-----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, UvztHzuceQLRLdZODCHB5wsM74M+ycKA6lYIuvRQfQL+dCkcR+JNcTY4BwTZ7B1M 5BSXEBZhzMxS0eMVZTniow== 0000914233-97-000136.txt : 19970912 0000914233-97-000136.hdr.sgml : 19970911 ACCESSION NUMBER: 0000914233-97-000136 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970828 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: LA TEKO RESOURCES LTD CENTRAL INDEX KEY: 0000357281 STANDARD INDUSTRIAL CLASSIFICATION: GOLD & SILVER ORES [1040] IRS NUMBER: 870483319 STATE OF INCORPORATION: A1 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-10104 FILM NUMBER: 97671525 BUSINESS ADDRESS: STREET 1: 625 HOWE ST STREET 2: STE 500 CITY: VANCOUVER, B.C. STATE: A1 ZIP: 84101 BUSINESS PHONE: 6046880833 MAIL ADDRESS: STREET 1: 180 EAST 2100 SOUTH STREET 2: STE 204 CITY: SALT LAKE CITY STATE: UT ZIP: 84115 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q {X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1997 Commission file number 0-10104 LA TEKO RESOURCES LTD. ---------------------------------------------------- (Exact name of Registrant as specified in its charter) British Columbia, Canada 87-0483319 ------------------------------- ----------------- (State or other Jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 625 Howe St., #500 Vancouver, B.C. V6C 2T6 ------------------------------------- ------------------ (Address of principal executive offices) (Zip Code) (604) 688-0833 -------------------------------------------------- (Registrant's telephone number, including area code) N/A ------------------------------------------------------------------------ Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes X No As of June 30, 1997, the registrant had 23,467,358 shares of its common stock issued and outstanding. LA TEKO RESOURCES LTD. Financial Information - ------------------------------------------------------------------------------- ITEM 1. FINANCIAL STATEMENTS - ------------------------------------------------------------------------------- The unaudited financial statements presented herein have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and note disclosures required by generally accepted accounting principles. These statements should be read in conjunction with the financial statements and notes thereto included in the Company's annual report on Form 10- K for the year ended December 31, 1996. The accompanying financial statements have not been examined by independent accountants in accordance with generally accepted auditing standards, but in the opinion of management such financial statements include all adjustments (consisting only of normal recurring adjustments) necessary to summarize fairly the Company's financial position and results of operations. LA TEKO RESOURCES LTD. CONSOLIDATED STATEMENTS OF OPERATIONS (EXPRESSED IN U.S. DOLLARS) SIX MONTHS ENDED JUNE 30, 1997 (Unaudited) 1997 1996 -------- -------- EXPENSES General and administrative expenses 561,476 526,755 Operating and mine maintenance costs 101,286 105,333 Royalty and lease 75,000 75,000 Depreciation 28,564 26,797 New prospect evaluation -- 39,333 766,326 773,218 -------- -------- Loss from operations before other items (6,326) (773,218) -------- -------- OTHER ITEMS Interest income 46,301 -- Gain on sale of equipment 1,581 7,407 Loss on abandonment of furnishings and equipment (4,505) 7,447 --------- --------- NET LOSS $ (722,949) (758,364) ========= ========= LA TEKO RESOURCES LTD. CONSOLIDATED BALANCE SHEET (EXPRESSED IN U.S. DOLLARS) JUNE 30, 1997 (Unaudited) 1997 1996 -------- -------- CURRENT ASSETS Cash and short-term deposits$ $ 1,642,830 $ 2,142,038 Accounts receivable 19,579 53,084 Inventories 3,148 6,295 Prepaid expenses 102,635 89,889 ---------- ---------- Total current assets 1,768,192 2,291,306 ---------- ---------- Mineral properties and deferred costs 10,736,199 10,292,061 Plant and equipment 239,040 209,503 Investments 500,913 231,069 ---------- ---------- $13,244,344 $13,023,939 ========== ========== CURRENT LIABILITIES Accounts payable and accrued expenses $ 35,480 $ 118,999 Current portion of long-term debt -- 868,000 ---------- ---------- Total current liabilities 35,480 986,999 Long-term debt -- 15,000 ---------- ---------- 35,480 1,001,999 SHAREHOLDERS' EQUITY Common capital stock; no par value; authorized: 100,000,000 shares; issued and outstanding: 23,467,358 (1996: 23,318,478) 18,225,341 18,029,617 Accumulated deficit (5,016,477) (6,007,677) ---------- ---------- 13,208,864 12,021,940 ---------- ---------- $13,244,344 $13,023,939 ========== ========== LA TEKO RESOURCES LTD. CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (EXPRESSED IN U.S. DOLLARS) FOR YEARS ENDED DECEMBER 1995 AND 1996 AND SIX MONTHS ENDED JUNE 30, 1997 (Unaudited) Common Stock Accumulated Shares Amount Deficit Total ------------- ---------- ---------- ---------- Balance, December 31, 1994 36,287,809 23,052,479 (4,884,456) 18,168,023 1995 Common stock issued for: Public offering sales 70,520 177,005 -- 177,005 Exercise of warrants 371,120 814,061 -- 814,061 Short swing profits -- 2,100 -- 2,100 Less offering costs -- (45,360) -- (45,360) Compensatory stock options -- 64,190 -- 64,190 Net loss -- -- (364,857) (364,857) ---------- ---------- --------- ---------- 441,640 1,011,996 (364,857) 647,139 ---------- ---------- --------- ---------- Balance, December 31, 1995 36,729,449 24,064,475 (5,249,313) 18,815,162 1996 Common stock issued for: Exercise of options 138,780 222,048 -- 222,048 Compensatory stock options -- 188,125 -- 188,125 Net income -- -- 955,785 955,785 ---------- ---------- --------- ---------- 138,780 410,173 955,785 1,365,958 ---------- ---------- --------- ---------- Balance, December 31, 1996 36,868,229 24,474,648 (4,293,528) 20,181,120 Six months ended June 30, 1997 Common stock issued for: Exercise of options 5,000 8,000 -- 8,000 Other 5,100 -- -- -- Net loss -- -- (722,949) (722,949) ---------- ---------- --------- ---------- 10,100 8,000 (722,949) (714,949) ---------- ---------- --------- ---------- Balance, June 30, 1997 36,878,329 24,482,648 (5,016,477) 19,466,171 Less treasury shares (13,410,971) (6,257,307) -- (6,257,307) ---------- ---------- --------- ---------- Balance, June 30, 1997 23,467,358 $18,225,341 $(5,016,477) $13,208,864 ========== ========== ========= ========== LA TEKO RESOURCES LTD. CONSOLIDATED STATEMENT OF CASH FLOWS (EXPRESSED IN U.S. DOLLARS) SIX MONTHS ENDED JUNE 30, 1997 (Unaudited) 1997 1996 ---------- --------- Cash flows from operating activities Net loss $(722,949) $(758,364) Charges (credits) to operations not affecting cash: Loss on abandonment of furnishings and equipment 4,505 -- Gain on sale of investment (1,581) (7,407) Depreciation 28,564 26,797 Compensatory expense - stock options granted -- 66,000 --------- --------- (691,461) (672,974) Net changes Decrease in accounts receivable and pre-paid expenses 97,696 158,444 Decrease in accounts payable and accrued expenses (159,238) (121,441) Increase in current portion of long-term debt -- 155,704 --------- --------- Net cash used in operating activities (753,003) (480,267) Cash Flows from Investing Activities Exploration costs capitalized (221,060) (121,828) Proceeds from sale of equipment 3,456 9,800 Purchase of plant and equipment (63,268) (34,104) Investment in mineral properties -- (15,000) --------- --------- Net cash used in investing activities (280,872) (161,132) --------- --------- Cash Flows From Financing Activities Reduction of debt (372,500) (345,289) Cash proceeds from issuance of common stock 8,000 156,448 --------- --------- Net cash used in financing activities (364,500) (188,841) --------- --------- Net decrease in cash and cash equivalents (1,398,375) (830,240) Cash and cash equivalents, beginning of period 3,041,205 2,972,278 --------- --------- Cash and cash equivalents, end of period $1,642,830 $2,142,038 ========= ========= Supplemental Disclosures of Cash Flow Information Cash paid during the period for interest $2,396 58,565 Cash paid during the period for income taxes -- 300 Supplementary Schedule of Non-cash Investing and Financing Activities Depreciation capitalized into deferred costs -- -- Stock issued as bonus compensation -- -- LA TEKO RESOURCES LTD. - ------------------------------------------------------------------------------- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - ------------------------------------------------------------------------------- GENERAL The Company is in the business of exploration and development of mineral properties, with two advanced-stage projects, True North and Ryan Lode, and five early stage exploration projects. The Company has provided for recent years' operations primarily from the receipt of funds from Newmont pursuant to the True North JV Agreement and the cash proceeds from issuance of common stock. It is anticipated that the $1,642,830 cash on hand June 30, 1997 is sufficient to cover expenditures required for the balance of 1997. All dollar amounts included herein respecting Management's Discussion and Analysis are in U.S. dollars except where noted otherwise as Canadian dollars (CAN). CAPITALIZED COSTS Costs of acquisition and deferred exploration expenditures associated with the Company's mineral properties are summarized as follows: Balance Capitalized Additions Balance PROJECT December 31, 1996 (Deletions) 1997 June 30, 1997 - ----------------- ----------------- --------------------- ------------- True North 0 70,201 70,201 Ryan Lode 9,795,939 48,864 9,844,803 Margarita 426,194 525 426,719 Juniper 168,505 14,858 183,363 Twin Buttes 57,634 75,482 133,116 Lucky Gulch 31,313 793 32,106 Discovery 35,555 10,336 45,891 ---------- -------- ----------- Total Mineral Properties and Deferred Costs 10,515,140 221,059 10,736,199 =========== ======== =========== RESULTS OF OPERATIONS Income The Company has not received operating revenues during any of the last three years and will not have income from sales of mineral product in 1997. Expenses During the first half of 1997, the Company expended $221,059 for capitalized costs associated with the exploration and development of its mineral properties compared to $136,828 which was expended during the first six months of 1996. The increase was due primarily to $70,201 paid to Newmont for the Company's 35% share of the initial acquisition costs for a number of new properties added to the True North JV. General and administrative expenses, including corporate and project overhead increased to $561,476 for the first six months of 1997 as compared to $526,755 for the same six month period for 1996. Most of this difference was in the first quarter, as the second quarter 1997 result, $345,552 is virtually the same as the second quarter 1996, $344,839. Operating and mine maintenance costs were $101,286 for the first half 1997 as compared to $105,333 in the first half 1996, again reflecting reclamation and environmental monitoring activities at the Ryan Lode project. Royalty and lease payments of $75,000, compared with $75,000 in the first half of 1996. Net interest income for the first six months of 1997 was $46,301 compared with $7,447 for the comparable six months of 1996. The increase reflects the reduction in interest expense resulting from the redemption of the company's debentures. The Company currently has no debt. Depreciation was approximately equal for the six month periods ended June 30, 1997 and 1996. LIQUIDITY AND CAPITAL RESOURCES During the first half of 1997, the Company has relied on its December 31, 1996 cash on hand of $3,041,205 to fund its requirements for general and administrative costs, ongoing exploration and development projects, and redemption of debentures. At June 30, 1997, the Company had working capital of approximately $1,733,000 compared with $2,697,000 at December 31, 1996. The Company believes that it has sufficient working capital to meet its anticipated expenditures for the remainder of 1997. During the six months of 1997, cash flows for operating activities used approximately $753,000, investing activities $280,240, primarily respecting capitalized exploration costs, and $372,500 for the redemption of convertible debentures. Remaining cash requirements for 1997 will be provided from current cash reserves. Subsequent to the quarter, on July 16, 1997, the Company announced the sale of its Ryan Lode property for $12 million over five years. The transaction will close, with an initial payment of $500,000 on completion of a 60 day due diligence period. If this payment is made, as anticipated, it will not only add to the Company's treasury, but it will also relieve the Company of significant ongoing reclamation and property maintenance costs related to the Ryan Lode project. The Company will receive no further cash payments from Newmont under the True North JV Agreement. Beyond 1997, the Company may require additional capital for ongoing administrative, exploration, development and acquisition activities. In order to meet such long-term needs, it will be necessary to obtain required capital from the sale of securities, possible new joint ventures or similar arrangements, project financing or other sources. There can be no assurance that any required additional funds will be available or can be obtained on terms favourable to the Company. The Company has outstanding options exercisable during 1997 to purchase an aggregate of 1,654,935 shares of common stock at an average exercise price of $1.86 per share, for a total of $ 3,078,180, but cannot predict whether any material number of such options will be exercised. PROJECTED 1997 REQUIREMENTS During 1997, the Company budgeted approximately $1,998,000 in capital to fund the continuation of permitting and reclamation activities at the Ryan Lode mine and related royalty payments, continue with the True North project under joint venture with Newmont, undertake exploration of its other prospects and make related minimum royalty and other property payments, evaluate and perhaps acquire other potential prospects, retire $373,000 in convertible debentures, and meet other ongoing operating expenses. First half 1997 expenditures for these purpuses were approximately $1,398,000. The sale of Ryan Lode will result in some 1997 savings, although the bulk of the 1997 program will have been completed prior to closing of the sale. Notwithstanding Newmont's announcement of its intent to continue with the True North Joint Venture and that it is planning substantial additional exploration and development work during 1997, decisions by Newmont respecting its True North activities are beyond the ability of the Company to predict or control. Provisions of the joint venture agreement are such that Newmont may withdraw from the joint venture at its sole discretion. In the event of termination by Newmont, the Company will re-acquire, at no cost, Newmont's 65% interest in the True North project, including subsequently-acquired acreage, together with all exploration data, and the Company will then become obligated for the continuing carrying costs and expenses of the True North project. COMMITMENTS AND CONTINGENCIES Operations are subject to certain lease and royalty obligations. The Company carries insurance against property damage including insurance on its machinery and equipment and motor vehic les and also comprehensive general liability and liability policies applicable to motor vehicles. The Company has elected not to insure against business interruption. The Company cannot insure for environmental pollution and has elected not to insure for mine cave-ins, flooding, earthquake and other possible natural hazards consistent with industry practice. The Company may in the future be exposed to contingencies and liabilities relating to the foregoing that may arise under governmental regulations relating to the environment. The Company is not aware of any existing material contingencies respecting compliance of its previous activities with environmental requirements. The Company has implemented procedures to minimize the possibility of chemical spills, especially in its drilling and heap-leaching operations and utilizes a patented process in the neutralization of cyanide and other chemical solutions prior to disseminating liquids from its retention ponds into the environment. CHANGING PRICES, CURRENCY EXCHANGE RATES AND INFLATION The value of the Company's properties and its proposed operations have been and will continue to be affected generally by changes in gold prices. The Company's ability to obtain exploration capital through joint ventures or other arrangements with other mining firms and attract additional capital, if required, through the sale of securities or borrowings on attractive terms are also affected by gold prices. Such prices are subject to substantial fluctuations that are beyond the ability of the Company to control or predict. Although certain of the Company's costs and expenses are affected by the level of inflation, inflation has not had a significant effect on the Company's operations. Similarly, the Company's operations, all of which except for its executive offices are located in the United States, are not materially affected by fluctuations in the exchange rate between Canadian and US dollars. OTHER The Company has reviewed all recently issued, but not yet adopted, accounting standards in order to determine their effects, if any, on the results of operations or financial position of the Company. Based on that review, the Company believes that none of these pronouncements will have significant effects on current or future operations. - ------------------------------------------------------------------------------- ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K - ------------------------------------------------------------------------------- (a) EXHIBITS The following exhibits are included as part of this report: none. (b) REPORTS ON FORM 8-K During the quarter ended June 30, 1997, the Company filed the following reports on Form 8-K: Date of Event Reported Item(s) Reported - ---------------------- -------------------- April 16, 1997 Item 5. Other Events April 24, 1997 Item 5. Other Events May 8, 1997 Item 5. Other Events May 15, 1997 Item 5. Other Events June 5, 1997 Item 5. Other Events June 12, 1997 Item 5. Other Events June 18,1997 Item 5. Other Events - ------------------------------------------------------------------------------- SIGNATURES - ------------------------------------------------------------------------------- In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. LA TEKO RESOURCES, LTD. (Registrant) Date: August 27, 1997 By /s/ Gerry G. Carlson Chief Executive Officer, President, Chief Financial and Accounting Officer, and Director EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE SHEET AS OF JUNE 30, 1997, AND STATEMENTS OF OPERATIONS FOR THE QUARTER ENDED JUNE 30, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 6-MOS DEC-31-1997 JAN-01-1997 JUN-30-1997 1,642,830 0 122,214 0 3,148 1,768,192 12,161,390 (685,238) 13,244,344 35,480 0 18,225,341 0 0 (5,016,477) 13,244,344 0 0 0 (766,326) 43,377 0 0 (722,949) 0 (722,949) 0 0 0 (722,949) (0.03) (0.03)
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