-----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, F2RNqUc0cYqebHY0k/r0Jm7Cz+wlOoquyz0Pw2xafvb2FccMsT2X8++iWlK/mssI Amp+F5uYUtqjjg14qIHJBg== 0000950144-96-005198.txt : 19960813 0000950144-96-005198.hdr.sgml : 19960813 ACCESSION NUMBER: 0000950144-96-005198 CONFORMED SUBMISSION TYPE: 10QSB/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960812 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PIEDMONT MINING CO INC CENTRAL INDEX KEY: 0000819517 STANDARD INDUSTRIAL CLASSIFICATION: GOLD & SILVER ORES [1040] IRS NUMBER: 561378516 STATE OF INCORPORATION: NC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-16436 FILM NUMBER: 96608792 BUSINESS ADDRESS: STREET 1: 4215 STUART ANDREW BLVD CITY: CHARLOTTE STATE: NC ZIP: 28217 BUSINESS PHONE: 7045236866 MAIL ADDRESS: STREET 1: 4215 STUART ANDREW BLVD CITY: CHARLOTTE STATE: NC ZIP: 28217 10QSB/A 1 PIEDMONT MINING COMPANY INC 10-QSB/A1 3-31-96 1 FORM 10-QSB/A Amendment No. 1 U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996 -------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________ to ______________ COMMISSION FILE NUMBER 0-16436 ------- PIEDMONT MINING COMPANY, INC. (Exact name of small business issuer as specified in its charter) NORTH CAROLINA 56-1378516 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 4215 STUART ANDREW BOULEVARD CHARLOTTE, NORTH CAROLINA 28217 (Address of principal executive offices) (704) 523-6866 (Issuer's telephone number) NOT APPLICABLE (Former name, former address and former fiscal year, if changed since last report) Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 ------- ------- APPLICABLE ONLY TO CORPORATE ISSUERS State the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: COMMON STOCK, NO PAR VALUE--15,043,869 SHARES OUTSTANDING AS OF MAY 15, 1996 2 PIEDMONT MINING COMPANY, INC PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS
At At March 31 December 31 1996 1995 ----------- ----------- (unaudited) CONSOLIDATED CONDENSED BALANCE SHEETS ASSETS CURRENT ASSETS Cash and cash equivalents (including $0 and $0 relating to the Haile Mining Venture) $ 607,000 $ 782,000 Investment in Amax Gold common stock (Note B) 1,656,000 1,830,000 Accounts receivable 28,000 28,000 ------------ ------------ TOTAL CURRENT ASSETS 2,291,000 2,640,000 PROPERTY AND EQUIPMENT (including $237,000 and $245,000 relating to the Haile Mining Venture) 275,000 286,000 OTHER ASSETS Deferred costs, net of accumulated amortization (including $1,536,000 relating to the Haile Mining Venture) 1,754,000 1,754,000 Other 4,000 4,000 ------------ ------------ TOTAL OTHER ASSETS 1,758,000 1,758,000 ------------ ------------ TOTAL ASSETS $ 4,324,000 $ 4,684,000 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable (including $295,000 and $234,000 relating to Haile Mining Venture) $ 375,000 $ 288,000 Accrued venture costs (Note C) 371,000 315,000 Accrued salaries and wages 6,000 9,000 Accrued arbitration award (Note E) 1,370,000 1,370,000 ------------ ------------ TOTAL CURRENT LIABILITIES 2,122,000 1,982,000 ------------ ------------ ACCRUED RECLAMATION COSTS 125,000 125,000 ------------ ------------ DEFERRED GAIN 7,019,000 7,019,000 Less accumulated amortization (6,465,000) (6,341,000) ------------ ------------ 554,000 678,000 SHAREHOLDERS' EQUITY Common Stock 11,157,000 11,157,000 Contributed capital 317,000 317,000 Accumulated deficit (10,190,000) (9,882,000) Unrealized gain on available-for-sale securities (Note C) 239,000 307,000 ------------ ------------ TOTAL SHAREHOLDERS' EQUITY 1,523,000 1,899,000 ------------ ------------ TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 4,324,000 $ 4,684,000 ============ ============
See notes to consolidated condensed financial statements 2 3 PIEDMONT MINING COMPANY, INC. CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended March 31, --------------------------- 1996 1995 NET SALES $ -0- $ -0- COST OF SALES: Depreciation expense 2,000 2,000 Haile Mining Venture expenses 124,000 141,000 Amortization of deferred gain (124,000) (141,000) ---------- ---------- 2,000 2,000 ---------- ---------- GROSS LOSS FROM OPERATIONS 2,000 2,000 OTHER (INCOME) EXPENSES: General and administrative 168,000 156,000 Exploration 2,000 5,000 Professional fees 132,000 55,000 Interest and other, net (7,000) 23,000 Loss (Gain) on sale of stock (35,000) 94,000 Brokers fees and commissions 1,000 31,000 ---------- ---------- 261,000 364,000 ---------- ---------- LOSS BEFORE INCOME TAXES 263,000 366,000 Income tax provision (benefit) 45,000 (120,000) ---------- ---------- NET LOSS $ 308,000 $ 246,000 ========== ========== NET LOSS PER COMMON SHARE $ .02 $ .02 ========== ========== CASH DIVIDENDS PER SHARE None None WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 15,043,869 15,043,869 ========== ==========
See notes to consolidated condensed financial statements. 3 4 PIEDMONT MINING COMPANY, INC. CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three Months Ended March 31, ------------------------- 1996 1995 OPERATING ACTIVITIES Net loss $ (308,000) $ (246,000) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 11,000 7,000 Amortization of deferred gain (124,000) (141,000) Deferred income tax (benefit) expense 45,000 (120,000) (Gain) Loss on sale of assets (35,000) 91,000 Changes in operating assets and liabilities: Increase (decrease) in accounts payable and accrued expenses 141,000 9,000 Other -0- (4,000) ---------- ---------- NET CASH USED IN OPERATING ACTIVITIES (270,000) (404,000) ---------- ---------- INVESTING ACTIVITIES Proceeds from sales of land, property and equipment -0- 3,000 Proceeds from sales of Amax Stock 95,000 2,597,000 ---------- ---------- NET CASH PROVIDED BY INVESTING ACTIVITIES 95,000 2,600,000 ---------- ---------- FINANCING ACTIVITIES Payments on short-term debt -0- (2,197,000) ---------- ---------- NET CASH USED IN FINANCING ACTIVITIES -0- (2,197,000) ---------- ---------- (DECREASE) IN CASH AND CASH EQUIVALENTS (175,000) (1,000) Cash and Cash equivalents at beginning of period 782,000 91,000 ---------- --------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 607,000 $ 90,000 ========== ==========
See notes to consolidated condensed financial statements. 4 5 PIEDMONT MINING COMPANY, INC. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations General The Registrant's principal operations prior to mid-1992, other than its exploration activities, were mining and production of gold at the Haile Property, which accounted for most of the Registrant's revenues to date. On March 15, 1991, the Registrant entered into an Option and Earn-In Agreement with Amax Gold Inc. (AGI) pursuant to which AGI was granted an option to acquire a 62.5% undivided interest in the Haile Property. In connection with its entering into the Option and Earn-In Agreement and AGI's exploration activities at the Haile Property during the option period thereunder, the Registrant began to phase out its shallow, open-pit mining operations at the Haile Property in March 1991 and suspended mining and hauling in August 1991. AGI exercised its option on May 1, 1992, and the Registrant and AGI formed the Venture on July 1, 1992 to further explore, evaluate, and, if warranted, develop and operate a large-scale mining operation at the Haile Property. The Registrant has an undivided 37.5% interest in the Venture's assets, liabilities, costs and revenues. Recovery and production of gold from the leaching of ore previously mined continued until July 1, 1992 for the account of the Registrant until the formation of the Venture on July 1, 1992, after which AGI commenced taking its 62.5% of the gold production. THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THE THREE MONTHS ENDED MARCH 31, 1995. There were no sales for the three months ended March 31, 1996 due to the suspension of mining in 1991 and the completion in 1992 of recoveries of gold from leaching of ore previously mined. There were no mine operating expenses for the three months ended March 31, 1996 due to the suspension of mining in 1991 and production in 1992. Depreciation expense remained unchanged at $2,000 because machinery and equipment purchases were offset by fixed assets being fully depreciated. General and administrative expenses increased 7.7% principally due to reduced office personnel expenses offset by increased franchise and intangible tax payments. Professional fees increased 140% principally due to the increase in required legal expense primarily as a result of the pending litigation against AGI. Exploration expenses declined 60% to $2,000 due to a decline in the Registrant's North Carolina property lease expense. Interest and other, net was $7,000 of interest income for the first three months of 1996 compared to $23,000 of interest expense for the first three months of 1995. This was a result of no borrowings in 1996, while earning interest income on cash investments. The Registrant recorded a gain of approximately $35,000 on AGI stock sold during the first three months of 1996, compared to a loss of $94,000 in the prior year quarter. 5 6 PIEDMONT MINING COMPANY, INC. THREE MONTHS COMPARISON (CONT.) As a result of the Registrant's reduced AGI stock sales for the three months ending March 31, 1996, brokers fees and commissions were $1,000 compared to $31,000 in 1995. The Registrant has been amortizing the deferred gain, recorded as a result of the AGI option exercise, to income in amounts equal to the sum of the Registrant's share of the Venture's costs and expenses and the Registrant's other direct costs of participation in the Venture. Such costs and related amortization amounted to $124,000 for the three months ended March 31, 1996. This amount is 12% lower than the three months ended March 31, 1995 due to the lack of exploration expenditures and the maintenance status of the property. The Registrant recorded a deferred income tax provision of $45,000 for the three months ended March 31, 1996 relating principally to a increase in the valuation allowance against deferred income tax assets. This increase was directly attributable to accounting for the unrealized gain on the AGI Common Stock as further discussed in Note D. The offsetting tax benefit relating to a reduction of the deferred tax liability associated with the unrealized gain on the AGI Common Stock is recorded as an adjustment to shareholder's equity. The Registrant's net loss of $308,000 in the first quarter ended March 31, 1996 was due to the factors set forth above. FINANCIAL CONDITION The Registrant's financial condition and liquidity continued to decline in the first three months of 1996 due primarily to the accrual of its 37.5% share of the costs and expenses of the Venture and the funding of various corporate and legal costs without any offsetting revenues. In addition, the Registrant has accrued effective December 31, 1995 $1,370,000 for the arbitration award entered against it in March 1996 as discussed in Part II, Item 1 -- Legal Proceedings, and Note E to the accompanying financial statements. Working capital declined to $169,000 at March 31, 1996, compared with $658,000 at the end of 1995. The Registrant's principal source of liquidity since the beginning of 1995 has been the sale of some of the shares of AGI Common Stock it had acquired upon AGI's exercise of its option with respect to the Haile Property which the Registrant began to liquidate in January of 1995. Proceeds from the sale of such shares were also used to repay previous borrowings against such shares made in 1993 and 1994. At March 31, 1996, the Registrant held 240,900 shares of AGI Common Stock and had approximately $607,000 in cash and cash equivalents. Further sales of or margin loans on the remaining shares of the AGI Common Stock held by the Registrant may be its only source of additional cash for the foreseeable future. Thus, further declines in the market price of the AGI Common Stock could severely affect the Registrant's liquidity. The closing price of AGI Common Stock on the New York Stock Exchange on March 31, 1996 was $6.875. The continued deterioration in the Registrant's cash position during the first three months of 1996 and increasing litigation costs have resulted in uncertainty whether the Registrant would be able to fund its ongoing corporate and legal expenses through the end of 1996 if the Registrant is required to pay the $1,370,000 arbitration award in favor of AGI before there is a satisfactory resolution of the Registrant's 6 7 PIEDMONT MINING COMPANY, INC. THREE MONTHS COMPARISON (CONT.) claims against AGI in its pending litigation. (See Part II, Item 1- Legal Proceedings.) The Registrant is vigorously pursuing its motions to stay or vacate the arbitration award, but on April 26, 1996 the Magistrate Judge to whom the Registrant's motions were referred entered a report to the Court recommending that the motions be denied and that judgement be entered against the Registrant on the arbitration award. The Registrant has filed objections and exceptions to the Magistrate Judge's report and has requested oral argument, but a ruling by the Court could be imminent. If a judgement is entered on the arbitration award prior to resolution of the Registrant's claims against AGI and the Registrant determines that enforcement of such judgement would impair its ability to prosecute its claims against AGI, it may be necessary for the Registrant to seek protection under the Federal Bankruptcy Code to stay enforcement of the award. Even if the Registrant is not ultimately required to pay the arbitration award to AGI or the enforcement of the arbitration award is stayed pending resolution of the Registrant's claims against AGI, the Registrant will need additional financing if the Haile Mining Venture decides to develop and commence mining operations at the Haile Property pursuant to the Venture Agreement, or if prior to a production decision the Venture incurs substantially more expenditures for which the Registrant is responsible. Additional financing for such purposes could be sought through the issuance of additional shares of the Registrant's Common Stock or other equity securities, through debt financing, or through various arrangements (including joint ventures or mergers) with third parties. However, the Registrant currently has no commitments for any such additional financing, and there is no assurance that the Registrant could obtain any such additional financing if and when needed. If a production decision is made by the Haile Mining Venture, the Registrant's share of the Venture's total costs of developing and commencing mining operations at the Haile Property, as estimated in the Preliminary Feasibility Study prepared in December 1991 by AGI pursuant to the Option and Earn-In Agreement, could be as great as $30,000,000, depending upon the nature, size and scope of the operations and other variables, which have not yet been determined. Although the Registrant and AGI agreed in their Venture Agreement to seek project financing for the development of the Haile Property if a production decision is made, there is no assurance that project financing will be available and the Registrant may be required to seek its own separate financing. 7 8 PIEDMONT MINING COMPANY, INC. FINANCIAL CONDITION (CONT.) 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. PIEDMONT MINING COMPANY, INC. Date: August 12, 1996 By /s/ Thomas L. Ross, III -------------------------- Thomas L. Ross, III Secretary and Controller (Chief Accounting Officer) 8 -----END PRIVACY-ENHANCED MESSAGE-----