-----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, SWM+koMyS9xl6cg6I8mdRAiMjGmWOQO/eVnONeoMYdsFdqMehp1TTIfbzTxcJbBK nyhh1qAQImmxKjNqsmBz7A== 0001001348-96-000135.txt : 19961115 0001001348-96-000135.hdr.sgml : 19961115 ACCESSION NUMBER: 0001001348-96-000135 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961113 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: 96661663 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 QUARTERLY REPORT 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 November 5, 1996, the Registrant had 18,390,980 shares of Common Stock outstanding. TABLE OF CONTENTS PAGE PART I - FINANCIAL INFORMATION Item 1 - Financial Statements Consolidated Balance Sheet September 30, 1996 and December 31, 1995. . . . 1 Consolidated Condensed Statement of Income (Loss) and Deficit Three Months and Nine Months Ended September 30, 1996 and 1995 2 Consolidated Statement of Mineral Property Costs Nine Months Ended September 30, 1996 and 1995 3 Consolidated Statement of Cash Flow Nine Months Ended September 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) US Dollars (Unaudited) ASSETS As of As of September December 30, 1996 31, 1995 Current Cash $ 69,344 $ 527,725 Short term investments 439,710 2,454,951 Accounts receivable 67,833 6,115 Prepaid expenses 0 2,492 Total current assets 576,887 2,991,283 Mineral property at cost 5,402,183 4,012,012 Plants, buildings and equipment at cost, net of accumulated depreciation 688,489 16,424 Total assets $6,677,559 $7,019,719 LIABILITIES & SHAREHOLDERS EQUITY Current Liabilities Accounts payable and accrued liabilities $ 136,528 $ 87,123 Due to related party 0 130,261 Total current liabilities 136,528 217,384 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. 7,993,531 7,565,416 Deficit- accumulated during development stage (1,462,500) (763,081) Total shareholder's equity 6,531,031 6,802,335 Total liabilities & shareholder's equity $6,677,559 $7,019,719 See Accompanying Notes CONSOLIDATED CONDENSED STATEMENT OF INCOME (LOSS) AND DEFICIT Summo Minerals Corporation (A Development Stage Company) US Dollars (Unaudited) Three Months Nine Months Ending Ending Cumulative September 30, September 30, from Inception 1996 1995 1996 1995 Expenses General and administration $1,453,994 $286,567 $178,839 $748,107 $380,943 Depreciation and amortization 19,011 5,411 4,558 11,779 4,812 Exploration Expense 57,066 717 26,272 11,433 26,272 Interest and Bank Charges, net (154,467) (16,675) (16,954) (71,900) (56,724) Income(Loss) Before the following (1,375,604) (276,020) (192,715) (699,419) (355,303) Impairment of mineral property cost (91,446) - - - - Gain on sale of mineral property 4,550 - - - - Net Income(Loss) for the period (1,462,500) (276,020) (192,715) (699,419) (355,303) Deficit - Beginning of period - (1,186,480) (424,762) (763,081) (262,174) Deficit - End of Period (1,462,500)(1,462,500) (617,477)(1,462,500)(617,477) Earnings(Loss) Per Share $(0.02) $ (0.02) $ (0.04) $(0.03) See Accompanying Notes CONSOLIDATED STATEMENT OF MINERAL PROPERTY COSTS Summo Minerals Corporation (A Development Stage Company) US Dollars (Unaudited) For the For the 9 months 9 months Ending Ending Cumulative Sept. 30, Sept. 30, from Inception 1996 1995 DIRECT Lisbon Valley, Utah, USA Land acquisition, staking, lease & rental $1,190,343 $137,973 $596,413 Permitting 836,999 514,582 70,737 Geophysical, geological and engineering 522,961 25,987 124,289 Drilling 451,861 3,256 88,313 Metallurgy 349,215 57,244 126,178 Feasibility 243,670 58,088 180,528 Legal 71,301 3,253 22,939 Taxes, licenses and insurance 14,072 - - Assaying 13,064 - - Support, accommo- dation and general costs 659,553 246,294 264,836 4,353,039 1,046,677 1,474,233 Cashin, Colorado,USA Land acquisition, staking, lease & rental 399,097 121,229 116,883 Geophysical, geological and engineering 69,686 5,697 14,261 Drilling 124,433 75 84,236 Metallurgy 8,459 2,951 5,464 Legal 16,454 880 751 Taxes, licenses and insurance 609 - - Support, accommodation and general costs 73,513 20,677 11,089 692,251 151,509 232,684 Champion, New Mexico, USA Land acquisition, staking, lease & rental 159,632 81,899 79,306 Geophysical, geological and engineering 27,485 8,964 12,439 Drilling 164,648 99,539 645 Metallurgy 2,808 2,808 - Legal 200 200 363 Support, accommodation and general costs 2,120 (1,425) 314 356,893 191,985 93,067 Other, USA 91,446 - 2,622 Cost for the period 5,493,629 1,390,171 1,802,606 Balance-beginning of period - 4,012,012 1,695,871 Less: Write-off of mineral property (91,446) - - Balance - End of Period $5,402,183 $5,402,183 $3,498,477 See Accompanying Notes CONSOLIDATED STATEMENT OF CASH FLOW Summo Minerals Corporation (A Development Stage Company) US Dollars (Unaudited) For the Nine Months Ending Cumulative Sept. 30, Sept. 30, from Inception 1996 1995 Operating Activities Net income (loss) $(1,462,500) $ (699,419) $ (355,303) Reconciliation of net income loss) to net cash: Depreciation and amortization 19,011 11,779 4,812 Impairment of mineral properties at cost 91,446 - - Change in current assets and liabi- lities accounts receivable (67,833) (61,718) 773 prepaid expenses - 2,492 (969) accounts payable 22,429 (10,421) 497,643 Net cash (used in) provided by operating activities (1,397,447) (757,287) 146,956 Investing Activities Mineral property cost (5,493,629) (1,390,171) (1,802,606) Less shares issued for property 495,792 - 58,369 Increase in accounts payable 114,099 59,826 - Plant, buildings and equipment (707,500) (683,844) (21,236) Net cash used in investing activities (5,591,238) (2,014,189) (1,765,473) Financing Activities Issuance of share capital (net of issue costs) 7,497,739 428,115 2,618,859 Proceeds of loan from related party 285,144 Payments of loan from related party (285,144) Due to related party - net - (130,261) (182,229) Net cash provided by financing activi- ties 7,497,739 297,854 2,436,630 Net increase (decrease) in cash 509,054 (2,473,622) 818,113 Cash and cash equivalents - beginning of period 2,982,676 176,961 Cash and cash equivalents - end of period $ 509,054 $ 509,054 $ 995,074 See Accompanying Notes NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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 nine 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 September 30, 1996, a total of 7,872,500 shares of authorized Common Shares were reserved for the following: Stock Options 1,522,500 Warrants 6,350,000 7,872,500 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. On July 7, 1996, the Board of Directors issued an additional 20,000 options to an employee of the Company at an exercise price of $1.90 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 would not be reflected as issued and outstanding and would be excluded from loss per share calculations. FINANCIAL STATEMENT PRESENTATION Sept. 30, Sept. 30, 1996 1995 Weighted average number of shares Canadian Basis 17,882,221 11,813,540 U.S. Basis 17,607,221 11,063,545 Income (Loss) Per Share U.S. Basis (.04) (.03) 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 $0.7 million for the first nine months of 1996 as compared to a net loss of $0.36 million in 1995. Expenses General and administrative expenses increased $0.37 million to $0.75 million for the first six months of 1996 compared to $0.38 million in 1995 due primarily to increased salary expenses ($0.30 million) and other G & A expenses attributable to setting up offices in Denver, Colorado. Exploration expenses increased $0.01 million for the first nine months of 1996 compared to $0.03 for 1995 due to increased activity in evaluating additional exploration targets. Interest income increased $0.02 million to $0.07 million for the first nine months of 1996 as compared to $0.05 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 $0.90 million to $0.76 million in the first nine months of 1996 as compared to ($0.15) million in 1995, due to a general increase in accounts payable in 1995 and an increase in G & A expenses in 1996. Net cash used in investing activities increased by $0.25 to $2.01 million in the first nine months of 1996 compared to $1.77 million in 1995. The difference is due to increased development activity and an increased exploration activity on the Champion property ($0.10 million) and investment in plant, building and equipment ($0.68 million), which includes the initial engineering on Lisbon Valley planned construction. Net cash used in financing activities was $0.30 million in the first nine months of 1996 compared to cash provided by financing activities of $2.44 million in 1995. The Company's primary use of cash in this area was the reduction of amounts owed to related parties in 1996. The Company had $0.51 million in cash and cash equivalents and working capital of $0.80 million as of September 30, 1996 compared to $2.98 million of cash and cash equivalents and working capital of $2.77 million at December 31, 1995. The Company will complete a $1 million Private Placement in November 1996 to increase working capital. Outlook Pending availability of financing, the Company plans to start the construction of the Lisbon Valley mine in 1997. The Company will seek financing of approximately $48 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, with the above private placement, to meet its operating requirements until mid 1997, at which time it may have to sell additional stock for working capital, if it does not complete a project financing as indicated above. 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. * Incorporated by reference from 10-Q filed August 9,1996. 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, thereunto duly authorized, effective November 6, 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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