Attached files
| file | filename |
|---|---|
| EX-32.1 - EXHIBIT 32.1 - Advantego Corp | exh32_1.htm |
| EX-32.2 - EXHIBIT 32.2 - Advantego Corp | exh32_2.htm |
| EX-31.1 - EXHIBIT 31.1 - Advantego Corp | exh31_1.htm |
| EX-31.2 - EXHIBIT 31.2 - Advantego Corp | exh31_2.htm |
| EXCEL - IDEA: XBRL DOCUMENT - Advantego Corp | Financial_Report.xls |
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10 - K
(MARK ONE)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31, 2011.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______ TO _______.
Golden Eagle International, Inc.
(Exact name of registrant as specified in its charter)
Colorado
(State or other jurisdiction of incorporation or organization)
0-23726 84-1116515
(Commission File Number) (IRS Employer Identification Number)
9653 South 700 East, Salt Lake City, Utah 84070
(Address of principal executive offices including zip code)
(801) 619-9320
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Exchange Act:
(None)
Securities registered pursuant to Section 12(g) of the Exchange Act:
Common Stock
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes [ ] No [X]
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
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).
Yes [X ] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained in this form, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
Yes [X] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer", "accelerated filer" and "small reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
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 Act).
Yes [ ] No [X]
As of June 30, 2011, the aggregate market value of the voting and nonvoting common equity held by non-affiliates of Golden Eagle International, Inc. was approximately $1,458,806. This estimate is based on the last sale price per share of $0.155 on June 30, 2011, on the OTCBB, and 9,411,649 shares estimated to be held by non-affiliates.
The number of shares of the registrant's $.0001 par value common stock outstanding as of March 21, 2012 was 14,625,044.
2
Table of Contents
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Page No.
|
PART I
|
Item 1.
|
Business
|
4 | |||
|
Item 1A.
|
Risk Factors
|
7 | |||
|
Item 1B.
|
Unresolved Staff Comments
|
10 | |||
|
Item 2.
|
Properties
|
10 | |||
|
Item 3.
|
Legal Proceedings
|
11 | |||
|
Item 4.
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Removed and Reserved
|
11 |
PART II
|
Item 5.
|
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer
|
11 | |||
|
Item 6.
|
Selected Financial Data
|
14 | |||
|
Item 7.
|
Management's Discussion and Analysis of Financial Condition and Results of Operation
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14 | |||
|
Item 7A.
|
Quantitative and Qualitative Disclosures about Market Risk
|
16 | |||
|
Item 8.
|
Financial Statements and Supplementary Data
|
16 | |||
|
Item 9.
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|
16 | |||
|
Item 9A
|
Controls and Procedures
|
16 | |||
|
Item 9B.
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Other Information
|
18 |
PART III
|
Item 10.
|
Directors, Executive Officers and Corporate Governance
|
18 | |||
|
Item 11.
|
Executive Compensation
|
21 | |||
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
25 | |||
|
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence
|
27 | |||
|
Item 14.
|
Principal Accountant Fees and Services
|
28 |
PART IV
|
Item 15.
|
Exhibits, Financial Statement Schedules
|
29 | |||
|
Signatures
|
30 |
3
PART I.
Forward-Looking Statements
Because we want to provide you with more meaningful and useful information, this Annual Report on Form 10-K 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”, 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.
The Company is 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.
Item 1. Business
General; Business Overview
Throughout this Annual Report on Form 10-K Golden Eagle International, Inc. is referred to as “we”, “our”, “us”, the “Company” and “Golden Eagle”.
We were formed as a Colorado corporation on July 21, 1988 as Beneficial Capital Financial Services Corp. On February 2, 1995, we changed our name to Golden Eagle International, Inc.
Our corporate headquarters are in Salt Lake City, Utah.
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” or the “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 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 material capital asset. The Mill is currently listed on our balance sheet at a cost of $3,980,000. We continually evaluate this asset to determine if it requires impairment or an adjustment. Based on the valuations reports which we have received and the interest that has been shown by various parties for the Mill, we believe that the Mill has a value in excess of the book value on our balance sheet.
4
In the event we enter into a joint venture, refurbish, or operate the milling facility on our own, we are likely to require a significant amount of additional capital. To bring the 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. 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.
Because the Gold Bar Mill is our principal remaining capital asset shareholder approval may be required if we choose to sell or transfer the Gold Bar Mill or enter into any type of merger arrangement.
The Jerritt Canyon Gold Mill; YNG Settlement
In October 2008 we entered into a Mill Operating Agreement with Yukon-Nevada Gold Corp. (“YNG”) and its subsidiary, Queenstake Resources USA, Inc. (“Queenstake”) (the “Queenstake Agreement”), to operate the Jerritt Canyon Mill, a 4,000 tpd gold processing mill located near Elko, Nevada. This business arrangement resulted in litigation after Queenstake terminated the Agreement and initiated legal action against us in June 2009.
On August 20, 2010, we entered into a settlement agreement with YNG and its subsidiary, Queenstake (the “YNG settlement”), 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). 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 2 million shares of YNG issued and outstanding common stock (the “YNG Shares”). As of the date of this report the transferability restrictions related to the YNG Shares have been removed. We currently hold 1,289,905 YNG Shares as of March 22, 2012. Although the YNG Shares constitute a significant asset on our balance sheet at December 31, 2011, we do not intend to engage in, and do not believe we are engaged in the business of investing or reinvesting in, holding, or trading securities of other companies. We anticipate that we will continue to sell shares of YNG at the best price possible to meet our cash requirements. Should we be unable to sell the Gold Bar Mill or enter into a joint venture agreement we may be forced to sell all remaining shares of our YNG stock which will exhaust our last remaining source of cash flow.
B. Bolivia
In and before 2008 our operations were primarily focused on minerals exploration, mining and milling operations in Bolivia through our Bolivian-based wholly-owned subsidiary, Golden Eagle International, Inc. (Bolivia). Although our Bolivian assets and operations were once our primary focus, starting in late 2008 we began to focus our operations primarily within the United States and in March 2009 we reduced significantly our land holdings in Bolivia.
5
Based in large part on a number of factors relating to the political and economic climate in Bolivia as further described in our Form 10-K for the year ended December 31, 2009, we believed it was in our best interests to sell our Bolivian assets and operations, and continue focusing our efforts and resources on our operations and assets within the United States. As a result, effective March 10, 2010 we transferred control of all of our Bolivian assets and operations to an unrelated Swiss corporation. In addition to other consideration which has been paid, the buyer agreed to pay us a 3% net smelter return on all minerals produced from the properties of up to $3 million. The net smelter return will be on a quarterly basis if and when mineral production is achieved from the mining concessions owned by the Bolivian subsidiary, and will likely be subject to compliance with Bolivian law regarding the expatriation of capital.
As of the date of this report, all obligations of the buyer have been satisfied with the exception of the payment of the net smelter return which we believe, but cannot guarantee, will be satisfied when (and if) mining and milling operations commence.
Plan of Operations
The Gold Bar Mill.
We are exploring and considering various alternatives with respect to the Gold Bar Mill. While we have had multiple discussions with various parties with regards to a possible merger or sale of the Gold Bar Mill, as of the date of this report we have not entered into any definitive agreement with any party and we cannot guarantee that we will do so in the future. We continue to negotiate with possible merger candidates or buyers of the Gold Bar Mill. Among the options we are considering are:
|
-
|
A merger or an outright sale either for cash or stock and other consideration contingent upon identifying a suitable buyer.
|
|
|
-
|
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;
|
|
|
-
|
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.
|
We have attempted to complete a merger transaction or a sale of the Gold Bar Mill for the past three years but we have been unsuccessful. We have entered into serious negotiations with various parties related to the company and/or the Mill during the past year however final approval for the transaction was not received. We will attempt to market the company and the Mill more aggressively during the coming year which may require us to reduce our asking price. We can offer no guarantees that we will be successful in selling the Mill or the company.
Effect of government regulation
If we pursue further development and operation of our Gold Bar Mill we will become subject to numerous governmental regulations applied to the mining and milling industries.
See additional discussion below contained in Item 1A – Risk Factors.
6
Employees
At December 31, 2011, we employed two total employees. Our full time employees work primarily in our corporate offices in Salt Lake City, Utah.
Available information
We are a Colorado corporation with our principal executive offices located at 9653 South 700 East, Salt Lake City, Utah 84070. Our telephone number is: (801) 619-9320. Our fax number is: (801) 619-1747. Our general e-mail address is info@geii.com. Our website address is www.geii.com. We file our annual, quarterly, and current reports with the Securities and Exchange Commission (SEC), copies of which are available on our website or from the SEC free of charge at www.sec.gov. The public may also read and copy any materials that we have filed with the SEC at the SEC’s Public Reference Room at 450 Fifth Street N.W., Washington, D.C. 20549. Information on the Public Reference Room may be obtained by calling: 1-800-SEC-0330. Our Code of Business Conduct and Ethics is also available free of charge on our website or by faxing a request to us at: (801) 619-1747 or sending us an e-mail at info@geii.com.
Item 1A. Risk Factors
The following risks and uncertainties, along with other information contained in this Form 10-K, should be carefully considered by anyone considering an investment in our securities. The occurrence of any of the following risks could negatively affect our business, financial condition and operating results.
Financial Risks
We have no business activities, and we can provide no assurance that we will be able to engage in any business activities before our limited remaining working capital is expended. At the present time, the Company has no business operations, has working capital of approximately $450,000, and is incurring a negative cash flow of approximately $50,000 per month (including salaries to its executive officers). This is lower than our monthly fee for 2010 as a result of a reduction of general and administrative expenses and interest expense. While management is continuing to conserve working capital where appropriate, given the inability to complete an arrangement with respect to the Gold Bar Mill and the volatility and illiquidity of the YNG Shares, we cannot offer any assurance that the Company will be able to continue to meet its corporate obligations through the current fiscal year. Since business combinations are frequently based on the availability of working capital, it is unlikely that we will be able to negotiate any business combination with any other entity.
A significant portion of our net worth and our working capital includes the value of a thinly traded and volatile security. Our balance sheet reflects the value of our 1,567,500 YNG Shares at $458,825 ($0.283 per share). While this value is based on the market price of the YNG Shares as reported on the Toronto Stock Exchange (the “TSX”), there can be no assurance that we would be able to receive this amount of money were we to attempt to sell our YNG Shares. The market for YNG Shares on the TSX is volatile both in terms of price and volume, and there can be no assurance that we would recover the full amount set forth on our balance sheet were we to attempt to sell the YNG Shares we hold. The closing price on the TSX on March 7, 2012, was $0.36 (Cdn) ($0.363 U.S.). We have, however, sold 482,900 shares of YNG generating $165,067.
7
A significant portion of our balance sheet reflects a $3,980,000 value of the Gold Bar Mill, a value that we may not be able to realize in the near future, if ever. We have held the Gold Bar Mill since 2004 when we originally acquired it. It has been inactive since then. Although over the years since then we have developed a number of plans with respect to its utilization, we have not been able to act on any of our plans. Any use of the Gold Bar Mill will require the owner (either the Company or any purchaser or business partner) to expend a significant amount of money to rehabilitate the Mill to meet current standards. Given our lack of working capital and success in dealing with the Gold Bar Mill over the past eight years, we cannot offer any assurance that we will be able to do so. If we are unable to deal with the Gold Bar Mill before our capital is exhausted, we may lose the opportunity to do so at any time in the future because of the various corporate requirements (including shareholder approval) attendant to completing any such transaction.
Because the YNG Shares constitute a significant Company asset, the Company could become subject to additional regulation. The YNG Shares represent the Company’s most significant asset (because of its liquidity as compared to the Gold Bar Mill) as of December 31, 2011 and subsequently. In certain situations companies whose assets are in large part comprised of marketable securities can be subject to state and/or federal regulations, such as under Investment Company Act of 1940 (the “ICA”). Although the Company does not intend to engage in, and does not to believe it is engaged in the business of investing or reinvesting in, holding, or trading securities of other companies, and does not intend to be subject to regulation under the ICA, if the Company would become an investment company we will be subject to a significant amount of additional regulation, significant restrictions in our ability to do business, and significant restrictions on any relationship with affiliates.
Historically, cash shortages have negatively affected our ability to explore and develop our properties and further our business development. Historically we have experienced significant cash shortages. We have been able to meet certain of our financial obligations through funds raised in equity and debt financings. Given our limited working capital expected to suffice only through 2012, we likely will continue to experience cash shortages, which may cause delays in development of any business prospects and any possible revenue generating operations, and will otherwise negatively affect our financial condition. We cannot offer any assurance that there will be any additional capital available to us when required.
Should we be successful in identifying and executing upon a business opportunity with respect to our Gold Bar Mill or elsewhere within the metals mining industry, our revenues may be negatively affected by price volatility of those metals. Metals prices are subject to extreme price volatility. Our ability to refurbish and recommence operations at Gold Bar Mill would likely be directly related to gold prices. Metals prices are subject to factors that are beyond our control, including speculation, political and economic conditions, and inflation. Should gold prices experience downward price trends, our business prospects and potential revenues will be negatively affected.
The following table presents the annual high, low and average afternoon fixing prices over the past ten years, expressed in U.S. dollars, for gold per troy ounce on the London Metals Exchange and demonstrates the significant fluctuations in metal prices:
|
Year
|
High
|
Low
|
Average
|
|
2001
|
293
|
256
|
271
|
|
2002
|
349
|
278
|
310
|
|
2003
|
416
|
320
|
363
|
|
2004
|
454
|
375
|
389
|
|
2005
|
536
|
411
|
445
|
|
2006
|
725
|
525
|
603
|
|
2007
|
806
|
631
|
695
|
|
2008
|
1,011
|
712
|
872
|
|
2009
|
1,212
|
810
|
1,011
|
|
2010
|
1,421
|
1,058
|
1,219
|
|
2011
|
1,895
|
1,319
|
1,571
|
Source of Data: Kitco.com and usgold.com
8
On February 8, 2012, the afternoon fixing price for gold on the London Metals Exchange was $1,746 per ounce.
Our future success is in part dependent upon our ability to retain and attract qualified management. Our future success in large part is dependent upon the continued efforts of our current management team who provide us with the key technical and management aspects of our contemplated operations, including: Terry Turner, and Tracy A. Madsen. At times each of these persons has agreed to defer their wages or other remuneration otherwise due to them. Although we have entered into employment agreements with Messrs. Turner and Madsen, as a result of our continued liquidity shortages, these persons may be motivated to seek other employment. We believe that our future success depends in part upon our ability to attract and retain qualified personnel for our operations. The failure to attract or retain such persons could materially adversely affect our business, financial condition and results of operations.
Operations in the metal mining industry are subject to various state and federal regulations. Our historical and contemplated business operations are subject to extensive regulation pertaining to the development of mining prospects and possible production, environmental regulation, labor standards, mine safety and others. Should we fail to abide by these regulations, our operations may be subject to fines or restrictions on activities pertaining to our prospects and properties, which may negatively affect our ability to conduct our operations.
Provisions in our charter documents could prevent or delay a change in control, which could delay or prevent a takeover. Our articles of incorporation authorize the issuance of “blank check” preferred stock with such designations, rights, and preferences, as may be determined by our Board of Directors. Accordingly, the Board of Directors may, without shareholder approval, issue shares of preferred stock with dividend, liquidation, conversion, voting, or other rights that could adversely affect the voting power or other rights of the holders of our common stock. Preferred stock could also be issued to discourage, delay, or prevent a change in our control.
We have agreed to indemnify our officers and directors to the full extent permitted by Colorado law, which could negatively affect our financial condition. Our Articles of Incorporation and Bylaws provide for indemnification of our officers and directors to the full extent permitted by Colorado law. This indemnification may require us to pay judgments, fines and expenses incurred by an officer or director, as a result of actions or proceedings against them. Funds or our securities paid in satisfaction of judgments, fines or expenses would likely be funds that we would need for our operations and for the exploration and development of our properties, and may negatively affect our operations, financial condition, and/or further dilute the value of our securities.
9
We have not implemented certain corporate governance practices. We have only a single independent director, and therefore a majority of the board consists of directors who are not independent. Additionally, we do not have separately designated audit, compensation, or nominating committees. This lack of independence and independent controls over our corporate affairs may result in potential or actual conflicts of interest between our officers, directors and our shareholders. We have no formal policy to resolve such conflicts and these conflicts of interests may benefit the interests of our officers and directors over that of our minority stockholders.
The public market for our common stock is extremely volatile, both as to price and volume, and may continue to be volatile in the future. Historically, the price and trading volume of our common stock has been volatile. Several factors likely contributed to this volatility including: our significant operating losses; the suspension of our operations and subsequent sale of our Bolivian projects, the termination of our agreement with Queenstake Resources USA Inc. related to the operation of the Jerritt Canyon mill; and the dilution of shareholders’ interests. Such factors will likely continue to impact price and trading volume volatility.
As our stock is not listed on a national securities exchange, trading in our shares will be subject to rules governing penny stocks, which will impair trading activity in our shares. Our stock is not on a national securities exchange. Therefore, our stock is subject to rules adopted by the Commission regulating broker dealer practices in connection with transactions in penny stocks. Those disclosure rules applicable to penny stocks require a broker dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized list disclosure document prepared by the Commission. That disclosure document advises an investor that investment in penny stocks can be very risky and that the investor's salesperson or broker is not an impartial advisor but rather paid to sell the shares. The disclosure contains further warnings for the investor to exercise caution in connection with an investment in penny stocks, to independently investigate the security, as well as the salesperson with which the investor is working and to understand the risky nature of an investment in this security. The broker dealer must also provide the customer with certain other information and must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. Further, the rules require that, following the proposed transaction, the broker provide the customer with monthly account statements containing market information about the prices of the securities.
We have never paid any cash dividends on our common stock and we do not anticipate paying cash dividends on our common stock in the foreseeable future. We have never declared or paid a cash dividend on our common stock. We presently intend to retain our earnings, if any, to fund development and growth of our business and, therefore, we do not anticipate paying cash dividends in the foreseeable future.
Item 1B. Unresolved staff comments
None
Item 2. Properties
10
Gold Bar Mill and plant
We currently own the Gold Bar Mill and gold recovery plant located 25 miles northwest of Eureka, Nevada, however, we do not own the land on which it is located (or any other real property).
Office lease
Our executive office is located at 9653 South 700 East, Salt Lake City, Utah 84070. We pay $810 per month on the lease on a month to month basis.
Item 3. Legal proceedings
None
Item 4. Mine Safety Disclosure
Not Applicable.
Part II
|
Item 5.
|
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
|
Market Information
|
|
Our common stock is quoted on the Over-the-Counter (“OTC”) Bulletin Board under the trading symbol “MYNG.” The following table shows the high and low bid for our common stock during the last two years. These prices represent inter-dealer prices, without retail mark-up, markdown, or commission, and may not represent actual transactions. Additionally, the prices listed below give effect to the 1-for-500 reverse stock split we effected in April 2010 and that was reflected in the general marketplace in May 2010.
|
2010
|
Low Bid
|
High Bid
|
|
First Quarter
|
$.35
|
$.80
|
|
Second Quarter
|
$.10
|
$1.01
|
|
Third Quarter
|
$.07
|
$.28
|
|
Fourth Quarter
|
$.11
|
$.30
|
|
2011
|
Low Bid
|
High Bid
|
|
First Quarter
|
$.11
|
$.25
|
|
Second Quarter
|
$.12
|
$.25
|
|
Third Quarter
|
$.11
|
$.188
|
|
Fourth Quarter
|
$.04
|
$.16
|
Holders
As of December 31, 2011, there were approximately 1,207 shareholders of record of our common stock. This does not include an indeterminate number of persons who hold our common stock in brokerage accounts and otherwise in ‘street name. We estimate the total number of shareholders to exceed 8,000.
11
Capital Structure
We currently are authorized to issue 2,000,000,000 shares of common stock, and as of December 31, 2011, we had 14,625,044 shares of our common stock outstanding. In addition to the outstanding shares of common stock, we have authorized a total of 10,000,000 preferred shares of which the following separate classes have been designated:
| (i) 3,500,000 shares of our Series A Convertible Preferred Stock have been authorized for issuance, none of which are currently issued or outstanding. | |
| (ii) 4,500,000 shares of our Series B Preferred Stock have been authorized for issuance, of which 80,000 are issued and outstanding. These 80,000 Series B shares are in the aggregate convertible into 40,000 common shares post reverse split. | |
| (iii) one share of Series C Preferred Stock has been authorized and is no longer outstanding. | |
| (iv) 999,000 shares of Series D Convertible Preferred Stock have been authorized, none of which is outstanding. |
Additionally, we have convertible debentures, as well as stock options outstanding that are convertible or exercisable into common stock. On a fully diluted basis as of December 31, 2011 we had 15,139,152 shares of common stock outstanding.
|
Fully diluted shares for the years ended December 31,
|
2011
|
2010
|
||||||
|
Basic shares outstanding
|
14,625,044 | 9,335,445 | ||||||
|
Series B preferred conversion
|
40,000 | 40,000 | ||||||
|
Series C preferred conversion
|
- | 975,493 | ||||||
|
Series D preferred conversion
|
- | 2,844,430 | ||||||
|
Convertible debentures & convertible notes payable
|
63,907 | 1,154,444 | ||||||
|
Stock payable
|
- | - | ||||||
|
Stock options
|
410,200 | 460,833 | ||||||
|
Total
|
15,139,151 | * | 14,810,645 | * | ||||
* Exclusive of immaterial fractional shares and rounding.
Reverse Stock Split
On March 23, 2010 our shareholders approved an amendment to our Articles of Incorporation to effect a 1-for-500 reverse stock split. The reverse split became effective under Colorado law on April 28, 2010. On May 13, 2010, the Financial Industry Regulatory Authority took the necessary actions, and made the required notifications, to cause the reverse stock split to be reflected in the trading markets. Upon the reverse split being effected every 500 shares of our issued and outstanding common stock was automatically combined into one issued and outstanding share without any change in the par value of such shares. No fractional shares were issued in connection with the reverse stock split. Shareholders who were entitled to a fractional share are entitled to receive a whole share. The reverse split affected all of the holders of our common stock uniformly and did not affect any shareholder’s percentage of ownership interest, except to the extent that the reverse split resulted in any holder being granted a whole share for any fractional share that resulted from the reverse split. The number of common shares into which each of our outstanding series of preferred stock may be convertible into, as well as the shares of common stock underlying options, warrants and convertible debentures was proportionately reduced and the exercise prices of any warrants or options, and the conversion prices of any convertible debentures, was proportionately increased by the reverse stock split.
12
Following the reverse stock split, there remain 2,000,000,000 shares of common stock authorized, and 10,000,000 shares of preferred stock authorized.
Dividends
We have never paid a cash dividend on our common stock or on our preferred stock and have no present intention to declare or pay cash dividends on our common or preferred stock in the foreseeable future. We intend to retain any earnings that we may realize in the foreseeable future to finance our operations. Future dividends are very unlikely for the foreseeable future and any future dividends, if any, will depend on earnings, financing requirements and other factors. Should we sell the Gold Bar Mill for cash or securities without entering a merger arrangement a dividend of cash or shares may be contemplated. We can, however, offer no assurances that any sale will take place or that we will issue a dividend if a sale or merger does take place.
Securities authorized for issuance under equity compensation plans
|
(1)
|
Stock options issued
|
At times we have granted certain officers and directors stock options and stock bonuses, but those are ad hoc grants and have not been made pursuant to a formal plan (except for those options granted under the 2009 Revised Plan which were subsequently deemed void ab initio).
The information in the following table is provided with respect to compensation plans (including individual compensation arrangements) under which equity securities are authorized for issuance as of the fiscal year ending December 31, 2011.
|
Plan Category and Description
|
Number of Securities to be issued upon exercise of outstanding options, warrants, and rights
(a)
|
Weighted –average exercise price of outstanding options, warrants and rights
(b)
|
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
(c)
|
|
|
|||
|
Equity compensation plans approved by security holders
|
-0-
|
-0-
|
-0-
|
|
Equity compensation plans not approved by security holders
|
410,200
|
$0.43
|
-0-
|
|
Total
|
410,200
|
$0.43
|
-0-
|
13
Unregistered sales of equity securities and use of proceeds
All transactions have been previously disclosed.
Item 6. Selected Financial Data
Not applicable.
Item 7. Management's discussion and analysis of financial condition and results of operations
Overview
Currently our efforts are primarily focused on exploring and pursuing our options with respect to the Gold Bar Mill that we own in Nevada. We are currently seeking a buyer for the Gold Bar Mill or a possible merger candidate. While we have had negotiations with various entities with regards to the Gold Bar Mill we have not been able to enter into a definitive agreement with respect to the Mill. Additionally we have investigated refurbishing the Mill for active operations. Any refurbishment of the Mill would require additional outside capital. The Company cannot offer any assurance that such capital will be available on reasonable terms, if at all. While we believe we have sufficient funds to operate during the coming year, in the event we are unable to successfully identify and act upon a business opportunity or if there is drop in the price of YNG stock that we are currently using to fund administrative expenses, we will not have sufficient cash continue as a going concern without additional financing which we cannot guarantee that we will be able to obtain.
Liquidity and capital resources
The following table sets forth our working capital position at December 31, 2011.
|
Year ended December 31,
|
2011
|
|||
|
Cash and cash equivalents
|
$ | 118,835 | ||
|
Marketable securities*
|
458,825 | |||
|
Prepaid expenses
|
1,100 | |||
|
Accounts receivable
|
6,744 | |||
|
Current Assets
|
585,504 | |||
|
Current Liabilities
|
(129,978 | ) | ||
|
Working Capital
|
$ | 455,526 | ||
|
*
|
As of December 31, 2011 we held 1,567,500 YNG Shares. While we have made no decision as to whether we will hold or sell any or part of these remaining securities, we believe but cannot guarantee that by selling part or all of these securities we may be able to satisfy all or part of our capital commitments should we no longer have cash available. Because of our diminishing working capital and absent other financing (of which there can be no assurance), it is likely that we will be required to dispose of our remaining YNG Shares during the current fiscal year.
|
We believe we have sufficient cash and securities on hand to satisfy our current limited business operations through our 2012 fiscal year if we are able to sell shares of YNG which we own at a consistent price of $.30 or higher. However, these assets are not sufficient to allow us to engage in significant operations such as refurbishing or operating the Gold Bar Mill (which operations are not currently contemplated).
14
Because we have no continuing active business operations, our cash flow commitments of approximately $50,000 per month are related primarily to our office lease, salaries, accounting and legal expenses associated with maintaining our status as a company reporting under the Securities Exchange Act of 1934. Inasmuch as we have no revenues, we can expect our working capital and available cash to continue to decrease as we pay our corporate obligations during 2012 and may deplete our remaining cash unless we are able to obtain additional financing (of which there can be no assurance) or we are able to dramatically reduce our expenses.
We have no prospects at the current time of generating any revenues other than nominal amounts of interest generated from funds we have on deposit. 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 during at least the first half of fiscal 2012, such resources are not sufficient to allow us to engage in any significant operations at the Gold Bar Mill or elsewhere.
Results of operations
The following sets forth certain information regarding our results of operations as of December 31, 2011 and 2010.
|
Years ended December 31,
|
2011
|
2010
|
||||||
|
Revenues
|
$ | - | $ | - | ||||
|
Exploration & development costs
|
- | (54,771 | ) | |||||
|
General and administrative
|
(829,826 | ) | (836,400 | ) | ||||
|
Depreciation and depletion
|
(205 | ) | (205 | ) | ||||
|
Operating (loss)
|
(830,031 | ) | (891,376 | ) | ||||
|
Interest expense
|
(65,874 | ) | (367,944 | ) | ||||
Revenues. We did not generate revenue during 2011 and all 2010 revenue was related to the discontinued operation of the Jerritt-Canyon Gold Mill. At the present time we expect no revenues from continuing operations in 2012.
Exploration and Development Expenses. Our exploration and development costs decreased to $-0- during the year ended December 31, 2011from $54,771 for the year ended December 31, 2010. Unless we re-enter the mining exploration and development business we expect these costs to remain at the 2011 level.
General & Administrative Expenses. General and administrative expenses decreased by $6,574 to $829,826 for year ended December 31, 2011 (approximately $70,000 per month), from $836,400 during our 2010 fiscal year. The stability of our general and administrative expenses results from the limited nature of our operations.
15
Interest Expense. Interest expense for the year ended December 31, 2011, decreased by $302,070 to $65,874, from $367,944 during the same 2010 period. The decrease was primarily due to the elimination of almost all the debt that we owed. During 2011 we paid off in excess of $451,000 in debt and in excess of $480,000 in accrued interest. We anticipate that interest expense will continue to decline during 2012.
Off-balance sheet arrangements
Not applicable
Item 7A. Quantitative and Qualitative disclosures about market risk
No disclosure required.
Item 8. Financial statements and supplementary data
The disclosure required by this item are contained on pages F-1 through F-18.
Item 9. Changes in and disagreements with accountants on accounting and financial disclosure
During the year ended December 31, 2011 we did not have any disagreements with our auditors, Mark Bailey & Company, LLC on any matters of accounting principles, practices or financial statement disclosures.
On January 26, 2012, we engaged Ingenium Accounting Associates, Reno, Nevada, to audit our financial statements for the year ended December 31, 2011 and the periods then ended. Accordingly, we dismissed Mark Bailey & Company, Ltd., on January 26, 2012. Both actions were approved by our Board of Directors. We do not have an audit committee.
In connection with the audits of the Company’s financial statements for the two most recent fiscal years ended December 31, 2009 and December 31, 2010 and subsequent interim periods through the date of dismissal, there were no disagreements with Mark Bailey & Company, Ltd. on any matter of accounting principles or practices, financial statement disclosure, or auditing scope and procedures which, if not resolved to the satisfaction of Mark Bailey & Company, Ltd. would have caused Mark Bailey & Company, Ltd. to make reference to the matter in their report. The reports on the financial statements prepared by Mark Bailey & Company, Ltd., for the past two fiscal years did not contain an adverse opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles.
Item 9A. Controls and procedures
Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our filings under the Exchange Act is recorded, processed, summarized and reported within the periods specified in the rules and forms of the SEC. This information is accumulated and communicated to our executive officer to allow timely decisions regarding required disclosure. Our Chief Executive Officer and our Chief Financial Officer evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this report. Based on that evaluation and the requirements of the Exchange Act, our Chief Executive Officer and our Chief Financial Officer concluded that, as of December 31, 2011, our disclosure controls and procedures needed to be declared as ineffective. The small size of our company does not provide for the desired separation of control functions, and we do not have the required level of documentation of our monitoring and control procedures. The potential remedies for this situation are described below.
16
Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Management conducted an evaluation of the effectiveness of our internal control over financial reporting and determined that our internal control over financial reporting was ineffective as of December 31, 2011 due to material weaknesses. A material weakness in internal control over financial reporting is defined by the Public Company Accounting Oversight Board’s Audit Standard No. 5 as a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of our financial reporting.
Management’s assessment identified the following material weaknesses in internal control over financial reporting:
|
●
|
The small size of our Company limits our ability to achieve the desired level of separation our internal controls and financial reporting. We do have a separate CEO and CFO, however we do not have an Audit Committee to review and oversee the financial policies and procedures of the Company. In the interim, we will continue to strengthen the role of our CEO and CFO and their review of our internal control procedures.
|
|
●
|
We have not achieved the desired level of documentation of our internal controls and procedures. This documentation will be strengthened to limit the possibility of any lapse in controls occurring.
|
In light of the material weaknesses described above, we performed additional analysis and other post-closing procedures to ensure our financial statements were prepared in accordance with generally accepted accounting principles. Accordingly, we believe that the financial statements included in this report fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented.
Subject to the Company’s financial resources, Management hopes to further mitigate the risk of the material weaknesses going forward by utilizing external financial consulting services, in a more effective manner, prior to the review by our principal independent accounting firm to ensure that all information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported accurately and within the time periods specified in the Commission’s rule and forms.
17
Our management determined that there were no other changes made in our internal controls over financial reporting during 2011 that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.
This Annual Report on Form 10-K does not include an attestation report of the Company's independent registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's independent registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only management's report in this Annual Report on Form 10-K.
Item 9B Other information
No disclosure required.
Part III
Item 10. Directors, Executive Officers and Corporate Governance
Identification of Directors and Executive Officers:
The following table sets forth certain information concerning the persons serving as our directors and executive officers (including of our subsidiaries) as of March 22, 2012. Executive officers are appointed by the Board of Directors. Each officer holds office for one year or until a successor has been duly appointed, and qualified or until death, resignation or removal. Messrs. Turner and Madsen have entered into employment agreements as discussed under the employment agreement section. No family relationships exist among the officers and directors. Directors hold office until the next meeting of shareholders and until a successor is elected and qualified, or until their resignation.
| Name | Age | Position | Term of Office |
| Terry C. Turner | 59 | Chairman of the Board of Directors, President & CEO | 2/14/97-present |
| Alvaro Riveros | 69 | Director | 1/5/04-present |
| Harlan M. (Mac) DeLozier, II | 68 | Director | 9/28/06- present |
| Tracy A. Madsen | 50 | Secretary/Treasurer/CFO/Vice President US Admin. | 2/13/03-present |
Terry C. Turner, was appointed to the Board of Directors and as our President and Chief Executive Officer on February 14, 1997 and he is currently working substantially full time for the Company. In 1977, Mr. Turner received a B.A. in Political Science and a B.A. in Spanish from the University of Utah. He received his Juris Doctorate in 1980 from Brigham Young University. He is admitted to practice law in the State and Federal Courts of Utah and Colorado, as well as the 10th Circuit Court of Appeals and the United States Supreme Court. Mr. Turner is also a member of the District of Columbia Bar, the American Bar Association, the Inter-American Bar Association and the International Bar Association. In addition, he is the first and only American attorney admitted as a member of the Bolivian College of Lawyers (Bolivian National Bar) and the Bar of the State (Department) of La Paz, Bolivia.
18
Alvaro Riveros, was appointed as a member of our Board of Directors on January 5, 2004. Mr. Riveros received a Master’s Degree in Electromechanical Engineering from the Werner Siemens School of Engineering in Stuttgart, Germany. He is a registered engineer in Bolivia whose firm, EDICOM, carried out the electromechanical engineering, design and installation for our former Cangalli gold recovery plant and mine.
Harlan M. (Mac) DeLozier II, was appointed as a member of our Board of Directors on September 28, 2006; however, he was previously appointed as our Vice President for Bolivian Administration on March 1, 1997 until we sold our Bolivian operations in April 2010 when he resigned as an officer. Mr. DeLozier continues to serve as a Director. Mr. DeLozier is a 1966 graduate of Oklahoma State University, where he received B.A. degrees in Political Science, Foreign Language and History. He has an extensive background in business and mining in Bolivia.
Tracy A. Madsen was appointed as Corporate Secretary/Treasurer and Chief Financial Officer on February 13, 2003. On November 12, 2003 he was also appointed Vice President US Administration. Mr. Madsen is currently working substantially full time for the Company. Mr. Madsen received a B.A. in Finance from Boise State University, and an MBA from the University of Nevada Las Vegas. Mr. Madsen has broad financial and executive experience serving as a Chief Financial Officer for various companies for the past 22 years.
Blane W. Wilson at December 31, 2011 was our Chief Operating Officer, having been appointed April 20, 2008; however, on January 31, 2012, our Board of Directors accepted Mr. Wilson’s resignation. In his resignation, Mr. Wilson did not express any disagreement with management or disclosure issues. Mr. Wilson is currently serving as the President, CEO and as a director of Klondex Mines Ltd.
Board of Directors – Composition
Our Board of Directors seeks to ensure that it is composed of members whose particular experience, qualifications, attributes, and skills, when taken together, will allow the Board of Directors to satisfy its oversight obligations effectively. Currently, the Company does not have a separate nominating or compensation committee as it does not believe that given the small size of the Company and its limited resources and personnel that such a committee is warranted. Currently the Board of Directors as a whole is in charge of identifying and appointing appropriate persons to add to the Board of Directors when necessary. In identifying Board candidates it is the Board’s goal to identify persons whom it believes have appropriate expertise and experience to contribute to the oversight of a company of Golden Eagle’s nature while also reviewing other appropriate factors.
The Company believes that each of the persons that currently comprise its Board of Directors have the experience, qualifications and attributes and skills taken as a whole to enable the Board of Directors to satisfy its oversight responsibilities effectively. In particular, we believe that because of Mr. Turner’s significant experience in the mining industry (both domestically and in South America), as well as his broad legal experience in the mining sector, that he is a valuable member of our Board of Directors. As two of our directors reside in Bolivia it is more difficult for them to closely oversee the operations of the company; however, their extensive mining, milling and business experience continues to contribute to our Board’s decision-making process.
19
Involvement in certain legal proceedings
During the past ten years, no present director or executive officer of the Company has been the subject matter of any of the following legal proceedings that are required to be disclosed pursuant to Item 401(f) of Regulation S-K including: (a) any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; (b) any criminal convictions; (c) any order, judgment, or decree permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; (d) any finding by a court, the SEC or the CFTC to have violated a federal or state securities or commodities law, any law or regulation respecting financial institutions or insurance companies, or any law or regulation prohibiting mail or wire fraud; or (e) any sanction or order of any self-regulatory organization or registered entity or equivalent exchange, association or entity. Further, no such legal proceedings are believed to be contemplated by governmental authorities against any director or executive officer.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), requires our officers and directors, and persons who own more than 10% of a registered class of our equity securities, to file reports of ownership and changes in ownership of our equity securities with the Securities and Exchange Commission. Officers, directors and greater-than-ten-percent shareholders are required by Securities and Exchange Commission regulations to furnish us with copies of all Section 16(a) filings.
Based solely on our review of Forms 3, 4 and 5 available to us and, where applicable, written representations from directors, officers and 10% shareholders that no form is required to be filed, we believe that no director, officer or beneficial owner of more than 10% of its common stock failed to file on a timely basis reports required pursuant to Section 16(a) of the Exchange Act with respect to fiscal year ended December 31, 2011, with the exception of:
Golden Eagle Mineral Holdings, Inc. did not file a Form 4 reporting its conversion(s) of shares of our preferred stock into shares of our common stock in June 2011
The Dewey Williams trust did not timely file a Form 4 reporting its conversion(s) of two convertible debentures in June 2011, however a Form 5 was filed by Mr. Williams on March 5, 2012 reporting this conversion and we believe he is now current in his filings.
Code of Ethics
We adopted a Code of Ethics on March 23, 2004, that applies to our principal executive officer, principal financial officer, principal accounting officer or controlling persons, or persons performing similar functions. A copy of the Code was included as an exhibit to our annual report for the period ending December 31, 2003. In addition, our Code of Ethics is available on our web site at www.geii.com under the caption “Investor Relations: Code of Ethics.” A copy of our Code of Ethics is available to any person, without charge, by faxing a request to our Chief Financial Officer at our corporate offices at (801) 619-1747.
20
Nominating Procedures
We have not changed our nominating procedures during the past fiscal year or subsequently. We do not have a nominating committee and, as a result, the Board of Directors as a whole performs the functions of the nominating committee and directs and oversees the process by which individuals may be nominated to our Board of Directors.
No Audit Committee
Because of the Company’s small size and that it is not subject to the rules of any specific national stock exchange, the Company has not appointed an audit committee and has not identified an audit committee financial expert. Consequently, the Board of Directors as a whole performs the functions of an audit committee.
Item 11. Executive Compensation.
The following table sets out the compensation received during the previous two fiscal years, in respect to the only person that served as our chief executive officer at any time during the last fiscal year and our most highly compensated executive officers whose total salary and bonus exceeded $100,000 (the “Named Executive Officers”).
21
SUMMARY COMPENSATION TABLE
|
Non-Equity
|
|||||||||||||||||||||||||
|
Stock
|
Option
|
Incentive Plan
|
|||||||||||||||||||||||
|
Name and
|
Fiscal
|
Salary
|
Bonus
|
Awards (**)
|
Awards (**)
|
Compensation
|
Total
|
||||||||||||||||||
|
Principal Position
|
Year
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
||||||||||||||||||
|
Terry C. Turner,
Chief Executive Officer and Chairman
|
2011
|
$ | 260,844 | (A) | $ | 85,000 | (B) | $ | - | $ | - | $ | - | $ | 345,844 | ||||||||||
|
2010
|
$ | 255,749 | (A) | $ | 60,000 | (B) | $ | - | $ | - | $ | - | $ | 315,749 | |||||||||||
|
Tracy A. Madsen,
Chief Financial Officer, VP, Secretary & Treasurer
|
2011
|
$ | 150,000 | (C) | $ | 25,000 | (E) | $ | - | $ | - | $ | - | $ | 175,000 | ||||||||||
|
|
2010
|
$ | 188,941 | (C) | $ | - | $ | 32,423 | (D) | $ | - | $ | - | $ | 221,364 | ||||||||||
(**) This column represents the dollar amount recognized for financial statement reporting purposes with respect to the fair value of stock awards and stock options granted to the named executive officers. See note B to the consolidated financial statements for discussion regarding the assumptions used to calculate fair value under the Black-Scholes–Merton valuation model.
(A) Effective October 1, 2010 Mr. Turner’s salary was increased to $200,000 per year plus $60,000 in a cashless bonus. Mr. Turner received $185,000 in cash for his 2010 back wages plus $70,749 in cash for previous years’ deferred wages. During 2011, Mr. Turner was paid $200,000 for his 2011 salary plus $60,844 for prior year’s accrued salary.
(B) Of the amounts indicated during 2011 and 2010 $60,000 each year was in the form of a cashless bonus. These bonus payments reflect non-cash debt forgiveness. At December 31, 2010, Mr. Turner owed us $96,783 in non-interest bearing loans he received from us prior to July 31, 2002; we also owed Mr. Turner $96,783 on a non-interest bearing basis as a result of salaries that accrued without payment during 1997 through 2001 (in excess of the $443,772 in accrued salary that Mr. Turner waived on December 31, 2001). During each of 2010 and 2011, Mr. Turner waived $60,000 of unpaid accrued salary. There has been no material modification of the terms of either indebtedness since the enactment of Section 402 of the Sarbanes-Oxley Act of 2002. As of December 31, 2011 the amount owed to us by Mr. Turner and the amount we owed Mr. Turner was (in both cases) $36,783. The remaining $25,000 bonus during 2011 was paid in cash.
22
(C) Effective October 1, 2010 Mr. Madsen’s salary was increased to $150,000 annually. During 2010, Mr. Madsen was paid $120,000 for 2010 salary plus $50,167 which had been deferred from the previous year plus $18,775 in accrued interest on deferred salary.
(D) In May 2010 Mr. Madsen was granted 574,230 shares of our restricted common stock at a price of $.10 per share valued at $57,423. This amount was made up of the $25,000 note payable granted in February 2009 and $25,000 in shares granted in February 2010 for 2009 plus $7,423 in accrued interest on the note payable.
(E) In February 2011 Mr. Madsen was paid a cash bonus of $25,000.
Compensation Discussion and Analysis; Employment Agreements
Our Board of Directors as a whole reviews and approves the total direct compensation packages for each of our executive officers. As described in the notes to the Summary Compensation Table above, the primary elements of compensation to our named executive officers are cash compensation and equity compensation in the form of stock option grants and restricted stock grants.
Our named executive officers are to receive a base salary payable in accordance with our normal payroll practices and in accordance with the terms of their employment contracts which contemplate their full time employment by the Company.
Given the Company’s history of limited financial resources at times our named executive officers have agreed to defer a portion of their salaries to help the Company conserve its financial resources. Each of Messrs. Turner and Madsen and (while he was an executive officer) Mr. Wilson deferred portions of their cash compensation during fiscal 2009 and 2010 which as of the date of this report have been paid in full.
When the Board considers total cash compensation for our named executive officers, we do so by evaluating their responsibilities, experience and the competitive marketplace. Specifically, the Board considers the following factors:
|
●
|
the Company’s financial resources and ability to meet its current and prospective financial obligations;
|
|
●
|
the executive’s leadership and operational performance and potential to enhance long-term value to the Company’s shareholders;
|
|
●
|
performance compared to the financial, operational and strategic goals established for the Company;
|
|
●
|
the nature, scope and level of the executive’s responsibilities;
|
|
●
|
competitive market compensation paid by other companies for similar positions, experience and performance levels; and
|
|
●
|
the executive’s current salary, the appropriate balance between incentives for long-term and short-term performance.
|
We have entered into employment agreements with certain of our executive officers, each of which is described below.
23
Terry Turner and Tracy Madsen
On October 7, 2009, we entered into employment agreements with (a) Terry Turner, our Chief Executive Officer, President and Chairman (the “Turner Agreement”); and (b) Tracy Madsen, our Chief Financial Officer and Vice President (the “Madsen Agreement”). Both of these agreements were contingent on receiving shareholder approval. On March 23, 2010 our shareholders approved the terms of both the Turner Agreement and the Madsen Agreement, and each became effective and binding on that date.
In this summary collectively the Turner Agreement and the Madsen Agreement are referred to the “Agreements” and Mr. Turner and Mr. Madsen are each referred to herein as the “Executive.” The Agreements contemplate the Executives’ full time employment by the Company, and are both for an initial 3-year term expiring October 2012. The Agreements will renew for successive one year terms unless either the Company or the Executive gives at least 60 days’ notice to the other that it or he will not accept the renewal term..
The Turner Agreement provides for a base salary of $180,000 which was increased to $200,000 on October 1, 2010; the Madsen Agreement provides for a base salary of $110,000 which was increased to $150,000 on October 1, 2010. The Agreements provide that the Executive is eligible to receive a discretionary cash bonus based on the Company’s business and results are eligible to participate in the Company’s equity based compensation plans and to receive other standard employee benefits. The Agreements impose restrictive covenants on the Executive, such as confidentiality obligations and non-solicitation restrictions.
If the Agreements are terminated by the Company without cause, or not as a result of the Executive’s death or disability, the Executive is entitled to a severance payment equal to the Executive’s base salary at the rate in effect on the termination date for a period of 6 months, plus one month for each year that Executive has been with the Company, or through expiration of the Agreement’s original term, whichever is a shorter period of time. However, in no event will the Executive be entitled to less than 6 months of severance pay. This severance pay requirement is not applicable if the Agreements terminate because of non-renewal.
The Agreements also provide for a severance payment upon a “change of control event” (as defined in the Agreements) or if the Agreements are terminated by the Executive for “good reason” (as defined in the Agreements). The severance to be paid to Mr. Turner upon a change of control event or upon the Agreement being terminated for good reason is calculated using the greater of:
|
1)
|
An amount equal to Mr. Turner’s base salary at the rate in effect on the termination date for a period of 6 months, plus one month for each year that Mr. Turner has been with the Company, or through expiration of the Agreement’s original term, whichever is a shorter period of time; or
|
|
2)
|
An amount equal to 2 times the sum of (a) Mr. Turner’s then current annual base salary and (b) the amount of the most recent discretionary bonus paid to Mr. Turner (if any) less applicable withholding.
|
The severance to be paid to Mr. Madsen upon a change of control event or upon the Agreement being terminated for good reason is calculated using the greater of:
24
|
1)
|
An amount equal to Mr. Madsen’s base salary at the rate in effect on the termination date for a period of 6 months, plus one month for each year that Mr. Madsen has been with the Company, or through expiration of the Agreement’s original term, whichever is a shorter period of time; or
|
|
2)
|
An amount equal to (a) one year of Mr. Madsen’s current annual base salary and (b) the amount of the most recent discretionary bonus paid to Mr. Madsen (if any) less applicable withholding.
|
Option Grants To Our Named Executive Officers.
No options or restricted stock were granted to any named executive officer of Golden Eagle during the fiscal year ended December 31, 2011.
Compensation of Directors
We reimburse directors for travel and related expenses associated with Board of Directors’ meetings. We also compensate out non-employee directors $1,000 per month for attending any Board of Directors’ meetings held within that month telephonically or in person The following table sets forth information regarding the cash compensation paid to our directors during our year ended December 31, 2011:
DIRECTOR COMPENSATION
|
Name
|
Fees earned or paid in cash ($)
|
Stock awards
($)
|
Option awards
($) (1)
|
All other compensation ($)
|
Total
($)
|
|||||
|
Alvaro Riveros
|
$9,000
|
-
|
-
|
-
|
$9,000
|
|||||
|
Harlan DeLozier
|
$10,000
|
$10,000
|
Although Mr. Turner also served on our Board of Directors during our 2011 fiscal year he did not receive any separate compensation for his service in his capacity as Chairman of the Board of Directors.
Item 12. Security ownership of certain beneficial owners and management and related stockholder matters
Security Ownership of Golden Eagle Officers and Directors
As of December 31, 2011 and February 29, 2012, there were 14,625,044 shares of the Company’s common stock outstanding. The following table sets forth the beneficial ownership of the Company’s common stock as of February 29, 2012 by each director and each executive officer of the Company and by all directors and executive officers as a group. To the extent any of the named shareholders own derivative securities that are vested or otherwise exercisable into shares of our common stock these securities are included in that shareholders’ beneficial ownership (as required by Rule 13d-3(a)) at their conversion ratios and explained in the notes to the table. For purposes of this report we have used the fully diluted number of shares of 15,139,151.
25
|
Name and Address of Beneficial Owner
|
Position
|
Amount and Nature of Beneficial Ownership(1)
|
Percent of Common Stock(1)
|
|
Terry C. Turner
9653 South 700 East
Salt Lake City, Utah 84070
|
Chief Executive Officer, President, and Chairman
|
- (2)
|
-%
|
|
Harlan M. (Mac) DeLozier
9653 South 700 East
Salt Lake City, Utah 84070
|
Vice President and Director
|
468,817
|
3.1%
|
|
Tracy A. Madsen
9653 South 700 East
Salt Lake City, Utah 84070
|
Chief Financial Officer, Vice President –U.S. Administration
|
409,487
|
2.7%
|
|
Alvaro Riveros
9653 South 700 East
Salt Lake City, Utah 84070
|
Director
|
-
|
-
|
|
All current directors and executive officers as a group (four persons)
|
878,304
|
5.8%
|
|
(1)
|
Calculated in accordance with Rule 13d-3(a) promulgated under the Securities Exchange Act of 1934 and Item 403 of Regulation S-K.
|
|
(2)
|
Mr. Turner does not own any shares of our common stock.
|
Security Ownership of Certain Beneficial Owners
The following table sets forth the beneficial ownership of the Company’s common stock as of February 29, 2012 by each person (other than the directors and executive officers of the Company) was known to own beneficially, more than 5% of the outstanding voting shares of common stock. To the extent any of the named shareholders own shares of outstanding Preferred Stock (being Series B Stock) or other derivative securities that are exercisable into shares of our common stock or grant the holder voting power, these securities are included in that shareholders’ beneficial ownership (as required by Rule 13d-3(a)) at their conversion ratios and explained in the notes to the table). As of February 29, 2012 there were 14,625,044 shares of the Company’s common stock outstanding. For purposes of this report we have used the fully diluted number of shares of 15,139,151.
26
|
Name and Address of
Beneficial Owner
|
Amount and Nature of
Beneficial Ownership (1)
|
Percent of Common Stock(1)
|
||
|
Golden Eagle Mineral Holdings, Inc.
Chancery Court, Leeward Highway
Providenciales
Turks and Caicos Islands
|
2,387,123
|
15.8%
|
||
|
Dewey L. Williams
6860 N. Dallas Pkwy, Suite 200
Plano, TX 75024
|
1,403,413
|
9.3%
|
||
|
Edmundo Arauz
Jaimes Freire, 4 Norte
Calle Las Jardineras #16
Santa Cruz de la Sierra, Bolivia
|
1,124,775
|
7.4%
|
||
|
Total as a group
|
4,915,311
|
32.47%
|
|
|
(1)
|
Calculated in accordance with Rule 13d-3(a) promulgated under the Securities Exchange Act of 1934 and Item 403 of Regulation S-K. Because certain Golden Eagle securities held by the beneficial holders are convertible into common shares or grant the holder voting rights these securities are included in the beneficial ownership of the given beneficial holder. All outstanding shares of Golden Eagle’s preferred stock are entitled to vote as a single class with the common stock.
|
Change of Control Arrangements
There are not any plans or arrangement known to Golden Eagle that will result in a change of control.
Securities Authorized for Issuance under Equity Compensation Plans
See the description in Item 5 of this Annual Report for a description of the Company’s equity compensation plans.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
The following sets out information regarding transactions between officers, directors and significant shareholders of Golden Eagle during the most recent two fiscal years and during the subsequent fiscal year.
Indebtedness
At December 31, 2010, Mr. Turner owed us $96,783 in non-interest bearing loans he received from us prior to July 31, 2002; we also owed Mr. Turner $96,783 on a non-interest bearing basis as a result of salaries that accrued without payment during 1997 through 2001 (in excess of the $443,772 in accrued salary that Mr. Turner waived on December 31, 2001). During each of 2010 and 2011, Mr. Turner waived $60,000 of unpaid accrued salary. There has been no material modification of the terms of either indebtedness since the enactment of Section 402 of the Sarbanes-Oxley Act of 2002. As of December 31, 2011 the amount owed to us by Mr. Turner and the amount we owed Mr. Turner was (in both cases) $36,783.
27
Employment Agreements
See Item 11, Executive Compensation – Compensation Discussion and Analysis; Employment Agreements, for a discussion of the employment contracts between the Company and Messrs. Turner, and Madsen.
Transactions with significant shareholders
None
Director Independence
Our board of directors consists of Messrs. Turner, Riveros and DeLozier. Mr. Riveros is the only board member that we consider to be “independent” as defined by Section 803A of the NYSE Amex Company Guide. The board considers all relevant facts and circumstances in its determination of independence of all members of the board.
Item 14. Principal accountants’ fees and services
Our Board of Directors selected the independent accounting firm of Ingenium Accounting Associates, with respect to the audit of our consolidated financial statements for the years ended December 31, 2011. Our Board of Directors selected the independent accounting firm of Mark Bailey & Company, Ltd with respect to the audit of our consolidated financial statements for the years ended December 31, 2010.
Audit Fees
We anticipate paying Ingenium Accounting Associates $15,000 to complete the 2011 audit of our financial statements.
During the fiscal year ended December 31, 2011 we paid Mark Bailey & Company Ltd $14,000 for the review of our quarterly financial statements, $30,921 for the audit of our December 31, 2010 financial statements, and $34,200 for the re-audit of our December 31, 2009 financial statements. These aggregate fees include professional services for the audit of our annual financial statements and the review of the financial statements included in our reports on Form 10-Q and Form 10-K.
Audit-Related Fees
There were no fees billed by Mark Bailey & Company, Ltd. and Ingenium Accounting Associates for audit-related services rendered during fiscal years ended December 31, 2011 and 2010.
Tax Fees
There were no fees billed by Mark Bailey & Company, LLC and Ingenium Accounting Associates during the fiscal year ended December 31, 2011 and 2010, for tax compliance, tax advice, and tax planning.
28
All Other Fees
There were no other services provided by Mark Bailey & Company Ltd. or Ingenium Accounting Associates during fiscal years ended December 31, 2011 and 2010.
Audit Committee’s Pre-Approval Practice.
Inasmuch as Golden Eagle does not have an audit committee, Golden Eagle’s board of directors performs the functions of its audit committee. Section 10A(i) of the Securities Exchange Act of 1934 prohibits our auditors from performing audit services for us as well as any services not considered to be “audit services” unless such services are pre-approved by the board of directors (in lieu of the audit committee) or unless the services meet certain de minimis standards.
The Board of Directors has adopted resolutions that provide that the board must:
Preapprove all audit services that the auditor may provide to us or any subsidiary (including, without limitation, providing comfort letters in connection with securities underwritings or statutory audits) as required by §10A(i)(1)(A) of the Securities Exchange Act of 1934 (as amended by the Sarbanes-Oxley Act of 2002).
Preapprove all non-audit services (other than certain de minimis services described in §10A(i)(1)(B) of the Securities Exchange Act of 1934 (as amended by the Sarbanes-Oxley Act of 2002) that the auditors propose to provide to us or any of its subsidiaries.
The Board of Directors considers at each of its meetings whether to approve any audit services or non-audit services. In some cases, management may present the request; in other cases, the auditors may present the request.
Part IV
Item 15. Exhibits and financial statement schedules
(a) Financial statements
| The following documents are filed as part of this report: | Page |
| Independent Auditors Report | F-2 & F-3 |
| Consolidated Balance Sheets as of December 31, 2011and 2010 | F-4 |
| Consolidated Statements of Operations for the years ended December 31, 2011 and 2010 | F-5 |
| Consolidated Statements of Cash Flows for the years ended December 31, 2011 and 2010 | F-6 |
| Consolidated Statement of Stockholders' Equity (Deficit) for the years ended December 31, 2011 and 2010 | F-7 |
| Notes to Consolidated Financial Statements | F-8 through F-17 |
29
(b) Exhibits
The following exhibits are filed with this Form 10-K or incorporated herein by the following references:
|
Exhibit Number
|
Description
|
|
|
3.1
|
Articles of Incorporation. (1)
|
|
|
3.1.1
|
Certificate of Designation for the Series A Convertible Preferred Stock.(2)
|
|
|
3.1.2
|
Certificate of Designation for the Series B Convertible Preferred Stock. (3)
|
|
|
3.1.3
|
Articles of Amendment (4)
|
|
|
3.1.4
|
Certificate of Designation for the Series C Convertible Preferred Stock. (5)
|
|
|
3.1.5
|
Certificate of Designation for the Series D Convertible Preferred Stock. (6)
|
|
|
3.1.6
|
Articles of Amendment to effect Reverse Stock Split. (7)
|
|
|
3.1.7
|
Amended and Restated Bylaws. Filed Herewith
|
|
|
10.2
|
Employment Agreement with Terry Turner. (8)
|
|
|
10.3
|
Employment Agreement with Tracy Madsen. (8)
|
|
|
16.1
|
Letter from Mark Bailey & Company. (9)
|
|
|
Certification by the Principal Executive Officer pursuant to Rule 13a-14(a)/15d-14(a)
|
||
|
Certification by the Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a)
|
||
|
Certification by the Principal Executive Officer pursuant to Section 1350.
|
||
|
Certification by the Principal Financial Officer pursuant to Section 1350.
|
||
|
(1)
|
Incorporated by reference from our registration statement on Form 10-SB that became effective June 17, 1994.
|
|
(2)
|
Incorporated by reference from Current Report on Form 8-K dated March 10, 2005.
|
|
(3)
|
Incorporated by reference from Current Report on Form 8-K dated December 29, 2006.
|
|
(4)
|
Incorporated by reference from Current Report on Form 8-K dated September 14, 2007.
|
|
(5)
|
Incorporated by reference from Current Report on Form 8-K dated December 24, 2008.
|
|
(6)
|
Incorporated by reference from Current Report on Form 8-K dated July 6, 2009.
|
|
(7)
|
Incorporated by reference from Current Report on Form 8-K dated April 28, 2010.
|
|
(8)
|
Incorporated by reference from Current Report on Form 8-K dated October 7, 2009.
|
|
(9)
|
Incorporated by reference from Current Report on Form 8-K dated February 1, 2012.
|
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Golden Eagle International, Inc. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| GOLDEN EAGLE INTERNATIONAL, INC. | |
| March 30, 2012 | /s/ Terry C. Turner |
| Terry C. Turner, President and Chief Executive Officer | |
30
Pursuant to the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of Golden Eagle International, Inc. and in the capacities and on the dates indicated.
GOLDEN EAGLE INTERNATIONAL, INC.
March 30, 2012 /s/ Terry C. Turner______________________
Terry C. Turner, President, Chief Executive Officer and Director
March 30, 2012 /s/ Alvaro Riveros_______________________
Alvaro Riveros, Director
March 30, 2012 /s/ Harlan M. (Mac) DeLozier______________________
Harlan M. (Mac) DeLozier, Director
March 30, 2012 /s/ Tracy A. Madsen
Tracy A. Madsen, Chief Financial Officer and Principal Accounting Officer.
31
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
March 29, 2012
To the Board of Directors and
Stockholders of Golden Eagle International, Inc.
We have audited the accompanying balance sheet of Golden Eagle International, Inc. as of December 31, 2011, and the related statements of income, stockholders’ equity and comprehensive income, and cash flows for the year ended December 31, 2011. Golden Eagle International’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Golden Eagle International, Inc. as of December 31, 2011, and the results of its operations and its cash flows for the year ended December 31, 2011 in conformity with accounting principles generally accepted in the United States of America.
/s:/ Ingenium Accounting Associates
Reno, Nevada
F-2
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
April 11, 2011
To the Board of Directors and
Stockholders of Golden Eagle International, Inc.
We have audited the accompanying consolidated balance sheet of Golden Eagle International, Inc. as of December 31, 2010, and the related consolidated statement of operations, stockholders’ equity and comprehensive income, and cash flows for the year then ended. Golden Eagle International’s management is responsible for these consolidated financial statements. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Golden Eagle International, Inc. as of December 31, 2010, and the results of its operations and its cash flows for the year ended December 31, 2010 in conformity with accounting principles generally accepted in the United States of America.
|
/s/ Mark Bailey & Company, Ltd.
|
|
|
Reno, Nevada
|
|
F-3
|
Golden Eagle International, Inc.
|
||||||||||
|
Consolidated Balance Sheets
|
||||||||||
|
As of December 31, 2011 and 2010
|
||||||||||
|
2011
|
2010
|
|||||||||
|
ASSETS
|
||||||||||
|
CURRENT ASSETS
|
||||||||||
|
Cash & cash equivalents
|
$
|
118,835
|
$
|
1,670,949
|
||||||
|
Marketable securities
|
458,825
|
1,738,000
|
||||||||
|
Prepaid expenses
|
1,100
|
1,100
|
||||||||
|
Accounts receivable
|
6,744
|
-
|
||||||||
|
Total current assets
|
585,504
|
3,410,049
|
||||||||
|
PROPERTY AND EQUIPMENT
|
||||||||||
|
Plant and mill - idle
|
3,980,000
|
3,980,000
|
||||||||
|
Office equipment
|
9,204
|
9,204
|
||||||||
|
3,989,204
|
3,989,204
|
|||||||||
|
Less accumulated depreciation
|
(9,153
|
)
|
(8,948
|
)
|
||||||
|
Total property and equipment
|
3,980,051
|
3,980,256
|
||||||||
|
Total Assets
|
$
|
4,565,555
|
$
|
7,390,305
|
||||||
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||||
|
CURRENT LIABILITIES
|
||||||||||
|
Accounts payable and accrued expenses
|
$
|
43,244
|
$
|
210,713
|
||||||
|
Deferred wages
|
-
|
51,782
|
||||||||
|
Notes payable
|
15,000
|
401,410
|
||||||||
|
Debentures (net)
|
50,000
|
108,542
|
||||||||
|
Accrued interest payable
|
21,734
|
469,006
|
||||||||
|
Total current liabilities
|
129,978
|
1,241,453
|
||||||||
|
Total Liabilities
|
129,978
|
1,241,453
|
||||||||
|
Commitments and contingencies
|
-
|
-
|
||||||||
|
STOCKHOLDERS' EQUITY
|
||||||||||
|
Preferred stock, par value $.01 per share; 10,000,000 shares authorized,
|
||||||||||
|
80,000 and 648,887 issued and outstanding
|
800
|
6,489
|
||||||||
|
Common stock, par value $.0001 per share; 2,000,000,000 authorized shares;
|
||||||||||
|
14,625,044 and 9,335,445 issued and outstanding shares, respectively
|
1,462
|
934
|
||||||||
|
Additional paid-in capital
|
64,337,063
|
64,172,272
|
||||||||
|
Accumulated (deficit)
|
(59,459,693
|
)
|
(58,616,843
|
)
|
||||||
|
Accumulated other comprehensive income (loss)
|
(444,055
|
)
|
586,000
|
|||||||
|
Total stockholders' equity
|
4,435,577
|
6,148,852
|
||||||||
|
Total Liabilities and Stockholder's Equity
|
$
|
4,565,555
|
$
|
7,390,305
|
||||||
F-4
|
Golden Eagle International, Inc.
|
||||||||||
|
Consolidated Statements of Operations and Other Comprehensive Income
|
||||||||||
|
For the Years Ended December 31, 2011 and 2010
|
||||||||||
|
2011
|
2010
|
|||||||||
|
REVENUES
|
$
|
-
|
$
|
-
|
||||||
|
OPERATING EXPENSES
|
||||||||||
|
Exploration and development
|
-
|
54,771
|
||||||||
|
General and administration
|
829,826
|
836,400
|
||||||||
|
Depreciation and depletion
|
205
|
205
|
||||||||
|
Total operating expenses
|
830,031
|
891,376
|
||||||||
|
OPERATING (LOSS)
|
(830,031
|
)
|
(891,376
|
)
|
||||||
|
OTHER INCOME (EXPENSE)
|
||||||||||
|
Interest expense
|
(65,874
|
)
|
(367,944
|
)
|
||||||
|
Loss on sale of securities
|
(31,068
|
)
|
(50,854
|
)
|
||||||
|
Accretion of note discount
|
(6,458
|
)
|
(99,890
|
)
|
||||||
|
Total other (expense)
|
(103,400
|
)
|
(518,688
|
)
|
||||||
|
Loss before income taxes
|
(933,431
|
)
|
(1,410,064
|
)
|
||||||
|
Income taxes
|
-
|
-
|
||||||||
|
NET LOSS ON CONTINUING OPERATIONS
|
(933,431
|
)
|
(1,410,064
|
)
|
||||||
|
DISCONTINUED OPERATIONS,NET OF TAX
|
||||||||||
|
Loss on discontinued operations (Bolivia) net of tax
|
-
|
(57,606
|
)
|
|||||||
|
Gain (loss) discontinued operations (Nevada) net of tax
|
90,581
|
(446,354
|
)
|
|||||||
|
Loss on sale of business unit (Bolivia) net of tax
|
-
|
(71,768
|
)
|
|||||||
|
Gain on legal settlement Nevada
|
-
|
4,349,301
|
||||||||
|
NET GAIN ON DISCONTINUED OPERATIONS
|
90,581
|
3,773,573
|
||||||||
|
NET INCOME (LOSS)
|
$
|
(842,850
|
)
|
$
|
2,363,509
|
|||||
|
Basic gain (loss) per share on continuing operations
|
$
|
(0.07
|
)
|
$
|
(0.21
|
)
|
||||
|
Basic gain (loss) per share on discontinued operations
|
0.01
|
0.56
|
||||||||
|
Weighted average shares outstanding - basic
|
12,558,707
|
6,691,304
|
||||||||
|
Fully Diluted gain (loss) per share on continuing operations
|
-
|
$
|
0.19
|
|||||||
|
Fully Diluted gain (loss) per share on discontinued operations
|
-
|
$
|
0.31
|
|||||||
|
Weighted average shares outstanding - Fully diluted
|
-
|
12,333,169
|
||||||||
|
OTHER COMPREHENSIVE INCOME
|
||||||||||
|
Unrealized gain (loss) on securities
|
(1,030,055
|
)
|
586,000
|
|||||||
|
NET COMPREHENSIVE INCOME (LOSS)
|
$
|
(1,872,905
|
)
|
$
|
2,949,509
|
|||||
F-5
|
Golden Eagle International, Inc.
|
||||||||||
|
Consolidated Statements of Cash Flows
|
||||||||||
|
For the Years Ended
|
||||||||||
|
December 31,
|
December 31,
|
|||||||||
|
2011
|
2010
|
|||||||||
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
||||||||||
|
Net income (loss)
|
$
|
(842,850
|
)
|
$
|
2,363,508
|
|||||
|
Adjustments to reconcile net income (loss) to net cash (used) by operating activities:
|
||||||||||
|
Officer compensation contributed
|
60,000
|
-
|
||||||||
|
Stock issued for services
|
4,200
|
-
|
||||||||
|
Non cash interest
|
36,888
|
110,600
|
||||||||
|
Loss on debt conversions
|
-
|
99,890
|
||||||||
|
Loss on sale of Bolivian Operations
|
-
|
71,768
|
||||||||
|
(Gain) on Queenstake settlement
|
-
|
(4,349,301
|
)
|
|||||||
|
Depreciation
|
205
|
205
|
||||||||
|
Stock based compensation
|
-
|
59,830
|
||||||||
|
Loss on sale of marketable securities
|
31,068
|
-
|
||||||||
|
Changes in operating assets and liabilities
|
||||||||||
|
Decrease (increase) in accounts receivable
|
(6,744
|
)
|
202,688
|
|||||||
|
Decrease (increase) in prepaid expense and other costs
|
-
|
2,400
|
||||||||
|
Increase (decrease) in deferred wages
|
(51,782
|
)
|
(224,989
|
)
|
||||||
|
Increase (decrease) in accounts payable
|
(141,828
|
)
|
(564,774
|
)
|
||||||
|
Increase (decrease) in accrued interest
|
(419,928
|
)
|
328,643
|
|||||||
|
Net cash flows (used by) operating activities
|
(1,330,771
|
)
|
(1,899,532
|
)
|
||||||
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||||||||
|
Proceeds from sale of marketable securities
|
165,067
|
-
|
||||||||
|
Proceeds from sale of Queenstake settlement
|
- |
3,467,152
|
||||||||
|
Proceeds from sale of Bolivian operations
|
-
|
50,000
|
||||||||
|
Net cash flows provided by investing activities
|
165,067
|
3,517,152
|
||||||||
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||||||
|
Borrowings from related parties
|
-
|
86,050
|
||||||||
|
Repayments to related parties
|
-
|
(111,050
|
)
|
|||||||
|
Proceeds from notes payable
|
-
|
276,300
|
||||||||
|
Repayments of notes payable
|
(386,410
|
)
|
(200,000
|
)
|
||||||
|
Net cash flows (used in) provided by financing activities
|
(386,410
|
)
|
51,300
|
|||||||
|
NET INCREASE (DECREASE) IN CASH
|
(1,552,114
|
)
|
1,668,920
|
|||||||
|
CASH - BEGINNING OF PERIOD
|
1,670,949
|
2,029
|
||||||||
|
CASH - END OF PERIOD
|
$
|
118,835
|
$
|
1,670,949
|
||||||
|
SUPPLEMENTAL CASH FLOW INFORMATION
|
||||||||||
|
Non cash financing activities
|
||||||||||
|
Common stock issued for note payable repayments
|
$
|
75,000
|
$
|
270,799
|
||||||
|
Common stock issued for related party note payable repayments
|
$
|
-
|
$
|
50,000
|
||||||
|
Non cash investing activities
|
||||||||||
|
2,000,000 shares of common stock of YNG received
|
$
|
-
|
$
|
1,152,000
|
||||||
|
Cash paid for
|
||||||||||
|
Interest
|
$
|
463,106
|
$
|
33,751
|
||||||
|
Income taxes
|
-
|
-
|
||||||||
F-6
|
Golden Eagle International, Inc.
|
||||||||||||||||||||||||||||||||
|
Consolidated Statement of Changes in Stockholders' Equity & Comprehensive Income
|
||||||||||||||||||||||||||||||||
|
For the Period December 31, 2009 through December 31, 2011
|
||||||||||||||||||||||||||||||||
|
Additional
|
||||||||||||||||||||||||||||||||
|
Preferred Stock
|
Common Stock
|
Paid-in
|
Accumulated
|
Comprehensive
|
||||||||||||||||||||||||||||
|
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
(Deficit)
|
Income
|
Total
|
|||||||||||||||||||||||||
|
Balance at December 31, 2009
|
819,220 | $ | 8,192 | 3,950,102 | $ | 396 | $ | 63,611,428 | $ | (60,980,351 | ) | $ | 2,639,666 | |||||||||||||||||||
|
Stock issued for interest and debt
|
- | - | 4,384,706 | 438 | 374,557 | - | - | 374,995 | ||||||||||||||||||||||||
|
Stock issued for service
|
- | - | 151,970 | 15 | 15,182 | - | - | 15,197 | ||||||||||||||||||||||||
|
Preferred stock converted to common stock
|
(169,733 | ) | (1,697 | ) | 848,667 | 85 | 1,019 | - | - | - | ||||||||||||||||||||||
|
Preferred sock returned
|
(600 | ) | (6 | ) | - | - | - | - | - | (600 | ) | |||||||||||||||||||||
|
Value of options granted
|
- | - | - | - | 44,634 | - | - | 44,634 | ||||||||||||||||||||||||
|
Discount on debentures
|
- | - | - | - | 25,562 | - | - | 25,562 | ||||||||||||||||||||||||
|
Loss on conversion
|
- | - | - | - | 99,890 | - | - | 99,890 | ||||||||||||||||||||||||
|
Net gain
|
- | - | - | - | - | 2,363,508 | - | 2,363,508 | ||||||||||||||||||||||||
|
Other comprehensive income
|
- | - | - | - | - | - | 586,000 | 586,000 | ||||||||||||||||||||||||
|
Balance at December 31, 2010
|
648,887 | $ | 6,489 | 9,335,445 | $ | 934 | $ | 64,172,272 | $ | (58,616,843 | ) | $ | 586,000 | $ | 6,148,852 | |||||||||||||||||
|
Stock issued for interest and debt
|
- | - | 1,444,660 | 144 | 95,224 | - | - | 95,368 | ||||||||||||||||||||||||
|
Stock issued for service
|
- | - | 24,706 | 2 | 4,198 | - | - | 4,200 | ||||||||||||||||||||||||
|
Preferred stock converted to common stock
|
(568,887 | ) | (5,689 | ) | 3,820,233 | 382 | 5,369 | - | - | 61 | ||||||||||||||||||||||
|
Forgiveness of debt-contribution by officer/shareholder
|
- | - | - | - | 60,000 | - | - | 60,000 | ||||||||||||||||||||||||
|
Net loss
|
- | - | - | - | - | (842,850 | ) | - | (842,850 | ) | ||||||||||||||||||||||
|
Other comprehensive income
|
- | - | - | - | - | - | (1,030,055 | ) | (1,030,055 | ) | ||||||||||||||||||||||
|
Balance at December 31, 20111
|
80,000 | $ | 800 | 14,625,044 | $ | 1,462 | $ | 64,337,063 | $ | (59,459,693 | ) | $ | (444,055 | ) | $ | 4,435,577 | ||||||||||||||||
F-7
Golden Eagle International, Inc.
Notes to Consolidated Financial Statements
Note A – Organization and Business
Organization and Nature of Business
Golden Eagle International, Inc. (“we,” “us” or “Golden Eagle”) was incorporated in Colorado on July 21, 1988. From late 2008 through June 2009, we were engaged in contract gold milling operations in the state of Nevada in the United States.
We have not had any business operations since we disposed of our wholly-owned subsidiary, Golden Eagle International, Inc. (Bolivia) in the first quarter of fiscal 2010. Prior to that time we had been involved in the business of minerals exploration and (prior to 2005) mining and milling operations in Bolivia through that subsidiary.
We currently own the Gold Bar Mill (the “Mill”) in Eureka, Nevada which is not currently in operation and which will require a significant expenditure to rehabilitate should we choose to do so. Although we have been attempting to seek value for our investment in the Gold Bar Mill since its acquisition in 2004, we have not been able to obtain the financing necessary to rehabilitate the Mill or enter into a joint venture or other business arrangement with respect to the Mill.
Note B – Summary of Significant Accounting Policies
Principles of Consolidation
The financial statements include the accounts of Golden Eagle International, Inc. and its subsidiaries, Golden Eagle International, an unincorporated Bolivian entity, and Golden Eagle International, Inc. (Bolivia). All inter-company transactions and balances have been eliminated. Minority interests are not presented since they are not obligated to fund operating losses. As of the year ended December 31, 2011 we did not own or control any subsidiaries.
Use of Estimates
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 the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates, and such differences may be material to the financial statements.
Foreign Currency
The functional currency for our foreign subsidiaries is U.S. dollars. The financial transactions, records and statements of foreign subsidiaries are all measured in U.S. dollars using the effective daily exchange rate. As a result, we have no material currency translation gains or losses.
Concentration of Credit Risk
From time to time our cash balances, held at a major financial institution, exceed the federally insured limits of $250,000. Our management believes that the financial institution is financially sound and the risk of loss is low.
F-8
Golden Eagle International, Inc.
Notes to Consolidated Financial Statements
Fair Value of Financial Instruments
We use the established three-level valuation hierarchy for valuing and disclosing our financial instruments at fair value. The three levels are defined as follows:
|
|
Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
|
|
|
|
Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
|
|
|
|
Level 3 inputs to valuation methodology are unobservable and significant to the fair measurement.
|
|
The carrying amounts reported in the balance sheets for cash, receivables, and current liabilities are at cost which approximates their fair value due to their short-term nature.
As part of our August 2010 settlement with Queenstake Resources we obtained 2,000,000 shares of common stock of Queenstake’s parent company, Yukon Nevada Gold Corp. (“YNG”).
These securities, classified as available for sale, are our only financial instrument that is measured at fair value on a recurring basis. At December 31, 2011 we held 1,567,500 shares of YNG and the fair value of these shares, using level 1 inputs, was $458,825. At December 31, 2010 we held 2,000,000 shares of YNG and the fair value of these shares, using level 1 inputs, was $1,738,000.
Since the securities are classified as available for sale, we recognize realized gains / losses and declines in value of the securities deemed to be other than temporary in earnings. Unrealized gains / losses are recognized as a component of other comprehensive income. For the year ended December 31, 2011 we recognized an unrealized loss of $1,030,055 on our YNG common stock holdings. For the year ended December 31, 2010 we recognized an unrealized gain of $586,000 on our YNG common stock holdings.
Cash and Cash Equivalents
For the statement of cash flows, any liquid investments with a maturity of three months or less at the time of acquisition are considered to be cash equivalents.
Property, Equipment
Property and equipment are recorded at cost. Maintenance and repair costs are charged to expense as incurred, and renewals and improvements that extend the useful life of assets are capitalized. Depreciation on property and equipment is computed using the straight-line method over the assets’ estimated useful lives as follows:
Mining equipment 7-8 years
Vehicles 5 years
Office equipment 4-10 years
Depreciation expense totaled $205 for the years ended December 31, 2011 and 2010, respectively.
F-9
Golden Eagle International, Inc.
Notes to Consolidated Financial Statements
At December 31, 2011 and 2010 we held a Mill with a carrying value of $3,980,000. The Mill is located near Eureka, Nevada and has been idle since acquisition; therefore, no depreciation expense has been recognized.
At December 31, 2011 and 2010 we have an immaterial amount of office equipment that is depreciated on a straight line basis.
Long-Lived Assets
We periodically review our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Impairment losses are recognized when the estimated future cash flows are less than the carrying amount of the asset calculated on discounted cash flow basis.
For the years ended December 31, 2011 and 2010 we recognized impairment charges of $0.
Stock Based Compensation
We measure stock-based compensation cost relative to the estimated fair value of the awards on the grant date using a Black Scholes options pricing model. We recognize the cost as the awards vest. See Note E for a more detailed description of our stock based compensation.
Beneficial Conversion Feature of Debentures and Convertible Notes Payable
In accordance with FASB ASC 470-20, Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios, we recognize the advantageous value of conversion rights attached to convertible debt. Such rights give the debt holder the ability to convert the debt into common stock at a price per share that is less than the trading price to the public on the day the loan is made to us. The beneficial value is calculated as the intrinsic value (the market price of the stock at the commitment date in excess of the conversion rate) of the beneficial conversion feature of debentures and related accruing interest is recorded as a discount to the related debt and an addition to additional paid in capital. The discount is amortized over the remaining outstanding period of related debt using the effective interest method.
Income (Loss) Per Share
The computation of basic earnings (loss) per common share is based on the weighted average number of shares outstanding during each year.
The computation of diluted earnings per common share is based on the weighted average number of shares outstanding during the year plus the common stock equivalents as detailed in the following chart. In 2011 the inclusion of these shares would have resulted in a weighted average shares fully diluted number that was anti-dilutive and as such they are excluded.
F-10
Golden Eagle International, Inc.
Notes to Consolidated Financial Statements
Stock equivalents consist of the following:
|
Fully diluted shares for the years ended December 31,
|
2011
|
2010
|
||||||
|
Basic shares outstanding
|
14,625,044 | 9,335,445 | ||||||
|
Series B preferred conversion
|
40,000 | 40,000 | ||||||
|
Series C preferred conversion
|
- | 975,493 | ||||||
|
Series D preferred conversion
|
- | 2,844,430 | ||||||
|
Convertible debentures & convertible notes payable
|
63,907 | 1,154,444 | ||||||
|
Stock payable
|
- | - | ||||||
|
Stock options
|
410,201 | 460,833 | ||||||
|
Total
|
15,139,151 | * | 14,810,645 | * | ||||
* Exclusive of immaterial fractional shares and rounding.
Income Taxes
Income taxes are accounted for under the liability method of accounting for income taxes. Under the liability method, future tax liabilities and assets are recognized for the estimated future tax consequences attributable to differences between the amounts reported in the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Future tax assets and liabilities are measured using enacted or substantially enacted income tax rates expected to apply when the asset is realized or the liability settled.
Deferred taxes are provided on a liability method whereby deferred tax assets tax assets are recognized for deductible temporary differences and operating loss and tax credit carry-forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax law and rates on the date of enactment.
Effect of New Accounting Pronouncements
There are no recent accounting pronouncements that are expected to have a material impact on our financial position, results of operations or cash flows.
F-11
Golden Eagle International, Inc.
Notes to Consolidated Financial Statements
Note C – Loans and Notes Payable
We have debt obligations outstanding at December 31, 2011 and 2010 as follows:
|
2011
|
2010
|
|||||||
|
Other Notes Payable
|
||||||||
|
A note totaling $220,000 payable to Casco Credit with an interest rate of 12% which matured on March 24, 2009. We did not pay this note when it was due. The creditor declared this note in default which resulted in the note beginning to accrue interest at a default rate of 5% per month. This note was secured by our Gold Bar Mill located 25 miles north of Eureka, Nevada. As of February 10, 2011 this note and accrued interest have been paid in full.
|
$
|
-
|
$
|
20,000
|
||||
|
A note totaling $33,000 payable to Casco Credit with an interest rate of 12% which matured on February 21, 2010. We did not pay the note when due and the note holder declared the note in default which resulted in the note accruing interest at a 5% per month default rate. This note is secured by the Gold Bar Mill located 25 miles north of Eureka, Nevada. As of February 10, 2011 this note and accrued interest have been paid in full.
|
-
|
33,000
|
||||||
|
A note totaling $15,000 payable to John Saunders with an interest rate of 8% per annum that matures on June 30, 2012.
|
15,000
|
15,000
|
||||||
|
A note payable to Lonestar Equity Group with an interest rate of 8% that matured on June 30, 2011. On May 25, 2011 this note and accrued interest was paid in full.
|
-
|
177,360
|
||||||
|
A note payable to Miguel Simon Guardia with an interest rate of 8% per annum which matures on June 30, 2011. On May 25, 2011 this note and accrued interest were paid in full.
|
-
|
156,050
|
||||||
|
Total other notes payable
|
$
|
15,000
|
$
|
401,410
|
||||
|
Convertible debentures
|
||||||||
|
A debenture payable to the John Saunders Trust dated July 7, 2008, maturing on June 30, 2012 at 8%
|
$
|
50,000
|
$
|
50,000
|
||||
|
A debenture payable of $52,000 to Dewey L. Williams and the Dewey L. Williams Profit Sharing Plan & Trust, maturing on May 13, 2011 at 8%. On June 13, 2011 this debenture and accrued interest was converted into 1,251,316 shares of our common stock.
|
-
|
52,000
|
||||||
|
A debenture payable to Dewey Williams, maturing on June 8, 2011 at 10%. On June 13, 2011 this debenture and accrued interest was converted into 22,077 shares of our common stock.
|
-
|
3,000
|
||||||
|
A convertible debenture payable to Richard Newberg maturing on February 3, 2012 at 10%. On June 30, 2011 this debenture and accrued interest were converted into 71,267 shares of our common stock.
|
-
|
10,000
|
||||||
|
Total convertible debentures
|
$
|
50,000
|
$
|
115,000
|
||||
|
Discount on debentures
|
-
|
(6,458
|
)
|
|||||
|
Debentures (net)
|
$
|
50,000
|
$
|
108,542
|
||||
|
Total Loans, notes and debentures
|
$ | 65,000 | $ | 509,952 | ||||
F-12
Golden Eagle International, Inc.
Notes to Consolidated Financial Statements
During the years ended December 31, 2011 and 2010, $6,458 and $50,854, respectively, were recognized for the accretion of beneficial conversion feature note discounts.
Additionally, we recognized losses on conversions of debt that was not initially convertible and subsequently converted at a discount, of $0 and $99,890 respectively for the years ended December 31, 2011 and 2010.
Note D– Stock Based Compensation
As part of certain employment agreements we issue stock options. These are generally approved by the Board of Directors. The exercise price is set by the average closing price of our stock the ten days prior to approval and the grant date fair value is estimated using a Black Scholes pricing model with the following assumptions:
Volatility = 225%
Expected term = 3 years
Dividend yield = 0
Risk free rate = .30%
The following table represents the option activity for the periods presented;
|
Number of Options
|
||||
|
Outstanding at 1/1/10
|
202,652 | |||
|
Granted
|
258,180 | |||
|
Exercised
|
- | |||
|
(Forfeited/expired)
|
- | |||
|
Outstanding at 12/31/10
|
460,832 | |||
|
Granted
|
- | |||
|
Exercised
|
- | |||
|
(Forfeited/expired)
|
(50,632 | ) | ||
|
Balance 12/31/11
|
410,200 | |||
During the years ended December 31, 2011 and December 31, 2010 we recognized stock based compensation of $0 and $44,634 respectively which is included in our General and administrative expenses. As of December 31, 2011 all of the options are vested and exercisable with a weighted average exercise price of $.43 and remaining terms between 2 weeks and 19 months. The total intrinsic value of the options outstanding as of December 31, 2011 is $0.
Stock Compensation Plans
At a special meeting of shareholders held on March 23, 2010 the Company’s shareholders approved the Golden Eagle International, Inc. Revised 2009 Equity Incentive Plan (“Plan”). As of December 31, 2011 there were no plan awards granted under the Plan.
Note E – Stockholders’ Equity
Effective April 28, 2010, we implemented the previously approved 500-for-1 reverse stock split. All share amounts included in this report have been retroactively adjusted accordingly.
F-13
Golden Eagle International, Inc.
Notes to Consolidated Financial Statements
Common Stock
During the year ended December 31, 2011 we issued a total of 1,444,660 shares of our common stock valued at $111,888 for the settlement of certain notes payable and interest.
Additionally, we issued 24,706 shares of common stock for services at a price of $0.17 per share for total consideration of $4,200.
Also during 2011, we issued 3,820,233 shares of common stock upon the conversion of one share of Series C preferred stock (convertible at a ratio 975,493 shares of common stock for each share of Series C preferred) and 568,948 shares of our Series D Preferred Stock (convertible at a ratio of 5 shares of common stock for each share of Series D preferred).
During 2010 we issued a total of 5,385,343 shares of our common stock valued at $604,560. This included 151,970 shares of common stock that was issued for services at a price of $.10 per share for a total of $15,197.
Additionally during 2010, we issued 4,384,706 shares of common stock to satisfy debt at prices between $.04 and $2.00 per share for a total value of $374,995.
We also issued 848,667 common shares upon the conversion of 169,733 shares of our Series D Preferred Stock.
Preferred stock
Our Articles of Incorporation provide that we may issue up to 10,000,000 shares of preferred stock. Subject to the requirements of the Colorado Business Corporation Act, the Board of Directors may issue the preferred stock in series with rights and preferences as the Board of Directors may determine appropriate, without shareholder approval. To date, the Board of Directors has authorized the creation of four series of preferred stock as described below.
|
(i)
|
3,500,000 shares of our Series A Convertible Preferred Stock have been authorized for issuance, none of which are currently issued or outstanding. |
|
(ii)
|
4,500,000 shares of our Series B Preferred Stock have been authorized for issuance, of which 80,000 are issued and outstanding. These 80,000 Series B shares are in the aggregate convertible into 40,000 common shares.
|
|
(iii)
|
one share of Series C Preferred Stock has been authorized and issued, and redeemed. There are no shares of Series C shares outstanding
|
|
(iv)
|
999,000 shares of Series D Convertible Preferred Stock have been authorized, of which 793,849 shares of Series D Preferred Stock were issued and redeemed. There are no Series D shares outstanding.
|
F-14
Golden Eagle International, Inc.
Notes to Consolidated Financial Statements
Note F – Related Party Transactions
At December 31, 2010, Mr. Turner owed us $96,783 in non-interest bearing loans he received from us prior to July 31, 2002; we also owed Mr. Turner $96,783 on a non-interest bearing basis as a result of salaries that accrued without payment during 1997 through 2001 (in excess of the $443,772 in accrued salary that Mr. Turner waived on December 31, 2001). During each of 2010 and 2011, Mr. Turner waived $60,000 of unpaid accrued salary. There has been no material modification of the terms of either indebtedness since the enactment of Section 402 of the Sarbanes-Oxley Act of 2002. As of December 31, 2011 and 2010 this arrangement resulted in a net zero balance.
Our officers and directors made the following loans to the company during 2010.
|
2010
|
Additions
|
Payments
|
Balance
|
|||||||||
|
Tracy Madsen(A)
|
$ | 61,050 | $ | (61,050 | ) | $ | - | |||||
|
(A)
|
Loans from Mr. Madsen were made from Avcon Services, Inc., a company owned and controlled by him. Avcon Services, Inc. was paid $0 and $23,182 in interest during 2011 and 2010, respectively.
|
During 2011 there were no loans made by officers or directors to the company.
Deferred salary
As of December 31, 2011 and 2010 we owed the following officers accrued compensation.
|
Officer Deferred Compensation
|
Position
|
2011
|
2010
|
||||||
|
Terry C. Turner
|
Chief Executive Officer
|
$ | - | $ | 42,800 | ||||
|
Total
|
$ | - | $ | 42,800 | |||||
As of December 31, 2010, we had accrued $18,044 in interest on unpaid past due wages that was due to Terry Turner. All deferred wages owed to Mr. Turner were paid during 2011 with the exception of unpaid accrued salary described in the first paragraph of this section.
Note G – Income Taxes
Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
F-15
Golden Eagle International, Inc.
Notes to Consolidated Financial Statements
Deferred tax assets and valuation allowance at December 31, 2011 and 2010, respectively are as follows:
|
For the Years Ended December 31,
|
||||||||
|
Deferred tax assets:
|
2011
|
2010
|
||||||
|
Unexercised stock options
|
$ | 38,000 | $ | 43,000 | ||||
|
Net operating loss carry forward
|
6,049,000 | 5,248,000 | ||||||
|
Valuation allowance
|
(6,087,000 | ) | (5,291,000 | ) | ||||
| $ | - | $ | - | |||||
The components of income tax expense for years-ended December 31, 2011 and 2010 respectively are as follows:
|
|
2011
|
2010
|
||||||
|
Current Federal tax
|
$ | - | $ | - | ||||
|
Current State tax
|
- | - | ||||||
|
Change in current year NOL (benefit)
|
(796,000 | ) | (244,000 | ) | ||||
|
True-up of prior year NOL (benefit)
|
- | (662,000 | ) | |||||
|
Change in valuation allowance
|
796,000 | 906,000 | ||||||
| $ | - | $ | - | |||||
A provision for income taxes has not been made due to net operating loss carry-forwards of $17,904,000 and $16,371,000 at December 31, 2011 and 2010, respectively, which may be offset against future taxable income through 2031. No tax benefit has been reported in the financial statements.
The actual provision for income tax differs from the statutory U.S. federal income tax rate for the years-ended December 31, 2011 and 2010, respectively as follows:
|
For the Years Ended December 31,
|
||||||||
|
2011
|
2010
|
|||||||
|
|
||||||||
|
Provision at US statutory rate of 34%
|
$ | 799,000 | $ | 1,037,000 | ||||
|
Permanent differences
|
(1,595,000 | ) | (1,281,000 | ) | ||||
|
True-up of prior year NOL
|
- | (662,000 | ) | |||||
|
Increase in valuation allowance
|
796,000 | 906,000 | ||||||
|
Ending Balance
|
$ | - | $ | - | ||||
Current accounting guidance requires the Company to provide a reconciliation of the beginning and ending amount of unrecognized tax impacts related to the sustainability of tax positions taken in current and prior periods.
As of December 31, 2011 the Company did not have any tax positions for which it is reasonably possible that the total amount of unrecognized tax benefits will significantly increase or decrease within the next 12 months.
F-16
Golden Eagle International, Inc.
Notes to Consolidated Financial Statements
The Company includes interest and penalties arising from the underpayment of income taxes in the consolidated statements of operations in the provision for income taxes. As of December 31, 2011 and 2010, the Company had no accrued interest or penalties related to uncertain tax positions.
The tax years that remain subject to examination by major taxing jurisdictions are those for the years ended December 31, 2009 through 2011.
F-17