o | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended March 31, 2007
|
|
OR
|
|
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FLORIDA
(State
or other jurisdiction of
incorporation
or organization)
|
7389
(Primary
Standard Industrial
Classification
Code Number)
|
65-0955118
(I.R.S.
Employer
Identification
No.)
|
|
PART
I - FINANCIAL INFORMATION
|
|
|
|
|
ITEM
1.
|
UNAUDITED
FINANCIAL STATEMENTS
|
F-1
|
|
|
|
|
Consolidated
Balance Sheet as of March 31, 2007 (Unaudited)
|
F-1
|
|
|
|
|
Consolidated
Statement of Operations (Unaudited)
|
F-3
|
|
|
|
|
Consolidated
Statement of Cash Flows (Unaudited)
|
F-4
|
|
|
|
|
Notes
to Financial Statements
|
F-5
|
|
|
|
ITEM
2.
|
MANAGEMENT'S
DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
|
1
|
ITEM
3.
|
CONTROLS
AND PROCEDURES
|
8
|
|
|
|
|
PART
II - OTHER INFORMATION
|
|
|
|
|
ITEM
1.
|
LEGAL
PROCEEDINGS
|
9
|
ITEM
2.
|
UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
11
|
ITEM
3.
|
DEFAULTS
UPON SENIOR SECURITIES
|
11
|
ITEM
4
|
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS
|
11
|
ITEM
5.
|
OTHER
INFORMATION
|
11
|
ITEM
6
|
EXHIBITS
AND REPORTS ON FORM 8-K
|
11
|
|
|
|
SIGNATURES
|
13
|
|
March
31, 2007
|
|||
(Unaudited)
|
||||
ASSETS
|
|
|||
CURRENT
ASSETS:
|
|
|||
Prepaid
expenses and other current assets
|
$
|
75,690
|
||
Deferred
financing fees, net
|
716,981
|
|||
TOTAL
CURRENT ASSETS
|
792,671
|
|||
|
||||
PLANT,
EQUIPMENT, MINE DEVELOPMENT, AND MINERAL PROPERTIES, NET:
|
||||
Mineral
properties
|
1,619,837
|
|||
Plant,
Equipment, Mine Development
|
685,088
|
|||
TOTAL
PROPERTY AND EQUIPMENT
|
2,304,925
|
|||
Reclamation
deposit
|
377,169
|
|||
|
||||
TOTAL
ASSETS
|
$
|
3,474,765
|
CURRENT
LIABILITIES
|
|
|||
Bank
Overdraft
|
$
|
2,882
|
||
Accounts
Payable
|
670,288
|
|||
Accrued
Expenses
|
1,195,305
|
|||
Accrued
liquidated damages
|
1,759,072
|
|||
Accrued
interest payable
|
1,998,837
|
|||
Derivative
Liabilities
|
274,706
|
|||
Short-Term
Lease Obligations
|
29,945
|
|||
Convertible
debentures
|
10,262,118
|
|||
Promissory
notes
|
2,475,000
|
|||
Other
notes payable and current portion of long-term debt
|
406,958
|
|||
TOTAL
CURRENT LIABILITIES
|
19,075,111
|
|||
|
||||
LONG-TERM
DEBT AND OTHER LONG-TERM LIABILITIES
|
||||
Long-term
debt, net of current portion
|
20,735
|
|||
Long-term
Lease obligation, net of current portion
|
39,092
|
|||
Long-term
Asset retirement obligations
|
553,190
|
|||
TOTAL
LONG-TERM DEBT AND OTHER LONG-TERM LIABILITIES
|
613,017
|
|||
TOTAL
LIABILITIES
|
19,688,128
|
|||
|
||||
SHAREHOLDERS'
DEFICIT
|
||||
Common
stock, $.000666 par value, 3,950,000,000 shares authorized ,
|
||||
1,178,751,631
shares issued and outstanding
|
758,049
|
|||
Additional
paid-in capital
|
12,064,333
|
|||
Accumulated
deficit - Prior years
|
(27,940,829
|
)
|
||
Accumulated
deficit - Current year
|
(1,121,916
|
)
|
||
TOTAL
SHAREHOLDERS’ DEFICIENCY
|
(16,240,363
|
)
|
||
|
||||
TOTAL
LIABILITIES AND SHAREHOLDERS’ DEFICIENCY
|
$
|
3,474,765
|
|
2007
|
2006
|
|||||
(Unaudited)
|
(Unaudited)
|
||||||
|
|
|
|||||
Revenue
from gold sales, net
|
$
|
199,905
|
$
|
537,806
|
|||
|
|||||||
Cost
and expenses:
|
|||||||
Costs
Applicable to sales (exclusive of depreciation, and
|
|
||||||
amortization
shown separately below)
|
-
|
-
|
|||||
Depletion,
depreciation and amortization
|
73,054
|
150,024
|
|||||
Exploration
|
375,994
|
425,776
|
|||||
General
and administrative
|
133,640
|
180,073
|
|||||
Consulting
and professional services
|
58,666
|
154,817
|
|||||
641,354
|
910,690
|
||||||
Operating
Loss
|
(441,449
|
)
|
(372,884
|
)
|
|||
Other
income (expense)
|
|||||||
Gain
on sale of fixed assets
|
-
|
105.397
|
|||||
Derivative
change in fair value
|
123,606
|
-
|
|||||
Interest
expense
|
(840,073
|
)
|
(749,646
|
)
|
|||
Interest
income
|
-
|
-
|
|||||
|
(680,467
|
)
|
(644,249
|
)
|
|||
|
|||||||
Net
loss:
|
(1,121,916
|
)
|
(1,017,133
|
)
|
|||
|
|||||||
Net
loss per common share - basic
|
$
|
(0.001
|
)
|
$
|
(0.002
|
)
|
|
|
|||||||
Basic
weighted average common shares outstanding
|
1,047,278,758
|
418,221,956
|
|
2007
|
2006
|
|||||
(Unaudited)
|
(Unaudited)
|
||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|||||
Net
loss
|
$
|
(1,121,916
|
)
|
$
|
(1,017,133
|
)
|
|
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
|||||||
Depreciation,
depletion, and amortization
|
250,470
|
226,848
|
|||||
Interest
paid through the issuance of stock
|
240,601
|
-
|
|||||
Changes
in operating assets and liabilities:
|
|||||||
Inventories
|
-
|
52,000
|
|||||
Prepaid
and other current assets
|
(51,083
|
)
|
(54,100
|
)
|
|||
Accounts
receivable
|
-
|
(199,286
|
)
|
||||
Bank
overdraft
|
(12,609
|
)
|
|||||
Accounts
payable
|
150,618
|
(870,529
|
|||||
Accrued
expenses
|
80,131
|
827,040
|
|||||
Accrued
interest
|
385,012
|
(229,109
|
)
|
||||
Net
change - derivative change fair value
|
(123,606)
|
-
|
|||||
Other
|
(8,878
|
)
|
999,486
|
||||
Net
cash used in operating activities
|
(211,260
|
)
|
(264,783
|
)
|
|||
|
|||||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|||||||
Net
cash provided by (used in) investing activities
|
-
|
-
|
|||||
|
|||||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|||||||
Proceeds
from financing net
|
400,000
|
||||||
Proceeds
from the issuance of notes payable to related party
|
220,000
|
-
|
|||||
Principal
payment Note Payable
|
(8,740
|
)
|
(60,189
|
||||
Net
Cash flows provided by financing activities
|
211,260
|
339,811
|
|||||
|
|||||||
Net
decrease in cash and cash equivalents
|
-
|
75,028
|
)
|
||||
Cash
- beginning of period
|
-
|
26,865
|
|||||
Cash
- end of period
|
$
|
-
|
$
|
101,893
|
|||
|
|||||||
Supplemental
disclosures of non-cash investing and financing activities:
|
|||||||
|
|||||||
Issuance
of company stock for interest
|
$
|
240,601
|
955,259
|
||||
Issuance
of company stock for liquidated
|
$
|
154,346
|
$
|
-
|
|||
Conversion
of debt into common shares
|
$
|
212,221
|
$
|
2,320,841
|
· |
Settlement
without payment of cash consideration by either side in either
case
|
· |
Dismissal
of both the Federal Court Action and the State Court Action with
prejudice
(including dismissal by Parent of the pending Federal Court
appeal)
|
· |
Mutual
release of liability and covenants not to
sue
|
· |
Invalidity
of Consent Resolutions described in the Federal Court’s April 18, 2006
Order Granting Preliminary Injunction in the Federal Court Action
and
agreement by the Parents and Medhi further to not further contest
or
challenge in any way the election of GoldSpring’s current Board of
Directors or any of the actions taken by GoldSpring’s Board of Directors
or its officers at any time up to the date of this Agreement, including,
but not limited to the approval and/or implementation of the November
30,
2004 financial restructuring.
|
· |
No
admission of liability by any party to either the Federal Court Action
or
the State Court Action.
|
Issued
date
|
Face
amount
|
||||||
Winfield
Debenture Payable
|
5/15/2006
|
$
|
300,000
|
||||
Winfield
Debenture Payable
|
6/21/2006
|
300,000
|
|||||
Winfield
Debenture Payable
|
8/23/2006
|
300,000
|
|||||
Longview
Debenture Payable
|
8/24/2006
|
300,000
|
|||||
Winfield
Debenture Payable
|
12/12/2006
|
100,000
|
|||||
Winfield/Longview
Debenture Payable
|
First
Quarter 2007
|
331,120
|
|||||
Total
|
$
|
1,631,120
|
2007
|
2006
|
||||||
Convertible
Debentures Payable-Investors
|
$
|
2,438,962
|
$
|
3,899,619
|
|||
Convertible
Debentures Payable- Mandatory Redemption payment
|
5,835,688
|
6,885,184
|
|||||
Convertible
Debentures Payable- Failure to Deliver Shares
|
356,348
|
356,348
|
|||||
Convertible
Notes Payable - 2006
|
1,631,120
|
-
|
|||||
Total
|
$
|
10,262,118
|
$
|
11,141,151
|
2007
|
2006
|
||||||
Promissory
Notes Payable-July 2005 Financing
|
$
|
1,200,000
|
$
|
1,200,000
|
|||
Promissory
Notes Payable-September 2005 Financing
|
300,000
|
300,000
|
|||||
Promissory
Notes Payable-December 2005 Financing
|
575,000
|
575,000
|
|||||
Promissory
Notes Payable-February 2006 Financing
|
250,000
|
250,000
|
|||||
Promissory
Notes Payable-March 2006 Financing
|
150,000
|
150,000
|
|||||
Total
|
$
|
2,475,000
|
$
|
2,475,000
|
2007
|
2006
|
||||||
Long-term
Debt-Current Plum Mine
|
$
|
9,758
|
$
|
9,108
|
|||
Long-term
Debt-Current Seller Note
|
397,200
|
414,000
|
|||||
Other
Long-term Debt-Current
|
-
|
28,870
|
|||||
Total
|
$
|
406,958
|
$
|
451,978
|
2007
|
2006
|
||||||
Long-term
Debt-non current Plum Mine
|
$
|
20,735
|
$
|
32,328
|
|||
Long-term
Debt-non current Seller Note
|
-
|
96,000
|
|||||
Other
Long-term Debt -Non-current
|
-
|
69,572
|
|||||
Total
|
$
|
20,735
|
$
|
197,900
|
2007
|
$
|
8,075
|
||
2008
|
$
|
11,441
|
||
2009
|
$
|
10,977
|
||
2010
and thereafter
|
$
|
-
|
||
Total
|
$
|
30,493
|
2007
|
2006
|
||||||
Convertible
Notes Payable
|
$
|
10,262,118
|
$
|
11,141,151
|
|||
Promissory
notes
|
2,475,000
|
2,475,000
|
|||||
Total
|
$
|
12,737,118
|
$
|
13,616,151
|
· |
Expanding
our footprint in the Comstock Region and other acquisition
opportunities
|
· |
Further
exploration in the Comstock Region to accomplish the
above
|
· |
Completion
of the Plum Mine reserve report
|
· |
Strategic
acquisitions in other areas of North
America
|
· |
Weather
- As disclosed in this Quarterly Report, excessive rains has caused
material delays in our ability to operate as high levels of water
in our
leaching ponds and flooding have prevented us from being able to
leach
materials, a necessary part of the gold production process. Excessive
snows, which can occur in the area in which the Plum Mine is located,
would also hamper mining as the Plum Mine is an open pit
mine.
|
|
|
· |
Current
Political Instability in the Middle East - Commodities such as gold
tend
to have widely fluctuating markets, and the current problems in areas
such
as Lebanon and Iraq, which are causing much political and economic
instability internationally, may very well be a contributing factor
to the
volatile gold market.
|
· |
Ore
body delineation
|
· |
Reserve
definition
|
· |
Completion
of reserve report
|
· |
Development
of comprehensive mine plan from exploration
results
|
· |
Increase
of ore reserves
|
· |
Augment
ability to mine and operate at more efficient
levels
|
· |
Intent
to cease mine operations until completion of the exploration program
and
related reports
|
· |
Expansion
of existing footprint in the Comstock
region
|
· |
Identification
of properties outside the Comstock region to complement Comstock
activities and increase Company
operations
|
|
Quarter
ended March 31, 2007
|
Quarter
ended March 31, 2006
|
Difference
|
|||||||
Revenue
|
$
|
199,905
|
$
|
537,806
|
(337,901
|
)
|
||||
|
||||||||||
Reclamation,
Exploration and Test Mining Expense
|
375,994
|
425,776
|
(49,782
|
)
|
||||||
|
||||||||||
General
and administration
|
133,638
|
180,073
|
(46,435
|
)
|
||||||
|
||||||||||
Consulting
and Professional Service
|
58,666
|
154,817
|
(96,150
|
)
|
||||||
|
||||||||||
Gain
on Sale of Fixed Asset
|
-0-
|
105,397
|
(105,397
|
)
|
||||||
|
||||||||||
Interest
Expense
|
804,073
|
749,646
|
54,427
|
|||||||
|
||||||||||
Net
Loss
|
($1,121,916
|
)
|
($1,017,133
|
)
|
$
|
181,607
|
(a)
|
The
following documents are filed as part of this
Report:
|
(1)
|
Financial
statements filed as part of this
Report:
|
· |
Consolidated
Balance Sheet as of March 31,
2007(Unaudited)
|
· |
Consolidated
Statement of Operations for the three-month periods ended March 31,
2007
and 2006 (Unaudited)
|
· |
Consolidated
Statement of Cash Flows for the three-month periods ended March 31,
2007
and 2006 (Unaudited)
|
· |
Notes
to Financial Statements
|
Exhibit
Number
|
Exhibit
|
|
31.1
|
Certification
of Chief Executive Officer and Chief Financial Officer pursuant
to Rule
13a-14(a) and Rule 15d-14(a), promulgated under the Securities
Exchange
Act of 1934, as amended.
|
|
32.1
|
Certification
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of
the Sarbanes-Oxley Act of
2002
|
GOLDSPRING,
INC.
(Registrant)
|
||
|
|
|
Date:
May 17, 2007
|
By: |
/s/
Robert T. Faber
|
Name:
Robert
T. Faber
|
||
Title:
President
and Chief Executive Officer
|
By: |
/s/
Robert T. Faber
|
|
Name:
Robert
T. Faber
|
||
Title:
Chief
Financial Officer
|