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Gold/Mining/Energy : Golden Eagle Int. (MYNG) -- Ignore unavailable to you. Want to Upgrade?

To: john who wrote (15484)	12/31/1998 4:18:00 PM
From: Probart	Respond to of 34075

2 To date, Golden Eagle has only been able to achieve limited cash flow from the limited non-commercial mining operations it has conducted. During 1997 Golden Eagle produced approximately 13,678 grams of gold, which it sold for approximately $126,000 (before payment of $25,000 in royalties). During the first quarter of 1998, Golden Eagle's operations in Bolivia produced post-royalty revenue of $11,800, and during the second quarter, $12,779, for a total through June 30, 1998, of $24,579. During 1997, and first two quarters of 1998, these revenues were all used in the Bolivian operations. Although Golden Eagle believes that it will be able to generate a significant amount of additional revenues from mining gold from its properties, no reserves have been established to date, Golden Eagle has not developed a formal mining plan, and there can be no assurance that any revenues received will exceed the expenses incurred. During the 1997 fiscal year (through December 31, 1997), Golden Eagle, through its Bolivian subsidiaries, completed a substantial amount of work on the Cangalli properties. These activities included ongoing rehabilitation and exploration of the Cangalli shaft, and exploration of several open-pit mining sites within the concession area. Some of this work continued during the first two quarters of 1998, but two material factors affected work on the property during the first quarter of 1998, and into April and May of 1998: 1) The "El Nino" world-wide weather phenomenon which resulted from warmer water temperatures in the Pacific Ocean off the coast of South America. The impacts of "El Nino" included substantial increases in rainfall over the usual precipitation received during the normal Bolivian rainy season. During the first quarter of 1998, the super-saturation of the soil in the Tipuani River Basin caused a mudslide in the town of Mokotoro, 15 kilometers upriver from the Cangalli properties, which resulted in over 60 deaths. The extremely wet weather caused Golden Eagle to reduce mining operations and to implement costly de-watering and mine timber replacement measures in the Cangalli shaft. 2) Golden Eagle's inability to finance any significant operations, other than its overall exploration work, on the property in the first two quarters of 1998. Golden Eagle has no significant capital commitments other than to continue to evaluate and explore its properties in Bolivia with the goal of achieving commercial production if the properties are capable of producing gold commercially. Golden Eagle is contractually committed to investing $3 million in the development and exploration of the Cangalli property over the 25-year life of the initial contract period. As a result of meetings held with the president and general secretary of the UCL in Miami, Florida on December 14 and 15, 1998, Golden Eagle's president and corporate secretary committed to fulfill a pending obligation to the cooperative of $42,451 owing on the purchase of equipment from the cooperative and for royalties on production. In addition, Golden Eagle committed to the cooperative that it would finish paying any and all back obligations owed to workers and suppliers in the Cangalli district, which amount is still pending an accounting from Golden Eagle's subsidiary in La Paz, Bolivia. In addition, Golden Eagle has offered to purchase the interests ("Certificados de Aporte" or "Certificates of Contribution") from each of UCL's 118 members. If the offer is accepted, and if certain conditions precedent are met, Golden Eagle will pay each member approximately $10,000, including $3,000 cash and the balance in shares of Golden Eagle's common stock. Among the conditions precedent that must be met before the offer can be completed is compliance with U.S. and Bolivian securities laws, as well as acceptance by the UCL members. Golden Eagle's offer to UCL is still pending as of the filing of this quarterly report. In summary, therefore, Golden Eagle believes that it does not have sufficient liquidity or capital resources to purchase the interests of the UCL members or to accomplish its other operational objectives. Golden Eagle's current status makes it more difficult for Golden Eagle to raise such funds on reasonable terms. Issues that Golden Eagle believes would be of concern to prospective investors include (without limitation) the pending litigation filed by the Securities and Exchange Commission, the significant working capital shortage, the lack of proven mineral reserves or a mine plan, the difficulties associated with international operations, the concentration of Golden Eagle's assets in a single prospect in Bolivia, and the significant dependence on management. 3 In addition, Golden Eagle believes that a substantial and material risk exists, which Management has termed the "cooperative risk factor." This risk relates to various aspects of Golden Eagle's relationship with the UCL, an organization consisting of 118 members of all socio-economic, education, and political levels and criteria. Golden Eagle's Management has sought and received, repeatedly, assurances from UCL's president and board of directors that Golden Eagle's subsidiary's contract position and right to the quiet pursuit of its contract rights of exploration, development, and mining will remain undisturbed. Over the course of the contract between Golden Eagle's subsidiary and UCL, approximately 22 years, Golden Eagle has received informal and formal complaints from UCL's administration regarding Golden Eagle's contract compliance. However, Golden Eagle believes it has always been able to satisfactorily resolve any complaint or dispute. Golden Eagle's management believes that this problem resolution process will continue for the life of the contract, 25 years from January 1996. Factors which are somewhat out of Golden Eagle's management's control regarding the "cooperative risk factor" are: tortious interference by unrelated third parties, force majeure, commodities and metals market fluctuations, or the failure of governmental institutions to support Golden Eagle's legitimate rights vis-a-vis some illegal action on the part of UCL or third parties. Golden Eagle is aware that certain third parties are attempting to disrupt Golden Eagle's relationship with UCL. Golden Eagle has defended, and intends to continue to defend, its rights aggressively. Although management believes it will be able to defend its rights, there can be no assurance that it will be successful. During the meetings with members of UCL's board of directors in December 1998, Golden Eagle's president and corporate secretary received written assurances that relations between UCL and Golden Eagle are extremely cordial and in excellent condition. While Golden Eagle's management's analysis is very positive for future relations, any potential investors or current shareholders must take notice of the "cooperative risk factor," and weigh it carefully when making any investment decision regarding Golden Eagle's securities. As noted, the future conduct of Golden Eagle's business and its response to issues raised by third parties are dependent upon a number of factors, and there can be no assurance that Golden Eagle will be able to conduct its operations as contemplated. Certain statements contained in this report using the terms "may," "expects to," and other terms denoting future possibilities, are forward-looking statements. The accuracy of these statements cannot be guaranteed as they are subject to a variety of risks which are beyond Golden Eagle's ability to predict or control and which may cause actual results to differ materially from the projections or estimates contained herein. These risks include, but are not limited to, the risks described above, and the other risks associated with start-up mineral exploration operations, and Golden Eagle's operations with insufficient liquidity and no historical profitability. It is important that each person reviewing this report understands the significant risks attendant to Golden Eagle's operations and that of its subsidiaries. As noted, the future conduct of Golden Eagle's business and its subsidiaries is dependent upon a number of factors, and there can be no assurance that any of these companies will be able to conduct its operations as contemplated herein. Golden Eagle disclaims any obligation to update any forward-looking statement made herein. Results of Operations --------------------- Golden Eagle's operations in the second quarter of 1998 resulted in significant losses and negative cash flow. Notwithstanding the limited amount of revenues generated from mining operations ($12,779 in post-royalty revenues in the second quarter of 1998), Golden Eagle's general, administrative and other costs have vastly outstripped the resources generated by Golden Eagle's operations. As described above in "Liquidity and Capital Resources," Golden Eagle has been dependent on loans from affiliated and unaffiliated parties (including certain family members of affiliates), stock issuances and debenture arrangements to meet its working capital obligations and to finance Golden Eagle's continuing operating losses. There can be no assurance that Golden Eagle will be able to continue to finance its operating losses in such a manner. The following sets forth certain information regarding Golden Eagle's results of operations during the three months of the second quarter of 1998 compared with the same period in 1997.

To: john who wrote (15484)	12/31/1998 4:19:00 PM
From: Probart	Respond to of 34075

. 4 Golden Eagle incurred operating expenses totaling $353,698 in the second quarter of 1998, as compared to $425,632 in 1997, a decrease of 17%. As a result of having limited revenues from operations, Golden Eagle incurred operating losses of ($340,919) in the second quarter of 1998 and ($425,632) in 1997, a decrease of 20%. The six months ended June 30, 1998, with a total operating loss of $786,054, however, did not likewise result in a decrease when compared to the same six month period in 1997, or $511,674, a 54% increase. The difference occurred in the second quarter of 1998, where both the "El Nino" weather phenomenon and the lack of additional, significant capital, lead to a decrease in activity at the mine. Once the punishing rainy season began to subside in May and June, Golden Eagle's subsidiary also incurred less cost for the pumping and timbering of the mine shaft and adits. In addition, Mr. Paravicini, and his geological teams, had concluded their work by late April, 1998, curtailing exploration expenditures in May and June of 1998. As of June 30, 1998, Golden Eagle had accrued cumulative compensation and related payroll taxes of approximately $705,766 (Golden Eagle's president, as well as Golden Eagle's secretary/treasurer, were not paid any salary during the first or second quarters of 1998; neither Golden Eagle's president nor the secretary/treasurer has been paid any compensation subsequently during 1998, although salaries are continuing to accrue at the rate of $200,000 per year for the president and $150,000 per year for the secretary/treasurer.) Golden Eagle's costs and operating expenses for second quarter of 1998 decreased substantially as to general and administrative expenses, totaling $254,303 compared to $422,300 during the same period in 1997, a 40% decrease. The same rationale applies as was explained above regarding overall operating expenses. However, second quarter 1998 exploration expenses rose by 22% over first quarter 1998 exploration expenses, from $55,970 to $68,367 (see following paragraph). Depreciation remained constant in the second quarter at $31,038, up from $3,332 in 1997, representing a rise of 832%. This increase in depreciation is due principally to the acquisition of mining equipment and putting more of that mining equipment into use. During 1997, due to uncertainties regarding the recoverability of Golden Eagle's investment in the Bolivian prospect (the uncertainty regarding reserves), Golden Eagle elected to write-down $873,462 of costs previously capitalized, including $470,853 which were incurred in 1996. As of December 31, 1997, through June 30, 1998, capitalized costs related to the Bolivian prospect are principally $100,000 paid for prospect acquisition rights and $813,529 for mining equipment. Golden Eagle incurred interest expense in the second quarter and for the six months ended June 30, 1998 of $64,432 and $187,316, respectively, an increase of 81% and 205% from comparable amounts in 1997. The increased amount of operating loans during the course of 1998, and the issuance of 558,353 shares of common stock issued in lieu of $72,500 cash for interest (in the first quarter), led to this escalation. This increased interest cost will continue, and probably rise significantly, during the balance of 1998 and through the foreseeable future because of increased borrowings necessary to maintain liquidity for operating purposes. Golden Eagle had a net loss for the second quarter of 1998 of ($402,349), or $(.004) per share, compared to its net loss during the same period of 1997 of ($2,936,227), or $(.036) per share, a decrease of 86% and 89% per share, respectively. The sizable difference between the second quarter 1997 and 1998 figures is due to the amount of common stock that Golden Eagle issued to a trust in Texas to secure a revolving line of credit for $1,000,000. Golden Eagle anticipates that the trend of net losses will continue through the balance of 1998, as it invests further in exploration on its Cangalli prospect and in general and administrative expenses in the United States and Bolivia, without generating significant revenues from those efforts. Impact of Inflation and Changing Prices --------------------------------------- Golden Eagle has not experienced any impact from the effects of inflation during the last three operating periods, 1995, 1996, or 1997, and was not impacted during the second quarter of 1998. Bolivian inflation, while astronomical at points during the early 1980's, has been relatively stable, at less than 10% since 1985, and during the last three years has been less than 8% per annum. 5 Year 2000 Compliance -------------------- Although there can be no assurance, Golden Eagle does not anticipate that it will suffer any adverse impact as a result of Year 2000 (Y2K) computer software issues either as a result of third party non-compliance or as a result of internal matters. None of the information technology or other software and hardware systems utilized by Golden Eagle or its subsidiaries incorporates technology that is incapable of recognizing dates beyond December 31, 1999. In making the foregoing determination, Golden Eagle assessed embedded systems contained in its office buildings, equipment, and other infrastructures. As a result, Golden Eagle has not established a contingency plan to come into effect in the event of a Y2K catastrophe, and management does not believe that such a plan is necessary. Of course, Golden Eagle is dependent on facilities outside of its control, such as electrical power supplies, banking facilities, transportation facilities (such as airlines), and communications facilities. Furthermore, Bolivia, the location of Golden Eagle's mineral property and its significant operations, is an emerging-growth country. Based on Golden Eagle's observation, although Bolivian facilities are attempting to address issues associated with Y2K, it does not appear that the infrastructure (banking facilities, communications facilities, transportation facilities, and electrical power supplies, among other things) is as sensitive to the issues as in the United States. Also, generally software available in Bolivia is less likely to be Y2K compliant, but Golden Eagle does not believe that a requirement to replace its existing hardware or software used in its Bolivian operations, if necessary, will materially affect it. While Golden Eagle believes, based on public reports and some notifications they have received, that the outside facilities in the United States and Bolivia are or will be Y2K compliant, Golden Eagle has no other basis for determining their compliance. The operations of Golden Eagle would be significantly and adversely affected if any of these outside facilities in the United States or Bolivia are adversely affected by the millenium change or by other issues related to Y2K. PART II-OTHER INFORMATION Item 1. Legal Proceedings ----------------- There are no material pending or threatened legal proceedings except as disclosed in Golden Eagle's annual report on Form 10-KSB for the year ended December 31, 1997, and its current report on Form 8-K reporting an event of November 13, 1998.Item 2. Changes in Securities --------------------- None.Item 3. Defaults upon Senior Securities ------------------------------- None. Item 4. Submission of Matters to a Vote of Security Holders --------------------------------------------------- None. Item 5. Other Information ----------------- None. Item 6. Exhibits and Reports on Form 8-K: --------------------------------- The following exhibits are filed with this Form 10-QSB or incorporated herein by the following references: a. 27.1 Financial Data Schedules 6 b. Reports on Form 8-K: The following reports on Form 8-K were filed during the last quarter of the year ended December 31, 1997, and subsequently: July 7, 1998, reporting an event under Item 5 of Form 8-K July 24, 1998, reporting an event under Item 5 of Form 8-K September 25, 1998, reporting an event under Item 5 of Form 8-K October 8, 1998, reporting an event under Item 5 of Form 8-K November 13, 1998 reporting an event under Item 5 of Form 8-K SIGNATURES ---------- Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Golden Eagle has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. GOLDEN EAGLE INTERNATIONAL, INC. -------------------------------- (Golden Eagle) December 31, 1998 by: /s/ Terry C. Turner ---------------------------------------- Terry C. Turner, President Pursuant to the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Golden Eagle and in the capacities and on the dates indicated. GOLDEN EAGLE INTERNATIONAL, INC. -------------------------------- December 31, 1998 by: /s/ Terry C. Turner ---------------------------------------- Terry C. Turner, Director and Principal Executive Officer December 31, 1998 by: /s/ Mary A. Erickson ---------------------------------------- Mary A. Erickson, Director, Principal Financial Officer and Principal Accounting Officer

To: john who wrote (15484)	12/31/1998 4:21:00 PM
From: Probart	Respond to of 34075

7 -------------------------------------------------------------------------------- Golden Eagle International, Inc.(A Development Stage Company) Consolidated Financial StatementsTable of Contents -------------------------------------------------------------------------------- PAGE ---- Consolidated Balance Sheet F-1 Consolidated Statement of Operations F-2 Consolidated Statement of Cash Flows F-3 Consolidated Statement of Changes in Stockholders' Equity (Deficit) F-4 - F-5 Notes to Consolidated Financial Statements F-6 -------------------------------------------------------------------------------- Golden Eagle International, Inc.(A Development Stage Company) Consolidated Balance Sheet -------------------------------------------------------------------------------- June 30, December 31, 1998 1997 ---- ---- (Unaudited)ASSETS CURRENT ASSETS Cash $ 12,410 $ 72,157 Prepaid expense and other costs 10,945 5,658 Income tax refund receivable -- 8,946 ------------ ------------ Total current assets 23,355 86,761 ------------ ------------ PROPERTY AND EQUIPMENT Mining equipment 813,529 813,529 Acquisition cost of mining prospect 100,000 100,000 Vehicles 59,796 94,796 Office equipment 45,933 45,933 1,019,258 1,054,258 ------------ ------------ Less accumulated depreciation (127,798) (70,389) ------------ ------------ 891,460 983,869 ------------ ------------ OTHER ASSETS Advance royalties 76,748 71,914 Deposits 52,275 38,775 ------------ ------------ 129,023 110,689 ------------ ------------ $ 1,043,838 $ 1,181,319 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)CURRENT LIABILITIES Bank loan payable, current maturities $ 1,000,000 $ -- Loans from related parties 1,034,060 946,819 Convertible debentures 135,000 268,500 Other notes payable 133,327 7,276 Accounts payable 170,651 191,635 Payable to related parties 112,673 128,361 Accrued compensation and taxes 705,766 533,085 Accrued interest payable 155,421 101,944 Other accrued liabilities 38,597 41,996 ------------ ------------ Total current liabilities 3,485,495 2,219,616 ------------ ------------ BANK LOAN PAYABLE, less current maturities -- 1,000,000 ------------ ------------ Total liabilities 3,485,495 3,219,616 ------------ ------------ STOCKHOLDERS' EQUITY (DEFICIT) Preferred stock, par value $.01 per share; shares authorized 10,000,000; none issued -- -- Common stock, par value $.0001 per share; authorized 800,000,000 shares; issued and outstanding 103,827,229 and 95,359,112 shares, respectively 10,382 9,534 Additional paid-in capital 7,631,834 7,065,734 Deficit accumulated during the development stage (10,083,873) (9,113,565) ------------ ------------ Total stockholders' (deficit) (2,441,657) (2,038,297) ------------ ------------ $ 1,043,838 $ 1,181,319 ============ ============ F-1See accompanying notes. ------------------------------------------------------------------------------------------------------------------------------------ Golden Eagle International, Inc.(A Development Stage Company) Consolidated Statement of Operations(Unaudited) ------------------------------------------------------------------------------------------------------------------------------------ July 21, 1988 (Inception) Three Months Ended Six Months Ended Through June 30, June 30, June 30, 1998 1997 1998 1997 1998 ---- ---- ---- ---- ---- REVENUES $ 12,779 $ -- $ 24,579 $ -- $ 126,038 COSTS AND OPERATING COSTS General and administration 254,303 422,300 624,230 506,257 5,489,017 Exploration 68,357 -- 124,327 -- 800,774 Depreciation 31,038 3,332 62,076 5,417 121,202 ------------- ------------- ------------- ------------- ------------- Total costs and operating expenses 353,698 425,632 810,633 511,674 6,410,993 ------------- ------------- ------------- ------------- ------------- OPERATING (LOSS) (340,919) (425,632) (786,054) (511,674) (6,284,955) ------------- ------------- ------------- ------------- ------------- OTHER INCOME (EXPENSE) Interest expense (64,432) (35,595) (187,316) (61,470) (478,445) Interest income 820 -- 844 14 14,490 Loss on sale and retirement of equipment -- -- (2,758) (4,084) (20,072) Loan financing costs, net -- (2,475,000) (2,475,000) (2,475,000) Write-down of mining prospect -- -- -- (873,462) Gain on marketable securities -- -- -- 124,336 Commissions -- -- -- 6,708 Write off advances to Mineral Mountain Mining Co. -- (78,000) Write off loan to investment advisor -- -- -- -- (15,000) Other income 2,182 -- 4,976 -- 21,117 Other expenses -- -- -- -- (20,290) ------------- ------------- ------------- ------------- ------------- Total other income (expense) (61,430) (2,510,595) (184,254) (2,540,540) (3,793,618) ------------- ------------- ------------- ------------- ------------- NET INCOME (LOSS) $ (402,349) $ (2,936,227) $ (970,308) $ (3,052,214) $ (10,078,573) ============= ============= ============= ============= ============= BASIC EARNINGS (LOSS) PER SHARE $ (.004) $ (.036) $ (.010) $ (.046) $ (.456) ============= ============= ============= ============= ============= WEIGHTED AVERAGE SHARES 103,123,790 82,416,004 100,620,720 66,279,224 22,087,771 ============= ============= ============= ============= ============= F-2See accompanying notes. --------------------------------------------------------------------------------------------------------- Golden Eagle International, Inc.(A Development Stage Company) Consolidated Statement of Cash Flows(Unaudited) --------------------------------------------------------------------------------------------------------- July 21, 1988 Six Months Ended (Inception) June 30, To June 30, 1998 1997 1998 CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $ (970,308) $ (3,052,214) $(10,078,573) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Stock issued for services 229,000 220,000 2,450,919 Stock issued in lieu of interest 79,448 41,659 106,719 Stock issued for loan pledges and renewals 2,475,000 2,500,000 Depreciation expense 62,076 5,417 121,202 Loss on retirement of equipment and other 2,758 4,084 8,235 Write-down of mining prospect -- -- 873,462 Write off advances to Mineral Mountain Mining Co. -- -- 78,000 Write off loan to investment advisor -- -- 15,000 Fair value of officer salary expensed -- -- 20,000 Loss (gain) from investments -- -- (114,670) Changes in operating assets and liabilities: Prepaid expense and other costs (5,287) (63,235) (10,945) Income tax refund receivable 8,946 -- -- Payables and accrued liabilities 186,087 (123,897) 1,183,108 ------------ ------------ ------------ Net cash flows (used for) operating activities (407,280) (493,186) (2,847,543) ------------ ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES Investment in property and equipment -- (572,012) (1,602,432) Advance royalties (4,834) (152,084) (76,748) Deposits (13,500) -- (53,775) Proceeds from investments sales -- -- 184,380 Advances to Mineral Mountain Mining Co. -- -- (78,000) Loan to investment advisor -- -- (15,000) Purchase of investment securities -- -- (59,478) Purchase of subsidiary (net of cash acquired) -- -- (2,700) ------------ ------------ ------------ Net cash flows from (used for) investing activities (18,334) (724,096) (1,703,753) ------------ ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from bank loan -- 640,000 1,000,000 Loans from related parties 114,816 63,000 1,546,025 Repayments of loans from related parties -- (181,858) (431,376) Proceeds from other notes payable 126,051 -- 265,609 Repayments of other notes payable -- (82,282) (69,146) Proceeds from convertible debentures 125,000 -- 413,500 Common stock issued -- 987,635 1,902,158 Stock issuance costs -- -- (63,064) ------------ ------------ ------------ Net cash flows from financing activities 365,867 1,426,495 4,563,706 ------------ ------------ ------------ NET INCREASE (DECREASE) IN CASH (59,747) 209,213 12,410 CASH - BEGINNING OF PERIOD 72,157 11,741 -- ------------ ------------ ------------ CASH - END OF PERIOD $ 12,410 $ 220,954 $ 12,410 ============ ============ ============

To: john who wrote (15484)	12/31/1998 4:22:00 PM
From: Probart	Read Replies (3) \| Respond to of 34075

F-3See accompanying notes. --------------------------------------------------------------------------------------------------------------------------- Golden Eagle International, Inc.(A Development Stage Company) Consolidated Statement of Stockholders' Equity (Deficit) -------------------------------------------------------------------------------------------------------------------------- Common Additional Common Stock Stock Paid-in Shares Amount Issuable Capital ------ ------ -------- ------- Inception July 21, 1988 -- $ -- $ -- $ -- Issuance of common stock: June 1, 1989 for cash at $.00006 per share 1,666,665 167 -- (67) June 30, 1990 for cash at $.03 per share 300,000 30 -- 8,970 July 3, 1990 for cash at $.003 per share 366,665 37 -- 1,063 50,000 to 1 stock split -- -- -- 4,900 January and March 1991 for cash at $.30074 per share from stock offering 268,335 27 -- 59,253 November 1, 1993 - deficit of acquired subsidiary -- -- -- -- Acquisition of subsidiary -- -- -- 2,600 Fair value of officer salary -- -- -- 20,000 November 7, 1994, convert debt to equity at $.003 per share 2,640,830 264 -- 7,659 November 8, 1994, $.00125 per share: Note receivable from affiliate 20,000,000 2,000 -- 23,000 Legal services 375,000 37 -- 432 Other (70) -- -- 2,625 Issued for cash in June and August 1995 ($.01 to $.05 per share), less $41,644 in stock issuance costs 10,052,250 1,005 -- 164,044 Issued for services in 1995 ($.07 per share) 2,009,000 201 -- 148,799 Convert notes payable in 1995 ($.15625 per share) 800,000 80 -- 124,920 Payment of note by affiliate in 1995 -- -- -- -- Issuable for cash in 1995 ($.125 to $.282 per share), 417,500 shares -- -- 80,000 -- Issuable in 1995 for services and additional consideration for loan ($.07 per share), 328,333 shares -- -- 22,983 -- Collection of receivable January 9, 1996 -- -- -- -- Shares previously subscribed issued in 1996 568,333 57 (52,983) 52,926 Issued for cash in 1996 ($.05 to $.25 per share) 21,150 2 -- 5,528 Issuable for cash in 1996 ($.10 to $.20 per share), 2,207,000 shares -- -- 396,500 -- Issued for services in 1996 ($.07 to $.30 per share) 5,448,985 545 -- 1,230,297 Shares previously subscribed in 1996 issued in 1997 2,407,000 238 (446,500) 446,262 Issued for cash in 1997 ($.10 per share) 10,126,350 1,013 -- 1,011,622 Issued to related parties for loan guarantees and renewals in 1997 ($.10 per share) 25,000,000 2,500 -- 2,497,500 Issued for services in 1997 ($.03 to $.17 per share) 9,276,398 928 -- 815,072 Issued for equipment in 1997 ($.10 per share) 2,993,161 299 -- 299,017 Issued for conversion of debentures and -- note payable in 1997 ($.09 and $.26 per share) 689,060 69 -- 104,347 Issued for vehicle in 1997 ($.10 per share) 350,000 35 -- 34,965 Net loss for the periods -- -- -- -- ------------ ------------ ------------ ------------ Balance at December 31, 1997 95,359,112 9,534 -- 7,065,734 Unaudited: Issued for services ($.0867 to $.175 per share) 1,664,232 167 -- 228,833 Issued for conversion of debentures ($.0467 per share) 5,687,219 569 -- 264,879 Issued in lieu of interest ($.0867 to $.1603 per share) 1,116,666 112 -- 72,388 Net loss for the period -- -- -- -- ------------ ------------ ------------ ------------ Balance at June 30, 1998 103,827,229 $ 10,382 $ -- $ 7,631,834 ============ ============ ============ ============ F-4 ----------------------------------------------------------------------------------------------------------- Golden Eagle International, Inc.(A Development Stage Company) Consolidated Statement of Stockholders' Equity (Deficit) (continued) ----------------------------------------------------------------------------------------------------------- Stockholder Accumulated Receivable Deficit Total ---------- ------- ----- Inception July 21, 1988 $ -- $ -- $ -- Issuance of common stock: June 1, 1989 for cash at $.00006 per share -- -- 100 June 30, 1990 for cash at $.03 per share -- -- 9,000 July 3, 1990 for cash at $.003 per share -- -- 1,100 50,000 to 1 stock split -- -- 4,900 January and March 1991 for cash at $.30074 per share from stock offering -- -- 59,280 November 1, 1993 - deficit of acquired subsidiary -- (5,300) (5,300) Acquisition of subsidiary -- -- 2,600 Fair value of officer salary -- -- 20,000 November 7, 1994, convert debt to equity at $.003 per share -- -- 7,923 November 8, 1994, $.00125 per share: Note receivable from affiliate (25,000) -- -- Legal services -- -- 469 Other -- -- 2,625 Issued for cash in June and August 1995 ($.01 to $.05 per share), less $41,644 in stock issuance costs -- -- 165,049 Issued for services in 1995 ($.07 per share) -- -- 149,000 Convert notes payable in 1995 ($.15625 per share) (20,000) -- 105,000 Payment of note by affiliate in 1995 25,000 -- 25,000 Issuable for cash in 1995 ($.125 to $.282 per share), 417,500 shares -- -- 80,000 Issuable I 1995 for services and additional consideration for loan ($.07 per share), 328,333 shares -- -- 22,983 Collection of receivable January 9, 1996 20,000 -- 20,000 Shares previously subscribed issued in 1996 -- -- -- Issued for cash in 1996 ($.05 to $.25 per share) -- -- 5,530 Issuable for cash in 1996 ($.10 to $.20 per share), 2,207,000 shares -- -- 396,500 Issued for services in 1996 ($.07 to $.30 per share) -- -- 1,230,842 Shares previously subscribed in 1996 issued in 1997 -- -- -- Issued for cash in 1997 ($.10 per share) -- -- 1,012,635 Issued to related parties for loan guarantees and renewals in 1997 ($.10 per share) -- -- 2,500,000 Issued for services in 1997 ($.03 to $.17 per share) -- -- 816,000 Issued for equipment in 1997 ($.10 per share) -- -- 299,316 Issued for conversion of debentures and note payable in 1997 ($.09 and $.26 per share) -- -- 104,416 Issued for vehicle in 1997 ($.10 per share) -- -- 35,000 Net loss for the periods -- (9,108,265) (9,108,265) ------------ ------------ ------------ Balance at December 31, 1997 -- (9,113,565) (2,038,297) Unaudited: Issued for services ($.0867 to $.175 per share) -- -- 229,000 Issued for conversion of debentures ($.0467 per share) -- -- 265,448 Issued in lieu of interest ($.0867 to $.1603 per share) -- -- 72,500 Net loss for the period -- (970,308) (970,308) ------------ ------------ ------------ Balance at June 30, 1998 $ -- $(10,083,873) $ (2,441,657) ============ ============ ============ F-5See accompanying notes. -------------------------------------------------------------------------------- Golden Eagle International, Inc.(A Development Stage Company) Notes to Condensed Consolidated Financial Statements(Unaudited) -------------------------------------------------------------------------------- Note A - General Golden Eagle International, Inc. (a development stage company, the "Company,") was incorporated in Colorado on July 21, 1988. The Company is to engage in the business of acquiring, developing, and operating gold, silver and other precious mineral properties. Activities of the Company since November 1994 have been primarily devoted to organizational matters and identification of precious mineral properties considered for acquisition. Presently, substantially all of the Company's operations and business interests are focused on a prospect in the Tipuani River area of the Republic of Bolivia. The accompanying unaudited condensed financial statements have been prepared in accordance with the instructions to Form 10-QSB and do not include all of the information and notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all material adjustments, consisting of only normal recurring adjustments considered necessary for a fair presentation, have been included. These statements should be read in conjunction with the financial statements and notes thereto included in the Company's Form 10-KSB for the year ended December 31, 1997. The financial statements include the accounts of Golden Eagle International, Inc. and its subsidiaries Golden Eagle Bolivia Mining, S.A. and Eagle Mining of Bolivia, Ltd. All intercompany transactions and balances have been eliminated. The results of operations for the three months ended March 31, 1998, are not necessarily indicative of the results for the remainder of 1998. Note B - Earnings (Loss) Per Share Basic earnings (loss) per share of common stock are computed using the weighted average number of shares outstanding during each period plus common equivalent shares (in periods in which they have a dilutive effect). Note C - Loans from Consulting Firm Through June 30, 1998, the Company borrowed a total of $126,051 on an unsecured basis from a Bolivian consulting engineering firm at 15% per annum with repayment due December 31, 1998.Note D - Related Party Transactions During the six months ended June 30, 1998, relatives of an officer loaned the Company a total of $114,816, with interest ranging from 12% to 24%. F-6 -------------------------------------------------------------------------------- Golden Eagle International, Inc.(A Development Stage Company) Notes to Condensed Consolidated Financial Statements(Unaudited) -------------------------------------------------------------------------------- Note E - Convertible Debenture In April and May 1998, the Company issued a $250,000 ten percent Convertible Debenture to a foreign corporation which is convertible to common stock at the lesser of 50% of the OTC Bulletin Board average closing bid price for three days prior to notice or $.16 per share. The Debenture requires quarterly interest payments beginning June 30, 1998 and was due June 30, 1998. As of October 14, 1998, $125,000 of the Debenture had been funded. On October 15, 1998, the Debenture holder and the Company agreed to conversion of the $125,000 debenture plus accrued interest and penalty totaling $35,000 into 2,560,000 shares of common stock at a conversion rate of $.0625. In addition, the Company agreed to file a registration statement covering the issued shares within 90 days and granted the holder the right to purchase up to $200,000 of stock within 30 days of the effectiveness of the registration statement in the event additional securities are registered. F-7