-----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, UQ+dw4qr6pDfi0c4NhajShipN5pNTJKgak8jcrzhRWGMVUy5RfMex+kFTGzFSp5D D/hvQUBxMgbd762I2viOPw== 0001001348-96-000049.txt : 19960517 0001001348-96-000049.hdr.sgml : 19960517 ACCESSION NUMBER: 0001001348-96-000049 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SUMMO MINERALS CORP CENTRAL INDEX KEY: 0000941230 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS METAL ORES [1090] FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-27272 FILM NUMBER: 96567480 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, 1996 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 3, 1996, the Registrant had 17,725,980 shares of Common Stock outstanding. TABLE OF CONTENTS PART I - FINANCIAL INFORMATION Item 1 - Financial Statements Consolidated Balance Sheet March 31, 1996 and December 31, 1995 Consolidated Condensed Statement of Income (Loss) and Deficit Three Months Ended March 31, 1996 and 1995 Consolidated Statement of Mineral Property Costs Three Months Ended March 31, 1996 and 1995 Consolidated Statement of Cash Flow Three Months Ended March 31, 1996 and 1995 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations PART II - OTHER INFORMATION Item 6 - Exhibits and Reports on Form 8-K CONSOLIDATED BALANCE SHEET Summo Minerals Corporation (A Development Stage Company) US Dollars (Unaudited) ASSETS As of March As of December 31, 1996 31, 1995 Current Cash $ 444,306 $ 527,725 Short term investments 1,787,908 2,454,951 Accounts receivable 3,418 6,115 Prepaid expenses 0 2,492 Total current assets 2,235,632 2,991,283 Mineral property at cost 4,413,962 4,012,012 Plants, buildings and equipment at cost, net of accumulated depreciation 27,435 16,424 Total assets $6,677,029 $7,019,719 LIABILITIES & SHAREHOLDERS EQUITY Current Liabilities Accounts payable and accrued liabilities $ 22,792 $ 87,123 Due to related party 10,485 130,261 Total current liabilities 33,277 217,384 Shareholders equity Preferred shares, without par value 100,000,000 authorized and none issued - - Common shares, without par value 500,000,000 authorized, 17,575,980 issued at March 31, 1996 and December 31, 1995. 7,565,416 7,565,416 Deficit- accumulated during development stage (921,664) (763,081) Total shareholder's equity 6,643,752 6,802,335 Total liabilities & shareholder's equity $6,677,029 $7,019,719 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 31, March 31, from Inception 1996 1995 Expenses General and administration $ 885,426 $ 179,539 $ 158,997 Depreciation and amortization 9,698 2,466 146 Exploration expense 54,747 9,114 - Interest and bank charges, net (115,103) (32,536) (11,486) Income (Loss) before the following (834,768) (158,583) (147,657) Impairment of mineral property cost (91,446) - - Gain on sale of mineral property 4,550 - - Net Income (Loss) for the period (921,664) (158,583) (147,657) Deficit-Beginning of period - (763,081) (262,174) Deficit- End of Period $ (921,664) $ (921,664) $(409,831) 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 (Unaudited) For the For the Quarter Quarter Ending Ending Cumulative March 31, March 31, from Inception 1996 1995 DIRECT Lisbon Valley, Utah, USA Land acquisition, staking, lease & rental $1,470,236 $ 95,449 $14,448 Geophysical, geological and engineering 512,256 15,282 46,715 Drilling 451,861 3,256 14,050 Metallurgy 310,315 18,344 46,108 Feasibility 185,582 - 13,239 Legal 69,448 1,400 5,287 Taxes, licenses and insurance 14,072 - - Assaying 13,064 - - Support, accommo- dation and general costs 634,729 221,470 51,344 3,661,563 355,201 191,191 Cashin, Colorado, USA Land acquisition, staking, lease & rental 281,866 3,998 270 Geophysical, geological and engineering 66,663 2,674 10,398 Drilling 124,358 - 859 Metallurgy 6,136 628 - Legal 15,874 300 - Taxes, licenses and insurance 609 - - Support, accommodation and general costs 59,271 6,435 1,049 554,777 14,035 12,576 Champion, New Mexico, USA Land acquisition, staking, lease & rental 108,923 31,190 - Geophysical, geological and engineering 23,247 4,726 - Drilling 65,109 - - Metallurgy 2,808 2,808 - Support, accommodation and general costs (2,465) (6,010) - 197,622 32,714 - Other, USA 91,446 - 2,622 Cost for the period 4,505,408 401,950 206,389 Balance-beginning of period 4,012,012 1,695,871 Less: Write-off of mineral property (91,446) - - Balance - End of Period $4,413,962 $4,413,962 $1,902,260 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 31, March 31, from Inception 1996 1995 Operating Activities Net income (loss) $ (921,664) $ (158,583) $ (147,657) Reconciliation of net income (loss) to net cash: Depreciation and amortization 9,698 2,466 1,466 Impairment of mineral properties at cost 91,446 - - Change in current assets and liabi- lities accounts receivable ( 3,417) 2,698 174 prepaid expenses 0 2,492 225 accounts payable (31,481) (64,331) 38,709 Net cash (used in) provided by operating activities (855,418) (215,258) (107,083) Investing Activities Mineral property cost (4,512,425) (403,353) (207,793) Less shares issued for property 495,792 - - Increase in accounts payable 54,273 - - Plant, buildings and equipment (30,116) (12,074) (2,554) Net cash used in investing activities (3,992,476) (415,427) (210,347) Financing Activities Issuance of share capital (net of issue costs) 7,069,624 - 2,322,917 Proceeds of loan from related party 285,144 Payments of loan from related party (285,144) Due to related party - net 10,484 (119,777) 36,887 Net cash provided by financing activi- ties 7,080,108 (119,777) 2,359,804 Net increase (decrease) in cash 2,232,214 (750,462) 2,042,374 Cash and cash equivalents - beginning of period 2,982,676 176,961 Cash and cash equivalents - end of period $2,232,214 $2,232,214 $2,219,335 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, 1995. 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, 1995. 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 During the first quarter of 1996, the Company acquired the 200 acre Wilcox ranch situated within the boundaries of the Lisbon Valley property for $50,000. Champion Property, New Mexico The Company has completed staking an additional 176 unpatented mining claims surrounding this property to allow additional space for facility siting and project permitting. 3. COMMITMENTS Common Shares Issuable At March 31, 1996, a total of 8,275,000 shares of authorized Common Shares were reserved for the following: Stock Options 1,925,000 Warrants 6,350,000 8,275,000 On February 1, 1996, the Company issued an additional 510,000 options to officers and directors of the Company at an exercise price of $1.20 Cdn. On March 26, 1996, the Board of Directors issued an additional 360,000 performance based options to officers of the Company at an exercise 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. general accepted accounting principles, the contingently cancelable escrow shares would not be reflected as issued and outstanding and would be excluded from loss per share calculations. FINANCIAL STATEMENT PRESENTATION March 31, March 31, 1996 1995 Weighted Average Number of Shares Canadian Basis 17,575,980 10,598,980 U.S. Basis 17,200,982 9,848,985 Income (Loss) Per Share U.S. Basis (.01) (.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 Results of Operations The Company reported a net loss of $.16 million for the first quarter 1996 as compared to a net loss of $.15 million in 1995. Expenses General and administrative expenses increased $.02 million to $.18 million for the first quarter 1996 compared to $.11 million in 1995 due primarily to increased salary expenses ($.07 million) which were partially offset by a decrease in foreign exchange loss ($.05 million) caused by a decrease in the exchange rate for the Company's Canadian assets. Exploration expenses increased $.01 million for the first quarter 1996 compared to $0 for 1995 due to increased activity in evaluating additional exploration targets. Interest income increased $.02 million to $.03 million for the first quarter 1996 as compared to $.01 million for 1995 reflecting the additional time the Company had to invest funds received from private placement stock offerings. Capital Resources and Liquidity Cash Flow - The Company's net cash used in operating activities increased $.10 million to $.21 million in the first quarter 1996 as compared to $.11 million in 1995 due to the use of cash to decrease accounts payable and other accrued liability balances. Net cash used in investing activities increased 100% to $.42 million in the first quarter 1996 compared to $.21 million in 1995. The difference is due to increased development activity on the Lisbon Valley property ($.17 million); increased exploration activity on the Champion property ($.03 million) and investment in office equipment ($.01 million). Net cash used in financing activities was $.12 million in the first quarter 1996 compared to cash provided by financing activities of $2.36 million in 1995. The Company had a Private Placement Offering in 1995 but used cash to decrease amounts owed to related parties in 1996. The Company had $2.23 million in cash and cash equivalents and working capital of $2.20 million as of March 31, 1996 compared to $2.98 million of cash and cash equivalents and working capital of $2.77 million at December 31, 1995. Outlook Pending availability of financing, the Company plans to start the construction of the Lisbon Valley mine later in 1996. The Company will seek financing of approximately $45 million through a combination of a senior debt facility, a subordinated debt agreement, a new equity issue of stock in the Company, or a sale of equity in the project. Management believes the Company has sufficient cash on hand to meet its operating requirements until that point. PART II - OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders There were no matters submitted to a vote of shareholders. Item 6. Exhibits Filed with the Form 10-Q 10.31 Wilcox Ranch Purchase Agreement Exhibits and Reports on Form 8-K The registrant filed a current report on Form 8-K to report a change in accountants. 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. SUMMO MINERALS CORPORATION By: /s/ Gregory A. Hahn Gregory A. Hahn President and Chief Executive Officer By: /s/ James D. Frank James D. Frank Vice President - Finance & CFO EX-10.31 2 EXHIBIT 10.31 PURCHASE AGREEMENT This Agreement, effective as of the 29th day of February, 1996, is between MICHAEL L. WILCOX ("Seller"), whose address is P.O. Box 202, La Sal, UT 84530, and SUMMO USA CORPORATION, a Colorado corporation ("Purchaser"), whose address is 1776 Lincoln St., Suite 1100, Denver, CO 80203. Recitals Seller represents that he is the owner of and is in possession of certain lands in San Juan County, Utah more particularly described as follows: Township 31 South, Range 25 East, SLB&M San Juan County, Utah Section 1: Lots 1, 2, 3, and 4 (also Known as N1/2 N1/2) Township 31 South, Range 26 East, SLB&M San Juan County, Utah Section 6: NW1/4NW1/4 said lands together all appurtenances and water rights incident thereto, and all improvements and personal property thereon, subject to mineral reservations of record, being herein referred to as the "Property." Seller is willing sell and Purchaser desires to purchase Property. NOW THEREFORE, in consideration of Ten Dollars ($10.00) in hand paid to Seller, the receipt and sufficiency of which are hereby acknowledged, and further in consideration of the mutual covenants, agreements, and promises herein contained, the parties hereto agree as follows: Purchase. Seller agrees to sell to Purchaser, and Purchaser agrees to purchase, all of Seller's right, title, and interest in the Property upon the terms and conditions set forth in this Agreement, for the amount of Fifty Thousand Dollars ($50,000.00) (the "Purchase Price"). Closing. (a) Unless the parties agree that the closing shall take place at some other time and place, the closing shall take place at the office of South Eastern Utah Title Company, whose address is 117 S. Main, Room 118, Monticello, Utah, at 10:00 o'clock a.m. on the 14th day of March, 1996. (b) At the closing, Seller shall deliver to Purchaser (i) a general warranty deed in the form of Exhibit B attached hereto, and (ii) a 1970 ALTA Form B owner's policy of title insurance showing title to be marketable and to be vested in Purchaser at the closing. (c) At the closing, Purchase shall pay the Purchase Price to Seller by certified or cashier's check or by wire transfer to Seller's account. (d) Purchaser shall pay all recording fees and documentary transfer taxes. Real property taxes shall be prorated as of the date of the exercise of the option. Title. Seller warrants that he is in possession of the Property, that he has the right to enter into this Agreement, that he knows of no other person claiming any interest in the Property, and that the Property is free from all liens and encumbrances, except liens for property taxes not yet due and payable. Seller warrants and will defend title to the Property against all persons whomsoever. Grazing Rights. Seller agrees that from time to time, upon Purchaser's request made within two (2) years after the date of this Purchase Agreement, Seller shall take all steps necessary to relinquish or cause to be relinquished all grazing rights, Federal, State, or private, held by Seller or by Wilcox Ranches, a partnership, on the Property and on the additional lands more particularly shown on the map set out in Exhibit A attached hereto and incorporated by reference herein. Stock Pond. Purchaser acknowledges the existence of a stock pond constructed by Seller in Section 36, Township 30 South, Range 25 East, SLB&M. When earth-moving equipment becomes available to Purchaser (which Purchaser estimates shall occur within ___ months from the date of this Purchase Agreement), Purchaser shall, at no cost to Seller, assist Seller in the construction of a replacement stock pond of similar size and character on other land owned or controlled by Seller. Inurement. All covenants, conditions, limitations, and provisions herein contained apply to and are binding upon the parties hereto, their heirs, representatives, successors, and assigns. Modification. No modification, variation, or amendment of this Agreement shall be effective unless the modification, variation, or amendment is in writing and is signed by Seller and Purchaser. Waiver. No waiver of any breach or default under this Agreement shall be effective unless the waiver is in writing and signed by the party against whom the waiver is claimed. No waiver of any breach or default shall be deemed to be a waiver of any other or subsequent breach or default. Entire Agreement. This Agreement sets forth the entire agreement of the parties and, except as herein expressly provided, supersedes all previous and contemporaneous agreements, representations, warranties, or understandings, written or oral. Construction. The paragraph headings are for convenience only, and shall not be used in the construction of this Agreement. Governing Law. The formation, interpretation, and performance of this Agreement shall be governed by the law of the state of Utah. Additional Documents. Seller will provide Purchaser with such additional documents as may be necessary to carry out the purposes of this Agreement. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. SELLER: /s/ Michael L. Wilcox PURCHASER: SUMMO USA CORPORATION By: /s/ Gregory A. Hahn President STATE OF UTAH ) ) ss. COUNTY OF SAN JUAN ) The foregoing instrument was acknowledged before me this 14th day of March, 1996, by Michael L. Wilcox, the person named in and who executed the foregoing instrument. /s/ Jean L. Pehrson Notary Public Residing at Monticello, Utah 84535 My Commission Expires: 4/20/97 [SEAL] STATE OF COLORADO ) ) ss. COUNTY OF JEFFERSON ) The foregoing instrument was acknowledged before me this 20th day of February, 1996, by Gregory A. Hahn as President of Summo USA Corporation, a Colorado corporation, the corporation named in and that executed the foregoing instrument, on behalf of the corporation. /s/ Michelle Hebert Notary Public Residing at Lakewood, Colorado 80227 My Commission Expires: 3/18/99 [SEAL] EXHIBIT B WARRANTY DEED MICHAEL L. WILCOX and JOAN I. WILCOX ("Grantors"), whose address is P.O. Box 202, La Sal, UT 84530, for the consideration of Ten Dollars ($10.00) and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, convey and warrants to SUMMO USA CORPORATION, a Colorado corporation ("Grantee"), whose address is 1776 Lincoln St., Suite 1100, Denver, CO 80203, the real property more particularly described as follows: Township 31 South, Range 25 East, SLB&M San Juan County, Utah Section 1: Lots 1, 2, 3, and 4 (also known as N1/2 N1/2) Township 31 South, Range 26 East, SLB&M San Juan County, Utah Section 6: NW1/4 NW1/4 together with all appurtenances and water rights incident thereto, and all improvements and personal property thereon, subject to mineral reservations of record (the "Property"). TO HAVE AND TO HOLD the Property to Grantee, its successors and assigns. IN WITNESS WHEREOF, Grantors have executed this Warranty Deed this _____ day of February, 1996. /s/ Michael L. Wilcox /s/ Joan I. Wilcox EX-27 3
5 3-MOS DEC-31-1996 MAR-31-1996 444,306 1,787,908 3,418 0 0 2,235,632 4,451,095 9,698 6,677,029 33,277 0 0 0 7,565,416 (921,664) 6,677,029 0 0 0 0 158,583 0 0 (158,583) 0 0 0 0 0 (158,583) (0.01) (0.01)
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