-----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, R+Ka9tGO0jIDGfn0ku6Hd9OCqvf33PlHRb0U53Xz/WV1/zYM1TsqcLmn4hsu4avl kBRAXXG9x25oVugdn9Px7A== 0001096906-02-000875.txt : 20021118 0001096906-02-000875.hdr.sgml : 20021118 20021114181016 ACCESSION NUMBER: 0001096906-02-000875 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020930 FILED AS OF DATE: 20021114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ATLAS MINERALS INC CENTRAL INDEX KEY: 0000008302 STANDARD INDUSTRIAL CLASSIFICATION: GOLD & SILVER ORES [1040] IRS NUMBER: 841533604 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 001-02714 FILM NUMBER: 02827143 BUSINESS ADDRESS: STREET 1: 10920 W. ALAMEDA AVENUE STREET 2: SUITE 205 CITY: LAKEWOOD STATE: CO ZIP: 80226 BUSINESS PHONE: 3033060823 MAIL ADDRESS: STREET 1: 2323 S TROY ST STREET 2: BLDG 5-210 CITY: AURORA STATE: CO ZIP: 80014 FORMER COMPANY: FORMER CONFORMED NAME: ATLAS CORP DATE OF NAME CHANGE: 19920703 10QSB 1 atlas10qsb_sept2002.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB COMMISSION FILE NO. 1-2714 (Mark One) (X) Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 2002 or ( ) Transition Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from _________ to ________ ATLAS MINERALS INC. ------------------- (Exact name of small business issuer as specified in its charter) COLORADO 84-1533604 - ------------------------------------- ------------------ (State or other jurisdiction of (I. R. S. Employer incorporation or organization) Identification No.) 10920 W. Alameda Ave., Suite 205, Lakewood, CO 80226 ---------------------------------------------------- (Address of principal executive offices) (Zip Code) 303-306-0823 ------------ (Issuer's telephone number) 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 past 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 ----- ------- Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes X No ----- ------- As of November 12, 2002, 5,915,103 shares of Common Stock, par value $0.01 per share, were issued and outstanding. Transitional Small Business Disclosure Format (Check one): Yes No X ----- ------ Page 1 of 20 INDEPENDENT ACCOUNTANTS' REPORT The Board of Directors and Stockholders Atlas Minerals Inc. We have reviewed the accompanying consolidated balance sheet of Atlas Minerals Inc. and subsidiaries as of September 30, 2002 and the related consolidated statements of operations for the three-month and nine-month periods ended September 30, 2002 and 2001 and cash flows for the nine-month periods ended September 30, 2002 and 2001. These consolidated financial statements are the responsibility of the Company's management. We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial statements consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the United States of America, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our reviews, we are not aware of any material modifications that should be made to the accompanying consolidated financial statements for them to be in conformity with accounting principles generally accepted in the United States of America. We have previously audited, in accordance with auditing standards generally accepted in the United States of America, the consolidated balance sheet as of December 31, 2001, and the related consolidated statements of operations, stockholders' equity and cash flows (not presented herein) for the year then ended; we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2001, is fairly stated in all material respects, in relation to the consolidated balance sheet from which it has been derived. HORWATH GELFOND HOCHSTADT PANGBURN, P.C. Denver, Colorado November 12, 2002 Page 2 of 20 PART I. FINANCIAL INFORMATION Item 1. Financial Statements. --------------------
Atlas Minerals Inc. Consolidated Balance Sheets (in Thousands) September 30, December 31, 2002 2001 - ----- ----------------------------------------------------------------------------------------------------------- (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 416 $ 417 Trade and other accounts receivable 7 -- Assets held for sale -- 250 CGL claims receivable -- 1,549 Prepaid expenses and other current assets 41 26 ------- ------- Total current assets 464 2,242 ------- ------- Property, plant and equipment 206 5 Less: accumulated depreciation, depletion and amortization (8) (4) ------- ------- 198 1 Deferred acquisition costs 45 -- Assets held for sale 1,004 1,192 Other assets 4 5 ------- ------- $ 1,715 $ 3,440 ======= ======= LIABILITIES Current liabilities: Trade accounts payable $ 40 $ 139 Accrued liabilities 32 70 Estimated reorganization liabilities 32 647 ------- ------- Total current liabilities 104 856 ------- ------- Estimated reorganization liabilities 443 962 Deferred gain 44 -- Other liabilities, long-term 132 142 ------- ------- Total long-term liabilities 619 1,104 ------- ------- Total liabilities 723 1,960 ------- ------- Commitments and contingencies STOCKHOLDERS' EQUITY Preferred stock, par $1 per share; authorized 1,000,000; no shares issued and outstanding -- -- Common stock, par value $0.01 per share; authorized 100,000,000; issued and outstanding, 5,915,000 at September 30, 2002 and 6,062,000 at December 31, 2001 59 61 Capital in excess of par value 2,980 2,999 Deficit (2,047) (1,580) ------- ------- Total stockholders' equity 992 1,480 ------- ------- $ 1,715 $ 3,440 ======= ======= See notes to consolidated financial statements.
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Atlas Minerals Inc Consolidated Statements of Operations (In Thousands, Except Per Share Data, Unaudited) Three Months Ended Nine Months Ended September 30, September 30, -------------------- -------------------- 2002 2001 2002 2001 ------- ------- ------- ------- Mining revenue $ 5 $ -- $ 5 $ -- Costs and expenses: Production costs 48 -- 48 -- Depreciation, depletion and amortization 4 -- 4 2 General and administrative expenses 213 125 433 232 ------- ------- ------- ------- Gross operating loss (260) (125) (480) (234) Other (income) and expense: Interest expense -- -- -- 1 Interest income (2) -- (7) (5) Impairment of assets held for sale 60 -- 60 -- Gain on settlement of CGL claims -- -- (66) -- Other -- -- -- (1) ------- ------- ------- ------- Total other income 58 -- (13) (5) Loss before income taxes (318) (125) (467) (229) Provision for income taxes -- -- -- -- ------- ------- ------- ------- Net loss $ (318) $ (125) $ (467) $ (229) ======= ======= ======= ======= Basic and diluted loss per share of common stock $ (0.05) $ (0.02) $ (0.08) $ (0.04) ======= ======= ======= ======= Weighted average number of common shares outstanding 5,963 6,064 6,028 6,064 ======= ======= ======= ======= See notes to consolidated financial statements.
Page 4 of 20
Atlas Minerals Inc. Consolidated Statements of Cash Flows (In Thousands, Unaudited) Nine Months Ended September 30, ------------------------------ 2002 2001 ------------ ------------ Operating activities: Net loss $ (467) $ (229) Add (deduct) non-cash items Impairment of assets held for sale 60 -- Gain on settlement of CGL claims (66) -- Depreciation, depletion and amortization 4 2 Net change in non-cash items Related to operations (Note 3) (190) (148) ------------ ------------ Cash used in operating activities (659) (375) ------------ ------------ Investing activities: Additions to property, plant and equipment (201) -- Reduction in cash resulting from abandonment of Arisur -- (6) Investment in CGL claims receivable (24) (320) Investment in assets held for sale (71) (90) Settlement of estimated reorganization liabilities (50) -- Deferred acquisition costs (45) -- Proceeds from settlement of CGL receivable 1,639 710 Proceeds from sale of assets held for sale 60 82 ------------ ------------ Cash provided by investing activities 1,308 376 ------------ ------------ Financing activities: Payment of estimated reorganization liabilities (650) (50) ------------ ------------ Cash used in financing activities (650) (50) ------------ ------------ Increase (decrease) in cash and cash equivalents (1) (49) Cash and cash equivalents: Beginning of period 417 119 ------------ ------------ End of period $ 416 $ 70 ============ ============ See notes to consolidated financial statements.
Page 5 of 20 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. There has not been any change in the significant accounting policies of Atlas Minerals Inc. (the "Company") for the periods presented. In the opinion of Management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The results for these interim periods are not necessarily indicative of results for the entire year. These statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-KSB for the fiscal year ended December 31, 2001. 2. The accompanying consolidated financial statements include the accounts of Atlas Minerals Inc. ("Atlas") and its subsidiaries as follows: Atlas Precious Metals Inc. ("APMI") (approximately 85% owned at December 31, 2001 and 96% owned at September 30, 2002), which in turn owns Atlas Gold Mining Inc. ("AGMI") (approximately 63% owned at December 31, 2001 and 89% owned at September 30, 2002), and as of July 2002, White Cliffs Mining, Inc., a wholly-owned subsidiary in which the White Cliffs property is held (Note 4) (collectively the "Company"). 3. The components of the net change in items other than cash related to operating activities as reflected in the Consolidated Statements of Cash Flows are as follows:
Nine Months Ended September 30, ---------------------------------------- (in thousands) 2002 2001 ------------------------------------------------- ------------------ ----------------- Add (deduct) items other than cash: Trade and other accounts receivable $ (7) $ (3) Prepaid expenses and other current assets (35) (12) Trade accounts payable (99) (94) Accrued liabilities (39) (28) Other liabilities, long-term (10) (11) ------------------ ----------------- $ (190) $ (148) ================== =================
During the quarter ended March 31, 2001, the Company abandoned its investment in Arisur. Assets abandoned: (thousands) Current assets, net of cash and cash equivalents $2,517 Property plant and equipment, net 3,601 Long-lived assets 17 ------ 6,135 ------ Liabilities abandoned: Current liabilities 5,710 Long-term liabilities 431 ------ 6,141 ------ Cash and cash equivalents abandoned $ 6 ====== Page 6 of 20 4. In June 2002, the Company purchased the White Cliffs Diatomite Mine and processing facilities located approximately 30 miles north of Tucson, Arizona ("White Cliffs") for $50,000. The property, which has been dormant for several years, consists of approximately 3,200 acres of unpatented placer claims, a fully permitted mine and a processing plant with a nominal annual capacity of at least 50,000 tons of finished product. The property was purchased from Arimetco, Inc., of which the Company's Chairman and Chief Executive Officer, is President. Through September 30, 2002, the Company purchased approximately $147,000 of operating equipment in order to place the White Cliffs property in commercial operation. During the last week of September 2002, White Cliffs shipped 44 tons of product to a single customer under a 220-ton contract, with an additional 71 tons shipped during October 2002. 5. In July 2002, the Company paid its one secured creditor, who held a lien on the Gold Bar mill site and equipment as part of a Court-approved claim against the Company, $60,000. The secured creditor is the Company's President and Chief Financial Officer. 6. During the third quarter 2002, the Company and the Pension Benefit Guaranty Corporation (PBGC) entered into a transaction whereby the Company effectively settled a portion of its "estimated reorganization liabilities". The Company paid $50,000 to PBGC in exchange for PBGC's rights to receive future creditor distributions under APMI's and AGMI's 2000 bankruptcy reorganization plan as well as to acquire the portion of APMI's and AGMI's outstanding common stock owned by PBGC. The common stock owned by PBGC consisted of 133 common share of APMI (11.41% of outstanding shares) and 391 common shares of AGMI (25.78% of outstanding shares). Under the bankruptcy reorganization plan, APMI and AGMI are to sell the "assets held for sale" and distribute the related proceeds to their creditors. At September 30, 2002, APMI and AGMI have no other assets. Therefore, the Company believes that the common stock acquired from PBGC has little to no fair value as of September 30, 2002 and the Company allocated the $50,000 cash paid to the effective settlement of the estimated reorganization liabilities. The carrying value of PBGC's portion of the estimated reorganization liabilities was approximately $94,000. The Company has deferred the $44,000 settlement gain because the ultimate realization of the gain is not assured until APMI and AGMI sell their assets and distribute the proceeds, which management expects to occur over the next several years. 7. In September 2002, the Company signed a 120-day exclusive option agreement to acquire 100% of the outstanding shares of Western Gold Resources, a private Florida company whose primary asset is the Estrades polymetallic mine. During the option period, the Company will conduct extensive due diligence of the property and seek financing for the project as will be required should the Company exercise the option and proceed with development. Assuming positive results from the due diligence and approval from the Board and, as required, by the Company's shareholders, the Company would subsequently merge with Western Gold Resources. The Board has approved the terms of the merger, which contemplates the issuance of 1.2 common shares of the Company for each share of Western Gold, payment of $150,000 in cash, and other considerations. Western Gold has outstanding 11,550,000 shares. The primary shareholder of Western Gold Resources is the Company's Chief Executive Officer. The Company has spent $45,000 as of September 30, 2002 Page 7 of 20 in deferred acquisition costs relating to this option agreement. Should the Company exercise the option agreement, the related deferred acquisition costs will be added to the purchase price and allocated to the assets acquired. If the Company does not exercise the option agreement, the deferred acquisition costs will be expensed. 8. Ongoing management assessment of the carrying value of the assets held for sale at Gold Bar resulted in third quarter 2002 reductions in the carrying value of assets held for sale and the related estimated reorganization liabilities of $450,000 and $390,000, respectively, and an impairment charge of $60,000. The impairment was deemed necessary due to the continuing depression in the mining industry and less than anticipated equipment sales during the year. 9. On August 9, 2002, stock options for 125,000 shares were granted to employees under the Atlas Minerals Inc. 2001 Stock Option Plan. The options granted were at an exercise price of $.21, being the quoted market price of the Company's shares at the date of grant, and expire on August 9, 2007. Page 8 of 20 Item 2. Management's Discussion and Analysis ------------------------------------ "SAFE HARBOR" STATEMENT UNDER THE UNITED STATES PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. This Form 10-QSB contains forward looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Atlas Minerals Inc. is referred to herein as "we" or "our". The words or phrases "would be," "will allow," "intends to," "will likely result," "are expected to," "will continue," "is anticipated," "estimate," "project," or similar expressions are intended to identify "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from those projected in the forward looking statements as a result of a number of risks and uncertainties. Statements made herein are as of the date of the filing of this Form 10-QSB with the Securities and Exchange Commission and should not be relied upon as of any subsequent date. Except as may otherwise be required by applicable law, we do not undertake, and specifically disclaim, any obligation to update any forward-looking statements contained in this Form 10-QSB to reflect occurrences, developments, unanticipated events or circumstances after the date of such statement. RECENT EVENTS On September 22, 1998, Atlas filed a petition for relief under Chapter 11 of the federal bankruptcy laws in the United States Bankruptcy Court for the District of Colorado. On January 26, 1999, APMI and AGMI also filed petitions for relief under Chapter 11. On December 11, 1999, the Bankruptcy Court approved the Reorganization Plan of Atlas, APMI and AGMI (the "Reorganized Company"). Having consummated the Reorganization Plan, Atlas, APMI and AGMI emerged from Chapter 11 on January 10, 2000. Final decrees were issued by the Bankruptcy Court officially closing the APMI and AGMI cases on November 8, 2000 and the Atlas case effective December 31, 2001. As a result of the bankruptcy proceedings, the majority of any remaining claims against the Company are unsecured claims (the "Creditors"). Under the Reorganization Plan, these Creditors received stock representing 67.5% of the Reorganized Company. In addition, the Creditors will receive a percentage distribution upon receipt of proceeds from certain assets of the Reorganized Company. These assets include: 1) proceeds from the salvaging of the Company's Gold Bar mill facility and related assets located near Eureka, Nevada (reorganization value of $940,000 of which Creditors receive approximately 86.4% of net proceeds); 2) proceeds from the sale of the Company's Grassy Mountain property located in eastern Oregon (reorganization value of $925,000 of which Creditors receive approximately 78.8% of net proceeds) and 3) proceeds from commercial general liability claims ("CGL Claims") against various insurance carriers for reimbursement of costs incurred in decommissioning and reclaiming a uranium millsite located near Moab, Utah that was previously owned and operated by the Company. (reorganization value of $1.5 million of which Creditors receive 10% of the first $1.5 million of net proceeds and 50% thereafter). Effective May 2002, the Company received cash settlements from all insurance carriers regarding the ongoing CGL Claims litigation. These settlements in aggregate provided the Company with $2,373,000 cumulative net proceeds during the year 2001 through May 21, 2002. Based on these agreements, Management determined the recorded book value of the asset at Page 9 of 20 December 31, 2001 was undervalued and increased the carrying value by $898,000. The final resolution of such claims resulted in a gain from settlement of CGL claims during second quarter 2002 of $66,000. On May 9, 1999, Arisur (the Company's former subsidiary which owned and operated a mine in Boliva) defaulted on a payment of $478,000 due under its loan agreement with Corporacion Andina de Fomento ("CAF"). During the first quarter of 2001, CAF began foreclosure proceedings against Arisur, and the Company's participation in Arisur's operations was terminated. As a result of this action, the investment in Arisur was effectively abandoned as of January 1, 2001. During the year ended December 31, 2000, the Company recorded an impairment charge of $683,000 related to the Andacaba mine. Neither the Company nor its subsidiaries have guaranteed any liabilities of Arisur. As a result, all revenue, cost of operations, assets and liabilities of Arisur have been eliminated from the financial statements of the Company during 2001 and future years. During December 2001, the Company took additional steps to ensure that any and all remaining liabilities associated with termination of Arisur's operations were extinguished. On December 24, 2001, the Company transferred all of the common stock of Arisur to a Bolivian group, which signed an agreement releasing and indemnifying the Company from any and all liabilities that could be associated with Arisur. In May, 2002, the Company moved from the NQB Pink Sheets and was listed on the OTC Bulletin Board. In June 2002, the Company purchased the White Cliffs Diatomite Mine and processing facilities located approximately 30 miles north of Tucson, Arizona ("White Cliffs") for $50,000. The property, which has been dormant for several years, consists of approximately 3,200 acres of unpatented placer claims, a fully permitted mine and a processing plant with a nominal annual capacity of at least 50,000 tons of finished product. From previous drilling, face sampling, and testing, approximately 2,500,000 tons of diatomite mineralization has to date been identified on the property. The property was purchased from Arimetco, Inc., of which the Company's Chairman and Chief Executive Officer, is President. In July 2002, the Company incorporated in Arizona a new wholly-owned subsidiary, White Cliffs Mining, Inc., in which the White Cliffs mine and related assets will be held. Through September 30, 2002, the Company has purchased approximately $147,000 of operating equipment. In August 2002, the Company commenced commercial mining operations on its White Cliffs diatomite mine. During the last week of September 2002, White Cliffs shipped 44 tons of product to a single customer under a 220-ton contract, with an additional 71 tons shipped during October 2002. In July 2001, an agreement was reached with TRW, Inc. ("TRW") to settle the one remaining adversary proceeding. Under the terms of the agreement, the Company agreed to make a total cash payment of $30,000 to TRW in three equal installments due in October 2001, January 2002, and April 2002. In exchange, TRW agreed to transfer back to the Company all common stock of the Company (146,415 shares) owned by it upon payment of the final installment. In July 2002, the final payment was accepted by TRW from the Company and the 146,415 shares of common stock held by TRW were transferred to the Company. These shares were cancelled during the third quarter of 2002. Page 10 of 20 In September 2002, the Company signed a 120-day exclusive option agreement to acquire 100% of the outstanding shares of Western Gold Resources, a private Florida company whose primary asset is the Estrades polymetallic mine. During the option period, the Company will conduct extensive due diligence of the property and seek financing for the project as will be required should the Company exercise the option and proceed with development. The Estrades property, located approximately 120 miles northwest of Val-d'Or in northwestern Quebec, hosts a polymetallic deposit known to contain gold, silver, lead, copper and zinc. The Estrades property consists of a fully developed mine and mine complex. The mine was last operated in 1992 before reportedly being idled due to depressed metal prices and high contract mining and toll milling costs. Based on the preliminary results of the due diligence work on the Estrades property, current conceptual operating plans envision a mining rate of 500 tonnes per day. Both a copper concentrate and a zinc concentrate would be produced. The Company is currently evaluating the possibility of constructing a mill on site to produce the concentrates as opposed to toll milling. Assuming positive results from the due diligence and approval from the Board and, as required, by the Company's shareholders, the Company would subsequently merge with Western Gold Resources. The Board has approved the terms of the merger, which contemplates the issuance of 1.2 common shares of the Company for each share of Western Gold, payment of $150,000 in cash, and other considerations. Western Gold has outstanding 11,550,000 shares. The primary shareholder of Western Gold Resources is the Company's Chief Executive Officer. During the third quarter 2002, the Company and the Pension Benefit Guaranty Corporation (PBGC) entered into a transaction whereby the Company effectively settled a portion of its "estimated reorganization liabilities". The Company paid $50,000 to PBGC in exchange for PBGC's rights to receive future creditor distributions under APMI's and AGMI's 2000 bankruptcy reorganization plan as well as to acquire the portion of APMI's and AGMI's outstanding common stock owned by PBGC. The common stock owned by PBGC consisted of 133 common share of APMI (11.41% of outstanding shares) and 391 common shares of AGMI (25.78% of outstanding shares). Under the bankruptcy reorganization plan, APMI and AGMI are to sell the "assets held for sale" and distribute the related proceeds to their creditors. At September 30, 2002, APMI and AGMI have no other assets. Therefore, the Company believes that the common stock acquired from PBGC has little to no fair value as of September 30, 2002 and the Company allocated the $50,000 cash paid to the effective settlement of the estimated reorganization liabilities. The carrying value of PBGC's portion of the estimated reorganization liabilities was approximately $94,000. The Company has deferred the $44,000 settlement gain because the ultimate realization of the gain is not assured until APMI and AGMI sell their assets and distribute the proceeds, which management expects to occur over the next several years. It is the intention of Management for the Company to remain in the business of development and exploitation of natural resource properties. Management's current efforts regarding this are being directed toward the identification of possible acquisition opportunities of smaller-scale properties, primarily in the sectors of industrial minerals, base metals, Page 11 of 20 precious metals and oil/natural gas. In the opinion of Management, the Company may have a competitive edge in making such acquisitions in that, being smaller than many of its competitors, it may be able to act more quickly and the smaller, possibly higher grade, properties on which it will most likely focus its efforts should be of little interest to the larger companies. CAPITAL RESOURCE REQUIREMENTS AND LIQUIDITY As of September 30, 2002, the Company's working capital was $360,000, compared to $1,386,000 as of December 31, 2001. The decrease of $1,026,000 was primarily the result of utilizing cash to fund operations for the nine months of 2002. Proceeds from CGL claims were $1,639,000; however, this amount was offset by expenses for the CGL receivables of $25,000, the payment of estimated reorganization liabilities of $650,000, additions to property, plant and equipment of $201,000, settlement of APMI and AGMI estimated reorganization liabilities of $50,000, deferred acquisition costs on the Estrades property of $45,000 and a reduction of current assets held for sale of $200,000. As described above, effective May 2002, the Company received cash settlements with all insurance carriers regarding the CGL Claims litigation. These settlements in aggregate provided the Company with $2,373,000 cumulative net proceeds during the year 2001 through May 21, 2002. The Company expects these proceeds will be adequate to pay general administrative and other operating expenses through 2002. Remaining assets held for sale include the Grassy Mountain property and the Gold Bar mill and related assets. While the Company is confident in the ultimate realization of these assets, it cannot be certain as to the timing or the exact amount of proceeds that will be received. Final pieces of mobile equipment were purchased and commercial operations commenced on the White Cliffs property during the most recent quarter. Pending completion of ongoing marketing studies, should the Company decide to install a calciner at the mill, up to an additional $100,000 may be required. However, it is currently the intention of the Company to trade where possible idled equipment at the Gold Bar mill for additional equipment needs at White Cliffs. Future cash requirements will be funded from the sources noted above and/or alternative sources of financing including loans against the aforementioned assets, equity financing or project financing as deemed necessary. RESULTS OF OPERATIONS The Company had revenues from production of diatomite at the White Cliffs property, which commenced mining operations in August, of $5,000 during both the three-month and nine-month periods ended September 30, 2002 compared to zero for comparable periods in 2001. Production costs, which included expenses associated with mill start-up at White Cliffs, were $48,000 during both the three-month and nine-month periods ended September 30, 2002 compared to zero for comparable periods in 2001. General and administrative expenses for the nine months ended September 30, 2002 were $433,000 compared to $232,000 for the comparable period in 2001. Salaries and benefit costs increased for the nine months ended September 30, 2002 to $127,000 from $59,000 during the same period in 2001. The Page 12 of 20 increase in salaries and benefits is due to hiring 2 non-production related employees at White Cliffs, amounting to $15,000 in related labor and benefit costs, and an increase in employees at the parent company from 1 during the nine month period in 2001 to 3 at September 30, 2002. Directors' fees and expenses increased from $22,000 to $33,000. During the first nine months of 2002, the Board met five times, the Audit Committee twice and the Compensation Committee twice, compared to four Board meetings in the first nine months of 2001. Other professional fees increased from zero for the first nine months of 2001 to $92,000 for the same period in 2002. The increase in other professional fees is due to the hiring on a contract basis a mine manager and various other consultants at White Cliffs prior to employment, $48,000; contracting with a former employee to assist with general administrative matters, $21,000; the retaining of a compliance specialist, $9,000; and outsourcing a part-time administrative assistant, $9,000. Insurance costs increased from $18,000 for the first nine months of 2001 to $36,000 for the comparable period in 2002 due to increased premiums for additional coverage for the Company's directors and officers insurance which became effective in February 2002. During the first nine months of 2002, travel and entertainment costs were $22,000 compared to zero for the same period in 2001 due to travel related to the White Cliffs project of $8,000 and other travel by the Company executives to visit existing properties and promote the Company of $14,000. Partially offsetting the above increases was a $45,000 decrease in legal fees for the nine months ended September 30, 2002 of $29,000 compared to $74,000 for the same period in 2001. The fees related to the 2001 period were higher due to the legal fees associated with the take-over bid by the new management in September 2001. General and administrative expenses for the three-month period ended September 30, 2002 were $213,000 compared to $125,000 for the comparable period in 2001. The increase in costs during the quarter of $88,000 is primarily due to the higher fees paid to outside professionals, higher insurance premiums and higher travel costs as discussed above. In addition, salary and benefits for the quarter ended September 30, 2002 were $81,000 compared to $18,000 for the same period in 2001. The increase is due to having three employees at the parent company and two non-production employees at White Cliffs during third quarter 2002 versus one during most of third quarter 2001. Interest income was $7,000 for the nine-month period ended September 30, 2002 versus $5,000 for the same period in 2001. Although the average cash balance was higher during the nine month period in 2002, interest rates were lower during 2002 versus 2001 resulting in little variance between the two periods. During the three-month period ended September 30, 2002, the Company recorded a $60,000 impairment of assets held for sale relating to Gold Bar. The impairment charge was the net result of reducing the assets held for sale by $450,000 and the related estimated reorganization liabilities by $390,000. The gain on settlement of CGL claims of $66,000 during the nine months ended September 30, 2002 arose as the anticipated net proceeds from the final cash receipts exceeded the carrying value of the CGL claims and the related estimated reorganization liabilities. Item 3. Controls and Procedures ----------------------- On November 11, 2002 ("Evaluation Date"), the Company's management concluded its evaluation of the effectiveness of the design and operation of the Company's disclosure controls and procedures. As of the Evaluation Date, the Company's Page 13 of 20 President and Chief Financial Officer and its Chief Executive Officer concluded that the Company maintains disclosure controls and procedures that are effective in providing reasonable assurance that information required to be disclosed in the Company's reports under the Securities Act of 1934 (Exchange Act) is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to the Company's management, including its President and Chief Financial Officer and its Chief Executive Officer, as appropriate, to allow timely decisions regarding required disclosure. The Company's management necessarily applied its judgment in assessing the costs and benefits of such controls and procedures, which, by their nature, can provide only reasonable assurance regarding management's control objectives. There have been no significant changes in the Company's internal controls or in other factors that could significantly affect these controls subsequent to the Evaluation Date. Page 14 of 20 PART II. OTHER INFORMATION Item 1. Legal Proceedings ----------------- None Item 2. Changes in Securities --------------------- None Item 3. Defaults upon Senior Securities ------------------------------- None Item 4. Submission of Matters to a Vote of Security Holders --------------------------------------------------- None Item 5. Other Information ----------------- None Item 6. Exhibits and Reports on Form 8-K -------------------------------- a. Exhibits 99.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350. Page 19 99.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350. Page 20 b. Reports on Form 8-K A press release dated August 22, 2002 and filed on September 4, 2002, with the Securities and Exchange Commission, announcing that commercial mining operations commenced on the Company's White Cliffs diatomite mine in Arizona, with first production from the property pre-sold primarily as livestock feed supplement. A press release dated and filed on September 9, 2002, with the Securities and Exchange Commission, announcing a 120-day exclusive option agreement to acquire 100% of the outstanding shares of Western Gold Resources, a private Florida company whose primary asset is the Estrades polymetallic mine located in Quebec and which asset consists of a fully developed mine and mine complex. During the option period, the Company will conduct extensive due diligence of the property and seek financing for the project as will be required should the Company exercise the option and proceed with development. Page 15 of 20 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ATLAS MINERALS INC. ------------------- (Registrant) Date: November 12, 2002 By: /s/ H.R. (Roy) Shipes --------------------- H.R. (Roy) Shipes Chief Executive Officer Date: November 12, 2002 By: /s/ Gary E. Davis ----------------- Gary E. Davis President and Chief Financial Officer Page 16 of 20 CERTIFICATION PURSUANT TO RULE 13A-14 OR 15D-14 OF THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, H.R. (Roy) Shipes, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Atlas Minerals Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report. 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report; and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of that date; 5. The registrant's other certifying officers and I have disclosed to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: November 12, 2002 /s/ H.R. (Roy) Shipes ---------------------- H.R. (Roy) Shipes Chief Executive Officer Page 17 of 20 CERTIFICATION PURSUANT TO RULE 13A-14 OR 15D-14 OF THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Gary E. Davis, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Atlas Minerals Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report. 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report; and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of that date; 5. The registrant's other certifying officers and I have disclosed to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: November 12, 2002 /s/ Gary E. Davis ------------------ Gary E. Davis President and Chief Financial Officer Page 18 of 20 Exhibit 99.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Atlas Minerals Inc. (the "Company") on Form 10-QSB for the period ending September 30, 2002, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, H.R. (Roy) Shipes, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002 that: 1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and 2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. By: /s/ H.R. (Roy) Shipes ------------------------ H.R. (Roy) Shipes Chief Executive Officer November 12, 2002 Page 19 of 20 Exhibit 99.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Atlas Minerals Inc. (the "Company") on Form 10-QSB for the period ending September 30, 2002, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Gary E. Davis, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002 that: 1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and 2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. By: /s/ Gary E. Davis ----------------- Gary E. Davis Chief Financial Officer November 12, 2002 Page 20 of 20 -----END PRIVACY-ENHANCED MESSAGE-----