-----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, POVTp5uLjlAGcG54PTn695joBM60/AN8WSQaCL7wP8qR81Z/GC9LAhntCDNYt0h2 x/wWpeuiiZ6MdJS/BDPOkQ== 0001001348-97-000106.txt : 19970520 0001001348-97-000106.hdr.sgml : 19970520 ACCESSION NUMBER: 0001001348-97-000106 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970515 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SUMMO MINERALS CORP CENTRAL INDEX KEY: 0000941230 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS METAL ORES [1090] IRS NUMBER: 000000000 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-27272 FILM NUMBER: 97608958 BUSINESS ADDRESS: STREET 1: 1776 LINCOLN ST STREET 2: STE 1100 CITY: ENVER STATE: CO ZIP: 80203 MAIL ADDRESS: STREET 1: 1776 LINCOLN ST STREET 2: STE 1100 CITY: DENVER STATE: CO ZIP: 80203 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarter Ended March 31, 1997 Commission File Number 0-27272 SUMMO MINERALS CORPORATION (incorporated in British Columbia) 1776 Lincoln Street, Suite 1100 Denver, Colorado 80203 (303) 861-5400 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 [ ] Indicate the number of shares outstanding of each of the Registrant s classes of common stock, as of the latest practicable date. As of May 2, 1997, the Registrant had 20,003,160 shares of Common Stock outstanding. TABLE OF CONTENTS PAGE PART I - FINANCIAL INFORMATION Item 1 - Financial Statements Consolidated Balance Sheet March 31, 1997 and December 31, 1996 . .. . . 1 Consolidated Condensed Statement of Income (Loss) and Deficit Three Months Ended March 31, 1997 and 1996 .. . .. . .. . .. . .. . .. . .. . . 2 Consolidated Statement of Mineral Property Costs Three Months Ended March 31, 1997 and 1996 .. . .. . .. . .. . .. . .. . .. . . 3 Consolidated Statement of Cash Flow Three Months Ended March 31, 1997 and 1996 .. . .. . .. . .. . .. . .. . .. . . 4 Item 2 - Management s Discussion and Analysis of Financial Condition and Results of Operations. . . 7 PART II - OTHER INFORMATION Item 6 - Exhibits and Reports on Form 8-K . . . . . . . . . 8 CONSOLIDATED BALANCE SHEET Summo Minerals Corporation (A Development Stage Company) US Dollars (Unaudited) As of As of March 31, December 31, 1997 1996 ASSETS Current Assets Cash $ 138,897 $ 214,481 Short term investments 360,537 636,342 Accounts receivable 2,145 813 Prepaid expenses 5,600 5,600 Total current assets 507,179 857,236 Mineral property at cost 6,160,361 5,878,099 Plants, buildings and equipment at cost, net of accumulated depreciation of $21,330 and $19,709 respectively 956,799 784,176 Total assets $ 7,624,339 $ 7,519,511 LIABILITIES & SHAREHOLDERS EQUITY Current Liabilities Accounts payable and accrued liabilities $ 130,111 $ 130,309 Due to related party 0 3,619 Total current liabilities $ 130,111 $ 133,928 Shareholders equity Preferred shares, without par value 100,000,000 authorized and none issued -- -- Common shares, without par value 500,000,000 authorized, 20,003,160 and 19,623,160 issued and net of share issuance costs of $12,519 and $0 at March 31, 1997 and December 31, 1996, respectively. 9,352,581 9,011,388 Deficit- accumulated during development stage (1,858,353) (1,625,805) Total shareholder's equity 7,494,228 7,385,583 Total liabilities & shareholder's equity $ 7,624,339 $ 7,519,511 See Accompanying Notes CONSOLIDATED CONDENSED STATEMENT OF INCOME (LOSS) AND DEFICIT Summo Minerals Corporation (A Development Stage Company) US Dollars (Unaudited) For the Three Months Ending Cumulative March March from 31, 31, Inception 1997 1996 Expenses General and admini- stration $1,846,434 $ 236,095 $ 179,539 Depreciation and amortization 30,663 5,340 2,466 Exploration expense 66,849 0 9,114 Interest and bank charges, net (172,489) (8,887) (32,536) Income (Loss) before the following (1,771,457) (232,548) (158,583) Impairment of mineral property cost (91,446) -- -- Gain on sale of mineral property 4,550 -- -- Net Income (Loss) for the period (1,858,353) (232,548) (158,583) Deficit-Beginning of period -- (1,625,805) (763,081) Deficit- End of period (1,858,353)(1,858,353) (921,664) Earnings (Loss) per Share $ (0.01) $ (0.01) See Accompanying Notes CONSOLIDATED STATEMENT OF MINERAL PROPERTY COSTS Summo Minerals Corporation (A Development Stage Company) US Dollars For the For the Quarter Quarter Ended Ended Cumulative March March from 31, 31, Inception 1997 1996 DIRECT Lisbon Valley, Utah, USA Land costs $ 1,310,933 $ 11,154 $ 95,449 Geophysical, geological and engineering 220,898 1,083 15,282 Drilling 483,671 -- 3,256 Metallurgy 349,729 15,218 18,344 Feasibility 488,612 -- -- Legal 68,048 -- -- Taxes, licenses and insurance 14,072 -- -- Assaying 13,064 -- -- Permitting 1,372,131 98,048 1,400 Support, accommo- dation and general costs 636,868 55,951 221,470 4,958,026 181,454 355,201 Cashin, Colorado, USA Land costs 411,485 763 3,998 Geophysical, geolo- gical and engineering 50,347 100 2,674 Drilling 146,805 -- -- Metallurgy 24,370 -- 628 Legal 15,574 -- -- Taxes, licenses and insurance 609 -- -- Permitting 20,438 -- -- Support, accommodation and general costs 38,731 -- 6,735 708,359 863 14,035 Champion, New Mexico, USA Land costs 186,042 2,716 31,190 Geophysical, geolo- gical and engineering 23,366 1,024 4,726 Drilling 166,657 -- -- Metallurgy 5,657 313 2,808 Permitting 69 -- -- Support, accommodation and general costs 2,223 75 (6,010) 384,014 4,128 32,714 Other, USA 201,408 95,817 -- Costs for the period 6,251,807 282,262 401,950 Balance-beginning of period -- 5,878,099 4,012,012 Less: write-off of mineral property (91,446) -- -- Balance - end of period $ 6,160,361 $ 6,160,361 $4,413,962 See Accompanying Notes CONSOLIDATED STATEMENT OF CASH FLOW Summo Minerals Corporation (A Development Stage Company) US Dollars (Unaudited) For the Three Months Ending Cumulative March March from 31, 31, Inception 1997 1996 Operating Activities Net income (loss) $ (1,858,353) $ (232,548) $(158,583) Reconciliation of net income (loss) to net cash: Depreciation and amorti- zation 30,663 5,340 2,466 Impairment of mineral properties at cost 91,446 -- -- Change in current assets & liabilities - accounts receivable (2,145) (1,332) 2,698 - prepaid expenses (5,600) -- 2,492 - accounts payable 75,838 (198) (64,331) Net cash used in operating activities (1,668,151) (228,738) (215,258) Investing Activities Mineral property cost (6,257,421) (282,262) (403,353) Less shares issued for property 495,792 -- -- Increase in accounts payable 54,273 -- -- Plant, buildings and equipment (981,848) (177,963) (12,074) Net cash used in investing activities (6,689,204) (460,225) (415,427) Financing Activities Issuance of share capital (net of issue costs) 8,856,789 341,193 -- Due to related party - net -- (3,619) (119,777) Net cash (used in) provided by financing activities 8,856,789 337,574 (119,777) Net Increase (decrease) in Cash 499,434 (351,389) (750,462) Cash and cash equivalents - beginning of period 850,823 2,982,676 Cash and Cash Equivalents - end of period $ 499,434 $ 499,434 $2,232,214 See Accompanying Notes 1. GENERAL The Company, which is organized in British Columbia, presents all financial statements in U.S. dollars unless otherwise indicated in Canadian (Cdn.) dollars under accounting principles generally accepted in Canada. Except as disclosed herein, there has been no material change in the information disclosed in the Notes to Consolidated Financial Statements included in the Annual Report on Form 10-K of Summo Minerals Corporation and Subsidiary (the Company) for the year ended December 31, 1996. In the opinion of Management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the periods presented are not necessarily indicative of the results that may be expected for the full year. The accounting policies followed by the Company are set forth in Note 2 to the Company s financial statements in Form 10-K for the year ended December 31, 1996. It is suggested that these financial statements be read in conjunction with the financial statements and notes included in the Form 10-K. 2. MINERAL PROPERTY COSTS Lisbon Valley, Utah The Company received a Letter of Commitment from ING Capital and Heller Financial, Inc. to provide a $45 million loan for Lisbon Valley Project subject to the Company providing $13.2 million of equity to the project and an additional $3 million of equity in the Company. The Company received the Final Environmental Impact Statement from the BLM, which means the Company could now start construction, if the financing were complete. Cactus Property, California The Company signed a six month Option to Purchase the Cactus Gold Mine Property in California in January 1997. Current exploration activity on this property includes title and environmental review and exploration drilling. 3. COMMITMENTS Common Shares Issuable At March 31, 1997, a total of 6,244,680 shares of authorized Common Shares were reserved for the following: Stock Options 1,612,500 Warrants 4,632,180 6,244,680 On January 29, 1997, 280,000 warrants were exercised at a price of $1.21 Cdn. On February 3, 1997, 100,000 warrants were exercised at a price of $1.10 Cdn. 4. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES These consolidated financial statements are prepared in accordance with accounting principles generally accepted in Canada. The U.S. Securities and Exchange Commission ( SEC ) requires that financial statements of certain foreign companies contain a reconciliation presenting the statements on the basis of accounting principles generally accepted in the United States. For SEC purposes the Company is in the development stage as defined by Statement of Financial Accounting Standards No. 7, Accounting and Reporting by Development Stage Enterprises. For periods prior to January 1, 1995, the Company s reporting currency was the Canadian dollar. As a result of the change in status of its US mineral property base, the reporting currency was changed to the US dollar. The Company s financial statements were translated into US dollars using a translation of convenience. US GAAP requires translation in accordance with the current rate method. The Company s restatement of the prior year accounts is not materially different from the translation of convenience. Any other differences in accounting principles as they pertain to the accompanying consolidated financial statements are not material except as follows: a) Contingent Shares. Under U.S. generally accepted accounting principles, the contingently cancelable escrow shares which existed at March 31, 1996 would not be reflected as issued and outstanding and would be excluded from loss per share calculations. No contingently cancelable escrow shares existed at March 31, 1997. FINANCIAL STATEMENT PRESENTATION March 31, 1996 Weighted Average Number of Shares Canadian Basis 17,575,980 U.S. Basis 17,200,982 Income (Loss) Per Share U.S. Basis (.01) b) Tax Disclosure. Federal income tax expense differs from the amount that would be provided by applying the statutory rate primarily due to a full valuation allowance for net operating loss carry-overs. c) Cash Flow. For Canadian GAAP financial statements the consolidated statement of cash flows presents non-cash items. US GAAP allows only supplemental disclosure of non-cash items. For US GAAP purposes, the investing portion of the consolidated cash flow statement would present mineral property costs net of the shares issued for property. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Cautionary Statement for Purposes of the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995 The matters discussed in this report, when not historical matters, are forward looking statements that involve a number of risks and uncertainties that could cause actual results to differ materially from projected results. Such factors include, among other things, the speculative nature of mineral exploration, commodity prices, production and reserve estimates, environmental and governmental regulations, availability of financing, force majeure events, and other risk factors as described from time to time in the Company's filings with the Securities and Exchange Commission. The following discussion should be read in conjunction with the Company's consolidated financial statements included in this report. All monetary figures discussed are in U.S. dollars. Results of Operations The Company reported a net loss of $0.23 million for the first quarter 1997 as compared to a net loss of $0.16 million in 1996. Expenses General and administrative expenses increased $0.06 million to $0.24 million for the first quarter 1997 compared to $0.18 million in 1996 due primarily to increased salary expenses ($0.03 million) in addition to increased general office and professional expenses ($0.03 million). Interest income decreased $0.024 million to $0.009 million for the first quarter 1997 as compared to $0.03 million for 1996 reflecting the use of the Company's interest earning assets in daily operations. Capital Resources and Liquidity Cash Flow - The Company s net cash used in operating activities increased $0.02 million to $0.23 million in the first quarter 1997 as compared to $0.21 million in 1996 due to the use of cash to decrease accounts payable and other accrued liability balances. Net cash used in investing activities increased $0.04 million to $0.46 million in the first quarter 1997 compared to $0.42 million in 1996. The difference is due to decreased development activity on the Lisbon Valley property (down $0.22 million); the addition of new exploration activity on the Cactus Gold property ($0.09 million) and increased capitalized investment in the Lisbon Valley Property; ($0.17 million). Net cash provided by financing activities was $0.34 million in the first quarter 1997 compared to cash used in financing activities of $0.12 million in 1996. This was due to the exercise of warrants in the amount of approximately $0.25 million and the exercise of options for $0.10 million. These increases were offset by share issuance costs of approximately $0.01 million. The Company had $0.50 million in cash and cash equivalents and working capital of $0.38 million as of March 31, 1997 compared to $0.85 million of cash and cash equivalents and working capital of $0.72 million at December 31, 1996. Outlook The Company is continuing efforts to establish a financing package which will allow the Company to proceed with the final engineering and construction of the Lisbon Valley project. This package may entail relinquishing part of the project in return for a commitment to supply capital in the project. Pending successful completion of the Company s financing efforts, the Company plans to start the construction of the Lisbon Valley mine later in 1997. The Company has insufficient cash on hand to meet its operating requirements if this capital raising is not completed. In such a circumstance, the Company may have to sell additional shares for working capital, however no assurance can be given that this capital can be raised in the existing equity market. PART II - OTHER INFORMATION Item 6. Exhibits filed with the Form 10-Q None Exhibits and Reports on Form 8-K None 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, effective May 10, 1996. Date: May 15, 1997 SUMMO MINERALS CORPORATION By: /s/ Gregory A. Hahn Gregory A. Hahn, President and Chief Executive Officer By: /s/ James D. Frank Frank D. Frank, Vice- President of Finance and Chief Financial Officer EX-27 2
5 3-MOS DEC-31-1997 MAR-31-1997 499,434 0 2,145 0 0 507,179 956,799 (21,330) 7,624,339 130,111 0 0 0 9,352,581 0 7,624,339 0 0 0 (241,435) 0 0 (216) (232,548) 0 0 0 0 0 (232,548) (.01) (.01)
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