-----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, Jp0GbpodOz4cegLND7YwZcbFqsJfYPX/sc8f5mMct0CKqrtRNwQSaXVwxxP0x564 rNC5PXJgV/sUr2EMLRELfg== 0000914233-97-000069.txt : 19970512 0000914233-97-000069.hdr.sgml : 19970512 ACCESSION NUMBER: 0000914233-97-000069 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970509 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: 1934 Act SEC FILE NUMBER: 000-10104 FILM NUMBER: 97599525 BUSINESS ADDRESS: STREET 1: 50 WEST BROADWAY STREET 2: SUTTE 800 CITY: SALT LAKE CITY STATE: UT ZIP: 84101 BUSINESS PHONE: 8014661402 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, 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 Street, #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 April 25, 1997, the registrant had 23,462,258 shares of its common stock issued and outstanding. LA TEKO RESOURCES LTD. Part I - 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. Condensed Consolidated Balance Sheets MARCH 31, DECEMBER 31, 1997 1996 ----------- ------------ ASSETS (Unaudited) Current Assets Cash and short-term deposits $ 2,238,389 $ 3,041,205 Receivables 14,364 15,918 Inventories 6,295 6,295 Pre-paid expenses 158,104 200,845 ------------- ------------ Total current assets 2,417,152 3,264,263 Mineral properties and 10,559,261 10,515,140 deferred costs Plant and equipment 210,848 210,716 Investments 500,913 500,913 ------------- ------------ $ 13,688,174 $ 14,491,032 ============= ============ LIABILITIES Current Liabilities Accounts payable and accrued $ 51,284 $ 194,718 expenses Current portion of long-term -- 372,500 debt ------------- ------------ Total current liabilities 51,284 567,218 ------------- ------------ SHAREHOLDERS' EQUITY Common capital stock, no par value; authorized 100,000,000 shares; issued and outstanding: 23,462,258 and 23,457,258 18,225,342 18,217,342 Accumulated deficit (4,588,452) (4,293,528) ------------- ------------ 13,636,890 13,923,814 ------------- ------------ $ 13,688,174 $ 14,491,032 ============= ============ The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these consolidated financial statements. LA TEKO RESOURCES LTD. Condensed Consolidated Statements of Operations (Unaudited) FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 1997 1996 Sales of gold and silver $ -- $ -- Expenses Operating and mine 54,628 30,201 maintenance costs New prospect evaluation 42 32,478 General and administrative 215,924 181,916 expenses Depreciation 12,991 11,337 Royalty and lease expenses 37,500 37,500 --------- -------- 321,085 293,432 --------- -------- Income (loss) from operations (321,085) (293,432) Other income (expense) Abandonment of furnishings and (4,349) -- equipment Gain on sale of equipment 1,581 3,875 Interest income (expense)(net) 28,929 (13,999) --------- -------- Income (loss) before income (294,924) (303,556) taxes Income taxes -- -- Net loss $(294,924) $(303,556) ========= ========= Loss per share $( 0.013) $( 0.013) ========= ========= Weighted average shares outstanding 23,142,906 23,328,422 ========== ========== The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these consolidated financial statements. LA TEKO RESOURCES LTD. Condensed Consolidated Statements of Cash Flows (Unaudited) FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 1997 1996 --------- --------- Cash Flows From Operating Activities Net loss $(294,924) $(303,556) Charges (credits) to operations not affecting cash: (1,581) (3,875) (Gain)/loss on sale of equipment 4,349 -- Abandonment of furnishings and equipment 12,991 11,337 Depreciation -- 1,875 --------- -------- Stock option compensation (279,165) (294,219) --------- -------- Net changes (Increase)/decrease in accounts receivable and pre-paid expenses 42,741 122,048 (Decrease)/increase in accounts payable and accrued expenses (143,434) (177,300) --------- -------- (100,693) (55,252) --------- -------- Net cash used in operating activities (379,858) (349,471) --------- -------- Cash Flows From Investing Activities Exploration costs capitalized (44,121) (94,770) Proceeds from sale of equipment 3,456 5,000 Purchase of equipment (17,793) (12,884) --------- -------- Net cash used in investing activities (58,458) (102,654) --------- -------- Cash Flows From Financing Activities Reduction of debt (372,500) (55,000) Cash proceeds from stock issuance 8,000 73,968 --------- -------- Net cash provided by (used in) financing activities (364,500) 18,968 --------- -------- Net increase (decrease) in cash and cash equivalents (802,816) (433,157) Cash and cash equivalents, beginning of period 3,041,205 2,972,278 --------- --------- Cash and cash equivalents, end of period $ 2,238,389 $ 2,539,121 =========== =========== Supplemental Disclosures of Cash Flow Information Cash paid during the period for $ 3,060 $ 33,003 interest Cash paid during the period for $ -- $ 18,500 income taxes Supplementary Schedule of Non- cash Investing and Financing Activities Compensatory stock options $ -- $ 44,000 The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these consolidated financial statements. LA TEKO RESOURCES LTD. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Note 1 - Share Capital Authorized - 100,000,000 shares having no par value Issued - 23,462,258 - March 31, 1997 During the first quarter of 1997, the Company issued 5,000 shares in exchange for $8,000 upon exercise of employee stock options. Options, Warrants and Convertible Securities Options Outstanding EXERCISE NAME SHARES PRICE EXPIRATION DATE DIRECTORS Gerald G. Carlson 500,000 $1.85 12/10/2001-04 Robert W. Gentry 100,000 $1.60 11/16/2000-03 100,000 $2.50 03/14/2001 Gordon Fretwell 100,000 $1.60 11/24/2000-03 John R. Hardesty 100,000 $1.60 11/16/2000-03 John S. Auston 100,000 $2.41 06/18/2001-04 Douglas R. Beaumont 100,000 $2.41 06/18/2001-04 PREVIOUS DIRECTORS Jack Layne 200,000 $1.60 01/31/1998 David Tinsley 25,000 $1.60 06/05/1997 OTHERS 100,000 $2.13 04/01/1998-99 149,000 $1.60 08/17/1999 105,935 $1.60 11/16/2000 --------- 1,679,935 Warrants None Convertible Securities None - -------------------------------------------------------------------------- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - -------------------------------------------------------------------------- GENERAL Commencing in 1990, the Company discontinued mining operations at the Ryan Lode and embarked upon an extensive exploration program to further delineate the extent of mineral reserves. The Company has had no income from sales of mineral product since 1990 and will continue to sustain exploration, general and administrative and mine property expenses through 1997 without income from operations. 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 $2,238,000 cash on hand March 31, 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). RESULTS OF OPERATIONS Income As noted above, 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 As noted above and in the accompanying statement of cash flows, during the first quarter 1997, the Company expended $44,121 for capitalized costs associated with the exploration and development of its mineral properties compared to $94,770 which was expended during the first quarter 1996. Operating and mine maintenance costs increased 81% to $54,628 for the first quarter 1997 as compared to $30,201 in the first quarter 1996. The variations between 1997 and 1996 were due principally to equipment repairs and changes in salaries, wages and employee benefits related to the level of environmental compliance and reclamation efforts associated with the Ryan Lode Mine and its spent heap-leach pads. New prospect evaluation expenses decreased 100% to only $42 for the first quarter ended March 31, 1997 as compared to $32,478 in 1996, reflecting the Company's decreased first quarter activities in seeking new exploration prospects. These efforts have since been re-established. General and administrative expenses, including corporate and project overhead, increased 18.7% to $215,924 for the first quarter 1997 as compared to $181,916 for the same quarter of 1996. The 1997 increase was primarily the result of having hired a full-time corporate president and establishing corporate offices in Vancouver B.C. Interest expense for the first quarter 1997 was only $3,060 compared with $33,003 for the comparable quarter of 1996. The substantial reduction was the result of the Company having paid off all of its convertible debentures during 1996 and through January 1997. The Company currently has no debt. Interest income for the first quarter ended March 31, 1997 was approximately $32,000 compared with $19,000 for the comparable quarter of 1996. Interest income for the first quarter 1996 was under-accrued by approximately $12,000, which amount was adjusted in the second quarter 1996. Depreciation was approximately equal for the quarters ended March 31, 1997 and 1996. Office furniture and equipment increased nominally as the Company established a new corporate office in Vancouver, British Columbia. LIQUIDITY AND CAPITAL RESOURCES During 1996, the Company relied principally on net cash provided from investing activities, namely the sale of a 65% interest in its True North property to Newmont under the JV Agreement, to fund its cash requirements for general and administrative costs, ongoing exploration and development projects, and redemption of outstanding debentures. Cash on hand at December 31, 1996 in the amount of $3,041,205 is being used to fund 1997 financial requirements. At March 31, 1997, the Company had working capital of approximately $2,366,000 compared with $2,697,000 at December 31, 1996. The Company believes that it has sufficient working capital to meet its anticipated expenditures for 1997. During the first quarter 1997, cash flows from operating activities used approximately $380,000, investing activities utilized $58,500, primarily respecting capitalized exploration costs, and $364,500 was used in financing activities, $372,500 for the redemption of convertible debentures. Remaining cash requirements for 1997 will be provided for from current cash reserves. The Company will receive no further cash payments from Newmont under the True North JV Agreement and will not have operating capital resources to meet budgeted expenditures. Beyond 1997, the Company may require additional capital before initiating production on the Ryan Lode property, providing a portion of the capital that may be required for large scale production at the True North property, or undertaking significant other exploration or other 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 1997 to purchase an aggregate of 1,079,000 shares of common stock at an average exercise price of $1.82 per share, for a total of $1,963,780, 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 initial 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 quarter 1997 expenditures for these purposes were approximately $803,000. 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 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. La Teko 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 special 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 None (b) Reports on Form 8-K Since the beginning of the quarter covered by this report, the Company filed reports on form 8-K as follows: DATE OF EVENT REPORTED ITEM REPORTED January 7, 1997 Item 5. Other Events March 26, 1997 Item 5. Other Events April 16, 1997 Item 5. Other Events April 24, 1997 Item 5. Other Events - -------------------------------------------------------------------------- SIGNATURES - -------------------------------------------------------------------------- Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. LA TEKO RESOURCES LTD. Dated: May 8, 1997 By /s/ Gerald G. Carlson, President and Chief Financial Officer EX-27 2 FINANCIAL DATA SCHEDULE WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE SHEET AS OF MARCH 31, 1997, AND STATEMENTS OF OPERATIONS FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3 MOS DEC-31-1997 JAN-01-1997 MAR-31-1997 2,238,389 500,913 14,364 0 6,295 2,417,152 879,950 669,102 13,688,174 51,284 0 18,225,342 0 0 0 13,668,174 0 31,989 0 0 323,853 0 3,660 (294,924) 0 (294,924) 0 0 0 (294,924) (.013) (.013)
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