-----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, LiCF/78ouDbGqWwG/a9cVpTjmzf249P55J47kTAwpe8cd2g06p+E6ZEWtlew2eYO pmmeiomT1gmB8xHkREQzJg== 0001001348-96-000111.txt : 19960814 0001001348-96-000111.hdr.sgml : 19960814 ACCESSION NUMBER: 0001001348-96-000111 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960813 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: 96611452 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 June 30, 1996 Commission File Number 0-27272 SUMMO MINERALS CORPORATION (incorporated in British Columbia) 1776 Lincoln Street, Suite 900 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 periods 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 August 8, 1996, the Registrant had 18,185,980 shares of Common Stock outstanding. TABLE OF CONTENTS PAGE PART I - FINANCIAL INFORMATION Item 1 - Financial Statements Consolidated Balance Sheet June 30, 1996 and December 31, 1995 1 Consolidated Condensed Statement of Income (Loss) and Deficit Three Months and Six Months Ended June 30, 1996 and 1995 2 Consolidated Statement of Mineral Property Costs Six Months Ended June 30, 1996 and 1995 3 Consolidated Statement of Cash Flow Six Months Ended June 30, 1996 and 1995 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) U.S. Dollars (Unaudited) ASSETS As of June 30, As of December 1996 31, 1995 Current Cash $ 732,216 $ 527,725 Short term investments 1,081,117 2,454,951 Accounts receivable 3,127 6,115 Prepaid expenses - 2,492 __________ __________ Total current assets 1,816,460 2,991,283 Mineral property at cost 4,851,298 4,012,012 Plants, buildings and equipment at cost, net of accumulated depreciation 236,872 16,424 __________ __________ Total assets $6,904,630 $7,019,719 LIABILITIES & SHAREHOLDERS EQUITY Current Liabilities Accounts payable and accrued liabilities $ 192,554 $ 87,123 Due to related party - 130,261 __________ __________ Total current liabilities 192,554 217,384 Shareholders equity Preferred shares, without par value 100,000,000 authorized and none issued - - Common shares, without par value 500,000,000 authorized, 18,185,980 and 17,575,980 issued at June 30, 1996 and December 31, 1995, respectively. 7,898,556 7,565,416 Deficit - accumulated during development stage (1,186,480) (763,081) ________________ _______________ Total shareholders equity 6,712,076 6,802,335 ________________ _______________ Total liabilities & shareholders equity $ 6,904,630 $ 7,019,719 See Accompanying Notes CONSOLIDATED CONDENSED STATEMENT OF INCOME (LOSS) AND DEFICIT Summo Minerals Corporation (A Development Stage Company) U.S. Dollars (Unaudited) Three Months Ending Six Months Ending June 30, June 30, Cumulative from Inception 1996 1995 1996 1995 Expenses General and $1,167,427 282,001 43,107 461,540 202,104 Admini- stration Depreciation 13,600 3,902 108 6,368 254 and Amortization Exploration 56,349 1,602 - 10,716 - Expense Interest and (137,792) (22,689) (28,284) (55,225) (39,770) bank charges, net _______________________________________________ Income (Loss) before the following: (1,099,584) (264,816) (14,931)(423,399)(162,588) Impairment of (91,446) - - - - mineral prop- erty cost Gain on sale of mineral property ________________________________________________ Net Income (1,186,480) (264,816) (14,931)(423,399)(162,588) (Loss) for the period: Deficit - - (921,664)(409,831)(763,081)(262,174) Beginning of period Deficit - End of Period (1,186,480)(1,186,480)(424,762)(1,186,480)(424,762) _ ______________________________________________________ Earnings (Loss) - $(0.01) - $(0.02) $(0.01) per Share See Accompanying Notes CONSOLIDATED STATEMENT OF MINERAL PROPERTY COSTS Summo Minerals Corporation (A Development Stage Company) U.S. Dollars (Unaudited) For the For the Six Months Six Months Cumulative Ending Ending from June 30, June 30, Inception 1996 1995 DIRECT Lisbon Valley, Utah, U.S.A Land acquisition, $ 1,157,336 $ 104,966 $ 66,755 staking, lease & rental Permitting 662,603 340,186 17,927 Geophysical, 542,338 45,364 94,971 geological and engineering Drilling 451,861 3,256 65,937 Metallurgy 330,024 38,053 80,789 Feasibility 235,263 49,681 110,408 Legal 71,301 3,253 13,508 Taxes, licenses 14,072 - - and insurance Assaying 13,064 - - Support, accommodation 539,078 125,819 99,843 and general costs ________________________________________ 4,016,940 710,578 550,138 Cashin, Colorado, U.S.A Land acquisition, 285,613 7,745 4,490 staking, lease & rental Geophysical, geological 73,279 9,290 8,972 and engineering Drilling 124,433 75 32,090 Metallurgy 6,136 628 - Legal 16,454 880 40 Taxes, licenses and 609 - - insurance Support, accommodation 70,167 17,331 10,919 and general costs ________________________________________ 576,691 35,949 56,511 Champion, New Mexico, U.S.A Land acquisition, 139,476 61,743 1,434 staking, lease & rental Geophysical, geological 23,869 5,348 5,980 and engineering Drilling 87,785 22,676 - Metallurgy 2,808 2,808 - Legal 200 200 363 Support, accommodation (2,464) (6,009) - and general costs ________________________________________ 251,674 86,766 7,777 ________________________________________ Other, U.S.A 91,446 - 2,622 ________________________________________ Cost for the period 4,936,751 833,293 617,048 Balance - 4,012,012 1,695,871 beginning of period Less: Write-off (91,446) - - of mineral property ________________________________________ Balance - $ 4,845,305 $4,845,305 $2,312,919 end of period See Accompanying Notes. CONSOLIDATED STATEMENT OF CASH FLOW Summo Minerals Corporation (A Development Stage Company) U.S. Dollars (Unaudited) For the For the Six Months Six Months Cumulative Ending Ending from June 30, June 30, Inception 1996 1995 Operating Activities $(1,186,480) $(423,399) $(162,588) Net income (loss) Reconciliation of net income (loss) to net cash: Depreciation and 13,600 6,368 254 amortization Impairment of 91,446 - - mineral properties at cost Change in current assets & liabilities - accounts receivable (3,127) 2,988 (627) - prepaid expenses - 2,492 (492) - accounts payable 138,281 105,431 113,888 ________________________________________ Net cash (used in) (946,280) (306,120) (49,565) provided by operating activities ________________________________________ Investing Activities Mineral property (4,954,726) (845,654) (810,310) cost Less shares issued 495,792 - - for property Increase in accounts 54,273 - - payable Plant, buildings (238,490) (220,448) (5,999) and equipment ________________________________________ Net cash used in investing activities (4,643,151) (1,066,102) (816,309) ________________________________________ Financing Activities Issuance of share 7,402,764 333,140 2,433,650 capital (net of issue costs) Proceeds of loan 285,144 from related party Payments of loan (285,144) from related party Due to related party - net - (130,261) 36,887 ________________________________________ Net cash provided by 7,402,764 202,879 2,470,537 financing activities ________________________________________ Net Increase (decrease) 1,813,333 (1,169,343) 1,604,663 in Cash Cash and cash 2,982,676 176,961 equivalents - beginning of period ________________________________________ Cash and cash $1,813,333 $1,813,333 $1,781,624 equivalents-end of period ________________________________________ 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 has 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 six months 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 June 30, 1996, a total of 8,806,671 shares of authorized Common Shares were reserved for the following: Stock Options 1,672,500 Warrants 7,134,171 __________ 8,806,671 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. On April 22, 1996, the Board of Directors issued an additional 7,500 options to an employee of the Company at an exercise price of $1.75 Cdn. On April 30, 1996, the Board of Directors issued an additional 150,000 options to Directors of the Company at an exercise price of $1.51 Cdn. On May 29, 1996, the Board of Directors issued an additional 150,000 options to Directors of the Company at an exercise price of $2.50 Cdn. On June 9, 1996, the Board of Directors issued an additional 50,000 options to Directors of the Company at an exercise price of $2.10 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 U.S. mineral property base, the reporting currency was changed to the U.S. dollar. The Company's financial statements were translated into U.S. dollars using a translation of convenience. U.S. 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 June 30, June 30, 1996 1995 Weighted Average Number of Shares Canadian Basis 17,720,760 11,420,759 U.S. Basis 17,445,760 10,670,764 Income (Loss) Per Share U.S. Basis (.02) (.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. U.S. GAAP allows only supplemental disclosure of non-cash items. For U.S. 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 $0.42 million for the first six months 1996 as compared to a net loss of $0.16 million in 1995. Expenses General and administrative expenses increased $0.26 million to $0.46 million for the first six months of 1996 compared to $0.20 million in 1995 due primarily to increased salary expenses ($0.16 million) and other G & A expenses due to setting up offices in Denver, Colorado. Exploration expenses increased $0.01 million for the first six months 1996 compared to $0 for 1995 due to increased activity in evaluating additional exploration targets. Interest income increased $0.02 million to $0.06 million for the first six months 1996 as compared to $0.04 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 $0.28 million to $0.31 million in the first six months of 1996 as compared to $0.50 million in 1995 due to increase in G & A expenses. Net cash used in investing activities increased by $0.25 to $1.07 million in the first six months of 1996 compared to $0.82 million in 1995. The difference is due to increased development activity on the Lisbon Valley property ($0.16 million); increased exploration activity on the Champion property ($0.08 million) and investment in plant, building and equipment ($0.22 million), this is includes the initial engineering on Lisbon Valley planned construction. Net cash used in financing activities was $0.20 million in the first six months 1996 compared to cash provided by financing activities of $2.47 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 $46 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. If the Company does not finance the Lisbon Valley mine by December 1996, it will have to seek a small private placement to fund its working capital for 1997. PART II - OTHER INFORMATION 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 dated January 25, 1996 to report a change in accountants. * Incorporated by reference from 10-Q filed May 3, 1996. 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, there unto duly authorized, effective August 9, 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-27 2
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