10QSB 1 stgeo.txt THIRD QUARTER REPORT 2001 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 1O-QSB Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarter Ended October 31, 2001 Commission File Number 0-18616 -------------------------------------- ------------------------------ ST. GEORGE METALS, INC. ----------------------------------------------------- (Exact name of registrant as specified In its charter) Nevada 88-0227915 -------- ------------ (State or other jurisdiction of (I.R.S. Employer Identification Number) Incorporation or organization) 9020 Stony Point Parkway, Suite 145, Richmond, Virginia 23235 ------------------------------------------------------- ------- (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code: (804) 272-9020 -------------- 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 October 31, 2001, the number of shares of Common Stock outstanding was 14,487,159. NOTE: The information presented in this Form 10-QSB is unaudited, but in the opinion of management reflects all adjustments (which include only normal recurring adjustments) necessary to fairly present such information. ST. GEORGE METALS, INC. FORM 10-QSB QUARTER ENDED OCTOBER 31, 2000 INDEX PAGE ---- PART I - FINANCIAL INFORMATION ------------------------------ Interim Consolidated Balance Sheets...................................... 3 Interim Consolidated Statement of Income and Deficit..................... 4 Interim Consolidated Statement of Cash Flows............................. 5 Notes to the Interim Consolidated Financial Statements................... 6 Management's Discussion and Analysis of Financial Condition and Results of Operations................................................ 7 PART II - OTHER INFORMATION --------------------------- Items 1 - 6.............................................................. 8-9 Signatures............................................................... 10 -2- ST. GEORGE METALS, INC. (A DEVELOPMENT STAGE COMPANY) INTERIM CONSOLIDATED BALANCE SHEETS AS OF OCTOBER 31, 2001 AND JANUARY 31, 2001 (EXPRESSED IN THOUSANDS OF U.S. DOLLARS)
OCTOBER 31, JANUARY 31, 2001 2001 ----------- ----------- ASSETS CURRENT Cash $ - $ 3 OTHER - Reclamation deposit 78 78 ----------- ----------- $ 78 $ 81 ----------- ----------- LIABILITIES CURRENT Advances from shareholders $ 540 $ 527 Accrued interest payable 6,031 5,253 Accrued mineral interests reclamation costs 90 90 ----------- ----------- 6,661 5,870 LONG TERM-DEBT Other 1,888 1,888 Related parties 5,003 5,003 ----------- ----------- TOTAL LIABILITIES 13,552 12,761 ----------- ----------- SHAREHOLDERS' DEFICIT SHARE CAPITAL Authorized 10,000,000 Preferred shares - Par value $.01 per share 30,000,000 Common shares - Par value $.01 per share Issued and paid in capital 1,450 Series A Preferred shares 1,450 1,450 166,417 Series B Preferred shares 499 499 14,487,159 Common shares 9,285 9,285 Deficit accumulated during development stage (24,708) (23,914) ----------- ----------- (13,474) (12,680) ----------- ----------- TOTAL $ 78 $ 81 ----------- -----------
PREPARED BY MANAGEMENT -3- ST. GEORGE METALS, INC. (A DEVELOPMENT STAGE COMPANY) INTERIM CONSOLIDATED STATEMENT OF INCOME AND DEFICIT FOR THE THREE MONTHS AND NINE MONTHS ENDED OCTOBER 31, 2001 AND 2000 (EXPRESSED IN THOUSANDS OF U.S. DOLLARS)
THREE MONTHS NINE MONTHS ENDED OCT. 31 ENDED OCT. 31 2001 2000 2001 2000 ---------- ---------- ---------- ---------- REVENUE Option fees - 25 - 25 ---------- ---------- ---------- ---------- ADMINISTRATION COSTS General and administrative 12 3 15 4 Interest 266 238 778 738 Professional fees 1 1 2 1 ---------- ---------- ---------- ---------- TOTAL ADMINISTRATIVE COSTS 279 242 795 743 ---------- ---------- ---------- ---------- NET LOSS BEFORE INTEREST INCOME 279 217 795 718 INTEREST INCOME - 1 1 3 ---------- ---------- ---------- ---------- NET LOSS 279 216 794 715 DEFICIT BEGINNING OF PERIOD 24,429 23,454 23,914 22,955 ---------- ---------- ---------- ---------- DEFICIT END OF PERIOD 24,708 23,670 24,708 23,670 ---------- ---------- ---------- ---------- BASIC LOSS PER SHARE IN U.S. DOLLARS $ .02 $ .01 $ .06 $ .05 ---------- ---------- ---------- ---------- WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 14,487,159 14,487,159 14,487,159 14,487,159 ---------- ---------- ---------- ----------
PREPARED BY MANAGEMENT -4- ST. GEORGE METALS, INC. (A DEVELOPMENT STAGE COMPANY) INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED OCTOBER 31, 2001 AND 2000 (EXPRESSED IN THOUSANDS OF U.S. DOLLARS)
NINE MONTHS ENDED OCTOBER 31, 2001 2000 ----------- ----------- FUNDS PROVIDED (USED) BY OPERATING ACTIVITIES Net loss recovery $ (794) $ (715) CHANGES IN OTHER WORKING CAPITAL ITEMS 791 739 ----------- ----------- TOTAL (3) 24 ----------- ----------- FINANCING ACTIVITIES Long-term debt - (27) ----------- ------------ NET INCREASE (DECREASE) IN CASH (3) (3) CASH BALANCE BEGINNING OF PERIOD 3 6 ----------- ----------- CASH BALANCE END OF PERIOD $ 0 $ 3 ----------- -----------
PREPARED BY MANAGEMENT -5- ST. GEORGE METALS, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS OCTOBER 31, 2001 (EXPRESSED IN THOUSANDS OF U.S. DOLLARS) 1. ACCOUNTING POLICIES These interim consolidated financial statements have been prepared in accordance with accounting principles and practices that are generally accepted in the United States. The notes to the Company's (unaudited) consolidated financial statements as of January 31, 2001, substantially apply to the interim financial statements at October 31, 2001, and are not repeated here. 2. INTERIM ADJUSTMENTS The unaudited interim financial information reflects all adjustments which are, in the opinion of management, necessary to a fair statement of the results for the interim period presented. These adjustments are of a normal recurring nature. 3. STATUS OF BUSINESS The Company is not engaged in any active business. There was no change during the quarter ending October 31, 2001, with respect to the Company's continuing efforts to reach an out-of-court accord with its trade creditors. See Item 5, Other Information, of Part II of this Form 10-QSB. PREPARED BY MANAGEMENT -6- Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations - Financial --------------------------------- Revenues. The Company had no revenues during the quarter ended October 31, 2001, compared to $25,000 during the comparable quarter in fiscal 2000. For the nine months ended October 31, 2001, the Company had no revenues compared to $25,000 during the nine months ended October 31, 2000. The revenue in the quarter ended October 31, 2000, was attributable to the annual renewal fee on a previously reported sublease to Triband Resources U.S. Inc. of the Company's remaining 63 claim blocks in the AMAX/Draco property and its leasehold interest in the Whiskey Canyon and Red Cap properties, all as described in the Company's Form 10-KSB for the year ended January 31, 2000. As explained in Item 5 to this Form 10-QSB, Triband Resources terminated its agreement with the Company during the summer of 2001. Costs and Expenses. During the quarter ended October 31, 2001, the Company had total administrative costs of $279,000 compared to $242,000 in the comparable period in the prior year. Administrative costs consisted primarily of accrued interest, which was $266,000 during the current period, compared to $238,000 during the quarter ended October 31, 2000. For the nine months ended October 31, 2001, total administrative costs were $795,000 compared to $743,000 in the comparable period ended October 31, 2000. The increase was attributable to higher interest costs ($778,000 for the current period versus $738,000 for the comparable nine months in the prior period). Interest Income. The Company had no interest income during the quarter ended October 31, 2001, compared to $1,000 during the comparable period in the preceding year. Net Loss. The Company had a net loss for the quarter ended October 31, 2001, of $279,000 (or $.02 per share), compared to $216,000 (or $.01 per share) for the comparable period in the prior year. For the nine months ended October 31, 2001, the Company had a net loss of $794,000 ($.06 per share) compared to $715,000 ($.05 per share) in the nine months ended October 31, 2000. Analysis of Financial Condition ------------------------------- The Company had no material liquidity or capital resources at quarter ended October 31, 2001. At that date, the Company had no current assets and current liabilities of $6.7 million. Current liabilities include $6.0 million of accrued interest payable which is in arrears. A substantial portion of the Company's current liabilities and other indebtedness is owed to related parties. The Company obtained no new financing during the three-month period ended October 31, 2001. Since 1995, the Company has continued to seek to satisfy its trade creditors and other operational expenses other than through a court supervised process. Virtually all trade debt, other than trade advances from one shareholder, have been satisfied or waived. The Company does not presently expect to be in a position to make any payments on its Operations Advances (which are payable solely from net cash flow from the Company's now-terminated Dean Mine operations) or on its Gold Delivery Contracts and $4.3 million principal amount of term debt, both of which categories have been voluntarily subordinated by the holders to the payment of the Operations Advances. -7- PART II - OTHER INFORMATION Item 1. Legal proceedings. (a) None Item 2. Changes in securities. (a) None (b) None Item 3. Defaults upon senior securities. Under the Company's Phase I and II Loan Commitments, non-payment of interest constitutes an event of default; however, a note holder must advise the Company in writing that he declares his debt to be in default. As previously reported, two note holders, one a former related party of the Company, advised the Company in January, 1994, that the Company was in default with respect to the Company's debt obligations to them. The Company advised such holders that it did not agree with their position, and no further actions have been taken by such noteholders. Item 4. Submission of matters to a vote of security holders. None Item 5. Other information. General. The Company's financial resources have been ------- substantially exhausted and management does not know of any significant additional financing available to the Company. The Company has no continuing on-going business operations at this time. The Company has been seeking, since early 1995, to satisfy its trade debt other than through a court supervised process, which would entail significant administrative expenses. The Company has been able to satisfy a substantial portion of its trade debt, but in light of its financial position, it is unlikely any payments will be made on its other indebtedness, which has been voluntary subordinated to the Company's trade creditors. SEC Reporting Obligations. Because of the Company's financial ------------------------- condition and its consequent difficulty paying the attendant legal and accounting expenses, its ability to continue to meet its reporting obligations under the Securities Exchange Act of 1934 remains questionable. The financial statements included with its Form 10-KSB for the year ended January 31, 2001, were not audited by an independent certified accountant, because the Company could not afford the cost of an audit. -8- Inability to Pay Indebtedness. Management does not presently ------------------------------ anticipate that any of its outstanding obligations under its Operations Advances, Gold Delivery Contracts and term debt, a substantial portion of which outstanding obligations are held by members of the Company's board of directors, can be satisfied. Accordingly, management does not believe, as a practical matter, that there is any remaining value to be ascribed to the Company's outstanding preferred stock or common stock. Status of Properties. Effective June 26, 2001, Triband ---------------------- Resources U.S. Inc. gave notice to the Company of termination on its sublease of the Company's AMAX/Draco, Whiskey Canyon and Red Cap claims, under the lease agreement described in the Company's Form 10-KSB for the year ended January 31, 2000. In connection with this termination by Triband, the Company gave notice to the underlying lessors of the Whiskey Canyon and Red Cap claims of the Company's termination of its lease of these claims. The Company continues to hold claims for another year to the AMAX/Draco properties described in its Form 10-KSB for the year ended January 31, 2000. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits: None -------- (b) Reports on Form 8-K: None ------------------- -9- 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. St. George Metals. Inc. ------------------------------------------------- (Registrant) December 6, 2001 By: /s/ C. B. Robertson, III ---------------------------------------------- C. B. Robertson, III - Chairman and Principal Executive Officer December 6, 2001 /s/ Harrison Nesbit, II ------------------------------------------------- Harrison Nesbit, II - Treasurer and Chief Financial and Accounting Officer -10-