UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 2O549
FORM 10-QSB
(Mark one)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2007 or
-----------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR l5 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________ to ______________
Commission File Number 0-16097
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GOLDEN RIVER RESOURCES CORPORATION
(formerly BAY RESOURCES LTD)
(Exact name of Registrant as specified in its charter)
Delaware 98-0079697
-------- ----------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
Level 8, 580 St. Kilda Road, Melbourne, Victoria, 3004 Australia
----------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 011 (613) 8532 2860
-------------------
Indicate by check mark whether the Registrant (1) filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act during the past 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____________
Indicate by check mark whether the Registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
Yes No___X_________
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. There were 26,711,630
outstanding shares of Common Stock as of February 11, 2008. (Does not include
10,000,000 shares of common stock that are issuable upon exercise of Special
Warrants, without the payment of any additional consideration.)
Transitional Small Business Disclosure Format (Check one) Yes ____ No __x_
Table Of Contents
PAGE NO
PART I. FINANCIAL INFORMATION
Item 1 Financial Statements 2
Item 2 Management's Discussion and Analysis or Plan of Operation 12
Item 3 Controls and Procedures 15
PART II OTHER INFORMATION
Item 1 Legal Proceedings 16
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds 16
Item 3 Defaults Upon Senior Securities 16
Item 4 Submission of Matters to a Vote of Security Holders 16
Item 5 Other Information 16
Item 6 Exhibits 16
SIGNATURES 17
EXHIBIT INDEX 18
Exh. 31.1 Certification 19
Exh. 31.2 Certification 21
Exh. 32.1 Certification 23
Exh. 32.2 Certification 24
1
Item 1. FINANCIAL STATEMENTS
Introduction to Interim Financial Statements.
The interim financial statements included herein have been prepared by
Golden River Resources Corporation ("Golden River Resources" or the "Company")
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission (the "Commission"). Certain information and footnote
disclosure normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted pursuant
to such rules and regulations, although the Company believes that the
disclosures are adequate to make the information presented not misleading. These
interim financial statements should be read in conjunction with the financial
statements and notes thereto included in the Company's Annual Report on Form
10-KSB for the year ended June 30, 2007.
In the opinion of management, all adjustments, consisting of normal
recurring adjustments and consolidating entries, necessary to present fairly the
financial position of the Company and subsidiaries as of December 31, 2007, the
results of its operations for the three and six month periods ended December 31,
2007 and December 31, 2006, and the changes in its cash flows for the three and
six month periods ended December 31, 2007 and December 31, 2006, have been
included. The results of operations for the interim periods are not necessarily
indicative of the results for the full year.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect certain reported
amounts and disclosures. Accordingly, actual results could differ from those
estimates.
UNLESS OTHERWISE INDICATED, ALL FINANCIAL INFORMATION PRESENTED IS IN
AUSTRALIAN DOLLARS.
2
GOLDEN RIVER RESOURCES CORPORATION AND SUBSIDIARIES
(An Exploration Stage Company)
Consolidated Balance Sheet
December 31, 2007
(Unaudited)
A$000's
-----------
ASSETS
Current Assets
Cash 11
Receivables 44
Prepayments and Deposits 51
-----------------
Total Current Assets 106
=================
Non Current Assets
Property and Equipment, net -
-----------------
Total Non Current Assets -
-----------------
Total Assets 106
=================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable and Accrued Expenses 389
-----------------
Total Current Liabilities 389
-----------------
Total Liabilities 389
-----------------
Stockholders' Equity:
Common Stock: $.0001 par value
100,000,000 shares authorized,
26,714,130 issued 3
Additional Paid-in-Capital 34,735
Less Treasury Stock at Cost, 2,500 shares (20)
Other Comprehensive Loss (12)
Retained Deficit during exploration stage (8,587)
Retained Deficit prior to exploration stage (26,402)
-----------------
Total Stockholders' Equity (Deficit) (283)
-----------------
Total Liabilities and Stockholders' Equity 106
=================
See Notes to Consolidated Financial Statements
3
GOLDEN RIVER RESOURCES CORPORATION AND SUBSIDIARIES
(An Exploration Stage Company)
Consolidated Statements of Operations
Three and Six Months Ended December 31, 2007 and 2006
and for the cumulative period July 1, 2002
(inception of exploration activities) to
December 31, 2007
(Unaudited)
Three Months Three Months
Ended Ended Six Months Six Months July 1, 2002
December 31, December 31, Ended Ended to
2007 2006 December 31, December 31, December 31,
A$000's A$000's 2007 2006 2007
A$000's A$000's A$000's
Revenues A$- A$- A$- A$- A$-
--------------- --------------- --------------- --------------- --------------
Costs and Expenses:
Stock Based Compensation 53 36 107 43 975
Exploration Expenditure (20) 50 55 424 3,219
Loss on Disposal of Equipment - - - - 1
Interest Expense, net - - - - 416
Legal, Accounting and Professional 14 55 31 78 653
Administrative 135 106 273 235 3,207
--------------- --------------- --------------- --------------- --------------
182 247 466 780 8,471
--------------- --------------- --------------- --------------- --------------
(Loss) from Operations (182) (247) (466) (780) (8,471)
Foreign Currency Exchange Gain (Loss) 1 (45) (5) (61) (124)
Other Income:
Interest - 4 - 7 5
- net, related entity
- other - - - 2 3
--------------- --------------- --------------- --------------- --------------
(Loss) before Income Tax (181) (288) (471) (832) (8,587)
Provision for Income Tax - - - - -
--------------- --------------- --------------- --------------- --------------
Net (Loss) (181) (288) (471) (832) (8,587)
--------------- --------------- --------------- --------------- --------------
Basic net (Loss) Per Common Equivalent Shares $(0.00) $(0.01) $(0.01) $(0.02) $(0.44)
--------------- --------------- --------------- --------------- --------------
Weighted Number of Common 36,714 36,714 36,714 36,714 19,343
Equivalent Shares Outstanding (000's)
--------------- --------------- --------------- --------------- --------------
See Notes to Consolidated Financial Statements
4
GOLDEN RIVER RESOURCES CORPORATION AND SUBSIDIARIES
(An Exploration Stage Company)
Consolidated Statements of Cash
Flows Six Months Ended December 31, 2007 and 2006
and for the cumulative period
July 1, 2002 (inception of exploration activities) to December 31, 2007
(Unaudited)
July 1, 2002
to December 31,
2007 2006 2007
A$000's A$000's A$000's
CASH FLOWS FROM OPERATING ACTIVITIES
Net (Loss) (471) (832) (8,587)
Adjustments to reconcile net (loss) to net cash (used)
in Operating Activities
Foreign Currency Exchange Loss 5 61 112
Depreciation of Plant and Equipment - 4 26
Stock based compensation 107 43 975
Accrued interest added to principal - - 184
Net Change in:
Receivables (23) (121) (44)
Staking Deposit - - 23
Prepayments and Deposits (3) - (51)
Accounts Payable and Accrued Expenses 56 (342) (65)
Short Term Advance - Affiliates - (1) (36)
---------------- ------------------ ------------------
Net Cash (Used) in Operating Activities (329) (1,188) (7,463)
---------------- ------------------ ------------------
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of Plant and Equipment - - (27)
---------------- ------------------ ------------------
Net Cash (Used) in Investing Activities - - (27)
---------------- ------------------ ------------------
CASH FLOW PROVIDED BY FINANCING ACTIVITIES
Net Borrowings from Affiliates - - 1,031
Sale of Warrants (net) - (7) 4,311
Proceeds from Loan Payable - - 2,273
---------------- ------------------ ------------------
Net Cash Provided by (Used in)Financing Activities - (7) 7,615
---------------- ------------------ ------------------
Effects of Exchange Rate on Cash (9) - (115)
---------------- ------------------ ------------------
Net Increase (decrease) in Cash (338) (1,195) 10
Cash at Beginning of Period 349 2,016 1
---------------- ------------------ ------------------
Cash at End of Period 11 821 11
---------------- ------------------ ------------------
Supplemental Disclosures
Interest Paid - 363
NON CASH FINANCING ACTIVITY
Debt repaid through issuance of shares - - 4,273
Stock Options recorded as Deferred Compensation - - 575
See Notes to Consolidated Financial Statements
5
GOLDEN RIVER RESOURCES CORPORATION AND SUBSIDIARIES
(An Exploration Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit)
December 31, 2007
and for the cumulative period July 1, 2002
(inception of exploration activities) to December 31, 2007
(Unaudited)
Common Treasury Additional Retained Retained Deferred Other
Stock Stock, Paid-in (Deficit) (Deficit) Compen- Compre-
Shares Amount at Capital (during the (prior to sation hensive Total
Cost Exploration Exploration Loss
stage) stage)
----------------------------------------------------------------------------------------
000's A$000's A$000's A$000's A$000's A$000's A$000's A$000's A$000's
Balance June 30, 2002 6,347 $1 $(20) $25,175 - $(26,402) - - $(1,246)
Net loss - - - - $(681) - - - (681)
------ ------- -------- ---------- ------------ ------------ ---------- ------- --------
Balance June 30, 2003 6,347 $1 $(20) $25,175 $(681) $(26,402) - - $(1,927)
Issuance of 1,753,984
shares and warrants
in lieu of debt
repayment 1,754 - - $2,273 - - - - $2,273
Sale of 1,670,000
shares and warrants 1,670 - - $2,253 - - - - $2,253
Issuance of 6,943,057
shares on cashless
exercise of options 6,943 $1 - $(1) - - - - -
Net unrealized loss
on foreign exchange - - - - - - - $(9) $(9)
Net (loss) - - - - $(1,723) - - - $(1,723)
----------------------------------------------------------------------------------------
Balance June 30, 2004 16,714 $2 $(20) $29,700 $(2,404) $(26,402) - $(9) $867
Issuance of 1,400,000
options under 2004
stock option plan - - - $575 - - $(575) - -
Amortization of
1,400,000 options
under 2004 stock
option plan - - - - - - $377 - $377
Net unrealized gain
on foreign exchange - - - - - - - $6 $6
Net/(loss) - - - - $(2,600) - - - $(2,600)
----------------------------------------------------------------------------------------
Balance June 30, 2005 16,714 $2 $(20) $30,275 $(5,004) $(26,402) $(198) $(3) $(1,350)
To eliminate deferred
compensation against
Paid-In Capital - - - $(198) - - $198 - -
Issuance of
10,000,000 shares
and 20,000,000
options in lieu of
debt repayment 10,000 $1 - $1,999 - - - - $2,000
Sale of 20,000,000
normal warrants - - - $997 - - - $997
Sale of 10,000,000
special warrants - - - $1,069 - - - - $1,069
See Notes to Consolidated Financial Statements
6
GOLDEN RIVER RESOURCES CORPORATION AND SUBSIDIARIES
(An Exploration Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit)
December 31, 2007
and for the cumulative period July 1, 2002
(inception of exploration activities) to December 31, 2007
(Unaudited) Continued
Common Treasury Additional Retained Retained Deferred Other
Stock Stock, Paid-in (Deficit) (Deficit) Compen- Compre-
Shares Amount at Capital (during the (prior to sation hensive Total
Cost Exploration Exploration Loss
stage) stage)
--------------------------------------------------------------------------------------
000's A$000's A$000's A$000's A$000's A$000's A$000's A$000's A$000's
Net unrealized loss on
foreign exchange - - - - - - - $(8) $(8)
Net (loss) - - - - $(1,328) - - - $(1,328)
--------------------------------------------------------------------------------------
Balance June 30, 2006 26,714 $3 $(20) $34,333 $(6,332) $(26,402) $- $(11) $1,571
Costs associated with
sale of normal and
special warrants - - - $(5) - - - - $(5)
Amortization of
1,400,000 options
under 2004 stock
option plan - - - $7 - - - - $7
Amortization of
4,650,000 options
under 2006 stock
option plan - - - $293 - - - - $293
Net unrealized loss on
foreign exchange - - - - - - - $5 $5
Net (loss) - - - - $(1,784) - - - $(1,784)
--------------------------------------------------------------------------------------
Balance June 30, 2007 26,714 $3 $(20) $34,628 $(8,116) $(26,402) $- $(6) $87
Amortization of
4,650,000 options
under 2006 stock
option plan - - - $107 - - - - $107
Net unrealized loss on
foreign exchange - - - - - - - $(6) $(6)
Net (loss) - - -- - $(471) - - - $(471)
--------------------------------------------------------------------------------------
Balance December 31,
2007 26,714 $3 $(20) $34,735 $(8,587) $(26,402) $- $(12) $(283)
--------------------------------------------------------------------------------------
See Notes to Consolidated Financial Statements
7
GOLDEN RIVER RESOURCES CORPORATION AND SUBSIDIARIES
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2007
(1) Organisation
------------
Golden River Resources Corporation ("Golden River Resources"), formerly
Bay Resources Ltd, is incorporated in the State of Delaware. The principal
shareholders of Golden River Resources are companies associated with Mr JI
Gutnick and Mrs S Gutnick. These companies owned 77.48% of Golden River
Resources as of December 31, 2007. During fiscal 1998, Golden River Resources
incorporated a further subsidiary, Baynex.com Pty Ltd, under the laws of
Australia. Baynex.com Pty Ltd has not traded since incorporation. On August 21,
2000, Golden River Resources incorporated a new wholly owned subsidiary, Bay
Resources (Asia) Pty Ltd, a corporation incorporated under the laws of
Australia. In May 2002, the Company incorporated a new wholly owned subsidiary,
Golden Bull Resources Corporation (formerly 4075251 Canada Inc), a corporation
incorporated under the laws of Canada. Golden Bull Resources Corporation is
undertaking exploration activities for gold in Canada. On March 8, 2006,
shareholders approved the change of the Company's name to Golden River
Resources. On January 22, 2008, Bay resources (Asia) Pty Ltd and Baynex.com Pty
Ltd made application to Australian Securities and Investments Commission for
de-registration as they were no longer trading.
(2) Affiliate Transactions
----------------------
Golden River Resources advances to and receives advances from various
affiliates. All advances between consolidated affiliates are eliminated on
consolidation.
Included in payables at December 31, 2007 was A$225,696 due to AXIS.
During the six months ended December 31, 2007 and 2006 AXIS advanced Golden
River Resources A$25,000 and A$53,000 respectively, provided services in
accordance with the service agreement of A$252,725 and A$183,169 respectively
and advanced/reimbursed AXIS A$192,614 and A$362,000 respectively for
outstanding amounts, including carried forward outstanding amounts. During the
six months ended December 31, 2006 the Company charged AXIS interest of A$6,992
at an interest rate between 9.35% and 10.10%. During the six months ended
December 31, 2007 AXIS did not charge interest. AXIS is affiliated through
common management and ownership.
Interest expense incurred on loans and advances due to affiliated
entities approximated A$nil in the six months ended December 31, 2006 and $nil
in the six months ended December 31, 2007.
(3) Recent Accounting Pronouncements
--------------------------------
In July 2006, the FASB issued FASB Interpretation No. 48 "Accounting
for Uncertainty in Income Taxes"- an interpretation of FASB Statement No. 109
(FIN 48), which provides clarification related to the process associated with
accounting for uncertain tax positions recognized in consolidated financial
statements. FIN 48 prescribes a more-likely-than-not threshold for financial
statement recognition and measurement of a tax position taken, or expected to be
taken, in a tax return. FIN 48 also provides guidance related to, among other
things, classification, accounting for interest and penalties associated with
tax positions, and disclosure requirements. FIN 48 is effective for fiscal years
beginning after December 15, 2006. The adoption of this statement did not have a
material effect on the Company's future reported financial position or results
of operations.
In September 2006, the FASB issued SFAS No. 157, "Fair Value
Measurements" which provides enhanced guidance for using fair value to measure
assets and liabilities. SFAS No. 157 provides a common definition of fair value
and establishes a framework to make the measurement of fair value in generally
accepted accounting principles more consistent and comparable. SFAS No. 157 also
8
requires expanded disclosures to provide information about the extent to which
fair value is used to measure assets and liabilities, the methods and
assumptions used to measure fair value, and the effect of fair value measures on
earnings. SFAS No. 157 is effective for financial statements issued in fiscal
years beginning after November 15, 2007 and for interim periods within those
fiscal years. The adoption of this interpretation is not expected to have a
material impact on the Company's future reported financial position or results
of operations.
In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option
for Financial Assets and Financial Liabilities - Including an Amendment of FASB
Statement No. 115", which permits companies to choose to measure many financial
instruments and certain other items at fair value. SFAS 159 is effective for
fiscal years beginning after November 15, 2007 and interim periods within those
fiscal years. The adoption of this interpretation is not expected to have a
material impact on the Company's future reported financial position or results
of operations.
In December 2007, the FASB issued SFAS No. 141(R), "Business
Combinations" ("SFAS 141(R)"), which replaces SFAS 141. SFAS 141(R) requires
assets and liabilities acquired in a business combination, contingent
consideration, and certain acquired contingencies to be measured at their fair
values as of the date of acquisition. SFAS 141(R) also requires that
acquisition-related costs and restructuring costs be recognized separately from
the business combination. SFAS 141(R) is effective for fiscal years beginning
after December 15, 2008 and will be effective for business combinations entered
into after January 1, 2009.
In December 2007, the FASB issued SFAS No. 160, "Noncontrolling
Interests in Consolidated Financial Statements, an Amendment of ARB No. 51"
("SFAS 160"). SFAS 160 clarifies the accounting for noncontrolling interests and
establishes accounting and reporting standards for the noncontrolling interest
in a subsidiary, including classification as a component of equity. SFAS 160 is
effective for fiscal years beginning after December 15, 2008. The Company does
not currently have any minority interests.
(4) Comprehensive Income (Loss)
---------------------------
The Company follows SFAS No. 130 "Reporting Comprehensive Income"
("SFAS 130"). SFAS 130 requires a company to report comprehensive income (loss)
and its components in a full set of financial statements. Comprehensive income
(loss) is the change in equity during a period from transactions and other
events and circumstances from non-owner sources, such as unrealized gains
(losses) on foreign currency translation adjustments. Changes in unrealized
foreign currency gains or (losses) during the six months to December 31, 2007
and 2006 amounted to (A$6,000) and A$7,000 respectively. Accordingly,
comprehensive loss for the six months ended December 31, 2007 and 2006 amounted
to A$(477,000) and A$(825,000) respectively.
(5) Going Concern
-------------
The accompanying consolidated financial statements have been prepared
in conformity with generally accepted accounting principles, which contemplate
continuation of Golden River Resources as a going concern. Golden River
Resources is in the exploration stage, has sustained recurring losses which
raises substantial doubts as to its ability to continue as a going concern.
In addition Golden River Resources has historically relied on loans and
advances from corporations affiliated with the President of Golden River
Resources. Based on discussions with these affiliate companies, Golden River
Resources believes this source of funding will continue to be available. Other
than the arrangements noted above, Golden River Resources has not confirmed any
other arrangement for ongoing funding. As a result Golden River Resources may be
required to raise funds by additional debt or equity offerings in order to meet
its cash flow requirements during the forthcoming year.
The accumulated deficit of the Company from inception through December
31, 2007 amounted to A$34,989,000 of which A$8,587,000 has been accumulated from
July 2002, the date the Company entered the Exploration Stage, through December
31, 2007.
(6) Income Taxes
------------
Golden River Resources should have carried forward losses of
approximately US$22.6 million as of June 30, 2007 which will expire in the year
2008 through 2025. Golden River Resources will need to file tax returns for
those years having losses on which returns have not been filed to establish the
tax benefits of the net operating loss carry forwards. Due to the uncertainty of
9
the availability and future utilization of those operating loss carry forwards,
management has provided a full valuation against the related tax benefit.
(7) Issue of Options under Stock Option Plan
----------------------------------------
On January 1, 2006, the Company adopted revised SFAS No.123,
Share-Based payment, which addresses the accounting for share-based payment
transactions in which a company receives employee services in exchange for (a)
equity instruments of that company or (b) liabilities that are based on the fair
value of the company's equity instruments or that may be settled by the issuance
of such equity instruments. Because the Company had previously adopted the fair
value recognition provisions of SFAS No. 123, the revised standard did not have
a material impact on its financial statements.
The Company has accounted for all options issued based upon their fair
market value using either the Black Scholes or Binomial option pricing method.
Prior to 2006, the Company used the Black Scholes option pricing method to
determine the fair market value of options issued. In 2006, the Company changed
from using the Black Scholes option pricing method to the Binomial option
pricing model. The Binomial option pricing model breaks down the time to
expiration into a number of steps or intervals and can therefore be used to
value American style options, taking into account the possibility of early
exercise and reflect changing inputs over time. The options issued in 2006 have
three vesting periods and therefore, the Company believed the Binomial option
pricing model is a more accurate measure of the fair value of the options.
In October 2004, the Board of Directors and Remuneration Committee of
the Company adopted a Stock Option Plan and agreed to issue 1,400,000 options
and up to a further 500,000 options to acquire shares of common stock in the
Company, at an exercise price of US$1.00 per option, subject to shareholder
approval which was subsequently received on January 27, 2005. Of the total
1,400,000 options issued, 350,000 vested immediately following shareholder
approval, 50,000 vested on September 30, 2005, 333,331 vested on July 27, 2005,
333,334 vested on January 27, 2006 and 333,335 vested on July 27, 2006. An
additional 500,000 options were not granted as the proposed recipient had
resigned prior to the date on which the options were issuable. The exercise
price of US$1.00 was derived from the issue price of common stock from the
placement of shares on September 30, 2004 and is considered by the Company's
Directors to be the fair value of the common stock. The options expire on
October 15, 2014.
The Company calculated the fair value of the 1,400,000 options using
the Black Scholes valuation method using a fair value share price of US$1.00,
strike price of US$1.00, maturity period of 5 years 7 1/2 months, risk free
interest rate of 5.15% and volatility of 20%. This equates to a value of US31.85
cents per option. The total value of the options equates to be A$575,100
(US$445,900) and such amount was amortized over the vesting period. At December
31, 2007, the options were fully vested.
A summary of the options outstanding and exercisable at December 31,
2007 are as follows:
Outstanding Exercisable
Number of options 950,000 950,000
Exercise price US$1.00 US$1.00
Expiration date October 15, 2014 October 15, 2014
On October 19, 2006, the Directors of the Company agreed to offer a
further 4,650,000 options under the Stock Option Plan. The options have no issue
price, an exercise price of US30.84 cents, and a latest exercise date of October
19, 2016. The options vest 1/3 on October 19, 2007 ("T1"), 1/3 on October 19,
2008 ("T2") and 1/3 on October 19, 2009 ("T3"). The Company obtained an external
valuation on the options from an unrelated third party.
The Company has calculated the fair value of the 4,650,000 options using the
binomial option pricing model using a fair value share price of US$0.166,
exercise price of US30.84 cents, expected life T1 - 5 years 6 months, T2 - 6
years, T3 - 6 years 6 months, risk-free interest rate of 4.75% and volatility of
10
90%. The total value of the options equates to A$696,976 (US$525,450) and is
being amortized over the vesting periods. For the six months ended December 31,
2007, the amortization amounted to A$107,420 and 600,000 options were forfeited.
At December 31, 2007, the unamortized deferred compensation of these 4,050,000
outstanding options amounted to A$206,586.
A summary of the options outstanding and exercisable at December 31,
2007 are as follows:
Outstanding Exercisable
Number of options 4,050,000 1,350,000
Exercise price US$0.308 US$0.308
Expiration date October 19, 2016 October 19, 2016
(8) Loss per share
--------------
Basic (loss) per share is computed based on the weighted average number
of common shares outstanding during the period. Dilutive loss per share has not
been presented as the effects of common stock equivalents are anti-dilutive. The
Company has on issue 10,000,000 special warrants which are exercisable at any
time until expiration and for no consideration. However, there is a restriction
in the subscription agreement that does not allow the Company to process a
warrant exercise notice if the holder (and its associates) would hold more than
9.99% of the shares of common stock unless the holder provides the Company with
61 days prior notice in which case the holder can exercise the entire 10,000,000
warrants. Accordingly, the Company has included 10,000,000 shares issuable by
exercise of the special warrants in the weighted number of common equivalent
shares outstanding.
Earnings per share
The Company calculates loss per share in accordance with SFAS No. 128,
"Earnings per Share".
The following table reconciles the weighted average shares outstanding
used for the computation:
Six months ended
December 31
2007 2006
Weighted average shares 000's 000's
Outstanding - basic 26,714 26,714
- Warrants 10,000 10,000
------------ ------------
Weighted average shares outstanding 36,714 36,714
============ ============
11
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
FUND COSTS CONVERSION
The consolidated statements of operations and other financial and
operating data contained elsewhere here in and the consolidated balance sheets
and financial results have been reflected in Australian dollars unless otherwise
stated.
The following table shows the average rate of exchange of the
Australian dollar as compared to the US dollar and Canadian dollar during the
periods indicated:
6 months ended December 31, 2006 A$1.00 = US$.7893
6 months ended December 31, 2007 A$1.00 = US$.8767
6 months ended December 31, 2006 A$1.00 = CDN$.9207
6 months ended December 31, 2007 A$1.00 = CDN$.8610
RESULTS OF OPERATION
Three Months Ended December 31, 2007 vs. Three Months Ended December 31, 2006.
Costs and expenses decreased from A$247,000 in the three months ended
December 31, 2006 to A$182,000 in the three months ended December 31, 2007. The
Company's financial statements are prepared in Australian dollars (A$). A number
of the costs and expenses of the Company are incurred in US$ and CDN$ and the
conversion of these costs to A$ means that the comparison of the three months
ended December 31, 2007 to the three months ended December 31, 2006 does not
always present a true comparison.
The decrease in costs and expenses is a net result of:
a) a decrease in legal, accounting and professional expense from A$55,000
for the three months ended December 31, 2006 to A$14,000 for the three
months ended December 31, 2007, primarily as a result of work in
reviewing agreements in the three months ended December 31, 2006 for
which there was no comparable amounts in the three months ended
December 31, 2007.
b) an increase in administrative costs including salaries from A$106,000
in the three months ended December 31, 2006 to A$135,000 in the three
months ended December 31, 2007, primarily as a result of an increase in
the cost of services provided by AXIS in accordance with the service
agreement.
c) a decrease in the exploration expenditure expense from A$50,000 for the
three months ended December 31, 2006 to A$(20,000) for the three months
ended December 31, 2007. The costs for the three months ended December
31, 2006 represents the finalization of field and sampling program
undertaken at the Company's exploration properties within the Slave
Craton in Nunavut, Canada for 2006. For the three months ended December
31, 2007, the costs related to consultants providing exploration
reviews and advice, and adjustment to cost of rehabilitation as the
Company was required to pay the estimated cost of the rehabilitation in
advance and the actual cost was less than the estimated cost. No field
exploration was undertaken during the quarter ended December 31, 2007.
d) an increase in stock based compensation from A$36,000 for the three
months ended December 31, 2006 to A$53,000 for the three months ended
December 31, 2007 as a result of an increase in the number of options
outstanding. See Note 6 concerning the Company's outstanding stock
options.
As a result of the foregoing, the loss from operations decreased from
A$247,000 for the three months ended December 31, 2006 to A$182,000 for the
three months ended December 31, 2007.
Other income decreased from A$4,000 in the three months ended December
31, 2006 to A$nil in the three months ended December 31, 2007.
12
The Company recorded a foreign currency exchange gain of A$1,000 for
the three months ended December 31, 2007 compared to a foreign currency exchange
loss of A$45,000 for the three months ended December 31, 2006.
The net loss was A$181,000 for the three months ended December 31, 2007
compared to a net loss of A$288,000 for the three months ended December 31,
2006.
Six Months Ended December 31, 2007 vs. Six Months Ended December 31, 2006
Revenue was A$nil in the six months ended December 31, 2006 and A$nil
in the six months ended December 31, 2007.
Costs and expenses decreased from A$780,000 in the six months ended
December 31, 2006 to A$466,000 in the six months ended December 31, 2007. The
Company's financial statements are prepared in Australian dollars (A$). A number
of the costs and expenses of the Company are incurred in US$ and CDN$ and the
conversion of these costs to A$ means that the comparison of the six months
ended December 31, 2007 to the six months ended December 31, 2006 does not
always present a true comparison.
The increase in expenses is a net result of:
a) a decrease in legal, accounting and professional expense from A$78,000
for the six months ended December 31, 2006 to A$31,000 for the six
months ended December 31, 2007. For the six months ended December 31,
2007, a decrease in share register activity decreased the fee for
maintenance of the records by the external share registrar, and legal
expenses for reviewing agreements compared to the six months ended
December 31, 2006.
b) an increase in administrative costs including salaries from A$235,000
in the six months ended December 31, 2006 to A$273,000 in the six
months ended December 31, 2007 primarily as a result of an increase in
the cost of services provided by AXIS in accordance with the service
agreement.
c) a decrease in the exploration expenditure expense from A$424,000 for
the six months ended December 31, 2006 to A$55,000 for the six months
ended December 31, 2007 primarily as a result of decreased exploration
activity. The cost for the six months ended December 31, 2006
represents the field and sampling program undertaken of the Company's
exploration properties within the Slave Craton in Nunavut, Canada. No
field exploration was completed during the six months ended December
31, 2007 however the costs relate to consultants providing exploration
reviews and advice.
d) an increase in stock based compensation from A$43,000 for the six
months ended December 31, 2006 to A$107,000 for the six months ended
December 31, 2007 as a result of an increase in the number of options
outstanding. See Note 6 concerning the Company's outstanding stock
options.
As a result of the foregoing, the loss from operations decreased from
A$780,000 for the six months ended December 31, 2006 to A$466,000 for the six
months ended December 31, 2007.
Other income decreased from A$9,000 in the six months ended December
31, 2006 to A$nil in the six months ended December 31, 2007.
The Company recorded a foreign currency exchange loss of A$5,000 for
the six months ended December 31, 2007, compared to A$61,000 for the six months
ended December 31, 2006.
The net loss was A$471,000 for the six months ended December 31, 2007,
compared to a net loss of A$832,000 for the six months ended December 31, 2006.
13
Liquidity and Capital Resources
For the six months ended December 31, 2007, net cash used in operating
activities was A$329,000 primarily consisting of the net loss of A$471,000; and
an increase in receivables of A$23,000, partially offset by an increase in
accounts payable and accrued expenses of A$56,000 and an increase in stock based
compensation of A$107,000.
Effective as of June 9, 2006, Golden River Resources, entered into a
Subscription Agreement with RAB Special Situations Fund (Master) Limited ("RAB")
pursuant to which the Company issued to RAB in a private placement transaction
(the "Private Placement") for an aggregate purchase price of A$2,000,000
(US$1,542,000): (i)10,000,000 special warrants (the "Special Warrants"), each of
which is exercisable at any time to acquire, without additional consideration,
one (1) share (the "Special Warrant Shares") of Common Stock, US$0.001 par value
("Common Stock"), of the Company, and (ii) warrants (the "Warrants") for the
purchase of 20,000,000 shares of Common Stock, US$0.001 par value (the "Warrant
Shares"), at an exercise price of A$0.20 (US$0.1542) to be exercisable until
April 30, 2011.
The Company agreed to prepare and file with the Securities and Exchange
Commission a registration statement covering the resale of the shares of Common
Stock issuable upon exercise of the Special Warrants and the Warrants, which
registration statement was declared effective on October 17, 2006.
The Company is obligated to keep such registration statement effective
until the earlier of (i) the date that all of the Registrable Securities have
been sold pursuant to such registration statement, (ii) all Registrable
Securities have been otherwise transferred to persons who may trade such shares
without restriction under the Securities Act, and the Company has delivered a
new certificate or other evidence of ownership for such securities not bearing a
restrictive legend, or (iii) all Registrable Securities may be sold at any time,
without volume or manner of sale limitations pursuant to Rule 144(k) or any
similar provision then in effect under the Securities Act; or (iv) 2 years from
the effective date.
As of December 31, 2007 the Company had short-term obligations of
A$389,000 comprising accounts payable and accrued expenses.
We have A$11,000 in cash at December 31, 2007.
During fiscal 2004 and 2005, we undertook a field exploration program
on our Committee Bay and Slave Properties. In relation to the Committee Bay
Properties, this was more than the minimum required expenditure and as a result,
we do not have a legal obligation to undertake further exploration on those
properties during their life. However our properties are prospective for gold
and other minerals. We undertook further exploration in August 2006 on the Slave
Properties and we spent A$502,000 on such exploration activities in fiscal 2007
and to date A$55,000 in fiscal 2008 for maintenance cost. We are currently
investigating capital raising opportunities which may be in the form of either
equity or debt, to provide funding for working capital purposes and future
exploration programs. There can be no assurance that such a capital raising will
be successful, or that even if an offer of financing is received by the Company,
it is on terms acceptable to the Company.
Cautionary Safe Harbor Statement under the United States Private Securities
Litigation Reform Act of 1995.
Certain information contained in this Form 10-QSB's forward looking
information within the meaning of the Private Securities Litigation Act of 1995
(the "Act") which became law in December 1995. In order to obtain the benefits
of the "safe harbor" provisions of the act for any such forwarding looking
statements, the Company wishes to caution investors and prospective investors
about significant factors which among others have affected the Company's actual
results and are in the future likely to affect the Company's actual results and
cause them to differ materially from those expressed in any such forward looking
statements. This Form 10-QSB report contains forward looking statements relating
to future financial results. Actual results may differ as a result of factors
over which the Company has no control including, without limitation, the risks
of exploration and development stage projects, political risks of development in
foreign countries, risks associated with environmental and other regulatory
matters, mining risks and competition and the volatility of gold and copper
prices, movements in the foreign exchange rate
14
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (cont'd)
Cautionary Safe Harbor Statement under the United States Private Securities
Litigation Reform Act of 1995 (cont'd)
and the availability of additional financing for the Company. Additional
information which could affect the Company's financial results is included in
the Company's Form 10-KSB on file with the Securities and Exchange Commission.
Item 3. CONTROLS AND PROCEDURES
Our principal executive officer and our principal financial officer
evaluated the effectiveness of our disclosure controls and procedures (as
defined in Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934
as amended) as of the end of the period covered by this report. Such disclosure
controls and procedures are designed to ensure that information required to be
disclosed by the Company is accumulated and communicated to the appropriate
management, including the principal executive and financial officers, on a basis
that permits timely decisions regarding timely disclosure. Based on that
evaluation, such principal executive officer and principal financial officer
concluded that, the Company's disclosure control and procedure as of the end of
the period covered by this report have been designed and are functioning
effectively to provide reasonable assurance that the information required to be
disclosed by the Company in reports filed under the Securities Exchange Act of
1934 is recorded, processed, summarized and reported within the time periods
specified in the SEC's rules and forms.
Change in Internal Control over Financial Reporting
No change in our internal control over financial reporting occurred
during our most recent fiscal quarter that has materially affected, or is
reasonably likely to materially affect our internal control over financial
reporting.
We believe that a controls system, no matter how well designed and
operated, can not provide absolute assurance that the objectives of the controls
system, no matter how well designed and operated, can not provide absolute
assurance that the objectives of the controls system are met, and no evaluation
of controls can provide absolute assurance that all control issues and instances
of fraud, if any, within a company have been detected.
15
PART II
OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
Not Applicable
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Not Applicable
Item 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable
Item 5. OTHER INFORMATION
Not Applicable
Item 6. EXHIBITS
(a) Exhibit No. Description
31.1 Certification of Chief Executive Officer
required by Rule 13a-14(a)/15d-14(a) under
the Exchange Act
31.2 Certification of Chief Financial Officer
required by Rule 13a-14(a)/15d-14(a) under
the Exchange Act
32.1 Certification of Chief Executive Officer
pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of Sarbanes-Oxley act
of 2002
32.2 Certification of Chief Financial Officer
pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of Sarbanes-Oxley act
of 2002
16
(FORM 10-QSB)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Golden River Resources Corporation
By: /s/____Joseph I. Gutnick________________
Joseph I. Gutnick
Chairman of the Board, President and
Chief Executive Officer
(Principal Executive Officer)
By: /s/____Peter Lee________________________
Peter Lee, Director, Secretary and
Chief Financial Officer
(Principal Financial Officer)
Dated February 14, 2008
17
EXHIBIT INDEX
Exhibit No. Description
31.1 Certification of Chief Executive Officer
required by Rule 13a-14(a)/15d-14(a) under the
Exchange Act
31.2 Certification of Chief Financial Officer
required by Rule 13a-14(a)/15d-14(a) under the
Exchange Act
32.1 Certification of Chief Executive Officer
pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of Sarbanes-Oxley act
of 2002
32.2 Certification of Chief Financial Officer
pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of Sarbanes-Oxley act
of 2002
18