-----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, GZwyHsamuC16N+/XeCArMXYW/Ql+PKuwrYd4iOrzLTjtHNTM37cLpuMD1XTsMOo1 FBduCdYtLCMnYR5qyCvrmw== 0000914233-98-000065.txt : 19980518 0000914233-98-000065.hdr.sgml : 19980518 ACCESSION NUMBER: 0000914233-98-000065 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980515 SROS: NASD 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: 98625098 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 March 31, 1998 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 Identification No.) incorporation or organization) 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 March 31, 1998, 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, 1997. 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 BALANCE SHEETS (EXPRESSED IN U.S. DOLLARS) Unaudited - See Notice to Reader December 31, March 31, 1998 1997 --------------- -------------- CURRENT ASSETS Cash and short-term deposits $ 266,895 $ 613,304 Accounts receivable 83,065 93,891 Prepaid expenses 122,590 160,090 ------------ ------------ Total current assets 472,550 867,285 Mineral properties and deferred costs 11,009,324 10,985,135 Plant and equipment 54,845 57,593 Investments 728,413 750,913 ------------ ------------ $ 12,265,132 $ 12,660,926 CURRENT LIABILITIES Bank demand loan $ - $ 150,000 Accounts payable and accrued expenses 16,419 84,462 ------------ ------------ $ 16,419 $ 234,462 SHAREHOLDERS' EQUITY Common capital stock; no par value; authorized: 100,000,000 shares; issued and outstanding: 23,467,358 (1997: 23,462,358) 18,182,217 18,182,217 Accumulated deficit (5,933,504) (5,755,753) ------------ ------------ 12,248,713 12,426,464 $ 12,265,132 $ 12,660,926 LA TEKO RESOURCES LTD. CONSOLIDATED STATEMENTS OF OPERATIONS (EXPRESSED IN U.S. DOLLARS) Three months ended March 31, 1998 Unaudited - See Notice to Reader EXPENSES 1998 1997 ---------- ---------- General and administrative expenses $ 128,520 $ 215,924 Royalty and lease 37,500 37,500 Operating and mine maintenance 6,881 54,628 costs Depreciation 3,650 12,991 New prospect evaluation - 42 ---------- ---------- 176,551 321,085 Loss from operations before other items (176,551) (321,085) OTHER ITEMS Interest income (net) 3,199 28,929 Gain (loss) on sale of investments (4,399) - Gain (loss) on sale of equipment - (2,768) ---------- ---------- NET LOSS $ (177,751) $ (294,924) NET LOSS PER SHARE $ (0.008) $ (0.013) LA TEKO RESOURCES LTD. CONSOLIDATED STATEMENTS OF CASH FLOW (EXPRESSED IN U.S. DOLLARS) Three months ended March 31, 1998 and 1997 Unaudited - See Notice to Reader Three Months Ended ------------------------------- December 31, March 31, 1998 1997 -------------- ------------ Supplemental Disclosures of Cash Flow Information Net loss $ (177,751) $ (294,924) Charges (credits) to operations not affecting cash: (Gain) / loss on sale of investments 4,399 - Depreciation 3,650 12,991 (Gain) / loss on sale of equipment - 2,768 ---------- ---------- (169,702) (279,165) Net changes Decrease in accounts receivable and pre-paid expenses 48,326 42,741 Decrease in accounts payable and accrued expenses (67,677) (143,434) ---------- ---------- Net cash used in operating activities (189,053) (379,858) Cash Flows from Investing Activities Proceeds from sale of investments 18,101 - Investment in mineral properties (21,260) - Exploration costs capitalized (2,929) (44,121) Purchase of plant and equipment (1,268) (17,793) Proceeds from sale of equipment - 3,456 ---------- ---------- Net cash used in investing activities (7,356) (58,458) ---------- ---------- Cash Flows From Financing Activities Reduction of principal on debt - (372,500) Cash proceeds from issuance of common stock - 8,000 ---------- ---------- Net cash used in financing activities - (364,500) ---------- ---------- Net increase (decrease) in cash and cash equivalents (196,409) (802,816) Cash and cash equivalents, beginning of period 463,304 3,041,205 ---------- ---------- Cash and cash equivalents, end of period $ 266,895 $2,238,389 ========== ========== Cash paid during the period for interest - 3,060 Cash paid during the period for income taxes - - Supplementary Schedule of Non-cash Investing and Financing Activities - - Depreciation capitalized into deferred costs - - Stock issued as bonus compensation - - LA TEKO RESOURCES LTD. CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (EXPRESSED IN U.S. DOLLARS) For the years ended December 1996 and 1997 and three months ended March 31,1998 Unaudited - See Notice to Reader Common Stock Accumulated ----------------------- ------------ Shares Amount Deficit Total ---------- ---------- ------------ ----------- 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 (loss) - - 955,785 955,785 ---------- ---------- ---------- ---------- Balance, December 31, 1996 36,868,229 24,474,648 (4,293,528) 20,181,120 1997 Common stock issued for: Exercise of options 5,000 8,000 - 8,000 Other 5,100 - - - Compensatory stock options - (43,125) - (43,125) (reduction) Net income (loss) - - (1,462,225) (1,462,225) ---------- ---------- ---------- ---------- Balance, December 31, 1997 36,878,329 24,439,523 (5,755,753) 18,683,770 Three months ended March 31, 1998 Common stock issued for: Exercise of options - - - - Net loss - - (177,751) (177,751) ---------- ---------- ---------- ---------- Balance, March 31, 1997 36,878,329 24,439,523 (5,933,504) 18,506,019 Less treasury shares (13,410,971) (6,257,306) - (6,257,306) ---------- ---------- ---------- ---------- Balance, March 31, 1997 23,467,358 18,182,217 (5,933,504) $12,248,713 ========== ========== ========== =========== LA TEKO RESOURCES LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (EXPRESSED IN U.S. DOLLARS) Three months ended March 31, 1998 and 1997 Unaudited - See Notice to Reader 1. SHARE CAPITAL AUTHORIZED - 100,000,000 shares having no par value ISSUED - 23,467,358 During the first quarter no shares were issued or options granted. Options outstanding at March 31, 1998: Number Price Expire ------- ------- ------------- 300,000 $1.60 11/16/2000-03 100,000 $2.50 03-14-2001 200,000 $2.41 06/05/2001-04 500,000 $1.85 12-10-2001-04 100,000 $2.13 06/30/1998 24,000 $1.60 08/17/1999 100,000 $1.50 07/16/2002-05 100,000 $1.60 06/30/1998 50,000 $1.60 12/31/1998 150,000 $1.05 10/08/2002-05 WARRANTS OUTSTANDING - None 2. SUBSEQUENT EVENTS A. On May 1, 1998, the Company completed a private placement of 2,000,000 units at $0.85 per unit for gross proceeds of $1,700,000. Each unit consists of one common share and one share purchase warrant. Each warrant entitles the holder to purchase one share at a price at $1.05 in the first 12 months after closing and $1.25 in the 12 months thereafter. A finder's fee is payable with respect to the transaction, amounting to 5.9% of the gross proceeds, plus 133,000 share purchase warrants on the same terms as those described above. As part of the private placement, the Company granted the subscriber a right of first refusal to finance the purchase of Newmont Exploration Limited's ("Newmont") interest in the True North project in the event that such interest is offered through the Company's right of first opportunity as defined under the terms of its joint venture agreement with Newmont. B. On April 24, 1998, the Company agreed to a private placement of 700,000 units at $0.85 per unit for gross proceeds of $595,000. Each unit consists of one common share and one share purchase warrant. Each warrant entitles the holder to purchase one share at a price of $1.05 in the first 12 months after closing and $1.25 in the 12 months thereafter. This transaction is subject to regulatory approval. 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, one mid 11 stage project, Scheelite Dome, and four early stage exploration projects. The Company has provided for recent years' operations primarily from the receipt of funds from Newmont Exploration Limited ("Newmont") pursuant to the True North JV Agreement and the cash proceeds from issuance of common stock. It is anticipated that the $267,000 cash on hand March 31,1998 combined with gross proceeds of $2,295,000 from private placements done subsequent to the end of the first quarter are sufficient to cover expenditures required for the balance of 1998. 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: CAPITALIZED BALANCE ADDITIONS BALANCE PROJECT DECEMBER 31, 1997 (DELETIONS) 1998 03/ 31/98 - ------------------- ------------------ ---------------- ----------- True North 225,465 44 225,509 Ryan Lode 9,770,530 - 9,770,530 Margarita 430,652 - 430,652 Juniper 231,762 - 231,762 Twin Buttes 227,671 911 228,582 Discovery Gulch 99,055 1,974 101,029 Lucky Gulch 0 - 0 Scheelite Dome - 21,260 21,260 ----------- ------- ----------- Total Mineral Properties and Deferred Costs $10,985,135 $24,189 $11,009,324 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 1998. EXPENSES During the first quarter of 1998, the Company expended $24,189 for capitalized costs associated with the acquisition, exploration and development of its mineral properties compared to $44,121 which was expended during the comparable period of 1997. The expenditure reflects the normal low level of activity on the properties during the winter months. General and administrative expenses, including corporate and project overhead decreased to $128,520 for the first three months of 1998 as compared to $215,924 for the same three month period for 1997. The decrease reflects the closure the Fairbanks office, the absence of costs incurred in transferring the head office functions from Salt Lake City to Vancouver, which occurred in the first quarter of 1997, and a focused effort to minimize costs. Operating and mine maintenance costs were $6,881 for the first three months of 1998 as compared to $54,628 in the first three months of 1997, reflecting the operatorship of Silverado Gold Mines, Ltd. ("Silverado") during this period and reduced reclamation and environmental monitoring activities at the Ryan Lode project following a major effort last year. There will be further costs in 1998, however the costs are expected to be at substantially lower levels than were incurred in 1997. Royalty and lease payments were identical at $37,500 for the first quarter. Net interest income for the first three months of 1998 was $3,199 compared with $28,929 for the comparable three months of 1997. The decrease in interest income reflects the reduction in term deposits. The Company currently has no debt, having completed the repayment of its outstanding debt last year. Depreciation declined to $3,650 from $12,991 for the first quarter as some of the equipment required for the Ryan Lode and Fairbanks office was disposed of in 1997. LIQUIDITY AND CAPITAL RESOURCES During the first three months of 1998, the Company has relied on its December 31, 1997 cash on hand of $613,304 to fund its requirements for general and administrative costs and ongoing exploration and development projects. At March 31, 1998, the Company had working capital of approximately $456,000 compared with $2,365,868 for the comparable period in 1997. The Company believes that it has sufficient working capital combined with gross proceeds of $2,295,000 from private placements done subsequent to the end of the first quarter to cover expenditures required for the balance of 1998. During the three months of 1998, cash flows from operating activities used approximately $189,000 and investing activities $7,000, primarily respecting capitalized exploration costs offset by the proceeds from the sale of investments. During the three months of the comparable period in 1997, cash flows from operating activities used approximately $380,000 and investing activities $58,000, again primarily respecting capitalized exploration costs. Remaining cash requirements for 1998 will be provided for from current cash reserves and the private placements referred to above. On March 30, 1998, the Company announced that it had received notice from Silverado that Silverado was terminating its right to purchase the Ryan Lode property near Fairbanks, Alaska. Thus the Company will not be receiving any cash payments which were due under the terms of the purchase agreement and will be responsible for ongoing reclamation and property maintenance. The Company will receive no further cash payments from Newmont under the True North JV Agreement. Beyond 1998, 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 favorable to the Company. The Company has outstanding options exercisable during 1998 to purchase an aggregate of 1,650,000 shares of common stock at an average exercise price of $1.81 per share, for a total of $ 2,986,500 but cannot predict whether any material number of such options will be exercised. PROJECTED 1998 REQUIREMENTS During the period when payments due to the Company from Silverado for the Ryan Lode property were overdue (after January 27, 1998) and while consideration was being given to the sale of securities the Company budgeted approximately $700,000 to continue with the True North project under joint venture with Newmont, fund the continuation of basic activities at the Ryan Lode property and other prospects and meet other ongoing operating expenses. The Company is in the process of revising the interim budget as the sale of securities has occurred through private placements. The Company is also evaluating various courses of action for the Ryan Lode property. Notwithstanding Newmont's announcement of its intent to continue with the True North Joint Venture the decisions by Newmont respecting its True North activities are beyond the ability of the Company to predict or control. Newmont is planning substantial additional exploration and development work during 1998, including $2.1 million for prefeasibilty studies through the full year and $1.5 million for exploration through the end of June. 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. Newmont may also elect to attempt to sell an interest in the joint venture agreement, in which case the Company has the right of first opportunity to acquire Newmont's interest. Subsequent to the end of the first quarter as part of the private placement with Kinross Gold Corporation ("Kinross"), La Teko has granted Kinross a right of first refusal to finance the purchase of Newmont's interest in the True North Project in the event such interest is offered to La Teko through La Teko's right of first opportunity as defined under the terms of the joint venture agreement between La Teko and Newmont. Under the agreement between La Teko and Kinross, if Newmont elects to sell all or part of its 65% interest in True North (the "Newmont Interest") and if Kinross elects to finance La Teko to acquire the Newmont Interest, Kinross will advance the funds necessary for La Teko to acquire the Newmont Interest by means of a 120 day interest-free loan (the "Loan"), secured by the Newmont Interest. At the election of either La Teko or Kinross, La Teko would repay the Loan by conveying the Newmont Interest to Kinross, provided that La Teko may elect to retain 15/65ths of the Newmont Interest. In such case, La Teko would repay the remainder of the Loan in cash or, at La Teko's option, by issuing shares to Kinross at a 10% premium to market. 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 vehicles 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. PART II ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K (A) EXHIBITS The following exhibits are included a part of this report: Exhibit SEC No. Reference No. Title of Document Location - -------- ------------- ---------------------- ----------- 27.01 27 Financial Data Schedule This filing (B) REPORTS ON FORM 8-K During the quarter ended March 31, 1998 the Company filed the following reports on Form 8-K: Date of event reported Item reported - ------------------------ ------------------------- December 29, 1997 Item 5. Other events January 6, 1998 Item 5. Other events January 14, 1998 Item 5. Other events February 3, 1998 Item 5. Other events February 10, 1998 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. Date: May 15, 1998 By /s/ Gerald G. Carlson Chief Executive Officer, President, Chief Financial Officer, and Director EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE SHEET AS OF MARCH 31, 1998, AND STATEMENTS OF OPERATIONS FOR THE QUARTER ENDED MARCH 31, 1998, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS DEC-31-1998 JAN-01-1998 MAR-31-1998 266,895 0 205,655 0 0 472,550 11,809,256 (16,674) 12,265,132 16,419 0 18,182,217 0 0 (5,933,504) 12,265,132 0 0 0 (176,551) (4,399) 0 3,199 (177,751) 0 (177,751) 0 0 0 (177,751) (0.008) (0.008)
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