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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
FORM 10-Q
--------------
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended: March 31 2008
or
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from: _____________ to _____________
--------------
GOLDEN RIVER RESOURCES CORPORATION
(Exact name of registrant as specified in its charter)
--------------
Delaware 0-16097 98-0079697
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
Level 8, 580 St Kilda Road Melbourne, Victoria, 3004, Australia
(Address of Principal Executive Office) (Zip Code)
011 (613) 8532 2866
(Registrant's telephone number, including area code)
N/A Former name, former address and former fiscal year, if changed since last
report)
--------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
[x] Yes 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.
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 [x] No [_]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. There were 26,711,630
outstanding shares of Common Stock as of April 30, 2008. (Does not include
10,000,000 shares of common stock that are issuable upon exercise of Special
Warrants, without the payment of any additional consideration.)
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes [x] No [_]
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Table Of Contents
PAGE NO
-------
PART I. FINANCIAL INFORMATION
Item 1 Financial Statements 2
Item 2 Management's Discussion and Analysis or Plan of 13
Operations
Item 3 Quantitative and Qualitative Disclosure about Market Risk 16
Item 4 Controls and Procedures 16
PART II OTHER INFORMATION
Item 1 Legal Proceedings 17
Item 1A Risk Factors 17
Item 2 Unregistered Sales of Equity Securities and Use of 17
Proceeds
Item 3 Defaults Upon Senior Securities 17
Item 4 Submission of Matters to a Vote of Security Holders 17
Item 5 Other Information 17
Item 6 Exhibits 17
SIGNATURES 18
EXHIBIT INDEX 19
Exh. 31.1 Certification 20
Exh. 31.2 Certification 22
Exh. 32.1 Certification 24
Exh. 32.2 Certification 25
1
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Introduction to Interim Financial Statements.
The interim financial statements included herein have been prepared by
Golden River Resources Corporation ("Golden River Resources" or the "Company")
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission (the "Commission"). Certain information and footnote
disclosure normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted pursuant
to such rules and regulations, although the Company believes that the
disclosures are adequate to make the information presented not misleading. These
interim financial statements should be read in conjunction with the financial
statements and notes thereto included in the Company's Annual Report on Form
10-KSB for the year ended June 30, 2007.
In the opinion of management, all adjustments, consisting of normal
recurring adjustments and consolidating entries, necessary to present fairly the
financial position of the Company and subsidiaries as of March 31, 2008, the
results of its operations for the three and nine month periods ended March 31,
2008 and March 31, 2007, and the changes in its cash flows for the nine month
periods ended March 31, 2008 and March 31, 2007, have been included. The results
of operations for the interim periods are not necessarily indicative of the
results for the full year.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect certain reported
amounts and disclosures. Accordingly, actual results could differ from those
estimates.
UNLESS OTHERWISE INDICATED, ALL FINANCIAL INFORMATION PRESENTED IS IN
AUSTRALIAN DOLLARS.
2
GOLDEN RIVER RESOURCES CORPORATION AND SUBSIDIARIES
(An Exploration Stage Company)
Consolidated Balance Sheet
March 31, 2008 June 30, 2007
A$000's A$000's
(Unaudited)
ASSETS
Current Assets
Cash 9 349
Receivables 133 21
Prepayments and Deposits 47 48
--------------- ---------------
Total Current Assets 189 418
--------------- ---------------
Non Current Assets
Property and Equipment, net - 2
--------------- ---------------
2
Total Non Current Assets -
--------------- ---------------
Total Assets 189 420
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable and Accrued Expenses 633 333
--------------- ---------------
Total Current Liabilities 633 333
--------------- ---------------
Total Liabilities 633 333
--------------- ---------------
Stockholders' Equity:
Common Stock: $.0001 par value
100,000,000 shares authorized,
26,714,130 issued 3 3
Additional Paid-in-Capital 34,778 34,628
Less Treasury Stock at Cost, 2,500 shares (20) (20)
Accumulated Other Comprehensive Loss (9) (6)
Retained Deficit during exploration stage (8,794) (8,116)
Retained Deficit prior to exploration stage (26,402) (26,402)
--------------- ---------------
Total Stockholders' Equity (Deficit) (444) 87
--------------- ---------------
Total Liabilities and Stockholders' Equity 189 420
=============== ===============
See Notes to Consolidated Financial Statements
3
GOLDEN RIVER RESOURCES CORPORATION AND SUBSIDIARIES
(An Exploration Stage Company)
Consolidated Statements of Operations
Three and Nine Months Ended March 31, 2008 and 2007 and for the cumulative
period July 1, 2002 (inception of exploration activities) to March 31, 2008
(Unaudited)
Three Months Three Months Nine Months Nine Months July 1, 2002
Ended Ended Ended Ended to
March 31, 2008 March 31, 2007 March 31, March 31, 2007 March 31,
A$000's A$000's 2008 A$000's 2008
A$000's A$000's
Revenues A$- A$- A$- A$- A$-
-------------- -------------- ------------- -------------- -------------
Costs and Expenses:
Stock Based Compensation 43 152 150 195 1,018
Exploration Expenditure 38 10 93 434 3,257
Loss on Disposal of Equipment - - - - 1
Interest Expense, net - - - - 416
Legal, Accounting and Professional 15 12 46 90 668
Administrative 111 128 385 363 3,318
-------------- -------------- ------------- -------------- -------------
207 302 674 1,082 8,678
-------------- -------------- ------------- -------------- -------------
(Loss) from Operations (207) (302) (674) (1,082) (8,678)
Foreign Currency Exchange Gain (Loss) - (15) (4) (76) (124)
Other Income:
Interest - net, related entity - 3 - 10 5
- other - - - 2 3
-------------- -------------- ------------- -------------- -------------
(Loss) before Income Tax (207) (314) (678) (1,146) (8,794)
Provision for Income Tax - - - - -
-------------- -------------- ------------- -------------- -------------
Net (Loss) (207) (314) (678) (1,146) (8,794)
-------------- -------------- ------------- -------------- -------------
Basic net (Loss) Per Common Equivalent
Shares $ (0.01) $ (0.01) $ (0.02) $ (0.03) $ (0.44)
-------------- -------------- ------------- -------------- -------------
Weighted Number of Common
Equivalent Shares Outstanding (000's) 36,714 36,714 36,714 36,714 20,096
-------------- -------------- ------------- -------------- -------------
See Notes to Consolidated Financial Statements
4
GOLDEN RIVER RESOURCES CORPORATION AND SUBSIDIARIES
(An Exploration Stage Company)
Consolidated Statements of Cash Flows Nine Months
Ended March 31, 2008 and 2007 and for the cumulative period
July 1, 2002 (inception of exploration activities) to March 31, 2008
(Unaudited)
July 1, 2002
to March 31,
2008 2007 2008
A$000's A$000's A$000's
---------- ------------- ----------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net (Loss) (678) (1,146) (8,794)
Adjustments to reconcile net (loss) to net cash
(used)
in Operating Activities
Foreign Currency Exchange Loss 4 76 111
Depreciation of Plant and Equipment - 6 26
Stock based compensation 150 195 1,018
Accrued interest added to principal - - 184
Net Change in:
Receivables (112) (58) (169)
Staking Deposit - - 23
Prepayments and Deposits 1 - (47)
Accounts Payable and Accrued Expenses 300 (446) 179
Short Term Advance - Affiliates - (1) -
---------- ------------- ----------------
Net Cash (Used) in Operating Activities (335) (1,374) (7,469)
---------- ------------- ----------------
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of Plant and Equipment (2) - (29)
---------- ------------- ----------------
Net Cash (Used) in Investing Activities (2) - (29)
---------- ------------- ----------------
CASH FLOW PROVIDED BY FINANCING ACTIVITIES
Net Borrowings from Affiliates - - 1,031
Sale of Warrants (net) - (7) 4,311
Proceeds from Loan Payable - - 2,273
---------- ------------- ----------------
Net Cash Provided by (Used in)Financing Activities - (7) 7,615
---------- ------------- ----------------
Effects of Exchange Rate on Cash (3) - (109)
---------- ------------- ----------------
Net Increase (decrease) in Cash (340) (1,381) 8
Cash at Beginning of Period 349 2,016 1
---------- ------------- ----------------
Cash at End of Period 9 635 9
---------- ------------- ----------------
Supplemental Disclosures
Interest Paid - 363
NON CASH FINANCING ACTIVITY
Debt repaid through issuance of shares - - 4,273
Stock Options recorded as Deferred Compensation - - 575
See Notes to Consolidated Financial Statements
5
GOLDEN RIVER RESOURCES CORPORATION AND SUBSIDIARIES
(An Exploration Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit)
March 31, 2008 and for the cumulative period July 1, 2002
(inception of exploration activities) to March 31, 2008
(Unaudited)
Common Treasury Additional Retained Retained Deferred Accumulated
Stock Stock, at Paid-in (Deficit) (Deficit) Compen- Other
Shares Amount Cost Capital (during the (prior to sation Compre- Total
Exploration Exploration hensive
stage) stage) Loss
------- -------- --------- ----------- ------------ ------------ ---------- ----------- --------
000's A$000's A$000's A$000's A$000's A$000's A$000's A$000's A$000's
Balance June 30, 2002 6,347 $ 1 $ (20) $ 25,175 - $ (26,402) - - $(1,246)
Net loss - - - - $ (681) - - - (681)
------- -------- --------- ----------- ------------ ------------ ---------- ----------- --------
Balance June 30, 2003 6,347 $ 1 $ (20) $ 25,175 $ (681) $ (26,402) - - $(1,927)
Issuance of 1,753,984 shares and
warrants in lieu of debt repayment 1,754 - - $ 2,273 - - - - $ 2,273
Sale of 1,670,000 shares and
warrants 1,670 - - $ 2,253 - - - - $ 2,253
Issuance of 6,943,057 shares on
cashless exercise of options 6,943 $ 1 - $ (1) - - - - -
Net unrealized loss on foreign
exchange - - - - - - - $ (9) $ (9)
Net (loss) - - - - $ (1,723) - - - $(1,723)
------- -------- --------- ----------- ------------ ------------ ---------- ----------- --------
Balance June 30, 2004 16,714 $ 2 $ (20) $ 29,700 $ (2,404) $ (26,402) - $ (9) $ 867
Issuance of 1,400,000 options under
2004 stock option plan - - - $ 575 - - $ (575) - -
Amortization of 1,400,000 options
under 2004 stock option plan - - - - - - $ 377 - $ 377
Net unrealized gain on foreign
exchange - - - - - - - $ 6 $ 6
Net/(loss) - - - - $ (2,600) - - - $(2,600)
------- -------- --------- ----------- ------------ ------------ ---------- ----------- --------
Balance June 30, 2005 16,714 $ 2 $ (20) $ 30,275 $ (5,004) $ (26,402) $ (198) $ (3) $(1,350)
See Notes to Consolidated Financial Statements
6
GOLDEN RIVER RESOURCES CORPORATION AND SUBSIDIARIES
(An Exploration Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit)
March 31, 2008
and for the cumulative period July 1, 2002
(inception of exploration activities) to March 31, 2008
(Unaudited) Continued
Common Treasury Additional Retained Retained Deferred Accumulated
Stock Stock, at Paid-in (Deficit) (Deficit) Compen- Other
Shares Amount Cost Capital (during the (prior to sation Compre- Total
Exploration Exploration hensive
stage) stage) Loss
--------- ----------- --------- ------------ ------------- ------------- --------- ----------- ----------
000's A$000's A$000's A$000's A$000's A$000's A$000's A$000's A$000's
To eliminate deferred
compensation against
Paid-In Capital - - - $ (198) - - $ 198 - -
Issuance of
10,000,000 shares
and 20,000,000
options in lieu of
debt repayment 10,000 $ 1 - $ 1,999 - - - - $ 2,000
Sale of 20,000,000
normal warrants - - - $ 997 - - - - $ 997
Sale of 10,000,000
special warrants - - - $ 1,069 - - - - $ 1,069
Amortization of
1,400,000 options
under 2004 stock
option plan - - - 191 - - - - 191
Net unrealized loss
on foreign exchange - - - - - - - $ (8) $ (8)
Net (loss) - - - - $ (1,328) - - - $ (1,328)
--------- ----------- --------- ------------ ------------- ------------- --------- ----------- ----------
Balance June 30, 2006 26,714 $ 3 $ (20) $ 34,333 $ (6,332) $ (26,402) $ - $ (11) $ 1,571
Costs associated with
sale of normal and
special warrants - - - $ (5) - - - - $ (5)
Amortization of
1,400,000 options
under 2004 stock
option plan - - - $ 7 - - - - $ 7
Amortization of
4,650,000 options
under 2006 stock
option plan - - - $ 293 - - - - $ 293
Net unrealized loss
on foreign exchange - - - - - - - $ 5 $ 5
Net (loss) - - - - $ (1,784) - - - $ (1,784)
--------- ----------- --------- ------------ ------------- ------------- --------- ----------- ----------
Balance June 30, 2007 26,714 $ 3 $ (20) $ 34,628 $ (8,116) $ (26,402) $ - $ (6) $ 87
2007
See Notes to Consolidated Financial Statements
7
GOLDEN RIVER RESOURCES CORPORATION AND SUBSIDIARIES
(An Exploration Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit)
March 31, 2008
and for the cumulative period July 1, 2002
(inception of exploration activities) to March 31, 2008
(Unaudited) Continued
Retained Retained
(Deficit) (Deficit) AccumulatedOther
Common Treasury Additional (during the (prior to Deferred Compre-
Stock Stock, at Paid-in Exploration Exploration Compen- hensive
Shares Amount Cost Capital stage) stage) sation Loss Total
Amortization of
4,650,000 options
under 2006 stock
option plan - - - $ 150 - - - - $ 150
Net unrealized loss
on foreign exchange - - - - - - - $ (3) $ (3)
Net (loss) - - -- - $ (678) - - - $ (678)
--------- ----------- --------- ----------- ------------- ------------ ---------- ---------------- ---------
Balance March 31,
2008 26,714 $ 3 $ (20) $34,778 $ (8,794) $ (26,402) $ - $ (9) $ (444)
--------- ----------- --------- ----------- ------------- ------------ ---------- ---------------- ---------
See Notes to Consolidated Financial Statements
8
GOLDEN RIVER RESOURCES CORPORATION AND SUBSIDIARIES
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
March 31, 2008
(1) Organisation
Golden River Resources Corporation ("Golden River Resources"), formerly
Bay Resources Ltd, is incorporated in the State of Delaware. The principal
shareholders of Golden River Resources are companies associated with Mr JI
Gutnick and Mrs S Gutnick. These companies owned 77.48% of Golden River
Resources as of March 31, 2008. During fiscal 1998, Golden River Resources
incorporated a further subsidiary, Baynex.com Pty Ltd, under the laws of
Australia. Baynex.com Pty Ltd has not traded since incorporation. On August 21,
2000, Golden River Resources incorporated a new wholly owned subsidiary, Bay
Resources (Asia) Pty Ltd, a corporation incorporated under the laws of
Australia. In May 2002, the Company incorporated a new wholly owned subsidiary,
Golden Bull Resources Corporation (formerly 4075251 Canada Inc), a corporation
incorporated under the laws of Canada. Golden Bull Resources Corporation is
undertaking exploration activities for gold in Canada. On March 8, 2006,
shareholders approved the change of the Company's name to Golden River
Resources.
(2) Affiliate Transactions
Golden River Resources advances to and receives advances from various
affiliates. All advances between consolidated affiliates are eliminated on
consolidation.
Included in payables at March 31, 2008 was A$495,842 due to AXIS. During
the nine months ended March 31, 2008 and 2007 AXIS advanced Golden River
Resources A$187,000 and A$427,000 respectively, provided services in accordance
with the service agreement of A$360,871 and A$305,817 respectively and
advanced/reimbursed AXIS A$192,614 and A$53,000 respectively for outstanding
amounts, including carried forward outstanding amounts. During the nine months
ended March 31, 2007 the Company charged AXIS interest of A$9,834 at an interest
rate between 9.35% and 10.10%. During the nine months ended March 31, 2008 AXIS
did not charge interest. AXIS is affiliated through common management and
ownership.
(3) Recent Accounting Pronouncements
In July 2006, the FASB issued FASB Interpretation No. 48 "Accounting for
Uncertainty in Income Taxes"- an interpretation of FASB Statement No. 109 (FIN
48), which provides clarification related to the process associated with
accounting for uncertain tax positions recognized in consolidated financial
statements. FIN 48 prescribes a more-likely-than-not threshold for financial
statement recognition and measurement of a tax position taken, or expected to be
taken, in a tax return. FIN 48 also provides guidance related to, among other
things, classification, accounting for interest and penalties associated with
tax positions, and disclosure requirements. FIN 48 is effective for fiscal years
beginning after December 15, 2006. The adoption of this statement did not have a
material effect on the Company's future reported financial position or results
of operations.
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements
which provides enhanced guidance for using fair value to measure assets and
liabilities. SFAS No. 157 provides a common definition of fair value and
establishes a framework to make the measurement of fair value in generally
accepted accounting principles more consistent and comparable. SFAS No. 157 also
requires expanded disclosures to provide information about the extent to which
fair value is used to measure assets and liabilities, the methods and
assumptions used to measure fair value, and the effect of fair value measures on
earnings. SFAS No. 157 is effective for financial statements issued in fiscal
years beginning after November 15, 2007 and for interim periods within those
fiscal years. In February 2008, the FASB staff issued Staff Position No. 157-2
"Effective date of FASB Statement No. 157" ("FSP FAS 157-2"). FSP FAS 157-2
delayed the effective date of FAS 157 for nonfinancial assets and nonfinancial
liabilities, except for items that are recognised or disclosed at fair value in
the financial statements on a recurring basis ( at least annually). The
provisions of FSP FAS 157-2 are effective for the Company's fiscal year
beginning July 1, 2009. The adoption of this interpretation has not and is not
expected to have a material impact on the Company's future reported financial
position or results of operations.
9
In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities - Including an Amendment of FASB
Statement No. 115", which permits companies to choose to measure many financial
instruments and certain other items at fair value. The provisions of FAS 159 are
effective for financial statements issued in fiscal years beginning after
November 15, 2007 and for interim periods between those fiscal years. The
adoption of FAS 159 is not expected to have a material impact on the Company's
consolidated financial position, results or operations or cash flows.
In December 2007, the FASB issued SFAS No. 141(R), "Business Combinations"
("SFAS 141(R)"), which replaces SFAS 141. SFAS 141(R) requires assets and
liabilities acquired in a business combination, contingent consideration, and
certain acquired contingencies to be measured at their fair values as of the
date of acquisition. SFAS 141(R) also requires that acquisition-related costs
and restructuring costs be recognized separately from the business combination.
SFAS 141(R) is effective for fiscal years beginning after December 15, 2008 and
will be effective for business combinations entered into after January 1, 2009.
The Company is currently evaluating the potential impact of adopting this
statement on the Company's financial position, results of operations or cash
flows.
In December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interests
in Consolidated Financial Statements, an Amendment of ARB No. 51" ("SFAS 160").
SFAS 160 clarifies the accounting for noncontrolling interests and establishes
accounting and reporting standards for the noncontrolling interest in a
subsidiary, including classification as a component of equity. SFAS 160 is
effective for fiscal years beginning after December 15, 2008. The Company does
not currently have any minority interests.
In March 2008, the FASB issued FSAB Statement No. 161 "Disclosure about
Derivative Instruments and Hedging Activities-an amendment of FASB statements
No. 133 ( "FAS 161") which provides revised guidance for enhanced disclosures
about how and why an entity uses derivative instruments, how derivative
instruments and related hedged items are accounted for under FAS 133, and how
derivative instruments and the related hedged items affect and entity's
financial position, financial performance and cash flows. FAS 161 is effective
for the Company's fiscal year beginning January 1, 2009. The Company does not
currently have any derivative instruments and is not involved in any hedging
activities.
(4) Comprehensive Income (Loss)
The Company follows SFAS No. 130 "Reporting Comprehensive Income" ("SFAS
130"). SFAS 130 requires a company to report comprehensive income (loss) and its
components in a full set of financial statements. Comprehensive income (loss) is
the change in equity during a period from transactions and other events and
circumstances from non-owner sources, such as unrealized gains (losses) on
foreign currency translation adjustments. Changes in unrealized foreign currency
gains or (losses) during the nine months to March 31, 2008 and 2007 amounted to
A$(3,383) and A$(6,586) respectively. Accordingly, comprehensive loss for the
nine months ended March 31, 2008 and 2007 amounted to A$(681,000) and
A$(1,139,000) respectively.
(5) Going Concern
The accompanying consolidated financial statements have been prepared in
conformity with generally accepted accounting principles, which contemplate
continuation of Golden River Resources as a going concern. Golden River
Resources is in the exploration stage, has sustained recurring losses which
raises substantial doubts as to its ability to continue as a going concern.
In addition Golden River Resources has historically relied on loans and
advances from corporations affiliated with the President of Golden River
Resources. Based on discussions with these affiliate companies, Golden River
Resources believes this source of funding will continue to be available. Other
than the arrangements noted above, Golden River Resources has not confirmed any
other arrangement for ongoing funding. As a result Golden River Resources may be
required to raise funds by additional debt or equity offerings in order to meet
its cash flow requirements during the forthcoming year.
10
The accumulated deficit of the Company from inception through March 31,
2008 amounted to A$35,196,000 of which A$8,794,000 has been accumulated from
July 2002, the date the Company entered the Exploration Stage, through March 31,
2008.
(6) Income Taxes
Golden River Resources should have carried forward losses of approximately
US$22.6 million as of June 30, 2007 which will expire in the year 2008 through
2025. Golden River Resources will need to file tax returns for those years
having losses on which returns have not been filed to establish the tax benefits
of the net operating loss carry forwards. Due to the uncertainty of the
availability and future utilization of those operating loss carry forwards,
management has provided a full valuation against the related tax benefit.
(7) Issue of Options under Stock Option Plan
The Company follows the provisions of SFAS No.123(R), Share-Based payment,
which addresses the accounting for share-based payment transactions in which a
company receives employee services in exchange for (a) equity instruments of
that company or (b) liabilities that are based on the fair value of the
company's equity instruments or that may be settled by the issuance of such
equity instruments
The Company has accounted for all options issued based upon their fair
market value using either the Black Scholes or Binomial option pricing method.
Prior to 2006, the Company used the Black Scholes option pricing method to
determine the fair market value of options issued. In 2006, the Company changed
from using the Black Scholes option pricing method to the Binomial option
pricing model. The Binomial option pricing model breaks down the time to
expiration into a number of steps or intervals and can therefore be used to
value American style options, taking into account the possibility of early
exercise and reflect changing inputs over time. The options issued in 2006 have
three vesting periods and therefore, the Company believed the Binomial option
pricing model is a more accurate measure of the fair value of the options.
In October 2004, the Board of Directors and Remuneration Committee of the
Company adopted a Stock Option Plan and agreed to issue 1,400,000 options to
acquire shares of common stock in the Company, at an exercise price of US$1.00
per option, subject to shareholder approval which was subsequently received on
January 27, 2005. All such options were vested by July 2006. The exercise price
of US$1.00 was derived from the issue price of common stock from the placement
of shares on September 30, 2004 and is considered by the Company's Directors to
be the fair value of the common stock. The options expire on October 15, 2014.
The Company calculated the fair value of the 1,400,000 options using the
Black Scholes valuation method using a fair value share price of US$1.00, strike
price of US$1.00, maturity period of 5 years 7 1/2 months, risk free interest
rate of 5.15% and volatility of 20%. This equates to a value of US31.85 cents
per option. The total value of the options equates to A$575,100 (US$445,900) and
such amount was amortized over the vesting period. At March 31, 2008, the
options were fully vested.
A summary of the options outstanding and exercisable at March 31, 2008 are
as follows:
Outstanding Exercisable
Number of options 950,000 950,000
Exercise price US$1.00 US$1.00
Expiration date October 15, 2014 October 15, 2014
11
On October 19, 2006, the Directors of the Company agreed to offer a
further 4,650,000 options under the Stock Option Plan. The options have no issue
price, an exercise price of US30.84 cents, and a latest exercise date of October
19, 2016. The options vest 1/3 on October 19, 2007 ("T1"), 1/3 on October 19,
2008 ("T2") and 1/3 on October 19, 2009 ("T3"). The Company obtained an external
valuation on the options from an unrelated third party.
The Company, through an unrelated third party consultant, has calculated the
fair value of the 4,650,000 options using the binomial option pricing model
using a fair value share price of US$0.166, exercise price of US30.84 cents,
expected life T1 - 5 years 6 months, T2 - 6 years, T3 - 6 years 6 months,
risk-free interest rate of 4.75% and volatility of 90%. For the nine months
ended March 31, 2008, the amortization amounted to A$149,971 and 600,000 options
were forfeited. At March 31, 2008, remaining value of the unamortized deferred
compensation of these 4,050,000 outstanding options amounted to A$164,035.
A summary of the options outstanding and exercisable at March 31, 2008 are
as follows:
Outstanding Exercisable
Number of options 4,050,000 1,350,000
Exercise price US$0.308 US$0.308
Expiration date October 19, 2016 October 19, 2016
(8) Loss per share
Basic (loss) per share is computed based on the weighted average number of
common shares outstanding during the period. Dilutive loss per share has not
been presented as the effects of common stock equivalents are anti-dilutive. The
Company has on issue 10,000,000 special warrants which are exercisable at any
time until expiration and for no consideration. However, there is a restriction
in the subscription agreement that does not allow the Company to process a
warrant exercise notice if the holder (and its associates) would hold more than
9.99% of the shares of common stock unless the holder provides the Company with
61 days prior notice in which case the holder can exercise the entire 10,000,000
warrants. Accordingly, the Company has included 10,000,000 shares issuable by
exercise of the special warrants in the weighted number of common equivalent
shares outstanding.
Earnings per share
The Company calculates loss per share in accordance with SFAS No. 128,
"Earnings per Share".
The following table reconciles the weighted average shares outstanding
used for the computation:
Nine months ended
March 31
2008 2007
Weighted average shares 000's 000's
Outstanding - basic 26,714 26,714
- Warrants 10,000 10,000
--------- --------
Weighted average shares outstanding 36,714 36,714
========= ========
The options to purchase 5,000,000 shares of common stock are not included in the
earnings per share computation as such amounts would be anti-dilutive.
12
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
FUND COSTS CONVERSION
The consolidated statements of operations and other financial and
operating data contained elsewhere here in and the consolidated balance sheets
and financial results have been reflected in Australian dollars unless otherwise
stated.
The following table shows the average rate of exchange of the Australian
dollar as compared to the US dollar and Canadian dollar during the periods
indicated:
9 months ended March 31, 2007 A$1.00 = US$.7893
9 months ended March 31, 2008 A$1.00 = US$.9178
9 months ended March 31, 2007 A$1.00 = CDN$.9207
9 months ended March 31, 2008 A$1.00 = CDN$.9390
RESULTS OF OPERATION
Three Months Ended March 31, 2008 vs. Three Months Ended March 31, 2007.
Costs and expenses decreased from A$302,000 in the three months ended
March 31, 2007 to A$207,000 in the three months ended March 31, 2008. The
Company's financial statements are prepared in Australian dollars (A$). A number
of the costs and expenses of the Company are incurred in US$ and CDN$ and the
conversion of these costs to A$ means that the comparison of the three months
ended March 31, 2008 to the three months ended March 31, 2007 does not always
present a true comparison.
The decrease in costs and expenses is a net result of:
a) An increase in legal, accounting and professional expense from A$12,000 for
the three months ended March 31, 2007 to A$15,000 for the three months
ended March 31, 2008, primarily as a result of costs associated with the
Company's SEC compliance obligations.
b) a decrease in administrative costs including salaries from A$128,000 in the
three months ended March 31, 2007 to A$111,000 in the three months ended
March 31, 2008, primarily as a result of a decrease in the cost of services
provided by AXIS in accordance with the service agreement.
c) an increase in the exploration expenditure expense from A$10,000 for the
three months ended March 31, 2007 to A$38,000 for the three months ended
March 31, 2008. For the three months ended March 31, 2008, the costs
related to consultants providing exploration reviews and advice, for which
there were no comparable amounts for the three months ended March 31, 2007.
d) decrease in stock based compensation from A$152,000 for the three months
ended March 31, 2007 to A$43,000 for the three months ended March 31, 2008
as a result of a decrease in the number of options outstanding combined
with a number of options being fully expensed prior to the current period.
See Note 6 concerning the Company's outstanding stock options.
As a result of the foregoing, the loss from operations decreased from
A$302,000 for the three months ended March 31, 2007 to A$207,000 for the three
months ended March 31, 2008.
Other income decreased from A$3,000 in the three months ended March 31,
2007 to A$nil in the three months ended March 31, 2008.
The Company recorded a foreign currency exchange gain of A$nil for the
three months ended March 31, 2008 compared to a foreign currency exchange loss
of A$15,000 for the three months ended March 31, 2007.
13
The net loss was A$207,000 for the three months ended March 31, 2008
compared to a net loss of A$314,000 for the three months ended March 31, 2007.
Nine months Ended March 31, 2008 vs. Nine months Ended March 31, 2007
Revenue was A$nil in the nine months ended March 31, 2007 and A$nil in the
nine months ended March 31, 2008.
Costs and expenses decreased from A$1,082,000 in the nine months ended
March 31, 2007 to A$674,000 in the nine months ended March 31, 2008. The
Company's financial statements are prepared in Australian dollars (A$). A number
of the costs and expenses of the Company are incurred in US$ and CDN$ and the
conversion of these costs to A$ means that the comparison of the nine months
ended March 31, 2008 to the nine months ended March 31, 2007 does not always
present a true comparison.
The increase in expenses is a net result of:
a) a decrease in legal, accounting and professional expense from A$90,000 for
the nine months ended March 31, 2007 to A$46,000 for the nine months ended
March 31, 2008. For the nine months ended March 31, 2008, a decrease in
share register activity decreased the fee for maintenance of the records by
the external share registrar. Legal and accounting expenses were incurred
in relation to the preparation of the registration statement to register
the warrants issued to RAB in the nine months ended March 31, 2007 and
there was no comparable expense in the nine months ended March 31, 2008.
b) an increase in administrative costs including salaries from A$363,000 in
the nine months ended March 31, 2007 to A$385,000 in the nine months ended
March 31, 2008 primarily as a result of an increase in the cost of services
provided by AXIS in accordance with the service agreement.
c) a decrease in the exploration expenditure expense from A$434,000 for the
nine months ended March 31, 2007 to A$93,000 for the nine months ended
March 31, 2008 primarily as a result of decreased exploration activity. The
cost for the nine months ended March 31, 2007 represents the field and
sampling program undertaken of the Company's exploration properties within
the Slave Craton in Nunavut, Canada. No field exploration was completed
during the nine months ended March 31, 2008 however the costs relate to
consultants providing exploration reviews and advice.
d) A decrease in stock based compensation from A$195,000 for the nine months
ended March 31, 2007 to A$150,000 for the nine months ended March 31, 2008
as a result of a decrease in the number of options outstanding combined
with a number of options being fully expensed prior to the current period.
See Note 6 concerning the Company's outstanding stock options.
As a result of the foregoing, the loss from operations decreased from
A$1,082,000 for the nine months ended March 31, 2007 to A$674,000 for the nine
months ended March 31, 2008.
Other income decreased from A$12,000 in the nine months ended March 31,
2007 to A$nil in the nine months ended March 31, 2008.
The Company recorded a foreign currency exchange loss of A$4,000 for the
nine months ended March 31, 2008, compared to A$76,000 for the nine months ended
March 31, 2007.
The net loss was A$678,000 for the nine months ended March 31, 2008,
compared to a net loss of A$1,146,000 for the nine months ended March 31, 2007.
14
Liquidity and Capital Resources
For the nine months ended March 31, 2008, net cash used in operating
activities was A$335,000 primarily consisting of the net loss of A$678,000; and
an increase in receivables of A$112,000, partially offset by an increase in
accounts payable and accrued expenses of A$300,000 and an increase in stock
based compensation of A$150,000.
Effective as of June 9, 2006, Golden River Resources, entered into a
Subscription Agreement with RAB Special Situations Fund (Master) Limited ("RAB")
pursuant to which the Company issued to RAB in a private placement transaction
(the "Private Placement") for an aggregate purchase price of A$2,000,000
(US$1,542,000): (i)10,000,000 special warrants (the "Special Warrants"), each of
which is exercisable at any time to acquire, without additional consideration,
one (1) share (the "Special Warrant Shares") of Common Stock, US$0.001 par value
("Common Stock"), of the Company, and (ii) warrants (the
"Warrants") for the purchase of 20,000,000 shares of Common Stock, US$0.001 par
value (the "Warrant Shares"), at an exercise price of A$0.20 (US$0.1542) to be
exercisable until April 30, 2011.
The Company agreed to prepare and file with the Securities and Exchange
Commission a registration statement covering the resale of the shares of Common
Stock issuable upon exercise of the Special Warrants and the Warrants, which
registration statement was declared effective on October 17, 2006.
The Company is obligated to keep such registration statement effective
until the earlier of (i) the date that all of the Registrable Securities have
been sold pursuant to such registration statement, (ii) all Registrable
Securities have been otherwise transferred to persons who may trade such shares
without restriction under the Securities Act, and the Company has delivered a
new certificate or other evidence of ownership for such securities not bearing a
restrictive legend, or (iii) all Registrable Securities may be sold at any time,
without volume or manner of sale limitations pursuant to Rule 144(k) or any
similar provision then in effect under the Securities Act; or (iv) 2 years from
the effective date.
As of March 31, 2008 the Company had short-term obligations of A$633,000
comprising accounts payable and accrued expenses.
We have A$9,000 in cash at March 31, 2008.
During fiscal 2004 and 2005, we undertook a field exploration program on
our Committee Bay and Slave Properties. In relation to the Committee Bay
Properties, this was more than the minimum required expenditure and as a result,
we do not have a legal obligation to undertake further exploration on those
properties during their life. However our properties are prospective for gold
and other minerals. We undertook further exploration in August 2006 on the Slave
Properties and we spent A$502,000 on such exploration activities in fiscal 2007
and to date A$93,000 in fiscal 2008 for maintenance cost. We are currently
investigating capital raising opportunities which may be in the form of either
equity or debt, to provide funding for working capital purposes and future
exploration programs. There can be no assurance that such a capital raising will
be successful, or that even if an offer of financing is received by the Company,
it is on terms acceptable to the Company.
Cautionary Safe Harbor Statement under the United States Private Securities
Litigation Reform Act of 1995.
Certain information contained in this Form 10-Q's forward looking
information within the meaning of the Private Securities Litigation Act of 1995
(the "Act") which became law in December 1995. In order to obtain the benefits
of the "safe harbor" provisions of the act for any such forwarding looking
statements, the Company wishes to caution investors and prospective investors
about significant factors which among others have affected the Company's actual
results and are in the future likely to affect the Company's actual results and
cause them to differ materially from those expressed in any such forward looking
statements. This Form 10-Q report contains forward looking statements relating
to future financial results. Actual results may differ as a result of factors
over which the Company has no control including, without limitation, the risks
of exploration and development stage projects, political risks of development in
foreign countries, risks associated with environmental and other regulatory
matters, mining risks and competition and the volatility of gold and copper
prices, movements in the foreign exchange rate and the availability of
additional financing for the Company. Additional information which could affect
the Company's financial results is included in the Company's Form 10-KSB on file
with the Securities and Exchange Commission.
15
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
At March 31, 2008, the Company had no outstanding loan facilities. At
March 31, 2008, assuming no change in the cash at bank, a 10% change in the A$
versus US$ exchange rate would have a nil effect on the Company's cash position.
Item 4. Controls and Procedures.
Our principal executive officer and our principal financial officer
evaluated the effectiveness of our disclosure controls and procedures (as
defined in Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934
as amended) as of the end of the period covered by this report. Such disclosure
controls and procedures are designed to ensure that information required to be
disclosed by the Company is accumulated and communicated to the appropriate
management, including the principal executive and financial officers, on a basis
that permits timely decisions regarding timely disclosure. Based on that
evaluation, such principal executive officer and principal financial officer
concluded that, the Company's disclosure control and procedure as of the end of
the period covered by this report have been designed and are functioning
effectively to provide reasonable assurance that the information required to be
disclosed by the Company in reports filed under the Securities Exchange Act of
1934 is recorded, processed, summarized and reported within the time periods
specified in the SEC's rules and forms.
Change in Internal Control over Financial Reporting
No change in our internal control over financial reporting occurred during
our most recent fiscal quarter that has materially affected, or is reasonably
likely to materially affect our internal control over financial reporting.
We believe that a controls system, no matter how well designed and
operated, can not provide absolute assurance that the objectives of the controls
system, no matter how well designed and operated, can not provide absolute
assurance that the objectives of the controls system are met, and no evaluation
of controls can provide absolute assurance that all control issues and instances
of fraud, if any, within a company have been detected.
16
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
Not Applicable
Item 1A. Risk Factors.
Not Applicable
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Not Applicable
Item 3. Defaults Upon Senior Securities.
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders.
Not Applicable
Item 5. Other Information.
Not Applicable
Item 6. Exhibits.
(a) Exhibit No. Description
----------- -----------
31.1 Certification of Chief Executive Officer required by
Rule 13a-14(a)/15d-14(a) under the Exchange Act
31.2 Certification of Chief Financial Officer required by
Rule 13a-14(a)/15d-14(a) under the Exchange Act
32.1 Certification of Chief Executive Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906
of Sarbanes-Oxley act of 2002
32.2 Certification of Chief Financial Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906
of Sarbanes-Oxley act of 2002
17
(FORM 10-Q)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Golden River Resources Corporation
By: Joseph I. Gutnick
-----------------
Joseph I. Gutnick
Chairman of the Board, President and
Chief Executive Officer
(Principal Executive Officer)
By: Peter Lee
---------
Peter Lee
Director, Secretary and
Chief Financial Officer
(Principal Financial Officer)
Dated May 13, 2008
18
EXHIBIT INDEX
Exhibit No. Description
31.1 Certification of Chief Executive Officer required by
Rule 13a-14(a)/15d-14(a) under the Exchange Act
31.2 Certification of Chief Financial Officer required by
Rule 13a-14(a)/15d-14(a) under the Exchange Act
32.1 Certification of Chief Executive Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906
of Sarbanes-Oxley act of 2002
32.2 Certification of Chief Financial Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906
of Sarbanes-Oxley act of 2002
19