
|
2011
|
2010
|
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|
CASH FLOWS FROM OPERATING ACTIVITIES
|
||||||||
|
Net income (loss)
|
$ | (764,325 | ) | $ | 2,730,513 | |||
|
Adjustments to reconcile net income (loss)
|
||||||||
| to net cash (used) by operating activities: | ||||||||
| Officer compensation contributed | 45,000 | - | ||||||
| Stock issued for services | 4,200 | 15,196 | ||||||
| Stock issued for interest | 15,368 | - | ||||||
| Depreciation | 154 | 154 | ||||||
| Accretion of note discount | 6,458 | 41,333 | ||||||
| Stock based compensation | - | 44,634 | ||||||
| Loss on sale of marketable securities | 33,499 | |||||||
| Loss on disposition of asset | - | (1,504,458 | ) | |||||
|
Changes in operating assets and liabilities
|
||||||||
| Decrease (increase) in accounts receivable | (8,597 | ) | (1,516,645 | ) | ||||
| Decrease (increase) in prepaid expense and other costs | - | 2,400 | ||||||
| Increase (decrease) in deferred wages | (51,782 | ) | (78,355 | ) | ||||
| Increase (decrease) in accounts payable | (12,859 | ) | (822,064 | ) | ||||
| Increase (decrease) in accrued interest | (448,581 | ) | 291,550 | |||||
|
Net cash flows (used by) operating activities
|
(1,181,465 | ) | (795,742 | ) | ||||
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||||||
| Proceeds from sale of marketable securities | 168,161 | - | ||||||
| Proceeds from sale of fixed assets | - | 822,044 | ||||||
|
Net cash flows provided by investing activities
|
168,161 | 822,044 | ||||||
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||||
| Borrowings from related parties | - | 86,050 | ||||||
| Repayments to related parties | - | (12,650 | ) | |||||
| Proceeds from notes payable | - | 244,300 | ||||||
| Repayments of notes payable | (386,410 | ) | (200,000 | ) | ||||
| Proceeds from debentures | - | 13,000 | ||||||
|
Net cash flows (used in) provided by financing activities
|
(386,410 | ) | 130,700 | |||||
|
NET INCREASE (DECREASE) IN CASH
|
(1,399,714 | ) | 157,002 | |||||
|
CASH - BEGINNING OF PERIOD
|
1,670,949 | 1,368 | ||||||
|
CASH - END OF PERIOD
|
$ | 271,235 | $ | 158,370 | ||||
|
SUPPLEMENTAL CASH FLOW INFORMATION
|
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|
Non cash financing and investing activities (see note D)
|
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|
Preferred and common stock issued for debt
|
$ | 65,000 | $ | 221,349 | ||||
|
Cash paid for
|
||||||||
| Interest | 464,733 | 600 | ||||||
|
Income taxes
|
$ | - | - | |||||
Note A – Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of the Company are presented in accordance with the requirements for Form 10-Q and Article 8-03 of Regulation S-X. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP’) have been condensed or omitted pursuant to such SEC rules and regulations. The accompanying financial statements are unaudited. However, in our opinion, the accompanying financial statements reflect all adjustments, consisting of only normal recurring adjustments, necessary for fair presentation. These financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2010.
The preparation of financial statements in accordance with accounting principles generally accepted in the United States (“US GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying footnotes. Our actual results could differ materially from these estimates. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this Report and any documents incorporated herein by reference, as well as the Annual Report on Form 10-K for the year ended December 31, 2010.
|
Note B - Organization and Nature of Business
|
As of September 30, 2011 our only significant capital asset is the Gold Bar Mill. During 2010, we disposed of our previous Bolivian properties and assets and we settled litigation with Yukon-Nevada Gold and its subsidiary Queenstake Resources (collectively referred to as “YNG”) following YNG’s termination of the operating agreement for the Jerritt-Canyon Gold Bar Mill.
The Gold Bar Mill (“Mill”), our only remaining significant non-current asset, is currently idle and has been since we acquired it in 2004. We continue to monitor the Mill for impairment on a periodic basis or whenever circumstances arise that indicate the carrying amount of the Mill may not be recoverable. An impairment loss is recognized when the carrying value of the Mill exceeds the estimated undiscounted future cash flows. As of and through September 30, 2011 we have not recognized any impairment on the Mill.
Note C –Gain (Loss) Per Share
The computation of diluted earnings per common share is based on the weighted average number of shares outstanding as of September 30, of each year plus the common stock equivalents. For the 2011 presentation, the inclusion of these shares would have resulted in a weighted average shares fully diluted number that was anti-dilutive for 2011 and as such they are excluded from the weighted average shares fully diluted calculation. For 2010 both the basic and fully diluted gain per share are presented for both the three and nine month period.
Note D – Notes Payable
A summary of our notes payable as of September 30, 2011 and related changes for the nine-months ended September 30, 2011 are as follows:
|
Type
|
Balance
January 1, 2011
|
Additions
|
Payments and Conversions
|
Beneficial Conversion Feature Discount
|
Carrying
value at
September 30, 2011
|
Interest
accrued
|
||||||||||||||||||
|
Other notes payable
(in default)
|
$ | 53,000 | $ | - | $ | (53,000 | ) | $ | - | $ | - | $ | - | |||||||||||
|
Other notes payable
|
348,410 | - | (333,410 | ) | - | 15,000 | 3,131 | |||||||||||||||||
|
Total other notes payable
|
$ | 401,410 | $ | - | $ | (386,410 | ) | $ | - | $ | 15,000 | $ | 3,131 | |||||||||||
|
Debentures
|
$ | 108,542 | $ | - | $ | (65,000 | ) | $ | 6,458 | $ | 50,000 | $ | 17,294 | |||||||||||
|
Total debt
|
$ | 509,952 | $ | - | $ | (451,410 | ) | $ | - | $ | 65,000 | $ | 20,425 | |||||||||||
|
During the three and nine months ended September 30, we recognized $1,311 and $49,564 of interest expense respectively. All of the above notes payable are classified as current.
|
Note E – Recent Accounting Pronouncements
In June 2011, the FASB issued ASU No. 2011-05, Presentation of Comprehensive Income. This ASU amends existing presentation and disclosure requirements concerning comprehensive income, most significantly by requiring that comprehensive income be presented with net income in a continuous financial statement, or in a separate but consecutive financial statement. The provisions of this ASU, which are effective for us beginning with the first quarter of 2012, will result in changes to the presentation of comprehensive income in our consolidated financial statements, but will have no effect on the calculation of net income, comprehensive net income or earnings per share.
Note F – Marketable Securities
As part of our settlement with YNG, we received 2,000,000 restricted common shares of YNG with an initial fair value of $1,152,000 (utilizing the sale price quoted on the Toronto Stock Exchange of $.576 a Level 1 input). We have classified the shares as available for sale.
During the three-month period ended September 30, 2011 we sold 210,000 shares of YNG common stock at prices ranging from $.53 per share to $.44 per share. The sale of shares resulted in a loss of $21,483 during the period. We generated net cash of $99,477 from the sale of these shares. During the nine-month period ended September 30, 2011 we sold 350,000 shares of YNG common stock at prices ranging from $.53 per share to $.44 per share. The sale of shares resulted in a loss of $33,499 during the period. We generated net cash of $168,161 from the sale of these shares.
As of September 30, 2011 we had 1,650,000 shares available for sale. Subsequent adjustments to the fair value of the shares are reflected in the carrying amount as of the balance sheet date, and fluctuations in the fair value affect other comprehensive income. As of September 30, 2011, the market price for YNG shares was $.28.
Note G – Subsequent Events
None