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 March 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
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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
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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 May 12, 2007. (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
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Table Of Contents
PAGE NO
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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, 2006.
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 March 31, 2007, the
results of its operations for the three and nine month periods ended March 31,
2007 and March 31, 2006, and the changes in its cash flows for the nine month
periods ended March 31, 2007 and March 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
March 31, 2007
(Unaudited)
A$000's
--------
ASSETS
Current Assets
Cash 635
Receivables 98
Prepayments and Deposits 47
--------
Total Current Assets 780
--------
Non Current Assets
Property and Equipment, net 3
--------
Total Non Current Assets 3
--------
Total Assets 783
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable and Accrued Expenses 161
--------
Total Current Liabilities 161
--------
Total Liabilities 161
--------
Stockholders' Equity:
Common Stock: $.0001 par value 3
100,000,000 shares authorized,
26,714,130 issued
Additional Paid-in-Capital 34,523
Less Treasury Stock at Cost, 2,500 shares (20)
Other Comprehensive Loss (4)
Retained Deficit during exploration stage (7,478)
Retained Deficit prior to exploration stage (26,402)
--------
Total Stockholders' Equity 622
--------
Total Liabilities and Stockholders' Equity 783
========
See Notes to Consolidated Financial Statements
3
GOLDEN RIVER RESOURCES CORPORATION AND SUBSIDIARIES
(An Exploration Stage Company)
Consolidated Statements of Operations
Three and Nine Months Ended March 31, 2007 and 2006 and for the cumulative
period July 1, 2002 (inception of exploration activities) to March 31, 2007
(Unaudited)
Three Three Nine Nine
Months Months Months Months July 1,
Ended Ended Ended Ended 2002 to
March 31, March 31, March 31, March 31, March 31,
2007 2006 2007 2006 2007
A$000's A$000's A$000's A$000's A$000's
Revenues A$- A$- A$- A$- A$-
---------------------------------------------------------
Costs and Expenses:
Stock Based Compensation 152 32 195 168 763
Exploration Expenditure 10 37 434 162 3,096
Loss on Disposal of Equipment - - - - 1
Interest Expense, net - 36 - 99 412
Legal, Accounting and Professional 12 39 90 78 577
Administrative 128 146 363 461 2,552
---------------------------------------------------------
302 290 1,082 968 7,401
---------------------------------------------------------
(Loss) from Operations (302) (290) (1,082) (968) (7,401)
Foreign Currency Exchange Gain (Loss) (15) (13) (76) (36) (89)
Other Income:
Interest - net, related entity 3 - 10 - 10
- other - - 2 - 2
---------------------------------------------------------
(Loss) before Income Tax (314) (303) (1,146) (1,004) (7,478)
Provision for Income Tax - - - - -
---------------------------------------------------------
Net (Loss) (314) (303) (1,146) (1,004) (7,478)
---------------------------------------------------------
Basic net (Loss) Per Common Equivalent
Shares $(0.01) $(0.02) $(0.04) $(0.04) $(0.50)
---------------------------------------------------------
Weighted Number of Common
Equivalent Shares Outstanding (000's) 27,823 16,714 27,823 16,714 15,073
---------------------------------------------------------
See Notes to Consolidated Financial Statements
4
GOLDEN RIVER RESOURCES CORPORATION AND SUBSIDIARIES
(An Exploration Stage Company)
Consolidated Statements of Cash
Flows Nine Months Ended March 31, 2007 and 2006
and for the cumulative period
July 1, 2002 (inception of exploration activities) to March 31, 2007
(Unaudited)
July 1, 2002
2007 to March 31,
2006 2007
A$000's A$000's A$000's
------------- ------------ --------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net (Loss) (1,146) (1,004) (7,478)
Adjustments to reconcile net (loss) to net cash used
in Operating Activities
Foreign Currency Exchange Loss/(Gain) 76 36 77
Depreciation of Plant and Equipment 6 5 24
Stock based compensation 195 168 763
Accrued interest added to principal - 26 184
Net Change in:
Receivables (58) 41 (91)
Staking Deposit - - 23
Prepayments and Deposits - 4 (54)
Accounts Payable and Accrued Expenses (446) 52 (366)
Short Term Advance - Affiliates (1) - (36)
-------------------------------------------
Net Cash (Used) in Operating Activities (1,374) (622) (6,954)
-------------------------------------------
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 - 643 1,031
Sale of Warrants (net) (7) - 4,311
Proceeds from Loan Payable - - 2,273
-------------------------------------------
Net Cash Provided by (Used in)Financing Activities (7) 643 7,615
-------------------------------------------
Net Increase (decrease) in Cash (1,381) 21 634
Cash at Beginning of Period 2,016 2 1
-------------------------------------------
Cash at End of Period 635 23 635
-------------------------------------------
Supplemental Disclosures
Interest Paid - 15 359
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
Common Treasury Additional Retained Retained
Stock Stock, at Paid-in (Deficit) (Deficit) Other
Shares Amount Cost Capital (during the (prior to Deferred Compre-
Exploration Exploration Compen- hensive
stage) stage) sation Loss Total
------- -------- ---------- ---------- ------------ ---------- --------- -------- --------
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
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)
March 31, 2007
and for the cumulative period July 1, 2002
(inception of exploration activities) to March 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 - - - $188 - - - - $188
Net unrealized loss on foreign
exchange - - - - - - - $7 $7
Net (loss) - - - - $(1,146) - - - $(1,146)
---------------------------------------------------------------------------------------
Balance March 31, 2007 26,714 $3 $(20) $34,523 $(7,478) $(26,402) $- $(4) $622
---------------------------------------------------------------------------------------
See Notes to Consolidated Financial Statements
7
GOLDEN RIVER RESOURCES CORPORATION AND SUBSIDIARIES
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
March 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 March 31, 2007. During fiscal 1998, Golden River Resources
incorporated a further subsidiary, Baynex.com Pty Ltd (formerly Bayou Australia
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 (formerly Bayou
International Pty Ltd), a corporation incorporated under the laws of Australia.
In June 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.
(2) Short-Term Advance - Affiliate
------------------------------
During the nine months ended March 31, 2007 the Company repaid A$1,329
owing to Joseph Gutnick, President of Golden River Resources.
(3) Affiliate Transactions
----------------------
Golden River Resources advances to and receives advances from
various affiliates. All advances between consolidated affiliates are eliminated
on consolidation.
Included in receivables at March 31, 2007 was A$57,567 due by AXIS, an
affiliated management company. At March 31, 2006 the Company owed AXIS
A$134,504. During the nine months ended March 31, 2007 and 2006 AXIS advanced
Golden River Resources A$427,000 and A$94,250 respectively, provided services in
accordance with the service agreement of A$305,817 and A$286,141 respectively
and advanced/reimbursed AXIS A$53,000 and A$562,569 respectively for outstanding
amounts, including carried forward outstanding amounts and a short term advance
to assist with the payment of anticipated future costs incurred on the behalf of
the Company. During the nine months ended March 31, 2006 AXIS charged interest
of A$19,918 at an interest rate of 9.35%. During the nine months ended March 31,
2007 the Company charged AXIS interest of A$9,834 at an interest rate between
9.35% to 10.10%. AXIS is affiliated through common management and ownership.
Wilzed Pty Ltd, a company associated with the President of the Company,
Joseph Gutnick, provided loan funds to enable the Company to meet its
liabilities and has paid certain expenses on behalf of the Company. During the
nine months ending March 31, 2006, Wilzed loaned the Company A$809,999 and
charged interest of A$71,156. The interest rate charged by Wilzed for the nine
months was 9.35%. At March 31, 2006, the Company owed Wilzed A$1,556,627. At
March 31, 2007, there were no amounts owing to Wilzed as they had been repaid in
full during the twelve months ended June 30, 2006.
Interest expense incurred on loans and advances due to affiliated
entities approximated A$91,075 in the nine months ended March 31, 2006 and $nil
in the nine months ended March 31, 2007.
(4) Recent Accounting Pronouncements
--------------------------------
In July 2006, the Financial Accounting Standards Board (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
8
GOLDEN RIVER RESOURCES CORPORATION AND SUBSIDIARIES
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
March 31, 2007
(4) Recent Accounting Pronouncements (Cont'd)
-----------------------------------------
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 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 Company does not expect SFAS 159 to have a material impact on
its results of operations or financial position.
(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 March 31,
2007 amounted to A$33,880,000 of which A$7,478,000 has been accumulated from
July 2002, the date the Company entered the Exploration Stage, through March 31,
2007.
(6) Income Taxes
------------
Golden River Resources should have carried forward losses of
approximately US$22.6 million as of June 30, 2006 which will expire in the year
2007 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
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.
Consistent with the provisions of APB No. 25, the Company recorded the
fair value of stock option grants in stockholders equity. Under SFAS No.123R an
equity instrument is not considered to be issued until the instrument vests.
Accordingly, as provided in SFAS No.123R, effective July 1, 2005, the Company
has reversed A$198,000 representing the unamortized restricted stock
compensation included in stockholders equity, at June 30, 2005, for the unvested
portions of stock option grants awarded prior to the effective date of SFAS
No.123R.
9
GOLDEN RIVER RESOURCES CORPORATION AND SUBSIDIARIES
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
March 31, 2007
(7) Issue of Options under Stock Option Plan (Cont'd)
-------------------------------------------------
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 was 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 has 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 A$575,100
(US$445,900) and is being amortized over the vesting period. For the nine months
ended March 31, 2007, the amortization amounted to A$6,771. At March 31, 2007,
the options were fully vested.
During the three months ended September 30, 2005, 50,000 options lapsed
when Mr P. Ehrlich resigned as a Director and during the three months ended
September 30, 2006, 250,000 options lapsed when Mr P. Althaus resigned as Chief
Operating Officer.
A summary of the options outstanding and exercisable at March 31, 2007
are as follows:
Outstanding Exercisable
Number of options 1,100,000 1,100,000
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 90%. The total value of the options equates to A$696,976
(US$525,450) and is being amortized over the
10
GOLDEN RIVER RESOURCES CORPORATION AND SUBSIDIARIES
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
March 31, 2007
(7) Issue of Options under Stock Option Plan (Cont'd)
-------------------------------------------------
vesting periods. For the nine months ended March 31, 2007, the amortization
amounted to A$188,463. At March 31, 2007, the unamortized deferred compensation
related to these 4,650,000 options amounted to A$508,513.
When aggregated with the amortization of the options issued in October
2004, for the nine months ended March 31, 2007, the total amortization amounted
to $195,234.
A summary of the options outstanding and exercisable at March 31, 2007
are as follows:
Outstanding Exercisable
Number of options 4,650,000 0
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. Accordingly, the Company has included
1,109,000 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:
Three months ended
March 31
Weighted average shares 2007 2006
000's 000's
Outstanding - basic 26,714 16,714
- Warrants 1,109 -
------------------------
Weighted average shares outstanding 27,823 16,714
========================
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:
9 months ended March 31, 2006 A$1.00 = US$.7110
9 months ended March 31, 2007 A$1.00 = US$.8080
9 months ended March 31, 2006 A$1.00 = CDN$.8302
9 months ended March 31, 2007 A$1.00 = CDN$.9339
RESULTS OF OPERATION
Three Months Ended March 31, 2007 vs. Three Months Ended March 31, 2006.
Other income increased from A$nil in the three months ended March 31,
2006 to A$2,965 in the three months ended March 31, 2007. The increase in other
income - interest is a result of interest earned on monies owed to the Company
by AXIS of A$3,529 and from the monies held in bank accounts of A$528.
Costs and expenses increased from A$290,000 in the three months ended
March 31, 2006 to A$302,000 in the three months ended March 31, 2007. The
Company's financial statements are prepared in Australian dollars (A$). 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 March 31, 2007 to the three months ended March 31, 2006 does not always
present a true comparison.
The increase in costs and expenses is a net result of:
a) a decrease in interest expense (net) from A$35,834 for the three months
ended March 31, 2006 to A$nil for the three months ended March 31,
2007. For the three months ended March 31, 2007, the Company had no
interest bearing liabilities as they had been repaid in full. For the
three months to March 31, 2006, Wilzed charged A$20,039 in interest and
A$8,000 general interest was charged on outstanding accounts payable
liabilities. AXIS provides management and geological services to the
Company pursuant to a Service Deed dated November 25, 1988. AXIS
charged A$1,552 in interest on outstanding amounts at a rate of 9.35%
b) a decrease in legal, accounting and professional expense from A$39,337
for the three months ended March 31, 2006 to A$11,491 for the three
months ended March 31, 2007. In the three months ended March 31, 2006,
the Company incurred costs as a result of reviewing the proposed
listing application and there was an increase in share registry
maintenance fees for which there was no comparable amounts in the three
months ended March 31, 2007.
c) a decrease in administrative costs including salaries from A$146,212 in
the three months ended March 31, 2006 to A$127,344 in the three months
ended March 31, 2007, primarily as a result of reduced administrative
salaries and costs following the resignation of the Chief Operating
Officer.
d) a decrease in the exploration expenditure expense from A$37,542 for the
three months ended March 31, 2006 to A$9,762 for the three months ended
March 31, 2007 primarily as a result of decreased exploration activity.
The cost for the three months ended March 31, 2006 represents the cost
of the Vice President Exploration and associated costs. For the three
months ended March 31, 2007, the costs related to consultants providing
exploration reviews and advice. No field exploration was undertaken
during the quarters ended March 31, 2006 or 2007.
12
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (Cont'd)
Three Months Ended March 31, 2007 vs. Three Months Ended March 31, 2006 (Cont'd)
an increase in stock based compensation from A$33,000 for the three
months ended March 31, 2006 to A$153,000 for the three months ended
March 31, 2007 as a result of an increase in the number of options
outstanding. See Note 7 concerning the Company's outstanding stock
options.
As a result of the foregoing, the loss from operations increased from
A$290,000 for the three months ended March 31, 2006 to A$299,000 for the three
months ended March 31, 2007.
The Company recorded a foreign currency exchange loss of A$15,000 for
the three months ended March 31, 2007 compared to A$13,000 for the three months
ended March 31, 2006.
The net loss was A$314,000 for the three months ended March 31, 2007
compared to a net loss of A$303,000 for the three months ended March 31, 2006.
Other income increased from A$nil in the nine months ended March 31,
2006 to A$12,000 in the nine months ended March 31, 2007. The increase in other
income - interest is a result of interest earned on monies owed to the Company
by AXIS of A$10,000 and from the monies held in bank accounts of A$2,000.
Costs and expenses increased from A$968,000 in the nine months ended
March 31, 2006 to A$1,082,000 in the nine months ended March 31, 2007. The
Company's financial statements are prepared in Australian dollars (A$). 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 nine months
ended March 31, 2007 to the nine months ended March 31, 2006 does not always
present a true comparison.
The increase in expenses is a net result of:
a) a decrease in interest expense (net) from A$99,000 for the nine months
ended March 31, 2006 to A$nil for the nine months ended March 31, 2007.
For the nine months ended March 31, 2007, the Company had no interest
bearing liabilities as they had been repaid in full. AXIS provides
management and geological services to the Company pursuant to a Service
Deed dated November 25, 1988. AXIS charged A$20,000 in interest on
outstanding amounts at a rate of 9.35% for the nine months to March 31,
2006, Wilzed charged A$71,000 in interest and A$8,000 general interest
was charged on outstanding accounts payable liabilities.
b) an increase in legal, accounting and professional expense from A$78,000
for the nine months ended March 31, 2006 to A$90,000 for the nine
months ended March 31, 2007. The increase is primarily the legal and
accounting expenses involved in the preparation of the registration
statement to register the warrants issued to RAB.
c) a decrease in administrative costs including salaries from A$461,000 in
the nine months ended March 31, 2006 to A$363,000 in the nine months
ended March 31, 2007. In the nine month period to March 31, 2006, the
Company employed a Chief Operating Officer and the costs of his salary
and operating costs were treated as administrative expenses. The Chief
Operating officer resigned in April 2006 and this resulted in a
reduction in administrative costs as the Company did not have to pay
the salary and operating costs in the nine months ended March 31, 2007.
d) an increase in the exploration expenditure expense from A$162,000 for
the nine months ended March 31, 2006 to A$434,000 for the nine months
ended March 31, 2007. The cost for the nine months ended March 31, 2007
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 nine months ended March 31,
2006 due to the high level of field exploration in 2004 and limited
funding.
e) an increase in stock based compensation from A$168,000 for the nine
months ended March 31, 2006 to A$195,000 for the nine months ended
March 31, 2007 as a result of an increase in the number of outstanding
options. See Note 7 concerning the Company's outstanding stock options.
13
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (Cont'd)
Nine Months Ended March 31, 2007 vs. Nine Months Ended March 31, 2006 (Cont'd)
As a result of the foregoing, the loss from operations increased from
A$968,000 for the nine months ended March 31, 2006 to A$1,070,000 for the nine
months ended March 31, 2007.
The Company recorded a foreign currency exchange loss of A$76,000 for
the nine months ended March 31, 2007 compared to A$36,000 for the nine months
ended March 31, 2006.
The net loss was A$1,146,000 for the nine months ended March 31, 2007
compared to a net loss of A$1,004,000 for the nine months ended March 31, 2006.
Liquidity and Capital Resources
For the nine months ended March 31, 2007, net cash used in operating
activities was A$1,374,000 primarily consisting of the net loss of A$1,146,000;
a decrease in receivables of A$58,000, a decrease in accounts payable and
accrued expenses of A$446,000 and an increase in stock based compensation of
A$195,000.
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 March 31, 2007 the Company had short-term obligations of
A$161,000 comprising accounts payable and accrued expenses.
We have A$635,000 in cash at March 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 to date we have spent A$434,000 on such exploration activities in
fiscal 2007. 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.
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.
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 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/ J.I. Gutnick
---------------------
Joseph I. Gutnick
Chairman of the Board, President and
Chief Executive Officer
(Principal Executive Officer)
By:
/s/ Peter Lee
----------------------
Peter Lee
Peter Lee, Director, Secretary and
Chief Financial Officer
(Principal Financial Officer)
Dated May 14, 2007
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