-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, K6DXncjD+NCOADe5y67Q/ONS7ctaxuickJ2h4RmAcJMwIX2A37Ptqu5goWJVkF9N wgC7IqIgeAQ4nSGgm1HKyg== 0001015402-02-000945.txt : 20020415 0001015402-02-000945.hdr.sgml : 20020415 ACCESSION NUMBER: 0001015402-02-000945 CONFORMED SUBMISSION TYPE: 10KSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20011231 FILED AS OF DATE: 20020328 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AURORA GOLD CORP CENTRAL INDEX KEY: 0001037049 STANDARD INDUSTRIAL CLASSIFICATION: METAL MINING [1000] IRS NUMBER: 133945947 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10KSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-24393 FILM NUMBER: 02589607 BUSINESS ADDRESS: STREET 1: PO BOX 3711 STN TERMINAL STREET 2: 349 WEST GEORGIA STREET, VANCOUVER CITY: BC CANADA V6B 3Z1 STATE: A1 ZIP: 00000 BUSINESS PHONE: 604-687-4432 MAIL ADDRESS: STREET 1: PO BOX 3711 STN TERMINAL STREET 2: 349 WEST GEORGIA STREET, VANCOUVER CITY: BC CANADA V6B 3Z1 STATE: A1 ZIP: 00000 10KSB 1 doc1.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-KSB [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal year ended December 31, 2001 Commission file number 0-24393 AURORA GOLD CORPORATION (Exact name of small business issuer as specified in its charter) Delaware 13-3945947 (State or other jurisdiction (IRS Employer of incorporation or organization) Identification No.) PO Box 3711 STN Terminal, 349 West Georgia Street, Vancouver, BC Canada V6B 3Z1 (Address of principal executive offices) Registrant's telephone number, including area code 604-687-4432 Securities registered under Section 12(b) of the Securities Exchange Act of 1934: None Securities registered pursuant to Section 12 (g) of the Securities Exchange Act of 1934: Title of each class Name of each exchange on - ----------------------- which registered ------------------------ Common stock, par value $0.001 per share NASD OTC Bulletin Board - ---------------------------------------- ------------------------ Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Security 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. YES [X] NO [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-B is not contained herein, and will not be contained, to the best of the Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part 111 of this Form 10-KSB or any amendment to this Form 10-KSB. [X] Revenue for the fiscal year ended December 31, 2001 was $Nil The aggregate market value of the Registrant's voting common Stock held by non-affiliates was $3,777,822 as of March 15, 2002. There were 12,873,943, shares of the registrant's Common Stock outstanding as of March 15, 2002. Documents incorporated by reference herein: None Transitional Small Business disclosure format (check one); YES [ ] NO [X] AURORA GOLD CORPORATION This annual report contains statements that plan for or anticipate the future and are not historical facts. In this Report these forward looking statements are generally identified by words such as "anticipate", "plan", "believe", "expect", "estimate", and the like. Because forward-looking statements involve future risks and uncertainties, these are factors that could cause actual results to differ materially from the estimated results. These risks and uncertainties are detailed in Item 1. "Business", Item 2. "Properties", Item 6. "Management's Discussion and Analysis of Financial Condition and Results of Operations" Item 7 "Financial Statements", Item 12 "Certain Relationships and Related Transactions". The Private Securities Litigation Reform Act of 1995, which provides a "safe harbor" for such statements, may not apply to this Report. ITEM 1. BUSINESS (A) GENERAL Aurora Gold Corporation (the "Company" or "Aurora") was incorporated under the laws of the State of Delaware on October 10, 1995, under the name "Chefs Acquisition Corp." Initially formed for the purpose of engaging in the food preparation business, it redirected its business efforts in late 1995 following a change of control, which occurred on October 30, 1995, to the acquisition, exploration and, if warranted, the development of mineral resource properties. The Company changed its name to Aurora Gold Corporation on August 20, 1996 to more fully reflect its business activities. Since its redirection, the Company's activities have been limited primarily to the acquisition of rights to certain mineral properties and the implementation of preliminary exploration programs on these properties in which it has acquired an interest. See "Item 2. Description of Property." The Company is engaged in the location, acquisition, exploration and, if warranted, development of mineral resource properties. All of the mineral properties in which the Company has an interest or a right to acquire an interest in are currently in the exploration stage. None of the properties have a known body of Mineral Reserves. The Company's primary objective is to explore for gold, silver, base metals and industrial minerals and, if warranted, to develop those existing mineral properties. Its secondary objective is to locate, evaluate, and acquire other mineral properties, and to finance their exploration and development through equity financing, by way of joint venture or option agreements or through a combination of both. Currently, the Company's activities are centered in Canada. None of the Company's properties contain any known Mineral Reserves. The Company's common stock is traded on the NASD OTC Bulletin Board. The Company's mailing address is - PO Box 3711 STN Terminal, 349 West Georgia Street, Vancouver, British Columbia, Canada, V6B 3Z1. (B) SIGNIFICANT DEVELOPMENTS IN FISCAL 2001 AND SUBSEQUENT EVENTS In fiscal 2001 the Company issued Nil (fiscal 2000 - 1,504,000) shares for an aggregate consideration of $0 (fiscal 2000 - $528,550) and cancelled Nil (2000 - 90,706) common shares with an aggregate consideration of $0 (fiscal 2000 - - $56,691) 2 On January 29, 2001 the Company's wholly owned subsidiary Aurora Metals (BVI) Limited signed a Subscription Agreement with Billiton E&D 3 B.V. and an Option Agreement with Billiton UK Resources B.V., both subsidiaries of Billiton plc ("Billiton"), for funding of exploration for zinc on the Hammala and Kebbouch District Exploration Permits in Northern Tunisia, North Africa. Closing occurred on February 8, 2001. Under the terms of the agreements: (i) Billiton, through its subsidiary, Billiton E&D 3 B.V., made a private placement in Aurora Metals (BVI) Limited of $600,000 by purchasing 857,143 newly issued Units at a price of $0.70 with each Unit comprising of a common share and a purchase warrant, exercisable for a period of one year at $0.85, which if exercised would result in further proceeds of $728,571; (ii) Aurora Metals (BVI) Limited undertook to spend $475,000 of the private placement on exploration on Hammala Exploration Permit and the ten other Exploration Permits in the Kebbouch District owned by Aurora Metals (BVI) Limited; (iii) after the proceeds of the initial private placement are expended, Billiton, through its subsidiary, can elect to exercise a First Option whereby it can earn a 51% interest in the Property by spending $1.0 million over the ensuing two years; (iv) following the exercise of the First Option and satisfaction of the earn-in, Aurora Metals (BVI) Limited and Billiton UK Resources B.V. will form a Joint Venture and will pro rata fund further expenditures on exploration of the Property; (v) prior to the expenditure under the Joint Venture Phase reaching $2.0 million, Billiton, through its subsidiary, can elect to exercise a Second Option to earn a further 19%, i.e. to reach a total of 70%, by providing financing for all further work including, but not limited to, Pre-feasibility and Feasibility studies, engineering, mine development and construction through to commercial production. Aurora Metal (BVI) Limited's pro rata share of these costs will be repaid from Aurora Metal (BVI) Limited's share of cash flow; and (vi) Aurora Metals (BVI) Limited will be the Operator from the outset and will also undertake regional geological investigations in the country. On March 9, 2001 the Company completed the spin-off of its wholly owned subsidiary Aurora Metals (BVI) Limited when it distributed 12,873,943 shares of Aurora Metals (BVI) Limited to the Company's shareholders of record on June 15, 2000 as a stock dividend. Upon completion of the spin-off the Company returned 126,057 (13,000,000 - 12,873,943) shares of Aurora Metals (BVI) Limited common stock back to Aurora Metals (BVI) Limited's treasury for cancellation. The 13,000,000 shares of common stock of Aurora Metals (BVI) Limited represented the entire outstanding and issued common stock of Aurora Metals (BVI) Limited. As a result of the distribution of Aurora Metals (BVI) Limited shares to the shareholders of the Company, Aurora Metals (BVI) Limited is no longer a subsidiary of the Company. On March 9, 2001 Aurora Metals (BVI) Limited had 13,731,086 common shares outstanding and 857,143 share purchase warrants outstanding as a result of the issuance of 857,143 common shares to Billiton E&D 3 B.V., in a private placement that closed on February 8, 2001. The Company's Consolidated Financial Statements for the year ended December 31, 2000 reflected the spin-off of Aurora Metals (BVI) Limited at book value. Accordingly, expenses and cash flows of the spun-off Aurora Metals (BVI) Limited were segregated in the Consolidated Statements of Operations and Cash Flows for the year ended December 31, 2000. The historical carrying amount of the net deficiency transferred to Aurora Metals (BVI) Limited on the spin-off date (net of initial investment of $100) were recorded as additional paid-in capital of $316,498 at December 31, 2000. Included in the net deficiency transferred at September 15, 2000 was a $226,778 of loan owed to the Company by Aurora Metals (BVI) Limited. On April 2, 2001 the Company completed the spin-off of its wholly owned subsidiary Deltango Gold Limited ("Deltango"). Deltango was spun-off to the management of Deltango for $0 consideration. Deltango's management will assume all current ($217,332) and future debt and liabilities of Deltango. On April 2, 2001 Deltango had a stockholders' deficiency of $476,038; $259,564 of which was funded by the Company and the balance of $216,474 was funded by other creditors. Since the debt due to other creditors was assumed by Deltango, the Company recorded a gain on the recovery of exploration costs previously expensed. 3 On May 4, 2001 Mr. David Jenkins resigned from the Board of Directors and as President of the Company to pursue other interests. On May 4, 2001 Mr. Cameron Richardson was appointed to the Board of Directors of the Corporation and President of the Company. In July 2001 Aurora Metals (BVI) Limited settled $206,978 of indebtedness to the Company with the issue of 295,683 shares of common stock of Aurora Metals (BVI) Limited at a deemed value of $0.70 per share. (C) EXPLORATION AND DEVELOPMENT The Company conducts exploration activities from its headquarters in Vancouver, Canada. The Company owns or controls unpatented mining claims in British Columbia Canada. The Company's strategy is to concentrate its investigations into: (i) Existing operations where an infrastructure already exists; (ii) Properties presently being developed and/or in advanced stages of exploration which have potential for additional discoveries; and (iii) Grass-roots exploration opportunities. The Company is currently concentrating its exploration activities in Canada. The Company is also examining data relating to the potential acquisition of other exploration properties in Guatemala, Mexico and the United States of America. Exploration expenses on the British Columbia Kumealon limestone prospect totalled $880 during the twelve-months ended December 31, 2001 (fiscal 2000 - $910). During fiscal 2001 the Company did not renew the five mineral exploration licences and one mineral reconnaissance licence for its Guatemala mineral exploration and reconnaissance concessions. In April 2001 the Company disposed of its wholly owned subsidiary Deltango Gold limited which held five gold exploration properties in the Yukon Territory of Canada. The Company was spun-off to the management of Deltango Gold Limited for $0 consideration. The Company's property is in the exploration stage only and is without a known body of Mineral Reserves. Development of the property will follow only if satisfactory exploration results are obtained. Mineral exploration and development involves a high degree of risk and few properties that are explored are ultimately developed into producing mines. There is no assurance that the Company's mineral exploration and development activities will result in any discoveries of commercially viable bodies of mineralization. The long-term profitability of the Company's operations will be, in part, directly related to the cost and success of its exploration programs, which may be affected by a number of factors. (D) EMPLOYEES As of March 15, 2002 there was one full time employee and one part time employee. (E) REGULATION OF MINING ACTIVITY The Company's interests in its projects will be subject to various laws and regulations concerning exploration, production, taxes, labor standards, environmental protection, mine safety and other matters. In addition, new laws or regulations governing operations and activities could have a material adverse impact on the Company. 4 (F) FOREIGN COUNTRIES AND REGULATORY REQUIREMENTS Mineral exploration, and mining activities on the Company's properties may be affected in varying degrees by political stability, and the policies of other nations. Any changes in regulations or shifts in political conditions are beyond the control of the Company and may adversely affect its business. Operations may be affected by government laws and regulations or the interpretations thereof, including those with respect to export controls, expropriation of property, employment, land use, water use, environmental legislation and mine safety. Operations may be also affected by political and economic instability, confiscatory taxation, restriction on currency conversions, imports and sources of supplies, the expropriation of private enterprises, economic or other sanctions imposed by other nations, terrorism, military repression, crime, and extreme fluctuations in currency exchange rates and high inflation and which may it more difficult for the Company to raise funds for the development of its mineral interests in some countries. (G) COMPETITION Many companies are engaged in the exploration of mineral properties. The Company encounters strong competition from other mining companies in connection with the acquisition of properties producing or capable of producing gold, silver, base metals and industrial metals. Many of these companies have substantially greater technical and financial resources than the company and thus the Company may be at a disadvantage with respect to some of its competitors. The marketing of minerals is affected by numerous factors, many of which are beyond the control of the Company. Such factors include the price of the mineral in the marketplace, imports of minerals from other nations, the availability of adequate refining and processing facilities, the price of fuel, electricity, labor, supplies and reagents and the market price of competitive minerals. In addition, sale prices for many commodities are determined by world market forces or are subject to rapid and significant fluctuations that may not necessarily be related to supply or demand or competitive conditions that in the past have affected such prices. Significant price movements in mineral prices over short periods of time may be affected by numerous factors beyond the control of the Company, including international economic and political trends, expectations of inflation, currency exchange fluctuations (specifically, the U.S. dollar relative to other currencies), interest rates and global or regional consumption patterns, speculative activities and increased production due to improved mining and production methods. The effect of these factors on the price of minerals and, therefore, the economic viability of any of the Company's projects cannot accurately be predicted. As the Company is in the exploration stage, the above factors have had no material impact on operations or income. (H) ENVIRONMENTAL REGULATIONS Environmental legislation in all countries is evolving in a manner which will require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their officers, directors and employees. All phases of the Company's operations in Canada, Guatemala and the United States of America are subject to that country's environmental regulations. The regulations are comprehensive and cover water quality, discharge limits, hazardous wastes, agricultural land and vegetation. (I) MINING RISKS AND INSURANCE Mineral exploration involves many risks, which even a combination of experience, knowledge and careful evaluation may not be able to overcome. Operations in which the Company has a direct or indirect interest will be subject to all type of hazards and risks or unexpected formations, cave-ins, 5 pollution, all of which could result in work stoppages, damages to property, and possible environmental damages. The Company has general liability insurance covering its operations. Payment of any liabilities in excess of the Company's insurance coverage could have a materially adverse effect upon the Company's financial condition. ITEM 2. DESCRIPTION OF PROPERTY All of the Company's properties are in the preliminary exploration stage and do not contain any known body of ore. All of the Company's exploration activities are presently in Canada. BRITISH COLUMBIA, CANADA - -------------------------- In February 1999, the Company acquired, by staking, a high grade limestone property three (3) square kilometres (741 acres) located on the north shore of Kumealon Inlet, 54 kilometres south-southeast of Prince Rupert, B.C. Canada. This property is highlighted by consistence of purity and whiteness of the limestone zone outcropping along the southwest shore of Kumealon Lagoon. The zone is comprised mostly of white, recrystallized, fine to course grained limestone, striking 150 degrees and can be traced for at least 1200 meters. The zone is estimated to have an average stratigraphic thickness of 180 meters. Chip samples taken across the zone averaged 55.06% CaO, 2.11% insolubles and 43.51% ignition loss. The zone is estimated to contain 19 million tonnes of high-grade limestone over a strike length of 1200 meters, with an average width of 180 meters and an average height above water of 30 meters. The Company plans to conduct a bedrock-sampling program in fiscal 2002. ITEM 3. LEGAL PROCEEDINGS The company is not party to any litigation, and has no knowledge of any pending or threatened litigation against it. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None PART II ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. (a) The Common Stock of the Company has been quoted on the NASD OTC Bulletin Board since December 5, 1996. The following table sets forth the high and low bid prices for the Common Stock for the calendar quarters indicated as reported by the NASD OTC Bulletin Board for the last two years. These prices represent quotations between dealers without adjustment for retail markup, markdown or commission and may not represent actual transactions. 6
First Quarter Second Quarter Third Quarter Fourth Quarter -------------- --------------- -------------- --------------- 2001 - High $ 0.312 $ 0.230 $ 0.230 $ 0.190 - ----------- -------------- --------------- -------------- --------------- 2001 - Low $ 0.094 $ 0.060 $ 0.100 $ 0.090 - ----------- -------------- --------------- -------------- --------------- 2000 - High $ 0.750 $ 0.750 $ 0.500 $ 0.375 - ----------- -------------- --------------- -------------- --------------- 2000 - Low $ 0.250 $ 0.141 $ 0.250 $ 0.094 - ----------- -------------- --------------- -------------- ---------------
(b) As of March 15, 2002, there were 753 holders of record of the Common Stock. (c) On March 9, 2001 the Company completed the spin-off of its wholly owned subsidiary Aurora Metals (BVI) Limited when it distributed 12,873,943 shares of Aurora Metals (BVI) Limited to the Company's shareholders of record on June 15, 2000 as a stock dividend. Upon completion of the spin-off the Company returned 126,057 (13,000,000 - 12,873,943) shares of Aurora Metals (BVI) Limited common stock back to Aurora Metals (BVI) Limited's treasury for cancellation. The 13,000,000 shares of common stock of Aurora Metals (BVI) Limited represented the entire outstanding and issued common stock of Aurora Metals (BVI) Limited. As a result of the distribution of Aurora Metals (BVI) Limited shares to the shareholders of the Company, Aurora Metals (BVI) Limited is no longer a subsidiary of the Company. There were no Common Stock cash dividends paid in 2001, 2000, 1999, 1998 or 1997. The amount and frequency of cash dividends are significantly influenced by metal prices, operating results and the Company's cash requirements. The Registrant has issued securities in the manner set forth below without registration under the Securities Act of 1933, as amended (the "Act") Between January 1 and December 31, 2001. No shares were issued between January 1 and December 31, 2001. The Registrant believes that each of the above-referenced transaction was exempt from registration under the Act, pursuant to Section 4(2) of the Act and the rules and regulations promulgated thereunder as a transaction by an issuer not involving any public offering. ITEM 6. MANAGEMENTS' DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION (A) GENERAL The Company is a mineral exploration company based in Vancouver, Canada engaged in the exploration of base, precious metals and industrial minerals worldwide. The Company was incorporated under the laws of the State of Delaware on October 10, 1995, under the name "Chefs Acquisition Corp.". The Company conducts exploration activities from it headquarters in Vancouver, Canada. The Company owns or controls unpatented mining claims in British Columbia, Canada. The Company's strategy is to concentrate its investigations into: (i) Existing operations where an infrastructure already exists; (ii) Properties presently being developed and/or in advanced stages of exploration which have potential for additional discoveries; and (iii) Grass-roots exploration opportunities. The Company is currently concentrating its exploration activities in Canada. The Company is also examining data relating to the potential acquisition of other exploration properties in Guatemala, Mexico and the United States of America. All of the Company's properties are in the preliminary exploration stage without any presently known Mineral Reserves. 7 The Company had no revenues during fiscal 2001 and 2000. Income in fiscal 2001 resulted from the disposition of a subsidiary. On April 2, 2001, the Company disposed of its wholly-owned subsidiary Deltango Gold Limited ("Deltango") to the management of Deltango for $Nil consideration. As of the date of disposition, Deltango had a stockholders' deficiency of $476,038; $259,564 of which was funded by the Company and the balance of $216,474 was funded by other creditors. Since the debt due to other creditors was assumed by the purchaser, the Company recorded a gain on recovery of exploration costs previously expensed. The Company has no mineral properties in production. Funds raised in fiscal 2001 and 2000 were used for exploration of the Company's properties and general administration. During the next 12 months the Company needs to raise additional funds through equity offerings and/or debt borrowing to meet its administrative/general operating expenses, to conduct work on its exploration properties, to meet its obligations under the Tunisian agreements. The Company intends to move forward in the current low gold price environment by selectively developing its existing assets and to further develop the Company through the possible acquisition or joint venturing of additional mineral properties either in the exploration or development stage. Additional employees will be hired on a consulting basis as required by the exploration projects. (B) FINANCING In fiscal 2001 the Company did not issue any common shares. In fiscal 2000 the Company issued 1,504,000 common shares for an aggregate consideration of $528,550 and cancelled 90,706 common shares with an aggregate consideration of $56,691. The following is a breakdown of the common shares issued in fiscal 2000. The Company issued 900,000 common shares during the first quarter of fiscal 2000. The 900,000 common shares had been subscribed in fiscal 1999 for $425,000. The Company issued 405,0000 common shares for aggregate cash consideration of $4,050 upon the exercise of 405,000 common share stock options. The Company settled $99,500 of debt with the issuance of 199,000 common shares at a price of $0.50 per common share. The Company cancelled 90,706 common shares with an aggregate consideration of $56,691. (C) FINANCIAL INFORMATION (a) Twelve Months Ended December 31, 2001 (Fiscal 2001) versus Twelve Months Ended December 31, 2000 (Fiscal 2000) For the year ended December 31, 2001 the Company recorded a loss of $87,929 or $0.01 per share, compared to a loss of $677,705 ($0.06 per share) in 2000. General and administrative expenses - For the year ended December 31, 2001 the Company recorded general and administrative expenses of $87,503 (fiscal 2000 - $217,838). The fiscal 2001 amount of $87,503 includes travel and project research and development of $0 (fiscal 2001 - $120,359), professional fees - accounting $8,773 (fiscal 2000 - $14,964) and legal $1,266 (fiscal 2000 - $-3,272). Exploration expenditures - For the year ended December 31, 2001 the Company recorded exploration expenses of $620, compared to $109,054 in fiscal 2000. The following is a breakdown of the exploration expenses by property: - Canada, Kumealon property $880 (2000 - $910); Canada - Yukon properties $0 (2000 - $35,799); Guatemala $0 (2000 - $6,793); and Project assessment and exploration expenditures of $-260 (2000 - $65,552). Amortization expenditures - For the year ended December 31, 2001 the Company recorded depreciation and amortization costs of $8,766, compared to $4,592 in fiscal 2000. 8 (b) Twelve Months Ended December 31, 2000 (Fiscal 2000) versus Twelve Months Ended December 31, 1999 (Fiscal 1999) For the year ended December 31, 2000 the Company recorded a loss of $677,705, or $0.06 per share, compared to a loss of $855,391 ($0.08 per share) in 1999. General and administrative expenses - For the year ended December 31, 2000 the Company recorded general and administrative expenses of $217,838, compared to $169,093 in 1999. The 2000 amount of $217,838 includes travel expense and project research and development of $129,000 (1999 - $64,000), professional fees - accounting $14,964 (1999 - $19,171) and legal $-3,272 (1999 - $13,713). Exploration expenditures - For the year ended December 31, 2000 the Company recorded exploration expenses of $265,410, compared to $686,968 in 1999. The following is a breakdown of the exploration expenses by property: - Canada, Kumealon property $910 (December 31, 1999 - $2,286); Canada - Yukon properties $35,799 (December 31, 1999 - $407,319); Guatemala $6,793 (December 31, 1999 - $53,597); Tunisia $156,356 (December 31, 1999 - $93,362); United States, Totem Talc property $0 (December 31, 1999 - $39,783); and Project assessment and exploration expenditures of $65,552 (December 31, 1999 - $90,621). Amortization expenditures - For the year ended December 31, 2000 the Company recorded depreciation and amortization costs of $4,592, compared to $4,607 in 1999. The Company initially capitalized all costs directly incurred in its formation. To comply with the American Institute of Certified Public Accounts Statement of Position 98-5 "Reporting on Costs of Start-Up Activities", the remaining balance was written off to depreciation expense during 1999. (D) FINANCIAL CONDITION AND LIQUIDITY At December 31, 2001, the Company had cash of $92 (2000 - $1,685) and working capital deficiency of $408,359 (2000 working capital deficiency - $403,742) respectively. Total liabilities as of December 31, 2001 were $474,094 as compared to $632,505 on December 31, 2000, a decrease of $158,411. During 2001 financing activities consisted of the following, net proceeds from the issuance and subscription of common stock of $0 (2000 - $4,050). In Fiscal 2001 investing activities consisted of additions to mineral properties $0 (2000 - $0) and additions to fixed assets $0 (2000 - $30,583). For the year ended December 31, 2001 the Company recorded a loss of $87,929, or $0.01 per share, compared to a loss of $677,705 ($0.06 per share) in 2000. The Company does not have sufficient working capital to (i) pay its administrative and general operating expenses through December 31, 2000 and (ii) to conduct its preliminary exploration programs. Without cash flow from operations, it may need to obtain additional funds (presumably through equity offerings and/or debt borrowing) in order, if warranted, to implement additional exploration programs on its properties. Failure to obtain such additional financing may result in a reduction of the Company's interest in certain properties or an actual foreclosure of its interest. The Company has no agreements or understandings with any person as to such additional financing. 9 The Company's exploration property has not commenced commercial production and the Company has no history of earnings or cash flow from its operations. While the Company may attempt to generate additional working capital through the operation, development, sale or possible joint venture development of its properties, there is no assurance that any such activity will generate funds that will be available for operations. There were no Common Stock cash dividends paid in 2001, 2000, 1999, 1998 or 1997. The amount and frequency of cash dividends are significantly influenced by metal prices, operating results and the Company's cash requirements. PLANS FOR YEAR 2002 General The Company intends to concentrate its exploration activities on the Kumealon limestone property in British Columbia Canada. The Company intends to examine data relating to the potential acquisition of other exploration properties in Guatemala, Mexico and the United States of America. The Company's exploration work program in 2002 on the British Columbia Kumealon limestone prospect will entail surface mapping of geology, sampling of soils on a grid basis to delineate geochemical anomalies, stream sediment sampling and geophysical surveying. The data assembled from this work will be used to determine whether: (i) further exploration and diamond core drilling is warranted and if so the sites for initial holes; or (ii) whether certain claim blocks should be surrendered. (E) NEW ACCOUNTING PRONOUNCEMENTS In June 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 141 (SFAS 141), Business Combinations. SFAS 141 applies to all business combinations initiated after June 30, 2001. The SFAS 141 applies to all business combinations accounted for using the purchase method for which the date of acquisition is July 1, 2001, or later. The adoption of SFAS 141 will not have an impact on the Company's financial statements. In June 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 142 (SFAS 142), Goodwill and Other Intangible Assets. The provisions of SFAS 142 are required to be applied starting with fiscal years beginning after December 15, 2001 with earlier application permitted for entities with fiscal years beginning after March 15, 2001 provided that the first interim financial statements have not been previously issued. The Statement is required to be applied at the beginning of the entity's fiscal year and to be applied to all goodwill and other intangible assets recognized in its financial statements to that date. The adoption of SFAS 142 will not have an impact on the Company's financial statements. In August 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 143 (SFAS 143), Asset Retirement Obligations. SFAS 143 establishes accounting standards for recognition and measurement of a liability for the costs of assets retirement obligations. Under SFAS 143, the costs of retiring an asset will be recorded as a liability when the retirement obligation arises and will be amortized to expense over the life of the asset. The adoption of SFAS 143 will not have an impact on the Company's financial statements. In October 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 144 (SFAS 144), Accounting for the Impairment or Disposal of Long-lived Assets. SFAS 144 supersedes SFAS 121, Accounting for the Impairment of Long-lived Assets and Long-lived Assets to be Disposed Of, and APB Opinion 30, Reporting the Results of Operations - Reporting 10 the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions, for segments of a business to be disposed of. SFAS 144 is effective for fiscal years beginning after December 15, 2001. The adoption of SFAS 144 will not have an impact on the Company's financial statements. ITEM 7. FINANCIAL STATEMENTS See ITEM 13 of this Report for information with respect to the financial statements filed as a part hereof, including financial statements filed pursuant to the requirements of this ITEM 7. ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS None PART III. ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS: The following table lists the names and positions of the executive officers and directors of the Company as of December 31, 2001 and March 15, 2002. All executive officers and directors have been elected and appointed to serve until their successors are elected and qualified. Additional information regarding the business experience, length of time served in each capacity and other matters relevant to each individual are set forth below the table.
Name Position - ------------------------------------------------------------------------------------- John A. A. James Age 63, Vice President and Director since October 1996. President and Director of Aurora Metals (BVI) Limited since May 2000. President of JAMine Inc. (formerly James Askew Associates, Inc.) since 1988. President and Director of Mirage Resource Corporation from 1994 to 1997. - ------------------------------------------------------------------------------------- Antonino G. Cacace Age 56, Director since October 1995. Director of Patagonia Gold Corporation since June 1997. Engineer, Founder and current Managing Director of Stelax Industries in the United Kingdom. Between 1984 and 1995 he was managing director/chief executive officer of several Companies involved in development and operation of steel/bar rolling mills. - ------------------------------------------------------------------------------------- A. Cameron Richardson Age 49, President and Director since May 4, 2001, Secretary since April 1998. 1981 to 1997 held accounting positions with various Canadian resource companies. - -------------------------------------------------------------------------------------
There are no family relationships between any of the executive officers. COMPLIANCE WITH SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE, OF THE EXCHANGE ACT OF 1934 Section 16 (a) of the Securities Exchange Act of 1934 requires the Company's officers and directors, and persons who have more than ten percent of a registered class of the Company's equity securities, to file reports of 11 ownership and changes in ownership with the Securities and Exchange Commission (the "SEC"). Officers, directors and greater than ten percent shareholders are required by the SEC regulation to furnish the Company with copies of all Section 16 (a) forms they file. Based solely on its review of the copies of such forms received by it, or written representations from certain reporting persons, the Company believes that during the fiscal year ended December 31, 2001 all filings requirements applicable to its officers, directors and greater than ten percent beneficial owners were complied with. ITEM 10. EXECUTIVE COMPENSATION (A) General The following table sets forth information concerning the compensation of the named executive officers for each of the registrant's last three completed fiscal year:
- ------------------------------------------------------------------------------------------------------- Annual Compensation Long-Term Compensation ------------------------------------------------------------------- Awards Payments ----------------------------------- Securities Other Under- All Annual Restricted Lying other Name And Compen- Stock Options/ LTIP Compen- Principal Position Year Salary Bonuses Sation Award(s) SARs Payouts sation (Note 1.) ($) ($) ($) ($) (=) ($) ($) (a) (b) (c) (d) (e) (f) (g) (h) (i) - ------------------------------------------------------------------------------------------------------- David Jenkins 2001 30,000 -0- -0- None None None -0- Former President and 2000 60,000 -0- -0- None None None -0- Director (Note 2.) 1999 60,000 -0- -0- None None None -0- - ------------------------------------------------------------------------------------------------------- John A. A. James 2001 -0- -0- -0- None None None -0- Vice President and 2000 154,950 -0- -0- None None None -0- Director 1999 111,890 -0- -0- None None None -0- - ------------------------------------------------------------------------------------------------------- Scott Broughton 2001 -0- -0- -0- None None None -0- Vice President 2000 -0- -0- -0- None None None -0- (Note 3.) 1999 26,972 -0- -0- None None None -0- - ------------------------------------------------------------------------------------------------------- Cameron Richardson 2001 6,186 -0- -0- None None None -0- President and 2000 6,744 -0- -0- None None None -0- Director (Note 2.) 1999 7,059 -0- -0- None None None -0- =======================================================================================================
Note 1. None of the Company's officers or directors was party to an employment agreement with the Company. Directors and/or officers receive expense reimbursement for expenses reasonably incurred on behalf of the Company. During the fiscal year ending December 31, 2001 the entire board of directors acted as the Company's compensation committee. 12 Note 2. On May 4, 2001 Mr. David Jenkins resigned from the Board of Directors and as President of the Company to pursue other interests. On May 4, 2001 Mr. Cameron Richardson was appointed to the Board of Directors of the Corporation and President of the Company. Note 3. On April 2, 2001 Mr. Scott Broughton resigned from his position of Vice-President to pursue other interests. (B) Options/SAR Grants Table The following table sets forth information concerning individual grants of stock options (whether or not in tandem with stock appreciation rights ("SARs") and freestanding SARs made during the last completed fiscal year to each of the named executive officers;
- ------------------------------------------------------------------------------------------------- OPTION/SAR GRANTS IN 1997, 1998, 1999, 2000 and 2001 FISCAL YEAR (Individual Grants) ================================================================================================= Percent Of Number of Total Options/ Securities SARs Granted Underlying To Employees Exercise Or Expiration Option/SARs In Fiscal Base Price Date Name Granted (#) Year ($/Sh) (M/D/Y) (a) (b) (c) (d) (e) - ------------------------------------------------------------------------------------------------- David Jenkins (1) (2) (3) (4) (5) (7) None 0% $ 0 - ------------------------------------------------------------------------------------------------- John James (1) (2) (3) (4) (5) None 0% $ 0 - ------------------------------------------------------------------------------------------------- Scott Broughton (1)(2)(6) (8) None 0% $ 0 - ------------------------------------------------------------------------------------------------- Cameron Richardson (1) (2)(4)(7) None 0% $ 0 - ------------------------------------------------------------------------------------------------- (1) No options were awarded in 2001. (2) No options were awarded in 2000. (3) Options granted to David Jenkins (200,000) and John James (100,000) on June 26, 1998 at $0.01 per share, expiring June 26, 2003, were exercised during the year. (4) Options granted to David Jenkins (200,000), John James (50,000) and Cameron Richardson (25,000) on September 9, 1998 at $0.75 per share, expiring September 9, 2003 were cancelled in June 2000. (5) Options granted to David Jenkins (100,000), John James (50,000) on December 11, 1998 at $0.75 per share, expiring December 11, 2003 were cancelled in June 2000. (6) Options granted to Scott Broughton (150,000) on August 5, 1999 at $0.69 per share, expiring August 5, 2004 were cancelled in June 2000. (7) On May 4, 2001 Mr. David Jenkins resigned from the Board of Directors and as President of the Company to pursue other interests. On May 4, 2001 Mr. Cameron Richardson was appointed to the Board of Directors of the Corporation and President of the Company. (8) On April 2, 2001 Mr. Scott Broughton resigned from his position of Vice-President to pursue other interests.
(C) Aggregated Option/SAR Exercises and Fiscal Year-End Option/SAR Value Table 13 The following table sets forth information concerning each exercise of stock options (or tandem SARs) and freestanding SARs during the last completed fiscal year by each of the named executive officers and the fiscal year-end value of unexercised options and SARs, on an aggregated basis:
- ---------------------------------------------------------------------------------------- AGGREGATED OPTION/SAR EXERCISE IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES ======================================================================================== Number of Securities Value Of Underlying Unexercised Unexercised In-The-Money Shares Options/SARs Options/SARs Acquired Value At FY-End ($) At FY-End ($0.170) On Exercise Realized Exercisable/ Exercisable/ Name (#) ($) Unexercisable Unexercisable (a) (b) (c) (d) (e) - ---------------------------------------------------------------------------------------- David Jenkins (1) None None None $ 0 - ---------------------------------------------------------------------------------------- John James None None None $ 0 - ---------------------------------------------------------------------------------------- Scott Broughton (2) None None None $ 0 - ---------------------------------------------------------------------------------------- Cameron Richardson (1) None None None $ 0 - ----------------------------------------------------------------------------------------
Note 1. On May 4, 2001 Mr. David Jenkins resigned from the Board of Directors and as President of the Company to pursue other interests. On May 4, 2001 Mr. Cameron Richardson was appointed to the Board of Directors of the Corporation and President of the Company. Note 2. On April 2, 2001 Mr. Scott Broughton resigned from his position of Vice-President to pursue other interests. (D) Long-Term Incentive Plans ("LTIP") Awards Table The Company does not have a Long-term Incentive Plan. (E) Compensation of Directors The Company does not pay a fee to its outside, non-officer directors. The Company reimburses its directors for reasonable expenses incurred by them in attending meetings of the Board of Directors. During fiscal 2001 non-officers directors received a total of $0 in consulting fees. ITEM 11 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth certain information regarding the beneficial ownership of the Company's Common Stock as of March 15, 2002 by (i) each person who is known by the Company to own beneficially more than five percent (5%) of the Company's outstanding Common Stock; (ii) each of the Company's directors and officers; and (iii) all directors and officers of the Company as a group. As at March 15, 2002 there were 12,873,943 shares of Common Stock issued and outstanding. 14
Name of Shares of Common Approximate Beneficial Stock Beneficially Percentage Owner Owned Owned - ---------------------------------- ------------------- ------------ Officers and Directors - ---------------------- John A.A. James 2055 South Ingalls Way, Lakewood, Colorado U.S.A. 80227-2515 272,870 2.119% Antonino G. Cacace Crud-y-Gloyat Carswell Bay Swansea Wales, U.K. 8,333 * Officers and Directors (2 persons) 281,203 2.184% * Less than 1%.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The proposed business of the Company raises potential conflicts of interests between the Company and certain of its officers and directors. Certain of the directors of the Company are directors of other mineral resource companies and, to the extent that such other companies may participate in ventures in which the Company may participate, the directors of the Company may have a conflict of interest in negotiating and concluding terms regarding the extent of such participation. In the event that such a conflict of interest arises at a meeting of the directors of the Company, a director who has such a conflict will abstain from voting for or against the approval of such participation or such terms. In appropriate cases, the Company will establish a special committee of independent directors to review a matter in which several directors, or Management, may have a conflict. From time to time, several companies may participate in the acquisition, exploration and development of natural resource properties thereby allowing for their participation in larger programs, involvement in a greater number of programs and reduction of the financial exposure with respect to any one program. It may also occur that a particular company will assign all or a portion of its interest in a particular program to another of these companies due to the financial position of the company making the assignment. In determining whether the Company will participate in a particular program and the interest therein to be acquired by it, the directors will primarily consider the potential benefits to the Company, the degree of risk to which the Company may be exposed and its financial position at that time. Other than as indicated, the Company has no other procedures or mechanisms to deal with conflicts of interest. The Company is not aware of the existence of any conflict of interest as described herein. Directors and/or officers will receive expense reimbursement for expenses reasonably incurred on behalf of the Company. Included in accounts payable at December 31, 2001 is $134,374 (2000 - $69,934) due to a director, a former director and a company controlled by a former director in respect of salaries, consulting fees and reimbursement for operating expenses. The Company does not pay a fee to its outside, non-officer directors. The Company believes that consulting fees and reimbursement for operating expenses paid to corporations owned by directors are comparable to amounts that would have been paid to at arms length third party providers of such services. 15 ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K (1) FINANCIAL STATEMENTS - Reference is made to the Financial Statements appearing on pages F-1, through F-37 (2) EXHIBITS - AURORA GOLD CORPORATION 3.1 Certificate of Incorporation* 3.2 Certificate of Amendment to the Certificate of Incorporation* 3.3 Certificate of Restoration and Renewal of Certificate of Incorporation* 3.4 Amended and Restated By-laws* 10.1 Agreement dated July 18, 1997 between The Company and Minera Motagua, S.A.* 10.2 Agreement dated August 16, 1997 between the Company and Minera Motagua, S.A.* 10.3 Agreement dated November 3, 1997 between the Company and Minera Motagua, S.A.* 10.4 Agreement dated July 28, 1998 between the Company and Minera Motagua, S.A.* 10.5 Agreement dated August 24, 1998 with Jorge Mario Rios Munoz. * 10.6 Agreement dated November 18, 1998 between the Company and United Catalyst, Inc. and Getchell Gold Corporation. * 10.7 Agreement dated February 23, 1999 between the Company and Gregory G. Crowe. * 10.8 Option Agreements dated as shown between the Company and High Marsh Holdings Ltd.* 10.8.1 Hamman Zriba/Jebel Guebli October 15, 1999 10.8.2 Koudiat Sidii October 15, 1999 10.8.3 Ouled Moussa (bou Jabeur Est) October 15, 1999 10.8.4 Hammala January 20, 2000 10.8.5 El Mohguer (Garn Halfaya) January 20, 2000 10.8.6 Jebel Oum Edeboua (Garn Halfaya) January 20, 2000 10.9 Joint Venture Agreement between the Company and Patagonia Gold Corporation * 10.10 Letter of Intent between the Company and Billiton UK Resources B.V. * 10.11 January 29, 2001 Subscription Agreement between Aurora Metals (BVI) Limited and Billiton E&D 3 B.V. * 10.12 January 29, 2001 Option Agreement between Aurora Metals (BVI) Limited and Billiton UK Resources B.V. * 21.1 List of subsidiaries of the Registrant. - -------- * Previously Filed 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 thereunder duly authorized. Date: March 22, 2002 BY: /s/ Cameron Richardson ---------------- ------------------------ Cameron Richardson Director and President Date: March 22, 2002 BY: /s/ John A.A. James ---------------- ---------------------- John A.A. James Director and Vice-President 16 EXHIBIT (1) THE FOLLOWING FINANCIAL STATEMENTS REQUIRED TO BE INCLUDED IN ITEM 8 ARE LISTED BELOW INDEX TO CONSOLIDATED FINANCIAL STATEMENTS - December 31, 2001
Financial Statements Page - -------------------------------------------------------------------- ------------ Report of Independent Accountants F-2 Consolidated Balance Sheets F-3 Consolidated Statements of Changes in Stockholders' Equity (Deficit) F-4 Consolidated Statements of Operations F-5 Consolidated Statements of Cash Flows F-6 Summary of Significant Accounting Policies F-7 to F-11 Notes to the Consolidated Financial Statements F-12 to F-19
Financial Statement Schedules * * Financial Statement Schedules have been omitted as not applicable 17 AURORA GOLD CORPORATION AND SUBSIDIARIES (An exploration stage enterprise) Consolidated Financial Statements (EXPRESSED IN U.S. DOLLARS) December 31, 2001 and 2000 INDEX ----- Report of Independent Accountants Consolidated Balance Sheets Consolidated Statement of Stockholders' Deficiency Consolidated Statements of Operations Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements MOORE STEPHENS ELLIS FOSTER LTD. F1 MOORE STEPHENS ELLIS FOSTER LTD. CHARTERED ACCOUNTANTS 1650 West 1st Avenue Vancouver, BC Canada V6J 1G1 Telephone: (604) 734-1112 Facsimile: (604) 714-5916 E-Mail: generaldelivery@ellisfoster.com ------------------------------- Website: www.ellisfoster.com - -------------------------------------------------------------------------------- REPORT OF INDEPENDENT ACCOUNTANTS TO THE BOARD OF DIRECTORS AND STOCKHOLDERS AURORA GOLD CORPORATION AND SUBSIDIARIES (An exploration stage enterprise) We have audited the consolidated balance sheets of AURORA GOLD CORPORATION & ITS SUBSIDIARIES ("the Company") as at December 31, 2001 and 2000 and the consolidated statements of stockholders' deficiency, operations and cash flows and cumulative data from October 10, 1995 to December 31, 2001. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2001 and 2000 and the results of their operations and their cash flows and cumulative data for the years then ended in conformity with generally accepted accounting principles in the United States of America. The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raises substantial doubt about its ability to continue as a going concern. Management's plans concerning these matters are described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Vancouver, Canada "MOORE STEPHENS ELLIS FOSTER LTD." March 7, 2002 Chartered Accountants F2 - -------------------------------------------------------------------------------- MS An independently owned and operated member of Moore Stephens North America, Inc. Members in principal cities throughout North America. Moore Stephens North America, Inc. is a member of Moore Stephens International Limited, members in principal cities throughout the world.
AURORA GOLD CORPORATION & SUBSIDIARIES (An exploration stage enterprise) Consolidated Balance Sheet December 31, 2001 (EXPRESSED IN U.S. DOLLARS) - ---------------------------------------------------------------------------------------- 2001 2000 - ---------------------------------------------------------------------------------------- ASSETS CURRENT Cash $ 92 $ 1,685 Receivables 593 300 Loan receivables (Note 8) - 226,778 Investments 65,050 - - ---------------------------------------------------------------------------------------- TOTAL CURRENT ASSETS 65,735 228,763 FIXED ASSETS (Note 4) 17,225 25,991 - ---------------------------------------------------------------------------------------- TOTAL ASSETS $ 82,960 $ 254,754 ======================================================================================== LIABILITIES AND STOCKHOLDERS' (DEFICIENCY) LIABILITIES CURRENT Accounts payable and accrued liabilities $ 150,617 $ 306,238 Loans payable (Note 6) 323,477 326,267 - ---------------------------------------------------------------------------------------- TOTAL LIABILITIES 474,094 632,505 - ---------------------------------------------------------------------------------------- STOCKHOLDERS' (DEFICIENCY) SHARE CAPITAL Authorized: 50,000,000 common shares, with par value of $0.001 each Issued: 12,873,943 common shares 12,874 12,874 ADDITIONAL PAID-IN CAPITAL 3,271,163 3,271,163 ACCUMULATED (DEFICIT) (3,533,243) (3,661,788) ACCUMULATED OTHER COMPREHENSIVE (LOSS) Unrealized loss on securities available for sale (141,928) - - ---------------------------------------------------------------------------------------- STOCKHOLDERS' (DEFICIENCY) (391,134) (377,751) - ---------------------------------------------------------------------------------------- TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIENCY) $ 82,960 $ 254,754 ========================================================================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. MOORE STEPHENS ELLIS FOSTER LTD. F3
AURORA GOLD CORPORATION & SUBSIDIARIES (An exploration stage enterprise) Consolidated Statement of Stockholders' Deficiency January 1, 2000 to December 31, 2001 (EXPRESSED IN U.S. DOLLARS) - --------------------------------------------------------------------------------------------------------------------------- Advances Compre- Accumulated Total stock- Additional for stock hensive other holders' Common Stock paid-in sub- income Accumulated comprehensive equity Shares Amount capital scriptions (loss) deficit income (loss)(deficiency) - --------------------------------------------------------------------------------------------------------------------------- BALANCE, January 1, 2000 11,460,649 $11,461 $2,484,219 $ 425,000 $(2,984,083) $ (63,403) Issuance of common stock: For cash in March 2000 at $0.50 per share 350,000 350 174,650 (175,000) - - For cash in March 2000 at $0.455 per share 550,000 550 249,450 (250,000) - - For settlement of indebtedness (Note 9) 199,000 199 99,301 - - 99,500 Cancellation of shares in April 2000 (90,706) (91) (56,600) - - (56,691) Exercise of options in June 2000 405,000 405 3,645 - - 4,050 Spin-off of AML (Note 8) 316,498 Net (loss) for the year (677,705) (677,705) - --------------------------------------------------------------------------------------------------------------------------- BALANCE, December 31, 2000 12,873,943 12,874 3,271,163 - (3,661,788) (377,751) Net (loss) for the year 128,545 128,545 128,545 Change in unrealized investment gains (losses) (141,928) (141,928) (141,928) - --------------------------------------------------------------------------------------------------------------------------- Total comprehensive gain (loss) $(13,383) ============= BALANCE, December 31, 2001 12,873,943 $12,874 $3,271,163 $ - $(3,533,243) $(141,928) $(391,134) ========================================================================== ====================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. MOORE STEPHENS ELLIS FOSTER LTD. F4
AURORA GOLD CORPORATION & SUBSIDIARIES (An exploration stage enterprise) Consolidated Statement of Operations (EXPRESSED IN U.S. DOLLARS) - ---------------------------------------------------------------------------------------- Cumulative October 10 Year Year 1995 (inception) Ended Ended to December 31 December 31 December 31 2001 2001 2000 - ---------------------------------------------------------------------------------------- GENERAL AND ADMINISTRATIVE EXPENSES Depreciation and amortization $ 35,220 $ 8,766 $ 4,592 Interest, bank charges and foreign exchange 40,835 1,674 2,768 Administrative and general 610,066 15,497 129,840 Professional fees - accounting and legal 340,949 10,039 11,692 Salaries and consulting fees 852,657 51,527 68,946 - ---------------------------------------------------------------------------------------- 1,879,727 87,503 217,838 EXPLORATION EXPENSES 1,402,749 620 109,054 WRITEOFF OF MINERAL PROPERTY COSTS 172,981 - 133,571 - ---------------------------------------------------------------------------------------- 3,455,457 88,123 460,463 - ---------------------------------------------------------------------------------------- OTHER INCOME (LOSS) Gain on disposition of subsidiary (Note 7) 216,474 216,474 - Interest income 22,338 194 614 Operating loss of Spun-off operations (Note 8) (316,598) - (217,856) - ---------------------------------------------------------------------------------------- (77,786) 216,668 (217,242) - ---------------------------------------------------------------------------------------- NET INCOME (LOSS) FOR THE PERIOD $ (3,533,243) $ 128,545 $ (677,705) ======================================================================================== (LOSS) PER SHARE, basic and diluted $ (0.01) $ (0.06) ======================================================================================== WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - basic and diluted 12,873,943 12,014,298 ========================================================================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. MOORE STEPHENS ELLIS FOSTER LTD. F5
AURORA GOLD CORPORATION & SUBSIDIARIES (An exploration stage enterprise) Consolidated Statement of Cash Flows (EXPRESSED IN U.S. DOLLARS) - ----------------------------------------------------------------------------------------- Cumulative October 10 Year Year 1995 (inception) Ended Ended to December 31 December 31 December 31 2001 2001 2000 - ----------------------------------------------------------------------------------------- CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES Net income (loss) for the period (Note 7) $ (3,533,243) $ 128,545 $(677,705) Adjustments to reconcile net loss to net cash used in operating activities: - depreciation and amortization 35,220 8,766 4,592 - compensation on stock options 720,500 - - - expenses satisfied with common stocks 292,200 - 42,809 - writeoff of mineral property costs 172,981 - 133,571 - adjustment for spin-off of AML (Note 8) 316,498 - 316,498 - ----------------------------------------------------------------------------------------- (1,995,844) 137,311 (180,235) Changes in assets and liabilities: - decrease (increase) in receivables (593) 226,485 (227,078) - decrease (increase) in accounts payable 474,094 (158,411) 418,422 - ----------------------------------------------------------------------------------------- (1,522,343) 205,385 11,109 - ----------------------------------------------------------------------------------------- CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES Purchase of fixed assets (55,383) - (30,583) Proceeds on disposal of fixed assets 14,449 - - Mineral property costs (172,981) - 15,000 Incorporation cost (11,511) - - Purchase of available for sale securities (206,978) (206,978) - - ----------------------------------------------------------------------------------------- (432,404) (206,978) (15,583) - ----------------------------------------------------------------------------------------- CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES Proceeds from issuance of common stocks and stock subscription receipts 1,954,839 - 4,050 - ----------------------------------------------------------------------------------------- INCREASE (DECREASE) IN CASH FOR THE PERIOD 92 (1,593) (424) CASH AND CASH EQUIVALENTS, beginning of period - 1,685 2,109 - ----------------------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS, end of period $ 92 $ 92 $ 1,685 =========================================================================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. MOORE STEPHENS ELLIS FOSTER LTD. F6 AURORA GOLD CORPORATION & SUBSIDIARIES (An exploration stage enterprise) Notes to Consolidated Financial Statements December 31, 2001 and 2000 (EXPRESSED IN U.S. DOLLARS) - -------------------------------------------------------------------------------- 1. NATURE OF BUSINESS AND CONTINUANCE OF OPERATIONS The Company was formed on October 10, 1995 under the laws of the State of Delaware and is in the business of location, acquisition, exploration and, if warranted, development of mineral properties. The Company has not yet determined whether its properties contain mineral reserves that may be economically recoverable. These consolidated financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The general business strategy of the Company is to acquire mineral properties either directly or through the acquisition of operating entities. The continued operations of the Company and the recoverability of mineral property costs is dependent upon the existence of economically recoverable mineral reserves, confirmation of the Company's interest in the underlying mineral claims, the ability of the Company to obtain necessary financing to complete the development and upon future profitable production. The Company has incurred recurring operating losses and requires additional funds to meet its obligations and maintain its operations. Management's plans in this regard are to raise equity financing as required. These conditions raise substantial doubt about the Company's ability to continue as a going concern. These financial statements do not include any adjustments that might result from this uncertainty. The Company has not generated any operating revenues to date. 2. SIGNIFICANT ACCOUNTING POLICIES (a) Basis of Consolidation These consolidated financial statements are stated in US dollars and have been prepared in accordance with accounting principles generally accepted in the United States of America and include the accounts of the Company and its wholly-owned Guatamalan subsidiary Aurora Gold, S.A. All inter-company transactions and balances have been eliminated. (b) Accounting Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and assumptions. MOORE STEPHENS ELLIS FOSTER LTD. F7 AURORA GOLD CORPORATION & SUBSIDIARIES (An exploration stage enterprise) Notes to Consolidated Financial Statements December 31, 2001 and 2000 (EXPRESSED IN U.S. DOLLARS) - -------------------------------------------------------------------------------- 2. SIGNIFICANT ACCOUNTING POLICIES (continued) (c) Cash Equivalents Cash equivalents comprise certain highly liquid instruments with a maturity of three months or less when purchased. There were no cash equivalents as of December 31, 2001 and 2000. (d) Fixed Assets Depreciation is based on the estimated useful lives of the assets and is computed using the straight-line method. Fixed assets are recorded at cost. Depreciation is provided over the following useful lives: Computer equipment 2 years Telecommunication equipment 5 years Office equipment 5 years (e) Mineral Properties and Exploration Expenses Exploration costs are charged to operations as incurred until such time that proven reserves are discovered. From that time forward, the Company will capitalize all costs to the extent that future cash flow from mineral reserves equals or exceeds the costs deferred. The deferred costs will be amortized over the recoverable reserves when a property reaches commercial production. As at December 31, 2001 and 2000, the Company did not have proven reserves. Costs of initial acquisition of mineral rights and concessions are capitalized until the properties are abandoned or the right expires. Exploration activities conducted jointly with others are reflected at the Company's proportionate interest in such activities. Costs related to site restoration programs are accrued over the life of the project. (f) Stock-Based Compensation The Company applies Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees", and related interpretations in accounting for stock option plans. Under APB No. 25, compensation cost is recognized for stock options granted at prices below the market price of the underlying common stock on the date of grant. SFAS No. 123, "Accounting for Stock-Based Compensation", requires the Company to provide pro-forma information regarding net income as if compensation cost for the Company's stock option plan had been determined in accordance with the fair value based method prescribed in SFAS No. 123. MOORE STEPHENS ELLIS FOSTER LTD. F8 AURORA GOLD CORPORATION & SUBSIDIARIES (An exploration stage enterprise) Notes to Consolidated Financial Statements December 31, 2001 and 2000 (EXPRESSED IN U.S. DOLLARS) - -------------------------------------------------------------------------------- 2. SIGNIFICANT ACCOUNTING POLICIES (continued) (g) Advertising Expenses The Company expenses advertising costs as incurred. There were no advertising expenses incurred by the Company for the periods ended December 31, 2001 and 2000. (h) Foreign Currency Transactions Foreign currency accounts are translated into U.S. Dollars. At the transaction date, each asset, liability, revenue and expense is translated into U.S. dollars by the use of the exchange rate in effect at that date. At the period end, monetary assets and liabilities are translated into U.S. dollars by using the exchange rate in effect at that date. The resulting foreign exchange gains and losses are included in operations. (i) Concentration of Credit Risk The Company places its cash and cash equivalents with high credit quality financial institutions. The Company routinely maintains balances in a financial institution beyond the insured amount. As of December 31, 2001 and 2000, the Company has no deposit in a bank beyond insured limits. (j) Long-Lived Assets Impairment Certain long-term assets of the Company are reviewed when changes in circumstances require as to whether their carrying value has become impaired, pursuant to guidance established in Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for the impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of". Management considers assets to be impaired if the carrying value exceeds the future projected cash flows from related operations (undiscounted and without interest charges). If impairment is deemed to exist, the assets will be written down to fair value. (k) Fair Value of Financial Instruments The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash, receivables, loan receivable, accounts payable and accrued liabilities and loan payables. Fair values were assumed to approximate carrying values for these financial instruments, except where noted, since they are short term in nature and their carrying amounts approximate fair values or they are receivable or payable on demand. Management is of the opinion that the Company is not exposed to significant interest, credit or currency risks arising from these financial instruments. MOORE STEPHENS ELLIS FOSTER LTD. F9 AURORA GOLD CORPORATION & SUBSIDIARIES (An exploration stage enterprise) Notes to Consolidated Financial Statements December 31, 2001 and 2000 (EXPRESSED IN U.S. DOLLARS) - -------------------------------------------------------------------------------- 2. SIGNIFICANT ACCOUNTING POLICIES (continued) (l) Accounting for Derivative Instruments and Hedging Activities In June 1998, the Financial Accounting Standards Board issued SFAS No. 133 "Accounting for Derivative Instruments and Hedging Activities". SFAS No. 133 requires companies to recognize all derivative contracts as either assets or liabilities in the balance sheet and to measure them at fair value. If certain conditions are met, a derivative may be specifically designated as a hedge, the objective of which is to match the timing of gain or loss recognition on the hedging derivative with the recognition of (i) the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk or (ii) the designated as a hedging instrument, the gain or loss is recognized in income in the period of change. SFAS No. 133 is effective for all fiscal quarters of fiscal years beginning after June 15, 2000. Historically, the Company has not entered into derivative contracts either to hedge existing risks or for speculative purposes. The Company does not anticipate that the adoption of the statement will have a significant impact on its financial statements. (m) Income Taxes The Company has adopted Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting for income Taxes", which requires the Company to recognize deferred tax liabilities and assets for the expected future tax consequences of events that have been recognized in the Company's financial statements or tax returns using the liability method. Under this method, deferred tax liabilities and assets are determined based on the differences between the financial statement carry amounts and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. (n) Loss Per Share Loss per share is computed using the weighted average number of shares outstanding during the year. Effective for the year ended December 31, 1997, the Company adopted SFAS No. 128, "Earnings Per Share". Diluted loss per share is equivalent to basic loss per share. (o) Comprehensive Income The Company adopted SFAS No. 130, "Reporting Comprehensive Income", which establishes standards for reporting and display of comprehensive income, its components and accumulated balances. The Company is disclosing this information on its Statement of Stockholders' Equity. Comprehensive income comprises equity except those resulting from investments by owners and distributions to owners. SFAS No. 130 did not change the current accounting treatments for components of comprehensive income. MOORE STEPHENS ELLIS FOSTER LTD. F10 AURORA GOLD CORPORATION & SUBSIDIARIES (An exploration stage enterprise) Notes to Consolidated Financial Statements December 31, 2001 and 2000 (EXPRESSED IN U.S. DOLLARS) - -------------------------------------------------------------------------------- 2. SIGNIFICANT ACCOUNTING POLICIES (continued) (p) New Accounting Pronouncements In June 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 141 (SFAS 141), Business Combinations. SFAS 141 applies to all business combinations initated after June 30, 2001. The SFAS 141 applies to all business combinations accounted for using the purchase method for which the date of acquisition is July 1, 2001, or later. The adoption of SFAS 141 will not have an impact on the Company's financial statements. In June 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 142 (SFAS 142), Goodwill and Other Intangible Assets. The provisions of SFAS 142 are required to be applied starting with fiscal years beginning after December 15, 2001 with earlier application permitted for entities with fiscal years beginning after March 15, 2001 provided that the first interim financial statements have not been previously issued. The Statement is required to be applied at the beginning of the entity's fiscal year and to be applied to all goodwill and other intangible assets recognized in its financial statements to that date. The adoption of SFAS 142 will not have an impact on the Company's financial statements. In August 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 143 (SFAS 143), Asset Retirement Obligations. SFAS 143 establishes accounting standards for recognition and measurement of a liability for the costs of assets retirement obligations. Under SFAS 143, the costs of retiring an asset will be recorded as a liability when the retirement obligation arises and will be amortized to expense over the life of the asset. The adoption of SFAS 143 will not have an impact on the Company's financial statements. In October, 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 144 (SFAS 144), Accounting for the Impairment or Disposal of Long-lived Assets. SFAS 144 supersedes SFAS 121, Accounting for the Impairment of Long-lived Assets and Long-lived Assets to be Disposed Of, and APB Opinion 30, Reporting the Results of Operations - Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions, for segments of a business to be disposed of. SFAS 144 is effective for fiscal years beginning after December 15, 2001. The adoption of SFAS 144 will not have an impact on the Company's financial statements. MOORE STEPHENS ELLIS FOSTER LTD. F11 AURORA GOLD CORPORATION & SUBSIDIARIES (An exploration stage enterprise) Notes to Consolidated Financial Statements December 31, 2001 and 2000 (EXPRESSED IN U.S. DOLLARS) - -------------------------------------------------------------------------------- 3. INVESTMENTS Investments consist of available-for-sale securities and are summarized as follows: - -------------------------------------------------------------------------------- Gross Gross Accumulated unrealized unrealized unrealized Market Cost gains losses losses value - -------------------------------------------------------------------------------- January 1, 2001 $ - $ - $ - $ - $ - Change during the year 206,978 - (141,928) (141,928) 65,050 - -------------------------------------------------------------------------------- December 31, 2001 $206,978 $ - $(141,928) $(141,928) $ 65,050 ================================================================================ 4. FIXED ASSETS - ---------------------------------------------------------------- 2001 2000 - ---------------------------------------------------------------- Computer equipment $ 15,125 $ 15,125 Telecommunication equipment 1,875 1,875 Office equipment 13,583 13,583 - ---------------------------------------------------------------- 30,583 30,583 Accumulated depreciation and amortization (13,358) (4,592) - ---------------------------------------------------------------- $ 17,225 $ 25,991 ================================================================ MOORE STEPHENS ELLIS FOSTER LTD. F12 AURORA GOLD CORPORATION & SUBSIDIARIES (An exploration stage enterprise) Notes to Consolidated Financial Statements December 31, 2001 and 2000 (EXPRESSED IN U.S. DOLLARS) - -------------------------------------------------------------------------------- 5. MINERAL PROPERTIES AND EXPLORATION EXPENSES (a) Guatemala, Central America During 1998, the Company made application to the Guatemalan government for fifteen mineral exploration licenses and one mineral reconnaissance license, of which ten mineral exploration licenses were granted during 1998. At December 31, 1998, applications for five mineral exploration licenses and one mineral reconnaissance license were awaiting government approval. As a consequence of the results of the geological reconnaissance, sampling of rock outcrops and stream sediment sampling which was carried out in 1998 and the first quarter of 1999, the Company decided to surrender six exploration licenses (January, 1999) and withdraw four applications (February, 1999). At December 31, 2001 and 2000, the Company retains five mineral exploration licenses and one mineral reconnaissance license. In order to maintain these licences in good standing, the Company has to make annual fee payments and submit technical reports of activities carried out on the concessions. Each distinct mineral deposit per mineral concession acquired by the Company will be subject to a Net Smelter Return ("NSR") royalty equal to 1% of the NSR royalty payable to the Government of Guatemala. In fiscal year 2000, there were no proven mineral reserves discovered and the Company continuously operates with a working capital deficiency. These conditions raised substantial doubt regarding the recovering of the capitalized acquisition cost. Therefore, pursuant to guidance established in Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-live Assets and for Long-lived Assets to be Disposed of", the Company wrote off the capitalized acquisition cost of $103,941 to operations. In fiscal year 2001, the Company failed to make the annual fee payment and submit technical reports of activities carried out on the concessions and, therefore, the remaining five mineral exploration licences and one mineral reconnaissance licence were forfeited. MOORE STEPHENS ELLIS FOSTER LTD. F13 AURORA GOLD CORPORATION & SUBSIDIARIES (An exploration stage enterprise) Notes to Consolidated Financial Statements December 31, 2001 and 2000 (EXPRESSED IN U.S. DOLLARS) - -------------------------------------------------------------------------------- 5. MINERAL PROPERTIES AND EXPLORATION EXPENSES (continued) (b) Totem Talc Property, Washington, U.S.A An Option Agreement, dated November 18, 1998, was established between the Company and joint venture owners of the Totem Talc property. The Totem Talc property consists of 10 unpatented lode claims covering approximately 206 acres and is located near Metalline Falls in Pend Oreille County, Washington, approximately 100 miles north of Spokane. The agreement calls for the Company to pay the Joint Venture $5,000 on or before May 18, 1999 in addition to the initial payment of $1,000 already made. The Company committed to expenditures of $10,000 by July 18, 1999 and an additional $50,000 by November 18, 1999 on further development of the project through market studies, geological and engineering work, claims maintenance and the like. The Company is committed to pay the Joint Venture a further total of $400,000 commencing with $100,000 on December 15, 1999 and subsequent payments of $100,000 on December 15, 2000 and $200,000 on December 15, 2001. The Company has not complied with the expenditure requirements for 1999 and has not made the required option payments on December 15, 1999. The Company is seeking modification to the exploration commitments and the schedule of option payments. In fiscal year 2000, the Company failed to make the option payments and exploration commitments, and, therefore, the joint ownership of Totem Talc property was forfeited. The Company wrote off capitalized acquisition cost of $6,000 to operations. (c) British Columbia, Canada - Kumealon Property In February 1999, the Company acquired, by staking, a 741 acre limestone property located on the north shore of Kumealon Inlet, southeast of Prince Rupert, British Columbia, Canada. A finder's fee of 25,000 shares of common stock was paid in connection with these claims. In fiscal year 2000, there were no proven mineral reserves discovered and the Company continuously operates with a working capital deficiency. These conditions raised substantial doubt regarding the recovering of the capitalized acquisition cost. Therefore, pursuant to guidance established in Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-live Assets and for Long-lived Assets to be Disposed of", the Company wrote off the capitalized acquisition cost of $23,630 to operations. MOORE STEPHENS ELLIS FOSTER LTD. F14 AURORA GOLD CORPORATION & SUBSIDIARIES (An exploration stage enterprise) Notes to Consolidated Financial Statements December 31, 2001 and 2000 (EXPRESSED IN U.S. DOLLARS) - -------------------------------------------------------------------------------- 5. MINERAL PROPERTIES AND EXPLORATION EXPENSES (continued) (d) Yukon Territory, Canada In May and June 1999, the Company acquired, by staking, 100% interest in five gold exploration properties covering approximately 240 square kilometres in the Yukon's Tintina Gold Belt. The properties are known as Carlisle Creek, Independence Creek, Livingstone Creek North, Sonora West and White River. Permits on the properties expire between April 2001 and June 2003, but are subject to renewal. In fiscal year 2001, the Company disposed of its wholly-owned subsidiary which holds these properties. 6. LOANS PAYABLE The loans are payable to companies related by common management. They are unsecured, non-interest bearing and due on demand. 7. DISPOSITION OF A SUBSIDIARY In fiscal year 2001, the Company disposed of its wholly-owned subsidiary Deltango Gold Limited ("Deltango") for $Nil consideration. As at the date of disposition, Deltango had a stockholder's deficiency of $476,038; $259,564 of which was funded by the Company, with the balance of $216,474 being funded by other creditors. Since the debt due to other creditors was assumed by the purchaser, the Company recorded a gain on recovery of exploration costs expensed previously. 8. SPIN-OFF OF AURORA METALS (BVI) LIMITED ("AML") In fiscal year 2000, the Company spun off its wholly-owned subsidiary Aurora Metals (BVI) Limited in a stock dividend distribution to the Company's stockholders. Each stockholder of the Company received one share of AML (13,000,000 common shares issued and outstanding) common stock for each share of the Company's stock (12,873,943 common shares issued and outstanding) held on the record date of June 15, 2000. In fiscal year 2001, the Company completed the spin off. The Company returned the remaining 126,057 (13,000,000 - 12,873,943) common shares of AML back to AML for cancellation. MOORE STEPHENS ELLIS FOSTER LTD. F15 AURORA GOLD CORPORATION & SUBSIDIARIES (An exploration stage enterprise) Notes to Consolidated Financial Statements December 31, 2001 and 2000 (EXPRESSED IN U.S. DOLLARS) - -------------------------------------------------------------------------------- 8. SPIN-OFF OF AURORA METALS (BVI) LIMITED ("AML") (continued) The Consolidated Financial Statements for the year ended at December 31, 2001 and 2000 of the Company have been prepared to reflect the spin-off of AML at book value. Accordingly, expenses and cash flows of AML spun off have been segregated in the Consolidated Statements of Operations and Cash Flows for the years then ended. The historical carrying amount of the net deficiency transferred to AML on the spin-off date (net of initial investment of $100) has been recorded as additional paid-in capital of $316,498. Included in the net deficiency transferred at June 15, 2000 was a $226,778 of loan owed to the Company by AML. The effect of the transfer are reflected in the Consolidated Balance Sheet. Following is the summarized financial information for the Spun-off operations: -------------------------------------------------------------------------- Cumulative from From January 1 June 17, 1997 2000 (inception of AML) to June 15 to June 15, 2000 2000 -------------------------------------------------------------------------- General and administrative expenses $ 51,880 $ 46,500 Exploration expenses 264,718 171,356 -------------------------------------------------------------------------- Operating Loss $ 316,598 $ 217,856 -------------------------------------------------------------------------- -------------------------------------------------------------------------- June 15 2000 -------------------------------------------------------------------------- Total assets $ 500 Total liabilities (317,098) -------------------------------------------------------------------------- Net deficiency of AML $ (316,598) -------------------------------------------------------------------------- MOORE STEPHENS ELLIS FOSTER LTD. F16 AURORA GOLD CORPORATION & SUBSIDIARIES (An exploration stage enterprise) Notes to Consolidated Financial Statements December 31, 2001 and 2000 (EXPRESSED IN U.S. DOLLARS) - -------------------------------------------------------------------------------- 9. STOCK OPTIONS In 1997, the Company's Board of Director approved a stock options plan ("the Plan") to offer an inducement to obtain services of key employees, directors and consultants of the Company. The maximum number of shares issuable under the Plan in any calendar year shall be an amount equal to 15% of the issued and outstanding common stock on January 1 of each year. Under the Plan, the exercise price of an incentive stock option must be at least equal to 100% of the fair market value of the common stock on the date of grant (110% of fair market value in the case of options granted to employees who hold more than 10% of the company's capital stock on the date of grant). The exercise price of a non-qualified stock option must not be less than the par value of a share of the common stock on the date of the grant. The term of an incentive or non-qualified stock option is not to exceed five years. A summary of the status of the Company's stock options as of December 31, 2001 and 2000 and the changes during the years then ended is as follows: -------------------------------------------------------------------------- Weighted Weighted Average Average Number Exercise Fair of Options Price Value -------------------------------------------------------------------------- Outstanding and exercisable, December 31, 1999 1,405,000 $ 0.48 -------------------------------------------------------------------------- Exercised 405,000 $ 0.48 Cancelled 1,000,000 $ 0.48 -------------------------------------------------------------------------- Outstanding and exercisable, December 31, 2001 and 2000 - $ - -------------------------------------------------------------------------- There were no stock options granted during the year and there is no pro-forma effect in the net loss for the period and loss per share. MOORE STEPHENS ELLIS FOSTER LTD. F17 AURORA GOLD CORPORATION & SUBSIDIARIES (An exploration stage enterprise) Notes to Consolidated Financial Statements December 31, 2001 and 2000 (EXPRESSED IN U.S. DOLLARS) - -------------------------------------------------------------------------------- 10. RELATED PARTY TRANSACTIONS Related party transactions not disclosed elsewhere in these financial statements: (a) Included in accounts payable is $134,374 (2000 - $69,934) due to a director, a former director and a company controlled by the former director in respect of salaries, consulting fees and reimbursement for expenses. (b) During the year, salaries and consulting fees of $36,186 (2000 - $174,492) were paid or are payable to a director and a former director. (c) In January 2000, fixed assets of $14,449 sold to a director at their book value were purchased back by the Company at their sold book value. Except as otherwise noted, these transactions are recorded at the exchange amount, being the value established and agreed to by the related parties. 11. NON-CASH INVESTING AND FINANCING ACTIVITIES In 2000, the Company settled various debts with the issuance of shares of common stock as follows: -------------------------------------------------------------------------- FISCAL YEAR 2000 Conversion Month of Settlement Indebtedness Price Shares -------------------------------------------------------------------------- February $ 35,000 $ 0.50 70,000 April 20,000 0.50 40,000 April 40,000 0.50 80,000 May 4,500 0.50 9,000 ------------- -------- $ 99,500 199,000 ============= ======== The carrying value of the indebtedness approximated the fair value of the common shares issued. Indebtedness of directors totalling $35,000 was settled in 2000 with the issuance of 70,000 shares of common stock. MOORE STEPHENS ELLIS FOSTER LTD. F18 AURORA GOLD CORPORATION & SUBSIDIARIES (An exploration stage enterprise) Notes to Consolidated Financial Statements December 31, 2001 and 2000 (EXPRESSED IN U.S. DOLLARS) - -------------------------------------------------------------------------------- 12. INCOME TAXES (a) The Company has net losses for tax purposes totalling approximately $2,471,000 which may be applied against future taxable income. Accordingly, there is no tax expense for the years ended December 31, 2001 and 2000. The potential tax benefits arising from these losses have not been recorded in the financial statements. The Company evaluates its valuation allowance requirements on an annual basis based on projected future operations. When circumstances change and this causes a change in management's judgement about the realizability of deferred tax assets, the impact of the change on the valuation allowance is reflected in current operations. The right to claim these losses expires as follows: ---------------------------------------------- 2011 $ 231,000 2012 564,000 2018 331,000 2019 795,000 2020 550,000 ---------------------------------------------- $2,471,000 ============================================== (b) The tax effects of temporary difference that give rise to the Company's deferred tax asset are as follows: -------------------------------------------------------------------- 2001 2000 -------------------------------------------------------------------- Tax loss carryforwards $ 865,000 $ 923,000 Valuation allowance (865,000) (923,000) -------------------------------------------------------------------- $ - $ - ==================================================================== No tax effect has been recorded on the accumulated other comprehensive loss on unrealized loss on securities available-for-sale due to the existence of U.S. tax loss carryforwards. 13. CUMULATIVE FIGURES Certain cumulative figures have been reclassified to conform with the financial statement presentation adopted for 2001. MOORE STEPHENS ELLIS FOSTER LTD. F19 EX-21.1 3 doc2.txt EXHIBIT 21.1 SUBSIDIARIES OF THE COMPANY SUBSIDIARIES OF THE COMPANY
Percentage of Voting ----------------------------- Name Jurisdiction of Incorporation Securities Owned - ------------------ ----------------------------- ----------------- Aurora Gold, S. A. Guatemala 100 (a) (a) Included in the consolidated financial statements filed herein.
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