-----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, TpEp5q9gbER34YQUCoYbCh3QDq4FUKkPEFuBahaemlh2GYVdjGxbcU+KLfNPeOvY /u0zRoUVjnlQFG3vlGCZYw== 0000933157-97-000013.txt : 19970430 0000933157-97-000013.hdr.sgml : 19970430 ACCESSION NUMBER: 0000933157-97-000013 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970213 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ROYAL SILVER MINES INC CENTRAL INDEX KEY: 0000933157 STANDARD INDUSTRIAL CLASSIFICATION: 1000 IRS NUMBER: 912938293 STATE OF INCORPORATION: UT FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-25170 FILM NUMBER: 97531049 BUSINESS ADDRESS: STREET 1: 10220 N NEVADA STREET 2: STE 230 CITY: SPOKANE STATE: WA ZIP: 99218 BUSINESS PHONE: 5098385111 MAIL ADDRESS: STREET 1: 10220 N NEVADA STREET 2: STE 230 CITY: SPOKANE STATE: WA ZIP: 99218 FORMER COMPANY: FORMER CONFORMED NAME: CONSOLIDATED ROYAL MINES INC DATE OF NAME CHANGE: 19950908 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: December 31, 1996 ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM: __________________________________ Commission File Number: 0-25170 __________________________________ ROYAL SILVER MINES, INC. (Exact name of registrant as specified in its charter) UTAH 87-0306609 (State or other jurisdiction of (I.R.S. Employer Incorporation or organization) Identification Number) 10220 N. Nevada, Suite 230, Spokane, WA 99218 (Address of Principal Executive Offices) (Zip Code) 509-466-3144 Registrant's telephone number, including area code 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 ______ The number of shares outstanding at December 31, 1996: 10,721,104 1 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS OF ROYAL SILVER MINES, INC. (Hereinafter referred to as Registrant or Company) Condensed financial statements, and an accompanying independent accountants' report, are filed as part of this Quarterly Report at pages 7 to 33. In management's opinion, these financial statements present fairly in all material respects Registrant's financial condition and changes in condition as of December 31, 1996 and September 30, 1996, and the results of operations, stockholders' equity and cash flows for the three months ended December 31, 1996 and 1995, and from inception on February 17, 1994 through December 31,1996, in conformance with generally accepted accounting principles. The accompanying financial statements consolidate the financial statements of Celebration Mining Company and Royal Silver Mines, Inc. due to the Reorganization discussed in Note 1 of the financial statements following this Report. All significant intercompany accounts and transactions have been eliminated. Also, the consolidation required a change in fiscal year-end, from November 30 (Celebration) to September 30 (Royal). The financial statements account for the Reorganization using the purchase method of accounting (see Note 1 to the financial statements). Celebration is treated as the acquiring company for financial reporting purposes because its shareholders constitute greater than 50 percent of the combined shareholder group. In conformity with generally accepted accounting principles and the Company's accounting policy, Celebration is recognized as the predecessor entity. Consequently, Celebration's assets and liabilities were not adjusted in the accompanying financial statements. The financial statements for the period from the inception of Celebration on February 17, 1994 to November 30, 1994 ("Fiscal 1994") do not include the balance sheet data or results of operations of Consolidated Royal Mines, Inc. The accompanying financial statements represent the activities of Royal Silver Mines and Celebration, but are not considered consolidated financial statements since Royal Silver is the successor to Celebration. As discussed in greater detail under Item 2 below, a substantial portion of Registrant's assets consist of investments in mineral properties for which additional exploration is required to determine if they contain ore reserves that are economically recoverable. The realization of these investments is contingent to large extent upon the success of Registrant's property transactions as a whole, the existence of economically recoverable reserves, the ability of the Company to obtain financing or make other arrangements for development, and upon future profitable production. Accordingly, the accompanying financial statements make no provision for any asset impairment or other adjustment that might result from the outcome of this uncertainty. 2 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES. There is considerable risk in any mining venture, and there can be no assurance that the Company's operations will be successful or profitable. Exploration for commercially minable ore deposits is highly speculative and involves risks greater than those involved in the discovery of mineralization. Mining companies use the evaluation work of professional geologists, geophysicists, and engineers in determining whether to acquire an interest in a specific property, or whether or not to commence exploration or development work. These estimates are not always scientifically exact, and in some instances result in the expenditure of substantial amount of money on a property before it is possible to make a final determination as to whether or not the property contains economically minable ore bodies. The economic viability of a property cannot be finally determined until extensive exploration and development work, plus a detailed economic feasibility study, has been performed. Also, the market prices for mineralization produced are subject to fluctuation and uncertainty, which may negatively affect the economic viability of properties on which expenditures have been made. During the development stage of the Company, from inception to December 31, 1996, the Company accumulated a deficit of $3,397,141. At December 31, 1996, $4,801,941 of the Company's total assets of $5,286,472 were investments in mineral properties. Additional exploration is required to substantiate or determine whether these mineral properties contain ore reserves that are economically recoverable. The realization of these investments is dependent upon the success of future property sales, the existence of economically recoverable reserves, the ability of the Company to obtain financing, the Company's success in carrying out its present plans or making other arrangements for development, and upon future profitable production. The ultimate outcome of these investments cannot be determined at this time; accordingly, no provision for any asset impairment that may result, in the event the Company is not successful in developing or selling these properties, has been made in the Company's financial statements. LIQUIDITY AND CAPITAL RESOURCES. The Company currently has no revenues but, as explained above, has an accumulated deficit. Although it has recurring losses from operations, the Company has increased its operating capital and improved its financial condition and ability. Regarding its losses from operations, the Company cannot assure that it will be able to fully carry out its plans as budgeted without additional operating capital. At December 31, 1996, the Company had working capital of $390,852. This amount is a significant improvement in liquidity and capital resources from its position of negative working capital of ($3,068) at December 31, 1995. In the three months ending December 31, 1996, the Company's working capital has decreased by $295,721 (from $686,573 at September 30) because of the absence of cash stock sales in this quarter, the presence of ongoing administrative expenses being funded by diminishing cash resources, and the reduction of short-term debt. During the same three month period, the Company's cash decreased from $688,716 to $347,505. In the first quarter of fiscal 1997, the Company reduced its short-term debt position from $60,000 to $35,000 by paying off a $25,000 promissory note. In the same quarter, the Company reduced its accrued expenses and accounts payable. Accordingly, the Company's current liabilities shrank from $119,867 at September 30, 1996 to $81,245 at December 31, 1996. 3 The Company has estimated that it will need capital resources of approximately $40,000-50,000 per month to meet its estimated expenditures for fiscal 1997. In 1996, acting on instructions from the Board, several key members of management, in particular the CEO of the Company, met with experienced financial and investment firms through out Europe and North America and negotiated the preliminary terms and arrangements for such capital fund raising. During the third fiscal quarter of 1996, the Company raised $876,053 in funds, primarily through the private placement of shares and warrants. The Company is continuing with the previously described negotiations and various alternatives to raise capital. The Board of Directors reasonably believes that the Company is able to engage in nearly any size operation or scope of mining activity depending on the circumstances and merits of each proposed operation or mining activity. Accordingly, the Board has not limited the size of operation or scope of project which it believes is reasonable for management to consider in achieving the Company's business plan. Therefore, management has been authorized to consider and review numerous proposals and, upon satisfactory assessment, to then make a specific determination as to an estimated range of funding amounts that each such proposal reasonably might require. Inasmuch as the Company has not yet determined in detail the specifications of the project, operation or mining activity that it intends to undertake, management is not able at this time to provide a detailed listing or exact range of operation costs, including increases in general and administrative expense, if any. However, the Company plans to fund any increases in general and administrative expense principally from joint venture revenues or funds it may receive or savings it may realize through corporate restructuring or business combination arrangements. Funds required to finance the Company's exploration and development of mineral properties are expected to come primarily from the contributions of its joint venture participants, and from the funds generated from such joint ventures and other lease or royalty arrangements. The Company consistently has made full and timely payment of its expenses, in particular to the various governmental payees it interacts with, and has met its obligations to the entities which provide its personnel, office space, and equipment needs. The Company currently is seeking alternate sources of working capital sufficient to increase the funding of additional general and administrative expenses that may become necessary as the Company's business plan develops, and to continue meeting its ongoing payment obligations for its leases to governmental entities. RESULTS OF OPERATIONS COMPARISON OF THE THREE MONTHS ENDED DECEMBER 31, 1995 AND DECEMBER 31, 1996, RESPECTIVELY. General and administrative expenses decreased from $363,359 during the first quarter of fiscal 1996 to $340,173 during the first quarter of fiscal 1997. This decrease is principally due to reductions in consulting expenses and amortization expense which in aggregate more than offset increased compensation to officers and directors. As a result, during the first quarter of fiscal 1996 compared to the first quarter of 1997, the net loss decreased from $366,109 to $339,324, while the net loss per share decreased from $0.05 to $0.03. 4 The Company is unable to fully determine the impact of future transactions on its operating capital. Hence, the Company has determined not to incur and does not have any commitments or plans for material capital expenditures during the remainder of its current fiscal year for which it does not have a reasonably available source of payment. It is uncertain what effect this decision may have with respect to restricting capital expenditures. On the one hand, if the Company were to continue such restriction, the likely effect might be adverse to the preservation of its assets and capital base, thereby narrowing the scope of plans for future operations and constricting liquidity. On the other hand, if the Company were to discontinue such restriction without an increase in sustained cash flow, the likely effect of that might be an increase in accumulated deficits which could be adverse to the Company's financial condition with respect to liabilities and stockholders' equity. Therefore, while the Company continues to seek a joint venture participant and additional sources of capital for financing operations during the remainder of its current fiscal year, the Company will continue to carefully monitor its capital expenditures. 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. None. 5 _____________________________________________________________________________ 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. ROYAL SILVER MINES, INC. /s/ Howard Crosby February 13, 1997 ____________________________________ Dated: _________________ By: Howard Crosby Its: Chief Executive Officer /s/ Robert Jorgensen February 13, 1997 ___________________________________ Dated: _________________ By: Robert Jorgensen Its: Principal Accounting Officer 6 ROYAL SILVER MINES, INC. (A Development Stage Company) Financial Statements December 31, 1996 and September 30, 1996 7
C O N T E N T S Independent Auditor's Report F1 Balance Sheets F2-3 Statements of Operations F4 Statements of Stockholders' Equity F5-10 Statements of Cash Flows F11-13 Notes to the Financial Statements F14
8 (Company Logo) Williams & Webster, P.S. Certified Public Accountants Seafirst Financial Center 601 W. Riverside, Suite 1970 Spokane, WA 99201-0611 Tel: (509) 838-5111 Fax: (509) 624-5001 The Board of Directors Royal Silver Mines, Inc. (A Development Stage Company) Spokane, Washington INDEPENDENT AUDITOR'S REPORT We have audited the accompanying balance sheet of Royal Silver Mines, Inc. (a development stage company) as of September 30, 1996, and the related statements of operations, shareholders' equity, and cash flows for the year then ended, and from inception on February 17, 1994 through September 30, 1996. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements of Royal Silver Mines, Inc. as of September 30, 1995 were audited by other auditors whose report dated December 5, 1995 expressed an unqualified opinion on those statements. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Royal Silver Mines, Inc. as of September 30, 1996, and the results of their operations and their cash flows for the year then ended and from inception on February 17, 1994 through September 30, 1996 in conformity with generally accepted accounting principles. Williams & Webster, P.S. Certified Public Accountants Spokane, Washington December 13, 1996 F-1 9 ROYAL SILVER MINES, INC. (A Development Stage Company) BALANCE SHEETS
December 31, September 30, 1996 1996 (Unaudited) (Audited) ______________ _____________ ASSETS CURRENT ASSETS Cash $ 347,505 $ 688,716 Note receivable 100,000 100,000 Interest receivable 4,166 333 Prepaid expenses 20,426 17,391 ______________ _____________ TOTAL CURRENT ASSETS 472,097 806,440 ______________ _____________ MINERAL PROPERTIES 4,801,941 4,785,665 PROPERTY AND EQUIPMENT Furniture and equipment 15,185 15,802 Less - accumulated depreciation (2,985) (2,809) ______________ _____________ TOTAL PROPERTY AND EQUIPMENT 12,200 12,993 ______________ _____________ OTHER ASSETS Deferred debt issuance costs, net - - Organization costs, net 234 259 ______________ _____________ TOTAL OTHER ASSETS 234 259 ______________ _____________ TOTAL ASSETS $ 5,286,472 $ 5,605,357 ============== ============= The accompanying notes are an integral part of these financial statements. F-2 10 ROYAL SILVER MINES, INC. (A Development Stage Company) BALANCE SHEETS (Continued)
December 31, September 30, 1996 1996 (Unaudited) (Audited) ______________ _____________ LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 15,083 $ 25,135 Payable to related parties - 289 Accrued expenses 31,162 34,443 Notes payable 35,000 60,000 ______________ _____________ TOTAL CURRENT LIABILITIES 81,245 119,867 ______________ _____________ LONG-TERM DEBT - - COMMITMENTS AND CONTINGENCIES - - SHAREHOLDERS' EQUITY Common stock, $.01 par value; 40,000,000 shares authorized, 10,721,104 and 10,649,854 shares issued and outstanding, respectively 107,211 106,499 Additional paid-in capital 8,495,157 8,436,808 Deficit accumulated during development stage (3,397,141) (3,057,817) ______________ _____________ TOTAL SHAREHOLDERS' EQUITY 5,205,227 5,485,490 ______________ _____________ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 5,286,472 $ 5,605,357 ============== =============
The accompanying notes are an integral part of these financial statements. F-3 11 ROYAL SILVER MINES, INC. (A DEVELOPMENT STAGE COMPANY) STATEMENTS OF OPERATIONS
Period From February 17, 1994 Three months Three months (inception) ended ended through December 31, December 31, December 30, 1996 1995 1996 _____________ _____________ _____________ REVENUES $ - $ - $ - _____________ _____________ _____________ GENERAL AND ADMINISTRATIVE EXPENSES Mineral leases - 2,270 8,965 Depreciation and amortization 9,587 20,448 107,656 Officers and directors compensation 73,625 42,600 905,573 General and administrative 256,961 298,041 1,908,967 _____________ _____________ _____________ Total expenses 340,173 363,359 2,931,161 _____________ _____________ _____________ OPERATING LOSS (340,173) (363,359) (2,931,161) _____________ _____________ _____________ OTHER EXPENSES Interest income 3,833 - 3,833 Interest expense (1,215) (2,750) (73,306) Loss on disposition of assets (1,769) - (346,507) _____________ _____________ _____________ Total other expenses 849 (2,750) (415,980) _____________ _____________ _____________ NET LOSS $ (339,324) $ (366,109) $ (3,347,141) ============= ============= ============= NET LOSS PER COMMON SHARE $ (0.03) $ (0.05) $ (0.51) ============= ============= ============= WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 10,701,742 8,009,916 6,621,722 ============= ============= =============
The accompanying notes are an integral part of these financial statements. F-4 12 ROYAL SILVER MINES, INC. (A Development Stage Company) STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT) (Unaudited)
Common Stock Total _________________________ Additional Stock- Number Paid-in Accumulated holders of Shares Amount Capital Deficit Equity ___________ ___________ ____________ ____________ ____________ Balance February 17, 1994 - $ - $ - $ - $ - ___________ ___________ ____________ ____________ ____________ Issuance in May 1994 of shares at $.002 per share to officers and directors in exchange for assignment of mining property option 2,250,000 22,500 (18,500) - 4,000 Issuance in July 1994 of shares for cash at $.402 in private placement, net of costs 1,050,000 10,500 411,116 - 421,616 Issuance in August 1994 of shares to a director in exchange for services, valued at $.417 per share 150,000 1,500 61,000 - 62,500 Net loss for the year ended November 30, 1994 - - - (211,796) (211,796) ____________ ___________ ____________ ____________ ____________ Balance, November 30, 1994 3,450,000 34,500 453,616 (211,796) 276,320 ____________ ___________ ____________ ____________ ____________
The accompanying notes are an integral part of these financial statements. F-5 13 ROYAL SILVER MINES, INC. (A Development Stage Company) STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT) (Unaudited)
Common Stock Total _________________________ Additional Stock- Number Paid-in Accumulated holders of Shares Amount Capital Deficit Equity ___________ ___________ ____________ ____________ ____________ Balance, forward November 30, 1994 3,450,000 34,500 453,616 (211,796) 276,320 ____________ ___________ ____________ ____________ ____________ Issuance of shares in debt offering at $.03 per share 416,250 4,163 9,712 - 13,875 Issuance of shares for mineral properties valued at $1.00 per share 262,500 2,625 259,875 - 262,500 Issuance of shares for cash at $1.00 per share 15,000 150 14,850 - 15,000 Stock issuance costs - - (58,202) - (58,202) Issuance of shares to acquire Consolidated Royal Mines, Inc. at $.15 per share 2,434,563 24,346 335,750 - 360,096 Issuance of shares to directors and employees for services at prices ranging from $2.00 to $2.50 per share 12,750 127 29,473 - 29,600 ____________ ___________ ____________ ____________ ____________ Balance forward 6,591,063 65,911 1,045,074 (211,796) 899,189 ____________ ___________ ____________ ____________ ____________
The accompanying notes are an integral part of these financial statements. F-6 14 ROYAL SILVER MINES, INC. (A Development Stage Company) STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT) (Unaudited)
Common Stock Total _________________________ Additional Stock- Number Paid-in Accumulated holders of Shares Amount Capital Deficit Equity ___________ ___________ ____________ ____________ ____________ Balance, forward 6,591,063 65,911 1,045,074 (211,796) 899,189 ____________ ___________ ____________ ____________ ___________ Issuance of shares in exchange for mineral properties at prices ranging from $3.13 to $3.25 per share 800,000 8,000 2,530,126 - 2,538,126 Issuance of shares for cash at prices ranging from $1.50 to $2.00 per share 166,000 1,660 247,340 - 249,000 Issuance of shares in exchange for debt at $1.50 per share 200,000 2,000 298,000 - 300,000 Net loss for the ten months ended September 30, 1995 - - - (750,939) (750,939) ____________ ___________ ____________ ____________ ____________ Balance, September 30, 1995 7,757,063 $ 77,571 $ 4,120,540 $ (962,735) $ 3,235,376 ____________ ___________ ____________ ____________ ____________ Issuance of shares for cash at $1.50 per share 1,176,832 11,769 1,754,010 - 1,765,779 ____________ ___________ ____________ ____________ ____________ Balance forward 8,933,895 89,340 5,874,550 (962,735) 5,001,155 ____________ ___________ ____________ ____________ ____________
The accompanying notes are an integral part of these financial statements. F-7 15 ROYAL SILVER MINES, INC. (A Development Stage Company) STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT) (Unaudited)
Common Stock Total _________________________ Additional Stock- Number Paid-in Accumulated holders of Shares Amount Capital Deficit Equity ___________ ___________ ____________ ____________ ____________ Balance, forward 8,933,895 89,340 5,874,550 (962,735) 5,001,155 ___________ ___________ ____________ ____________ ____________ Issuance of shares to directors and employees for services at $1.50 per share 222,700 2,227 331,823 - 334,050 Issuance of shares in exchange for debt and accrued interest at $1.50 per share 406,050 4,060 605,015 - 609,075 Issuance of shares for cash at $2.20 per share 150,000 1,500 328,500 - 330,000 Issuance of warrants for cash at $.05 per warrant - - 41,068 - 41,068 Issuance of shares for cash at $1.62 per share 65,000 650 104,650 - 105,300 Issuance of shares for cash to directors and employees at prices ranging from $1.62 to $2.08 per share 107,500 1,075 181,175 - 182,250 ____________ ___________ ____________ ____________ ____________ Balance forward 9,885,145 98,852 7,466,781 (962,735) 6,602,898 ____________ ___________ ____________ ____________ ____________
The accompanying notes are an integral part of these financial statements. F-8 16 ROYAL SILVER MINES, INC. (A Development Stage Company) STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT) (Unaudited)
Common Stock Total _________________________ Additional Stock- Number Paid-in Accumulated holders of Shares Amount Capital Deficit Equity ___________ ___________ ____________ ____________ ____________ Balance, forward 9,885,145 98,852 7,466,781 (962,735) 6,602,898 ___________ ___________ ____________ ____________ ____________ Issuance of shares for cash at $0.75 per share 200,000 2,000 147,985 - 149,985 Issuance of shares for cash at $1.70 per share 250,000 2,500 422,500 - 425,000 Cancellation of 35,000 shares received in exchange for return of mining property (35,000) (350) (109,025) - (109,375) Payment to Centurion Mines for option to repurchase stock - - - (50,000) (50,000) Issuance of shares for joint venture in mining property at $1.50 per share 100,000 1,000 149,000 - 150,000 Repurchase of 25,000 shares issued for joint venture at $1.40 per share (25,000) (250) (34,750) - (35,000) ____________ ___________ ____________ ____________ ____________ Balance forward 10,375,145 103,752 8,042,491 (1,012,735) 7,133,508 ____________ ___________ ____________ ____________ ____________
The accompanying notes are an integral part of these financial statements. F-9 17 ROYAL SILVER MINES, INC. (A Development Stage Company) STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT) (Unaudited)
Common Stock Total _________________________ Additional Stock- Number Paid-in Accumulated holders of Shares Amount Capital Deficit Equity ___________ ___________ ____________ ____________ ____________ Balance, forward 10,375,145 103,752 8,042,491 (1,012,735) 7,133,508 ___________ ___________ ____________ ____________ ____________ Issuance of shares for mining property at $1.50 per share 20,000 200 29,800 - 30,000 Issuance of shares to noteholders for extension of notes at $1.50 per share 39,375 394 58,669 - 59,063 Issuance of shares for services at $1.50 per share 215,334 2,153 320,848 - 323,001 Stock issuance costs - - (15,000) - (15,000) Net loss for the year ended September 30, 1996 - - - (2,045,082) (2,045,082) ____________ ___________ ____________ ____________ ____________ Balance, September 30, 1996 10,649,854 $ 106,499 $ 8,436,808 $ (3,057,817) $ 5,485,490 ____________ ___________ ____________ ____________ ____________
The accompanying notes are an integral part of these financial statements. F-10 18 ROYAL SILVER MINES, INC. (A Development Stage Company) STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT) (Unaudited)
Common Stock Total _________________________ Additional Stock- Number Paid-in Accumulated holders of Shares Amount Capital Deficit Equity ___________ ___________ ____________ ____________ ____________ Balance, forward 10,649,854 $ 106,499 $ 8,436,808 $ (3,057,817) $ 5,485,490 ___________ ___________ ____________ ____________ ____________ Stock issuance costs - - (30,000) - (30,000) Issuance of shares for services at $1.25 per share 71,250 712 88,349 - 89,061 Net loss for the three months ended December 31, 1996 - - - (339,324) (339,324) ___________ ___________ ____________ ____________ ____________ 10,721,104 $ 107,211 $ 8,495,157 $ (3,397,141) $ 5,205,227 =========== =========== ============ ============ ============ The accompanying notes are an integral part of these financial statements. F-11 19 ROYAL SILVER MINES, INC. (A Development Stage Company) STATEMENTS OF CASH FLOWS (Unaudited)
From February 17, Three Months Three Months 1994 (Inception) Ended Ended Through December 31, December 31, December 31, 1996 1995 1996 ______________ ______________ ______________ Cash flows from operating activities: Net loss $ (339,324) $ (366,109) $ (3,347,141) ______________ ______________ ______________ Adjustments to reconcile net loss to net cash used by operating activities: Gain on sale of equipment 1,769 - 1,769 Depreciation and amortization 9,587 20,448 110,203 Issuance of common stock for services 89,061 78,600 838,214 Write-off of joint venture costs - - 150,000 Changes in assets and liabilities: Note receivable - - (100,000) Interest receivable (3,833) - (4,166) Prepaid expenses (11,241) (3,195) (28,636) Other assets - - (3,801) Accounts payable (10,053) 30,748 15,083 Accrued expenses (3,282) 10,092 31,162 Payable to related parties (289) - 300,000 ______________ ______________ ______________ Net cash used in operating activities (267,605) (229,416) (2,037,313) ______________ ______________ ______________ Cash flows from investing activities: Sale of assets 500 - 500 Purchase and development of mineral properties (16,276) (237,191) (1,621,112) Purchase of fixed assets (2,830) (2,117) (18,632) ______________ ______________ ______________ Net cash provided used in investing activities (18,606) (239,308) (1,639,244) ______________ ______________ ______________ The accompanying notes are an integral part of these financial statements. F-12 20 ROYAL SILVER MINES, INC. (A Development Stage Company) STATEMENTS OF CASH FLOWS (Unaudited)
From February 17, Three Months Three Months 1994 (Inception) Ended Ended Through December 31, December 31, December 31, 1996 1995 1996 ______________ ______________ ______________ Cash flows from financing activities: Stock issuance and offering costs (30,000) - (174,835) Proceeds received on long-term debt - - 675,000 Payments made on notes payable (25,000) - (139,206) Issuance of common stock for cash - 559,500 3,659,814 Payment for option to repurchase stock - - (50,000) Issuance of common stock for accrued interest - - 38,158 Issuance of common stock for extension of notes payable maturation - - 59,063 Payment for return of stock issued for mining property interest - - (35,000) Payment of joint venture costs - - (50,000) Issuance of warrants for cash - - 41,068 ______________ ______________ ______________ Net cash provided by financing activities (55,000) 559,500 4,024,062 ______________ ______________ ______________ Net increase in cash $ (341,211) $ 90,776 $ 347,505 Cash, beginning of period 688,716 151,698 - ______________ ______________ ______________ Cash, end of period $ 347,505 $ 242,474 $ 347,505 ============== ============== ============== The accompanying notes are an integral part of these financial statements. F-13 21 ROYAL SILVER MINES, INC. (A Development Stage Company) STATEMENTS OF CASH FLOWS (Unaudited)
From February 17, Three Months Three Months 1994 (Inception) Ended Ended Through December 31, December 31, December 31, 1996 1995 1996 ______________ ______________ ______________ Supplemental cashflow disclosure: Income taxes $ - $ - $ 350 Interest $ 5,000 $ - $ 28,398 Non-cash financing activities: Common stock issued for services rendered $ 89,061 $ 78,600 $ 838,212 Common stock issued for mineral properties $ - $ - $ 2,980,626 Common stock issued for exchange for debt $ - $ 609,075 $ 922,950 Common stock issued in acquisition of Consolidated Royal Mines, Inc. $ - $ - $ 360,096 Option rights acquired in exchange for a payable $ - $ - $ 79,000 Common stock issued for assignment of mining property options $ - $ - $ 4,000
The accompanying notes are an integral part of these financial statements. F-14 22 ROYAL SILVER MINES, INC. (A Development Stage Company) Notes to the Financial Statements December 31, 1996 NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS Royal Silver Mines, Inc. (Royal) was incorporated in April of 1969 under the laws of the State of Utah primarily for the purpose of acquiring and developing mineral properties. Royal conducts its business as a "junior" natural resource company, meaning that it intends to receive income from property sales or joint ventures with larger companies. Celebration Mining Company (Celebration), currently a wholly-owned subsidiary of Royal was incorporated for the purpose of identifying, acquiring, exploring and developing mining properties. Celebration was organized on February 17, 1994 as a Washington Corporation. Celebration has not yet realized any revenues from its planned operations. On August 8, 1995, Royal and Celebration completed an Agreement and Plan of Reorganization whereby the Company issued 4,143,750 shares of its common stock and 1,455,000 warrants in exchange for all of the outstanding common stock of Celebration. Pursuant to the reorganization the name of the Company was changed to Royal Silver Mines, Inc. Immediately prior to the Agreement and Plan of Reorganization, the Company had 2,375,463 common shares issued and outstanding. The acquisition was accounted for as a purchase by Celebration of Royal, because the shareholders of Celebration control the company after the acquisition. Therefore, Celebration is treated as the acquiring entity. There was no adjustment to the carrying value of the assets or liabilities of Royal in the exchange as the market value approximated the net carrying value. Royal is the acquiring entity for legal purposes and Celebration is the surviving entity for accounting purposes. The $4,801,941 cost of mineral properties included in the accompanying balance sheet as of December 31, 1996 is related to exploration properties. The Company has not determined whether the exploration properties contain ore reserves that are economically recoverable. The ultimate realization of the Company's investment in exploration properties is dependent upon the success of future property sales, the existence of economically recoverable reserves, the ability of the Company to obtain financing or make other arrangements for development and upon future profitable production. The ultimate realization of the Company's investment in exploration properties cannot be determined at this time and, accordingly, no provision for any asset impairment that may result, in the event the Company is not successful in developing or selling these properties, has been made in the accompanying financial statements. The Company is actively seeking additional capital and management believes the properties can ultimately be sold or developed to enable the Company to continue its operations. However, there are inherent uncertainties in mining operations and management cannot provide assurances that it will be successful in this endeavor. Furthermore, the Company is in the development stage as it has not realized any significant revenues from its planned operations. F-15 23 ROYAL SILVER MINES, INC. (A Development Stage Company) Notes to the Financial Statements December 31, 1996 NOTE 2 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Accounting Method The Company's financial statements are prepared using the accrual method of accounting. Loss Per Share Loss per share was computed by dividing the net loss by the weighted average number of shares outstanding during the year The weighted average number of shares was calculated by taking the number of shares outstanding and weighing them by the amount of time they were outstanding. The outstanding warrants were not included in the computation of loss per share because the exercise price of the outstanding warrants is higher than the market price of the stock, thereby causing the warrants to be antidilutive. Cash Equivalents The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Mineral Properties Costs of acquiring, exploring and developing mineral properties are capitalized by project area. Costs to maintain the mineral rights and leases are expensed as incurred. When a property reaches the production stage, the related capitalized costs will be amortized, using the units of production method on the basis of periodic estimates of ore reserves. Mineral properties are periodically assessed for impairment of value and any losses are charged to operations at the time of impairment. Should a property be abandoned, its capitalized costs are charged to operations. The Company charges to operations the allocable portion of capitalized costs attributable to properties sold. Capitalized costs are allocated to properties sold based on the proportion of claims sold to the claims remaining within the project area. Concentration of Risk The Company maintains its cash accounts in primarily one commercial bank in Spokane, Washington. Accounts are guaranteed by the Federal Deposit Insurance Corporation (FDIC) up to $100,000. The Company's cash balance exceeds that amount by $247,505 at December 31, 1996. F-16 24 ROYAL SILVER MINES, INC. (A Development Stage Company) Notes to the Financial Statements December 31, 1996 Provision For Taxes At December 31, 1996, the Company had net operating loss carryforwards of approximately $3,130,000 that may be offset against future taxable income through 2011 No tax benefit has been reported in the financial statements as the Company believes there is a 50% or greater chance the net operating loss carryforwards will expire unused. Accordingly, the potential tax benefits of the net operating loss carryforwards are offset by a valuation allowance of the same amount. Recently Issued Accounting Standards In March 1995, the Financial Accounting Standards Board issued a new statement titled "Accounting for Impairment of Long-Lived Assets." This new standard is effective for years beginning after December 15, 1995. In complying with this standard, the Company has reviewed its long-lived assets at December 31, 1996, and concluded that no events or change in circumstances have transpired which indicate that the carrying value of its assets may not be recoverable. The Company does not believe that adoption of the new standard will have a material effect on its financial statements in the current fiscal year. In October 1995, the Financial Accounting Standards Board issued a new statement titled "Accounting for Stock-Based Compensation " (FAS 123). The new statement is effective for fiscal years beginning after December 15, 1995. FAS 123 encourages, but does not require, companies to recognize compensation expense for grants of stock, stock options, and other equity instruments to employees based on fair value. Companies that do not adopt the fair value accounting rules must disclose the impact of adopting the new method in the notes to the financial statements. Transactions in equity instruments with non-employees for goods or services must be accounted for on the fair value method. The Company currently intends to adopt the fair value accounting prescribed by FAS 123. However, the Company intends to continue its analysis of FAS 123 to determine its ultimate effect in the future. NOTE 3 - MINERAL PROPERTIES Utah Mining Property Joint Venture In October 1994, Celebration and United Silver Mine, Inc., (United ) entered into a joint venture agreement, whereby Celebration could acquire up to an 80% interest in a mining property located in the State of Utah. Under the terms of the agreement, United contributed real properties for an initial 75% interest in the joint venture, and Celebration was to remove all liens associated with the real properties by paying $175,000 to a bank which was the primary lien holder for its initial 25% interest in the venture. F-17 25 ROYAL SILVER MINES, INC. (A Development Stage Company) Notes to the Financial Statements December 31, 1996 NOTE 3 - MINERAL PROPERTIES (Continued) Celebration expended $175,000 to purchase the aforementioned promissory note. The property was auctioned in a public auction in May, 1995 and by virtue of Celebration's first position lien, Celebration was able to successfully bid the full amount of the underlying promissory note. Although additional expenditures have been made on the property through December 31, 1996, no further funds toward the joint venture have been expended by Celebration, which owns an undivided 25% interest in the property. Shoshone County Idaho Mineral Lease In February 1995, Celebration entered into an agreement to acquire a fifty- year renewable mineral lease on a property in Shoshone County, Idaho. The mining property consists of twelve patented claims and associated Idaho state leases. In connection with this lease, Celebration paid $50,000 and issued 175,000 shares of common stock. In addition, 10,000 shares were issued to a new director for his assistance in obtaining this lease. Celebration subsequently paid $950,000 for the option of extending its lease for an additional forty-nine years. When, and if, the property achieves gross sales of $40,000,000, Celebration will be obligated to pay an additional 0.5% royalty on future sales. Furthermore, beginning after September 1, 1995, and at such time as the average price of silver has reached $6.00 per ounce for a 30-day period, Celebration is obligated to spend not less than $2,000,000 during the subsequent 36 months to de-water and repair the mine. Thereafter, Celebration will be required to maintain the mine in a condition to allow it to be put into production within sixty days. There are certain claims by the U.S. Environmental Protection Agency and the County on this property for which the lessor is obligated to pay. In the event these claims are not satisfactorily resolved, they may effect Celebration's rights to the property. Australian Mineral Property Joint Venture In March 1995, Celebration entered into a joint venture agreement with an Australian company for exploration of a certain mineral property in Australia. Under the original terms of the joint venture agreement, Celebration acquired a 10% interest by paying $100,000 in April 1995. No additional funds where paid or required to be paid subsequent to the initial payment. Washington and Idaho Mineral Properties During the year ended September 30, 1995, Celebration purchased through the issuance of 800,000 shares of its common stock, various mineral properties located in the States of Washington and Idaho. The mineral properties were recorded at the fair market value of the shares paid on the date of issuance ranging from $3.13 to $3.25 per share for a total purchase price of $2,538,126. In May 1996, the Company sold back the Frisco Standard Silver Mine to its original seller in exchange for the same price (35,000 shares of Royal stock) received by the seller when the mine was purchased. The shares received were canceled and no gain or loss was recorded on the transaction. F-18 26 ROYAL SILVER MINES, INC. (A Development Stage Company) Notes to the Financial Statements December 31, 1996 NOTE 3 - MINERAL PROPERTIES (Continued) The Company's proposed future mining activities will be subject to laws and regulations controlling not only the exploration and mining of mineral properties, but also the effect of such activities on the environment. Compliance with such laws and regulations may necessitate additional capital outlays, affect the economics of a project, and cause changes or delays in the Company's activities. The total mineral properties at December 31, 1996 are classified as follows: Mineral properties under joint ventures $ 366,510 Other mineral properties 4,435,431 _____________ Total Mineral Properties $ 4,801,941 =============
The Company's mineral properties are valued at the lower of cost or net realizable value. NOTE 4 - PROPERTY AND EQUIPMENT Property and equipment are recorded at cost. Major additions and improvements are capitalized. Minor replacements, maintenance and repairs that do not increase the useful life of the assets are expensed as incurred. Depreciation of property and equipment is determined using the straight-line method over the expected useful lives of the assets of five years. NOTE 5 - INTANGIBLE ASSETS Deferred debt issuance costs and organization costs are recorded at cost. Amortization of these intangible assets is determined using the straight-line method over the expected useful lives of the assets as follows: Description Useful Lives ___________________________ ____________ Deferred debt issuance costs 1 year Organization costs 5 years NOTE 6 - COMMON STOCK During the year ended November 30, 1994, Celebration issued 1,500,000 shares of common stock to directors for services rendered, valued at $.003 to $.625 per share, which is the fair market value of the shares on the date of issuance. During the year ended September 30, 1995, the Company issued 12,750 shares of common stock to directors and employees for services rendered, valued at prices ranging from $2.00 to $2.50 per share, which is the fair market value of the shares on the date of issuance. F-19 27 ROYAL SILVER MINES, INC. (A Development Stage Company) Notes to the Financial Statements December 31, 1996 NOTE 6 - COMMON STOCK (Continued) During the year ended September 30, 1995, Celebration issued 975,000 shares of common stock in exchange for mineral properties (See Note 3) and sold 176,000 shares of common stock for $264,000 cash. The Company issued 200,000 shares of its common stock during the year ended September 30, 1995 in lieu of outstanding debt that was owed to Centurion Mines Corporation (Centurion), a related entity. The stock was issued at $1.50 per share in payment of $300,000 of outstanding debt (See Note 9). The Company also issued 277,500 shares in connection with the issuance of notes payable (See Note 9). (See also the disclosure in Note 1). During the year ended September 30, 1996, the Company sold 1,949,332 shares of its common stock for $2,958,314 in cash. The Company also issued 222,700 shares to directors and employees for services rendered valued at $1.50 per share, which is the fair market value of the shares on the date of issuance. Also during the year ended September 30, 1996, the Company issued 100,000 shares of its common stock for a joint venture in a mining property and 20,000 common shares for a mining property (See Note 11.) The stock issued was valued at $1.50 per share, which is the fair market value to the shares at the date of issuance. In the same twelve-month period, the Company also issued 406,050 shares of its common stock in payment of outstanding debt of $570,917 and accrued interest of $38,158. The stock was issued at $1.50 per share for a total value of $609,075. In addition, the Company issued 39,375 shares of common stock to noteholders for extending the maturity date of their loans. Again, the shares were valued at $1.50 each, which is the fair market value of the shares when issued. Also during the year ended September 30, 1996, the Company issued 215,334 shares of its common stock for services received. The shares were valued at $1.50 per share, which was the fair market value of the shares at the date of issuance. During the three months ended December 31, 1996, the Company issued 71,250 shares of its common stock for services received. The shares were valued at $1.25 per share, which was the fair market value at the date of issuance. NOTE 7 - COMMON STOCK OPTIONS AND WARRANTS In January 1992, the shareholders of Royal approved a 1992 Stock Option and Stock Award Plan under which up to ten percent of the issued and outstanding shares of the Company's common stock could be awarded based on merit of work performed. As of December 31, 1996, 12,750 shares of common stock have been awarded under the Plan. F-20 28 ROYAL SILVER MINES, INC. (A Development Stage Company) Notes to the Financial Statements December 31, 1996 NOTE 7 - COMMON STOCK OPTIONS AND WARRANTS (Continued) Celebration, prior to the exchange agreement with Royal, had granted securities to certain shareholders which represented rights to purchase or receive shares of Celebration's common stock. These options were assumed by the Company after the merger at a rate of 1.5 shares for each option still outstanding. Thus, the Company has granted options, with varying conditions and requirements, to purchase a total of 1,455,000 shares of its common stock. There are 255,000 of the stock options exercisable at $1.50 per share which expire March 21, 2000. The remaining 1,200,000 stock options are exercisable at $0.93 per share and expire on August 31, 2001. As of December 31, 1996, none of these options have been exercised. On January 9, 1996, the Board of Directors approved the issuance of warrants to two of its officers to purchase a total of 300,000 shares for a purchase price of $2.50 per share, exercisable from the date of issuance until January 9, 1999. On March 22, 1996, the Board of Directors approved the issuance of warrants to an investor to purchase 625,000 shares of common stock of the Company in partial completion of a private placement of stock. These warrants are exercisable until September 30, 1998, at a price of $1.50 per share, which is 67% of the closing price on March 22, 1996. On April 10, 1996, following the close of the second quarter of fiscal 1996, the Board of Directors authorized the issuance of 420,666 warrants to unaffiliated investors as part of the private placement of stock. These warrants are exercisable until April 12, 1997 at prices ranging from $2.50 to $2.625 per share. As of December 31, 1996, 320,666 warrants have been issued (but not exercised) for a total amount of $41,068. NOTE 8 - ADDITIONAL PAID-IN CAPITAL The following is a summary of additional paid-in capital at December 31, 1996 and September 30, 1996:
December 31, September 30, 1996 1996 _____________ _____________ Applicable to: Common stock $8,454,089 $8,395,740 Stock warrants 41,068 41,068 _____________ _____________ $8,495,157 $8,436,808 ============= =============
F-21 29 ROYAL SILVER MINES, INC. (A Development Stage Company) Notes to the Financial Statements December 31, 1996 NOTE 9 - NOTES PAYABLE In February 1995, Celebration raised $555,000 through the issuance of promissory notes. During the second quarter ended March 31, 1996, $470,000 of the total amount plus accrued interest of $29,265 was converted into 332,800 shares of the Company's common stock, leaving an amount owing of $85,000, which was further reduced by cash payments to $35,000 at December 31, 1996. The notes bear interest at 10% per annum and will be due on the earlier of January 1, 1997 or the closing of any public offering of equity securities by the Company. The note holders also received 277,500 shares of Celebration's common stock. A 10% commission was charged by an underwriter on the sale of almost all of the notes. In April 1995, Celebration raised $120,000 in 10% convertible debentures. In late 1995, $105,000 of the total amount plus accrued interest of $4,810 was converted into 73,250 shares of the Company's common stock, leaving an amount owing of $15,000. During the third quarter ended December 31, 1996, this remaining $15,000 plus accrued interest was paid. NOTE 10- FUTURE LEASE OBLIGATIONS The Company is obligated under its lease arrangements to make additional lease payments subsequent to December 31, 1996 as follows:
Year Ended September 30, Amount _____________ _________ 1997 $ 5,351 1998 4,500 1999 4,500 2000 and thereafter 22,500 _________ Total $ 36,851 =========
NOTE 11- OPTIONS WITH PLACER MINING CORPORATION In April 1996, the Company entered into an option with Placer Mining Corporation ("Placer") of Kellogg, Idaho whereby the Company could acquire a joint venture interest in the Bunker Hill Mine, a silver-lead-zinc mine in Shoshone County, Idaho. After issuing 100,000 shares valued at $1.50 per share and spending a non-refundable $50,000 on this option, the Company elected to renegotiate this option agreement and entered into a second option agreement with Placer on September 18, 1996. F-22 30 ROYAL SILVER MINES, INC. (A Development Stage Company) Notes to the Financial Statements December 31, 1996 NOTE 11- OPTIONS WITH PLACER MINING CORPORATION (Continued) In the second agreement, the Company paid $100,000 in September 1996 for the nonassignable option of acquiring a 100% interest in the Bunker Hill Mine. In order to exercise this option, the Company must issue 500,000 shares of its common stock to Placer by May 10, 1997 and pay Placer either $7,000,000 by that date or $4,000,000 by that date and $3,500,000 by May 10, 1998. Under the terms of this agreement, the Company will pay Placer a 2 3/4% net smelter return royalty in perpetuity with stipulated annual advance minimum royalty payments to Placer ranging from $100,000 (in 1999) to $250,000 (in years 2002 through 2010). All advance minimum royalties paid are to be credited against actual production royalties. At December 31, 1996, the Company had expended $101,715 in option and related expenses toward the purchase of the Bunker Hill Mine. These costs are included in the cost of mineral properties (Note 3) on the Company's balance sheet. NOTE 12 - STOCK OPTION AGREEMENT WITH CENTURION MINES CORPORATION In September 1996, the Company executed an agreement with Centurion Mines Corporation ("Centurion") whereby the Company acquired an option from Centurion to purchase up to 800,000 shares of its common stock held by Centurion for the exercise price of $1.75 per share during the two-year period ending September 30, 1998. The cost of this two-year stock purchase option was $50,000, which was paid by the Company and charged to stockholders' equity (accumulated deficit). At December 31, 1996, no shares were acquired from Centurion under this option agreement. NOTE - 13 SUBSEQUENT EVENTS Subsequent to December 31, 1996, the following material events have occurred: 1. On February 5, 1997, the Company filed Form 8-K with the Securities and Exchange Commission in order to report two transactions. A. On January 25, 1997, two of the Company's officer-directors resigned and on February 5, 1997 one of those open seats was filled. B. On January 30, 1997, the Company sold 200,000 "units" at $0.75 per unit for $150,000 cash. Each unit consists of one share of common stock and one warrant to purchase one additional share of common stock at $1.25 per share within the next two years. The Company also granted the purchaser an option to purchase an additional 335,000 units on February 14, 1997 and an additional 800,000 units on March 3, 1997. As of February 12, 1997, none of the warrants or options had been exercised. F-23 31 ROYAL SILVER MINES, INC. (A Development Stage Company) Notes to the Financial Statements December 31, 1996 NOTE - 13 SUBSEQUENT EVENTS 2. On February 7, 1997, the Company filed Form SB-2 with the Securities and Exchange Commission in order to register 625,000 warrants, 625,000 common shares issuable upon the exercise of those warrants, and 166,000 shares of common stock held outside of the Company. 3. On February 10, 1997, the Company announced that it has negotiated an option to buy 12 different potential mine sites in Argentina. Under the agreement, the Company can buy the properties on or before March 1, 2000, by paying $4,500,000 in cash or $5,500,000 in Royal Silver common stock, subject to certain conditions including the seller's retention of a 1.95% net smelter royalty on the mines. F-24 32 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS INCLUDED IN REGISTRANT'S FORM 10-Q FOR THE PERIOD ENDED DECEMBER 31, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO ITS FINANCIAL STATEMENTS. 3-MOS SEP-30-1996 DEC-31-1996 347,505 0 100,000 0 0 472,097 15,185 2,985 5,286,472 81,245 0 107,211 0 0 5,098,016 5,286,472 0 0 0 340,173 2,984 0 3,833 (339,324) 0 (339,324) 0 0 0 (339,324) (0.03) (0.03)
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