SCOTTSDALE, Ariz., June 24, 2004 (PRIMEZONE) -- After careful review and consideration, and pursuant to the GoldSpring, Inc.'s (OTCBB:GSPG) recent S-1 filing, the Company has elected to treat the original transaction between GoldSpring, Inc. and Ecovery, Inc. as a reverse merger and not as a business combination from an accounting standpoint. Accordingly, the Company has filed amendments to its 8K originally filed July 3, 2003, its 10KSB for December 31, 2003, the S-1 filed April 21, 2004 and its recent 10QSB filed May 17, 2004 that restate the financial statements to reflect the accounting treatment change for recording this transaction.
At the time of the transaction, the Company adopted the business combination accounting treatment to record this transaction, whereby the market value of the common stock exchanged for the assets plus the book value of the assets acquired were used to determine the valuation of the transaction. Employing this accounting treatment, the Company recorded approximately $8.9 million of goodwill, an intangible asset. After considering such factors as: (1) the change in control of the Company based on the number of GoldSpring shares issued to the Ecovery shareholders in the transaction; (2) effective the date of the transaction, the sole officer and director of the Company resigned; and (3) the Company, GoldSpring, Inc., had no operations prior to the Transaction, the Company and its independent auditors concluded that the reverse merger accounting treatment more accurately reflects the nature of this transaction. Under the reverse merger accounting treatment, historical asset values (book value of the assets) are utilized to determine the valuation of the transaction. Accordingly, no goodwill is generated with this transaction. This more conservative accounting treatment has no impact on the results of operations of the Company and the Company continues to meet the published listing requirements established by the American Stock Exchange (AMEX). The Balance Sheet attached below reflects the new treatment.
The elimination of this intangible asset by restatement at this time, prior to the AMEX listing, should simplify our financial presentation going forward. Our plans for rapid corporate growth through acquisition will add substantial additional mining assets and reserves, which are both tangible in nature.
PLUM MINING UPDATE: Mining operations at Plum have resumed with N.A. Degerstrom operating the drilling, blasting, mining , hauling, crushing, agglomerating of ore and heap leach pad loading. Operations will be balanced over the next couple of weeks so that a constant feed of 400tons/hour will be loaded on the leach pad. While complete leach recovery will take several months to accomplish, the gross value added to the heap per hour will be around $8,000, or $80,000 per 10 hour shift. These revenues will be recovered over the next two quarters for solid positive cash flow from operations for 2004.
GoldSpring is focused on production and rapid growth. Current in-ground reported reserves total approximately: Gold: 1.35 Million oz., Silver: 3.7 Million oz., and Copper: 25 Million lbs., Iron Ore: 1.2 billion tons. The Company's plan is to increase In-Ground Reserves to over 3 million ounces of gold equivalent in 2004 through acquisitions and exploration of existing properties.
Further information will be forthcoming regarding acquisitions in progress, the pending AMEX listing application and feasibility information on the iron project when available for publication.
GOLDSPRING, INC.
CONSOLIDATED BALANCE SHEET
As of March 31, 2004
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 8,011,819
Other current assets $ 78,374
Investment (Gold) $ 504,000
Inventory - $ 869,920
Deferred tax benefit $ 1,420,000
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TOTAL CURRENT ASSETS 10,884,113
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PLANT, EQUIPMENT AND MINERAL PROPERITES, NET
Mineral Properties $ 5,984,837
Plant and equipment $ 1,486,284
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TOTAL PROPERTY AND EQUIPMENT 7,471,121
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OTHER ASSETS:
Reclamation deposit $ 145,000
Equipment purchase deposit $ 100,000
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TOTAL ASSETS $18,600,234
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts Payable $ 346,496
Accrued Expenses $ 302,718
Current portion of long-term debt
- related party $ 400,000
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TOTAL CURRENT LIABILITIES 1,049,214
LONG-TERM DEBT - RELATED PARTY,
NET OF CURRENT PORTION $ 500,000
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TOTAL LIABILITIES 1,549,214
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STOCKHOLDERS' EQUITY
Convertible redeemable preferred stock,
$100 par value, 150,000 authorized,
46,500 issued and outstanding $ 4,650,000
Common stock, $.000666 par value,
500,000,000 shares authorized,
194,992,911 shares issued and outstanding $ 129,777
Additional Paid-in Capital $15,930,019
Accumulated deficit - Prior Years $(3,705,019)
Accumulated Earnings - Current Year $ 45,870
TOTAL STOCKHOLDERS' EQUITY $17,051,020
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TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $18,600,234
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Statements contained in this press release, which are not historical facts, are forward looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based largely on the Company's expectations and are subject to a number of risks and uncertainties beyond the company's control, including but not limited to economic, competitive and other factors affecting the Company's operations, management team effectiveness, expansion strategies, available financing, market prices and recovery costs, government regulations involving the Company, facts and events not known at the time of this release, and other factors discussed in the Company's filings with the Securities and Exchange Commission. These statements are not guarantees of future performance and readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. The Company undertakes no obligation to update publicly any forward-looking statements.